Petition — University of Chicago & Argonne v. McDaniel
Supreme Court brief1977
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Supreme Court, U. & :
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APK 21 1977
MICHAEL ROUAK J8, CLERK
IN THE
Supreme Court of the Anited States
Ocrossr Team, 1976
ne. 76-1464
THE UNIVERSITY OF CHICAGO anno ARGONNE,
A CORPORATION,
Petitioner.
vs.
LOUIS ALLEN McDANIBL, JR.,
Respondent
PETITION FOR WRIT OF CERTIORARI TO THE UNITED
STATES COURT OF APPEALS FOR
THE SEVENTH CIRCUTT.
Witrreo F. Rice, Jr.,
Geracp D. SKONING,
Tueron L. Maasn, Il,
Seyrarth, SHaw, FArmwearHer
& GBERALDSON,
55 East Monroe Street,
Suite 4200,
Chicago, Illinois 60603,
Attorneys for Petitioner.
Gunthorp Werren Printing Company Chicago ¢ Financia: 6 6565
TABLE OF CONTENTS.
2 aoe a << nm
Reasons for Granting the Petition for Writ of Certiorari
ay Be ih 4 HE He
i i Hee
lis + alte Hat Hf
of the
fg hl ti of
nine i
The
The Proper Contraction f the Davi Bacon
and Judgment of Court of Appeals
in McDaniel | entered March 14, 1975 ........ Als
1H
i
Same. CHGS Pn nccccccccccccccccceccccces A344
Cases
Allen v. State Board of Blections, 393 U. S 544
CUBED) acccccccccccccccccceccceccccccccce 4,6,7,8
Blaney v. Florida National Bank At Orlando, 357 F. 2d
BP GE GR GED cccccccccccccccncccccccccces 1S
Cathoon v. Harvey, 379 U. S. 134 (1964) ............ 15
Cort v. Ash, 422 U. S. 66 (1975)... cnn
pobetsutseeenesaccéence 2, 5, 6, 7, 8, 9, 10, 11, 12, 16,17
Fleischmann Distilling Corporation v. Maier Brewing Co.,
Ee SD paccndccice aun cedenaas 15-16
Hernandez v. Frank Sorce Landscaping, Inc., Case No.
TO © SRD GR Bi Badocccccccccccccccccecccces 13
Hewitt Robins, Incorporated v. Eastern Freight-Ways, Inc.,
S50 G B BS Clipe nc ccccacenccecseccsccccces 23
iti
J. 1, Case Company v. Borak, 377 U. S. 426 (1964)....
Seb eke Sows vbeaes Cbs Chee We in che eeieus ces 4,6, 7,8
Loyd v. Regional Transportation Authority, F. 2d
, 45 U. SL. W. 2371 (7th Cir, 1977)... ..... 8
Montana-Dakota Utilities Co. v. Northwestern Public Serv-
i Se Gk eb GMa ccneccecesccceecece 1s
National Railroad Passenger Corporation v. National Asso-
ciation of Railroad Passengers, 414 U. S. 453 (1974)
wTTTTT TT TTT TTT eee 5, 7, 8, 9, 11, 16,17
Perma Life Mufflers, Inc. v. International Parts Corp.,
392 U. S. 134, 136 (19GB) ccc nes 13
Piper v. Chris-Craft Industries, Inc., = _
Gk Se Geen caccncactcccocesecocccecess 7,8
Powell v. Washington Post Company, 267 F. 2d 651 (D.C.
Cir, 1959), cert. denied, 360 U. §. 930............ 1s
Santa Fe Industries, Inc. v. Green, U. §. , 45
U. S. L. W. 4317 (Mar, 23, 1977)... ccc 7,8
Securities Investor Protection Corp. v. Barbour, 421 U. §S.
Ge Gee cceccccsccceses 2, 5, 6, 7, 8, 9 11, 12, 16,17
Stanley BE. Coutu v. Universities Research, Inc., Case No.
St nn, nM nnd acon cencenncsconncences 12
Switchmen's Union of North America v. National Media-
tion Board, 320 U. S. 297, 301 (1943)... 6... 6... 1s
United States v. Blair, 321 U. S. 730 (1944).......... 10
United States for the Benefit of Eusebio Castellon v.
Copenhaver, Case No. 74 C 1230 (N. D. TIL)... .... 13
United States v. Joseph A. Holpuch Co., 328 U. §. 234,
i Jinn cendedeous ehodeness 6ececedeee 10
Williams v. Lee, 358 U. §. 217, 218 (1959)... . 6.6.68, 13
iv
Statutes.
Davis-Bacon Act, 40 U. S.C. § 276a, ef seg. ©... 66.6, passim
Section 1, 40 U. S.C. 8 27a... cee 2, 18, 23
Section 2, 40 U. S.C. § 27Ga-1. wees 18
Section 3(a), 40 U. S.C. § 276a-2(a). ©... 6. 64. 18
Section 3(b), 40 U. S. C. § 276a-2(b)..... 2,3, 14,18
Judicial Code™
ete) een 2
3S UU @ GC. B Bee ccccceneceeseseceunnnl 4
Miller Act, 40 U. S.C. § 270a, ef seq... cee 2,14
Section 2, 40 U. S.C. § 27OB. wc cen 3,4
Portal-to-Portal Act,
2 U. & C. 0 SBR, GF GiBic cc cccccncncesueueees 14
Rehabilitation Act of 1973, 29 U. S&C. § 794........ ‘
Securities Exchange Act of 1934, 15 U.S.C. § 77, et seq. 7
Miscellaneous.
Hearings Before the Special Subcommittee on Labor of the
Committee on Education and Labor, 87th Cong., 2d
Base. CODER). . cccccccccseocscccesseencueeeeenee 18
H.R. 1111S, 87th Cong., 2d Sess. (1962)... 2. ...... 18
H. R. 6041, 88th Cong., Ist Sess. (1963)... 00.6.6. 0.., 20
H. R. 9890, 88th Cong., 2d Sess. (1964)......... 11, 18, 19
H. R. Rep. No. 308, 88th Cong., Ist Sess. (1964)... ...
»0000000006660080 508 Nunn 20, 21, 22, 23, 25
B. 3067, Phat Came, COGBRD.. 0 ccccccccccesnueenenee 17
B Bee. Ma 696 COORD... .cccccccenueeeuneuanee 17
68 Conp, Res. 0800-0808... .00000cccesnueuneeee 22
88 Cong. Rec. 1201 (1964) (Remarks by Congressman
Pema) cv ccccccccccceccccsccscesseeeeeenenen 22
88 Cong. Rec. 1227 (1964) (Remarks by Congressman
Banta .occcccccccceeecesssenenne 20
Supreme Court cf the United States
Octoper Term, 1976
No.
THE UNIVERSITY OF CHICAGO ano ARGONNE,
A CORPORATION,
Petitioner,
vs.
LOUIS ALLEN McDANIEL, JR.,
Respondent.
PETITION FOR WRIT OF CERTIORARI TO THE UNITED
STATES COURT OF APPEALS FOR
THE SEVENTH CIRCUIT.
Petitioner, The University of Chicago and Argonne, prays
that a writ of certiorari issue to review the judgment and opinion
of the United States Court of Appeals for the Seventh Circuit
entered in this case on January 21, 1977.
OPINIONS BELOW.
The latest opinion of the Court of Appeals in this case is
reported at 548 F. 2d 689 (7th Cir. 1977) and is reproduced
herein as Appendix B. The previous opinion of the Court of
Appeals, which was vacated and remanded by this Court for
further consideration, 423 U. S. 810 (1975), is reported at
512 F. 2d 583 (7th Cir. 1975) and is reproduced herein as
Appendix E. The Memorandum of Decision of the District Court
is unreported, but is printed in its entirety as Appendix F hereto.
JURISDICTION.
The opinion and judgment of the Court of Appeals was en-
tered on January 21, 1977.’ On February 14, 1977, pursuant
to Petitioner's motion, the Court of Appeals stayed the issuance
of its mandate for a period of thirty days. Thereafter, on March
16, 1977, that stay order was extended to April 22, 1977.’
This Court's jurisdiction is invoked under 28 U. S.C. § 1254(1).
QUESTION PRESENTED.
Whether the Seventh Circuit, in adhering to its original deci-
sion that Section | of the Davis-Bacon Act, 40 U. S. C. § 276a,
gives rise to an implied private right of action in addition to
the cause of action expressly provided by Section 3(b) of the
Act, 40 U.S. C. § 276a-2(b), correctly interpreted the mandate
of this Court to consider the case in light of Securities Investor
Protection Corp. ¥. Barbour, 421 U. §. 412 (1975), and Cort
v. Ash. 422 U. S. 66 (1975).
STATUTORY PROVISIONS INVOLVED.
Sections | and 3 of the Davis-Bacon Act, as amended (40
U. S. C. § 276a ef seq.) and Section | of the Miller Act, as
amended (40 U. S. C. § 270a ef seq.) are applicable to this
2. The orders staying issuance of the mandate are printed as
Appendices C and D hereto.
STATEMENT OF THE CASE.
This is an action to recover wages allegedly owing under the
provisions of the Davis-Bacon Act to Respondent and a class he
purports to represent. Respondent alleges that he was employed
as a mechanic or laborer on a government construction project at
the Argonne National Laboratory (Argonne) pursuant to a con-
tract entered into between Argonne and the United States Atomic
Energy Commission (AEC), now the United States Energy Re-
source Development Agency (ERDA), that the Davis-Bacon
Act was applicable to the contract, and that Petitioner failed
to pay him the prevailing wages to which he a!leges the Secretary
of Labor had determined he was entitled.’ The action is alleged
to arise “under one or more laws regulating Interstate Com-
merce,” and Respondent claims that federal “jurisdiction of this
action is predicated upon 28 United States Code, Sections 1331
and 1337, among others, and under the Davis-Bacon Act, Title
40 United States Code, Section 276a.”*
Petitioner moved to dismiss, contending, inter alia, that the
Davis-Bacon Act does not admit of a private right of action
other than that expressly granted under Section 3(b) of the
Act, 40 U. S. C. § 276a-2(b), which establishes a cause of ac-
tion by an aggrieved employee against the contractor's bond
under the Miller Act, 40 U. S. C. § 270b.
On March 12, 1973, the District Court for the Northern Dis-
trict of Illinois (Honorable Philip W. Tone) granted Petitioner's
motion and dismissed the Complaint, ruling that Respondent had
failed to state a cause of action upon which relief could be granted
and that the Court's jurisdiction could not properly be invoked
under the Davis-Bacon Act.’ In so ruling, the Court reasoned
3. Complaint, Paras. I-IV.
4. Complaint, Para. |.
5S. App. F, p. A27.
4
that the one right of action specifically provided under the Davis-
Bacon Act was exclusive and that:
“{T)here is no way to avoid the thrust of the statute's lan-
guage and legislative history in delimiting the right of action
to one which Congress felt would be adequate to protect
employees whose contractors failed to pay them the wages
prescribed by the statute.”"
The Seventh Circuit reversed and remanded the case to the
District Court for further proceedings. In an opinion’ by Chief
Judge Thomas E. Fairchild, in which Circuit Judge Swygert and
Circuit Judge Sprecher concurred, the Court reasoned that even
though “the terms of § 276a-2(b) do not create a cause of ac-
tion, cognizabie in federal court, for one in (Respondent )'s posi-
tion,” other related statutes evidence congressional recognition
that “wage earners have or may have rights of action under the
contractual provisions required by § 276a which may be en-
forced in state court actions or federal court actions where
jurisdiction is properly based.”” Concluding that the remedial
scheme expressly provided by Congress had “proved ineffective,”
the Court searched elsewhere for a jurisdictional predicate for
Respondent's action."” Against this background, and spurred
on by what it considered to be the mandate of this Court in
J. 1. Case Company v. Borak, 377 U. S. 426 (1964), and
Allen v. State Board of Elections, 393 U. S. 544 (1969), the
Seventh Circuit decided that a sufficient nexus exists between the
_ Davis-Bacon Act and the commerce clause to found subject
matter jurisdiction for this implied private right of action on 28
U. $. C. § 1337."
—_—_——S— — —— _— en —_— — oe ee
6. App. F, p. A26.
7. Hereinafter sometimes referred to as McDaniel 1.
8. S12 F. 2d at S85; App. E, p. Al8.
9. Si2 F. 2d at 586; App. E, p. A20.
10. S12 F. 2d at 587; App. E, p. A20.
11. Si2 F. 2d at 587; App. E, p. A2z2.
5
On October 6, 1975, this Court entered its order granting re-
view of the Seventh Circuit's decision and summarily remanding
the case for further consideration as follows:
“The petition for a writ of certiorari is granted. The judg-
ment is vacated and the case is remanded to the United
States Court of Appeals for the Seventh Circuit for further
consideration in light of Securities Investor Protection Corp.
v. Barbour, 421 U.S. 412 (1975) and Cort v. Ash, 422
U.S. 66 (1975).” 423 U. S. 810 (1975); App. A, p. Al.
Subsequently, on November 19, 1975, the Seventh Circuit issued
an order, sua sponte, for the filing of supplemental briefs ad-
dressed to the question of any action called for by this Court's
mandate.
The Seventh Circuit's opinion on remand” was issued on
January 21, 1977. After reviewing the decisions in Securities
Investor (SIPC) and Cort, supra, pursuant to this Court's man-
date, and additionally considering National Railroad Passenger
Corporation v. National Association of Railroad Passengers
(Amtrak), 414 U. S. 453 (1974), the Seventh Circuit concluded
that:
“(Ijmplying a private right of action in the Davis-Bacon
Act is necessary to effectuate the intention of Congress in
passing the statute.”"*
Persisting in its perception that “. . . this case is a good example
of how the governmental remedies specifically provided in the
Act can be ineffective . . .”"* the Court adhered to its holding
in McDaniel | implying a private right of action in federal court
under the Davis-Bacon Act.
12. Hereinafter sometimes referred to as McDaniel /1.
13. 548 F. 2d at 695; App. B, p. Al2.
14. 548 F. 2d at 694; App. B, p. All.
REASONS FOR GRANTING THE PETITION
FOR WRIT OF CERTIORARI,
A. The Seventh Circuit's Opinion on Remand Misconstrues
This Court's Mandate and Conflicts with Recent Decisions
of This Court.
In its first decision in this case, McDaniel /, the Seventh Cir-
cuit ruled that Section | of the Davis-Bacon Act gives rise to
an implied private right of action in federal district court."
This Court vacated that judgment and remanded the case for
consideration in light of S/PC and Cort." On remand, in
McDaniel Il, the Seventh Circuit tenaciously adhered to its
original judgment that there should be a private right of action
under the Act,'’ notwithstanding the strict test for implication
of such remedies established by this Court in S/PC and Cort.
Although the Court of Appeals paid lip service to those two
opinions, and made passing reference to Amtrak, supra, the
Court's opinion in McDaniel II essentially echoes the deficient
analysis of McDaniel | which was premised upon the different
standards and line of reasoning set forth in J. /. Case and Allen,
supra. Despite the obvious limitations S/PC and Cort impose
upon the J. /, Case-Allen theory that a judicial remedy should
be implied whenever the statutory remedies prove “ineffective,”
the Seventh Circuit has once again concluded that private liti-
gation under the Davis-Bacon Act should be allowed. In es-
1S. $12 F. 2d $83 (7th Cir. 1975); App. E, p. AIS.
16. 423 U. S. 810 (1975); App. A, p. Al.
17. 548 F. 2d 689 (7th Cir. 1977); App. B, p. A2.
-
sence, the Court has ruled that S/PC and Cort do not mandate
a different result than that reached in McDaniel I. We respect-
fully disagree.
It has been clear since Amtrak, SIPC and Cort that more
than mere ineffectiveness of the remedies established by Con-
gress is required before federai court remedies will be implied."*
Nonetheless, in McDaniel 11, it is clear that the Seventh Circuit
was guided once again by its perception of the adequacy of
the remedies available under the Act. In McDaniel 11, the Court
stated as follows:
“This case is a good example of how governmental reme-
dies specifically provided in the Act can be ineffective in
accomplishing the congressional purpose.
. * * . e
“(W]e hold that implying a private right of action in the
Davis-Bacon Act is necessary to effectuate the intention of
Congress in passing the statute.” 548 F. 2d at 694, 695;
App. B, pp. All-A12.
This language compares with McDaniel |, where, relying upon
this Court's earlier decisions in J. /. Case and Allen, the Court
reasoned:
“In a case in which the express remedies provided .. .
have proved ineffective, we should be especially ‘alert to
make effective the congressional purpose.’ ” (Citations and
footnote omitted.) 512 F. 2d at 587; App. E, pp. A20-
A2l.
18. This Court's recent decisions in Piper v. Chris-Craft Indus-
a = , 97 S. Ct. 926 (1977), and Sanita Fe
Induseries, Inc. V. GPO@R, sce. U.S. come 45 U. SL. W. 4317
(Mar. 23, 1977), although not directly applicable herein, clearly
jal this Court's continued close scrutiny of the judicial ‘implica-
that
Act
Obviously, the Seventh Circuit has continued its reliance on the
! 1. Case-Allen analysis despite this Court's admonition to heed
the strict criteria of S/PC and Cort. In its apparent zeal to find
at implied judicial remedy for Respondent herein,'’ the Seventh
Circuit has strained to distinguish S/PC and Cort and as a re-
sult has not properly applied those carefully established stand-
ards to the instant case.
Bh. In its Opinion on Remand the Seventh Circuit Has
Misconstrued and Misapplied the SIPC-Cort Criteria.
Close examination of McDaniel I reveals that the Seventh
Circuit has completely misconstrued and misapplied this Court's
decisions in SIPC and Cort, After reviewing those cases and
this Court's decision in Amira, the Court distilled four criteria
lor determining whether a federal private right of action should
be implied in a particular case:
the legislative histor, or the language of the act itself
nee © Cope Sak © Sey 6 ee ae
action. .. . Third, we must determine whether a private
right of action in this case would be necessary or even
capable of effectuating the purpose of the Act... . Finally,
we must consider whether the cause of action is one tradi-
tionally relegated to state law.””
—— - ry
new causes in federal court none have
provided ly Congee bes be Se San & 6 my aa &
In its selection of these four criteria, the Court merely par-
rots the four-part test enunciated in Cort with the notable ex-
ception of the third part, which has been significantly changed.
The third element of the analysis in Cort is as follows:
to a (
phasis added.) 422 U. S. at 66,."'
By replacing the Cort criterion with the substantially different
standard, “. . . necessary or even capable of effectuating the
purpose of the Act,” the Seventh Circuit has eliminated the
necessity to analyze the underlying (and possibly competing)
purposes and the administrative scheme surrounding the Act
as required by Amérak, S/PC and Cort. For example, in Amirak,
this Court reviewed the overall purposes of the Amtrak Act and
suits.” In SIPC, this Court found that the primary purpose of
the Act was the protection of investors. However, the Court
vision of its operations and concluded
“[A}s in Amtrak, it is clear that the overall structure and
of the SIPC scheme are with such an
10
In spite of these clear statements, the Seventh Circuit's inter-
pretation of these cases reduces the Cort analysis to a simple
search for the principal beneficiaries of the Act. Under McDaniel
‘1, whenever the “especial” beneficiaries are the overriding con-
cern, a private remedy is necessarily “capable of effectuating the
purpose” of the Act even though it might not be “consistent
with its underlying purposes.” Furthermore, if it is found that
ihe statutory remedies are “ineffective,” as the Seventh Circuit
found in the instant case, then the implied remedy becomes
“necessary.”
The Seventh Circuit did not consider the effect the creation
of a private right of action would have on the carefully balanced
program for administrative cost control of federally funded con-
tracts by contracting agencies. This correlative purpose of the
Davis-Bacon Act has been recognized by this Court. United
States v. Joseph A. Holpuch Co., 328 U. §. 234, 239 (1946);
United States ¥. Blair, 321 U. S. 730, 734 (1944). The Seventh
Circuit recognized the variety of reasons for which Davis-Bacon
was passed:
“(a) that local contractors be protected from unfair com-
ability and purchasing power of their citizens."
However, the Court disposed of these correlative purposes of the
Act in terms of its “principal beneficiaries” analysis:
“But for the plaintiff class to be the tal beneficiaries
does not mean that they must be ‘he exc beneficaries,
analysis of the third criterion of the Cort test. Similarly, the
25. S48 FP. 2d at 693; App. B, p. A7.
underlying purposes of the Act were ignored by the Court. In
this regard the Seventh Circuit misapplied the S/PC-Cort criteria
and for this reason misconstrued the legislative history of efforts
to amend the Davis-Bacon Act to specifically provide a private
right of action in federal court.
The Seventh Circuit's distortion, in McDaniel I/, of the third
element of the Cort test also skewed the Court's analysis of the
legislative history of the Act. Because its attention was focused
on the overriding purpose and intended beneficiaries of the Act.
rounding the defeat of Congressman Goodell’s bill, H. R. 9590,
88th Cong., 2d Sess. (1964), which would have explicitly
course,
with the effectuation of the purposes intended to be served
by the Act.’ Passenger Corp. Vv. Passenger Assn, 4
453, 457-458 (1974)... .” (Emphasis added.) 421
at 18. |
A Threshold Jurisdictional Issue in Other Federal Cases.
By virtue of the Seventh Circuit's decisions in the McDaniel
case, federal district courts have been, for the first time since
questions of coverage, classification and rates under the Act.
It is submitted that the potential for a flood of federal court
pa ee ig wholly unprecedented
13
action will raise the threshold jurisdictional question of whether
or not there is an implied private right of action in federal dis-
trict court under the Davis-Bacon Act.
Petitioner submits that the proper interpretation of the Davis-
Bacon Act is an important federal question which is now ripe
for decision and which should be definitively resolved by this
Court. Since the issue raised herein will be a threshold question
in future federal district court cases which will be complex, time-
consuming and expensive, the interests of judicial economy and
fairness to all parties militate in favor of a prompt resolution of
the issue by this Court.
alone sufficient reason for exercise of this Court's certiorari
(1968); Williams v. Lee, 358 U.S. 217, 218 (1959).
This Court has already recognized the application of this
principle to the instant case by granting certiorari and vacating
ee ee
Ty st - A tf 1 —~— 1, I~
reasesch laboratory ia the Chicago or +—+- ~
research in the Chicago area, which operates
contract: with . Based upon McDaniel |, the cistrict court
has refused to dismiss the complaint in that case which is virtually
two
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the judgment of the Seventh Circuit in McDaniel 1.” For similar
reasons, there is a compelling need for this Court's review of
the Seventh Circuit's opinion on remand in McDaniel 1/1. Because
it again found the “governmental remedies” expressly provided
by the Davis-Bacon Act “ineffective,” the Seventh Circuit has
once again seriously misconstrued the plain language of the Act
and has misinterpreted its legislative history, with the conse-
quence that a major congressional program will be subject to
serious disruption if the decision below is allowed to stand. By
substituting its implied judicial remedy for those remedies ex-
pressly created by Congress, the Seventh Circuit has overstepped
its constitutional bounds. This Court should closely review this
act of legislation by judicial fiat.
A. The Express Statutory Language Does Not Provide the
Private Right of Action Created by the Seventh Circuit.
It is obvious and indisputable that the clear and unambiguous
express language of Section | of the Davis-Bacon Act does not
provide a private right of action in federal district court. Section
| of the Act merely sets forth the requisite standards to which
certain federal contracts must adhere. Section | contains no
jurisdictional grant and creates no cause of action whatsoever.
With the exception of the limited right of action afforded by
Section 4/b), 40 U. S. C. § 276a-2(b), no other provision of
the Davis-Bacon Act expressly creates a private right of action.
The Seventh Circuit's analysis, in McDaniel /, of the limited
cause of action specifically provided in Section 3(b) of the Act
was sound. McDaniel | carefully reviewed and analyzed the
legislative history of the related statutes in question" and rightly
concluded that Section 3(b) of the Act creates only a limited
right of action on the bond:
ee
(29. 423 U. S. 810 (1975); App. A, p. Al.
30. $48 F. 2d at 694; App. B, p. All.
3\. Davis-Bacon Act, 40 U. §. C. § 2760 ef seq.
— S. C. § 2708 ef seq.; and Portal-to-Portal Act, 29 U. §. C.
y et seq.
congres-
of conferral by § 276e-2(b) of a right of
on ‘
The Court further concluded that Section 3(b) of the Act does
and mechanics a private of action. We adhere to our
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16
The Seventh Circuit's opinion deprecates the weight to be
accorded this principle in construing the words chosen by Con-
gress to carry out its legislative intent. As this Court has recog-
nized in Amsrak, and reaffirmed in both S/PC and Cort, this
principle of statutory construction should not be ignored unless
there is “clear contrary evidence of legislative intent.”” In the
present case, the legislative history compels the conclusion that
Congress meant exactly what it said.
B. The Legislative History of the Davis-Bacon Act Clearly
Indicates That Congress Did Not Intend to Provide the
Private Right of Action Created by the Seventh Circuit.
Since the Davis-Bacon Act provides no express private right
of action, we must turn to the legislative history to determine
whether the inference of such a private right of action is “con-
sistent with the evident legislative intent.” It is respectfully
submitted that the inference of such a private right of action by
the Seventh Circuit is wholly inconsistent with the legislative
history of the Davis-Bacon Act and, more specifically, amend-
ments to its enforcement provisions. Indeed, a proposed amend-
ment, specifically rejected by the Congress, would have changed
the Davis-Bacon Act to expressly provide the very right of
action judicially created below by the Seventh Circuit. Under
such circumstances, the Seventh Circuit has clearly transgressed
congressional intent that no such right of action be permitted
under the Act.
Petitioner has previously set forth relevant portions of legis-
lative history of the Davis-Bacon Act several times during the
(Footnote continued from preceding page.)
386 U. S. 714, 720 (1967): “When a cause of action has been
created by a statute which cxpressly i the remedies for
vindication of the cause, other should not readily be
35. Amtrak, 414 U. S. at 458, SIPC, 421 U. S. at 419.
36. Amtrak, supra, 414 U. S. at 458, SIPC, supra, 421 U. S.
412, 98 S. Ct at 1737.
expressly
provide the very right of action that has now been judicially
created by the Seventh Circuit. It is again respectfully submitted
that the inference of a private right of action here is wholly
inconsistent with the legislative history of the Davis-Bacon Act.
Under S/PC and Amtrak, supra, if the legislative history reveals
“clear contrary evidence of legislative intent,” contradicting the
plain language of the statute, then the principle of expressio
unius est exclusio alterius must yield
The original Davis-Bacon Act, enacted by Congress in 1931,
provided that the wages paid on certain federal construction
projects “shall not be less than the prevailing rate of wages."”
As intitially enacted, the statute contained only limited provi-
sions relating to wage determinations, and provided no enforce-
ment procedures. In 1932, Congress passed an amendment to
the Act providing for the imposition of fines and deductions on
any contrac‘or violating the Act,” however, the proposed
amendment was vetoed by President Hoover.” Subsequently, in
1935, Congress amended the Act to incorporate provisions for
administrative predetermination of wages and for enforcement
37. Davis-Bacon Act of 1931, Chap. 411, § 1, 46 Stat. 1494.
38. S. 3847, 7ist Cong. (1932).
39. See Veto Message (S. Doc. No. 134) (1932).
that remain unchanged today.“ Specifically, the 1935 statute
amended the original Act to provide a new Section 2, per-
mitting the government to cancel contracts for non-compliance
with the Act,"’ a new Section 3(a), authorizing the Comptroller
General to withhold payments to contractors,” and a new
Section 3(b), granting laborers and mechanics a limited right
to sue in federal court to recover wages against the Miller Act
bond.** Congress has not changed these basic provisions of the
Davis-Bacon Act.
Although no substantive amendment to these provisions has
been enacted, Congress has had the opportunity to review and
changed the Act. Specifically, in 1962 and 1963, the House
Special Subcommittee on Labor held extensive hearings on
various proposed amendments to the Davis-Bacon Act.** Among
the legislative measures considered by the Subcommittee and
the Congress were two bills sponsored by Congressman
Charles E. Goodell of New York, which would have amended
the Davis-Bacon Act to provide extensive judicial review of
administrative wage determinations and to provide a private
right of action in federal court to enforce the Act.
H. R. 9590, proposed by Congressman Goodell, would have
amended the Davis-Bacon Act to provide as follows:
“Sec. 7. (a) Whenever it is claimed that any contractor
or subcontractor has refused or failed to pay the wages
40. 40 U. S. C. §§ 276a-276a-2(b).
41. 40 U.S.C. § 276a-1.
42. 40 U. S. C. § 276a-2(a).
43. 40 U. S.C. § 276a-2(b).
, full of H. R. 9590 is printed as ix H.
H. R. 9590, 88th Cong., 2d Sess, §§ 8(a) and (ec) (1964). In
—— f-¥- ay —_F-, Ff a
bo aan of jdicial retiew of Senate. The
SD Gay Gas Cs SS Oe erred on
20
of its intended purpose during debate on the House floor,
should leave no doubt as to its intended meaning:
“The judicial review section which I am offering permits
an aggrieved individual who feels that the determination
of the Secretary of Labor is erroneous to bring an action
in federal court... ."*"
The fact that these proposed amendments were rejected by the
Congress is compelling evidence that the Seventh Circuit has
erred. However, even more instructive is the wealth of comment
and debate over these amendments which should leave abso-
lutely no doubt as to the intent of Congress with respect to
judicial relief.
At the conclusion of the extensive hearings into the various
amendments proposed, the House Committee on Education
and Labor, through its Chairman Adam C. Powell of New
York, issued a report favoring an amendment to add fringe
benefits to Davis-Bacon Act determinations,“ but rejecting the
concept of judicial review as embodied in the Goodell bill.
In recommending that the House reject amendments adding
judicial review to the Act, the majority report observed that:
“[J)udicial review of wage determinations under the Davis-
Bacon Act is simply not practicable and, in fact, could
frustrate the entire program.” (Emphasis added.)*°
The majority report went on to note that some form of review
of wage determinations should be provided; however, it con-
cluded that “administrative improvements rather than a legis-
lative solution provide the best approach.”*' The majority report
then observed that the Secretary of Labor had recently estab-
lished a Wage Appeals Board having jurisdiction over “all
significant questions under these labor standard statutes” and
concluded:
ot. Cong. Ree. 1227 (1964) (remarks by Congressman
49. H. R. 6041, 88th Cong., Ist Sess. (1963).
50. H.R. Rep. No. 308, 88th Cong., Ist Sess., p. 4 (1964).
Si. Ibid.
21
“The Committee is confident that this Board offers the
necessary procedural protections for interested parties,
without impeding the operation of our construction pro-
grams.” (Emphasis added. )™
Finally, and most significantly, the majority report commented
on the authority of the Wage Appeals Board in enforcement
matters and concluded that enforcement should be left to
administrative proceedings:
“In enforcement cases, the Board is empowered to review
potential debarment cases on the record after full oppor-
tunity to be heard has been extended to any contractor or
subcontractor. The committee believes that the effective-
ness and adequacy of this administrative approach should
be thoroughly tested before consideration is given to other
measures.” (Emphasis added. )”
From these comments on the proposed amendments, it is abund-
antly clear that the majority of the Committee, whose views were
ultimately ratified by the House, considered the creation of
judicial review inimical to the various interests promoted under
the Act. Furthermore, it is equally clear from the acrimonious
comments contained in the minority views, in which Congress-
man Goodell joined, that no provision of the Davis-Bacon Act
provided for the recourse to the courts envisioned by the amend-
ments proposed:
“At the present time, every finding of the Secretary of
Labor, with or without an investigation and with or without
a hearing, is final. Neither employees or employers have any
recourse except to beg the Secretary for mercy, or perhaps
prevail upon their to intervene. It is an in-
tolerable situation for such arbitrary and final authority to
be lodged in a single administrator.”
This minority view added the cryptic warning that, “If fringe
benefits (H. R. 6041] are approved by the Congress as separate
52. Ibid.
53. H.R. Rep. No. 308, 88th Cong., Ist Sess., p. 5 (1964).
54. H.R. Rep. No. 308, 88th Cong., Ist Sess., p. 29 (1964).
22
legislation, the opportunity for real reform will then be lost."”
The minority view did not prevail.
When these amendments were reported out of committee and
proceeded to the House floor for debate, Congressman Goodell
and his colleagues once again attempted to secure the broad
recourse to the courts by amendment to the Davis-Bacon Act.
The debate on the House floor preceding the defeat of Congress-
man Goodell’s proposed amendments” reveals that Congress
intended to provide no such recourse to the courts. In this
regard, Congressman Fogarty argued as follows:
“What will the Goodell amendment do? This is what
it will do. It will allow any contractor or subcontractor,
bidder or prospective bidder, employee or prospective em-
ployee and so far as the bill is concerned, almost anyone
who regards himself adversely affected by the Secretary's
Se eee
“This phrase ‘judicial review’ is an appealing concept, but
it is not practical. Its purpose is to try to drive a wedge
into the effective operation of the Davis-Bacon Act which
has been in existence for the past 30-some years."
The Goodell bill was defeated. In the words of the minority
report, the “opportunity for real reform” was lost. But, none-
theless, Congress had spoken and spoken unequivocally with
respect to the proposed recourse to the courts, both for judicial
review of wage determinations and for enforcement of the Act.
Congress viewed the administrative procedures then available
as entirely adequate. Congress has spoken no differently in this
regard since 1964. The intent of Congress could hardly be more
clear.
Tracing the course of this legislative history of the Act clearly
reveals that the implication of a private right of action is wholly
SS. HR.
56. 88 Cong. Ree. 1201-1231 (1964).
7 88 Cong. Ree 1201.
23
Congressman Goodell proposed legislation to create such a
private right of action is a clear indication that none then existed.
Indeed, the minority report argued strenuously (to no avail)
for the passage of such a bill because in their view no such
right of action then existed. And finally, after extensive com-
7
nt
g
e st
tis
fi
|
:
i
F
2
i
y
Li
f
HT
24
The basic flaw in the rationale of the Severth Circuit's opin-
ion is its overriding concern with the Act's “principal benefici-
aries” as reflected in its statement that the Act “reveals the
fundamental purpose .. . was to benefit laborers and mechan-
ics." In order to effectuate that purpose, the Seventh Circuit
concluded that implicavion of a private right of action was
necessary. despite the fact that none was provided by Congress.
The court below ignored the fact that Congress devised a com-
prehensive administrative scheme for implementation of the Act
and its many purposes and was especially sensitive to the poten-
tial for disputes pertaining to agency determinations on coverage
and wage rates.
It has long been recognized that the Act has several related
purposes, only one of which is the “prevailing wage” standard.
The legislative history of the Act makes it clear that one of the
important purposes of the entire statutory scheme is the main-
tenance of administrative controls over federally funded con-
struction projects and the elimination of wage rates as a factor
in bidding on government contracts.
The majority report of the House Committee on Education
and Labor, in commenting on proposed amendments to the
Davis-Bacon Act, clearly perceived the serious practical conse-
quences entailed in permitting wholesale recourse to the courts
to redress grievances arising under the Act. The majority report
reasoned that judicial review was “simply not practicable” and
stated that it “could frustrate the entire program.”” The report
went on to recommend “administrative improvements” rather
than legislation of a judicial remedy because of the dire conse-
quences visualized in the latter approach:
“It could reasonably be anticipated that a flood of litiga-
tron would ensue which would be comparable in magnitude
to the wave of wage-hour cases which inundated the courts
some years ago and resulted in enactment of the Portal-to-
60. S48 F.2d at 693; App. Bp As t—~—t
61. H.R. Rep. No. 308, 88th Cong., Ist Sess, p. 4 (1964).
purpose and general structure of the Act. It is submitted that the
Seventh Circuit's decision totally emasculates a key part of this
entire statutory scheme and, accordingly, threatens to disturb
the delicate balance of competing policy considerations carefully
62. Ibid.
63. H.R. Rep. No. 308, 88th Cong., Ist Sess, p. 5 (1964).
26
weighed by Congress. The issue presented is a pure question of
statutory interpretation bearing upon the threshold question of
federal district court jurisdiction under the Act. It is an issue
which does not require further consideration and refinement by
lower courts prior to disposition by this Court. It is and will be
a threshold jurisdictional question in pending and anticipated
federal cases which, if allowed to proceed on their merits, will
be complex, time-consuming and expensive. The decision of the
Seventh Circuit is an appropriate vehicle for exercise of this
Court's jurisdiction because that decision not only presents a
fundamental question of statutory construction, but also has
created a serious impediment to the continued implementation
of the central policy of the Act, the elimination of wage rates
as a factor in bidding on government contracts.
For all of the foregoing reasons Petitioner prays that a writ
of certiorari issue to review the judgment and opinion of the
United States Court of Appeals for the Seventh Circuit entered
in this case on January 21, 1977.
Respectfully submitted,
Witrrep F. Rice, Ja.,
Gerato D. Skontno,
Teron L. Marsa, Il,
SeyvrartH, SHaw, Famwearner
& GERALDSON,
55 East Monroe Street,
Suite 4200,
Chicago, Illinois 60603,
Attorneys for Petitioner.
Al
APPENDIX A.
In THE SuPReME CouRT oF THE UNITED STATES,
423 U. S. 810
Tue Universiry of CHicaco and ARGONNE,
Petitioners,
vs.
Louis ALLEN McDaniet, Jr.
No, 75-83.
Facts and opinion, 512 F. 2d $83.
Oct. 6, 1975. On petition for writ of certiorari to the United
States Court of Appeals for the Seventh Circuit. Petition for
writ of certiorari granted, judgment vacated and case remanded
to the Court of Appeals for further consideration in light of
Securities Investor Protection Corp. v. Barbour, 421 U. §. 412,
95 S. Ct. 1733, 44 L. Bd. 2d 263 (1975), and Cort v. Ash, 422
U. S. 66, 95 S. Ct. 2080, 45 L. Ed. 2d 26 (1975).
tw THe Unrrep States Court oF APPEALS
For the Seventh Circuit
No. 73-1438
Lous ALLEN McDaniet, Jr.,
Plaintiff-A ppellant,
vs.
Tue University Or Cricaco and ARGONNE, a corporation,
Detendants-A ppeliees.
On Remand from the Supreme Court of the United States
Submitted January 30, 1976—Decided January 21, 1977
Before Farrcnicp, Chief Judge, and SwyGERT and SPRECHER,
Circuit Judges.
Faincnicp, Chief Judge. The question before us is whether,
in light of Securities Investor Protection Corp. v. Barbour, 421
U. S. 412 (1975), and Cort v. Ash, 422 U. S. 66 (1975),
Section | of the Davis-Bacon Act, 40 U. S. C. § 276a, contains
an implhed private right of action for the benefit of laborers and
mechanics who are not paid the prevailing wage in their locality.
The facts and history of the case are reported at 512 F. 2d 583
(7th Cir. 1975), where we held that the Davis-Bacon Act did
contain an implied private cause of action, and that jurisdiction
rested on 28 U. S.C. § 1337. The Supreme Court of the United
States granted cerfiorari, vacated the judgment and remanded
for consideration in light of the two above-mentioned cases,
ce o
A}
which were decided subsequent to our decision in McDaniel,
423 U. S. 810.
In Cort v. Ash, supra, 422 U. S. at 78, the Supreme Court
specified the relevant factors to be considered by any court in
determining whether a private remedy is implicit in a federal
statute.
“First, is the plaintiff ‘one of the class for whose especial
benefit the statute was enacted’. . ., (citation omitted, emphasis
supplied by Supreme Court) . . . that is, does the statute create
a federal right in favor of the plaintiff? Second, is there any
indication of legislative intent, explicit or implicit, either to
create such a remedy or to deny one? (Citation omitted.) Third,
is it consistent with the underlying purposes of the legislative
scheme to imply such a remedy for the plaintiff? (Citation
omitted.) And finally, is the cause of action one traditionally
relegated to state law, in an area basically the concern of the
states, so that it would be inappropriate to infer a cause of
action based solely on federal law?”
At issue in Cort was a criminal statute, 18 U. S. C. § 610,
prohibiting corporations from making “a contribution or expen-
diture in connection with any election at which Presidential and
Vice Presidential electors . . . are to be voted for.” Considering
the factors set out above, the Supreme Court held first that
complainant citizens or stockholders were barred from enjoining
alleged violations of § 610 in future elections because a statute
passed after the filing of the suit, but prior to the Supreme
Court's review, established an administrative procedure for
processing complaints of § 610 violations; and that as far as an
implied private right of action for damages was concerned, the
primary congressional goals in passing § 610 had been elimi-
nating corporate influence over elections and preventing corpo-
rate officials from contributing corporate funds without the
consent of the stockholders. The statute had not been passed for
the “especial” benefit of the shareholders.
A4
Second, the Court noted that nothing in the legislative history
of § 610 suggested a congressional intention to confer on share-
holders a federal right to damages for violation of § 610. In
examining the legislative history, the Court stated that in a case
where the statute clearly granted a class of persons certain
rights, it is not necessary to show an explicit congressional inten-
tion to create a private cause of action, although an explicit
purpose to deny a private cause of action would be controlling.
But in a case like Cort, where it was at best doubtful that Con-
gress intended to vest rights in the plaintiff class, the Supreme
Court concluded that absence of a suggestion in § 610’s legis-
lative history of a suit for damages strongly suggested a con-
gressional intention to the contrary.
Third, the remedy of damages would not have served the
purposes of the primary congressional goals. Repayment by
corporate officials of funds contributed to political campaigns
would not remedy the evil legislated against (corporate political
influence), and would have had a minimal, if any, deterrent
effect. Thus, concluded the Supreme Court, no private right of
action was implicit in the criminal statute.'
Fourth, the Court deemed it appropriate to relegate stock-
holders similarly situated to whatever remedy is created by state
law. The fact that there might be no remedy under the law of
some states would not hinder the primary goal.
Similar reasoning is apparent in Securities /nvestor Protection
v. Barbour, 421 U. S. 412 (1975), and in Passenger Corp. v.
Passenger Assn., 414 U. §. 453, 457-58 (1974), (hereafter
“Amtrak”), on which Securities Investor heavily relies. In
Securities Investor, the question was whether customers of fail-
ing broker-dealers had an implied private right of action under
the Securities Investor Protection Act of 1970 (SIPA), 15
U. S. C. § 78aaa ef seqg., to compel the Securities Investor Pro-
tection Corporation (SIPC) to exercise its statutory authority
1. This is not to say that a private right of action may never be
implied in a criminal statute. See Cort, supra, 422 U. S. at 79.
AS
for their benefit. The SIPC was a non-profit corporation de-
signed by Congress to afford limited financial relief for losses
suffered by customers of failing broker-dealers.
In holding that no private right of action was implicit in 15
U. S. C. § 78aaa et seq., the Court stressed several factors. First,
the very structure of the SIPC and SEC yielded a strong infer-
ence against private causes of action. The SIPC is a non-profit,
corporate entity, designed to deal with a public problem, and is
substantially supervised by the SEC. The SIPC’s practice was to
defer intervention, if at all possible, to enable endangered firms
to avoid collapse by infusion of new capital or merger. Securities
Investor, supra, 421 U. S. at 421, fn. 4. In this respect, suit for
liquidation at the whim of the individual investor might be
antithetical to the whole thrust of the statute. Securities Investor,
supra, 421 U. S. at 422-23; Cort v. Ash, supra, 422 at 78, 84.
Second, a private cause of action would have been incon-
sistent with the very terms of the statute at issue. The respond-
ent in Securities Investor argued that since 15 U. S. C. § 78ccc
(b)(1) provided that since the SIPC can “sue and be sued,
complain and defend, in its corporate name and through its own
counsel, in any court, State, or Federal,” Congress must have
intended that an aggrieved customer of a member firm would be
able to sue. However, 15 U. S. C. § 78ggg(b) limits SEC
actions “to the district court of the United States in which the
principal office of SIPC is located.” As the Supreme Court
pointed out, “It would be anomalous for Congress to have
centralized SEC suits for the apparent convenience of the SIPC
while exposing the corporation to substantively identical suits by
investors ‘in any court, State or Federal.’” 421 U. S. at 420,
fn. 3.
Finally, conceding that Congress’ primary purpose in enacting
the SIPA and creating the SIPC was the protection of individual
investors, Securities Investor, 421 U. S. at 421, the Court held
that the other two factors, set out in Cort as well, of congres-
sional intent and the consonance of the remedy with the pur-
poses of the statute, were predominant.
A6
Before turning to the facts of the case before us, we must
also consider Amtrak, supra, 414 U. §. 453. Although not
explicitly cited in the remand from the Supreme Court, Amtrak
was heavily relied on by the Court in Securities Investor, and
for that reason commands our attention. The question in
Amtrak was whether a private right of action was implied in
the Amtrak Act, 45 U. S. C. § 501 ef seq. The respondent
National Association of Railroad Passengers (NARP) sought
to enjoin the announced discontinuance of certain passenger
trains that had previously been operated by the petitioner Cen-
tral of Georgia Railway. The Court of Appeals for the District
of Columbia held that the Amtrak Act contained an implied
private right of action. Potomac Passengers Ass'n Vv. Chesapeake
& Ohio Ry. Co., 475 F. 2d 325, 340 (D. C. Cir. 1973), re-
versed sub nom. Passenger Corp. v. Passenger Assn., 414 VU. §.
453 (1974). In reversing, the Supreme Court apparently as-
sumed for the sake of argument that railroad passengers were
the intended beneficiaries of the Amtrak Act; Amtrak, supra,
414 U. S. at 457-58. Cf. Cort v. Ash, supra, 422 U. S. at 80-
82. However, with regard to the other two important concerns,
i.e., whether such a remedy would serve the underlying pupose
of the statute, the Court found against NARP. Specifically, there
was extensive evidence in the legislative history that the Con-
gress contemplated no private right of action, and implication
of a private right of action would have been at odds with the
underlying purposes of the statute. As the Court noted, a hold-
ing that the Amtrak Act contained a private right of action
would have been merely to substitute the federal district courts
for the various administrative bodies formerly used to pass on
proposed discontinuances, and “. .. would completely undercut
the efficient apparatus that Congress sought to provide for Am-
trak to use in the ‘paring of uneconomic routes.” Amtrak,
supra, 414 U. S. at 463.
Thus, in the light of Cort and Securities Investor, our inquiry
in the case before us is in four parts. First, we must determine
whether a laborer like the members of the plaintiff class is the
A7
“especial” beneficiary of the Davis-Bacon Act. Cort, supra, 422
U. S. at 78. If he is not, that may well dispose of the case at
the outset. If he is, we have only passed the first hurdle. Cf.
Securities Investor, supra, 421 U. §. at 421.
Second, we must determine whether the legislative history or
the language of the Act itself reveals a congressional intent to
deny a private right of action. Clear evidence of an intent to
deny a private remedy would be controlling, although absence
of evidence of a legislative intent to create a private cause of
action would not necessarily be fatal to the plaintiff's case if we
find that they were granted rights by the Davis-Bacon Act.
Cort, supra, 422 VU. §. at 82.
Third, we must determine whether a private right of action
in this case would be necessary or even capable of effectuating
the purpose of the Act. Cf. Cort, supra, 422 U. S. at 84; Securi-
ties Investor, supra, 421 U. §. at 420-23; Amtrak, supra, 414
U. S. at 461-64,
Finally, we must consider whether the cause of action is one
traditionally relegated to state law.
We must consider, then, whether the plaintiff class of laborers
and mechanics are the “especial” beneficiaries of the Davis-
Bacon Act, 40 U. S. C. § 276a et seq. We conclude that they
are. Defendant-appellee University of Chicago contends, citing
S. Rep. No. 963, 88th Cong., 2nd Sess. (1964), that the Davis-
Bacon Act was passed in 1931 for a variety of reasons: (a) that
local contractors be protected from unfair competition, (b) that
local craftsmen not be denied work by contractors who re-
cruited labor from distant cheap labor areas; and (c) that
local communities not lose the working ability and purchasing
power of their citizens.
But for the plaintiff class to be the special beneficiaries does
not mean that they must be the exclusive beneficiaries, that local
contractors and communities may benefit from the Act does
not mean that it was not principally directed toward the labor-
ers and mechanics. The Davis-Bacon Act by its terms mandates
A8
that the contract between the federal government and the
contractor provide that laborers and mechanics hired by
the contractor be paid the minimum wages determined
by the Secretary of Labor to be prevailing for the corresponding
class of laborers in the locality. The laborer is not only the
principal beneficiary of the statute, but also a third-party bene-
ficiary of a contract provided for by the statute. Moreover,
the legislative history of the Davis-Bacon Act and subsequent
congressional comment on the Act reveals that the fundamental
purpose of the Act was to benefit laborers and mechanics by pay-
ing them wages prevailing in private industry:
“The purpose of this measure is to require contractors
and subcontractors engaged in constructing, altering or
repairing any public building of the United States or of the
District of Columbia situated within the geographic limits
of the United States to pay their employees the prevailing
wage rates when such wage rates have been established by
private industry.” Statement of the Committee on Labor
recommending passage of the Davis-Bacon Act to the
House of Representatives, 71st Cong., 3rd Sess., H. R.
Rep. No. 2453 (January 31, 1931).
“Almost from the inception of Federal construction
activity Congress recognized the necessity for providing
basic wage protection to local laborers and mechanics
employed on the construction. /t was precisely for the
purpose of providing this protection that Congress passed
the Davis-Bacon Act more than 30 years ago. Virtually all
segments of our society banded together to demand its
adoption.” (Emphasis added.) S. R. No. 963, 88th Cong.,
2nd Sess. (March 17, 1964), 2 U. S. Code Congressional
and Administrative News 2340.
Moreover, the Supreme Court of the United States recognized
in United States v. Binghamton Const. Co., Inc., 347 U. §. 171
(1954) that laborers are the primary beneficiaries of the Davis-
Bacon Act:
2. As we note below, this status as a third-party beneficiary
might well support an action for breach of contract in state court, or
in federal court if diversity jurisdiction were satisfied. See McDaniel,
512 F. 2d at 586.
A9
“The language of the [Davis-Bacon] Act and its legisla-
tive history plainly show that it was not enacted to benefit
contractors, but rather to protect their employees from
substandard earnings by fixing a fioor under wages on
Government projects.” 347 U. S. at 176-77.
The Court further stated:
“On its face, the [Davis-Bacon] Act is 2 minimum wage
law designed for the benefit of construction workers.” 347
U. S. at 178.
We thus conclude that the Davis-Bacon Act was passed for
the special benefit of the plaintiff class in this case.
We turn next to the question whether the language of the Act
itself or its legislative history reveals a congressional intent to
grant or deny a private right of action.
At the outset, we reject appellant's argument that 40 U. S. C.
§ 276a-2(b) explicitly gives laborers and mechanics a private
right of action. We adhere to our prior opinion that the language
in § 276a-2(b) applies only to the right of action on a Miller
Act bond, set forth in § 270(b). See McDaniel v. The Univer-
sity of Chicago, 512 F. 2d 583, 585-86 (7th Cir. 1975),
vacated and remanded on other grounds, 423 U. S. 810 (1975).*
We equally reject appellee University of Chicago’s reliance on
the legislative history of a bill sponsored by Congressman
Goodell of New York which was ultimately defeated. The
Goodell Bill, H. R. 9590, 88th Cong., 2nd Sess. (1964) dealt
with the narrow issue of judicial review of the Secretary of
Labor’s determination of prevailing fringe benefits, and was
offered as an Amendment to H. R. 6041 which provided that
fringe benefits be included in the Secretary of Labor’s determi-
nation under the Davis-Bacon Act.‘ The Congress did defeat
3. In United States v. Binghamton Const. Co., 347 U. §. 171,
176 (fn. 12), the Court refers to the right of action conferred by
40 U. S. C. § 276a-2(b), without mentioning the Milier Act. We do
not, however, read this as an indication by the Court that a right of
t of the Miller Act i ici
ray iller is explicitly provided by
4. The bill that Goodell sought to amend, H. R. 6041, was ulti-
mately passed by the Congress.
Al0
Congressman Goodell’s Amendment, but the issue of judicial
review of the Secretary of Labor's determination of prevailing
fringe benefits is not even remotely at issue in this case.
There is, however, evidence in other statutes, read in pari
materia with the Davis-Bacon Act, that reveals a congressional
recognition that laborers have rights of action under the con-
tractual provisions required by 40 U. S. C. § 276a. The Portal
to Portal Pay Act, 29 U. S. C. §§ 251-62, provides that a two
year statute of limitations applies to any cause of action for
unpaid minimum wages under the Davis-Bacon Act, see 29
U. S. C. § 255; and specifically contemplates a class action
under the Davis-Bacon Act, see 29 U. S. C. § 256. The Miller
Act, however, provides a one year statute of limitations on suits
on the Miller Act bond, see 40 U. S. C. § 270b(b). Unless the
Portal to Portal two year statute of limitations on Davis-Bacon
actions is a nullity, Congress must have recognized that laborers
are able to sue at least as third-party beneficiaries of the con-
tract required by 40 U. S. C. § 276a in state court or in federal
court if there were proper jurisdiction. See McDaniel, supra,
512 F. 2d at 586.
Next, we consider whether an implied private right of action
would be necessary or even capable of effectuating the purposes
of the Davis-Bacon Act. Unlike the statutes at issue in Cort and
Securities Investor, the Davis-Bacon Act contemplates by its
terms some private enforcement. Specifically, 40 U. S. C.
* 276a-2 provides that laborers and mechanics shall have a
right of action against the contractor and his sureties if they
have not been paid the required wages, and if the funds (if any)
withheld by the government are insufficient to make them
whole.* This case is unlike Cort, where the plaintiffs sought to
benefit from a statute passed for a different end. It is unlike
Securities Investor, where the relicf sought would have under-
mined the statutory purpose of shoring up financially endan-
5. As noted above in this opinicn, we have construed this
expressly conferred right of action to be a suit on the bond. Appellee
University of Chicago makes the point thai such a suit must be
( Footnote continued on next page)
All
gered brokerage houses, or Amtrak, where a private right of
action would have introduced a new evil (the possibility of
conflicting results among various federal district courts). The
Davis-Bacon Act already contemplates under some circum-
stances a private action, on a Miller Act bond, to provide
laborers with a remedy. But a bond only insures the solvency of
the defendant, i.e., that the remedy will be worth something.
The policy behind the remedy itself, private suit, is not really
in question.
Moreover, this case is a good example of how the govern-
mental remedies specifically provided in the Act can be ineffec-
tive in accomplishing the congressional purpose. The Executive
did not withhold funds from the contractor, see 40 U. S. C.
§ 276a: did not require a bond from the contractors, see 40
U. S. C. § 270a and 270(a); and did not invoke the sanctions
of termination, see 40 U. S. C. § 276a-1, or blacklisting, see 40
U. S. C. § 276a-2(a).
Finally, although an action for breach of an employment
contract is traditionally a state court action, the right to recover
.be unpaid portion of the prevailing wage is based on the con-
gressional choice of a federal policy. Unlike the situation pre-
sented in Cort, the failure of a state to grant a recovery to a
laborer, suing as a third-party beneficiary, would tend to defeat
the federal policy if a federal remedy did not exist.
The appellee University of Chicago argues disingenuously
that it would be somehow inequitable to allow a private right of
action in this case, because “. . . if a government contract is let
which does not demand prevailing wages and bonds, and the
contractor bids or negotiates on that possibly lesser-cost basis,
a later date complaint by an employee addressed to the con-
(Footnote continued from preceding page.)
brought in the name of the United States for the use of the person
suing, see 40 U. S. C. § 270(f), and hence it is not really a private
remedy. We reject this argument. Although the United States is the
nominal plaintiff, the laborer or mechanic retains real control of the
lawsuit, including whether to bring it in the first place. In substance,
it is a private cause of action.
Al2
tractor alone is obviously aimed in error.” Appellee’s brief at
10. This hypothetical rendition of the case is extremely mis-
leading. While it is true that no bond was exacted in this case,
the plaintiffs-appellants allege that the governmest contract with
appellee did contain the prevailing wage requirement, and appel-
lee does not deny it.* The district court, although deciding in
favor of appellee, conceded that the plaintiffs might have a
cause of action in state court, presumably as third-party benefi-
ciaries of the contract. Assuming the facts alleged, the contractor
in this case has been unjustly enriched by contracting on the
basis of prevailing wage costs, while in fact paying less than
the prevailing wage.
In sum, we hold that implying a private right of action in the
Davis-Bacon Act is necessary to effectuate the intention of
Congress in passing the statute. Unless we read Cort and Securi-
ties Investor to require an explicit statement of congressional
intent before an implied remedy may be found in any case, cf.
Cort, supra, 422 U. S. at 82, we find an implied right of action
here.
Cort and Securities Investor, the two cases cited in the judg-
ment of the Supreme Court ordering remand, dealt almost
exclusively with the implication of remedies, and provide no
guidance on the question whether there is federal court jurisdic-
tion of a cause of action if implied. In McDaniel, 512 F. 2d at
587-88, we held that federal court jurisdiction over this case is
found in 28 U. S. C. § 1337. We do not understand that the
Supreme Court directed a reconsideration of the jurisdictional
issue, and the parties (except for an amicus) have not argued it
in their briefs on remand. We adhere to our decision on the
point.
The judgment dismissing the complaint is reversed and the
cause is remanded for further proceedings consistent with this
opinion and with the opinion filed March 15, 1975.
é - So ;
of Lenets Getmemtunthen of Gee coreg wages te Ot coon tae
and area. See Federal Register, Vol. 36, No. 157, August 13, 1971,
pp. 15150 ef seq.
Al3
APPENDIX C.
UNITED STATES COURT OF APPEALS
For the Seventh Circuit
Chicago, Illinois 60604
February 14, 1977.
Hon. THoMas E. FAIRCHILD, Chief Judge
Lours ALLEN MCDANIEL, JrR.,
.
Plaintiff- Appellant, — from ——
No. 73-1438 vs. for the Northern Dis-
> trict of Illinois, East-
UNIVERSITY OF CHICAGO and ern Division.
ARGONNE, a Corp.,
Defendants-Appellees.) “0. 72€270
This matter comes before the Court on the “Motion for Stay
of Mandate,” filed herein on February 10, 1977 by counsel
for the defendants-appellees. On consideration whereof,
IT iS ORDERED that the mandate of this Court be STAYED
until March 16, 1977, in accordance with the provisions of
Rule 41(b) of the Federal Rules of Appellate Procedure.
Al4
APPENDIX D.
UNITED STATES COURT OF APPEALS
For the Seventh Circuit
Chicago, Illinois 60604
March 16, 1977.
Hon. THOMAS E. FAIRCHILD, Chief Judge
Louts ALLEN MCDANIEL, Jr.,
Plait Appein, | APpee rom he United
No. 73-1438 vs. for the Northern Dis-
r trict of Illinois, East-
UNIVERSITY OF CHICAGO and ern Division.
ARGONNE, a Corp.,
Defendants-A ppellees. )
No. 72C 270
This matter comes before the Court on the “Motion for
Further Stay of Mandate” filed herein on March 15, 1977 by
counsel for the defendants-appellees. On consideration whereof,
this Court being fully advised in the circumstances,
IT IS ORDERED that the mandate of this Court be STAYED
until April 22, 1977, pursuant to the provisions of Rule 41(b)
of the Federal Rules of Appellate Procedure.
AIS
APPENDIX E.
IN THE UNITED STATES CouRT OF APPEALS,
For the Seventh Circuit,
512 F. 2d 583 (1975).
No. 73-1438
Louis ALLEN MCDAaNiIegL, Jr.,
Plaintiff- Appellant,
THe UNIversity or CHICAGO AND ARGONNE, a corporation,
Defendants-A ppellees.
Appeal from the United States District Court for the Northern
District of Illinois, Eastern Division—No. 72 C 270
Puitie W. Tone, Judge.
Argued April 11, 1974—Decided March 14, 1975
Before Faircui.p, Chief Judge, and SwyGert and SPRECHER,
Circuit Judges.
FAIRCHILD, Chief Judge. Plaintiff McDaniel has appealed
from a judgment dismissing his complaint in a class action
against the University of Chicago.
The University had a contract with the United States for
construction or alteration of Argonne National Laboratory.
lnere is no question but that this goverament contract was
subject to the provisions of the Davis-Bacon Aci. Accordingly
40 U. S. C. § 276a required the specifications to “contain a
provision stating the minimum wages to be paid various classes
of laborers and mechanics which shall be based upon the wages
that will be determined by the Secretary of Labor to be prevail-
ing for the corresponding classes of laborers and mechanics
employed on projects «f a character similar to the contract
Al6
work” in the place of performance, and required any contract
based on the specifications to contain certain stipulations con-
cerning payment of mechanics and laborers by the contractor
or subcontractor.
Plaintiffs claimed that they were employed pursuant to the
contract, but were paid at rates substantially lower than the
determined prevailing wages. The complaint purported to state
five causes of action. The first was apparently based on the
theory that a cause of action against the contractor is conferred
by 40 U. S. C. § 276a-2(b) or should be implied from § 276a,
and the second on the theory that the contract had been
breached. Jurisdiction was predicated on 28 U. S. C. § 1331
(federal question) and § 1337 (action arising under Act regu-
lating commerce). Three other causes of action suggest common
law theories and pendant jurisdicuon was claimed.
The same facts which subject the University’s contract with
the United States to the Davis-Bacon Act, 40 U. S. C. §§ 276a
to 276a-7, also make it subject to the Miller Act, 40 U. S. C.
§§ 270a-270e. Section 270a requires that before such a contract
is awarded, the contractor shall furnish, in addition to a perform-
ance bond, “A payment bond with a surety or sureties satisfac-
tory to such officer for the protection of all persons supplying
labor and material in the prosecution of the work provided for
in said contract for the use of each such person.”
Section 270b provides that “Every person who has furnished
labor or material in the prosecution of the work provided for in
such contract, in respect of which a payment bond is furnished
under section 270a . . . and who has not been paid in full
therefore [within a specified period] shall have the right to sue
on such payment bond .. .” subject to specified conditions,
including a limitation of jurisdiction of such action to the
federal district court for the place of performance of the contract
and prohibition of commencement after one year.
Turning to the Davis-Bacon Act, § 276a requires that the
contract authorize withholding by the government of accrued
v. Montgomery Heating & Ventilating Co., et al., 255 F. 2d 683,
684 (Sth Cir. 1919); United States for the use of Felix Zambetti v.
American Fence Co., 15 F. 2d 449 (S. D. N. Y. 1925), aff'd 15
(Footnote continued on next page)
Als
Thus plaintiff and members of the class (assuming as claimed
that they were paid less than properly determined prevailing
wages) have available to them neither direct payment by the
government out of amounts withheld, nor an action on a Miller
Act bond, the two remedies clearly contemplated by Congress.
The district court reluctantly concluded that the Davis-Bacon
Act did not confer a right of action against the contractor, cog-
nizable in federal court, under the circumstances alleged in
the complaint. The language we have italicized above in
§ 276a-2(b) was deemed no more than a reference to the right
of action on the Miller Act bond, set forth in § 270b.
We have no difficulty in agreeing that the terms of § 276a-
2(b) do not create a cause of action, cognizable in federal
court, for one in plaintiff's position.
For many years, begining in 1894, the Heard Act required
that the bond filed by certain government contractors include
the obligation to “make payments to all persons supplying him
or them labor and materials in the prosecution of the work
provided for in such contract” and that upon the bond “said
person or persons supplying such labor and materials shall have
a right of action . . .” 28 Stats. 278.
In 1931, Congress enacted the provision of the Davis-Bacon
Act which required the contract to provide “that the rate of
wages for all laborers and mechanics employed by the contractor
or any subcontractor in the public buildings covered by the
contract shall be not less than the prevailing rate of wages for
work of similar nature” in the locality. 46 Stat. 1494. No remedy
was expressly provided, although it might well be supposed that
an underpaid person might have a cause of action as a third-
F. 2d 450 (2nd Cir. 1926); Strong v. American Fence Const. Co.,
245 N. Y. 48, 156 N. E. 92, 93 (1927). The Miller Act has been
similarly construed as not providing a federal cause of action for
failure to provide a bond. C/. Harry F. Ortlip Co. of Pennsylvania v.
Alvey Ferguson Co., 223 F. Supp. 893, 894 (E. D. Pa. 1963);
Gallagher & Speck, Inc. v. Ford Motor Co., 226 F. 2d 728, 731
(7th Cir. 1955).
Al9
party beneficiary of the contract, particularly since the pro-
vision was required by law for his protection.
In 1935, two changes took place. On August 24, the Miller
Act replaced the Heard Act, 49 Stat. 793, and on August 30,
the Davis-Bacon Act was amended by inserting, among other
things, the remedy provisions substantially in their present form.
49 Stat. 1011. Although the Miller Act preceded the Davis-
Bacon amendments in enactment by six days, the Heard Act
was in effect while the amendments were being drafted.
The language of the statutes, and the sequence of enactment
referred to, make it clear that “the right of action” referred to in
§ 276a-2(b) meant, when drafted, the “right of action” on the
bond conferred on persons supplying labor and materials by the
Heard Act, and supplanted by “the right to sue on such
payment bond” conferred on such persons by the Miller Act,
§ 270b(a).
This meaning was specified in the Senate Report accom-
panying the 1935 bill, as follows:
“Section 3(b) [§ 276a-2(b)]: When the funds with-
held for such claimants are insufficient to reimburse all
laborers and mechanics aggrieved by breach of the wage
stipulations, this subsection gives such laborers and me-
chanics a cause of action on the contractor’s bond, pur-
suant to the provisions of the Hurd [Heard] Act as
amended from time to time (act of Aug. 13, 1894, 28
Stat. 278, U. S. C. title 40, sec. 230).” Sen. Rep. No.
1155, 74th Cong., Ist Sess., 4 (1935). See remarks of
Senator Walsh to the same effect, 79 Cong. Rec. 12073
(July 30, 1935).
Numerous provisions with respect to Portal to Portal Pay,
29 U. S. C. §§ 251-262, refer to liability or actions to recover
minimum wages under the Davis-Bacon Act, as well as similar
actions under the Fair Labor Standards Act of 1938 and the
Walsh-Healey Act. Plaintiff refers particularly to § 255(a)
which imposes a two year statute of limitations on such actions.
Pointing out that 40 U. S. C. § 270b(b) prohibits a suit on
the bond under the Miller Act after one year after the last per-
A20
formance of labor, plaintiff argues that the Davis-Bacon Act
must contemplate a private right of action different from the
right to sue on this bond. We do not read the Portal to Portal
provisions with respect to actions under the Davis-Bacon Act as
congressional recognition of conferral by § 276a-2(b) of a
right of action other than on the bond. We do conclude, how-
ever, that it may well be recognition that wage-earners have or
may have rights of action under the contractual provisions re-
quired by § 276a which may be enforced in state court actions
or federal court actions where jurisdiction is properly based.°
Such a right of action is consistent with the congressional
purpose in the Davis-Bacon Act: insuring the payment of
“prevailing” wages to laborers and mechanics on all govern-
ment contracts in excess of $2000. Ia a case in which the
express remedies provided to fulfill this purpose, e.g., the with-
holding of accrued payments due the contractor by the govern-
ment for direct payment to underpaid laborers and mechanics
(40 U. S. C. § 276a(a)) and a suit on the required Miller Act
payment bond (40 U. S. C. § 270b(a)), have proved ineffec-
tive, we should be especially “alert to previde such remedies as
are necessary to make effective the ccugressional purpose.”
J. 1, Case v. Borak, 377 U. S. 426, 433 (1964).*
2. The Miller Act's grant of subject matter jurisdiction, while
underlying the right of action referred to in 40 U. S. C. § 276a-2(b)
(Davis-Bacon), is “inseparably linked” to the statutory remedy of
an action on the payment bond and thus cannot provide jurisdiction
over a cause of action arising from the contractual commitment to
pay “prevailing” wages imposed by § 276a(a). The Miller Act
requirements that suit be brought in the name of the United States
for the use of the person suing, that venue be limited to the district
in which the contract was to be performed or executed, and the
narrow one year limitation period are clearly designed to facilitate
the orderly and equitable disposition of all competing rights in the
bond and reenforce the conclusion that Miller Act subject matter
jurisdiction is limited to suits on the bond. See United States v.
Illinois Surety Co., 253 Pa. 557, 98 A. 730 (1916); Strong v.
American Fence Co., 245 N. Y. 48, 156 N. E. 92 (1927); and
note 1, supra, and cases cited therein.
3. Where the express remedies provided . as here, on
governmental enforcement (of both the withholding provision and
(Footnote continued on next page)
A2l
Plaintiff alleges that jurisdiction is predicated upon 28 U. S. C.
§ 1337 which provides in pertinent part:
“The district courts shall have original jurisdiction of
any civil actions . . . arising under any Act of Congress
regulating commerce.”
The scope of jurisdiction granted by this provision has been
broadly construed. In Murphy v. Colonial Federal Savings and
Loan Ass'n, 388 F. 2d 609, 614-15 (2nd Cir. 1967), the
court, Judge Friendly writing, held that the provision encom-
passed any actions arising under “all acts whose constitutional
basis is the commerce clause” and that “to found jurisdiction
upon § 1337, it is not requisite that the commerce clause be the
exclusive source of Federal power; it suffices that it be a signifi-
cant one.” See also, /mm v. Union R. R., 389 F. 2d #28, 860
(3rd Cir. 1961), cert. denied, 368 U. S. 833; Sosa v. Fite, 465
F. 2d 1227 (Sth Cir. 1972); Moreno v. United States Dep't of
Agriculture, 345 F. Supp. 310, 312-13 (D. D. C. 1972), aff'd,
413 U. S. 528 93 S. Ct. 2821, 37 L. Ed. 2d 782 (1973); C.
Wright, Law of Federal Courts (2nd ed. 1970), at p. 109 and
cases cited in note 33.
We conclude that the commerce clause constitutes a signifi-
cant constitutional basis underlying the Davis-Bacon Act's
validity. The requirement that all specified government con-
struction contracts contain an express commitment to pay
local “prevailing” wage rates as determined (in case of dispute)
by the Secretary of Labor was first enacted in 1931, c. 411,
3 1, 46 Stat. 1494, The committee report, Sen. Rep. No. 1494,
71st Cong., 3rd Sess. (1931), makes clear that the Act was
designed to “provide a more equable distribution of employ-
ment . . . and [to] generally benefit the country at large” by
preventing government contractors from importing migratory
labor at substantially less than prevailing wages. The country
(Footnote continued from preceding page. )
the bond requirement), “the guarantee [of “prevailing” wages] . . .
might well prove an empty promise unless the private citizen were
allowed to seek judicial enforcement . . .” Allen v. State Board of
Elections, 393 U. S. 545, 557 (1968).
A22
was then in the midst of a serious economic depression and
government construction projects were considered an important
element of recovery through the employment opportunities they
provided. One basic premise of this legislation was to foster
economic stability throughout the nation by requiring that
those employed on federal projects receive fair and equitable
wages. While Congress (possibly because of narrow views of
federal jurisdiction then widely held) elected to limit its atten-
tion to federal construction projects, and other constitutional
provisions doubtless exist which provide additional bases of
legislative power, we think a sufficient nexus exists with the
commerce clause to found jurisdiction upon § 1337.*
We therefore conclude that plaintiff's complaint, in that it
sought to enforce defendant's contractual commitment to pay
“prevailing” wages as determined by the Secretary of Labor,
stated a cause of action under the Davis-Bacon Act for which
relief could be granted and that subject matter jurisdiction was
properly based upon 28 U. S. C. § 1337.° Once the district
court had jurisdiction over this cause of action, it also had
pendant jurisdiction to decide the state claims, arising out of
the same facts, which were asserted in counts 3 through 5.
United Mine Workers v. Gibbs, 383 U.S. 715 (1966).
Accordingly, the judgment dismissing the complaint is re-
versed and the cause is remanded for further proceedings con-
sistent with this opinion.
4. The Fair Labor Standards Act of 1938, 29 U. S.C. § 201
et seq., reflecting a similar intent to forbid the payment of sub-
standard wages, cf. 29 U. S. C. § 202(a), imposed a minimum wage
uirement upon employers and was held to constitute a proper
legislative utilization of the commerce power. United States v. Darby,
312 U. S. 100, 117-124 (1941).
5. It is also alleged that jurisdiction is predicated upon 28
U. S.C. § 1331. Not only must the matter in controversy arise under
federal law, but must exceed $10,000, The complaint indicates only
that the accumulated claims of members of the class exceed that
amount. Such cumulation does not suffice either in diversity or
federal question cases. Snyder v. Harris, 394 U. S. 332 (1969);
Zahn v. International Paper Co., 414 U. §. 291 (1973); National
nage Employees Union vy. Nixon, 492 F. 2d 587, 592 (D. C.
Cir. 1974).
A23
UNITED STATEs District Court,
Northern District of Illinois,
Eastern Division.
Lours ALLEN MCDANIEL, JR., .
Plaintiff,
vs.
Tue University oF Cuicaco, a cor. N® 72€ 270.
poration, and ARGONNE, a corpora-
tion,
Defendants. J
MEMORANDUM OF DECISION.
Puitie W. Tone District Judge.
The Bacon-Davis Act requires that on all Government con-
struction contracts in excess of $2,000, laborers and mechanics
will be paid at least the wages which the Secretary of Labor
determines are “prevailing” for the corresponding classes of
laborers and mechanics employed on projects of a similar char-
acter in the locality in which the work is to be performed. The
Act provides that the contracting officer may withhold from
the contractor a sum sufficient to reimburse the laborers and
mechanics for any difference between the prevailing wages and
the wages they actually receive. If such sums are withheld, the
Comptroller-General is empowered to make the reimbursements
from the sums withheld. If the funds withheld are insufficient to
reimburse the laborers and mechanics in full, they may recover
the rest by resorting to “the right of action and/or of interven-
tion against the contractor and his sureties conferred by law
upon persons furnishing labor or materials, and in such proceed-
ings it shall be no defense that such laborers and mechanics
A24
accepted or agreed to accept less than the required rate of
wages or voluntarily made refunds.” 40 U. S. C. § 276a-2(b).
The statutory scheme also provides a range of penalties which
the Government may bring to bear upon a contractor who pays
substandard wages, including terminating his contract and black-
listing him.
Plaintiff in this action alleges that he and the class he seeks
to represent were employed as laborers or mechanics on a
Government construction contract covered by the Act at the
Argonne National Laboratory, and that defendants failed to
pay them the prevailing wages to which the Secretary of Labor
had determined they were entitled. The contracting officer failed
to withhold any funds for reimbursement. Plaintiff seeks dam-
ages under the Act for himself and the class and, since the
provisions of the contract reflected the wage rates required by
the Act, he also seeks damages for breach of contract and
related claims under state law under this Court's pendent juris-
diction.
The defendant university has moved to dismiss, relying
primarily on its contention that the Bacon-Davis Act does not
admit of a private right of action under the circumstances al-
leged in the complaint. Defendant argues that the Act establishes
an enforcement scheme in which it is solely up to the Govern-
ment to institute sanctions against an offending contractor—
contract termination, blacklisting, or withholding accrued pay-
ments for reimbursement. Only in the limited situation where
the Government itself has invoked the statute by actually with-
holding funds in an amount which proves to be inadequate does
the defendant concede that an aggrieved employee may proceed
on his own behalf under § 276a-2(b). Furthermore, defendant
contends that the right of action referred to there is solely
limited to an action on the contractor's bond under the Miller
Act, 40 U. S. C. § 270b to be pursued in the name of the
United States.
Defendant's contention that there is no right of action,
whether limited to the Miller Act remedy or not, when the
A25
contracting officer has failed to withhold accrued payments from
the contractor has no warrant in either the language of the
statute or its legislative history. Section 276a-2(b) merely says
that when the funds withheld “are insufficient,” the laborers and
mechanics shal] have their right of action. That language should
be interpreted to produce a rational result. Congress can hardly
have intended that the :cmedy be available if the contracting
officer withholds something, but less than the amount needed to
reimburse the laborers and mechanics in full, but not if he with-
holds nothing at all, when some amount is needed for reim-
bursement. There is no reason to believe that Congress meant
to leave it to the contracting officer to decide whether laborers
and mechanics could obtain redress for a violation of their
rights. On the contrary, there is evidence in the legislative his-
tory that Congress intended that aggrieved laborers and me-
chanics have a right of action when no funds have been with-
held. Senator Walsh of Massachusetts described the bill which
ultimately became § 276a-2(b) with these words:
“[{It will] provide remedies for laborers and mechanics ag-
grieved by forced rebate or failure to pay the prevailing
rate of wages by allowing such laborers and mechanics to
have the same right of action against the contractors and
his sureties in court which is now conferred by the bond
statute on persons funrishing labor and materials when
there are no funds to withhold for reimbursement.” At 79
Cong. Rec. 12073 (July 30, 1935). (Emphasis added.)
The more difficult question is whether Congress intended to
limit the right of action specified in § 276a-2(b) to an action
on the contractor’s bond under the Miller Act. I conclude re-
luctantly that it did so intend. Mindful as I am of the Supreme
Court's admonition that “it is the duty of the courts to be alert
to provide such remedies as are necessary to make effective the
Congressional purpose,” J. /. Case Co. v. Borak, 377 U. S.
426 (1964), and mindful that, ironically, if there were no
langauge at all about a private right of action in the Bacon-
Davis Act we would be justified in finding an implied right of
A26
action where a statutory scheme of remedies depends solely upon
the actions of Government officials, Allen v. State Board of
Elections, 393 U. S. 544, 556-57 (1968), there is no way to
avoid the thrust of the statute's language and legislative history
in delimiting the right of action to one which Congress felt would
be adequate to protect employees whose contractors failed to
pay them the wages prescribed by the statute. For the language
specifies that aggrieved employces shall have “the right of
action and/or of intervention against the contractor and his
sureties conferred by law upon persons furnishing labor or mate-
rials. . . .” This language is not only descriptive of the Heard,
now Miller, Act, but the choice of initial article lends weight
to defendant's conclusion that Congress had only one right of
action in mind. This conclusion is buttressed by the portion
of Senator Walsh's remarks quoted above which refers to “the
bond statute,” and by the Senate Report accompanying the
legislation, S. Rep. No. 1155, 74th Cong., Ist Sess., 4 (1935),
which say:
“Section 3(b): When the funds withheld for such claim-
ants are insufficient to reimburse all laborers and me-
chanics aggrieved by breach of the wage stipulations this
subsection gives such laborers and mechanics a cause of
action on the contractor’s bond, pursuant to the provisions
of the Hurd [Heard] Act as amended from time to time
(act of Aug. 13, 1894, 28 Stat. 278, U. S. C. title 40,
sec. 230).”
Accord, Willis v. E. 1. DuPont de Nemours & Co., 76 F. Supp.
1010 (D. C. Okla. 1948).
Plaintiff has stated in his memorandum that no bonds were
ever filed in this case pursuant to the Miller Act to protect him
and his fellow employees against violations of the Bacon-Davis
Act, and that they will be left without a remedy unless they are
allowed an ordinary direct action against the contractor pursu-
ant to the Bacon-Davis Act. The parties do not explain, nor can
I discern, why, in light of the Miller Act's clear requirements,
no bonds were filed. It is possible that plaintiff may have an
A27 °
action against the contractor in the state court. But he has no
remedy, nor may this Court's jurisdiction be invoked, under
the Bacon-Davis Act. While it is true that in this case giving
effect to what I perceive to be the Congressional intention may
leave plaintiff without a federal remedy, it appears that these
are extraordinary circumstances and that in the ordinary case the
statutory scheme of remedies supplemented by the limited pri-
vate right of action of § 276a-2(b), will suffice to effectuate the
Congressional purpose of protecting employees from substandard
earnings, United States v. Binghamton Construction Co., 347
U. S. 171, 177 (1964).
Since no cause of action could properly be stated under the
Miller Act in the absence of a bond, Harry F. Ortlip Co. of
Pennsylvania v. Alvey Ferguson Co., 223 F. Supp. 893, 895
(E. D. Pa. 1963), there is no possible way to make out a viola-
tion of the Bacon-Davis Act cognizable in a private action under
that Act. No purpose would therefore be served by amending
the complaint. And in light of our resolution of the issues dis-
cussed above, there is no need to consider the class action and
statute of limitation issues raised in the motion and supple-
mentary motion to dismiss.
Defendant's motion to dismiss the complaint is granted.
/s/ Puitie W. Tone,
United States District Judge.
Dated: March 12, 1973.
A28
APPENDIX G.
28 U.S.C. § 1337. Commerce and anti-trust regulations.
The district court shall have original jurisdiction of any civil
action or proceeding arising under any Act of Congress regulat-
ing commerce or protecting trade and commerce against re-
straints and monopolies.
40 U. S.C. § 276a. Rate of wages for laborers and mechanics.
(a) The advertised specifications for every contract in excess
of $2,000, to which the United States or the District of Columbia
is a party for construction, alteration, and/or repair, including
painting and decorating, of public buildings or public works of
the United States or the District of Columbia within the geo-
graphical limits of the States of the Union, or the District of
Columbia, and which requires or involves the employment of
mechanics and/or laborers shall contain a provision stating the
minimum wages to be paid various classes of laborers and
mechanics which shall be based upon the wages that will be
determined by the Secretary of Labor to be prevailing for the
corresponding classes of laborers and mechanics employed on
projects of a character similar to the contract work in the city,
town, village, or other civil subdivision of the State, in which
the work is to be performed, or in the District of Columbia if
the work is to be performed there; and every contract based upon
these specifications shall contain a stipulation that the contractor
or his subcontractor shall pay all mechanics and laborers em-
ployed directly upon the site of the work, unconditionally and
not less often than once a week, and without subsequent deduc-
tion or rebate on any account, the full amounts accrued at time
of payment, computed at wage rates not less than those stated in
the advertised specifications, regardless of any contractual rela-
tionship which may be alleged to exist between the contractor or
A29
subcontractor and such laborers and mechanics, and that the
scale of wages to be paid shall be posted by the contractor in
a promincnt and easily accessible place at the site of the work;
and the further stipulation that there may be withheld from the
contractor so much of accrued payments as may be considered
necessary by the contracting officer to pay to laborers and
mechanics employed by the contractor or any subcontractor on
the work the difference between the rates of wages required by
the contract to be paid laborers and mechanics on the work and
the rates of wages received by such laborers and mechanics and
not refunded to the contractor, subcontractors, or their agents.
(b) As used in sections 276a to 276a—S of this title the term
“wages”, “scale of wages’, “wage rates”, “minimum wages”, and
“prevailing wages” shall include—
(1) the basic hourly rate of pay; and
(2) the amount of—
(A) the rate of contribution irrevocably made by
a contractor or subcontractor to a trustee or to a
third person pursuant to a fund, plan, or program;
and
(B) the rate of costs to the contractor or sub-
contractor which may be reasonably anticipated in
providing benefits to laborers and mechanics pursuant
to an enforcible commitment to carry out a financially
responsible plan or program which was communicated
in writing to the laborers and mechanics affected,
for medical or hospital care, pensions on retirement or
death, compensation for injuries or illness resulting from
occupational activity, or insurance to provide any of the
foregoing, for unemployment benefits, life insurance, dis-
ability and sickness insurance, or accident insurance for
vacation and holiday pay, for defraying costs of apprentice-
ship or other similar programs, or for other bona fide fringe
benefits, but only where the contractor or subcontractor
is not required by other Federal, State or local law to
provide any of such benefits:
A30
Provided, That the obligation of a contractor or subcontractor
to make payment in accordance with the prevailing wage de-
terminations of the Secretary of Labor, insofar as sections 276a
to 276a—5 of this title and other Acts incorporating sections
276a to 276a—S of this title by reference are concerned may be
discharged by the making of payments in cash, by the making
of contributions of a type referred to in paragraph (2)(A), or
by the assumption of an enforcible commitment to bear the
costs of a plan or program of a type referred to in paragraph
(2)(B), or any combination thereof, where the aggregate of
any such payments, contributions, and costs is not less than the
rate of pay described in paragraph (1) plus the amount referred
to in paragraph (2).
In determining the overtime pay to which the laborer or
mechanic is entitled under any Federal law, his regular or basic
hourly rate of pay (or other alternative rate upon which premium
rate of overtime compensation is computed) shal! be deemed to
be the rate computed under paragraph (1), except that where
the amount of payments, contributions, or costs incurred with
respect to him exceeds the prevailing wage applicable to him
under sections 276a to 276a—S of this title, such regular or basic
hourly rate of pay (or such other alternative rate) shall be
arrived at by deducting from the amount of payments, contribu-
tions, or costs actually incurred with respect to him, the amount
of contributions or costs of the types described in paragraph (2)
actually incurred with respect to him, or the amount determined
under paragraph (2) but not actually paid, whichever amount
is the greater.
40 U. S. C. § 276a-2 Payment of Wages by Comptroller Gen-
eral from Withheld Payments; Listing con-
tractors Violating Contracts.
(a) The Comptroller General of the United States is author-
ized and directed to pay directly to laborers and mechanics from
any accrued payments withheld under the terms of the contract
A3l
any wages found to be due laborers and mechanics pursuant to
sections 276a to 276a—S of this title; and the Comptroller
General of the United States is further authorized and is directed
to distribute a list to all departments of the Government giving
the names of persons or firms whom he has found to have dis-
regarded their obligations to employees and subcontractors. No
contract shall be awarded to the persons or firms appearing on
this list or to any firm, corporation, partnership, or association
in which such persons or firms have an interest until three years
have elapsed from the date of publication of the list containing
the names of such persons or firms.
(b) If the accrued payments withheld under the terms of the
contract, as aforesaid, are insufficient to reimburse all the labor-
ers and mechanics, with respect to whom there has been a
failure to pay the wages required pursuant to sections 276a to
276a—S5 of this title, such laborers and mechanics shall have
the right of action and/or of intervention against the contractor
and his sureties conferred by law upon persons furnishing labor
or materials, and in such proceedings it shall be no defense that
such laborers and mechanics accepted or agreed to accept less
than the required rate of wages or voluntarily made refunds.
40 U. S. C. § 270a Bonds of Contractors for Public Buildings
or Works; Waiver of Bonds Covering Con-
tract Performed in Foreign Country.
(a) Before any contract, exceeding $2,000 in amount, for
the construction, alteration, or repair of any public building or
public work of the United States is awarded to any person, such
person shall furnish to the United States the following bonds,
which shall become bincing upon the award of the contract to
such persons, who is hes cinafter designated as “contractor”:
(1) A performance bond with a surety or sureties satis-
factory to the officer awarding such contract, and in such
amount as he shall deem adequate, for the protection of
the United States.
A32
(2) A payment bond with a surety or sureties satisfac-
tory to such officer for the protection of all persons supply-
ing labor and material in the prosecution of the work
provided for in said contract for the use of each such per-
son. Whenever the tota’ amount payable by the terms of
the contract shall be not more than $1,000,000 the said
payment bond shall be in a sum of one-half the total amount
payable by the terms of the contract. Whenever the total
amount payable by the terms of the contract shall be more
than $1,000,000 and not more than $5,000,000, the said
payment shall be in a sum of 40 per centum of the total
amount payable by the terms of the contract. Whenever
the total amount payable by the terms of the contract shall
be more than $5,000,000 the said payment bond shall be
in the sum of $2,500,000.
(b) The contracting officer in respect of any contract is
authorized to waive the requirement of a performance bond and
payment bond for so much of the work under such contract as
is to be performed in a foreign country if he finds that it is
impracticable for the contractor to furnish such bonds.
(c) Nothing in this section shall be construed to limit the
authority of any contracting officer to require a performance
bond or other security in addition to those, or in cases other
than the cases specified in subsection (a) of this section.
(d) Every performance bond required under this section shall
specifically provide coverage for taxes imposed by the United
States which are collected, deducted, or withheld from wages
paid by the contractor in carrying out the contract with respect
to which such bond is furnished. However, the United States
shall give the surety or sureties on such bond written notice, with
respect to any such unpaid taxes attributable to any period,
within ninety days after the date when such contractor files a
return for such period, except that no such notice shall be given
more than one hundred and eighty days from the date when a
A33
return for the period was required to be filed under the Internal
Revenue Code of 1954. No suit on such bond for such taxes shall
be commenced by the United States unless notice is given as
provided in the preceding sentence, and no such suit shall be
commenced after the expiration of one year after the day on
which such notice is given.
A34
APPENDIX H.
88th CONGRESS 2D SESSION-—H. R. 9590
IN THE HOUSE OF REPRESENTATIVES
JANUARY 8, 1964
Mr. GOovELt introduced the following bill; which was referred
to the Committee on Education and Labor
A BILL
To amend the prevailing wage section of the Davis-Bacon Act
to provide judicial review of wage determinations issued
by the Secretary of Labor, to provide judicial review of en-
forcement proceedings instituted by the Secretary of Labor,
and for other purposes.
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled, That the
Act of August 30, 1935, as amended (49 Stet. 1011, as
amended; 40 U. §. C. 276 et seq.), amending the Act of March
3, 1931 (46 Stat. 1494), is hereby amended by adding at the
end thereof the following new section:
“Sec. 8. (a) Any person aggrieved by a wage determ-
ination for laborers or mechanics issued pursuant to this Act
or to any other Act of Congress, incorporating directly or
by reference the prevailing wage provisions of this Act,
may obtain judicial review of such determination in an ac-
tion against the Secretary of Labor and the contracting
agency in a district court of the United States praying the
court to enjoin the application of such wage determination
to the invitation for bids for the advertised contract and
to determine the prevailing wage lawfully applicable
thereto.
A35
“(b) Notwithstanding any other provision of law, such
an action may be brought only in the United States court
for the district in which the work is to be performed and
shall be commenced within fifteen days after the publication
of the advertised specifications containing the challenged
wage determination.
“(c) The summons and complaint in such an action
shall be served as provided by the Federal Rules of Civil
Procedure, except that the delivery of the summons and
complaint to the officer or agency as required by the rules
may be made by certified mail beyond the territorial limits
of the district in which the action is brought.
“(d) Pending a final adjudication, the court may issue
a temporary restraining order directing the Secretary of
Labor and the contracting officer to relieve all bidders from
stipulating that they will comply with the specific determina-
tion being challenged: Provided, That if such order is
issued, the court may require any bidder to whom the con-
tract is awarded, to post an indemnity bond sufficient to
guarantee the fulfillment of any legal wage obligation,
should the challenged determination be ultimately sustained.
“(e) At the conclusion of any hearing on the merits,
the court shall, in any case in which it finds that the pre-
vailing wage originally promulgated was not determined in
accordance with law, establish such prevailing wage as it
deems to be in accordance with law. Such decision by the
court shall, within thirty days after its issuance, become
effective as the determination of the prevailing wage for the
project concerned, unless a petition for review of such de-
cision is filed within such period.
“(f) In carrying out its functions under this section, the
court shall have access to all data and material upon which
the Secretary of Labor relied in making his original prevail-
ing wage determination, but the court shall accord no
presumption of validity to any such determination by reason
of any prior administrative finding, act, practice, policy,
or rule.
“(g) Any party aggrieved by the decision of the United
States district court may appeal such decision by filing with-
in thirty days a petition for review in the United States
court of appeals for the circuit within which such district
A36
court is situated. The decision of such court shall be final,
subject to review by the Supreme Court of the United
States upon certiorari or certification as provided in section
1524 of title 28 of the United States Code.
“(h) For the purposes of this section, an aggrieved
person shall include any contractor, subcontractor, bidder,
prospective bidder, labor organization, employee, pros-
pective employee and any contracting agency, public or
private, adversely affected by the prevailing wage de-
termination issued by the Secretary of Labor.
“(i) Nothing herein shall be construed to limit the
right of the Secretary of Labor at any time to rescind his
original determination and to make such adjustments, re-
visions, or modifications as he deems appropriate.”
Sec. 2. Section 7 of such Act is hereby amended to read as
follows:
“Sec. 7. (a) Whenever it is claimed that any contractor
or subcontractor has refused or failed to pay the wages
that he is required to pay by reason of a wage determination
issued by the Secretary of Labor pursuant to section | of
the Act of March 3, 1931, as amended, or pursuant to any
other Act of Congress incorporating directly or by reference
the prevailing wage provisions of such Act, to employees
with respect to whom such determination is applicable, the
contracting agency shall promptly notify the contractor or
subcontractor of such claim, shall investigate the claim and
shall issue a ruling in writing which shall either deny or
sustain such claim, and which shall set forth the reasons
therefor. No penalties, including the withholding of funds
from the contractor or subcontractor, shall be imposed un-
der the terms of Acts to which this section applies prior
to such ruling. The contractor or subcontractor against
whom the claim is made, and any complaining employee,
shall be notified of any ruling made by the contracting
officer or any other official designated by the contracting
agency, at least twenty days before it is to become effective.
“(b) Any contractor or subcontractor aggrieved or ad-
versely affected by any ruling made pursuant to subsection
(a) of this section may bring a de novo action against the
United States of America or any contracting agency of the
A37
United States or its officers, in the United States district
court for the district wherein the violation is alleged to
have occurred. Such contractor or subcontractor may bring
an action against a contracting agency of a State in any
State court of competent jurisdiction. The court shall grant
such relief as is appropriate, and may stay any penalty im-
posed under the terms of Acts to which this section applies,
pending the completion of judicial review.
“(c) Any employee aggrieved or adversely affected by
any ruling made pursuant to subsection (a) of this section
may bring an action, in the United States district court
wherein such violation is alleged to have occurred, or in
any State court of competent jurisdiction, against the con-
tractor or subcontractor, or any surety, to recover the
amount of unpaid wages due under this Act. Such action
shall be subject to the two-year statute of limitations pro-
vided by the Portal-to-Portal Act of 1947 (6 Stat. 84; 29
U.S.C. 255). Such employee may maintain such action
on behalf of himself and other employees similarly situated,
but no employee shall be a party plaintiff to any action
unless he gives his consent in writing to become such a
party and such consent is filed in the court in which the
action is brought. The court in such action shall, in addi-
tion to any judgment awarded to the plaintiff or plaintiffs,
shall also award reasonable interest on the amount of such
judgment. Nothing in this subsection shall confer additional
rights on an employee given a right of action on a payment
bond pursuant to the requirements of the Miller Act (49
Stat. 793, as amended, 40 U.S.C. 270 et seq.).
“(d) In any action brought pursuant to subsection (b)
or (c) of this section, the court shall have authority to de-
termine the obligations of the contractor or subcontractor
under the wage provisions of his contract, and whether or
not the contractor or subcontractor has failed to comply
with them. No presumption of validity shall arise by reason
of prior administrative finding, act, practice, policy, or
rule.
“(e) Any party aggrieved by the decision of the United
States district court may appeal such decision by filing,
within thirty days, a petition for review in the circuit
court of the circuit within which such district court is
A38
located. The decision of such circuit court shall be final,
subject to review by the Supreme Court of the United
States upon certiorari or certification as provided in sec-
tion 1254 of title 28 of the United States Code.
“(f) The provisions of this section shall be
in, and made a part of, any contract to which this section
is applicable.”
This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.