Appendix — City of New York v. Kam Shing Chan
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J eS a; Qu es
- - No. 93-
IN THE
Supreme Court of the Gnited States
OCTOBER TERM, 1993
CITY OF NEW YORK; DEPARTMENT OF HOUSING
PRESERVATION & DEVELOPMENT OF NEW YORK
CITY; CHINESE-AMERICAN PLANNING COUNCIL,
INC.,
Petitioners,
- against -
KAM SHING CHAN, et al.,
Respondents.
APPENDIX TO PETITION FOR A WRIT OF
CERTIORARI TO THE UNITED STATES COURT
OF APPEALS FOR THE SECOND CIRCUIT
O. PETER SHERWOOD, KAYE, SCHOLER,
Corporation Counsel of the FIERMAN, HAYS, & HANDLER,
City of New York, Attorneys for Petitioner
Attorney for Municipal! Petitioners Chinese-American
100 Church Street, Planning Council, Inc.,
New York, N.Y. 10007. 425 Park Avenue
(212) 788-1034 New York, N.Y. 10022.
(212) 836-8000
LEONARD J. KOERNER,* PETER A. WALKER,
PAMELA SEIDER DOLGOW, JAY W. WAKS,
JOHN WOODS, BRIAN G. CESARATTO,
GOODWIN BENJAMIN, of Counsel.
FAY NG,
of Counsel.
September 30, 1993
* Counsel of Record
iv
TABLE OF CONTENTS
DECISION OF THE UNITED STATES
COURT OF APPEALS FOR THE
SECOND CIRCUIT, DATED AND
ENTERED JULY 26, 1993. ......
ORDER OF THE UNITED STATES
COURT OF APPEALS FOR THE
SECOND CIRCUIT GRANTING
PERMISSION TO APPEAL PURSUANT
TO 28 U.S.C. § 1292 (b) .......
OPINION AND ORDER OF THE
UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF
NEW YORK (WARD, D.C.J.),
ENTERED JUNE 5, 1992, DENYING
PETITIONERS' MOTIONS TO DISMISS
THE 42 U.S.C. § 1983 CLAIMS. ...
OPINION AND ORDER OF THE
UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF
NEW YORK (WARD, D.C.J.),
ENTERED SEPTEMBER 8, 1992
MODIFYING ITS JUNE 5, 1992 ORDER
AND CERTIFYING THIS’ CASE
FOR INTERLOCUTORY APPEAL
PURSUANT TO 28 U.S.C.
OEE 6 oe caw eh cleo ae
25
26
79
ORDER OF THE UNITED STATES
DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK,
(WARD, D.C.J.), DATED JANUARY 4.
1993 AND ENTERED JANUARY 5,
1993, GRANTING F.R.C.P. 54(B)
CERTIFICATION DIRECTING ENTRY
OF A FINAL JUDGMENT ON
RESPONDENTS' IMPLIED RIGHT OF
ALT GR os oer ees
FINAL JUDGMENT OF THE UNITED
STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK,
ENTERED JANUARY 11, 1993,
DISMISSING PLAINTIFFS-
RESPONDENTS' IMPLIED RIGHT OF
ACTION COANE, 2 ce wens
REPORT AND RECOMMENDATION OF
MAGISTRATE JUDGE FRANCIS,
DATED JANUARY 6, 1992.......
RELEVANT STATUTORY
got ot er Pe ae
RELEVANT SECTIONS OF 29 C.F.R.,
Ports 1 and 5 C106 2 bo os eee
89
93
121
UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT
Nos. 1230, 1231, 2194—August Term, 1992
(Argued: March 8, 1993 Decided: July 26, 1993)
Docket Nos. 92-9236, -9238, 93-7038
KAM SHING CHAN, KAM TAI CHAN, JING YI CHEN,
SHAN NON CHIU, BAK LOK CHU, KOK KUN CHU,
ISRAEL GONZALEZ, SUI BIN HUANG, JIAN NING
JIANG, KAM FAI KWOK, MOON SHUEN KWONG, WEI
XIANG LEE, YANG I LEE, YOUNG SHI LEE, BING
ZHAO LI, HAO HUI LI, KEI MAN LI, WAI TAI LI, CHI
KWONG LIU, JACK YE LOUIE, SHENG HUA LU, TIAN
GUANG MAI, CHEUK MINK NG, KIN CHUNG NG, KIN
HIN NG, SHUN GAO SHEN, TEN JEN SHEN, HAU
WING SIN, VEIN DINH SINTRUONG, WING SHING
TSE, WAI MAN WAN, KONG HTYAN WU, XU MING
WU, GUO XUAN and YUE NAM ZHU,
Plaintiffs-Appellees-Cross-Appellants,
—_—vV.-—-
CITY OF NEW YORK, DEPARTMENT OF HOUSING
PRESERVATION & DEVELOPMENT OF NEW YORK CITY
and CHINESE-AMERICAN PLANNING am INC.,
Defendants-Appellants#Cross-Appellees.
Al
Before:
KEARSE and CARDAMONE, Circuit Judges,
and BURNS, District Judge*.
Appeal from order of the United States District Court
for the Southern District of New York, Robert J. Ward,
Judge, denying motion to dismiss portion of complaint for
failure to state a claim under 42 U.S.C. § 1983; cross-
appeal from judgment dismissing portion of complaint for
failure to state a claim under 42 U.S.C. § 5310. See 803 F.
Supp. 710 (1992).
Affirmed.
JAMES REIF, New York, New York (Ellen
Dichner, Gladstein, Reif & Meginniss,
Shneyer & Shen, Asian American Legal
Defense & Education Fund, New York,
New York, on the brief), for Plaintiffs-
Appellees-Cross-Appellants.
FAY NG, New York, New York (O. Peter Sher-
wood, Corporation Counsel, City of New
York, Pamela Seider Dolgow, John P.
Woods, Goodwin E. Benjamin, New York,
New York, on the brief), for Defendants-
Appellants City of New York and De-
partment of Housing Preservation & Devel-
opment of New York City.
° Honorable Ellen Bree Burns, of the United States District Court for
the District of Connecticut, sitting by designation.
A2
PETER A. WALKER, New York, New York
(Jay W. Waks, Brian G. Cesaratto, Kaye,
Scholer, Fierman, Hays & Handler, New
York, New York, on the brief), for Defen-
dant-Appellant Chinese-American Planning
Council, Inc.
KEARSE, Circuit Judge:
Defendants City of New York (“City”), Department of
Housing Preservation & Development of New York City
(“HPD”) (collectively “municipal defendants”), and the
Chinese-American Planning Council, Inc. (“CPC”),
appeal from so much of an order of the United States Dis-
trict Court for the Southern District of New York, Robert
J. Ward, Judge, as denied their motions pursuant to Fed.
R. Civ. P. 12(b)(6) to dismiss claims of plaintiffs Kam
Shing Chan et al., asserted under 42 U.S.C. § 1983 (1988)
for payment of subminimum wages, in violation of § 5310
of the Housing and Community Development Act of
1974, 42 U.S.C. § 5301 et seg. (1988 & Supp. II 1990)
(“HCDA” or the “Act”). The district court ruled that
although there is no private right of action directly under
§ 5310, plaintiffs’ claims for violation of that section
could be pursued under § 1983. On appeal, defendants
contend principally (a) that § 5310 does not create a right
that can be enforced under § 1983, and (b) that a § 1983
action cannot be maintained because CPC cannot be con-
sidered a state actor. Plaintiffs cross-appeal, challenging
the district court’s ruling that § 5310 affords them no pri-
vate right of action directly under that section. For the
reasons below, we reject these challenges and affirm in all
respects.
A3
I. BACKGROUND
Plaintiffs were employees of CPC who worked on fed-
erally funded construction projects. The present contro-
versy arises out of their claims that CPC paid them less
than the minimum wage rates federally required for such
projects. For purposes of both the appeal and the cross-
appeal, we accept as true the allegations of the First
Amended Verified Complaint (“Complaint”), as clarified
by the actual terms of the contracts invoked by the Com-
plaint and presented to the district court, see Cortec
Industries, Inc. v. Sum Holding L.P., 949 F.2d 42, 47 (2d
Cir. 1991), cert. denied, 112 S.Ct. 1561 (1992).
A. The Contracts Between CPC and HPD
From 1986 to 1989, CPC was party to a series of three
contracts with HPD for the construction, repair, and reha-
bilitation of certain housing owned by the City (collec-
tively the “Contracts”). The Contracts were funded in
whole or in part by federal grants under the HCDA. Sec-
tion 5310 of that Act provides generally that laborers
employed on construction work financed in whole or in
part by HCDA grants “shall be paid wages at rates not
less than those prevailing on similar construction in the
locality” as determined by the Secretary of Labor (here-
inafter “federally recognized prevailing rates”) in accor-
dance with the Davis-Bacon Act, 40 U.S.C. §§ 276a to
276a-5 (1988) (“Davis-Bacon”). See 42 U.S.C. § 5310.
The Contracts between CPC and HPD contained certain
terms and conditions required by the HCDA. One such
provision, entitled “Federal Supplemental Terms and Con-
ditions,” stated that
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[t]he Contractor acknowledges that this Agreement is
funded under a program providing direct financial
assistance from the Federal government to the City
and HPD and is subject to, and the Contractor shall
comply with, the requirements of all applicable Fed-
eral Statutes, rules and regulations, including, but not
limited to, those set forth in Exhibit F attached to this
Agreement.
(1986-87 Contract, Article 18, 4 18.1.) Exhibit F speci-
fied that the Contracts were subject to the conditions of,
inter alia, the HCDA and Davis-Bacon:
The Davis-Bacon Act: In construction contracts
involving an excess of $2000, unless exclusively in
connection with the rehabilitation of a structure
designed for residential use by less than 8 families,
all laborers and mechanics must be payed at a rate
not less than those determined by the Secretary of
Labor to be prevailing for the locality, which rates
are annexed hereto as Exhibit A. These wage rates
are a federally mandated minimum... .
(1986-87 Contract, Exhibit F, Article 3(b)(i) (emphasis in
original).)
Each Contract was awarded following the submission
of bids in response to HPD’s Requests for Proposals
(“RFPs”). The RFPs, which were incorporated in the Con-
tracts, contained express provisions with respect to the
wages to be paid workers on projects covered by the Con-
tracts. For example, the RFP for the 1986-87 Contract
Stated:
A Person-Day Rate, which shall be all inclusive of
costs within each Proposal, will be the proper method
of establishing the overall budget. For example, if
A5
$75.00 is the Person-Day Rate, all costs to run the
program, pay the staff and trainees and provide train-
ing equipment and administrative services would be
covered by said rate multiplied by the number of
trainees multiplied by the number of days worked.
(1986-87 RFP General Guidelines 1 1 (emphasis omit-
ted).) This RFP also provided that “[t]here shall be 246
work days in the term of the Contract” (id. 1 6 (emphasis
omitted)), and that “[a] maximum Person-Day Rate is
being set at $90.00” (id. 1 2). The Contract prohibited
CPC from receiving any additional funding for “Program
Work performed pursuant to this Agreement.” (1986-87
Contract, Article 15, 1 15.2.)
CPC bid for and won the 1986-87 Contract with a bud-
get that called for 30 trainees working 246 days at the $90
Person-Day Rate. The total contract price was thus
$664,200. The 1988 and 1989 Contracts awarded to CPC
were Similar, though the RFPs permitted, and the Con-
tracts called for, Person-Day Rates of $95.
B. The Present Lawsuit and the District Court’s Decision
In 1990, plaintiffs commenced the present action, alleg-
ing that they were CPC employees who had performed
construction, repair, or rehabilitation work on the projects
covered by these Contracts and that from September 1986
to December 1989, (1) the wage rates specified in the
Contracts were lower than the then-current federally rec-
ognized prevailing rates, and (2) CPC paid plaintiffs at
rates even lower than those specified in the Contracts. The
Complaint alleged that HPD “knowingly consented to,
condoned, authorized, acquiesced in, and acted with
deliberate indifference to, the repeated failures and
refusals of CPC to pay plaintiffs at the federally mandated
A6
_ prevailing wage rates.” (Complaint 9 53.) Plaintiffs con-
tended principally that CPC in failing to pay federally rec-
ognized prevailing rates, and HPD in consenting,
condoning, and authorizing that failure, deprived plain-
tiffs of their rights under § 5310, in violation of § 1983.
As damages, plaintiffs requested, inter alia, the difference
between the federally mandated wages and the wages they
actually received.
Defendants moved pursuant to, inter alia, Fed. R. Civ.
P. 12(b)(6) to dismiss plaintiffs’ federal claims on the
grounds that (1) no implied private right of action exists
under § 5310, (2) the HCDA did not create a right that is
enforceable under § 1983, and (3) in any event, the Com-
plaint did not sufficiently allege that CPC acted under
color of state law within the meaning of § 1983. In an
opinion reported at 803 F. Supp. 710 (1992), the district
court dismissed plaintiffs’ claims to the extent that they
were asserted directly under § 5310 but denied defen-
dants’ motions to dismiss to the extent that the claims
were asserted under § 1983.
In determining that § 5310 itself did not grant plaintiffs
a private right of action, the district court principally
applied the analysis set out in Cort v. Ash, 422 U.S. 66
(1975). Noting that Congress had created other tools for
the enforcement of § 5310 and that there was “no strong
indication that Congress intended to create additional
remedies,” the court concluded that no private right of
action is to be implied under § 5310. 803 F. Supp. at 731.
The court ruled, however, that § 5310 created a federal
right that is enforceable under § 1983. Reading § 5310 lit-
erally and finding that its wording reflected an “unam-
biguous focus on construction workers,” 803 F. Supp. at
723, the court concluded that there was “little doubt that
A7
§ 5310 [wa]s intended to provide laborers with higher
wages than they would receive in the absence of this sec-
tion,” 803 F. Supp. at 723, and that by using the command
“ ‘shall’ ” in requiring payment of wages at rates not less
than the federally recognized prevailing rates, id. (empha-
sis in opinion), Congress indicated its intent to create a
binding obligation, id. at 725. Given that the Secretary of
Labor is required to establish with specificity the mini-
mum rates to be paid laborers and mechanics, the court
concluded that plaintiffs’ interests were not vague,
ambiguous, or amorphous:
The contractor knows exactly what wage rates will
need to be paid and. . . |what] rights are un-
ambiguously conferred on laborers and mechanics.
Finally, because the “shall” requirement of § 5310 is
directed at the payment of workers’ wages, rather
than compelling the inclusion of a contract
provision . . . the requirement is substantive, not
procedural.
Id.
The court found “no evidence in the legislative history
of the HCDA itself that Congress sought to foreclose a
§ 1983 remedy under § 5310.” 803 F. Supp. at 729. It
noted that the administrative scheme established for
enforcement of § 5310, though sufficient to contraindicate
a private right of action directly under that section, was
not sufficiently comprehensive to preclude a § 1983 right
of action, since there was no provision in the statute for
judicial remedies and no provision in the federal regula-
tions for an employee to initiate a proceeding for resolu-
tion of disputes. 803 F. Supp. at 727-28.
The court also concluded that the Complaint suffi-
ciently alleged the state action necessary for a § 1983 suit
A8
because there was a close nexus between CPC and the
municipal defendants:
Under the close nexus test and the facts presently
before the Court,. . . CPC can be said to be a state
actor. On the basis of the CPC/HPD Contracts and
the RFPs, plaintiffs have alleged facts which, if
proven true, would demonstrate that municipal defen-
dants had “exercised coercive power or ha[d] pro-
vided such significant encouragement, either overt or
covert, that the choice must in law be deemed to be
that of the government.” San Francisco Arts & Ath-
letics, Inc. v. United States Olympic Comm., 483 U.S.
at 546, 107 S. Ct. at 2986 (citations omitted). In par-
— ticular, plaintiffs assert that the $90—95 cap on the
Person Day Rate, which was required by municipal
defendants as a condition for awarding the contract,
was so low as to make it financially impossible for
CPC to pay prevailing wage rates as required under
42 U.S.C. § 5310. In short, plaintiffs have alleged
facts asserting that the municipal defendants ensured
that any successful bidder would be forced, for eco-
nomic reasons, to violate 42 U.S.C. § 5310. If proven
true, these facts would be sufficient to demonstrate
that the municipal defendants “exercised coercive
power or. . . provided such significant encourage-
ment” as to establish 42 U.S.C. § 1983 state action
under the close nexus test.
803 F. Supp. at 720-21.
Accordingly, the district court denied defendants’
motions to dismiss to the extent that the Complaint
asserted claims under § 1983.
Pursuant to 28 U.S.C. § 1292(b) (1988), the court cer-
tified for interlocutory appeal so much of its order as
AY
denied defendants’ motions to dismiss the § 1983 claims,
and this Court granted defendants permission to appeal
from that portion of the district court’s order. Thereafter,
pursuant to Fed. R. Civ. P. 54(b), the district court
directed that a final judgment be entered with respect to
so much of its order as had granted defendants’ motions
to dismiss plaintiffs’ claims directly under § 5310, find-
ing that there was no just reason for delay and that the
relationship between those claims and the § 1983 claims
was sufficiently close to make it desirable for this Court
to have the opportunity to review both rulings together.
Plaintiffs’ cross-appeal followed and was consolidated
with defendants’ appeal.
II. DISCUSSION
The HCDA, enacted in 1974, provides for federal
grants to local governmental units for use in the “devel-
opment of viable urban communities,” in part “by pro-
viding decent housing and a suitable living environment
and expanding economic opportunities, principally for
persons of low and moderate income,” 42 U.S.C.
§ 5301(c). Section 5310, which requires that certain work-
ers employed on construction projects funded by the
HCDA be paid at least at federally recognized prevailing
wage rates, provides in pertinent part as follows:
All laborers and mechanics employed by contractors
or subcontractors in the performance of construction
work financed in whole or in part with assistance
received under this chapter shall be paid wages at
rates not less than those prevailing on similar con-
struction in the locality as determined by the Secre-
tary of Labor in accordance with the Davis-Bacon
Act, as amended (40 U.S.C. 276a-276a-5)....
A10
The Secretary of Labor shall have, with respect to
such labor standards, the authority and functions set
forth in Reorganization Plan Numbered 14 of
ae
42 U.S.C. § 5310(a). The Reorganization Plan referred to
(hereinafter “1950 Plan”) required federal agencies to
cooperate in the enforcement of federal labor standards.
Reorganization Plan No. 14 of 1950, 5 U.S.C. app.
(1988).
The questions presented by these appeals are (1)
whether an action for violation of § 5310 is available to
plaintiffs directly under that section; (2) whether an action
for violation of § 5310 is available to plaintiffs under
§ 1983; and (3) if such an action is available under
§ 1983, whether payment of subminimum wages by CPC
can meet § 1983’s requirement of state action. We con-
clude, substantially for the reasons stated by the district
court, that the first question should be answered in the
negative but that the second and third should be answered
in the affirmative.
A. Implied Private Right of Action Under § 5310
Whether an implied private right of action exists under
a federal statute is strictly a matter of congressional
intent. “‘{Ujnless th[e] congressional intent [to create
such a right] can be inferred from the language of the
Statute, the statutory structure, or some other source, the
essential predicate for implication of a private remedy
simply does not exist.’” Thompson v. Thompson, 484 U.S.
174, 179 (1988) (quoting Northwest Airlines, Inc. v.
Transport Workers, 451 U.S. 77, 94 (1981)); see also
Touche Ross & Co. v. Redington, 442 U.S. 560, 568
(1979) (court’s “task is limited solely to determining
All
a i a a ae ee ee
whether Congress intended to create the private right of
action asserted”). “The test reflects a concern, grounded
in separation of powers, that Congress rather than the
courts controls the availability of remedies for violations
of statutes.” Wilder v. Virginia Hospital Ass'n, 496 U.S.
498, 509 n.9 (1990) (“Wilder”).
When the statute itself is silent as to whether it may be
enforced by private action, we normally start by exam-
ining the four factors set forth in Cort v. Ash, 422 U.S. 66,
to wit, (1) whether the plaintiff is one of the class for
whose “‘especial’” benefit the statute was enacted, “that
is, does the statute create a federal right in favor of the
plaintiff”; (2) whether there is “any indication of leg-
islative intent, explicit or implicit, either to create such a
remedy or to deny one”; (3) whether it is “consistent with
the underlying purposes of the legislative scheme to imply
such a remedy for the plaintiff”; and (4) whether the cause
of action is “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.” Jd. at 78 (emphasis in original). All four
Cort v. Ash factors are guides to determining congres-
sional intent. See Wilder, 496 U.S. at 508 n.9; Thompson
v. Thompson, 484 U.S. at 179; Transamerica Mortgage
Advisors, inc. (TAMA) v. Lewis, 444 U.S. 11, 15-16
(1979); Heats’ Care Plan, Inc. v. Aetna Life Insurance
Co., 966 F.2d 738, 740 (2d Cir. 1992). The mere fact that
plaintiffs are imtended beneficiaries of the statute does not
mean that Congress intended the statute to grant them a
private right of action to secure that benefit. See, e.g., id.
at 741. The courts may, for example, infer that Congress
did not intend to create such a right of action if it
expressly provided other remedies:
Al2
[Where a statute expressly provides a remedy, courts
must be especially reluctant to provide additional
remedies. . . . In such cases, “[i]n the absence of
strong indicia of contrary congressional intent, we
are compelled to conclude that Congress provided
precisely the remedies it considered appropriate.”
Karahalios v. National Federation of Federal Employees,
Local 1263, 489 U.S. 527, 533 (1989) (quoting Middlesex
County Sewerage Authority v. National Sea Clammers
Ass'n, 453 U.S. 1, 15 (1981)).
Here, though we are persuaded that plaintiffs, as work-
ers on an HCDA-funded project, are a class for whose
special benefit § 5310 was enacted (see Part II.B.1.
below), neither the statute nor the legislative history gives
any indication that Congress intended that section to cre-
ate a private right of action. Further, though the question
is close, we tend to agree with the district court that
Congress incorporated a regulatory scheme that is suffi-
ciently detailed to suggest that no private right of action
was intended. Under the 1950 Plan, to which Congress
referred in § 5310, the Secretary had adopted regulations
with respect to Davis-Bacon and related statutes; the reg-
ulations included provisions for the predetermination of
prevailing wage rates, see 29 C.F.R. § 1.1 et seq. (1974);
for reconsideration or administrative review of a wage
determination at the request of “[a]ny interested person,”
see id. §§ 1.8, 1.9; for investigations of complaints, see id.
§ 5.6; and for the resolution by a hearing officer of dis-
putes of fact or law concerning proper classifications and
the payment of prevailing wage rates, see id. § 5.11.
By its reference to the 1950 Plan in § 5310, Congress
indicated that that section could be enforced through these
regulatory provisions. Though there was no statement that
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these would be the exclusive means of enforcement, there
simply was no indication that, along with the cited regu-
latory mechanism, Congress also intended to authorize
laborers to bring private suits. Accordingly, we conclude
that § 5310 does not contain an implied private right of
action.
B. Enforceability of § 5310 Under § 1983
The fact that a statute conferring substantive rights does
not itself give its beneficiaries a private right of action to
enforce it does not mean that the beneficiaries are without
a private remedy. Section 1983, which provides, in per-
tinent part, that
[e]very person who, under color of any statute, or-
dinance, regulation, custom, or usage, of any
State . . . subjects, or causes to be subjected, any
citizen of the United States or other person within the
jurisdiction thereof to the deprivation of any rights,
privileges, or immunities secured by the Constitution
and laws, shall be liable to the party injured,
42 U.S.C. § 1983, may be available as a vehicle for rem-
edying violations of federal statutes as well as constitu-
tional violations, see Maine v. Thiboutot, 448 U.S. 1
(1980); Suter v. Artist M., 112 S. Ct. 1360, 1366 (1992)
(“Suter”). And unlike the inquiry into whether a sub-
stantive statute confers a direct private right of action, the
§ 1983 inquiry begins with a presumption in favor of the
right to bring suit, for the “general rule” is that § 1983
provides a remedy for violations of federal statutory rights
unless “Congress has affirmatively withdrawn the rem-
edy,” Wilder, 496 U.S. at 509 n.9.
Nonetheless, though the Supreme Court has “repeatedly
held that the coverage of [§ 1983] must be broadly con-
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strued,” Golden State Transit Corp. v. City of Los Ange-
les, 493 U.S. 103, 105 (1989), not every violation of a
federal statute gives rise to a cause of action under
§ 1983. Section 1983 relief “is not available to enforce a
violation of a federal statute ‘where Congress has fore-
closed such enforcement of the statute in the enactment
itself and where the statute did not create enforceable
rights, privileges, or immunities within the meaning of
§ 1983.’” Suter, 112 S. Ct. at 1366 (quoting Wright v. City
of Roanoke Redevelopment & Housing Authority, 479
U.S. 418, 423 (1987)); see also Wilder, 496 U.S. at 508.
As discussed below, neither circumstance exists here to
prevent these plaintiffs from suing under § 1983 for the
alleged violations of § 5310.
1. Creation of an Enforceable Right
In Wilder, the Supreme Court applied a three-part anal-
ysis, which is different from the Cort v. Ash analysis of
the existence of a direct right of action, see Wilder, 496
U.S. at 508-09 n.9, for determining whether a federal
Statute creates a right that may be enforced under § 1983.
The § 1983 inquiry
turns on whether “the provision in question was
intend[ed] to benefit the putative plaintiff.” . . . If
so, the provision creates an enforceable right unless
it reflects merely a “congressional preference” for a
certain kind of conduct rather than a binding obli-
gation on the governmental unit. . . or unless the
interest the plaintiff asserts is “‘too vague and amor-
phous’” such that it is “‘beyond the competence of
the judiciary to enforce.’”
Wilder, 496 U.S. at 509; see also Golden State Transit
Corp. v. City of Los Angeles, 493 U.S. at 106.
Al5
a
The Wilder Court considered whether health-care
providers could maintain a § 1983 action to enforce a pro-
vision of the Medicaid Act that required a state, in order
to receive reimbursement, to submit to the Secretary of
Health and Human Services (“HHS”) a medical assistance
plan that set rates which the “‘State finds, and makes
assurances satisfactory to [HHS] are reasonable and ade-
quate to meet the costs which must be incurred by effi-
ciently and economically operated facilities,’” Wilder, 496
U.S. at 503 (quoting 42 U.S.C. § 1396a(a)(13)(A) (Supp.
V 1982)). The Court found that there was “little doubt
that health care providers are the intended beneficiaries”
of that provision, Wilder, 496 U.S. at 510; that the pro-
vision imposed a binding obligation on participating
states that was “cast in mandatory rather than precatory
terms,” id. at 512; and that the obligation was not “too
‘vague and amorphous,’” as “the statute and regulation set
out factors which a State must consider” and provided
objective benchmarks for the assessment of the reason-
ableness of the rates, id. at 519. Thus, the Court con-
cluded that the statutory provision created a right that
health-care providers could enforce in an action under
§ 1983.
Two years later, the Supreme Court in Suter distin-
guished Wilder, without mentioning its three-part test, in
reaching a contrary conclusion as to a different statutory
provision. The Suter Court considered whether children
who were state wards could, under § 1983, enforce a fed-
eral statutory provision that conditioned federal reim-
bursement for state foster care programs on the
acceptance by HHS of a state plan containing a provision
that “ ‘reasonable efforts will be made (A) prior to the
placement of a child in foster care, to prevent or eliminate
the need for removal of the child from his home, and (B)
Al6
to make it possible for the child to return to his
home....’” 112 S. Ct. at 1364 (quoting 42
U.S.C. § 671(a)(15)). The Suter Court concluded that the
children had no right to maintain a § 1983 action because
(a) there was insufficient statutory guidance as to how
“reasonable efforts” were to be measured; (b) the state’s
mode of compliance was, “within broad limits, left up to
the State,” 112 S. Ct. at 1368; and (c) since the statute
provided other enforcement mechanisms, the absence of
a private remedy under § 1983 did not make the “rea-
sonable efforts” clause ineffectual, 112 S. Ct. at 1368-69.
The Court reasoned that “[t]he term ‘reasonable efforts’
in this context is at least as plausibly read to impose only
a rather generalized duty on the State, to be enforced not
by private individuals, but by [HHS],” and thus did not
“unambiguously confer an enforceable right upon the
Act’s beneficiaries.” Jd. at 1370.
In the present case, we conclude that under either the
Wilder analysis or, to the extent that it differs, the Suter
analysis, § 5310 provides these plaintiffs with a right that
is sufficiently clear to be enforceable under § 1983. While
the ultimate goal of Congress in enacting the HCDA was,
as a whole, the development of viable urban communities
by providing decent housing and expanding economic
opportunities for persons of low and moderate income,
there can be no question that the provision for payment of
a certain minimum wage confers its principal benefit on
the wage earners. The persons whose wages are the sub-
ject of § 5310 are clearly specified: they are “laborers and
mechanics.” The statutory requirement as to their wages
is not merely a hortatory “reasonable efforts” provision;
nor is it merely a provision requiring inclusion of wage
terms in a State plan; rather, the statute states that at least
the required level of wages “shall be paid.” Further, the
Al7
minimum level of those wages is neither vague nor spec-
ulative nor left for determination by the states; rather, it
is determinable by reference to an unambiguous specified
standard set by a federal official—the Secretary of
Labor—in accordance with another federal statute—
Davis-Bacon.
In sum, there can be little doubt that laborers and
mechanics are the intended beneficiaries of an obligation
that is cast by § 5310 in mandatory terms and that is read-
ily quantifiable by reference to a stated benchmark as set
by a federal official. There is no ambiguity. The con-
tractor is required to pay such workers wages at rates not
lower than the federally recognized prevailing rates.
2. Congressional Foreclosure
Notwithstanding a clearly conferred federal right, a
§ 1983 suit would not be available if Congress had man-
ifested its intention to foreclose such a remedy. Suter, 112
S. Ct. at 1366. The courts should “ ‘ “not lightly conclude
that Congress intended to preclude reliance on § 1983 as
a remedy” for the deprivation of a federally secured
right.’ . . . The burden is on the State to show ‘by
express provision or other specific evidence from the
statute itself that Congress intended to foreclose such pri-
vate enforcement,’ ” Wilder, 496 U.S. at 520-21 (citations
omitted). Such “other specific evidence” may include pro-
vision of a scheme of remedial devices that is sufficiently
comprehensive to demonstrate congressional intent to pre-
clude the remedy of suits under § 1983. See, e.g., Wilder,
496 U.S. at 521; Middlesex County Sewerage Authority v.
National Sea Clammers Ass'n, 453 U.S. 1, 20 (1981)
(“Sea Clammers”). In Sea Clammers, for example, the
Court dealt with claims under the Federal Water Pollution
Control Act, 33 U.S.C. § 1251 et seq., and the Marine
Al8s
Protection, Research, and Sanctuaries Act of 1972, 33
U.S.C. § 1401 et seg. The statutes themselves contained
“unusually elaborate enforcement provisions,” 453 U.S.
at 13, including, for example, provisions in the water pol-
lution statute (a) authorizing the Environmental Protection
Agency Administrator to seek civil penalties of up to
$10,000 a day, as well as criminal penalties, (b) allowing
“any interested person” to seek review of agency actions
in federal courts, and (c) allowing citizens to sue for
injunctions or for civil penalties payable to the govern-
ment, 453 U.S. at 13-14 & n.25. The Sea Clammers Court
concluded that because Congress “created so many spe-
cific statutory remedies, including the. . . citizen-suit
provisions,” it “intended to supplant any remedy that oth-
erwise would be available under § 1983.” 453 U.S. at
20-21. See also Smith v. Robinson, 468 U.S. 992, 1003
(1984) (“when a statute creates a comprehensive remedial
scheme, intentional ‘omissions’ from that scheme should
not be supplanted by the remedial apparatus of § 1983”).
The statutory scheme provided by § 5310 is not so com-
prehensive. The HCDA itself, though it allows the Sec-
retary of Labor to ask the Attorney General to bring a
civil action against a grant recipient for noncompliance
with the Act, see 42 U.S.C. §§ 5311(b); 5309(b)-(c),
makes no reference to any other type of civil suit. As dis-
cussed in Part II.A. above, § 5310 authorizes the Secre-
tary of Labor to cooperate with other federal agencies in
enforcement and in effect adopts the regulatory scheme
fashioned by the Secretary. Even that scheme, however,
though providing for the determination of prevailing wage
rates, the investigation of complaints, and the resolution
of wage disputes, does not make provision for laborers to
enforce their rights administratively. The dispute-reso-
lution proceedings may be initiated only by the federal
Al9
—————————————————
agency administering the HCDA contract, the Secretary,
or an HCDA contractor or subcontractor. See 29 C.F.R.
§ 5.11(a) (1992). Indeed, at the time the HCDA was
enacted, the regulations apparently permitted only the
contract-administering agency to initiate such proceed-
ings. See 29 C.F.R. § 5.11(b) (1974). The laborers who are
the beneficiaries of § 5310 were not and are not allowed
to initiate administrative dispute-resolution proceedings.
Nor is there any provision for a laborer to obtain judicial
review of any administrative decision. In sum, we do not
see in § 5310 recognition of a regulatory scheme of such
comprehensiveness as to manifest an affirmative con-
gressional intent to preclude invocation of § 1983 as a
remedy. a
In arguing that Congress intended to preclude use of
§ 1983 actions to enforce § 5310, defendants rely heavily
on Universities Research Assn. v. Coutu, 450 U.S. 754
(1981) (“Coutu”), which held that there was no private
right of action under Davis-Bacon for back wages where
(a) the contract did not provide for Davis-Bacon wage
levels, and (b) there had been an administrative prede-
termination that the contract did not call for Davis-Bacon
work. The Coutu Court noted that a contractor needs to
know in advance what its labor costs will be and reasoned
that implication of a private right of action under Davis-
Bacon to sue on a contract that had been predetermined
not to call for Davis-Bacon wages would “destroy [the]
careful balance” created between contractors and employ-
ees. 450 U.S. at 782.
For several reasons, this ruling does not suggest fore-
closure of the § 1983 claims asserted here. First, the con-
clusion that a direct action may not be brought to enforce
Davis-Bacon rights where it had been administratively
predetermined that Davis-Bacon did not apply wouid not
A20
be persuasive authority for even the proposition that no
direct action may be brought to enforce a contract that
expressly requires the payment of wages at Davis-Bacon
levels. Indeed, the Coutu Court expressly “d[id] not
decide whether the [Davis-Bacon] Act creates an implied
private right of action to enforce a contract that contains
specific Davis-Bacon Act stipulations.” 450 U.S. at 769.
Second, Coutu’s concern for the contractor’s need to
know in advance its labor costs is not an issue here, since
the Contracts expressly required the payment of wages at
Davis-Bacon levels. Finally, and most importantly, Coutu
concerned only whether the action could be brought
directly under Davis-Bacon, not whether it could be
brought under § 1983. Though there can be no implied
direct private right of action unless Congress demon-
strably intended to create one, the § 1983 remedy is pre-
sumptively available unless Congress has affirmatively
withdrawn it. As indicated above, we have seen no indi-
cation that Congress meant to withdraw the § 1983 rem-
edy for violation of § 5310 where the contracts expressly
call for payment of wages at rates not lower than the fed-
erally recognized prevailing rates.
In sum, we conclude that § 1983 is available as a rem-
edy for state action that violated § 5310.
C. State Action
An action under § 1983 cannot, of course, be main-
tained unless the challenged conduct was attributable at
least in part to a person acting under color of state law.
See, e.g., Rendell-Baker v. Kohn, 457 U.S. 830, 835
(1982); Dwares v. City of New York, 985 F.2d 94, 98 (2d
Cir. 1993). Thus, plaintiffs must plead and prove that the
relationship between CPC, which paid their wages, and
the municipal defendants, which establishec lignitations
A21
on the wages that could be paid, was sufficient to permit
an inference that CPC acted not as an independent orga-
nization, but an arm of the state.
Actions by a private party are deemed state action if
“there is a sufficiently close nexus between the State and
the challenged action” that the actions by the private par-
ties “may be fairly treated as that of the State itself.”
Jackson v. Metropolitan Edison Co., 419 U.S. 345, 351
(1974); see Hadges v. Yonkers Racing Corp., 918 F.2d
1079, 1081 (2d Cir. 1990), cert. denied, 111 S. Ct. 1583
(1991). The “close nexus” test is not satisfied merely by
the fact that the private entity is a business “ ‘affected
with the public interest,’ ” Jackson v. Metropolitan Edi-
son Co., 419 U.S. at 353; or that the state “‘approv[ed] of
or acquiesce[d] in the initiatives’ ” of the private entity,
San Francisco Arts & Athletics, Inc. v. United States
Olympic Committee, 483 U.S. 522, 547 (1987) (“San
Francisco”) (quoting Blum v. Yaretsky, 457 U.S. 991,
1004-05 (1982)); or that a business is subject to extensive
regulation, Jackson v. Metropolitan Edison Co., 419 U.S.
at 350, was publicly subsidized, San Francisco, 483 U.S.
at 544, or had been given monopoly status by the state,
Jackson v. Metropolitan Edison Co., 419 U.S. at 351-52.
“Acts of. . . private contractors do not become acts of
the government by reason of their significant or even total
engagement in performing public contracts.” Rendell-
Baker v. Kohn, 457 U.S. at 841. “The purpose of [the
close-nexus] requirement is to assure that constitutional
standards are invoked only when it can be said that the
State is responsible for the specific conduct of which the
plaintiff complains.” Blum v. Yaretsky, 457 U.S. at 1004
(emphasis in original). Such responsibility may be found
when, after the facts are sifted and weighed, it is evident
that a state or its political subdivision “‘has exercised
A22
coercive power or has provided such significant encour-
agement, either overt or covert, that the choice must in
law be deemed to be that of the [state or political subdi-
vision].’” San Francisco, 483 U.S. at 546 (quoting Blum
v. Yaretsky, 457 U.S. at 1004).
The present Complaint meets the close-nexus test
because the facts alleged, and supported by the Contracts
relied on, easily permit the inference that CPC could not
pay wages at the level required by § 5310 because of
strictures imposed by the municipal defendants. The HPD
RFPs provided that the contractor’s overall budget was to
be determined by setting a “Person-Day Rate,” multiplied
by the number of trainees, multiplied by the number of
days worked. The Person-Day Rate was to include wages
paid to the worker and all other expenses of running the
program, and HPD placed a dollar ceiling on the Person-
Day Rate. For the 1986-87 Contract, that ceiling was $90;
for the other years, the ceiling was $95. Both ceilings
were below the federally recognized prevailing wage min-
ima for a full day’s work. Thus, to win the Contracts, CPC
was required to make its bids based on wages below those
levels; it was paid a sum that did not give it sufficient
funds to pay wages at the § 5310 required minimum lev-
els; and it was prohibited by the Contracts from receiving
any additional funding for the work performed thereunder.
In sum, the facts alleged would suffice to permit a find-
ing that HPD effectively required CPC to pay less than
the minimum wages required by § 5310, that the actions
of CPC in paying those subminimum wages were the
responsibility of the municipal defendants, and that CPC’s
conduct was therefore state action.
Defendants also contend that even if CPC’s wage pay-
ments were constrained by the municipal defendants, CPC
A23
could not be deemed a state actor because the municipal
defendants themselves were engaged only in federal, not
state, action, as they merely expended federal funds under
the HCDA. We reject this contention for the principal rea-
son that the “Person-Day Rate” set by the RFPs, along
with the provision that the contractor could not obtain
other funding to pay its workers, apparently represented
an attempt by the City to limit any call upon its own trea-
sury for the projects in question. These restrictions were
not required by any federal provision. Thus, the under-
payment of wages cannot be attributed to the federal gov-
ernment; and the municipal defendants in limiting the
wages that could be paid and CPC in paying the wages as
thus limited cannot legitimately claim to have been fed-
eral, rather than state, actors.
We conclude that the district court properly denied
defendants’ motions to dismiss plaintiffs’ § 1983 claims.
CONCLUSION
The order and judgment of the district court are
affirmed. Costs to plaintiffs.
A24
ORDER OF THE UNITED STATES COURT OF
APPEALS FOR THE SECOND CIRCUIT GRANTING
PERMISSION TO APPEAL PURSUANT TO 28 U.S.C.
§ 1292(b) ENTERED NOVEMBER 10, 1992
Docket Nos. 92-9236, 92-9237
KAM SHING CHAN, et. al.,
-V-
CITY OF NEW YORK, DEPARTMENT OF HOUSING
PRESERVATION AND DEVELOPMENT OF THE CITY
OF NEW YORK, and THE CHINESE-AMERICAN
PLANNING COUNCIL INC.
Before: Hon. Jon O. Newman, Hon. Richard J.
Cardamone and Hon. J. Daniel Mahoney,
CJJ
IT IS HEREBY ORDERED that the motion be and
it hereby is granted.
ELAINE B. GOLDSMITH, Clerk
By:
Edward J. Guardaro,
Staff Attorney
A25
OPINION AND ORDER OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT OF
NEW YORK 90 Civ. 5653 (RJW), DATED JUNE 5, 1992
KAM SHING CHAN, KAM TAI CHAN, JING YI
CHEN, SHAN NON CHIU, BAK LOK CHU, KOK KUN
CHU, ISRAEL GONZALEZ, SUI BIN HUANG, JIAN
NING JIANG, KAM FAI KWOK, MOON SHUEN
KWONG, WEI XIANG LEE, YANG I LEE, YOUNG
SHI LEE, BING ZHAO LI, HAO HUI LI, KEI MAN LI,
WAI TAI LI, CHI KWONG LIU, JACK YE LOUIE,
SHENG HUA LU, TING GUANG MAI, CHEUK MING
NG, KIN CHUNG NG, KIN HIN NG, SHUN GUO
SHEN, TEN JEN SHEN, HAU WING SIN, VEIN DINH
SINTRUONG, WING SHING TSE, WAI MAN WAN,
KONG HTYAN WU, XU MING WU, GUO XUAN,
YUE NAM ZHU,
Plaintiff,
- against -
CITY OF NEW YORK, DEPARTMENT OF HOUSING
PRESERVATION AND DEVELOPMENT OF THE CITY
OF NEW YORK, and CHINESE-AMERICAN
PLANNING COUNSEL, INC.,
Defendants.
OPINION
A26
ELLEN DICHNER
JAMES REIF
Gladstein, Reif & Meginniss
361 Broadway
New York, New York 10013
MICHAEL SHEN
Shneyer & Shen
250 West 100th Street
New York, New York 10025
Asian American Legal Defense and Education Fund
99 Hudson Street
New York, New York 10013
Attorneys for Plaintiffs
O. PETER SHERWOOD
Corporation Counsel of the
City of New York
100 Church Street
New York, New York 10007
BETH PERITZ
GOODWIN BENJAMIN
JOHN P. WOODS
Of Counsel
A27
— Attorney for Defendants City of New York
and Department of Housing Preservation
and Development of the
City of New York
JAY S. BERKE
NICHOLAS J. PAPAS
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attorneys for Defendant
Chinese-American Planning Council, Inc.
WARD, District Judge.
Chinese-American Planning Counsel,Inc.
("CPC") has moved to dismiss plaintiffs' First Amended
Verified Complaint pursuant to Rule 12(b)(6), Fed. R. Civ.
P., for failure to state a claim upon which relief can be
granted. The City of New York ("the City") and the
Department of Housing Preservation and Development of
the City of New York ("HPD") (collectively "the municipal
defendants") have moved to dismiss the First Amended
Complaint pursuant to Rule 12(b)(1), Fed. R. Civ. P., for
lack of jurisdiction over the subject matter and/or Rule
A28
12(b)(6), Fed. R. Civ. P., for failure to state a claim which
relief can be granted.'
By order dated July 26, 1991, the motions
were referred to the Honorable James C. Francis IV,
United State Magistrate Judge, to hear and report pursuant
to 28 U.S.C. § 636(b)(1)(B). On January 6, 1992,
Magistrate Judge Francis ffiled a Report § and
Recommendation ("the Report"), in which he recommended
that the motions to dismiss be granted in their entirety.
Plaintiff timely filed objections to the Report. For the
reasons that follow, the Court denies defendants’ motions in
part, grants them in part, and modified the magistrate
' At the pre-motion conference on November 30, 1990,
the Court gave defendants leave to file motions to dismiss
only plaintiffs’ federal claims. The Court indicated that it
would consider whether to permit motions to dismiss
plaintiffs’ state claims after deciding the instant motions.
A29
judge's findings and recommendations in accordance with
this option.’
BACKGROUND
Kam Shing Chan and the other plaintiffs seek
to recover back wages, which they claim are due them
under 42 U.S.C. § 5310 and applicable contracts, from CPC
2 In their submissions to the Court, the parties make
several references to Charles Dickens' A Tale of Two
Cities. According to a recent article, this novel was the
eighth most commonly assigned book in public high schools
in 1963, when it was assigned to 33% of all students.
High School, N.Y. Times, May 29, 1992, at B8. By 1988,
however, this classic of English literature had fallen off the
top ten list. Perhaps a more timely literary reference would
be to Harper Lee's To Kill a Mockingbird (number four on
the list in 1988, assigned to 74% of public high school
students). Defendants' instant motions are undoubtedly an
effort "to kill a complaint".
A30
and the municipal defendants.’ Plaintiffs also seek
liquidated damages and attorneys’ fees.
3 In their complaint, plaintiffs assert that they were
subjected to deprivations of their rights secured by 42
U.S.C. § 5310, in violation of 42 U.S.C § 1983. First
Amended Verified Complaint 11 56-61. Nowhere in the
complaint do plaintiffs explicitly allege that they have an
impled private right of action to enforce 42 U.S.C § 5310.
Indeed, it is in their Memorandum in Opposition to Motions
to Dismiss Statutory Claims, at 14-23, not in the complaint,
that plaintiffs first make this legal argument with specificity.
See_also Memorandum of Law in Reply to Plaintiffs’
Memorandum of Law in Opposition to Municipal
Defendants' Motion to Dismiss the Complaint at 6-7;
Defendant CPC's Reply to Plaintiffs’ Memorandum in
Opposition to CPC's Motion to Dismiss Count I at 1-2.
Nevertheless, because courts are "required to read the
complaint with great generosity on a motion to dismiss,"
Yoder v. Orthomolecular Nutrition Institute, Inc.,751 F.2d
555, 558 (2d Cir. 1985) (citing Conley v. Gibson, 355 U.S.
41, 47-48 (1957)), the Court finds an implied "implied
private right of action" claim in the instant complaint and
will therefore address that claim in its opinion. This was
also the finding of the magistrate judge. Report and
Recommendation at 10. Thus, each defendant has had two
opportunities (once in their reply memoranda to their
motions to dismiss and once in their responses to the
objections to the magistrate judge's report and
recommendations) to address plaintiffs' assertion that there
is an implied private right of action pursuant to § 5310.
A3]
According to plaintiffs, from 1986 to 1989,
CPC entered into a series of three annual contracts with
HPD (the "CPC/HPD Contracts") for the "performance of
construction, repair and rehabilitation work on real estate
owned by the City of New York". Complaint at % 44.
Plaintiffs are laborers that CPC employed to perform the
work required under the terms of these contracts.
The CPC/HPD Contracts were funded in
whole or in part under Title I of the Housing and
Community Development Act of 1974 ("HCDA"), 42
U.S.C. § 5301 et seg., which provides that "(t]he primary
objective of this [title] is the development of viable urban
communities, by providing decent housing and a suitable
living environment and expanding economic opportunities,
principally for persons of low and moderate income." Id.
§ 5301(c).
42 U.S.C. § 5310, which is part of Title I of
the HCDA, provides, in relevant part, that:
All laborers and mechanics employed by
contractors or subcontractors in_ the
performance of construction work financed in
whole or in part with assistance received
under this chapter shall be paid wages at
rates not less than those prevailing on similar
construction in the locality as determined by
the Secretary of Labor in accordance with the
Davis-Bacon Act, as amended (40 U.S.C.
276a -- 276a-5).... The Secretary of Labor
shall have, with respect to such labor
A32
standards, the authority and functions set
forth in Reorganization Plan Numbered 14 of
1950* (15 F.R. 3176; 64 Stat. 1267) and
section 276c of Title 40.
Because the CPC/HPD Contracts were funded
under Title I of the HCDA, they were subject to, inter alia,
the provisions of § 5310. This was explicitly stated in the
CPC/HPD Contracts, which provided, in a section entitled
"Federal Supplemental Terms and Conditions," that:
[CPC] acknowledges that this Agreement is
funded under a program providing direct
financial assistance from the Federal
government to the City and HPD and is
subject to, and the Contractor shall comply
with, the requirements of all applicable
Federal Statutes, rules and regulations,
4 Reorganization Plan Numbered 14 of 1950 ("the
Reorganization Plan") authorized the Secretary of Labor to
make reasonable regulations to ensure compliance with the
Davis-Bacon Act and related statutes, such as the HCDA.
The regulatory regime established under the Reorganization
Plan allows contractors and laborers to challenge the setting
and application of. Davis-Bacon wage standards and provides
for contractors to be debarred for up to three years from
eligibility for applicable contracts as a deterrent to the
willful violation of labor standards in federal contracting.
Significantly, the Reorganization Plan does not provide for
an action by laborers for back wages claimed under the
Davis-Bacon standards.
A33
including, but not limited to, those set forth
in Exhibit F attached to this agreement.
Included among the "applicable Federal Statutes" in Exhibit
F were Title I of the HCDA, as well as the Davis-Bacon
Act.
Plaintiffs assert that they were not paid
prevailing wage rates, as determined by the Secretary of
Labor. In their Memorandum in Opposition to Motions to
Dismiss Statutory Claims, plaintiffs state that municipal
defendants issued a Request for Proposals ("RFP") and
ultimately signed a contract with CPC which provided that
the Person Day Rate applicable to the HCDA work could
not exceed $90 per diem.’ Plaintiffs argue that, once CPC's
other expenses were deducted the $90 cap on the Person
Day Rate "ensured that each [laborer] would be paid far
below the prevailing wage rate." Id. at 4.
° The Person Day Rate increased to $95 per day for the
second and third round RFPs and contracts.
A34
DISCUSSION
Defendants’ motions present this Court with
two distinct, yet related, areas of inquiry. First, the Court
must determine whether 42 U.S.C. § 5310 creates a right of
action under 42 U.S.C. § 1983. This inquiry turns on: (a)
whether defendants were acting under color of state law; (b)
whether 42 U.S.C. § 5310 creates an enforceable "right,
privilege or immunity," as required under 42 U.S.C.
§ 1983; and (c) whether Congress intended to foreclose a 42
U.S.C. § 1983 right of action under 42 U.S.C. § 5310.
Second, the Court -must-ascertain whether plaintiffs have an
implied private right of action 42 U.S.C. § 5310.
Part (a) of the first inquiry requires a fact-
specific analysis. Parts (b) and (c) of the first inquiry, as
well as the second inquiry, present questions of statutory
interpretation which are issues of first impression for the
federal courts.
After discussing the standards to be applied
when reviewing a magistrate judge's report and
recommendations and deciding a Rule 12(b)(1) or 12(b)(6)
motion to dismiss, the Court will turn to these substantive
issues.
A35
A. Seumindie for Rastent Magistrate Judge’
Report and Recommendations
To accept the Report and Recommendations
of a magistrate judge to which no timely objection has been
made, a district court need only satisfy itself that there is no
clear error on the face of the record. See Rule 72, Fed. R.
Civ. P., Notes of Advisory Committee on Rules (citing
Campbell v. United States Dist. Court, 501 F.2d 196, 206
(9th Cir.), cert. denied 419 U.S. 879 (1974)). 28 U.S.C.
§ 636(b)(1) affords the district court broad latitude in
considering a magistrate judge's recommendation, even if no
party objects to it. Grassia v. Scully, 892 F.2d 16, 19 (2d
Cir. 1989). When timely objection has been made to a
portion or portions of a magistrate judge's report, however,
the district judge must "make a de novo determination . . .
of any portion of the magistrate's disposition to which
specific written objection has been made." Rule 72(b), Fed.
R. Civ. P. See also, 28 U.S.C. § 636(b) (1). The judge
may then accept, reject, or modify, in whole or in part, the
magistrate jurlge's proposed findings and recommendations.
28 U.S.C. § 636 (b) (1).
A district court's obligation to make a de
novo determination of properly contested portions of a
magistrate judge's report does not require that the judge
conduct a de novo hearing on the matter. United States v.
Radatz, 447 U.S. 667, 676 (1980). It is sufficient that the
district court "arrive at its own, independent conclusion
about those portions of the [magistrate judge's] [report to
which objection is made." Hernandez, v. Estelle, 711 F.2d
619, 620 (5th Cir. 1983). To this end, the court must
A36
"exercise ... sound judicial discretion with respect to
whether reliance should be placed on [the magistrate
judge's] findings." i
v. Sabet, 512 F. Supp. 472, 473 (S.D.N.Y. 1981), aff'd
without opinion, 697 F.2d 287 (2d Cir.), cert. denied, 459
U.S. 858 (1982).
B. Standards for Dismissal Pursuant to Rules
12(b)(1) and 12
1. le 12(b)(
Municipal defendants have moved to dismiss
the First Amended verified Complaint pursuant to Rule
12(b)(1), Fed. R. Civ. P., for lack of jurisdiction over the
subject matter. When such a defense is asserted, " ‘the
court should consider the Rule 12(b)(1) challenge first since
if it must dismiss the complaint for lack of subject matter
jurisdiction, the accompanying defenses and objections
become moot and do not need to be determined. " Rhulen
Agency, Inc. v. Alabama Ins. Guar. Ass'n, 896 F.2d 674,
678 (2d Cir. 1990) (quoting 5 C. Wright and A. Miller,
Federal Practi r , § 1350, p. 548 (1969)).
Plaintiffs claim subject matter jurisdiction
pursuant to 28 U.S.C. §§ 1331 and 1337. Section 1331,
which confers jurisdiction when there is a federal question,
provides that, "[t}he district courts shall have original
jurisdiction of all civil actions arising under the Constitution,
laws or treaties of the United States." Inasmuch as this
action arises under 42 U.S.C. § 1983, as well as under 42
A37
U.S.C. § 5310, there is the requisite subject matter
jurisdiction pursuant to 28 U.S.C. § 1331.°
In accordance with this analysis, the portion
of municipal defendants' motion made pursuant to-Rule
12(b)(1) is denied.
2. Rule 12(b)(6)
In considering a motion to dismiss for failure
to state a claim upon which relief may be granted, a court
is required to accept the facts alleged in the complaint as
true. Frasier v. General Electric Co., 930 F.2d 1004, 1007
(2d Cir. 1991) (citing Cooper v. Pate, 378 U.S. 546
(1964)). The complaint includes any written instrument
attached to it as an exhibit and any statements or documents
incorporated into it by reference. Cortec Industries, Inc. v.
Sum Holding L.P., 949 F.2d 42, 47 (2d Cir. 1991), cert.
denied, 112 S. Ct. 1561 (1992); Goldman v. Belden, 754
F.2d 1059, 1065-66 (2d Cir. 1985).
In the instant case, the CPC/HPD Contracts
and the RFPs were neither attached to the complaint nor
incorporated into it by reference. It is undisputed by the
parties, however, that these documents are properly before
the Court on this motion to dismiss, because plaintiffs
clearly had notice of these documents and relied upon them
in framing the complaint. See Cortec Industries, Inc. v.
° Because this Court finds subject matter jurisdiction
pursuant to 28 U.S.C. § 1331, it is unnecessary to decide
whether jurisdiction exists pursuant to 28 U.S.C. § 1337.
A38
Sum Holding L.P., 949 F.2d at 48; Memorandum of Law
in Support of Municipal Defendants' Motion to Dismiss the
Complaint at 4n.2; Plaintiffs' Memorandum in Opposition
to Motions to Dismiss Statutory Claims at 3 n.1.
The court must read the complaint
generously, and draw ail reasonable inferences in favor of
plaintiffs. Pross v. Katz, 784 F.2d 455, 457 (2d Cir.
1986). The complaint may be dismissed only if "it appears
beyond doubt that the plaintiff can prove no set of facts in
support of his claim which would entitle him to relief."
Conley v. Gibson, 355 U.S. 41, 45-46 (1957); Branum v.
Clark, 927 F.2d 698, 705 (2d Cir 1991). Thus, "[the
function of a [Rule 12(b)(6)] motion to dismiss is merely
to assess the legal feasibility of the complaint, not to assay
the weight of the evidence which might be offered in
support thereof." Ryder Energy Distribution Corp. v
Merrill Lynch Commodities Inc., 748 F.2d 774, 779 (2d
Cir. 1984) (quoting Geisler v. Petrocelli, 616 F.2d 636, 639
(2d Cir. 1980)). The Court now turns to the legal feasibility
of the plaintiffs’ federal claims.
c. Plaintiffs' § 1983 Claim
The Court must determine whether 42 U.S.C.
§ 5310 provides plaintiffs with a cause of action pursuant to
42 U.S.C. § 1983, which provides, in relevant part,
[e]very person who, under color of any
statute, ordinance, regulation, custom, or
usage. of any State ..., subjects, or causes to
be subjected, any citizen of the United States
A39
or any other person within the jurisdiction
thereof to the deprivation of any rights,
privileges, or immunities secured by the
Constitution and laws, shall be liable to the
party injured in an action at law, suit in
equity, or any other proper proceeding for
redress.
(emphasis added)
In their motions to dismiss, defendants assert
that plaintiffs cannot satisfy either the "state action" or the
"rights, privileges or immunities" requirement. Further,
defendants assert that there is no § 1983 right of action,
because Congress intended to foreclose such a right of
action under § 5310. The Court now turns to these
arguments.
1. Were Defendants Acting Under Color of
State Law?
To state a claim against a private actor under
§ 1983, the complaint must allege facts demonstrating that
the private entity acted in concert with the state actor to
commit an unconstitutional or unlawful act. Spear v. Town
of West Hartford, 954 F.2d 63, 68 (2d Cir. 1992), petition
for cert. filed, May 20, 1992. Defendants assert that
plaintiffs' complaint fails to allege facts which would
establish that CPC's alleged failure to pay prevailing wages
was under color of state law. Plaintiffs bear the burden of
proving that the acts of private entities constitute state action
for purposes of § 1983. Flagg Brothers, Inc. v. Brooks,
A40
436 U.S. 149, 155 (1978); Hadges v. Yonkers Racing
Corp., 918 F.2d 1079, 1082 n.3 (2d Cir. 1990), cert.
denied, 11 S.Ct. 1583 (1991).
The Second Circuit has recently addressed the
issue of when private conduct qualified as state action for
§ 1983 purposes. In Hadges, the court was asked to decide
whether the Yonkers Racing Corporation ("YRC"), as the
private owner of a racetrack licensed by the State of New
York to conduct parimutuel wagering on harness races,
engaged in § 1983 state action when it denied Hadges'
application to work at YRC's racetrack. Hadges contended
that YRC's denial of his application amounted to § 1983
state action because YRC was subject to pervasive New
York State statutory and regulatory control, and because it
generated significant tax revenues for the State, received
State tax credits, and held a monopoly over harness racing
in the New York metropolitan area. Id. at 1080-81.
The Court identified two independent tests for
determining whether there is a state action: the symbiotic
relationship test and the close nexus test. Either test is
sufficient to establish § 1983 state action.
a. The Symbiotic Relationship Test
Private action is transformed into state action
under this test when " '[t]he State has so far insinuated itself
into a position of interdependence with [the private party]
that it must be recognized as a joint participant in the
challenged activity.'" Hadges v. Yonkers Racing Corp.,
A41
918 F.2d at 1081 (quoting Burton v. Wilmington Parking
Auth,, 365 U.S. 715 725 (1961)).
In Burton, where this test was first articulated
by the Supreme Court, the owner of a private restaurant that
leased space in a state-owned building refused to serve an
African-American. The Court found that the restauranteur's
action qualified as § 1983 state action because the state
owned the building, as well as an adjacent parking lot, and
thus had a direct financial interest in the restaurant's
success. In addition, the state had dedicated the building for
public purposes, thereby conferring tax exempt status on the
building. Hadges v. Yonkers Racing Corp., 918 F.2d at
1082 (citing Burton v. Wilmington Parking Auth., 365 U-S.
at 723-24).
While courts a> to search for "nonobvious
involvement of the State in ,*ivate conduct," Burton v.
Wilmington Parking Auth., 365 U.S. at 722, the Second
Circuit in Hadges did not find the nature or extent of state
involvement that was present in Burton. In contrast to
Burton, the State in Hadges did not have a proprietary
interest in Yonkers Raceway, which was purchased and
maintained by private, not public dollars. Furtheremore, the
State in Hadges did not own a neighboring, interlinked
business, and consequently lacked the direct financial stake
in YRC's success that was present in Burton. While YRC
received tax credits from the State, YRC did not enjoy the
State's tax-exempt status. Finally, the Hadges court noted
that the State did receive greater revenues if YRC
prospered, but the court held that if such a link were
sufficient to forge a symbiotic relationship between YRC
and the State, then the actions of every successful
A42
corporation within the State would qualify as state action.
Hadges v. Yonkers Racing Corp., 918 F.2d at 1082.
In sum, the symbiotic relationship test seeks
to establish whether the overall interests of the government
and the private actor overlap to such an extent as to virtually
coincide.
b. The Close Nexus Test
Whereas the symbiotic relationship test
focuses on the state's overall relationship with the private
actor, the close nexus test specifically examines the state's
link to the challenged action. Hadges v. Yonkers Racing
Corp., 918 F.2d at 1082. Under this test, private action is
transformed into state action when " there is a sufficiently
close nexus between the State and the challenged action’ that
the private party's action ‘may be fairly treated as that of
the State itself.'" Id. at 1081 (quoting Jackson v.
Metropolitan Edison Co., 419 U.S. 345, 351 (1974)).
The "close nexus" standard is a difficult one
to attain. For example, the mere fact that a business is
subject to state regulation does not by itself convert its
action into that of the state. n_Franci A
Athleti nc. v. United States Olympic Comm., 483 U.S.
522, 544 (1987). Nor does the fact that the regulation is
extensive and detailed, as in the case of most privately-
owned utilities, create state action. Jackson v. Metropolitan
Edison Co., 419 U.S. at 350. Furthermore, even when an
entity benefits from state-conferred monopoly status, this is
not sufficient state action for § 1983. Id. at 351-52.
Indeed, the government may subsidize private entities
without assuming constitutional responsibility for their
actions. San Francisco Arts & Athletics, Inc. v. United
States Olympic Comm., 483 U.S. at 544 (citing Blum v.
Yaretsky, 457 U.S. 991, 1011 (1982); Rendell-Baker v.
Kohn, 457 U.S. 830, 840 (1982). "The fact ‘that a private
entity performs a function which serves the public does not
make its acts governmental action.'" San Francisco Arts &
Athletics, Inc. v. United States Olympic Comm., 483 U.S.
at 544 (quoting Rendell-Baker v. Kohn, 457 U.S. at 842).
Of relevance to the instant case, private entities who
contract with the government are not necessarily government
actors. Rendell-Baker v. Kohn, 457 U.S. at 840-41 (a
"school . . . is not fundamentally different from many
private corporations whose business depends primarily on
contracts to build roads, bridges, dams, ships, or submarines
for government. Acts of such private contractors do not
become acts of the government by reason of their significant
or even total engagement in performing public contracts.")
Furthermore, " mere approval of or acquiescence in the
initiatives of [a private actor] . . . is not enough to make
the [private actor's] actions those of the Government." San
Francisco Arts & Athletics, Inc. v. United States Olympic
Comm., 483 U.S. at 547 (quoting Blum v. Yaretsky, 457
U.S. at 1004-05).
Thus the close nexus test establishes a
relatively small range of government action for purposes of
$ 1983: "a government normally can be held responsible
for riv ision only when it h xerci rciv
power or has provided such significant encouragement,
either overt or covert, that the choice must in law be
A44
deemed to be that of the government'". San Francisco Arts
& Athletics, Inc. v. United States Olympic Comm., 483
U.S. at 546 (quoting Blum v. Yaretsky, 457 U.S. at 1004;
Rendell-Baker v. Kohn, 457 U.S. at 840) ~ ‘ting Flagg
Brothers, Inc. v. Brooks, 436 U.S. at 16%, ~ ¢kson v.
Metropolitan Edison Co., 419 U.S. at 357; Moose Lodge
No. 107 v. Irvis, 407 U.S. 163, 173 (1972); Adickes v.
S.H. Kress & Co., 398 U.S. 144, 170 (1970))(emphasis
added).
Upon application of the close nexus test, the
Hadges court found no state action, holding that "there is no
evidence that a State official participated in YRC's decision
to deny Hadge's application."’ Hadges v. Yonkers Racing
Corp., 918 F.2d at 1083.
Cc. Th mbiotic Relationship T
nd Cl Nexus T Applied to
the RFPs and CPC/HPD Contracts
In determining whether either of these tests
results in a finding of § 1983 state action, this Court must
” However, the Hadges court did cite to Fitzgerald v
Mountain Laurel Racing, Inc., 607 F.2d 589, 599 (3d Cir.
1979), cert. denied, 446 U.S. 956 (1980), where the Third
Circuit held that if a State official "personally and actively
participated" in a racetrack's decision to expel a driver, state
action existed. Thus the Hadges court acknowledged that
there are circumstances where the close nexus test does
create § 1983 state action. Hadges v. Yonkers Racing
Corp., 918 F.2d at 1083.
A45
ultimately undertake a detailed factual inquiry. "Neither of
these tests lends itself to formulaic applications. Instead,
both of these inquires requires us to sift through and weigh
the facts to determine whether the alleged ties between the
State and the private actor are sufficiently strong to attribute
the private actor's conduct to the state." Hadges v. Yonkers
Racing Corp., 918 F.2d at 1081 (citing Burton v.
Wilmington Parking Auth., 365 U.S. at 722. See also
Jackson v. Metropolitan Edison Co., 419 U.S. at 351 ("The
true nature of the State's involvement may not be
immediately obvious, and detailed inquiry may be required
in order to determine whether the test is met." (citing
Burton v. Wilmington Parking Auth., 365 U.S. 715)). For
purposes of the instant motions to dismiss, in accordance
with Rule 12(b)(6) standards, the Court will accept the facts
alleged in the complaint as true and will consider the
CPC/HPD Contracts and the RFPs.
CPC was not a state actor under the symbiotic
relationship test. Neither municipal defendant had the sort
of interdependent economic interest that is required under
the Burton test. Municipal defendants did not share a
proprietary interest with CPC in the work being done. Nor
did the municipal defendants have an "interlinked" business,
as was the case with the State's parking lot in Burton. For
these reasons, the symbiotic relationship test does not
establish § 1983 state action in the instant case.
Under the close nexus test and the facts
presently before the Court, however, CPC can be said to be
a State actor. On the basis of the CPC/HPD Contracts and
the RFPs, plaintiffs have alleged facts which, if proven true,
A46
would demonstrate that municipal defendants had "exercised
coercive power or has provided such significant
encouragement, either overt or covert, that the choice must
in law be deemed to be that of the government." San
Francis Athleti nc. v. Uni lympi
Comm., 483 U.S. at 546 (citations omitted). In particular,
plaintiffs assert that the $90-95 cap on the Person Day Rate,
which was required by municipal defendants as a condition
for awarding the contract, was so low as to make it
financially impossible for CPC to pay prevailing wage rates
as required under 42 U.S.C. § 5310. In short, plaintiffs
have alleged facts asserting that the municipal defendants
ensured that any successful bidder would be forced, for
economic reasons, to violate 4Z U.S.C. § 5310. If proven
true, these facts would be sufficient to demonstrate that the
municipal defendants "exercised coercive power or. . .
provided such significant encouragement" as to establish 42
U.S.C. § 1983 state action under the close nexus test.®
8 Municipal defendants have argued that, because part of
CPC's contractual mandate was to provide off-site "life
skills" training to plaintiffs, and thus plaintiffs were not
laboring on-site for CPC on a full-time basis, the $90-95
Person Day Rate was sufficient to allow CPC to pay the
prevailing minimum wage during those hours of the week
when plaintiffs were actually providing labor services. See
Memorandum of Law in Reply to Plaintiffs Memorandum
of Law in Opposition to Municipal Defendants Motion to
Dismiss the Complaint at 26. This assertion, while relevant
to the ultimate adjudication of this action, concerns a factual
argument raised by defendants that is not properly before
(continued...)
A47
Finally, municipal defendants argue that
plaintiffs have failed to adequately plead the existence of a
municipal custom, practice or policy which caused
plaintiffs’ injuries. However plaintiffs did allege that
HPD's conduct "was pursuant to official custom, policy and
usage." Amended Complaint at 155. Moreover, it strains
credulity to assert, as municipal defendants have, that a
series of contracts, worth millions of dollars in the
aggregate, and signed by the Commissioner of HPD, do not
reflect official policy or usage.’
8 (...continued)
the Court on a Rule 12(b)(6) motion to dismiss.
* Because the Court has found state action under the close
nexus test, it is unnecessary to address plaintiffs' conspiracy
claim, First Amended Verified Complaint at 1 53, at the
present time.
A48
Privil r Immunity," Requir
Under 42 U.S.C.§ 1983?
a. The Existing Framework
The jurisprudence concerning whether a given
statute created a right, privilege or immunity enforceable
under § 1983 is in a state of flux. In Wilder v. Virginia
Hospital Ass'n, 110 S.Ct. 2510 (1990), the Supreme Court
applied a well-established, three-part test in finding that the
Boren Amendment to the Medicaid Act created such a right.
However in Suter v. Artist M., 112 S.Ct. 1360 (1992),
decided approximately two months ago, the Supreme Court
chose not to explicitly apply the Wilder framework when
determining whether such a right exists, although it did not
explicitly overrule Wilder and provided no alternative
analytic framework. Because the Wilder framework was
not explicitly overruled,'® this Court will apply the Wilder
10 Justice Blackmun, in a stinging dissent, indicates that the
Suter majority is dramatically altering, if not overruling,
Wilder:
the court has failed, without explanation, to
apply the framework our precedents have
consistently deemed applicable; it has sought
to support its conclusion by resurrecting
arguments decisively rejected less than two
years ago in Wilder; and it has contravened
22 years of precedent by suggesting that the
(continued...)
A49
framework, with the modifications suggested by Suter, in
ascertaining whether 42 U.S.U. §$ 5310 created a right
enforceable under § 1983."
Section 1983 provides a cause of action for
violations of federal statutes as well as the Constitution.
Maine v. Thiboutot, 448 U.S. 1, 4 (1980); Wil v.
Virginia Hospital Ass'n, 110 S.Ct. at 2517. There is no
cause of action, however, when " the statute does not
create enforceable rights, privileges, or immunities within
the meaning of § 1983'" Id. (quoting Wright v. Roanoke
10 (...continued)
existence of other “enforcement
mechanisms" precludes § 1983 enforcement.
At least for this case, it has changed the
rules of the game without offering even
minimal justification, and it has failed even
to acknowledge that it is doing anything
more extraordinary than "interpreting" the
[relevant act] "by its own terms." Readers
of the Court's opinion will not be mislead by
this hollow assurance.
Suter v. Artist M., 112 S.Ct. at 1377.
'' In the approximately two months since Suter was
decided, no federal court has addressed the issue of whether
the Wilder framework is still good law.
A50
Redevelopment and Housing Auth., 479 U.S. 418, 423
{1987)}).
Under this exception, a mere violation of
federal law is not sufficient to trigger § 1983. Rather
plaintiff must demonstrate that he or she was deprived of a
right, privilege, or immunity. Wilder v. Virginia Hospital
Ass'n, bps S.Ct. at 2517; Golden State Transit Corp. v
City of Los Angeles, 493 U.S. 103, 106 (1989)). In
determining whether such a right, privilege or ‘mmunity
exists, the Court must ascertain (1) whether " 'The
{statutory} provision in question was intended to benefit the
putative plaintiff’ " Wilder v. Virginia Hospital Ass'n, 110
S.Ct. at 2517 (quoting Golden State Transit Corp. v. City
of Los Angeles, 493 U.S. at 106). If so, the provision
creates an enforceable right unless (2) "it reflects merely a
congressional preference for a certain kind of conduct
rather than a binding obligation on the governmental unit,"
Wilder v. Virginia Hospital Ass'n 110 S.Ct. at 2517 (citing
a a v. Halderman, 451 U.S.
, 19 (1981)), or unless (3) the asserted interest is " ‘too
et and amorphous’ such that it is _beyond the
competence of the judiciary to enforce. " Wilder v.
Virginia Hospital Ass'n, 110 S.Ct. at 2517 (quoting Golden
State Transit Corp. v. City of Los Angeles, 493 U.S. at
108; Wright v. Roanoke Redevelopment and Housing Auth.,
479 U.S. at 431-32).
Applying this test in Wilder, the Supreme
Court found that the Boren Amendment to the Medicaid Act
created a right enforceable by the health care providers
under § 1983. First, the Court found that "[t]here can be
A5]
little doubt that health care providers are the intended
beneficiaries of the Boren Amendment. The provision ... is
phrased in terms of benefitting health care providers."
Wilder v. Virginia Hospital Ass'n, 110 S.Ct. at 2517-18.
Second, the Wilder court found that the Boren Amendment
was “cast in mandatory rather than precatory terms: the
state plan ‘must’ provide for payment of hospitals. "
Wilder v. Virginia Hospital Ass'n, 110 S.St. at 2519.
"'The Boren Amendment's language succinctly sets forth
a congressional command, which is wholly uncharacteristic
of a mere suggestion or nudge " Wilder v. Virginia
Hospital Ass'n 110 S.Ct. 2519 (quoting West Virginia
University Hospitals, Inc. v. Casey, 885 F.2d 11, 20 (3d
Cir., 1989).
The Suter court did not explicitly apply the
three-part "right" test of Wilder and its precursors.
Although the Court did not provide an analytic framework
for deciding § 1983 right of action cases, it did establish
certain guidelines to be followed in determining whether
there is a § 1983 of action.
In Suter, the Court held that there is no
private right of action to enforce the Adoption Assistance
and Child Welfare Act of 1980 (the "AACWA"), either
implicitly, under the AACWA itself, or through a § 1983
action. The Suter court distinguished the AACWA from the
statute in Wilder, writing that, "in [Wilder], we held that
the Boren Amendment actually required the States to adopt
reasonable and adequate rates, and that this obligation was
enforceable by the providers. We relied in part on the fact
that the statute and regulations set forth in some detail the
A52
factors to be considered in determining the methods for
calculating rates." Suter v. Artist M., 112 S.Ct. at 1368.
The Suter Court concluded that, in providing that the State
exercise "reasonable efforts" in maintaining a’ “‘used or
neglected child in his home or return the child to ms foster
care, the AACWA left the question of how to define
"reasonable efforts" up to the State. Id. Thus, the Court
reasoned, the AACWA did not create an enforceable right.
In addition, the Suter court wrote that,
"[clareful examination of the language [requiring
reasonable efforts], in the context of the entire
[AACWA], leads us to conclude that the ‘reasonable
efforts language does not mbi I nfer an
enforceable right upon the [AACWA's] beneficiaries. The
term ‘reasonable efforts’ in this context is at least as
plausibly read to impose only a rather generalized duty on
the State, to be enforced not by private individuals, but by
the Secretary." Id. at 1370 (emphasis added). Thus, under
Suter, any right must be unambiguously conferred.
Finally, the Court noted that the regulations
promulgated by the Secretary of Health and Human Service
to enforce the AACWA
do not evidence a view that [the AACWA]
places any requirement for state receipt of
federal funds other than the requirement that
the State submit a plan to be approved by the
Secretary.... What is significant is that the
[AACWA] regulations are not specific, and
dc not provide notice to the States that failure
A53
to do anything other than submit a plan with
the requisite features, to be approved by the
Secretary, is a further condition on the
receipt of funds from the Federal
Government.
Id. at 1369. Thus the Court found that the burdens placed
on the State under the AACWA were procedural, not
substantive.
While the Suter court's approach to analyzing
the AACWA is ad hoc, there are several guidelines at work.
First, the right allegedly created by Congress must be
specific and unambiguous. The statutory requirement that
the State exercise "reasonable efforts," the Court ruled, was
too general and ambiguous to establish a right. Finally, the
Court found that the AACWA requirements were merely
procedural, not substantive.
b. ‘The Existing F —_—
to 42 U.S.C, § 5310
Under the Wilder framework, the first
question to be asked is whether the statutory provision was
intended to benefit plaintiffs. There can be little doubt that
§ 5310 is intended to provide laborers with higher wages
than they would receive in the absence of this section. The
congressional word choice in § 5310, particularly when
viewed in contrast to other statutory provisions concerning
prevailing wage requirements, reflects an unambiguous
focus on construction workers: "[alll laborers and mechanics
employed by contractors or subcontractors in the
A54
performance of construction work financed ... with
assistance received under this chapter shall be paid wages at
rates not less than those prevailing on similar construction
in the locality" (emphasis added). This can be contrasted
with a provision in Title II of the HCDA, amending the
United States Housing Act of 1937, which provided that,
[a]ny contract ... pursuant to this chapter
shall contain a provision requiring that ... not
less than the wages prevailing in the locality,
as predetermined by the Secretary of Labor
pursuant to the Davis-Bacon Act, shall be
provided to all laborers and mechanics
employed in the development of the project
involved.
42 U.S.C. § 1437j (emphasis added). The § 1437}
language, with its emphasis on the contract, can properly be
viewed as creating a duty on the contractor, rather than
creating a right for the laborers/mechanics.
The contrast between § 1437j and § 5310 is
significant. In drafting § 5310, if Congress had wished to
focus on the contract itself, rather than establish a right for
workers, it certainly knew how to do so. Thus the wording
of § 1437j is strong evidence that Congress intended to
create a right for laborers and mechanics under § 5310.
Alternatively, Congress could have focused on
the government's responsibility, as it did in 33 U.S.C.
§ 1372, which provides:
A55
The Administrator [of the Environmental
Protection Agency] shall take such action as
may be necessary to insure that all laborers
and mechanics employed by contractors or
subcontractors on treatment works for which
grants are made under this chapter shall be
paid wages at rates not less than those
prevailing for the same type of work on
similar construction in the immediate locality,
as determined by the Secretary of Labor in
accordance with the Davis-Bacon Act.
On the basis of this language, the Fifth Circuit, in United
States ex rel. Glynn v. Capeletti Bros., Inc., 621 F.2d 1309
(5th Cir. 1980), concluded that Congress did not intend to
confer benefits directly on laborers, but rather to impose a
duty on a federal agency to insure that certain wages were
paid. It is significant that § 1372 was enacted prior to the
HCDA, in 1972, because this is further evidence that
Congress knew how to place a burden on a federal agency,
rather than confer a right on laborers/mechanics, when it
chose to do so.
It is also instructive to compare the language
of § 5310 to the language used in the Davis-Bacon Act
itself, which, like 42 U.S.C. § 1437j, has contracts, not
laborers, as its focus. That statute provides that:
[t]he advertised specifications for every
contract in excess of $2,000 to which the
United States ... is a party, for construction,
alteration and/or repair ... of public buildings
A56
or public works of the United States ...
which requires or involves the employment of
mechanic 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 [wages].
40 U.S.C. § 276a(a).
In Universities Research Assn. v. Coutu, 450
U.S. 754 (1981), the Supreme Court sought to determine
whether this Davis-Bacon Act provision created a right in
the mechanics and laborers:
[section 1 of the Davis-Bacon Act requires
that certain stipulations be placed in federal
construction contracts for the benefit of
mechanics and laborers, but it does not
confer rights directly on those individuals.
Since § 1 is simply ‘phrased as a directive to
federal agencies engaged in the disbursement
of funds, its language provides no support
for the implication of a private remedy.
Id. at 772-73 (emphasis added) (citing Cannon v. University
of Chicago, 441 U.S. 677, 693 n. 14 (1979)).”
ae Although the Coutu court's inquiry concerned the
alleged existence of an implied private right of action, rather
(continued...)
A57
Defendants point to Latinos Unidos De
helsea En Accion v. Secretary of Housing and Urban
Dev., 799 F.2d 774, 793-95 (1st Cir. 1986) to argue that
the language of § 5310, when viewed in the context of the
primary congressional purpose in passing Title I of the
HCDA, does not create a right in laborers and mechanics.
In Latinos Unidos, the First Circuit found that 42 U.S.C.
§ 5309, which prohibits discrimination on the basis of race,
color, national origin, or sex in connection with programs
or activities funded under Title I of the HCDA, did not
create an implied private right of action. The First Circuit
reasoned that the purpose of the HCDA was not the
prevention of discrimination, noting that Title I of the
HCDA "was passed in response to Congress’ concern for
the critical social, economic and _ environmental
conditions existing in the nation's cities. The statute's
primary objective was the development of viable urban
communities.'" Id. at 793 (quoting 42 U.S.C. §§ 5301(a)
& (c)). Thus the Latins Unidos court found that, because
Title I was not enacted for the "especial benefit" of the
minority community, 42 U.S.C. § 5309 did not create a
private right of action for discrimination.
When interpreting § 5310, this Court will
apply the general principle that "a statute should be read
according to its literal terms, unless this produces an
interpretation which makes little sense, does violence to the
2 (...continued)
than a § 1983 right of action, the analysis as to whether
there is a right created by a statutory provision is the same
for each inquiry.
A58
purposes Congress sought to serve by the statute, or is
otherwise demonstrably at odds with the intentions of the
Statutes drafters. " ropoli Tran Auth. v.
F.E.R.C., 796 F.2d 584, 591 (2d Cir. 1986) (citations
omitted), cert. denied, 479 U.S. 1085 (1987).
With this principle in mind, this Court
concludes that finding a right for-laborers and mechanics
under § 5310 is entirely consistent with the overall
congressional purpose in enacting Title I of the HCDA.
Congress stated that "(t]he primary objective of [Title I of
the HCDA] is the development of viable urban communities,
by providing decent housing and a suitable living
environment Pr NS ..- L
rincipall f_ low moderate income." 42
U.S.C. § 530100) rere added). Thus, the instant case
is distinguishable from Latinos. There can be little doubt
that, if CPC had paid the prevailing wage, rather than the
substantially lower wage actually paid to plaintiffs, this
would have provided expanded economic opportunities for
persons of low or moderate income, namely plaintiffs.'’
' Economists and other public policy makers debate the
value to those of low and moderate incomes of having a
wage floor, either in the form of a federal minimum wage
or a prevailing wage. While a wage floor increases the
welfare of those who are hired, it is arguable that, if there
were no prevailing wage requirement, social utility would be
increased because contractors would be able to hire more
workers on a fixed labor budget. It is, however, not the
function of the courts to resolve this policy debate. It is
(continued...)
459
The Court must next ask whether § 5310
contains merely a "congressional preference" for a certain
kind of conduct rather than a binding obligation on the
governmental unit. The language of § 5310 indicates that
Congress sought to create a binding obligation on the
governmental unit. In particular, § 5310 provides that
employees on construction projects financed under Title I of
the HCDA "shall" be paid at least prevailing wages, as
determined by the Secretary of Labor. As discussed above,
had Congress wished to create a procedural requirement that
contracts contain certain terms, rather than a binding
obligation toward laborers and mechanics, they could have
done so, using language such as was in 42 U.S.C. § 1437}.
Furthermore, in applying the third part of the
Wilder test, the interest that the plaintiffs assert is not "too
vague and amorphous such that it is beyond the competence
of the judiciary to enforce." Pursuant to § 5310, the
Secretary of Labor is required to establish, with great
13 (.. continued)
enough for the Court to find that Congress could have
believed that a prevailing wage provision would serve the
purpose of "expanding economic opportunities, principally
for persons of low and moderate income." Although there——
is nothing in the statute itself or its legislative history which
explicitly establishes that Congress had this causal link in
mind when it enacted Title I of the HCDA, the fact that
Congress included § 5310 in this title is sufficient to
establish that Congress thought § 5310 would, at a
minimum, not be inconsistent with the purposes of Title I.
A60
specificity, prevailing wage rates to be paid laborers and
mechanics.
Under the Suter court's guidelines, § 5310
also creates a § 1983 right of action. First, unlike the
"reasonable efforts" clause to the AACWA, the right to
prevailing wages under § 5310 (as determined by the
Secretary of Labor) creates an unambiguous, specific
benchmark. The contractor knows exactly what wage rates
will need to be paid and, as discussed supra, rights are
unambiguously conferred on laborers and mechanics.
Finally, because the "shall" requirement of § 5310 is
directed at the payment of workers' wages, rather than
compelling the inclusion of a contract provision (as in 42
U.S.C. § 1437j), the requirement is substantive, not
procedural. For these reasons, this Court finds that 42
U.S.C. §5310 unambiguously conferred a_ specific
substantive right on plaintiffs under the Suter standards.
3. Did Congress Foreclose § 1983
Enforcement of § 5310?
a. The Existing Framework
The general rule that a violation of federal
law creates a § 1983 right of action has a second exception:
when Congress has foreclosed § 1983 enforcement of a
given statute in that statute itself. However, a court should
not " lightly conclude that Congress intended to preclude
reliance on § 1983 as a remedy for the deprivation of a
federally secured right.'" Wilder v. Virginia H 'n,
110 S.Ct. at 2523 (quoting Wright v. Roanoke
A6l
Redevelopment _& Housing Auth., 479 U.S. at 423-24
(quoting Smith v. Robinson, 468 U.S. 992, 1012 (1984)).
Thus, there is a heavy burden on a defendant
to demonstrate that Congress intended to foreclose a § 1983
remedy. As the Wilder court wrote, in rejecting the
government's argument that Congress foreclosed
enforcement of the Medicaid Act under § 1983:
[t]he burden is on the State to show "by
express provision or other specific evidence
from the statute itself that Congress intended
to foreclose such private enforcement."
Wright, 479 U.S. at 423.... In the absence
of such an express provision, we have found
private enforcement foreclosed only when the
statute itself creates a remedial scheme that is
“sufficiently comprehensive... to
demonstrate congressional intent to preclude
the remedy of suits under § 1983."
Middlesex County Sewerage Auth. _v.
National Sea Clammers Assn., 453 U.S. 1,
20 (1981).
Wilder v. Virginia Hospital Assn., 110 S.Ct. at 2523.
Furthermore, "(t]he availability of administrative
mechanisms to protect plaintiff's interests is not necessarily
sufficient to demonstrate that Congress intended to foreclose
a § 1983 remedy. Rather the statutory framework must be
such that ‘allowing a plaintiff’ to bring a § 1983 action
‘would be inconsistent with Congress carefully tailored
A62
scheme. " Golden State Transit Corp. v. City of Los
Angeles, 493 U.S. at 106-07 (citations omitted).
The "sufficiently comprehensive" test is
rarely met. As the Wilder court noted,
[o]n only two occasions have we found a
remedial scheme established by Congress
sufficient to displace the remedy provided in
§ 1983. In Sea Clammers, we held that the
comprehensive enforcement scheme found in
the Federal Water Pollution Control Act --
which granted the Environmental Protection
Agency considerable enforcement power
through the use of noncompliance orders,
civil suits and criminal penalties, and which
included two citizen suit provisions --
evidenced a congressional intent to foreclose
reliance on § 1983.... Similarly, in Smith v.
Robinson, we held that the elaborate
administrative scheme set forth in the
Education of the Handicapped Act manifested
Congress' desire to foreclosure private
reliance on § 1983 as a remedy. The EHA
contained a carefully tailored administrative
and judicial mechanism that included local
administrative review and culminated in a -
right to judicial review.
Wilder v. Virginia Hospital Assn., 110 S.Ct. 2523-24
(citations omitted).
A63
The Wilder court concluded that the
administrative scheme established pursuant to the Boren
Amendment to the Medicaid Act could not be considered
sufficiently comprehensive to demonstrate a congressional
intent to withdraw the private remedy of § 1983, noting
that, “[i]n Wright, we concluded that the ‘generalized
powers of HUD to audit and cut off federal funds were
insufficient to foreclose reliance on § 1983 to vindicate
federal rights. We noted that HUD did not exercise its
auditing power frequently and the statute did not require,
nor did HUD provide, any mechanism for individuals to
bring problems to the attention of HUD." Wilder v.
Virginia Hospital Assn., 110 S.Ct. at 2523.
This Court must now determine whether the
administrative enforcement scheme of § 5310 is "sufficiently
comprehensive", such that allowing a § 1983 action would
be inconsistent with Congress' carefully tailored
enforcement scheme."
'* In dicta, the Suter court determined that other sections
of the AACWA provide enforcement mechanisms for the
"reasonable efforts" clause of the Act, and suggested that
even a non-comprehensive statutory enforcement scheme
might preclude a § 1983 right of action: "[w]hile the
[AACWA's] statutory provisions may not provide a
comprehensive enforcement mechanism so as to manifest
Congress’ intent to foreclose remedies under § 1983, they
do show that the absence of a remedy to private plaintiffs
under § 1983 does not make the reasonable efforts clause a
dead letter." Suter v. Artist M., 112 S.Ct. at 1368-69. See
(continued. ..)
A6é4
b. Th xistin Framework
Appli 42 1
Nowhere is the HCDA did Congress
explicitly foreclose § 1983 enforcement of § 5310. The
Court will therefore seek to determine whether Congress
implicitly foreclosed § 1983 enforcement of § 5310.
As an initial matter, it is helpful to view
§ 5310 as establishing two mechanisms in the context of
Title I of the HCDA: (1) the predetermination of a
prevailing wage and (2) the enforcement of a contractor's
obligation to pay that wage. While it may be that allowing
a § 1983 right of action to challenge the Secretary's
predetermination of a prevailing wage rate would upset
4 (...continued)
also, id. at 1377 (Blackmun, J., dissenting) ("[the Court]
has contravened 22 years of precedent by suggesting that the
existence of other ‘enforcement mechanisms precludes
§ 1983 enforcement"). However, because the Suter court
found that the AACWA did not create an enforceable right,
the Court did not reach the issue of whether a statutory
enforcement scheme that could be characterized as non-
comprehensive would preclude a right of action under
§ 1983. Id at 1368 n.11. Therefore this Court will
continue to follow the precedent of Wilder and its
predecessors in finding that only a "comprehensive"
statutory scheme will preclude a § 1983 right of action.
A65
Congress' carefully tailored scheme in enacting § 5310,'°
the same cannot be said of a § 1983 right of action seeking
to enforce a contractor's obligation to pay the predetermined
wage.
In analyzing the Davis-Bacon Act, as
amended, the Supreme Court found that it represented a
balancing between the interests of laborers and of
contractors. The contractor's interest lies in being able to
"know definitely in advance of submitting his bid what his
approximate labor costs will be," while the laborers’ interest
lies in protecting local wage standards. Universities
Research Assn. v. Coutu, 450 U.S. at 773, 775, 782.
There is no reason to believe that the interests Congress
sought to balance in enacting § 5310 are any different.
In the instant case, the predetermination of
prevailing wage rates by the Secretary of Labor provided
CPC with certainty when preparing its bid. Plaintiffs do not
challenge the Secretary's determination in this regard. Any
private enforcement, pursuant to § 1983, of the contractor's
obligation to pay would not upset the contractor's interest in
having a predetermined wage rate to factor into a bid. Thus
a private right of action pursuant to § 1983 does not upset
'? Because this issue is not before the Court in the instant
action, it is not necessary to decide that matter. However,
under the Davis-Bacon Act, the correctness of the
Secretary's wage rate determination is not subject to judicial
review. Universities Research Assn. v. Coutu, 450 U.S. at
761 n.10 (citing United States v. Binghamton Constr 7
347 U.S. 171, 177 (1954)).
A€66
the balance of Congress' "carefully tailored scheme" that is
at the heart of § 5310.
Defendants point to the finding of the
Supreme Court in Universiti
450 U.S. at 783, that, "[t]he implication of a private right
of action here would undercut as well the elaborate
administrative scheme promulgated pursuant to
Reorganization Pian No. 14." The issue in Coutu, however,
was whether the Davis-Bacon Act conferred a private right
of action on an employee under a contract that had been
predetermined by the Secretary of Labor not to call for
Davis-Bacon work. Thus the employee in Coutu was
challenging a predetermination ruling by the Secretary of
Labor concerning whether a contract is covered by Davis-
Bacon. If contractors had to worry that such
predetermination rulings might be upset in judicial post-
contract coverage rulings, the benefit of a predetermination
ruling would be largely lost, i.e., contractors would not be
able to accurately forecast their labor costs. It was this
need for consistency, in determining which contracts are
covered under Davis-Bacon and which are not, that the
Coutu court had in mind when it concluded that,
"[w]hatever may be the merits of allowing judicial review
of these complex coverage determinations. prior to
contracting, it clearly would be inappropriate for a court to
substitute its judgment for that of a contracting agency in a
private action brought after the contract was let." Id. at
784. This conclusion is not, however, applicable in a
situation, such as is presented in the instant case, where
coverage is not in dispute and employees merely seek to
A67
enforce that which was already predetermined: that § 5310
applies to the contract.
Defendants assert that allowing § 1983 right
of action would contravene the purpose of the
Reorganization Plan, as incorporated into § 5310, which is
to "assure coordination of administration and consistency of
enforcement of the labor standards." (emphasis added)
However, as the President's transmittal message makes
clear, this "consistency of enforcement" refers to a
consistent approach to enforcement across government
agencies, and thus would not preclude private enforcement:
the Federal agencies involved in the
administration of the various acts [including
the Davis-Bacon Act] are divided into two
classes: (1) agencies which contract for
Federal public works or construction; and (2)
agencies which lend or grant Federal funds
. . to aid in the construction of projects to
be built by State or local public agencies or
private individuals and groups. The methods
of enforcing labor standards necessarily differ
between these two groups of agencies.
The methods adopted by the various agencies
for nfor f r rds v
widely in char ffectiven
result, uniformity of enforcement is lacking
f ion aff work
varies from agency to agency.
A68
In order to correct this situation, this plan
authorizes the Secretary of Labor to
coordinate the administration of legislation
relating to wages and hours on federally
financed or assisted projects by prescribing
standards, regulations and procedures to
govern the enforcement activities of the
various federal agencies and by making such
investigations as he deems desirable to assure
consistent enforcement.
Reorganization Plan Number 14 of 1950, Message of the
President, 5 U.S.C. App. (emphasis added). Thus, the
Reorganization Plan was designed to remedy inconsistent
application of federal labor standards by federal
administrative agencies. This congressional and presidential
interest in a uniform approach to enforcement by federal
agencies would not be undermined by a § 1983 right of
action. Certainly there is no evidence that Congress or the
President even considered private enforcement when they
placed the “consistency of enforcement" language in the
Reorganization Plan.
Furthermore, it cannct be said that the
administrative enforcement scheme established pursuant to
§ 5310 is "sufficiently comprehensive" to preclude a § 1983
right of action. Unlike the comprehensive enforcement
schemes in Sea Clammers and Smith v. Robinson, neither
§ 5310 nor the Reorganization Plan contain provisions for
private judicial remedies. The federal regulation which
establishes a procedure for the resolution of disputes
concerning payment of wages under the Reorganization
A69
Plan, 29 C.F.R. § 5.11(a), does not allow an employee to
initiate such a procedure.’ Only after a ruling on a wage
dispute by the Administrator of the Department of Labor's
Wage and Hour Division or an ALJ does an employee have
an Opportunity to initiate an action: he or she may appeal
the ruling to the Wage Appeals Board, pursuant to 29
C.F.R. § 7.1 et seq.. There is, however, no right to
judicial review of the Wage Appeals Board decision, except
for procedural appeals under the Administrative Procedure
Act. Although these opportunities for employees to enforce
wage determinations are significant, they do not rise to the
level of being "sufficiently comprehensive."
Finally, defendants’ well-researched history
of the Davis-Bacon Act and the various congressional efforts
to amend the Davis-Bacon Act, in order to explicitly provide
private judicial remedies, does not persuade the Court that
Congress intended to preclude § 1983 actions under § 5310.
‘© 29 C.F.R. § 5.11(a) provides that:
This section sets forth the procedure for
resolution of disputes of fact or law
concerning payment of prevailing wage
rates, overtime pay or proper classification.
The_procedur 7 in this section may a
initiat ministrator'
motion, nyse ee f
Federal agency... . . or on request of
the contractor or subcontractor(s).
(emphasis added).
Although the congressional reasons for enacting § 5310
undoubtedly mirror, in large part, the rationale behind the
Davis-Bacon Act, as amended, it is important to keep in
mind that there are fundamental differences between the two
laws. Of greatest significance, the Davis-Bacon Act
regulates contracts to which the federal government is a
party and therefore there can be no § 1983 state action
remedy. Thus, on the numerous occasions when Congress
considered, and ultimately rejected, the creation of a private
right of action under the Davis-Bacon Act, Congress could
not have had in mind the preclusion of a § 1983 remedy, as
no such remedy was then (or is now) available under the
Davis-Bacon Act. Section 5310, in contrast, regulates
contracts between a state or local government unit and
contractor, and thus there may be state action for purposes
of a § 1983 action. For this reason, the legislative history
of the Davis-Bacon Act cannot be seen as demonstrating
congressional intent to preclude a § 1983 remedy under
§ 5310. Finally, there is absolutely no evidence in the
legislative history of the HCDA itself that Congress sought
to foreclose a § 1983 remedy under § 5310.
Defendants have not demonstrated that: (a)
the § 5310 administrative enforcement scheme is sufficiently
comprehensive; (b) a § 1983 remedy would skew a carefully
tailored enforcement scheme; or (c) there is any evidence in
the text or legislative history of the HCDA of congressional
intent to preclude a § 1983 action under § 5310. For these
reasons, this Court finds that defendants have not met their
heavy burden of proving that Congress intended to foreclose
§ 1983 enforcement of § 5319.
D. Plaintiff's Implied Private Right of Action Claim
1. The Existing Framework
"[T]he fact that a federal statute has been
violated and some person harmed does not automatically
give rise to a private cause of action in favor of that
person." Cannon v. University of Chicago, 441 U.S. 677,
688 (1979). Rather courts must determine whether a federal
Statute creates an implied private right of action by applying
the four-factor analysis of Cort v. Ash, 422 U.S. 66 (1975),
which asks: (1) is plaintiff one of the class for whose
especial benefit the statute was created?; (2) is there any
indication of legislative intent, explicit or implicit, either to
create such a remedy or to deny one?; (3) is it consistent
with the underlying purposes of the legislative scheme to
imply such remedy?; and (4) is the cause of action one
traditionally relegated to state law, so that it would be
inappropriate to infer a cause of action based solely on
federal law?
The implied private right of action analysis
under Cort, although related, is distinctly different from the
§ 1983 analysis discussed supra. As the Supreme Court
recently wrote:
The [four factored Cort] test reflects a
concern, grounded in separation of powers,
that Congress rather than the courts controls
the availability of remedies for violations of
Statutes. Because § 1983 provides an
"alternative source of express congressional
authorization of private suits," these
separation of powers concerns are not present
in a § 1983 case. Consistent with this view,
we recognize an exception to the general rule
that § 1983 provides a remedy for violation
of federal statutory rights only when
Congress has affirmatively withdrawn the
remedy.
Wilder v. Virginia Hospital Association, 110 S.Ct. at 2517,
n.9 (citations omitted).
While courts continue to apply Cort's four
factors, it is the second factor, legislative intent, that is the
primary focus in determining whether there is an implied
private right of action.'? Thompson v. Thompson, 484 U.S.
174, 179 (1988); Transamerica Mortage Advisors, Inc. v.
Lewis, 444 U.S. 11, 18 (1979); Touche R .
Redington, 442 U.S. 560, 575-76 (1979); Saltzman v. Farm
Credit Services, 950 F.2d 466, 467-68 (7th Cir. 1991).
Legislative intent may be found in the language or structure
‘7 Justice Scalia argues that the Supreme Court has
“effectively overruled" the four-factor Cort analysis in
Touche Ross & Co. v. Redington, 442 U.S. 560, 575-76
(1979) and in Transamerica Mortgage Advisors, Inc. v.
Lewis, 444 U.S. 11, 18 (1979), thereby converting Cort's
second factor (i.e. congressional intent) into "the
determinative factor", with the other three merely indicative
of the presence or absence of such intent. Thompson v.
Thompson, 484 U.S. 174, 188-89 (1988) (Scalia, J.,
concurring) (emphasis in original).
A73
of the statute or in some other source. Thompson v.
Thompson, 484 U.S. at 179 (citing Northwest Airlines, Inc.
v. Transport Workers, 451 U.S. 77, 94 (1981)). This
inquiry requires "a very close, even mocroscopic,
examination of the legislative history of the particular statute
involved." Davis v. United Air Lines, 662 F.2d 120, 123
(2d Cir. 1981), cert. denied, 456 U.S. 965 (1982).
A party may show legislative intent without
having to demonstrate that Congress simply forgot to create
a private right of action:
[o]ur focus on congressional intent does not
mean that we require evidence that Members
of Congress, in enacting the statute, actually
had in mind the creation of a private cause of
action. The implied cause of action doctrine
would be a virtual dead letter were it limited
to correcting drafting errors when Congress
simply forgot to codify its evident intention to
provide a cause of action. Rather, as an
implied cause of action doctrine suggests,
"the legislative history of a statute that does
not expressly create or deny a private remedy
will typically be equally silent or ambiguous
on the question." We therefore have
recognized that Congress' "intent may appear
implicitly in the language or structure of the
statute, or in the circumstances of its
enactment."
7
Thompson v. Thompson, 484 U.S. at 179 (citations omitted)
(emphasis in original).
Courts should generally not find an implied
private right of action in a given statute when cy A has
as provers a different pemeny. lios v.
: ederal ployees, Local , 489
U.S. 527, 533 (1989) ("Itis. . .an “elemental canon" of
statutory construction that where a statute expressly provides
a remedy, courts must be especially reluctant to provide
additional remedies. In such cases, ‘in the absence of
strong indicia of contrary congressional intent, we are
compelled to conclude that Congress provided precisely the
remedies it considered appropriate. " (quoting Middlesex
County Sewerage Authority v. Sea Clammers, 453 U.S. 1,
15 (1981) (other citations omitted)). However, "[t]he fact
that other provisions of a complex statutory scheme create
express remedies has not been accepted as a sufficient
reason for refusing to imply an otherwise appropriate
remedy under a separate section." Cannon v. University of
Chicago, 441 U.S. 677, 711 (1979).
, a istin mew li 4
U.S.C, § 5310
In determining whether § 5310 creates an
implied private right of action, it is the second Cort factor.
legislative intent, which will be this Court's primary focus. '®
'8 For the reasons stated in Section C.2.b., supra, the
Court finds that plaintiffs were one of the class for whose
(continued...)
As discussed above, courts generally should not find an
implied private right of action in a given statute when
Congress has expressly provided a different remedy in that
same part of the statute. Karahalios v. National Federation
of Federal Employees, Local 1263, 489 U.S. at 533.
Thus, while there is "an exception to the general rule that
§ 1983 provides a remedy for violation of federal statutory
rights only when Congress has affirmatively withdrawn the
remedy," Wilder v. Virginia Hospital Association, 110
S.Ct. at 2517 n.9, the presumption in implied private right
of action lawsuits is drawn in precisely the opposite
direction: when Congress has expressly provided other
remedies in connection with a particular section of a statute,
no other remedies are to be implied "in the absence of
strong indicia of contrary congressional intent." Karahalios
v. National Federation of Federal Employees, Local 1263,
489 US. at 533.
Congress has already created other tools for
enforcement of § 5310. The Reorganization Plan provides
for an administrative enforcement mechanism. This Court
has found that laborers and mechanics have a § 1983 right
of action. Because Congress has created these remedies and
there is no strong indication that Congress intended to create
additional remedies, this Court finds that no implied private
right of action exists under § 5310.
CONCLUSION
‘8 (...continued)
especial benefit § 5310 was created. Thus, the first prong
of the Cort test favors plaintiffs in the instant action.
A76
For the foregoing reasons, defendants’
motions to dismiss pursuant to Rule 12(b)(6), Fed. R. Civ.
P., are denied with respect to plaintiff's claims brought
under 42 U.S.C. § 1983 and granted with respect to those
claims brought pursuant to an asserted implied private right
of action under 42 U.S.C. § 5310. In addition, that part of
municipal defendants' motion brought pursuant to Rule
12(b)(1), Fed. R. Civ. P. is denied.’ The magistrate
‘9 Municipal defendants paint a doomsday scenario if their
motion is not granted and this Court finds a § 1983 remedy,
asserting that this would "generate thousands of new cases
for the already overburdened federal courts," that "[p]ublic
contracting where Davis-Bacon was applicable would likely
become impossible," and that "many municipalities would
decline to accept HCDA money and, thus, . . . the
purposes for which HCDA was designed would no longer be
served." Memorandum of Law in Support of Municipal
Defendant's Motion to Dismiss the Complaint at 122-23.
While municipal defendants' dire predictions may or may
not prove to be correct, it is not the function of this Court
to play prognosticator, nor to deny a meritorious claim
because it might invite other claims which would piace a
potentially heavy financial burden on municipalities. As
discussed above, the Court finds that the elements necessary
to establish a § 1983 right of action are present in § 5310.
Furthermore, this decision relies on the specific language of
§ 5310, which differs, in important respects, from the
language of the Davis-Bacon Act, as well as many of the
other statutory provisions that refer to the wage-setting
standards of the Davis-Bacon Act, such as 42 U.S.C.
(continued. ..)
judge's findings and recommendations are modified in
accordance with this opinion.
Inasmuch as the Court declines the municipal
defendants’ request to certify this case for an interlocutory
appeal pursuant to 28 U.S.C. § 1292(b), the parties are
directed to complete discovery by August 28, 1992 and to
file a joint pre-trial order by September 25, 1992.
It is so ordered.
Dated: New York, New York
June 5, 1992
U.S.D.J.
19 (...continued)
§ 1437j and 33 U.S.C. § 1372. Thus this opinion is quite
limited in its scope. Certainly if municipal defendants’
parade of horribles does come to pass, Congress is free to
prohibit a § 1983 right of action under § 5310 or any other
Statute.
OPINION AND ORDER OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN DISTRICT
OF NEW YORK, 90 Civ. 5653 (RJW), DATED
SEPTEMBER 8, 1992
KAM SHING CHAN, KAM TAI CHAN, JING YI
CHEN. SHAN NON CHIU, BAK LOK CHU, KOK KUN
CHU, ISRAEL GONZALEZ, SUI BIN HUANG, JIAN
NING JIANG, KAM FAI KWOK, MOON SHUEN
KWONG. WEI XIANG LEE, YANG I LEE, YOUNG
SHI LEE, BING ZHAO LI, HAO HUI LI, KEI MAN LI,
WAI TAI LI, CHI KWONG LIU, JACK YE LOUIE,
SHENG HUA LU, TING GUANG MAI, CHEUK MING
NG. KIN CHUNG NG, KIN HIN NG, SHUN GUO
SHEN. TEN JEN SHEN, HAU WING SIN, VEIN DINH
SINTRUONG, WING SHING TSE, WAI MAN WAN,
KONG HTYAN WU, XU MING WU, GUO XUAN,
YUE NAM ZHU,
Plaintiffs,
- against -
CITY OF NEW YORK, DEPARTMENT OF HOUSING
PRESERVATION AND DEVELOPMENT OF THE CITY
OF NEW YORK, and CHINESE-AMERICAN
PLANNING COUNSEL, INC.,
Defendants.
OPINION
(This page intentionally left blank)
APPEARANCES
ELLEN DICHNER
JAMES REIF
Gladstein, Reif & Meginniss
361 Broadway
New York, New York 10013
MICHAEL SHEN
Shneyer & Shen
250 West 100th Street
New York, New York 10025
Asian American Legal Defense
and Education Fund
99 Hudson Street
New York, New York 10013
Attorneys for Plaintiffs
A80
O. PETER SHERWOOD
Corporation Counsel of the City of
New York
100 Church Street
New York, New York 10007
BETH PERITZ
GOODWIN E. BENJAMIN
JOHN P. WOODS
Of Counsel
Attorney for Defendants City of New York
and Department of Housing Preservation
Development of the City of New York
JAY W. WAKS
PETER A. WALKER
Kaye, Scholer, Fierman, Hays & Handler
425 Park Avenue
New York, New York 10022 ©
JAY S. BERKE
NICHOLAS J, PAPAS
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Attorney for Defendant
Chinese-American Planning Council, Inc.
WARD, District Judge.
A8l
and
Defendants City of New York ("the City")
and the Department of Housing Preservation and
Development of the City of New York (collectively
"municipal defendants") and Chinese-American Planning
Counsel, Inc. ("CPC") have each moved, pursuant to Local
Civil Rule 3(J), USDC, SDNY, for reargument of that
portion of this Court's Opinion and Order dated June 5,
1992 (the "June 5, 1992 Opinion and Order") in which the
Court “decline[d] the municipal defendants' request to
certify this case for an interlocutory appeal pursuant to 28
U.S.C. § 1292(b)". Kam Shing Chan and the other
plaintiffs (collectively "plaintiffs") oppose the instant
motions. For the reasons that follow, the Court: (1) deems
defendants' motions for reargument to be motions to modify
the June 5, 1992 Opinion and Order; and (2) grants these
motions, thereby certifying this case for an interlocutory
appeal pursuant to 28 U.S.C. § 1292(b). In all other
respects, the Court adheres to its June 5, 1992 Opinion and
Order.
BACKGROUND
The relevant background to the underlying
action is contained in the June 5, 1992 Opinion and Order
at 3-6.
On June 3, 1992, approximately one month
after oral argument on defendants' motions to dismiss and
two days before the Court issued its opinion on those
motions, municipal defendants submitted a short letter,
containing little supporting authority, to the Court seeking
certification of an interlocutory appeal pursuant to 28
A82
U.S.C. § 1292(b). Prior to issuance of the June 5, 1992
Opinion and Order, no other party made any submissions on
this subject to the Court. In its June 5, 1992 Opinion and
Order, this Court declined to certify the case for
interlocutory appeal, and the instant motions followed.
DISCUSSION
A. Defendants’ Motions fi men
A party may move for reargument pursuant
to Local Civil Rule 3(j) only upon an assertion that "the
court has overlooked matters or controlling decisions’
which, had they been considered, might reasonably have
altered the result reached by the court." Adams v. United
States, 686 F. Supp. 417, 418 (S.D.N.Y. 1988) (quoting
Local Civil Rule 3(j), USDC, SDNY), quoted in
Schonberger v. Serchuk, 742 F. Supp. 108, 119 (S.D.N.Y.
1990).
In addition, "a party making a motion for
reargument may not, under [Local] Civil Rule 3(j), advance
new facts, issues or arguments not previously presented to
the Court." Schonberger v. Serchuk, 742 F. Supp. at 119.
In light of the fact that neither CPC nor
plaintiffs briefed the § 1292(b) certification issue prior to
issuance of the June 5, 1992 Opinion and Order, and that
municipal defendants letter seeking certification cited little
authority in support of municipal defendants ' position, it is
clear that, in the context of the instant motions for
reargument, each of which presents a great deal of
A83
supporting authority, all parties are "advancling] new facts,
issues or arguments not previously presented to the Court."
Accordingly, this Court would be compelled to deny
defendants’ motions for reargument pursuant to Local Civil
Rule 3(j).
However, because the issues concerning
§ 1292(b) certification have only now been fully briefed, in
the context of defendants’ motions for reargument, it is
appropriate to treat these issues as before the Court for the
first time. For this reason, the Court deems the instant
motions to be motions to modify the June 5, 1992 Opinion
and Order. Accordingly, the Court now turns to the merits
of the parties’ arguments.
B. Certification of an Interlocutory Appeal Pursuant
1292
Defendants seek an interlocutory appeal
pursuant to 28 U.S.C. § 1292(b), which provides, in
relevant part, that
[w]hen a district judge, in making in a civil
action an order not otherwise appealable
under [section 1292], shall be of the opinion
that such order [(1)] involves a controlling
question of law [(2)] as to which there
, | for diff t onini
is j n
and that [(3)] an immediate appeal from the
order may materially advance the ultimate
termination of the litigation, he shall so state
in writing in such order. The Court of
A84
Appeals . . . may thereupon, in its
discretion, permit an appeal to be taken from
such order, if application is made to it within
ten days after the entry of the order.
(emphasis added). The Second Circuit recently has
"urged[d] the district courts to exercise great care in making
a § 1292 (b) certification[, because] the district courts are
presumed to be more familiar with a case than is the court
of appeals prior to briefing and argument." Westwood
Ph icals Inc. v istri , 964
F.2d 85, 89 (2d Cir. 1992). Furthermore, only "exceptional
circumstances [will] justify a departure from the basic policy
of postponing appellate review until after the entry of a final
judgment." Coopers & Lybrand v. Livesay, 437 U.S. 463,
475 (1978), quoted in Klinghoffer v. S.N.C. Achille Lauro,
921 F.2d 21, 25 (2d Cir. 1990). With these general
admonitions in mind, the Court now turns to the three-
pronged test of § 1292(b) to ascertain whether the
exceptional circumstances of this case suggest that
certification is appropriate.
a Is ther ntrollin ion of Law?
There can be little doubt that the issues
defendants seek to appeal, concerning whether plaintiffs
have a right of action pursuant to 42 U.S.C. § 1983,
"importantly affect the conduct of [this] action," see In re
Duplan Corp., 591 F.2d 139, 148 n.11 (2d Cir. 1978) and
the sources cited therein. As defendants have correctly
noted, if the Court of Appeals determines that plaintiffs have
no § 1983 right of action, this Court may be compelled to
dismiss plaintiff's other claims as well, either under a theory
of preemption or because the only remaining claims would
be pendent state claims. Thus, a ruling by the Court of
Appeals in favor of defendants could result in dismissal of
this lawsuit.
Plaintiffs assert that the precedential value of
the June 5, 1992 Opinion and Order and any appellate
review will be limited. The Court agrees with plaintiffs on
this point. See June 5, 1992 Opinion and Order at 44-45,
n.19. However, it is not necessary for the resolution of a
question to be of great precedential value in order for that
question to be "controlling." Klinghoffer v. S.N.C. Achille
Lauro, 921 F.2d at 24.
For these reasons, the Court finds that its
June 5, 1992 Opinion and Order does involve a controlling
question of law.
, & I her ntial round _for
Differen f inion?
The issues addressed in the June 5, 1992
Opinion and Order involved matters that were both difficult
and of first impression. See Klinghoffer v. S.N.C. Achille
Lauro, 921 F.2d at 25 (noting with approval the district
court's conclusion that, when the issues before the district
court on a motion for certification pursuant to 28 U.S.C.
§ 1292(b) were “difficult and of first impression," there
were “substantial grounds for difference of opinion").
Although this Court found that there is a § 1983 right of
action under 42 U.S.C. § 5310, the conclusions reached by
A86
the Court were by no means the only reasonable conclusions
an impartial arbiter could reach. The Court was presented
with two close questions concerning whether Congress
intended to (1) create a "right" under § 5310 and (2)
foreclose § 1983 enforcement of § 5310. The Court
obviously believes it answered these questions correctly.
However, primarily because there was no explicit indication
in the text of § 5310 or in its legislative history to guide an
arbiter in answering these questions, the Court cannot say
that there is no "substantial ground for difference of
opinion." Accordingly, defendants have met the second
prong of the § 1292 (b) test.
3. Might an Immediate Appeal from the
Termination of the Litieation?
If defendants are successful on appeal and the
Second Circuit dismisses the § 1983 claims, there is a
substantial likelihood that the amount of discovery and
corresponding district court time will be reduced
dramatically, perhaps even entirely. Given the number of
plaintiffs already involved in this litigation, and their
pending motion for class certification, there is a significant
amount of discovery to be conducted simply to determine
the extent of each plaintiff's participation in CPC's training
programs. The fact that plaintiffs seek class certification
and that certain aspects of discovery involve translations
from Chinese to English adds an additional level of
complexity to this action. For these reasons, a successful
appeal by defendants would materially advance the ultimate
A87
termination of the litigation and would, in all likelihood,
preserve scarce resources of the parties and the judiciary.
CONCLUSION
Defendant's motions for reargument pursuant
to Local Civil Rule 3(j), USDC, SDNY are deemed by this
Court to be motions to modify the June 5, 1992 Opinion and
Order. For the reasons stated supra, this Court finds that
the June 5, 1992 Opinion and Order involves a controlling
question of law as to which there is substantial ground for
difference of opinion and that an immediate appeal from the
opinion and order may materially advance the ultimate
termination of the instant litigation. Except to the extent
indicated above, nothing in this opinion and order shall be
construed to modify the June 5, 1992 Opinion and Order.
It is so ordered.
Dated: New York, New York
September 8, 1992
U.S.D.J.
A88
No. 90 Civ. 5653 (RJW)
ORDER OF THE UNITED STATES
DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK, DATED JANUARY 4, 1993
GRANTING CERTIFICATION PURSUANT TO F.R. Civ.
P. 54(b)
KAM SHING CHAN, KAM TAI CHAN, JING YI
CHEN, SHAN NON CHIU, BAK LOK CHU, KOK
KUN CHU, ISRAEL GONZALEZ, SUI BIN
HUANG, JIAN NING JIANG, KAM FAI KWOK,
MOON SHUEN KWONG, WEI ZIANG LEE,
YANG I LEE, YOUNG SHI LEE, BING ZHAO LI,
HAO HUI LI, KEI MAN LI, WAI TAI LI, CHI
KWONG LIU, JACK YE LOUIE, SHENG HUA
LU, TING GUANG MAI, CHEUK MING NG, KIN
CHUNG NG, KIN HIN NG, SHUN GUO SHEN,
TEN JEN SHEN, HAU WING SIN, VEIN DINH
SINTRUONG, WING SHING TSE, WAI MAN
WAN, KONG HTYAN WU, XU MING WU, GUO
XUAN, YUE NAM ZHU,
Plaintiffs,
- against -
CITY OF NEW YORK, DEPARTMENT OF
HOUSING PRESERVATION AND
DEVELOPMENT OF THE CITY OF NEW YORK,
and CHINESE-AMERICAN PLANNING
COUNCIL, INC.,
Defendants.
A89
Plaintiffs allege that defendant Chinese-American
Planning Council, Inc. ("CPC") unlawfully failed to pay
them wages at not less than prevailing wage rates as
determined by the United States Secretary of Labor, and that
defendants City of New York and Department of Housing
Preservation and Development ("HPD") caused this failure.
Plaintiffs assert causes of action under 42 U.S.C. § 1983,
42 U.S.C. § 5310, contracts between CPC and HPD, New
York Labor Law § 198 and New York common Law.
All defendants moved pursuant to F.R. Civ. P. 12
to dismiss the federal statutory claims. By decision dated
June 5, 1992, this Court granted the motions in part and
denied them in part. The motions to dismiss the claims
brought under § 5310 were granted; the motions to dismiss
those claims asserted under § 1983 were denied. The Court
held that § 5310 does not create an implied cause of action
to remedy violations of that statute and, hence, that plaintiffs
had failed to state a claim under § 5310 upon which relief
might be granted. On the other hand, the Court held that
§ 1983 does provide plaintiffs with a cause of action to
remedy the violation: of § 5310 alleged and that the
circumstances alleged, if proven, would establish action by
CPC under color of state law."
! This Court has made no order with respect to the
sufficiency of any of plaintiffs’ causes of action other than
their federal statutory claims, and no motions pertaining to
these other claims are pending.
A90
Defendants thereafter moved pursuant to 28 U.S.C.
1292(b) to certify for interlocutory appeal that part of the
Court's order denying the motions to dismiss the § 1983
claims. By decision dated September 8, 1992, said motions
were granted. Defendants then moved for leave from the
Court of Appeals to take such interlocutory appeals. By
orders dated November 10, 1992, the Court of Appeals
granted said motions for permission to appeal.
Defendants have now requested that, pursuant to
F.R. Civ. P. 54(b), this Court direct entry of a final
judgment as to the claims brought directly under § 5310.
Plaintiffs have expressly consented to such a final judgment.
After due consideration of the matter, this Court
hereby directs entry of a final judgment as to plaintiffs’
causes of action brought pursuant to § 5310. In the
circumstances presented, there is no just reason for delaying
the Court of Appeals’ consideration of the § 5310 claims.
To the contrary, the interests in sound judicial
administration and efficiency will be served thereby.”
The questions (a) whether § 1983 expressly creates
a cause of action to enforce § 5310 and (b) whether § 5310
implicitly creates a cause of action to enforce § 5310 are not
the same. Nevertheless, the respective analyses necessary
to resolve these two legal questions are related, at least in
This order is predicated on the assumption that entry of
such a final judgment will not unduly delay consideration
and disposition of the pending appeals on the § 1983 claims.
A9]
part, and parallel each other. It would be most sensible to
enable the Court of Appeals to consider these questions at
the same time. As noted, that Court has already accepted
for interlocutory review defendants' appeal from that portion
of the June 5 order denying the motions to dismiss the
§ 1983 claims. Entry of a final judgment as to that portion
of the June 5 order granting the motions to dismiss the
§ 5310 causes of action will permit an immediate appeal
from the latter order. Staff Counsel for the Court of
Appeals has advised that an appeal on the § 5310 claims will
be consolidated with the already pending appeal on the
§ 1983 claims and that the latter appeal will be delayed only
approximately two weeks as a consequence. In these
circumstances, the interests in efficiency and sound judicial
administration strongly support entry of a final judgment as
to that portion of the June 5 order granting the motions to
dismiss the § 5310 claims.
Accordingly, it is so ordered.
DATED: NEW YORK, NEW YORK
January 4, 1993
U.S.D.J.
A92
90 Civ. 5653 (RJW)
FINAL JUDGMENT OF THE
UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK ENTERED
JANUARY 11, 1993, DISMISSING IMPLIED RIGHT OF
ACTION CLAIMS
ne Xx
KAM SHING CHAN, KAM TAI CHAN, JING YI
CHEN, SHAN NON CHIU, BAK LOK CHU, KOK
KUN CHU, ISRAEL GONZALEZ, SUI BIN
HUANG, JIAN NING JIANG, KAM FAI KWOK,
MOON SHUEN KWONG, WEI ZIANG LEE,
YANG I LEE, YOUNG SHI LEE, BING ZHAO LI,
HAO HUI LI, KEI MAN LI, WAI TAI LI; CHI
KWONG LIU, JACK YE LOUIE, SHENG HUA
LU, TING GUANG MAI, CHEUK MING NG, KIN
CHUNG NG, KIN HIN NG, SHUN GUO SHEN,
TEN JEN SHEN, HAU WING SIN, VEIN DINH
SINTRUONG, WING SHING TSE, WAI MAN
WAN, KONG HTYAN WU, XU MING WU, GUO
XUAN, YUE NAM ZHU,
Plaintiffs
- against -
CITY OF NEW YORK, DEPARTMENT OF
HOUSING PRESERVATION AND
DEVELOPMENT OF THE CITY OF NEW YORK,
and CHINESE-AMERICAN PLANNING
COUNCIL, INC.,
Defendants.
weeeeaweoeosowooooosoooocan eeeeesoooeocoeeooeoocooonn x
All defendants having moved pursuant to F.R.
Civ.P. 12 to dismiss the federal statutory claims, and the
said motions having come before the Honorable ROBERT
J. WARD, U.S.D.J., thereafter the Court having granted in
part and denied them in part by decision dated June 5, 1992,
defendant having requested that, pursuant to F.R. Civ.P.
54(b), the Court directs entry of a final judgment as to the
claims brought directly under Section 5310, and the Court
thereafter on January 5, 1993, having handed down its
certification pursuant to F.R.Civ.P. 54(b); directing entry of
a final judgment as to plaintiff's causes of action brought
pursuant to Section 5310, and in the circumstances
presented, there is no just reason for delaying the Court of
Appeals’ consideration of the Section 5310 claims, and
entering final judgment as to that portion of the June 5 order
granting the motions to dismiss the Section 5310 claims, it
is,
ORDERED, ADJUDGED AND
DECREED: That defendants’ motions to dismiss the
federal statutory claims be and they are hereby granted in
part and denied in part, and it is further,
A94
ORDERED, that plaintiffs' claims brought
under 42 U.S.C. Section 5310 be and they are hereby
dismissed pursuant to the Court's decision dated June 5,
1992.
DATED: NEW YORK, NEW YORK
January 11, 1993
Clerk
A95
REPORT AND RECOMMENDATION OF
MAGISTRATE JUDGE FRANCIS, DATED JANUARY
6, 1992
KAM SHING CHAN, KAM TAI CHAN, JING YI
CHEN, SHAN NON CHIU, BAK LOK CHU, KOK
KUN CHU, ISRAEL GONZALEZ, SUI BIN HUANG,
JIAN NING JIANG, KAM FAI KWOK, MOON
SHUEN KWONG, WEI XIANG LEE, YANG I, LEE,
YOUNG SHI LEE, BING ZHAO LI, HAO HUI LI,
KEI MAN LI, WAI TAI LI, CHI KWONG LIU, JACK
YE LOUIE, SHENG HUA LU, TING GUANG MAI,
CHEUK MING NG, KIN CHUNG NG, KIN HIN NG,
SHUN GAO SHEN, TEN JEN SHEN, HAU WING
SIN, VEIN DINH SINTRUOG, WING SHING TSE,
WAI MAN WAN, KONG HTYAN WU, XU MING
WU, GUO XUAN, YE NAM ZHU,
Plaintiffs,
- against -
THE CITY OF NEW YORK, THE DEPARTMENT OF
HOUSING PRESERVATION AND DEVELOPMENT
OF THE CITY OF NEW YORK, and CHINESE-
AMERICAN PLANNING COUNCIL, INC.,
Defendants.
REPORT AND RECOMMENDATION
A96
(This page intentionally left blank)
TO THE HONORABLE ROBERT J. WARD, U.S.D.J.:
In this action, Kam Shing Chan and the other
plaintiffs (collectively referred to as "Chan") seek to recover
backwages that they claim are due them under 42 U.S.C. §
5310 and applicable contracts, together with liquidated
damages and attorneys' fees, from defendants City of New
York ("City"), the Department of Housing Preservation and
Development of the City of New York ("HPD")
(collectively, the "municipal defendants") and the Chinese-
American Planning Council, Inc. ("CPC"). The defendants
now move to dismiss pursuant to Rules 12(b)(1) and
12(b)(6) of the Federal Rules of Civil Procedure, arguing
that § 5310 does not give rise either to a cause of action
under 42 U.S.C. § 1983 nor to an implied private right of
action. For the reasons that follow, I recommend that the
motion be granted.
Backgroun r hem
Plaintiffs are laborers that defendant CPC
employed under a contract with the municipal
defendants. The Housing and Community Development Act
of 1974 ("HCDA"), 42 U.S.C. § 5301 et seg., supplied the
federal funds for construction carried out under this
contract. § 5310, which governed the plaintiffs' rate of
payment, provides in relevant part:
All laborers and mechanics employed by
contractors or subcontractors in the
performance of construction work financed in
whole or in part with assistance under this
A97
chapter shall be paid wages at rates not less
than those prevailing on similar construction
in the locality as determined by the Secretary
of Labor in accordance with the Davis-Bacon
Act, as amended (40 U.S.C. 276a--276-a-5
.... The Secretary of Labor shall have, with
respect to such labor standards, the authority
and functions set forth in Reorganization Plan
Numbered 14 of 1950 (15 F.R. 3176; 64
Stat. 1267) and section 276c of Title 40.
Thus, § 5310, incorporates the wage standards of the Davis-
Bacon Act (the "Act").
The Davis-Bacon Act has its origins in the
Depression. See Universities Research Association v. Coutu,
450 U.S. 754, 773-74 (1981). It was meant to guarantee
that federal construction projects would benefit local
workers by paying them at the prevalent local rate rather
than relying upon a workforce of lesser paid outsiders. Id.
The provisions of the Miller Act of August 24, 1935, 40
U.S.C. Section 270a et seq. ("Miller Act"), add to the
Davis-Bacon Act a procedure for ensuring that the local rate
will be paid. Id. at 775-77. If wages paid fall short of
those required by a contract containing Davis-Bacon Act
stipulations, the difference will be paid at completion of the
project out of a bond that the contractor is required to post
with contracting federal agencies. If the bond is not large
enough to make up this difference, the Miller Act further
provides laborers and mechanics with a private right of
action against the contractor for any backwages still due.
A98
|
|
.
|
Subsequently Congress authorized the
Secretary of Labor under the Reorganization Plan Numbered
14 of 1950 ("Reorganization Plan") to make reasonable
regulations to ensure compliance with the Davis-Bacon Act
and related statutes. See Universities Research Association
vy. Coutu, 450 U.S. at 759 & nn. 6-7; Janik Paving &
Construction, Inc. v. Brock, 828 F.2d 84, 89 (2d Cir.
1987). The regulatory regime established under the
Reorganization Plan allows contractors and laborers to
challenge the setting and application of Davis-Bacon wage
standards, 29 C.F.R. §§ 5.11, 5.13 7.1, and provides for
contractors to be debarred for up to three years from
eligibility for applicable contracts as a deterrent to the
willful violation of labor standards in federal contracting.
Id, at 91. Significantly, the Reorganization Plan does not
provide for an action by laborers for backwages claimed
under the Davis-Bacon standards.
Congress enacted the HCDA in 1974. Under
the doctrine of the “new federalism," Congress sought to
spur development by means of "block grants" to state and
municipal governments, in contrast to Depression-era
development programs administered through federal
agencies. Congress wished to guarantee that contractors on
federally funded projects under thus new arrangement would
continue to pay at the prevailing local rate, and so
incorporated in § 5310 both the Davis-Bacon wage standards
and the administrative scheme established to ensure
compliance with them. However, HCDA did not provide
the equivalent of the Miller Act provisions conferring a
private right of action for backwages on laborers and
A99
mechanics working under a contract containing Davis-Bacon
wage Stipulations.
Plaintiffs contend that CPC failed to pay
wages at the level established by the Secretary of Labor
under the Davis-Bacon Act and applicable to their
employment under § 5310. They further allege that this
failure constitutes state action under § 1983 because of the
responsibility to oversee wage determinations placed on the
municipal defendants under HCDA and because the
municipal defendants conspired with CPC. Defendants
respond that the regulations promulgated under the
Reorganization Plan lodge in the Secretary of Labor
exclusive authority for hearing disputes arising out of Davis-
Bacon wage stipulations. Defendants argue that Congress
has precluded either a § 1983 action under § 5310 or an
implied private right of action by providing a detailed
administrative scheme and by choosing to omit from § 5310
the equivalent of the private right of action for backwages
supplied by the Miller Act. However, plaintiffs state that §
5310 does not provide an administrative means for recovery
of backwages due under the Davis-Bacon standards and
argue that an implied private right of action is therefore
necessary to achieve the purposes of § 5310. To illustrate
this, plaintiffs cite the response of the Secretary of Labor to
their complaint that CPC underpaid them under the Davis-
Bacon standards. The Secretary of Labor has determined
that CPC owes its employees $2,005,791.16 in backwages
and has requested a "restitution" of this amount. (See Dep't
of Labor Letter of 2/5/91 to CPC Exec. Dir. Charles Pei
Wang, attached as App. A to Def. CPC's Reply Br.)
A100
In considering a motion to dismiss, whether
for lack of subject matter jurisdiction pursuant to Rule
12(b)(1) of the Federal Rules of Civil Procedure, or for
failure to state a claim upon which relief can be granted
pursuant to Rule 12(b)(6), the Court must accept the
allegations of the complaint as true. See Scheuer v.
Rhodes, 416 U.S. 232, 236 (1974); see also Bankers Trust
Co. v. Rhoades, 859 F.2d 1096, 1098 (2d Cir. 1988), cert.
denied, 440 U.S. 1007 (1989). Furthermore, the Court
should not dismiss the complaint pursuant to either Rule
12(b)(1) or Rule 12(b)(6) "'unless it appears beyond doubt
that the plaintiff can prove no set of facts in support of his
claim which would entitle him to relief.'" Id. (quoting
Conley v. Gibson, 355 U.S. 41, 45-46 (1957).
B. §1983
The plaintiffs claim that the municipal
defendants and CPC conspired to violate their rights under
§ 5310 and that § 1983 affords them a remedy. However,
a plaintiff alleging a violation of a federal statute will not be
permitted to sue under § 1983 if the statute "[does} not
create enforceable rights, privileges, or immunities within
the meaning of § 1983." Wilder v. Virginia Hosp. Ass'n,
__ US. __, 110 S.Ct. 2510, 2517 (1990) (quoting Wright
v. Roanoke Redevelopment and Housing Authority, 479
U.S. 418, 423 (1987)). In Universities Research
Association, Inc. v. Coutu, the Supreme Court determined
that the Davis-Bacon Act does not confer rights on laborers
and mechanics, but rather imposes a duty on federal
agencies to ensure that the provisions required by the Davis-
Bacon Act are included in federal contracts to which the Act
applies. 450 U.S. at 772 & n.23 (1981).
Although plaintiffs distinguish between § 5310
and the Davis-Bacon Act, there is no reason why the Coutu
analysis should not be followed here. Surely it would be
anomalous if in incorporating the Davis-Bacon standards
into the HCDA, Congress conferred rights upon laborers
and mechanics employed under § 5310 that it withheld in
enacting the Davis-Bacon Act. The language and legislative
history of § 5310 reveal a legislative intent to impose on
federal agencies the duty of ensuring that contracts include
the Davis-Bacon wage stipulations and to provide the means
to enforcement available under the Reorganization Plan
regulatory regime. Significantly, the Reorganization Plan
allows laborers and mechanics to challenge the
determination and application of Davis-Bacon wage
standards and provides debarment from contracts as a
deterrent from willful violation of Davis-Bacon wage
standards. See, e.g., Janik Paving and Construction, Inc.,
828 F.2d at 91. In contrast, where Congress has chosen to
confer rights, as well as impose duties on federal agencies,
it has so provided. See, e.g., id. at 86 (provision of
contractor liability for direct payment to affected employees,
in addition to Reorganization Act debarment proceedings,
for willful violation of Contract Work Hours and Safety
Standards Act, 40 U.S.C. §§ 327-333).
A102
However, even if § 5310 created a right,
§ 1983 requires that the conduct complained of be
committed by a “person who may fairly be said to be a state
actor." Lugar v. Edmondson Oil Co., 457 U.S. 922, 937
(1982). Plaintiffs allege that defendant CPC acted under the
color of state law in denying them the salary levels required
under § 5310. However, CPC's relationship with the state
actors -- the City and HPD -- was contractual. There is no
indication of the joint participation demonstrating a "close
nexus" between the private and public parties that must be
present to give rise to state action. Jackson v. Metropolitan
Edison Co., 419 U.S. 345, 351 (1974). As in Hadges v.
Yonkers Racing Corp., 918 F.2d 1079 (2d Cir. 1990),
where there was "no evidence that a State Official
participated in [the private party's] decision to deny [the
plaintiff's) application [for employment]," the municipal
defendants’ link to the rate at which the plaintiffs were paid
is "too tenuous" to constitute state action, 918 F.2d at 1083,
since no state official participated in CPC's wage
determinations. In addition, plaintiffs claim that project
funding levels established by the City caused them to be
underpaid and that under Department of Housing and Urban
Development guidelines, the municipal defendants had
supervisory responsibilities over the CPC's wage levels; see
handbook attached as Ex. A to Aff. of James Reif of
1/23/91. However, neither extensive state regulation,
Jackson, 419 U.S. at 350, nor funding, Blum v. Yaretsky,
457 U.S. 991, 1011 (1982), gives rise to state action by a
private party.
The plaintiffs further allege that CPC
conspired with the municipal defendants to deprive them of
A103
the salary levels due under § 5310 and that CPC is
consequently a state actor. However, "conclusory, vague or
general allegations of conspiracy to deprive a person of
constitutional rights cannot withstand a motion to dismiss."
Zemsky v. City of New York, 821 F.2d 148, 151 (2d Cir.)
(quoting Sommer v. Dixon, 709 F.2d 173, 175 (2d Cir.)
(per curiam), cert. denied, 464 U.S. 857 (1983)), cert
denied, 484 U.S. 965 (1987). Here the plaintiffs do not
identify the individuals who entered into the purported
conspiracy, when it began, nor how long it continued.
Thus, the plaintiffs have also failed in their attempt to
characterize their loss of wages as the result of CPC's
conspiracy with a state actor.
C. Private Right of Action
Plaintiffs also claim that they are afforded a
private right of action for the backwages stipulated by
§ 5310. Again plaintiffs insist on a distinction between the
Davis-Bacon Act and § 5310; they argue that the Davis-
Bacon Act creates an implied private right of action and also
claim that decisions to the contrary are not applicable to
§ 5310. However, the incorporation of the Davis-Bacon
provisions into § 5310 is more significant than plaintiffs
recognize. In enacting § 5310, Congress expressly
incorporated both the Davis-Bacon wage standards and the
Davis-Bacon enforcement provisions but chose not to
provide any equivalent of the Miller Act provision of a
private right of action under the Davis-Bacon Act. Thus
§ 5310 and the Davis-Bacon Act are identical in all
essentials but one, and that one supports a finding that
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Congress did not intend to create a private right of action
under § 5310.
Whether or not Congress intended a statute to
create a right that is enforceable by a private cause of action
is analyzed according to three factors: "[1] Was the plaintiff
“one of the class for whose especial benefit the statute was
enacted'’...? [2] is there any indication of legislative intent,
explicit or implicit, either to create such a remedy or deny
one?...[3] is it consistent with the underlying purposes of the
legislative scheme to imply such a remedy for the plaintiff?"
Cort v. Ash, 422 U.S. 66, 78 (1975) (citations omitted).
In Coutu the Supreme Court gave negative
answers to the first and second Cort questions. First, the
Court found that while the Davis-Bacon Act did benefit
laborers and mechanics employed under a contract subject
to the Davis-Bacon standards, it did not "confer rights
directly" on them, but rather benefitted them as an indirect
effect of the duty that it imposed on federal agencies
contracting under the Davis-Bacon Act. Universities
iati , 450 U.S. at 772 & n.23.
Therefore, the Court concluded, the Davis-Bacon Act was
not enacted for the especial benefit of mechanics and
laborers. Id. Next, the Court examined the significance of
the Miller Act provision of an express private right of action
as an indication of legislative intent. Couty presented the
question of whether a cause of action could be inferred on
behalf of an employee engaged in government work whose
contract did not contain a Davis-Bacon wage standard
provision. The Court observed that the inclusion of the
Miller Act procedure in the Davis-Bacon Act "demonstrates
A105
that... “when Congress wished to provide a private damages
remedy, it knew how to do so and did so expressly.
Universities Research Association v. Coutu, 450 U.S. at 773
(quoting Touche Ross, 442 U.S. at 572). Thus the
provision of an express private right of action supported an
inference that Congress did not intend to create an additional
implied private right of action. The negative inference is at
least as warranted in the instant case. Here Congress did
provide that the plaintiffs' contracts would be subject to
Davis-Bacon wage standards but nevertheless chose not [sic]
provide an express private action equivalent to that under
the Miller Act. As in Coutu, where Congress chose not to
provide an express private right of action, it would be
illogical to conclude that it intended to create an implied
private right of action.
In sum, there is conclusive evidence of
Congress's intent not to create an implied right of action
under § 5310, and this evidence is bolstered by the
determination that § 5310 does not confer rights directly on
those in plaintiffs' position. It may be correct, as plaintiffs
claim, that implication of a private cause of action would be
consistent with the underlying purpose of § 5310, as the
third Cort factor requires. However, each of the Cort
factors is not necessarily "entitled to equal weight. The
central inquiry remains whether Congress intended to create,
either expressly or by implication, a private cause of
action." Transamerica Mortgage Advisors. Inc. v. Lewis,
444 U.S. 11, 23-24 (1979); see also CETA Workers
Organizing Committee v. New York, 617 F.2d 926, 932 n.2
(1980). As the Supreme Court stated in Coutu, "[T]he
question whether a statute creates a private right of action is
A106
ultimately “one of congressional intent, not one of whether
this Court thinks it can improve upon the statutory scheme
that Congress enacted into law.'" Universities Research
Association, Inc. v. Coutu, 450 U.S. at 770 (quoting
ington, 442 U.S. 560, 578
Touche Ross & Co, v. Redington
(1979)). Since Congress considered that the purposes of
§ 5310 were sufficiently served without a private remedy,
it is clear that § 5310 does not provide an implied private
cause of action.
onclusion
For the reasons set forth above, I recommend
that the motion to dismiss be granted. Pursuant to Rule 72
of the Federal Rules of Civil Procedure, the parties shall
have ten (10) days to file written objections to this Report
and Recommendation. Such objections shall be filed with
the Clerk of the Court, with extra copies delivered to the
chambers of the Honorable Robert J. Ward, room 2204, and
to the chambers of the undersigned, Room 633.
Respectfully submitted
JAMES C. FRANCIS IV
UNITED STATES MAGISTRATE
JUDGE
Dated: New York, New York
January 6, 1992
A107
Copies mailed this date to:
Ellen Dichner, Esq.
James Reif, Esq.
Gladstein, Reif & Meginniss
361 Broadway - Suite 610
New York, New York 10013
Michael Shen, Esq.
Shneyer & Shen
250 West 100th Street
New York, New York 10025
Asian American Legal Defense
and Education Fund
99 Hudson Street
New York, New York 10013
Jay S. Berke, Esq.
Special Counsel
Skadden, Arps, Slate, Meagher & Flom
919 Third Avenue
New York, New York 10022
Beth Peritz, Esq.
Assistant Corporation Counsel
100 Church Street
New York, New York 10007
A108
STATUTORY PROVISIONS
42 U.S.C. § 1983 provides:
Every person who, under color of
any statute, ordinance, regulation, custom,
or usage, of any State or Territory or the
District of Columbia, subjects, or causes to
be subjected, any citizen of the United
States or other person within the jurisdiction
thereof to the deprivation of any rights,
privileges, or immunities secured by the
Constitution and laws, shall be liable to the
party injured in an action at law, suit in
equity, or other proper proceeding for
redress. For the purposes of this section,
any Act of Congress applicable exclusively
to the District of Columbia shall be
considered to be a statute of the District of
Columbia.
Section 5310 of Title I of the Housing Community and
Development Act, 42 U.S.C. § 5310 provides, in
pertinent part:
All laborers and mechanics employed by contractors
or subcontractors in the performance of construction
work financed in whole or in part with assistance
received under this chapter shall be paid wages at
rates not less than those prevailing on similar
A109
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construction in the locality as determined by the
Secretary of Labor in accordance with the Davis-
Bacon Act, as amended (40 U.S.C. § 276a-276a-5):
Provided, that this section shall apply to the
rehabilitation of residential property only if such
property contains not less than 8 units. The
Secretary of Labor shall have, with respect to such
labor standards, the authority and functions set forth
in Reorganization Plan No. 14 of 1950 (15 F.R.
3176; 64 Stat. 1267) and section 276c of Title 40.
The Davis-Bacon Act, 40 U.S.C. § 276(a) et seq.,
provides in pertinent part:
(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 geographical limits of the State 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
A110
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;....
Reorganization Plan No. 14 of 1950, 5 U.S.C. App., 64
Stat. 1267, provides:
In order to assure coordination of administration and
consistency of enforcement of the labor standards
provisions of each of the following Acts by the
Federal agencies responsible for the administration
thereof, the Secretary of Labor shall prescribe
appropriate standards, regulations, and procedures,
which shall be observed by these agencies, and
cause to be made by the Department of Labor such
investigations, with respect to compliance with and
enforcement of such labor standards, as he deems
desirable, namely: (a) The Act of March 3, 1931
(46 Stat. 1494, ch. 411), as amended; (b) the Act of
June 13, 1934 (48 Stat. 948, ch. 482); (c) the Act
of August 1, 1892 (27 Stat. 340, ch. 352), as
amended; (d) the Act of June 19, 1912 (37 Stat.
137, ch. 174), as amended; (e) the Act of June 3,
1939 (53 Stat. 804, ch. 175), as amended; (f) the
Act of August 13, 1946 (60 Stat. 1040, ch. 958);
(g) the Act of May 13, 1946 (60 Stat. 170, ch.
251), as amended; and (h) the Act of July 15, 1949,
ch. 338, Public Law 171, 81st Congress, First
Session.
All]
The Elementary and Secondary Education
Act of 1969, 20 U.S.C. §1232b, provides:
Except for emergency relief under section 241-1 of
this title, all laborers and mechanics employed by
contractors or subcontractors on all construction and
minor remodeling projects assisted under any
applicable program shall be paid wages at rates not
less than those prevailing on similar construction
and minor remodeling in the locality as determined
by the Secretary of Labor in accordance with the
Davis-Bacon Act, as amended [40 U.S.C.A. §276a
et seq.]. The Secretary of Labor shall have, with
respect to the labor standards specified in this
section, the authority and functions set forth in
Reorganization Plan Numbered 14 of 1950 and
section 276c of Title 40.
The Headstart Economic, Opportunity and Community
Partnership Act of 1974, 42 U.S.C. §2992a, provides:
All laborers and mechanisms employed by
contractors or subcontractors in the construction,
alteration, or. repair, including painting or
decorating, of buildings or other facilities in
connection with projects assisted under this
subchapter, shall be paid wages at rates not less than
those prevailing on similar construction in the
locality, as determined by the Secretary of Labor in
All2
accordance with the Davis-Bacon Act [40 US _C_A. §276a
et. seq.]. The Secretary of Labor shall have, with respect
to such labor standards, the authority and functions set forth
in Reorganization Plan Numbered 14 of 1950, and section
276c of Title 40.
Section 6881(h) of the Energy Conservation and
Production Act, 42 U.S.C. §6881(h) provides:
All laborers and mechanics employed in
construction, alteration, or repair which is financed
by an obligation guaranteed under subsection (a) of
this section shall be paid wages at rates not less than
those prevailing on similar construction in the
locality, as determined by the Secretary of Labor in
accordance with the Davis-Bacon Act [40 U.S.C.A.
§276a et seq.]. The Secretary shall not guarantee
any obligations under subsection (a) of this section
without first obtaining adequate assurance that these
labor standards will be maintained during such
construction, alteration, or repair. The Secretary of
Labor shall, with respect to the labor standards in
this subsection, have the authority and functions set
forth in Reorganization Plan Numbered 14 of 1950
and section 276c o
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