Petition for Writ of Certiorari — Chinese American Planning Council, Inc. v. Kam Shing Chan

Supreme Court brief1993

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IN THE | CLERK |

Supreme Court of the United States

OcroBer TERM, 1993

CITY OF NEW YORK; DEPARTMENT OF HOUSING

PRESERVATION & DEVELOPMENT OF

NEW YORK CITY; CHINESE-AMERICAN

PLANNING COUNCIL, INC.,

Petitioners,

VS.

KAM SHING CHAN, et al..

Respondents.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

PETTTION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

SECOND CIRCUIT

PereR A. WALKER

Counsel of Record

Jay_W. Waks

BRIAN G. CESARATTO

KAYE, SCHOLER, FIERMAN,

Hays & HANDLER

Attorneys for Petitioner Chinese-

American Planning Council, Inc.

425 Park Avenue

New York, New York 10022

(212) 836-8000

ath

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QUESTIONS PRESENTED

1. Whether section 5310 of the Housing

and Community Development Act of 1974

(the "HCDA"), 42 U.S.C. § 5301 et seq.,

one of approximately sixty statutes

incorporating the Davis-Bacon Act

procedures for enforcement of prevailing

wage requirements, creates a private

right of action under 42 U.S.C. § 1983?

2. Whether a private, community based,

not-for-profit corporation fairly becomes

a State actor by simply contracting with

a Municipality at a price for labor, a

so-called "Person Day Rate," set by the

municipality so low as to preclude

payment of prevailing wages?

3. Whether a municipality exercising fed-

erally delegated authority to determine

that prevailing wage requirements do not

apply engages in federal, but not state,

action when it contracts for private

labor to be paid below prevailing wages?

LIST OF PARTIES

The parties to the proceedings below

were the petitioner Chinese-American

Planning Council, Inc. ("CPC"), a

private, community based, not-for-profit

corporation’; co-petitioners, the City of

New York (the "City") and the Department

of Housing Preservation & Development of

New York City ("HPD"); and respondents,

the below named former participants in

CPC programs.°

Petitioner CPC has no parent companies

or subsidiaries to list pursuant to

Rule 29.1.

Kam Shing Chan, Kam Tai Chan, Jing Ye

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.

TABLE OF CONTENTS

QUESTIONS PRESENTED

LIST OF PARTIES

TABLE OF CONTENTS

TABLE OF AUTHORITIES

OPINIONS BELOW

JURISDICTION

STATUTES, RULES AND REGULATIONS

INVOLVED ee *

STATEMENT OF THE CASE

A. The Present Lawsuit.

B. Statement Of The Facts

REASONS FOR GRANTING THE WRIT.

I. THE OPINION BELOW CONFLICTS

WITH THIS COURT’S DECISIONS IN

SEA CLAMMERS AND COUTU BY HOLD-

ING THAT PAYMENT OF PREVAILING

WAGES UNDER SECTION 5310 OF THE

HCDA IS PRIVATELY ENFORCEABLE

UNDER SECTION 1983

A. Section 5310’s Explicit

Adoption Of The Davis-Bacon

Act’s Comprehensive Scheme

Precludes Any Section 1983

Private Right Of Action. .. . 21

B. The Second Circuit’s

Opinion Destroys The Davis-

Bacon Act’s Balance Of

Contractor And Employee

Interests In Conflict With

Ce ce a gee ae ae ee Se te ee 29

C. The 1974 And Current DOL

Regulations Provide For A

Comprehensive Enforcement

ee > ao a 37

D. 42 U.S.C. § 5311 (DB) (2) ‘'s

Provision Of Civil Suits By

The U.S. Attorney General

To Recover Improperly

Expended HCDA Funds

Precludes Any Private Right

Of Action Against An HCDA

Recipient Under 42 U.S.C.

7 ane oe 6 ae ee ees 43

II. THE SECOND CIRCUIT’S

OPINION CONFLICTS WITH

SUTER BY HOLDING SECTION

5310 CREATES A COGNIZABLE

FEDERAL "RIGHT" TO BE PAID

PREVAILING WAGES ....... 45

TII. THE SECOND CIRCUIT UNFAIRLY

HELD CPC TO BE A STATE

ACTOR IN CONFLICT WITH

RENDELL-BAKER AND THIS

COURT’S GENERAL PRINCIPLES

FOR FINDING STATE ACTION;

CPC DID NOTHING MORE THAN

AGREE TO A CONTRACT PRICE

UNILATERALLY SET BY THE

Certs ti + ee oe ee ee eee |

IV. IN SETTING THE "PERSON DAY

RATE," THE CITY EXERCISED

DELEGATED FEDERAL AUTHORITY

FOR ENFORCING PREVAILING

WAGE STANDARDS

CONCLUSION .

TABLE OF AUTHORITIES

CASES PAGES

Blum v. Yaretsky, 457 U.S. 991

4 . + 5 Pe ee ee ere ee

Chan v. City of New York,

797 F. Supp. 1153

(S.0.8ies Sees eae ele ee passim

Chan v. City of New York,

803 F. Supp. 710

(B.D cies U6. ee ce a eee ee passim

Chan v. City of New York,

F.2d

(ga CSP. - deel eee Soe ae eee passim

Cort w. Ben. 422 U.S... 66

Cis tal 6 w 14 tee eee Ue eee ee ee 8n.6

Davis v. United States Dep’t

of Housing and Urban Dev., 627

F.2G 942 (9th Cir. i960). << «+ <« 44

Dixson v. United States,

465 U.8. 4@4 tageer « «ss +» & <> >s 19, 44

46, 60-62

Edmonson v. Leesville Concrete

CO.,e she Be Gee

ure (2992) «we SO eee ee eee

Faerber Elec. Co. v. Atlanta

Tri-Com, Inc., 795 F. Supp. 240

(N.D. Ill. 1992). 32 B.is

Flagq Bros. v. Brooks, 436 U.S.

249 (iS 7O8)« « « « & 2. Oreo 54

vil

International Union of Operating

PAGES

Enq’rs, Local 627 v. Arthurs, 355 F.

Supp. 7 (W.D. Okla.), aff’d,

480 F.2d 603 (10th Cir. 1973)

Jackson v. Metropolitan

Edison Co., 419 U.S. 345

(1974). Page Sake

Janik Paving & Constr.,

Inc. v. Brock, 828 F.2d 84

(2d Cir. 1987). ,

Latinos Unidos De Chelsea En

Accion v. Secretary of

Housing and Urban Dev., 799

F.2d 774 (1st Cir. 1986).

Lugar v. Edmondson Oil Co.,

457 U.S. 922 (1982)

McDaniel v. Univ. of Chicago,

512 F.2d 583 (7th Cir.),

vacated & remanded,

423 U.S. 810 (1975),-on remand,

548 F.2d 689 (7th Cir. 1977).

Middlesex County Sewerage

Auth. v. Nat’l Sea Clammers

Ass'n, 453 U.S. 1 (1981).

42 n.18

49 n.19

52 n.20

324 8.i3

Monell v. Dep’t of Social Services,

436 U.S. 658 (1978)

O'Grady v. City of Montpelier,

474 F. Supp. 186 (D. Vt. 1979).

Rendell-Baker v. Kohn,

Ge? wes Cae tebe! «i. « «= « * * 18, 51

S52, 54, 55

§5 n.21

San Francisco Arts & Athletics,

Inc. v. United States Olympic

Comm... 463 0.8. S22 (1967)... +. 55 n.2]

Simpson v. Reynolds Metals

Co., 629 F.2d 1226 (7th Cir.

RO al) agen g teen aerate <a> eS w/o ee ee

Smith v. Robinson, 468

cas. ee Cees oo alts oe See 20, 44

Suter v. Artist M., 112

Bo Gee Beee. Aieealc Ss « « « '* & “Be 26i-80

45-47

49, 50

Touche Ross & Co. v. Redington, :

642 0.8. S60 tiS79) «2. *« 2 «+. -. 31, 43

United States v. Capeletti

Bros., 621 F.2d 1309 (Sth Cir.

EE Stay ge’ einer ad gr ot cae tae et ae a 32, 48

United States v. Classic,

ree pi Poe, . Ree) | 5S ee 53

Universities Research Ass'n,

Inc. v. Coutu, 450 U.S. 754

ES | sR SG ea eer a a passim

Weber v. Heat Control Co.,

579 F. Supp. 346 (D.N.J. 1982),

aff’d, 728 F.2d 599

ee Meg ER 6 gas at aces cereus 32

vill

Wheeldin v. Wheeler, 373 U.S.

647 (1963).

Wilder v. Virginia Hosp.

Ass'n, 496 U.S. 498 (1990).

Wright v. Roanoke Redevelopment

and Housing Auth., 479 U.S. 418

(1987). ,

Yearsley v. W.A. Ross Constr.

Co., 309 U.S. 18 (1940)

STATUTES

Administrative Procedure Act,

5 U.S.C. § 701 et seg.

18 V.S.C. § 201

16 U.S.C. § 201(a).

28 U.S.C. § 1254(1)

28 U.S.C. § 1292 (b)

26 U.3.©C. $8 1331, 1337

The Miller Act of 1935,

40 U.S.C. § 270a et seg

40 U.S.C. § 270a(a) (2).

The Davis-Bacon Act,

40 U.S.C. § 276a et seq.

40 U.S.C. § 276a(a)

40 U.S.C. § 276a-1.

40 U.S.C. § 276a-2.

40 U.S.C. § 276a-2 (a)

PAGES

42 n.18

40 U.S.C. § 276a-2(b)

The Copeland Anti-Kickback

Act of 1934,

40 U.S.C. § 276c.

42 U.S.C. § 1983

The Housing and Community

Development Act of 1974,

42 U.S.C. § 5301 et seg.

42 U.S.C. § 5301(c) 7

42 U.S.C. § 5301(d)

42 U.S.C. § 5309 (a)

42 U.S.C. § 5310(a)

42 U.S.C. § 5311.

42 U.S.C. § 5311(a)

42 U.S.C. § 5311(b)

42 U.S.C. § 5311(b) (2).

Reorganization Plan Numbered

14 of 1950, 5 U.S.C. Appendix

DAVIS-BACON RELATED ACTS

National Foundation on the Arts

and Humanitarian Act of 1965,

20 U.S.C. § 954(n).

Elementary and Secondary

Education Act, 20 U.S.C. § 1232b.

Indian Self-Determination and

Education Assistance Act, 25

U.S.C. § 450(e) (a).

Hospital Survey and Construction

Act, 42 U.S.C. § 291e(a) (5)

assim

passim

50 n.19

passim

4, 43

Ss ae

43, 44

43,61

passim

15 n.9

15 0.9

15 n.9

Headstart, Economic Opportunity,

and Community Partnership Act of

1974, 42 U.S.C. § 2992a

Older Americans Act of 1965,

42 U.S.C. § 3027(a) (14) (D).

Energy Conservation and

Production Act, 42 U.S.C.

§ 6881 (h)

Solid Waste Disposal Act,

42 U.S.C. § 6979.

Domestic Volunteer Services Act

of 1973, 42 U.S.C. § 5046

Emergency Community Facilities

Act of 1970, 42 U.S.C. § 3107

SUPREME COURT RULES

Rule 10.1(c).

Rule 12.2

Rule 29.1

FEDERAL RULES OF CIVIL PROCEDURE

Fed. R. Civ. P. 12(b) (6)

Fed. R. Civ. P. 54(b)

FEDERAL REGULATIONS

United States Department of

Labor Regulations (1974)

29 C.F.R. §§ 1.10 - 1.16.

42> ©C.7.R. § $.8 .

29 C.F.R. § 5.5(a) (3

15 n.9

28 n.12

PAGES

29 C.F.R. § 5.6(a) (1) ; 58

29 C.F.R. § 5.6(a) (2), (3) 37

29 C.F.R. § 5.6(b). ; 37

29 C.F.R. § 5.7(a) (2) 37

29 C.F.R. § 5.7(bD). 37

o6 C.F.R. § S.7I(G). 37

26 €.9.8. 3 3:9 =>) * a7

29 C.F.R. § 5.10(a) 37

29 C.F.R. § 5.10(b) 38

29 C.F.R. § 5.11(a) 37

96 C.F.R. § 5.1115) 40

o9- ¢.9.8. § 5.34. 38

29 C.P.R. Part 7. 38, 40

United States Department of

Labor Regulations (1992)

29 C.F.R. Part 1, App. A. --+:- 14

29 C.F.R. § 1.6(a) (2) (Db). - + = : 58

99 C.F.R. § 1.6(b). - - + + e+ © * 38

29 C.F.R. §§ 1.8 - 1-9- - + +2: : 40 n.17

99 C.P.R. Part §..+ +++ +s 59 n.22

on CPR. §€ 5.5 « « se se 8 te 28 n.12

29 C.F.R. § 5.5(a) (9) - - © © = & 39

299 C.F.R. §§ 5.6 - 5.7. - + + + * 38 0.15

a6 C.9.R. 85.9. ss ee 8 8 38 n.15

599 C.F.R. §§ 5.10-5.12. - - + = : 38 n.15

so C.9R. §€ S.13ta) - + 6 « 2 40 -

99 C.F.R. § 5.11(b), (C)- - © = > 13 n.8

aeoe woe, 6 S.E3, « + 4 8 + 38

a6 2... PALE Fe « + © + 4 eee 38

40 n.17

29 C.FP.R. § 7.2(D) (1) « - « © 2 + 41

xii

IN THE SUPREME COURT OF THE UNITED STATES

OCTOBER TERM, 1993

CITY OF NEW YORK; DEPARTMENT OF HOUSING

PRESERVATION & DEVELOPMENT OF

NEW YORK CITY; CHINESE-AMERICAN

PLANNING COUNCIL, INC.,

Petitioners,

o- V a -

KAM SHING CHAN, et al.,

Respondents.

PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE SECOND CIRCUIT

Petitioner CPC respectfully prays for

a Writ of Certiorari to review the

judgment of the United States Court of

Appeals for the Second Circuit upholding

respondents’ claims under 42 U.S.C.

§ 1983 entered in the above entitled

proceeding on July 26, 1993.°

Pursuant to Rule 12.2 of the Court’s

Rules, CPC must petition separately

from the City. While it argues

herein, as does the City, that the

comprehensive Davis-Bacon Act pro-

(continued...)

OPINIONS BELOW

The Opinion of the United States Court

of Appeals for the Second Circuit is not

reported and is reprinted in the Appendix

hereto at Al.* The Opinions of the

District Court for the Southern District

of New York are reported at 797 F. Supp.

>( continued)

cedures expressly adopted in section

5310 of the HCDA preclude a private

section 1983 action and that respon-

dents have no federal "right" to be

paid prevailing wages, CPC separately

argues that it cannot be subject to

section 1983 liability because, as a

private contractor, it engaged in no

state action or, alternatively, the

City, in contracting with CPC, acted

as a federal agent exercising fed-

erally delegated authority. In this

case, CPC has cross-claimed against

the City based on respondents’

allegations that the City abrogated

its duty to have CPC pay prevailing

wages.

Citations to the Appendix filed

herewith are indicated in parenthesis

with an "A" followed by the page

number(s). Citations to the Joint

Appendix below are indicated in

parenthesis, not preceded with an "A"

followed by the page number(s).

1153 and 803 F. Supp. 710 and are

reprinted in the Appendix hereto at A26

and A79. The Opinion of the magistrate

judge is not reported and is reprinted in

the Appendix hereto at A96.

JURISDICTION

The judgment of the Court of Appeals

for the Second Circuit of which review is

sought was entered on July 26, 1993.

This Court has jurisdiction pursuant to

28 U.S.C. § 1254(1).

STATUTES, RULES AND REGULATIONS INVOLVED

Section 5310(a) of the HCDA, 42 U.S.C.

§ 5310(a), 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

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-5S). ete

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.

42 U.S.C. § 5311(a), (b) provides in

pertinent part:

(a) If the Secretary [of Housing and

Urban Development] finds after

reasonable notice and opportunity for

hearing that a recipient of assistance

under this chapter has failed to comply

substantially with any provision of this

chapter, the Secretary, until he is

satisfied that there is no longer any

such failure to comply, shall:

(1) terminate payments to the recipient

under this chapter, or

(2) reduce payments to the recipient

under this chapter by an amount equal to

the amount of such payments which were

not expended in accordance with this

chapter, or

(3) limit the availability of payments

under this chapter to programs,

projects, or activities not affected by

such failure to comply.

(b) (1) In lieu of, or in addition to,

any action authorized by subsection (a)

of this section, the Secretary may, if

he has reason to believe that a

recipient has failed to comply

Substantially with any provision of this

chapter, refer the matter to the

Attorney General of the United States

with a recommendation that an

appropriate civil action be instituted.

(2) Upon such a referral the Attorney

General may bring a civil action in any

United States district court having

venue thereof for such relief as may be

appropriate, including an action to

recover the amount of the assistance

furnished under this chapter which was

not expended in accordance with it, or

for mandatory or injunctive relief.

The Davis-Bacon Act, 40 U.S.C.

§§ 276a(a), 276a-1 and 276a-2, provides

in pertinent part:

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 ... 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 ... ; and every contract

based upon these specifications shall

contain a stipulation that the

contractor or his subcontractor shall

pay all mechanics and laborers ... the

full amounts accrued at time of payment,

computed at wage rates not less than

those stated in the advertised

specifications, .. . and the further

Stipulation that there may be withheld

from the contractor so much of accrued

payments as may be considered necessary

by the contracting officer to pay to

laborers and mechanics employed by the

contractor or any subcontractor on the

work the difference between the rates of

wages required by the contract to be paid

laborers and mechanics on the work and

the rates of wages received by such

laborers and mechanics

40 U.S.C. § 276a(a).

Every contract within the scope of

sections 276a to 276a-5 of this title

shall contain the further provision that

in the event it is found by the

contracting officer that any laborer or

mechanic employed by the contractor or

any subcontractor directly on the site

of the work covered by the contract has

been or is being paid a rate of wages

less than the rate of wages required by

the contract to be paid as aforesaid,

the Government may, by written notice to

the contractor, terminate his right to

proceed with the work or such part of

the work as to which there has been a

failure to pay said required wages and

to prosecute the work to completion by

contract or otherwise, and the

contractor and his sureties shall be

liable to the Government for any excess

costs occasioned the Government thereby.

40 U.S.C. § 276a-1.

(a) The Comptroller General of the

United States is authorized and directed

to pay directly to laborers and

mechanics from any accrued payments

withheld under the terms of the contract

any wages found to be due laborers and

mechanics pursuant to sections 276a to

276a-5 of this title; and the

Comptroller General of the United States

is further authorized and is directed to

distribute a list to all departments of

the Government giving the names of

persons or firms whom he has found to

have disregarded their obligations to

employees and subcontractors. No

contract shall be awarded to the persons

or firms appearing on this list or to

any firm, corporation, partnership, or

association in which such persons or

firms have an interest until three years

have elapsed from the date of

publication of the list containing the

names of such persons or firms.

(b) If the accrued payments withheld

under the terms of the contract, as

aforesaid are insufficient to reimburse

all the laborers and mechanics, with

respect to whom there has been a failure

to pay the wages required pursuant to

sections 276a to 276a-5 of this title,

such laborers and mechanics shall have

the right of action and/or of

intervention against the contractor and

his sureties conferred by law upon

persons furnishing labor or materials,

and in such proceedings it shall be no

defense that such laborers and mechanics

accepted or agreed to accept less than

the required rate of wages or

voluntarily made refunds.

40 U.S.C. § 276a-2.

The Reorganization Plan Numbered 14 of

1950, 5 U.S.C. Appendix, provides in

pertinent part:

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

areca

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.

42 U.S.C. § 1983 provides in pertinent

part:

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.

DOL regulations at 29 C.F.R. Parts 1

and 5 (1974) are too lengthy to be set

out verbatim and are reprinted in the

Appendix hereto at A121.

STATEMENT OF THE CASE

This case presents an important issue

of first impression of whether a private

right of action under section 1983 exists

to enforce a purported substantive

"right" of laborers and mechanics to be

paid prevailing wages under 42 U.8.C.

§ 5310.

A. The Present Lawsuit

Respondents filed this action for

declaratory relief, damages and

attorneys’ fees under 42 U.S.C. § 1983

alleging that CPC violated section 5310

of the HCDA by failing to pay prevailing

wages for their performance of federally

funded construction work on City-owned

real estate pursuant to three annual

contracts entered into by CPC with New

York City’s Department of Housing

Preservation and Development ("HPD")

between 1986 and 1989 (the "Contracts").

(29). Respondents also assert section

1983 claims against the City and HPD, and

are seeking class certification. (739).

CPC moved to dismiss respondents’

section 1983 claims, pursuant to Fed. R.

Civ. P. 12(b) (6), because section 5310

does not create privately enforceable

federal "rights" under section 1983 and

CPpc did not act "under color" of state

law. (45). CPC also moved to dismiss

respondents’ claim that they had an

implied private right of action directly

under section 5310. The City made a

Similar motion to dismiss. (48).

The magistrate judge recommended that

the respective motions be granted in

their entirety. (A107). The District

Court declined to follow the magistrate

judge’s recommendation, in part, by

upholding respondents’ section 1983

Claims. (A77). On September 8, 1992,

The District Court followed the

magistrate judge’s recommendation to

dismiss respondents’ claim directly

under section 5310. (A77).

the District Court certified an inter-

locutory appeal, pursuant to 28 U.S.C.

§ 1292(b), of that portion of the

decision refusing to dismiss the section

1983 claims. (A79).

On July 26, 1993, after granting an

interlocutory appeal (A25), the Second

Circuit affirmed the District Court’s

decision in all respects. o ) ee &

"conclude[d] 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." (A17).o

Federal subject matter jurisdiction is

pursuant to 28 U.S.C. §§ 1331 and 1337.

The Second Circuit, applying Cort v.

Ash, 422 U.S. 66 (1975), also

affirmed, on respondents’ cross-appeal

under Fed. R. Civ. P. 54(b), the

District Court’s final judgment (A93)

dismissing respondents’ claim directly

under section 5310. (A11-14).

B. Statement Of The Facts’

CPC provides work, training, day care,

elder care and other needed social

services primarily to members of the

Chinese-American community in New York

City. Respondents performed construc-

tion and rehabilitation work for CPC, and

received training from CPC in English and

other vocational skills, pursuant to the

Contracts. The Contracts were funded by

federal grants under the HCDA provided

directly to the City. The City then

contracted with CPC for its services

through its appropriate agency, HPD.

Each Contract contained contractual

provisions required by the HCDA and

applicable federal regulations. One such

provision, entitled "Federal Supplemental

Terms and Conditions," stated:

For purposes of this petition, all of

the allegations of respondents’

complaint have been taken as true.

The 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 Federal

Statutes, rules and regulations,

including, but not limited to, those

set forth in Exhibit F attached to

this Agreement.

(1986-87 Contract, Art. 18, 4 18.1) (89).

Exhibit F to the Contract included the

prevailing wage stipulation required

under the HCDA and the Davis-Bacon Act:

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 paid 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, Art.

3(b) (i)) (129).

Fach Contract was awarded based upon

responses to HPD’s Requests for Proposais

("RFPs"). The RFPs, which were

incorporated in the Contracts, contained

a "Person Day Rate," used by HPD to set

the total contract price. 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 $75.00 is the Person-Day

Rate, all costs to run the program,

pay the staff and trainees and provide

training 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 4 1)

(185). This RFP also provided that

"({t]here shall be 246 work days in the

term of the Contract" (id. 4 6), and that

"({a] maximum Person-Day Rate is being set

at $90.00" (id. 4 2). The Contract

prohibited CPC from receiving any

additional funding for "Program Work

performed pursuant to this Agreement."

(1986-87 Contract, Art. 15, 4 15.2) (89).

CPC received the 1986-87 Contract with

a budget calling for 30 trainees working

246 days (i.e., 7,380 "Person Days") at

the $90 "Person Day Rate," with a total

contract price of $664,200. The Person

Day Rates for the 1988 and 1989

contracts, awarded to CPC, were

unilaterally set by the City at $95.

Annexed by HPD to the Contracts were

prevailing wage schedules below the then

current prevailing wage rates as

determined by the DOL. CPC did not pay

respondents prevailing wages (or even at

the annexed wage rates) in accordance

with the direction of the HPD as

expressed by the "Person Day Rate" set by

HPD. HPD, which unilaterally set the

"Person Day Rate," thus breached its

duties under the HCDA and the Davis-Bacon

Act by misleading CPC to believe that

prevailing wages did not have to be paid

and by not providing CPC with the means

to pay prevailing wages under the

Contracts.®

REASONS FOR GRANTING THE WRIT

Petitioner has set forth above three

important questions of federal law, any

one of which meets the standard for

certiorari set forth in Rule 10.1(c) of

the Rules of this Court. Petitioner

urges this Court to further define the

limits of its section 1983 jurisprudence

in a case of first impression arising

under section 5310 of the HCDA, as well

as to now decide, in the context of

section 5310 and federal housing policy,

Respondents’ alleged prevailing wage

violations are the subject of a United

States Department of Labor ("DOL")

ruling finding that CPC committed

prevailing wage violations and

requesting restitution for alleged

back wages due. (766). CPC filed a

written response requesting withdrawal

of the ruling and an administrative

hearing pursuant to 29 C.F.R.

§ 5.11(b), (c) (1992). (864). To

date, the DOL has not decided this

matter.

the question it previously left open in

Universities Research Ass’n, Inc. v.

Coutu, 450 U.S. 754 (1981) -- namely,

whether the Davis-Bacon Act creates a

private right of action, albeit asserted

procedurally here under section 1983, to

enforce a contract that contains specific

Davis-Bacon Act prevailing wage

Stipulations.

The Court’s decision, if certiorari is

granted, may finally determine an

employee’s right to assert a private

right of action under section 1983

pursuant to the approximately sixty

federal statutes expressly adopting the

Davis-Bacon Act procedures for the

determination and enforcement of federal

prevailing wage requirements. A list of

these Davis-Bacon Related Acts is

contained at 29 C.F.R. Part 1, App. A

(1992). Ten of these Acts utilize these

procedures to enforce the identical

"Shall be paid [prevailing] wages" or

similar language used in section 5310.’

The Second Circuit’s Opinion

permitting a section 1983 action here

conflicts, moreover, with numerous

decisions of this Court. See Rule

10.1(c). This Court has steadfastly

refused to permit section 1983 actions

where an "elaborate" and "’comprehensive

enforcement scheme’" "demonstrate [s]

See the National Foundation on the

Arts and Humanitarian Act of 1965, 20

U.S.C. § 954(n); Elementary and

Secondary Education Act, 20 U.S.C.

§ 1232b; Indian Self-Determination and

Education Assistance Act, 25 U.S.C.

§ 450(e) (a); Hospital Survey and

Construction Act, 42 U.8.¢C. 3

291e(a) (5); Headstart, Economic

Opportunity, and Community Partnership

Act of 1974, 42 U.S.C. § 2992a; Older

Americans Act of 1965, 42 U.S.C. §

3027 (a) (14) (D); Energy Conservation

and Production Act, 42 U.S.C. §

6881(h); Solid Waste Disposal Act, 42

U.S.C. § 6979; Domestic Volunteer

Services Act of 1973, 42 U.S.C. §

5046; and Emergency Community

Facilities Act of 1970, 42 U.S.C. §

2107. (Reprinted at A1l12-121).

congressional intent to preclude the

remedy of suits under § 1983," Middlesex

County Sewerage Auth. v. Nat’l Sea

Clammers Ass‘n, 453 U.S. 1, 14, 20 (1981)

(citation omitted); and where the statute

does not "unambiguously confer an

enforceable right upon the Act’s

beneficiaries." Suter v. Artist M., 112

S. Ct. 1360, 1370 (1992).

Yet, precisely because the HCDA does

not provide for a private right of

action, the Second Circu:.t has now

authorized section 1983 as a procedural

device to recover allegedly owed

prevailing wages post-contract and to

take advantage of the remedies provided

under section 1983, thus vitiating the

carefully crafted judicial and

administrative enforcement scheme under

section 5310. Except for the narrow

private remedy to recover on the payment

bond permitted by the Miller Act of 1935

("Miller Act"), 40 U.S.C. § 270a et seg.,

incorporated in the Davis-Bacon Act at 40

U.S.C. § 276a-2(b), the Davis-Bacon Act

regulatory scheme does not provide fora

private remedy to recover back wages.

Section 5310, which does not incorporate

the Miller Act, is to be enforced, by its

express terms, only under the

comprehensive Davis-Bacon Act regulatory

scheme, the procedural provisions of the

Reorganization Plan Numbered 14 of 1950

("Reorganization Plan"), 5 U.S.C. App.,

and by civil action of the Attorney

General of the United States under 42

U.S.C. § 5311(b). Thus, by the knowing

and significant Congressional omission in

section 5310 of any private remedy akin

to the Miller Act or otherwise, the

Congressional balancing of contractor and

employee interests served by the Davis-

Bacon Act administrative and enforcement

schemes, and the sound public policy of

preventing piecemeal private litigation

from disrupting badly needed urban

rehabilitation, Congress affirmatively

withdrew any section 1983 remedy in

enacting section 5310.

In conflict with the general princi-

ples set forth in Rendell-Baker v. Kohn,

457 U.S. 830 (1982), the Second Circuit

also has transformed CPC, a private,

community based, not-for-profit corpora-

tion, into a state actor for no other

reason than that CPC contracted with the

City at the "Person Day Rate," which is

nothing more than a calculation used by

the City to determine an overall contract

price. By relying on the "Person Day

Rate" being set sufficiently low, that

after payment of expenses, CPC could not

afford to pay allegedly owed prevailing

wages, the Second Circuit has improperly

turned section 1983 on its head (i.e.,

because the "Person Day Rate" resulted in

a purported prevailing wage violation,

section 1983 state action by CPC

necessarily exists).

Finally, as this Court has previously

recognized in a different context, the

City here acted solely as a federal agent

in contracting with CPC by exercising its

federally delegated authority to expend

HCDA block grant funds in accordance with

pervasive and detailed federal

regulations, including a provision

requiring payment of prevailing wages.

See Dixson v. United States, 465 U.S. 482

(1984). CPC in simply contracting with

the City did not act "under color" of

State law, thus precluding any action

arising under section 1983.

For all of these reasons, certiorari

should be granted.

THE OPINION BELOW CONFLICTS

WITH THIS COURT'S DECISIONS

IN SEA CLAMMERS AND COUTU

BY HOLDING THAT PAYMENT

OF PREVAILING WAGES

UNDER SECTION 5310 OF

THE HCDA IS PRIVATELY

ENFORCEABLE UNDER SECTION 1983

No private section 1983 claim exists

where an "elaborate" or "’comprehensive

enforcement scheme’" "demonstrate ([s]

congressional intent to preclude the

remedy of suits under § 1983." Sea

Clammers, 453 U.S. at 14, 20 (citation

omitted) (foreclosing a § 1983 action

under the Federal Water Pollution Control

Act and the Marine Protection, Research

and Sanctuaries Act of 1972); see also

Smith v. Robinson, 468 U.S. 992 (1984)

(foreclosing any § 1983 remedy under the

Education of the Handicapped Act);

accord, Suter, 112 S. Ct. at 1368 n.11;

Wilder v. Virginia Hosp. Ass'n, 496 U.S.

498, 521 (1990).

"The key to the inquiry is the intent

of the Legislature." Sea Clammers, 453

U.S. at 13. The considerations in

determining congressional intent are:

We look first, of course, to the

Statutory language, particularly to

the provisions made therein for

enforcement and relief. Then we

review the legislative history and

other traditional aids of statutory

interpretation to determine

congressional intent.

A. Section 5310’s Explicit Adoption Of

The Davis-Bacon Act’s Comprehensive

Scheme Precludes Any Section 1983

Private Right Of Action

Congressional intent to preclude any

private enforcement of section 5310 under

section 1983 is unmistakable for the

following reasons:

@® Congress’ express incorporation of

the Davis-Bacon Act’s comprehensive

administrative and enforcement scheme

into the HCDA.

@® The failure of Congress to

incorporate in the HCDA the Miller Act’s

limited private right of action for

employees to sue on a payment bond

pursuant to Davis-Bacon Act contracts.

@ The long-recognized Congressional

intent to balance contractor and employee

interests solely through the Davis-Bacon

Act administrative scheme.

This carefully crafted enforcement

scheme, which excludes private action,

serves an important public policy -- to

prevent the disruption of national

housing policy by a multiplicity of

private suits.

Section 5310 could not be any clearer:

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 prevail-

ing 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

standards, the authority and

functions set forth in Reorganiza-

tion Plan Numbered 14 of 1950 (15

F.R. 3176; 64 Stat. 1267) and

section 276c of Title 40.

42 U.S.C. § 5310(a) (emphasis added).

Congress thus intended that the

Secretary of Labor shall determine

prevailing wage rates "in accordance with

the Davis-Bacon Act," and that the

payment of wage rates "with respect to

such labor standards" is to be enforced

through the comprehensive mechanism

authorized for the Davis-Bacon Act in

"Reorganization Plan Numbered 14 of 1950"

and the Copeland Anti-Kickback Act of

1934, 40 U.S.C. § 276c. It unequivocally

adopted the Davis-Bacon Act procedures

for wage determination and administrative

enforcement. '°

0 Section 5310, by expressly adopting

the Davis-Bacon Act procedures, is one

of approximately sixty statutes

"collectively referred to as ‘Davis-

Bacon Related Acts.’" Janik Paving &

Constr., Inc. v. Brock, 828 F.2d 84,

(continued...)

In expressly referencing the

Reorganization Plan, Congress likewise

must have adopted that Plan’s underlying

purpose to "assure consistent and

effective enforcement" of labor standards

under federal and federally assisted

public works contracts. Message of the

President, 5 U.S.C. App.; see also Coutu,

450 U.S. at 783. As stated in the

Reorganization Plan itself, consistency

was to be gained through DOL adminis-

trative regulations and investigations:

In order to assure coordination of

administration and consistency of

enforcement of the labor standards

provisions of each of the following

[Davis-Bacon Related] Acts by the

Federal agencies responsible for

the administration thereof, the

Secretary of Labor shall prescribe

appropriate standards, regulations,

and procedures, which shall be

1 . continued)

86 (2d Cir. 1987). The consistent

enforcement of all of these Davis-

Bacon Related Acts is now subject to

dispute and doubt based upon the

Second Circuit’s Opinion.

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 desir-

able.

5S U.S.C. App. (emphasis added). The

Reorganization Plan notably does not

provide for a private action by employees

to recover back wages.

As recognized by this Court, there-

fore, prevailing wage determination and

enforcement under the Davis-Bacon Act and

the Reorganization Plan are accomplished

through administrative procedures.

Coutu, 450 U.S. at 759-61. This

conclusion as to the HCDA is reinforced

by the Congressional omission from the

language of section 5310 any private

right of action and even refusal to

incorporate the Miller Act, which grants

to other Davis-Bacon laborers the right

to bring a limited private action for any

deficient back wages against a contractor

on the payment bond required as a

condition to the federal contract where

government withholding of contract funds

is insufficient. Id. at 758."

The Court’s statement in Coutu as to

the Davis-Bacon Act thus applies with

equal force here:

‘when Congress wished to provide a

private damages remedy, it knew how

to do so and did so expressly.’

Id. at 773 (holding that Congress did not

intend to provide a private remedy under

the Davis-Bacon Act greater than that

under the Miller Act) (citation omitted).

The fact that Congress did not intend

to create any private right of action is

further buttressed by the fact that the

decision to commence an action in federal

court under the HCDA is expressly granted

Unlike a federally assisted contract

as is the case here, contractors

contracting directly with the federal

government must post a Miller Act

payment bond. 40 U.S.C. § 270a(a) (2).

solely to the U.S. Attorney General. See

42 U.S.C. § 5311 and pp. 43-45 infra.

In addition, the Second Circuit has

disregarded the express Statutory

language of the Davis-Bacon Act,

incorporated in section 5310, which

provides for insertion into federal

contracts of provisions requiring payment

of prevailing wages and providing

Strictly administrative penalties for

failure to pay prevailing wages. Thus,

each contract must contain a provision

that if the contractor fails to pay the

prevailing wages specified in the

contract, the government may withhold

payments to pay the laborers and

mechanics the difference between the

contract wages and those actually paid.

Coutu, 450 U.S. at 757; see 40 U.S.C.

§ 276a(a). The Davis-Bacon Act

"authorizes the Comptroller General to

pay these accrued payments directly to

laborers and mechanics." Coutu, 450 U.S.

at 758; see 40 U.S.C. § 276a-2(a).

Furthermore, if a contractor fails to pay

the stipulated wages, "the contract may

be terminated and the contractor debarred

from all Government contracts for a

period of three years." Coutu, 450 U.S.

at 759; gee 40 U.S.C. § 276a-1, § 276a-

2(a)."

The Davis-Bacon Act’s (and thus the

HCDA’s) prevailing wage standards are

therefore enforced by mandating inclusion

of certain clauses in each contract,

authorizing the withholding of funds and

the payment of these amounts directly to

the workers, and providing for contract

In accordance with the Davis-Bacon Act

and the HCDA, insertion of contractual

provisions requiring payment of

prevailing wages, withholding, and

contract termination and debarment are

expressly provided for in the DOL’s

regulations under the Reorganization

Plan. See 29 C.F.R. § 5.5 (1974)

(1992).

termination and debarment. Thus,

Congress expressly adopted in section

5310 an administrative and enforcement

scheme whereby employees would receive

proper prevailing wages while contractors

would know their wage obligations in

advance of contracting. See Coutu, 450

U.S. at 762.

B. The Second Circuit’s Opinion Destroys

The Davis-Bacon Act’s Balance Of

Contractor And Employee Interests In

Conflict With Coutu

In Coutu, this Court held that a

private right of action would destroy the

Davis-Bacon Act’s elaborate enforcement

scheme and congressional balancing of

interests between contractors and

employees. 450 U.S. at 782-83. For this

reason, the Court concluded that the

Davis-Bacon Act does not confer on

laborers a private right of action for

back wages under a contract which had

been administratively determined not to

429

call for Davis-Bacon work and thus does

not contain prevailing wage stipulations.

Id. The Court did "not decide whether

the Act creates an implied private right

of action to enforce a contract that

contains specific Davis-Bacon Act

Stipulations .. . [but] recognize[d]

that some of our reasoning arguably

applies to the question whether the Act

creates any implied right of action."

id. at 769, 769 n.19.

The Second Circuit below, however,

expressly rejected CPC’s reliance on

Coutu, stating:

First, the conclusion 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 would not 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.

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.

(A20-21).

Thus, the Second Circuit not only

ignored the general applicability of

Coutu’s "reasoning" beyond its precise

holding, but it also failed to appreciate

that Coutu’s rejection of a Davis-Bacon

private right of action based upon

Congressional intent behind the Davis-

Bacon Act scheme applies with equal force

to a section 1983 action. Compare

Wilder, 496 U.S. at 509-11 (section

1983), with Touche Ross & Co. v.

Redington, 442 U.S. 560 (1979) (most

important factor in evaluating implied

private right of action is congressional

intent).

Other courts, indeed, have held that

no implied right of action exists to

enforce contracts actually containing

Davis-Bacon Act stipulations. United

States v. Capeletti Bros., 621 F.2d 1309

(Sth Cir. 1980) (no private right of

action exists to recover wages on

contract containing Davis-Bacon wage

specifications even though private Miller

Act bond remedy inapplicable) (cited with

approval in Coutu, 450 U.S. at 772-73

n.23). Accord Weber v. Heat Control Co.,

579 F. Supp. 346 (D.N.J. 1982), aff'd,

728 F.2d 599 (3d Cir. 1984)."

'5 Compare McDaniel v. Univ. of Chicago,

512 F.2d 583, 585-86 (7th Cir.)

(decided prior to Coutu, but finding

implied right of private action),

vacated & remanded, 423 U.S. 810

(1975), on remand, 548 F.2d 689 (7th

Cir. 1977) (again finding an implied

right of action under Davis-Bacon) ;

but see Simpson v. Reynolds Metals

Co., 629 F.2d 1226, 1240 n.27 (7th

Cir. 1980) (questioning McDaniel) ;

Faerber Elec. Co. v. Atlanta Tri-Com,

Inc., 795 F. Supp. 240, 244 n.2 (N.D.

Ill. 1992) (McDaniel’s holding that

there was a private right of action

under the Davis-Bacon Act "was

overruled in Coutu").

In any event, Coutu is, in fact,

directly on point, even though the

Contracts here contained prevailing wage

Stipulations, because in setting the

"Person Day Rate" below prevailing wage

levels, HPD made, and CPC relied on,

exactly the same predetermination present

in Coutu -- i.e., that the Davis-Bacon

Act prevailing wage requirements did not

apply.” Now, however, under the Second

Circuit’s Opinion, employees have been

blessed with a weapon to be used at will

to void wage predeterminations and to

The CPC/City Contract terms and

attached wage schedules are only

conclusory restatements of section

5310 -- it remained up to the City to

determine whether any actual

prevailing wage obligation applied

(e.g., whether respondents were

"employed" by CPC, and whether the

work to be performed was "construction

work," on "residential property" of

not less than "8 units"). See 42

U.S.C. § 5310(a); Coutu, 450 U.S. at

783-84; e.g., 1986-87 Contract Exhibit

F (Nos. 1 and 2) (129, 137).

recover private damages even after all

work under federally assisted contracts

has been performed and all monies paid.

The Second Circuit has thus completely

disregarded the unmistakable

Congressional intent to strike a fair

balance between the interests of

employees and contractors. As emphasized

in Coutu, the original Davis-Bacon Act

did not provide for predetermination of

prevailing wages nor any enforcement

mechanism. 450 U.S. at 775. Thus,

"{c]ontractors called for

predetermination of prevailing wages,

claiming that they had been put to

unexpected expense by post-contract

determinations that the prevailing wage

was higher than the rate upon which they

had based their bids." Id. Labor, on

the other hand, called for an enforcement

mechanism. Id. at 776.

In 1935, the Davis-Bacon Act was

amended to provide for both:

(T]he 1935 amendments added two key

features to the Act:

administrative predetermination of

the minimum wages that the

contractor must pay his laborers

and mechanics, and a means whereby

laborers and mechanics could

recover back wages under a contract

containing prevailing wage

Stipulations. The Act thus

carefully balances the interests of

contractors and their employees.

The contractor is able to ‘know

definitely in advance of submitting

his bid what his approximate labor

costs will be,’ S. Rep. No. 1155,

at 2, while the laborer or mechanic

is given a right of action to

enforce the stipulated wages. To

imply a private right of action to

sue for Davis-Bacon wages under a

contract that does not contain

prevailing wage stipulations would

destroy this careful balance.

Id. at 782.

In essence, the Second Circuit has now

excised the Davis-Bacon procedures and

balance of interests from the HCDA,

short-circuited the elaborate enforcement

scheme that had been placed in the hands

of HUD, the Department of Labor and the

ee ee

Attorney General, and put at risk badly

needed housing projects by placing HCDA

enforcement in the hands of private

parties and their lawyers. Not only will

contractors and public entities be

subject to the risk and uncertainty of

large damages and attorneys’ fee awards,

entire HCDA funded projects could be

halted as plaintiffs seek and obtain

injunctive relief to enforce their

section 1983 rights. Indeed, "laborers

and mechanics" could bring a private suit

not just after the contracts are

completed and all monies paid (as is the

case here), but at any time, even during

the pendency of the contract or while

administrative proceedings or remedies

are pending. A private right of action

will thus utterly vitiate the Reorganiza-

tion Plan and cripple Congress’ desire to

revitalize urban neighborhoods. Congress

Clearly did not intend section 5310 to

have such a devastating impact.

C. The 1974 And Current DOL Regulations

Provide For A Comprehensive

Enforcement Scheme

The extensive DOL regulations under

the Reorganization Plan in effect when

section 5310 was enacted in 1974, as well

as during all relevant times, Satisfy the

Sea Clammers standard by setting out a

comprehensive enforcement scheme.

Prevailing wage enforcement occurs

through labor standards investigations,

inspections and audits, 29 C.F.R.

S$ 5.5(a) (3), 5.6(a) (2), (3), 5.7(a) (2),

S.ll(a) (1974); enforcement reports, 29

C.F.R. § 5.7(b) (1974); debarment,

contract termination, and withholding, 29

C.F.R. §§ 5.6(b), 5.7(d), 5.9 (1974) ;

"request [s]" for restitution of wages, 29

C.F.R. § 5.10(a) (1974); and referral of

willful violations to the U.S. Attorney

General for criminal prosecution, 29

C.F.R. § 5.10(b) (1974).

Employees, moreover, are able to

initiate and gain administrative redress

for prevailing wage violations by

triggering an elaborate scheme to resolve

wage disputes. They may request the DOL

to make an "authoritative" ruling, and

the DOL must then resolve "[a]ll

questions" as to wage determinations,

their application, or wage disputes. 29

C.F.R. §§ 5.12 (1974); 1.6(BD), §.13

(1992). Any ruling is appealable to the

Wage Appeals Board. 29 C.F.R. Part 7

(1974) (1992). Indeed, the following

provision must be included in each

contract providing for resolution of all

labor standards disputes, including those

between contractor and employee:

" See also 29 C.F.R. §§ 5.6, 5.7, 5.9,

5.10-5.12 (1992) (to the same effect).

Disputes arising out of the labor

Standards provisions of this

contract . . . shall be resolved in

accordance with the procedures of

the Department of Labor set forth

in 29 C.F.R. parts 5, 6, and 7.

Disputes within the meaning of this

clause include disputes between the

contractor (or any of its

subcontractors) and the contracting

agency, the U.S. Department of

Labor, or the employees or their

representatives.

29 C.F.R. § 5.5(a) (9) (1992)."

Furthermore, at the initial

contracting stage, employees may directly

participate as "interested person[s]" in

a DOL-directed hearing on the specific

application of prevailing wage

requirements to the project before a

hearing examiner, from which they may

appeal as "interested person[s]" to the

DOL Administrator and to the Wage Appeals

Similar clauses are included in each

of the Contracts. See, e€.g., 1986-87

Contract Exhibit F. (No. 2), Arts. 13,

14 (142).

Board. 29 C.F.R. §§ 1.10-1.16, Part 7

(1974) ."7

The contracting agency, under the 1974

regulations, could also initiate a

hearing on prevailing wage disputes in

which "all interested parties" received

notice and could participate, after which

findings of wages due would be made. 29

C.F.R. § 5.11(b) (1974). Any "interested

person" could then appeal to the

Solicitor of Labor and to the Wage

Appeals Board. 29 C.F.R. §§ 5.11(b),

Part 7 (1974). This hearing procedure

may now be initiated not only by the

contracting agency, but also by the DOL,

on the employees’ behalf, or by the

contractor, or the subcontractor(s). 29

sd See also 29 C.F.R. §§ 1.8-1.9, Part 7

(1992) (providing that "[a]ny

interested person may seek recon-

Sideration of a wage determination" or

its "application" to the DOL

Administrator and the Wage Appeals

Board).

C.F.R. § 5.11(a) (1992). After a full

evidentiary hearing, employees may

continue to allow the DOL to act on their

behalf, or they may on their own behalf

as an "interested person" appeal to the

Wage Appeals Board. 29 C.F.R.

§ 7.2(b) (1) (1992).

Yet, the Second Circuit, in finding

that a comprehensive scheme has not been

set forth, emphasized that the regula-

tions do not provide that employees may

"initiate" the proceedings. (A19-20).

The government, however, acts for and on

behalf of the employees and is required

to act under its own regulations whenever

an employee brings a complaint, as it did

” Employees trigger the process and

here.

then have full participatory rights.

Thus, consistent with Congressional

intent to balance contractor and employee

interests, the 1974 and current

Regulations permit no private action by

employees. All of the powers under the

HCDA have been placed squarely in the

hands of either the contracting agency

(here the City), HUD, DOL or the Attorney

General in order to avoid a multiplicity

of individual litigations brought by

individual employees, members of the

public or other third parties. See

Coutu, 450 U.S. at 770 ("(T)he question

‘8 If the DOL does not act, laborers may

be able to compel agency action and

obtain limited judicial review under

the Administrative Procedure Act, 5

U.S.C. § 701 et seg. See Coutu, 450

U.S. at 761-62 n.10, and cases cited

therein; see also International Union

of Operating Eng’rs, Local 627 v.

Arthurs, 355 F. Supp. 7, 14 (W.D.

Okla.), aff'd, 480 F.2d 603 (10th Cir.

1973).

whether a statute creates a private right

of action is ultimately ‘one of

congressional intent, not one of whether

this Court thinks that it can improve

upon the statutory scheme that Congress

enacted into law’" (quoting Touche Ross &

Co., 442 U.S. at 578).

D. 42 U.S.C. § 5311(b) (2)’s Provision Of

Civil Suits By The U.S. Attorney

General To Recover Improperly Expended

HCDA Funds Precludes Any Private Right

Of Action Against An HCDA Recipient

Under 42 U.S.C. § 1983

Under section 5311(a), HUD may

terminate and limit HCDA payments to a

"recipient of assistance" upon a finding

"that a recipient of assistance under

this chapter has failed to comply

substantially with any provision of this

chapter." 42 U.S.C. § 5311(a). Section

5311(b) provides further for civil suit

by the Attorney General.

Thus, pursuant to section 5311(b), the

City, as the "recipient" of HCDA funds,

is subject to civil suit commenced by the

Attorney General after referral of the

matter by HUD. CPC may also be subject

to civil suit under this provision. See

Dixson, 465 U.S. at 487 (holding private

community organization which contracted

with city to administer HCDA funds was a

recipient of federal block grant funds).

The Davis-Bacon Act administrative

scheme is fully served by this

enforcement mechanism -- since HUD must

first refer the matter to the Attorney

General. See Davis v. United States

Dep't of Housing and Urban Dev., 627 F.2d

942, 946 (9th Cir. 1980) (referral under

42 U.S.C. § 5311(b) "is a matter for the

agency’s initial determination"). After

referral, the Attorney General may

proceed to impose both criminal and civil

liability. Again, it is clear that the

Sea Clammers/Smith standard has been met.

See, e.g., Sea Clammers, 453 U.S. at 13

(government had authority to issue

compliance orders, bring civil suits, and

seek civil and criminal penalties).

Sse

THE SECOND CIRCUIT'S OPINION CONFLICTS

WITH SUTER BY HOLDING SECTION 5310

CREATES A COGNIZABLE FEDERAL "RIGHT"

TO BE PAID PREVAILING WAGES

Section 1983 is not a procedural

vehicle to redress all violations of

federal laws, only those violations that

implicate rights, privileges and

immunities. Suter, 112 S. Ct. at 1367

("we caution that ‘'"Section 1983 speaks

in terms of ‘rights, privileges, or

immunities,’ not violations of federal

law"’" (quoting Wilder, 496 U.S. at

5909)). Thus, a private "federal right"

enforceable under section 1983 exists

only where "’the provision in question

was intend[ed] to benefit the putative

plaintiff,’" Wilder, 496 U.S. at 509,

and "unambiguously confer[s] an

enforceable right upon the Act’s

beneficiaries." Suter, 112 S. Ct. at

1370 (holding that the Adoption Act does

not "unambiguously confer upon the child

beneficiaries of the Act a right to

enforce the requirement that the State

make ‘reasonable efforts’ to prevent a

child from being removed from his home,

and once removed to reunify the child

with his family." Id. at 1367).

Yet, the "primary objective" of Title

I of the HCDA, as stated in Dixson, is

"the development of viable urban

communities,’" 465 U.S. at 486, quoting

42 U.S.C. § 5301(c), which expressly

provides:

The primary objective of this .

Chapter .. . 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.

The HCDA is thus not a wage statute

enacted for respondents’ benefit, but

rather provides federal funds intended

for the benefit of urban dwellers of low

and moderate income.

Respondents are, therefore, only

indirect non-intended beneficiaries of

the provision to the City of HCDA funds

pursuant to Congress’ spending power.

But, as emphasized in Suter, simply

gaining a statutory benefit (especially

an indirect one) is not sufficient to

rise to the level of a right. See Suter,

112 S. Ct. at 1367 (finding no § 1983

private right even though children were

intended "beneficiaries").

The Second Circuit therefore erred in

rejecting the holding in Coutu that the

Davis-Bacon Act does not confer rights on

laborers and mechanics, but, rather,

conveys only an indirect benefit from

obligations imposed on federal agencies:

477

Congress, rather than drafting the

legislation "with an unmistakable

focus on the benefited class,’"

instead has framed the statute

simply as a general prohibition or

a command to a federal agency.

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 ... § 1 is simply

‘phrased as a directive to federal

agencies engaged in the

disbursement of public funds.’

450 U.S. at 772 (citations omitted); see

also Capeletti Bros., 621 F.2d at 1314

("benefits flowing to laborers and

mechanics are derived indirectly and not

as a result of any right conferred

directly upon their class").

Indeed, as stated in Coutu:

[t]he [Davis-Bacon] Act was ‘designed

to protect local wage standards by

preventing contractors from basing

their bids on wages lower than those

prevailing in the area.’ .. . The

purpose of the bill was ‘simply to

give local labor and the local

contractor a fair opportunity to

participate in this building program.’

450 U.S. at 773-74.

Moreover, the use of the phrase "shall

be paid" in section 5310 does not

"unambiguously confer" a right given the

HCDA statutory scheme. Suter emphasized

that in discerning Congressional intent,

the entire statutory scheme must be

considered:

In both Wright [v. Roanoke

Redevelopment and Housing Auth.,

479 U.S. 418 (1987)] and Wilder the

word ‘’reasonable’ occupied a

prominent place in the critical

language of the statute or

regulation, and the word

‘reasonable’ is similarly involved

here. But this, obviously, is not

the end of the matter. The

opinions in both Wright and Wilder

took pains to analyze the Statutory

provisions in detail, in light of

the entire legislative enactment,

to determine whether the language

in question created ‘enforceable

rights, privileges, or immunities

within the meaning of § 1983.’

112 S. Ct. at 1367 (citation omitted) .'’

os See also Latinos Unidos De Chelsea En

Accion v. Secretary of Housing and

Urban Dev., 799 F.2d 774 (lst Cir.

1986) (under entire structure of HCDA,

no private right of action exists to

enforce the nondiscrimination provi-

(continued...)

Here, under the analysis in Suter, no

private right of action can be found in

light of (a) section 5310’s plain

language adopting the Davis-Bacon Act’s

comprehensive scheme, (b) the failure to

include even the limited Miller Act

remedy, (c) the Congressional intent to

balance contractor and employee

interests, (d) the unified enforcement

and certainty gained through the

Reorganization Plan and the DOL

administrative regulations thereunder,

and (e) since the HCDA was enacted under

Congressional spending powers for the

benefit of urban dwellers.

9) continued)

Sion of the HCDA, 42 U.S.C. § 5309(a)

(1.e., that no person "shall" be

discriminated against) ).

Ivr.

THE SECOND CIRCUIT UNFAIRLY HELD CPC TO

BE A STATE ACTOR IN CONFLICT WITH

RENDELL-BAKER AND THIS COURT'S GENERAL

PRINCIPLES FOR FINDING STATE ACTION; CPC

DID NOTHING MORE THAN AGREE TO A CONTRACT

PRICE UNILATERALLY SET BY TEE CITY

The precise factual issue here has not

previously been addressed by this Court

-- mamely, whether a private contractor

fairly becomes a stat@ actor when it

simply enters into a contract with a

municipality at a contract price for the

payment of labor -- a "Person Day Rate"

-- set by the municipality so low as to

make it financially impossible to pay

prevailing wages. The Second Circuit’s

Opinion finding state action by CPC,

however, conflicts with the general

principles set forth in Rendell-Baker v.

Kohn, 457 U.S. 830.”

- See Edmonson v. Leesville Concrete

Co., 111 S. Ct. 2077, 2083 (1991)

("Although we have recognized that

this aspect of the analysis [i.e.,

(continued...)

The principle set forth in Rendell-

Baker controls here:

id.

[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 the 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.

at 840-41 (emphasis added). Indeed,

this Court has stated a rigorous

threshold for CPC, as a private party, to

fairly become a state actor, which has

not been met:

Misuse of power, possessed by

virtue of state law and made

possible only because the wrongdoer

is clothed with the authority of

State law is action taken ‘under

color of’ state law.

. continued)

"whether a private litigant in all

fairness must be deemed a government

actor"] is often a factbound es age

see Lugar [v. Edmondson Oil Co.], 457

U.S. at 939, our cases disclose

certain principles of general

application").

United States v. Classic, 313 U.S. 299,

326 (1941); see also Jackson v.

Metropolitan Edison Co., 419 U.S. 345,

351 (1974) ("the inquiry must be whether

there is a sufficiently close nexus

between the State and the challenged

action of the [private party] so that the

action of the latter may be fairly

treated as that of the State itself").

Despite the coercive effect attributed

to the "Person Day Rate" by the Second

Circuit, it is, in reality, nothing more

than a mathematical calculation used by

the City to arrive at a total contract

price and to pay out funds. CPC had no

role in determining the "Person Day Rate"

and simply entered into a contract at

that price. Such action cannot convert

CPC into a state actor even if CPC

received such public funds as its total

and exclusive reimbursement for program

work. See Rendell-Baker, 457 U.S. at 840

(rejecting section 1983 claim even though

"virtually all of the school’s income was

derived from government funding"

The Second Circuit’s reasoning,

moreover,—is circular and thus

fundamentally flawed (i.e., becaus:

"Person Day Rate" resulted in a purported

prevailing wage violation, state act

by CPC necessarily exists In effect, a

purported underlying substantive prevail

ing wage violation has been bootstrapped

into state action. Compare Rendell-

Baker, 457 U.S. at 838 ("[t]he core issue

presented in this case is not whether

petitioners were discharged because of

their speech or without adequate

procedural protections, but whether the

school’s action in discharging them can

fairly be seen as state action"); Flagg

Bros. v. Brooks, 436 U.S. 149, 155-56

Thus, under the Second Circuit’s

flawed analysis, any contract between a

public entity and a private party in

which the public entity unilaterally sets

vital terms of the contract is converted

into state action. Private contractors

now risk section 1983 liability simply by

contracting with a public entity, despite

this Court’s holding in Rendell-Baker.

The Second Circuit’s decision, if allowed

to stand, would therefore utterly

obliterate the "essential dichotomy"

between public and private acts.

Jackson, 419 U.S. at 349 ,°!

The Second Circuit, in holding CPC to

be a state actor, also misapplied the

"coercive power" and "significant

encouragement" language taken from San

Francisco Arts & Athletics, Inc. v.

United States Olympic Comm., 483 U.S.

922, 546 (1987) (holding U.S. Olympic

Committee not to be a governmental

actor), which, after all, was taken

from Blum v. Yaretsky, 457 U.S. 991,

1004 (1982), and Rendell-Baker, 457

U.S. at 840 -- both of which, on their

facts, found no state action by the

private party.

In addition, since CPC simply paid

respondents in accordance with the

"Person Day Rate," as required by the

contract and the City’s determination,

mistaken or otherwise, that no prevailing

wage requirement applied, no liability

under section 1983 can be imposed on CPC

even if the mandated payment of

respondents’ wages pursuant to the

funding rate were held to be a violation

of section 5310. See Monell v. Dep’t of

Social Services, 436 U.S. 658, 691-95

(1978) (section 1983 does not create a

cause of action for vicarious liability

for deprivation of rights); Yearsley v.

W.A. Ross Constr. Co., 309 U.S. 18 (1940)

(private contractor simply acting in

accordance with contract with U.S.

Government not liable for alleged

constitutional injury caused by its

actions); O’Grady v. City of Montpelier,

474 F. Supp. 186, 187-88 (D. Vt. 1979)

(private contractor not liable under

section 1983 for merely performing in

accordance with terms of municipal

contract). Indeed, in ignoring this body

of law, the Second Circuit incredibly

conceded that CPC was being held

vicariously liable for the City’s (not

CPC’s) breach of official duty to

properly determine that prevailing wages

be paid:

In sum, the facts alleged would

suffice to permit a finding 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.

(A23) (emphasis added).

IV.

IN SETTING THE "PERSON DAY RATE,"

THE CITY EXERCISED DELEGATED FEDERAL

AUTHORITY FOR ENFORCING PREVAILING

WAGE STANDARDS

The Second Circuit also ignored this

Court’s established precedent ctnat when

state officials act solely pursuant to

federal authority, they act under color

of federal, but not state, law and are

not subject to section 1983. Wheeldin v.

Wheeler, 373 U.S. 647, 650 n.2 (1963).

The City, in contracting with CPC at the

"Person Day Rate," acted solely pursuant

to its delegated federal authority to

determine and enforce prevailing wage

Standards (i.e., in capping the "Person

Day Rate" and thus, the total contract

price, at a level insufficient for CPC to

pay prevailing wages, HPD determined that

no federal prevailing wage obligation

existed). See Coutu, 450 U.S. at 759 n.6

(contracting agency has "primary re-

sponsibility" for Davis-Bacon enforce-

ment); 29 C.F.R. §§ 5.6(a) (1) (1974);

1.6(a) (2) (b) (1992).

Indeed, in enforcing prevailing wage

standards, the federal government

(through both DOL and HUD) has not only

Overall responsibility, but also

overlapping day-to-day responsibility and

control with the City. Significantly,

no state law prevailing wage obligations

whatsoever were imposed on CPC -- any

™ See, €.g., 1986 Handbook of HUD

{ FOREWORD ("In ... the Community

Development Block Grant programs, HUD

has delegated to local and State

agencies certain ministerial

responsibilities to enforce labor

Standards. HUD at the same time,

however, retains overall responsibil -

ity for ensuring that local and State

agencies properly Carry out their

enforcement responsibilities"); 4 104

\"HUD has delegated certain of the

day-to-day enforcement responsibili-

ties [for labor standards compliance

to state and local agencies]

which directly administer HUD-

assisted programs."); 1987 DOL Field

Operations Handbook at Chapter

15a00(b) ("Under Reorganization Plan

No. 14 of 1950 . .. the Federal

contracting or other administering

agency has the primary responsibility

for the enforcement of the DBRA/CWHSSA

labor standards provisions included in

its contracts. The Secretary of Labor

(S/L) has coordination and Oversight

responsibilities including the

authority to investigate labor

Standards compliance as warranted.");

29 C.F.R. Part 5 (1992).

purported prevailing wage obligation

arose purely under federal law.

This Court in Dixson, moreover, held

that officers of a private social service

corporation just like CPC, which

administered HCDA block grant funds

pursuant to an agreement with a

municipality, "act[ed] for or on behalf

f the United States" within the meaning

of th

federal bribery statute, 18 U.S.C.

§ 201. 465 U.S. 482. While Dixson

arises under a criminal statute, not

section 1983, its holding and conclusions

govern the federal character of the

City’s actions here because, according to

the Court, they "turn[ed] on the

relationship between [the private]

petitioners and the Federal Government."

Id. at 486.

In holding the corporation’s officers

to be federal actors "with official

federal responsibilities," id. at 496,

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delegated to state and local authori-

ties." Id. at 486. It then held:

Given the structure of the HCDA

program and petitioners’

responsible positions as

administrators of the subgrant, we

have little difficulty concluding

that these persons served as public

officials for purposes of § 201(a).

As executives of UNI, petitioners

had operational responsibility for

the administration -ef the HEDA

grant program within the city of

Peoria. In allocating the federal]

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the federal funds could be

distributed. By accepting the

responsibility for distributing

these federal fiscal resources,

petitioners assumed the

quintessentially official role of

administering a social service

program established by the United

States Congress.

Id. at 496-97 (emphasis added).

Respondents’ section 1983 claim

involves federal action, and not state

action. Accordingly, as a matter of law,

it cannot stand.

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