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

> Briefs, arguments, decisions, and more.

URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386009_0512%3A1

## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1993
- **Citation:** 510 U.S. 978

## Text

,

{
al j Bu rA
ah -. . pr ms Cond, U.S, =
& wv Ls ae s i oe ik@ ae |
No. en
— _ as iSSS
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

=
Wii

1
e a
. ae i nf
i Mi | 7

_ =i

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.

ii

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

20

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

lv

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). >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).

56

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 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)

ix

PAGES

58

49

49

56

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
46

61

50 n.19
passim
27

4, 43
Ss ae
43, 44
43,61

passim

15 n.9

15 0.9

15 n.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

15 n.9

40
28 n.12
37

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

3

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

4

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

4A

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

4B

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

4C

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

5

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

10

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).

aa

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

12

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

14

"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).

pa

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

16

("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

17

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

18

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.

19

I.

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

21

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

22

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...)
23

a

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.

24

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

oa

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).

26

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

27

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).

28

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

30

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

31

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").

32

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).

33

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.

34

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

35

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

36

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

37

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).

38

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).

39

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).

40

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

41

” 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).

42

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,

43

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

44

(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

45

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.

46

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.

48

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...)

49

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) ).

50

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...)

51

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.

ad

. 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").

52

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

53

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

54

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.

55

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)

56

(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

57

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

58

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

e
{ 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).

59

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

4)

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,

60

, ‘ “+
hd Ad bibhJ sic i 4" 4 A* : A/S e Aid :
+ ’ = ’ ‘ y ‘7 » | a , , +’ y +
‘ ‘ r4 - })
. A i A id i i Y i j if #4 J 4 44 Ad
‘ " . ’ ‘7 ’ ’ , > ‘
i ALANA n/ i wy at 4 i a. J A P As i
. > > > y > ‘7 ‘ ‘ ‘ >
‘ } ‘ ‘ . bh }
’ ’ 7 > 10,4 ; ¥ . ‘|
: A i 4 2 : i — iir4 Ra
> 4 | hy, + ¥ ’ . ~ } »* ~ >
; ‘ A i A A A AVA A ete
‘ i-.. ¥ ‘7 “a aia “+ Ws , y ‘ ) .
a. * A A 4 v >! ; A. » > J ¥ wy ¥ ? ,
; ‘ > a. F ‘ ’ y ’ , . y ]
2 A X.Y 4 i 2 h v ALiNA
mr mor , ae ™ ,* y 7. 7 ,
‘ > - is » & “ ‘ : ‘ . s s Aa s
ry ¥ ¥ ¥ ‘7 ¥ ¥ > ’
4 P , y P ‘ y ‘ 1. ) ’
; n/ 4 \ i «A Y ; bNA A hNA
, 2 y ’ ; 4g ; y 7 . "
\ h P P | ae ‘ .
‘4 YY ; ’ . , “+ ‘
A £4 " ‘ ‘ b * Ad
‘ " y y\ + y Mm «es = —
i Ad i : : Aid Ad a ws A.4C 4 hb
‘ ¥ ‘
; yy i i Ad i 4 ‘ :
¥ 7 » ry ¥ ,
> ‘ > ‘ 4 _ ‘al .
j ‘ : be v¥ i
4 | '» | ’ > y ¥ ” , ’
fe AAA 4 : | i ia ‘ i .
, .* . ; ; - } y ;
L4 ‘ ia 4 4a : :
’ ‘ , y L ‘> ™ + , ; ‘ . q .
A : s ‘ ; | A i af Ww
~ } ’ ‘7 ; 4 “7 _ ; ‘ ‘ - }
i saa y say aA Rsid i : i
4 | ¥ ¥ ¥ ,» ry ’ | ’ ¥ > " ,
A Au b ; ‘ | Ld sh ‘ | ia

expenditure of federal funds, is
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]
resources made available to the
city through the HCDA grant
program, petitioners were charged
with abiding by federal guidelines,
which dictated both where and how
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.

62

CONCLUSION

77 Tro m my rT ‘ rn = a > ,
oe ad » be y r , 7 > Q rT) . 1
WHEREFORE for the reasons statea, we

Y cy ,a rf ~ + ~ . .~ + > an he ~ , .

request hla rie lr jral nis

T ‘ - Alour V vk VY rk
Valea: NEW YY 4¢$ Y rA
“SEAT EMHeEY | 190902
\ Liu I , \
r — + > + 1 Vas . vy - + q
KeESDE CruLLYyY SUDMI ed,
I J
AlN rT = c7AT WOT
\ be > be
PEIiSCK A. WALKER
~ £ oo
Rat, . ¥ |
. UlilsS © i st * i 4= i A
TAY WAK
y
JAY W. ARS
mm TART ’ AMOR DAMTT
tw re {
DM iAIN I. ~-ROARA 1 i
YaAYVtT CLI a oh a mT TTA ~ ay
se. 7 | aml be be
RAISE, . MUUGSNR, I RUYLALIN
ccER UTR ‘
7
rALl SO x
4 . y .
& 2 raIrI kK
AT tal Y y YK 7
iNew I I es LA “he a
7 Mm 4 pd
AL + ry 4 t ~ T > + . y
a’ L. i AS a i i i i Lif i
’ al
r ¥ 7) ates _¥ y \ ry ’ ’
Lh & dS a ALC L di aii ricaiil i 4

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386009_0512%3A1. Public record. Not legal advice.