Opposition Brief — Fidelity Technologies Corp. v. Butler

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Bugrom Court U.S.

FILE D

JUL 16 1997

No. 96-2015

In The

Supreme Court of the United States

October Term, 1996

FIDELITY TECHNOLOGIES CORPORATION,

Petitioner,

LONNIE B. BUTLER, ET AL.,

Respondents.

On Petition For A Writ Of Certiorari To The

Louisiana Third Circuit Court Of Appeal

BRIEF IN OPPOSITION

Submitted By:

Rosert J. T&ére — #17384

Jones, Téte, NoLten, HANCHEY,

Swirt, Spears & Font, L.L.P.

1135 Lakeshore Drive

Post Office Box 910

Lake Charles, LA 70602

(318) 439-8315

Counsel for Respondents

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

OR CALL COLLECT (402) 342-2831

TABLE OF CONTENTS

Page

pI SE Oe Peete Pree i

TABLE OF AUTHORITIES ........:....... paeudetys ii

PRE EE BEE ME ccc c ce ccciccceccceseace 1

PEERED MRIRTTS 5.0 6-05 0g 00s edd e donee ce 1

pes AO Ge) Se 3

REASONS FOR DENYING THE WRIT............. 4

RMPTRMEMEE SF 6 ES ec SARe babe Scccoveassvadrccseered 23

TABLE OF AUTHORITIES

Page

CASES

Allen v. Pennco Engineering Co., 847 F.Supp. 1315

GADD. Tie. Dion tne cc caddis entecsdarahetieen in 7

Allis-Chalmers Corp. v. Lueck, 471 U.S. 202, 105

S.Ct. 1904, 85 L. Ed. 2d 206 (1985)................ 21

Barron v. Reich, 13 F.3d 1370 (9th Cir. 1994) ......... 18

Berteau v. Wiener Corp., 362 So.2d 806 (La. App. 4th

Che. TDF) so cccccccectusseescbasnnetubegnereat: 5

Brown v. Luk, Inc., 1996 W.L. 280831 (N.D.N.Y.

IDOE)... cn ccccasscasscvshsudchveteaneeamieeees 16, 20

Cipollone v. Liggett Group, Inc., 505 U.S. 504, 112

S.Ct. 2608, 120 L. Ed. 2d 407 (1992)................ 7

Danielsen v. Burnside-Ott Aviation Training Center,

941 F.2d 1220 (D.C. Cir. 1991) ..........-..000. 18, 19

Elliott v. General Gas Corporation, 85 So.2d 55 (La.

BGG). 6a discs vc ccocns ts ssvveneneusedeebunewandsses 7

Foster v. Parker Transfer Co., 528 F.Supp. 906

CWT Date. BORED «ons cs ccsccncectppewsasénanbas 16, 18

Francis v. Morial, 455 So.2d 1168 (La. 1984)........... 6

Hendrix v. Delta Air Lines, Inc., 234 So.2d 93 (La.

Aap. Gs Cie. TSGGD. 6600 ccsiccctctsntnwatbing sass 22

La. Associated Gen. Contr. v. Calcasieu, 586 So.2d

13B6 Gin. BOP isis co saves ise pcanbasatomdeseenssss 6

Lee v. Katz and Bestoff, Inc., 479 So.2d 459 (La. App.

Sat Cie, Tee tibc s cnccictdasnhebstbagauipasocas s<ss 5

Lingle v. Norge Div. of Magic Chef, Inc., 486 U.S.

399, 108 S.Ct. 1877, 100 L. Ed. 2d 410 (1988)...... 21_

iii

TABLE OF AUTHORITIES - Continued

Page

Livadas v. Bradshaw, 512 U.S. 107, 114 S.Ct. 2068,

28 FL Fey er eee ia 21, 22

Masters v. Maryland Management Company, 493 F.2d

EE NG 0s 60 A ds belek d cA d kde sd cd saves. 20

Moore v. RLCC Technologies, Inc., 668 So.2d 1135

NM dns tah on cds kb chan Sud NGe dk cd oh 2622: 6

Nichols v. Mower’s News Services, Inc., 492 F.Supp.

ce eS . SSASRRREES PERRIER SSIES aan 18

Potvin v. Wright’s Sound Gallery, Inc., 568 So.2d 623

J = fa 1) Sena eae 5

Ruby v. City of Shreveport, 427 So.2d 1267 (La. App.

SERGE re SESE ma enn eet oa 6

Stafford v. City of Baton Rouge, 403 So.2d 733 (La.

MANES whles ches Cambio ks cues s . $3Si de Ce iwes vie 5, 6

Stell v. Caylor, 223 So.2d 423 (La. App. 3rd Cir.

ten LE ST Oe FE ees 1 Ee RE 5

Universities Research Ass'n v. Coutu, 101 S.Ct. 1451,

450 U.S. 754, 67 L. Ed. 2d 662 (1981).......... iy 42

Wisconsin Public Intervenor v. Mortier, 111 S.Ct.

2476, 501 U.S. 597, 115 L. Ed. 2d 532 (1991) ....... 7

STATUTES AND REGULATIONS

18 U.S.C. §§ 1961-1968 (RICO) ...................... 19

Pe I ih 6 en WG is aks eudws dadvcsioew cae 21

29 U.S.C. § 201 (Fair Labor Standards Act)... 16, 20, 22

EN Pd i Stich ca enn ds oh bee ok va ok ea. 15

TABLE OF AUTHORITIES - Continued

Page

40 U.S.C. §§ 327-33 (Contract Work Hours and

Safety Standiagdis Acta). o6 6 ois oss scseee Fedele vis oe 20

41 U.S.C. § 351(a) (Service Contract Act)...... 8, 11; 28

LSA-R-S. 23:631 and 632 .......200s60 2, 4, 5, 6, 23, 24

STATEMENT OF THE CASE

PROCEEDINGS BELOW

On behalf of LONNIE B. BUTLER, AUDREY M.

ANDERSON, ROBERT H. ARMER, W. L. BASCO, JR.,

LINDA KAY BEHAN, JAMES W. BRYANT, LOYIL W.

CRYER, WAYNE DUNN, KARAN M. MAHLEN, JOSEPH

T. MARTIN, MARGARET H. MAYO, FRANCES R.

MELCHIORRI, DONALD R. SAVANT, RAMONA

SMART, HAROLD D. STAPLES, and RUBY LEA HUT-

SON, counsel instituted this lawsuit on or about Decem-

ber 8, 1994. (App. 1-5). As alleged, Fidelity Technologies

Corporation (hereinafter sometimes referred to as “Fidel-

ity Technologies” or “petitioner”), failed to pay vacation

benefits due former employees within seventy-two hours

of their termination on November 5, 1992, notwithstand-

ing amicable demand for same. In fact, Fidelity Technolo-

gies admitted in the district court proceedings that no

amount was ever tendered to respondents until months

after this suit was filed, years after the debt was due.

(App. 23-24). The ostensible reason for the failure to

tender amounts due was because the former employer

was in a dispute with another company regarding which

company would pay respondents the accrued benefits —

the employer who terminated the employees, Fidelity

Technologies, Inc., or the company to whom Fidelity

assigned a contract, Dynamic Concepts, Inc. (App. 19).

Petitioner filed an exception to the subject matter

jurisdiction contending, as the company president stated

on the witness stand, that the United States Department

of Labor was the only entity that could “legally force us”

to pay. (App. 20). On February 23, 1996, a hearing on the

Bit ce ecu — ee

exception to the subject matter jurisdiction of the state

court was heard. The district judge sustained the excep-

tion. An appeal ensued. On December 26, 1996, the Third

Circuit Court of Appeal, reversed the trial court ruling

holding that state court has jurisdiction to address

respondents’ claims asserted pursuant to state wage laws

that require an employer to pay wages, including wage

benefits, within seventy-two hours of termination. As the

Third Circuit stated:

“The purpose of LSA-R.S. 23:631 and 632 is to

compel the employer to pay the earned wages of

an employee promptly after his dismissal or

resignation. In contrast, the SCA’s purpose and

objective is to ensure that federal service con-

tract employees are treated equally with

employees in that locality by requiring the con-

tractor to pay the prevailing wage and benefits.

La.R.S. 23:631 and 632 do not prevent or inter-

fere with the attainment of these federal goals.

In fact, 23:631 and 632 help to effectuate the

SCA. Depriving Louisiana employees of this

remedy would be inconsistent with the objec-

tives of the SCA when the SCA seeks to ensure

that these same employees are guaranteed the

same benefits as other employees in the same

locality and state. As such we find that the SCA

does not preempt La.R.S. 23:631 and 632 and

reverse the judgment of the trial court.”

The Louisiana Supreme Court voted unanimously to

deny petitioner’s writ application.

STATEMENT OF FACTS

The sixteen respondents are all former employees of

Fidelity Technologies whose employment with the peti-

tioner was terminated on or about November 5, 1992. On

November 1, 1992, a novation agreement dated October

30, 1992, between petitioner and Dynamic Concepts, Inc.

went into effect whereby Dynamic Concepts, Inc.

assumed the obligation to operate and maintain the

administrative telephone system located at Fort Polk pre-

viously operated by Fidelity Technologies Corporation.

The respondents were not paid their accrued vacation

benefits upon termination. Mr. Gulati, President of Fidel-

ity Technologies, testified on direct examination as fol-

lows:

Q. “Did you have dispute develop over who

owed vacation pay to the people that had

been employed by you but began working

for D.C.I. at the novation?”

“Yes, we did.”

“What was the dispute about?”

oO >

A. Dispute was which of our companies was

responsible for paying the vacation pay

which was accrued before the novation

transfer. (App. 19).

Counsel for respondents strenuously objected to the

trial court allowing parol testimony about the substance

of any purported “ruling” by the Department of Labor on

the grounds that such “ruling” itself would be the best

evidence of its content; that such testimony was hearsay

and that it also lacked an adequate foundation. In any

event, the dispute before the court was the dispute

between the petitioner and its former employees, not the

dispute between Fidelity and Dynamic Concepts.

The petitioner chose to shirk its employment obliga-

tion until such time as an extraneous dispute with

another party could be resolved. Mr. Gulati testified that,

by pure happenstance, a “ruling” on the Fidelity/

Dynamic dispute occurred within a few days after service

of the lawsuit now before this court. (App. 22). This suit

was filed more than two years after the obligation of

petitioner to pay the benefits arose. Not until three

months after the Department of Labor “ruling” did Fidel-

ity tender any monies at all, which tender did not include

interest, penalties, or attorney fees. (App. 23-24).

REASONS FOR DENYING THE WRIT

I. Whether Louisiana courts retain subject matter

jurisdiction over state wage law claims asserted pur-

suant to LSA-R.S. 23:631 and 632 in light of the

presumption that such laws are not preempted by

federal legislation.

After the passage of more than two years without

receiving the vacation benefits to which respondents

were entitled upon termination of employment, respon-

dents filed this lawsuit in state court asserting the rights

and remedies afforded by state law under LSA-R.S.

23:631 and 632. LSA-R.S. 23:631 provides in pertinent

part:

“Upon the discharge of any laborer or other

employee of any kind whatever, it shall be the

duty of the person employing such laborer or

other employee to pay the amount then due

under the terms of employment, whether the

employment is by the hour, day, week, or

month, not later than three days following the

date of discharge.”

LSA-R.S. 23:632 provides in pertinent part:

“Any employer who fails or refuses to comply

with the provisions of R.S. 23:631 shall be liable

to the employee either for ninety days wages at

the employee’s daily rate of pay, or else for full

wages from the time the employee’s demand for

payment is made until the employer shall pay or

tender the amount of unpaid wages due to such

employee, whichever is the lesser amount of

penalty wages. Reasonable attorney fees shall be

allowed the laborer or employee by the court

which shall be taxed as costs to be paid by the

employer, in the event a well-founded suit for

any unpaid wages whatsoever be filed by the

laborer or employee after three days shall have

elapsed from time of making first demand fol-

lowing discharge or resignation.”

With only minor modifications, these wage statutes

have been the law in Louisiana since 1920. Louisiana

courts have held that vacation benefits are considered an

“amount . . . due under the terms of employment” within

the meaning of these wage statutes. Stell v. Caylor, 223

So.2d 423, 426 (La. App. 3rd Cir. 1969). See also Berteau v.

Wiener Corp., 362 So.2d 806 (La. App. 4th Cir. 1978); Lee v.

Katz and Bestoff, Inc., 479 So.2d 459 (La. App. 1st Cir.

1985); Potvin v. Wright’s Sound Gallery, Inc., 568 So.2d 623

(La. App. 2nd Cir. 1990)

In Stafford v. City of Baton Rouge, 403 So.2d 733, 734

(La. 1981), the Louisiana Supreme Court held that

“ ... the requirements of R.S. 23:631, et seq., pertaining to

the duty of an employer to pay wages due to an

employee upon discharge or resignation . . . apply

equally to both private and governmental employers.”

The Court further stated:

“The employees of governmental agencies need

their wages upon cessation of employment just

as urgently as the employees of individuals or

of private corporations. Furthermore, the Legis-

lature, although expressly recognizing this spe-

cial need of all employees to receive wages due

him immediately upon discharge or termination,

has not seen fit to distinguish between govern-

mental and private employers in imposing the

obligation upon employers to pay immediately

the wages due upon cessation of employment.

We decline to imply that the Legislature

intended such a distinction, and we have not

been shown any rational basis for a constitu-

tional classification if the Legislature did intend

to distinguish between employers.” Stafford, 403

So.2d at 734

It is axiomatic that states have the right to adopt such

wage laws in the exercise of their police power, that is,

“ ... the inherent power of the state to govern persons

and things, within constitutional limits, for the promotion

of general security, health, morals and welfare.” Francis v.

Morial, 455 So.2d 1168, 1172 (La. 1984); La. Associated Gen.

Contr. v. Calcasieu, 586 So.2d 1354, 1366 (La. 1991); Moore

v. RLCC Technologies, Inc., 668 So.2d 1135, 1143 at note 11

(La. 1996); Ruby v. City of Shreveport, 427 So.2d 1267, 1271

(La. App. 2d Cir. 1983). These particular state laws were

first enacted because of “ . . . an evil practice then

prevailing among some employers of forcing a dis-

charged laborer to wait until pay day, or longer, to receive

the wages he had earned.” Elliott v. General Gas Corpora-

tion, 85 So.2d 55, 57 (La. 1955)

In analyzing whether the state wage laws, adopted to

protect Louisiana workers, are preempted by federal law,

Courts must start first with the presumption that” . . . the

historic police powers of the states [are] not to be super-

seded by . . . Federal Act unless that [is] the clear and

manifest purpose of Congress.” Allen v. Pennco Engineer-

ing Co., 847 F.Supp. 1315, 1318 (M.D. La. 1994) quoting

Cipollone v. Liggett Group, Inc., 505 U.S. 504, 112 S.Ct. 2608,

2617, 120 L. Ed. 2d 407 (1992). The court in the Allen case

succinctly summarizes the only instances in which state

law is preempted under the Supremacy Clause of the

United States Constitution as follows:

“Courts recognize three circumstances in which

state law is preempted under the Supremacy

Clause. A federal statute may contain a provi-

sion which states that it expressly supersedes

state authority. In the absence of such explicit

language, state law may be displaced when

Congressional regulation is so comprehensive

that it is said to have completely occupied an

entire field, leaving no room for state law. Pre-

emption may also occur when and to the ‘extent

that state and federal law actually conflict’.”

Allen, 847 F.Supp. at 1318, citing Wisconsin Public

Intervenor v. Mortier, 501 U.S. 605, 115 L. Ed. 2d

532, 111 S.Ct. 2476.

It is within this legal framework, that the Third Cir-

cuit, Court of Appeal considered and rejected the conten-

tion that state law is wholly preempted by the Service

Contract Act.

II. Whether the presumption against preemption of a

state law, enacted for the welfare of state citizens

pursuant to the state’s police power, is overcome by

any express provision in the Service Contract Act of

1965.

The SCA provides that:

“[e]very contract . . . entered into by the United

States . . . in excess of $2,500 . . . the principal

purpose of which is to furnish services in the

United States through the use of service

employees, shall contain . . . (1) A provision

specifying the minimum monetary wages to be

paid the various classes of service -

ees . . . as determined by the Secretary .

accordance with the rates for such Rat Sabre in

the locality. . . . (2) A provision specifying the

fringe benefits to be furnished the various

classes of service employees as determined by

the Secretary [including] vacation and holiday

pay ...”. 41 US.C.A. § 351(a)

Reference to the Service Contract Act, 41 U.S.C. 351 et

seq. will show that there is no express provision stating

that this federal law supersedes state law regulation of

the employment relationship. Therefore, the present case

may readily be focused more narrowly on whether a

conflict between federal and state law exists requiring

displacement of state law, or whether the Congressional

regulation is so comprehensive that it completely occu-

pies the entire field leaving no room for state law. To

consider these issues, the Third Circuit, Court of Appeal,

correctly considered not only the purpose of the state

laws, as stated above, but also the purpose of the federal

legislation which petitioner would apply.

Ill. The purpose for which the Service Contract Act of

1965 was enacted was to assure that employees

working for a private contractor performing work

for the federal government were paid the prevail-

ing wage rate in the locality of the work.

The Service Contract Act is, in short, a prevailing rate

wage law. The reason for the Act is stated in the Legisla-

tive History as follows:

The need for this legislation is well stated in the

report issued by the House Education and Labor

Committee on September 1, 1965 (H.Rept.No.

948), as follows:

Many of the employees performing work on

Federal service contracts are poorly paid.

The work is generally manual work and in

addition to craftwork, may be semiskilled or

unskilled. Types of service contracts which

the bill covers are varied and include laun-

dry and drycleaning, custodial and jan-

itorial, guard service, packing and crating,

food service, and miscellaneous housekeep-

Service employees in many instances are

not covered by the Fair Labor Standards Act

or State minimum wage laws. The counter-

part of these employees in Federal service,

blue-collar workers, are by a Presidential

directive assured of at least the Fair Labor

Standards Act minimum. Bureau of Labor

Statistics surveys of average earnings in ser-

vice occupations in selected areas in 1961

and 1962 show, however, that an extremely

depressed wage level may prevail in private

service employment. In contract cleaning

services, for example, in some areas less

than $1.05 an hour was paid. Elevator oper-

ators earned low rates, varying from $0.79

to $1.17 an hour. Service contract employees

are often not members of unions. They are

one of the most disadvantaged groups of

our workers and little hope exists for an

improvement of their position without some

positive acticn to raise their wage levels.

The Federal Government has added respon-

sibility in this area because of the legal

requirement that contracts be awarded to

the lowest responsible bidder. Since labor

costs are the predominant factor in most

service contracts, the odds on making a suc-

cessful low bid for a contract are heavily

stacked in favor of the contractor paying the

lowest wage. Contractors who wish to

maintain an enlightened wage policy may

find it almost impossible to compete for

Government service contracts with those

who pay wages to their employees at or

below the subsistence level. When a Gov-

ernment coritract is awarded to a service

contractor with low wage standards, the

Government is in effect subsidizing sub-

minimum wages.

As the historical and statutory notes of the SCA state:

“The purpose of this bill is to provide labor

standards for the protection of employees of

contractors and subcontractors furnishing ser-

vices to or performing maintenance service for

Federal agencies. The service contract is the

only remaining category of Federal contracts to

which no labor standards protection applies.

Federal construction contracts require compli-

ance with labor standards under the Davis-

Bacon Act and related statutes. Federal supply

contracts also provide labor standards under the

Walsh-Healy Public Contracts Act.”

+ » *

“Persons covered by the bill must be paid no

less than the prevailing rate in the locality as

determined by the Secretary, including fringe

benefits as an element of the wages. . . . In

determining the prevailing rate in the locality,

the Secretary will consider the compensation

paid persons engaged in such service-work and

work of a similar type in the locality.” See His-

torical and Statutory Notes 1965 Act 41 U.S.C.A.

§ 351.

This legislative history indicates that Congress enacted

this legislation for the very same reasons Congress had

previously enacted legislation relating to federal con-

struction contracts, namely, to assure a prevailing wage

rate. In Universities Research Ass'n v. Coutu, 101 S.Ct. 1451,

1463, 450 U.S. 754, 773, 67 L. Ed. 2d 662 (1981), this

Honorable Court extensively reviews the legislative his-

tory of the Davis-Bacon Act and states as follows:

“(T]he Davis-Bacon Act . . . was ‘designed to

protect local wage standards by preventing con-

tractors from basing their bids on wages lower

than those prevailing in the area.’ [citations.

omitted] Passage of the Act was spurred by the

economic conditions of the early 1930s, which

gave rise to an oversupply of labor and

increased the importance of federal building

programs, since private construction was lim-

ited. [citations omitted] In the words of Repre-

sentative Bacon, the Act was intended to combat

the practice of ‘certain itinerant irresponsible

contractors, with itinerant, cheap, bootleg labor,

[who] have been going around throughout the

country “picking” off a contract here and a con-

tract there.’ The purpose of the bill was ‘simply

to give local labor and the local contractor a fair

opportunity to participate in this building pro-

gram.’ 74 Cong.Rec. 6510 (1931).

As originally enacted . . . the Act required that

every federal contract in excess of $5,000 in

amount for ‘construction, alteration, and/or

repair of any public buildings’ contain a provi-

sion stating that the rate of wages paid laborers

and mechanics would not be less than the pre-

vailing rate for similar work in the locality; the

Act further required that every contract contain

a provision stating that disputes as to what the

prevailing wage was on any given project were

to be conclusively determined by the Secretary

if the contracting officer was unable to resolve

the controversy. The original Act thus did not

provide for predetermination of prevailing

wages by the Secretary; it also did not establish

any enforcement mechanism.

Congress soon concluded, however, that the Act

as originally drafted was inadequate. Discontent

focused on the lack of effective enforcement pro-

visions and the ‘postdetermination’ of the pre-

vailing wage. [citations omitted] Contractors

called for predetermination of prevailing wages,

claiming that they had been put to unexpected

expense by postcontract determinations that the

prevailing wage was higher than the rate upon

which they had based their bids. [citations omit-

ted] While the labor movement was divided on

this issue, most of the national leadership

opposed predetermination. [citations omitted]

Labor was united, however, in calling for the

establishment of an enforcement mechanism.

[citations omitted]

* * *

is [IJn 1935, Congress succeeded in adding the pre-

determination and enforcement provisions

found in the current statute. Act of Aug. 30,

1935, 49 Stat. 1011.” Universities Research Ass‘n at

1463-1464.

In view of the legislative history of the Service Contract

Act and the Davis-Bacon Act, after which the SCA was

modeled, respondents posed this question in the proceed-

ings below — to what extent, if any, does application of

state law in the instant case conflict with the Service

Contract Act? For the reasons assigned by the Third

Circuit, and the reasons set forth below, it is respectfully “=

submitted that the Third Circuit correctly held that there

was no conflict.

IV. Absent an express statement by Congress, pre-

empting state law, to what extent, if any, does the

assertion of a state law claim seeking payment of

monies owed pursuant to an employment contract

conflict with the Service Contract Act of 1965 or

the purpose for which it was enacted?

Respondents have not contended that there has been

any violation of the SCA by Fidelity Technologies Corpo-

ration. In fact, reference to the benefits outline issued by

Fidelity Technologies Corporation to its employees will

show that petitioner adopted the vacation pay required

by federal law. (App. 18). This agreement between Fidel-

ity and its employees provides in part:

“D. Vacation and Holiday Pay:

This policy is-as established in the Fringe

Benefit statement of the applicable wage deter-

mination.”

The applicable wage determination is attached to the

contract between Fidelity Technologies Corporation and

the Seventh Signal Command. (App. 31) The applicable

wage determination states that employees are entitled to

the following:

“2 weeks paid vacation after one year of service

with the contractor or successor; 3 weeks after

ten years of service.” (App. 18)

In short, by incorporating by reference the applicable

wage determination, petitioner complied with the appli-

cable federal law designed to protect an employee from

entering into an employment contract that pays less than

the prevailing wages and benefits.

Where an employer hires an employee at a wage

below that required by federal law, federal law provides

the employee with an administrative remedy whereby the

employee can seek to be paid the difference between

what the parties to the employment contract had agreed

upon and the actual amount to which the employee was

entitled by virtue of federal law. 29 C.F.R. § 4.191. The

underlying claim for which the administrative remedy is

afforded is one where the employer has violated the SCA

by entering an employment contract paying less than

required by federal law.! On the other hand, the underly-

ing right upon which respondents’ suit is based is the

right to payment of earned monies upon termination of

employment.

The purpose of the Service Contract Act, and the

purpose of the state wage laws are quite distinct from one

another. To suggest a conflict between these statutes

would be tantamount to-an argument that the federal

minimum wage law and the state statutes applicable in

this case conflict with one another because the former law

is intended to assure that an employer hires employees at

a certain minimum wage level and the latter state law

intended to assure that the employer actually pays those

wages to which the employer agreed upon cessation of

the employment relationship.

? Prior to retention of counsel, respondents who had not yet

grasped the distinction between a claim for non-payment of

wages upon termination which may be brought under state law,

and a claim arising out of payment of substandard wages, in

fact, filed a claim for administrative relief. However, as Mr.

Savant testified, the former employees never received any

response from the complaint. (App. 25-26)

The lack of a conflict between the Service Conflict

Act and application of Louisiana law in the instant case

may be best demonstrated through contrasting one of the

cases relied upon by petitioner and the present case. In

Foster v. Parker Transfer Company, 528 F.Supp. 906

(W.D.Penn. 1981), defendant’s employees, who were not

paid the wage rate provided in the SCA, filed a private

lawsuit against the employer to recoup wages. As the

court stated, “[respondents] simply allege that these

wages did not meet the levels set by the Secretary of

Labor under the Service Contract Labor Standards Act.”

Foster, 528 F.Supp. at 907. In that case, the recourse pro-

vided to the employees was through the Secretary of,

Labor. That court expressly noted that there was no alle-

gation that the wages paid fell below those required by

the Federal Labor Standards Act, 29 U.S.C. § 201 et seq.

Although no precise figures are stated in that case, the

employees were seeking the difference between the actual

wages that their employer had agreed to pay, and the

actual wages required by the wage determination by

Secretary of Labor pursuant to the SCA. Quite correctly,

the court held that the Secretary of Labor was the author-

ity vested with the power to enforce payment of the

“prevailing labor rates”. Foster, 528 F.Supp. at 907. The

court was not called upon to decide an instance where the

agreed wages were even less than minimum wage, and

the implication of the case is that in such instances wher

remedies may be available.?

2 In fact, where federal laws other than the SCA have been

violated, courts have considered these federal laws

supplemental to the SCA. See Brown v. Luk, Inc., infra.

In the present case, respondents have not contended

that their former employer had agreed to pay them any-

thing more or less than that required by the wage deter-

mination of the Secretary of Labor. The wrong for which

respondents have sought judicial intervention is that

Fidelity Technologies Corporation did not fulfill its

employment obligation existing by virtue of the employ-

ment contract existing between respondents and peti-

tioner, as evidenced by the employee benefit outline.

(App. 8-18). As the president of Fidelity admitted, the

dispute was not as to the amount, but as to the entity who

owed the monies, Fidelity or the company to whom the

Fidelity assigned its contract, Dynamic Concepts. (App.

19).

Respondents agree that the Secretary of Labor has

jurisdiction over a prevailing wage rate dispute. How-

ever, this is not the dispute in this case. The Third Circuit,

Court of Appeal, correctly held that state courts retain

jurisdiction to require payment of wages upon termina-

tion of the employment relationship within seventy-two

hours of same and the power to impose penalties and

attorney fees upon an employer who fails to comply with

this state law.

V. Whether the Service Contract Act of 1965 is so com-

prehensive that it leaves no room for state law.

The only other basis for denying the jurisdiction of

the state court to protect the rights of these Louisiana

citizens is if Congressional legislation is so comprehen-

sive that it is said to have completely occupied an entire

field.

Petitioner cited to the lower courts and to this Honor-

able Court a number of cases to support the proposition

that a service contract employee has no private cause of

action under the Service Contract Act; therefore, the ser-

vice contract employee has no private cause of action.

Danielsen v. Burnside-Ott Aviation Training Center, 941 F.2d

1220 (D.C. Cir. 1991); Foster v. Parker Transfer Co., 528

F.Supp. 906 (W.D.Penn. 1981); Nichols v. Mower’s News

Service, Inc., 492 F.Supp. 258 (D.Ver. 1980); Barron v. Reich,

13 F.3d 1370 (9th Cir. 1994). Petitioner’s argument begs

the question of whether state law is wholly preempted.

These cases were simply declining to fashion from the

Service Contract Act, itself, a federal common law pri-

vate remedy for service contract employees. In other

words, the courts were declining to infer from the SCA

that service contract employees could enforce their SCA

right to the prevailing wage rate by a mechanism other

than the administrative procedure established for dis-

putes arising out of contractors paying less than the

prevailing wage rate.

3 Respondents submit that the reason that the Department

of Labor never acted upon the complaint filed by respondents

subsequent to their termination of employment was that the

dispute is simply not one in which the Secretary of Labor was

interested since the matter did not involve a prevailing wage

rate dispute. The fact that the Secretary of Labor never

responded to the complaint hardly militates toward showing

that Congressional regulation has completely occupied the

entire field.

In the Danielsen case, relied upon by the petitioner,

respondents were faced with the situation where the right

to the prevailing wage rate was being circumvented by a

misclassification of employees that deprived workers of

the wage rate determined by the Secretary of Labor. That

dispute, of course, is one to be resolved by the Secretary

of Labor, and the court quite correctly held that no pri-

vate cause of action could be asserted to enforce that SCA

right. As the Danielsen court stated: “Congress provided

the statutory right for a limited and governmental cause

of action for underpayment.” Danielsen, 941 F.2d at 1227.

Congress, having created the right, also provided the

remedy. Respondents in the instant case, however, are not

asserting a cause of action for a failure to pay the prevail-

ing wage rate, but a distinct, separate and independent

claim to be paid, upon termination, that which the

employer actually agreed to pay. Respondents’ cause of

action arises from a state statutory right, with a state

Statutory remedy.

The Danielsen court was only required to decide and

only decided whether “the SCA gives rise to a private

civil action under RICO”* where the crux of the dispute

was whether or not some employee jobs had been

improperly classified under the contract so as to reduce

their wages to an amount below the prevailing wage rate

for the work under the proper classification. Danielsen,

941 F.2d at 1227.

* Racketeer Influenced and Corrupt Organization Act, 18

U.S.C. §§ 1961-1968.

If Fidelity Technologies Corporation had breached

the Service Contract Act by not incorporating into the

employment contract the requirements of the Service

Contract Act, then this case would be one of whether a

federal statutory right had been violated. Once, however,

Fidelity Technologies Corporation agreed to pay the pre-

vailing wage rate, including fringe benefits, these

employees became vested with that contractual right, and

the Louisiana statutory laws that protect such contractual

rights are not preempted by any federal law.

In a recent case, decided since the trial court ruling,

Brown v. Luk, Inc., 1996 W.L. 280831 (N.D.N.Y. 1996) the

court expressly recognized that the Service Contract Act,

Contract Work Hours and Safety Standards Act

(“CWHSSA”) 40 U.S.C. §§ 327-33, and the Fair Labor

Standards Act (“FLSA”), 29 U.S.C. §§ 201-19 “ ... are in

fact mutually supplemental which means that ‘none of

the three statutes are mutually exclusive of the other,

[and] the provisions of all may apply so far as they are

not in conflict.’ ” Brown v. Luk, Inc., supra, quoting Mas-

ters v. Maryland Management Company, 493 F.2d 1329, 1332

(4th Cir. 1974). If the rights and remedies under the

CWHSSA and FLSA are supplemental to the SCA, then a

state statutory right and remedy may also be supplemen-

tal.

By the terms of the employee benefits outline, Fidel-

ity Technologies Corporation agreed to pay whatever

vacation pay was set forth in the applicable wage deter-

mination, namely two weeks per year after one year of

service, and three weeks per year after ten years of ser-

vice. (App. 18; 31) The mere fact that one must refer to a

document that must be interpreted according to federal

law in order to compute the amount due each employee

does not warrant preemption. That issue has been

addressed by this Honorable Court in Livadas v. Bradshaw,

512 U.S. 107, 114 S.Ct. 2068, 129 L. Ed. 2d 93 (1994). In

Livadas, the plaintiff sought to recover from her former

employer under state law, wages due upon discharge,

together with penalties for failure to tender same. The

California Commissioner of Labor, vested with the

authority to hear such state law claims, responded that

the plaintiff was barred from enforcing any such state law

claim because the plaintiff's employment was governed

by a collective-bargaining agreement and therefore Sec-

tion 301 of the Labor Management Relations Act, 28

U.S.C. § 185(a), precluded the state from allowing the

assertion of state law remedy. This Court, however, dis-

agreed, citing previous holdings where the Court had

underscored the point:

“[t]hat Section 301 cannot be read broadly to

pre-empt nonnegotiable rights conferred on

individual employees as a matter of state law,

and we stressed that it is the legal character of a

claim, as ‘independent’ of rights under the col-

lective-bargaining agreement, Lueck, supra, 471

U.S., at 213, 105 S.Ct., at 1912 (and not whether a

grievance arising from ‘precisely the same set of

facts’ could be pursued, Lingle, supra, 486 U.S.,

at 410, 108 S.Ct., at 1883) that decides whether a

state cause of action may go forward. Finally, we

were clear that when the meaning of contract

terms is not the subject of dispute, the bare fact

that a collective-bargaining agreement will be

consulted in the course of state-law litigation

plainly does not require the claim to be extin-

guished, see Lingle, 486 U.S., at 413, n. 12, 108

S.Ct., at 1885, n. 12 (‘A collective-bargaining

agreement may, of course, contain information

such as rate of pay .. . that might be helpfui in

determining the damages to which a worker

prevailing in a state-law suit is entitled’).” Liv-

adas, 114 S.Ct. at 2078.

As in the Livadas case, the primary text to which a

court must look to decide whether respondents are enti-

tled to unpaid benefits together with legal interest, penal-

ties and attorney fees is not a contract, but rather a

calendar. Livadas, 114 S.Ct. at 2079. Since the only reason,

in the present case, that a state court will even need to

refer to the contract between Fidelity Technologies Corp.

and the Seventh Signal Command is to compute the dam-

ages due respondents, it can hardly be stated that such a

tangential relation bars respondents from seeking

recourse in state court.

In Hendrix v. Delta Air Lines, Inc., 234 So.2d 93 (La.

App. 4th Cir. 1970), writ denied 236 So.2d 498, the court

was called to decide whether federal law, in particular the

Federal Labor Standards Act, 29 U.S.C.A. § 201 et seq.,

preempted these same Louisiana wage statutes, relied

upon by respondents. The court held:

“[F]ederal law makes no provision for or against

penalties for mere failure to pay admittedly due

agreed-upon wages promptly upon termination

of employment. We conclude there is no pre-

emption on this question by the Fair Labor Stan-

dards Act, 29 U.S.C.A. § 201 et seg.” Hendrix, 234

So.2d at 95.

Respondents respectfully submit to this Honorable Court

that the same result is warranted in this case in view of

ii teeaciiinieentiaaeiaanniieiaaiaiiale

the facts and in light of the law. Petitioner’s writ of

certiorari should be denied.

CONCLUSION

Respondents filed suit against its former employer,

Fidelity Technologies Corporation, because more than

two years lapsed after their termination and after respon-

dents had first made amicable demand for their accrued

vacation benefits, and still their former employer had not

paid them. The suit was filed pursuant to LSA-R.S. 23:631

and 632, seeking the wage benefits, interest, penalties,

and attorney fees that are rightfully imposed upon an

employer who shirks its responsibilities to former

employees whose services are no longer required by fail-

ing to pay what even the employer now, belatedly, admits

was due and owing at termination.

Throughout these proceedings on petitioner’s excep-

tion to the jurisdiction of state court, petitioner has

sought to divert attention from addressing the issue,

squarely addressed by the Third Circuit, Court of Appeal,

namely, whether state law is preempted, by espousing a

fallacious argument, employing circular reasoning, that

respondents are claiming that petitioner violated the Ser-

vice Contract Act, 41 U.S.C. 351 et seq. (“SCA”), and that

the SCA provides the exclusive remedy for an SCA viola-

tion. Respondents have not asserted a claim under the

SCA which is a prevailing wage rate law that allows

underpaid employees, i.e., employees paid less than the

prevailing wage rate, to be compensated at the prevailing

wage. Respondents have sought unpaid wage benefits

due upon termination from employment.

Louisiana wage laws are a legitimate exercise of the

state’s police powers intended to promote the general

security of its citizens, and no court has ever held that

such state laws are preempted by the SCA, legislation

enacted to serve an entirely different purpose. The SCA is

designed to assure that a prevailing wage rate is paid.

LSA-R.S. 23:631 and 632 are intended to protect

employees from employers who do not pay earned wages

or wage benefits upon termination.

If Congress had intended the Service Contract Act to

preempt any and all state law causes of action relating to

non-payment of wages, the legislative branch could have

expressly stated such in the Act. There is no such provi-

sion in the SCA, and the legislative history of the Act

suggests the reason there is no such provision is because

Congress was enacting legislation to address a particular

concern, namely, that workers may be paid substandard

wages. The created federal right to the prevailing wage

rate is protected by a federal remedy; however, the right

to payment of earned wages, including benefits, upon

termination of employment remains a state concern pro-

tected by state law. State law does not conflict with

federal law on this point.

Without delving deeply into the mindset of a corpo-

ration that would think, even for a moment, that it could

make its own employees wait for payment until such time

as the company resolved its differences with a third party,

that very thought evidences that this is not an area where

Congressional legislation is so comprehensive as to leave

no room for state law. Respondents have been denied

long enough full recourse against their former employer.

Respondents urge this Honorable Court to deny peti-

tioner’s writ application.

Respectfully submitted,

Jones, Tfére, Noten, HANCHEY, Swirt,

Spears & Fonts, L.L.P.

1135 Lakeshore Drive

Post Office Box 910

Lake Charles, LA 70602

(318) 439-8315

Rosert J. Tere — #17384

Attorneys for Respondents

July 16, 1997

App. 1

LONNIE B. BUTLER, : 30TH JUDICIAL

AUDREY M. ANDERSON, _ : DISTRICT COURT

ROBERT H. ARMER, W. L. :

BASCO, JR., LINDA KAY

BEHAN, JAMES W.

BRYANT, LOYIL W. CRYER, :

WAYNE DUNN, KARAN MM. :

MAHLEN, JOSEPH T.

MARTIN, MARGARET H.

MAYO, FRANCES R.

MELCHIORRI, DONALD R.

SAVANT, RAMONA SMART, :

AND HAROLD D. STAPLES :

VS. NO. 55876 : PARISH OF VERNON

FIDELITY TECHNOLOGIES : STATE OF LOUISIANA

CORPORATION

FILED:

‘ DEPUTY CLERK

PETITION FOR DAMAGES

(Filed Dec. 8, 1994)

NOW INTO COURT, through undersigned counsel,

comes plaintiffs, LONNIE B. BUTLER, AUDREY M.

ANDERSON, ROBERT H. ARMER, W. L. BASCO, JR.,

LINDA KAY BEHAN, JAMES W. BRYANT, LOYIL W.

CRYER, WAYNE DUNN, KARAN M. MAHLEN, JOSEPH

T. MARTIN, MARGARET H. MAYO, FRANCES R.

MELCHIORRI, DONALD R. SAVANT, RAMONA

SMART, AND HAROLD STAPLES, all persons of the full

age of majority and residents of Vernon Parish, State of

Louisiana, appearing herein individually, who with

respect represents:

App. 2

Defendant, Fidelity Technologies Corporation is a

foreign corporation which was engaged at all times mate-

rial herein in business in the State of Louisiana, at Fort

Polk, Vernon Parish, where it provided maintenance and

installation of telephone services.

The named plaintiffs were at all times material herein

employed by Fidelity Technologies Corporation at Fort

Polk.

On or about November 5, 1992, defendant terminated

plaintiffs.

Thereafter, the terminated plaintiffs made timely

demand to be paid all wages including vacation benefits

and other fringe benefits owed by defendant to the plain-

tiffs.

Defendant failed to pay the vacation benefits and

other benefits owed to the terminated plaintiffs within 72

hours of the date of termination and, continuing to date,

have not made said payments.

App. 3

As a result of its actions described in paragraph 5

above, the plaintiffs have been damaged and are entitled

to be made whole by relief, including but not limited to:

(a) all wages and benefits owed but not yet paid;

(b) penalty wages as provided by LSA-R.S. 23:632;

(e) for all costs of these proceedings; and

(f) reasonable attorney fees.

No individual’s claim in this matter is in excess of

$20,000 exclusive of legal interest and costs.

WHEREFORE, plaintiffs respectfully request and

pray that after due proceedings had, the Court provide

the relief specified in paragraph 6 above, along with legal

interest and for all general and equitable relief.

JONES, TETE, NOLEN,

HANCHEY, SWIFT & SPEARS

Post Office Box 910

Lake Charles, LA 70602

(318) 439-8315

BY: /s/ Edward J. Fonti

EDWARD J. FONTI

BAR ROLL NO. 5676

App. 4

LONNIE B. BUTLER, : 30TH JUDICIAL

AUDREY M. ANDERSON, | : DISTRICT COURT

ROBERT H. ARMER, W. L._ :

BASCO, Jz., LINDA KAY

BEHAN, JAMES W. ;

BRYANT, LOYIL W. CRYER, :

WAYNE DUNN, KARAN MM. :

MAHLEN, JOSEPH T.

MARTIN, MARGARET H.

MAYO, FRANCES R.

MELCHIORRI, DONALD R. :

SAVANT, RAMONA SMART, :

AND HAROLD D. STAPLES :

VS. NO. 55,876 A , PARISH OF VERNON

FIDELITY TECHNOLOGIES . STATE OF LOUISIANA

CORPORATION

FILED:

DEPUTY CLERK

AMENDED PETITION FOR DAMAGES

(Filed Dec. 29, 1994)

NOW INTO COURT, through undersigned counsel,

comes plaintiffs, LONNIE B. BUTLER, AUDREY M.

ANDERSON, ROBERT H. ARMER, W. L. BASCO, JR.,

LINDA KAY BEHAN, JAMES W. BRYANT, LOYIL W.

CRYER, WAYNE DUNN, KARAN M. MAHLEN, JOSEPH

T. MARTIN, MARGARET H. MAYO, FRANCES R.

MELCHIORRI, DONALD R. SAVANT, RAMONA

SMART, AND HAROLD STAPLES, who amends the peti-

tion in the following respects:

aero

App. 5

To add Ruby Lea Hutson as a plaintiff.

WHEREFORE, plaintiffs respectfully request and

pray that after due proceedings had, the Court add RUBY

LEA HUTSON as a plaintiff to this lawsuit.

JONES, TETE, NOLEN,

HANCHEY, SWIFT & SPEARS

Post Office Box 910

Lake Charles, LA 70602

(318) 439-8315

BY: /s/ Edward J. Fonti

EDWARD J. FONTI

BAR ROLL NO. 5676

App. 6

LONNIE B. BUTLER, : NUMBER 55,876A

AUDREY M. ANDERSON,

ROBERT H. ARMER, W. L.

BASCO, JR., LINDA KAY

BEHAN, JAMES W.

BRYANT, LOYIL W. CRYER, :

WAYNE DUNN, KARAN M. :

MAHLEN, JOSEPH T. : 30TH JUDICIAL

MARTIN, MARGARET H. __ : DISTRICT COURT

MAYO, FRANCES R.

MELCHIORRI, DONALD R. :

SAVANT, RAMONA SMART, :

AND HAROLD D. STAPLES :

VERSUS —

FIDELITY TECHNOLOGIES : VERNON PARISH,

CORPORATION : LOUISIANA

DECLINATORY EXCEPTION OF LACK OF

SUBJECT MATTER JURISDICTION

(Filed March 14, 1995)

NOW INTO COURT, through undersigned counsel,

comes Fidelity Technologies, Inc., Defendant herein, and

excepts to the jurisdiction of this Court on the grounds

that this Court lacks subject matter jurisdiction over the

claims asserted herein, because under the Services Con-

tract Act of 1965, Plaintiffs, as service contract employees,

have no private right of action for underpayment of

wages or fringe benefits, including vacation pay, and

their sole remedy is to seek relief by application with the

aor one

Oe eee en oan ed

App. 7

Secretary of Labor, relief which has in fact been sought

and obtained.

Respectfully so omitted,

WIENER, WEISS, MADISON

& HOWELL

A Professional Corporation

By: /s/ James R Madison

James R. Madison

BR #8835

333 Texas Street,

Suite 2350

P. O. Box 21990

Shreveport, Louisiana

71120-1990

(318) 226-9100

ATTORNEYS FOR DEFENDANT,

FIDELITY TECHNOLOGIES, INC.

App. 8

TOINT EXHIBIT 6

FIDELITY TECHNOLOGIES CORPORATION

PROPOSED

OUTLINE OF BENEFITS

(Filed Feb. 23, 1996)

Fidelity Technologies Corporation Employee Benefits

Plan:

Following is an outline of benefits under your employer