Petition for Writ of Certiorari — American Renovation & Construction Co. v. Favel
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No, 0212 6 2 FEB 2 4 2003
——_— ene, OF HE OP
Jn The
Supreme Court of the Anited States
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AMERICAN RENOVATION AND
CONSTRUCTION COMPANY,
Petitioner,
Vv.
BILL FAVEL, JOHN PITZER, JOE LaMERE,
TOBY LaMERE, and ALVIN BELGARDE,
Respondents.
¢
On Petition For A Writ Of Certiorari
To The Montana Supreme Court
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PETITION FOR A WRIT OF CERTIORARI
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MARCIA DAVENPORT
Counsel of Record
CROWLEY, HAUGHEY, HANSON,
TOOLE & DIETRICH P.L.L.P.
100 North Park Avenue, Suite 300
P.O. Box 797
Helena, Montana 59624-0797
(406) 449-4165
COCKLE LAW BRIEF PRINTING CO. (800) 225-6964
OR CALL COLLECT (402) 342-2831
QUESTION PRESENTED
May laborers on a federal construction project who
complain they were not paid prevailing wages under the
Davis-Bacon Act circumvent the exclusive remedies
provided by Congress and privately enforce the Act by
bringing a state common law claim in state district court
against the contractor for alleged violation of the Act, the
result of which will be that state court judges and juries
will make the complex wage determinations that Congress
has declared must be decided by the Department of Labor?
ii
PARTIES TO THE PROCEEDING BELOW AND
RULE 29.6 STATEMENT
All parties to the proceeding below are listed in the
caption. Petitioner American Renovation and Construction
Company does not have a parent corporation nor does any
publicly held company own 10% or more of its stock.
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TABLE OF CONTENTS
Page
QUESTION PRESENTED... cc ccccceccscccccccceceeees i-
PARTIES TO THE PROCEEDING BELOW AND
RULE 29.6 STATEMENT.................cccccccccccoscccosse. il
TABLE OF CONTENTS ............ccccccscccsssssssssscscosese iii
TABLE RPO AUP BOUPIEE TBODY wnscccessvcnsesvesssseccsesdavevcevece Vv
PETITION FOR A WRIT OF CERTIORARI ............. 1
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STATEMENT OF THE CASE ................cccccssseseeeeeeees 4
I. FACTUAL BACKGROUND.....0...........cccccccceee 4°
Il. PROCEDURAL HISTORY AND PRESEN-
TATION AND PRESERVATION OF FEDERAL
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A. The Companion Case in Federal District
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B. The Proceedings in State District Court.. 7
C. The Proceedings in the Montana Su-
siti cceh cc iahienaketehsicisnriaxcevarevene 8
REASONS FOR GRANTING THE WRIT................. Y
I. THE MONTANA SUPREME COURT HAS
DECIDED AN IMPORTANT FEDERAL
QUESTION IN A WAY THAT CONFLICTS
WITH DECISIONS OF AT LEAST FOUR
CIRCUIT COURTS OF APPEALS AND AT
LEAST ONE STATE COURT OF LAST
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TABLE OF CONTENTS -— Continued
Page
A. The Montana Supreme Court’s decision
conflicts with decisions of the Second,
Third, Fifth, and Ninth Circuits.............. 10
B. The Montana Supreme Court’s decision
conflicts with a decision by the Arkansas
ND Gs sicccenesnceninsscovicsssctercsseensete 13
II. THE MONTANA SUPREME COURT DECIDED
AN IMPORTANT QUESTION OF FEDERAL
LAW IN A WAY THAT CONFLICTS WITH THE
GUIDANCE PROVIDED BY THIS COURT
IN UNIVERSITIES RESEARCH ASS'N uv.
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SEGRE bisssctntnnnsssnisnciasnntieiiniaveaseieenasinna 17
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TABLE OF AUTHORITIES
Page
CASES
Cannon v. University of Chicago, 441 U.S. 677
Sa O aD sheitsdan taialsscnenahintelbneatsiaiganesaunnidelaamunaianmaiaad sa 12, 16
Chan v. City of New York, 1 F.3d 96 (2d Cir. 1993) ........... 11
Coord ae, Beale, GD TE: Oo Ca ecisvinicien kes nvnicenstictatsisttieateccsec 7
Davis v. Hardaway Contracting Co., 386 S.W.2d
707 (Ark. 1965)............ denusapsavalcumesiecdbmernniancenaMaiiad ai 13
Davis v. United Air Lines, Inc., 575 F.Supp. 677
CER AEs Ba See siicenniceieteiuiincetennnnketnesnsninieiaaiies are a 11
Favel v. American Renovation & Construction Co.,
2002 MT 266, 312 Mont. 285, 59 P.3d 412 (2002)........... 1
Favel v. St. Paul Fire & Marine Ins. Co., No. CV-99-
60-RFC-GF, 2001 WL 92149 (D. Mont. Feb. 1,
Grochowski v. Phoenix Construction, __ F.3d __,
No. 01-7569, 2003 WL 115712 (2d Cir. Jan. 14,
ED skgvensecuvivicauiapecigessttdeeineielamiaiatatann a 10
McDaniel v. University of Chicago, 548 F.2d 689
CFU CINE FD vincicnecsssideussnentbadiinaseiaibisicanienciiciaai na une 12
Operating Eng’rs Health & Welfare Trust Fund v.
JWJ Contracting Co., 135 F.3d 671 (9th Cir.
SED covienctcenctechiiehigpuiiiaaanveliciaanaamaamas 12
Simpson v. Reynolds Metal Co., 629 F.2d 1226 (7th
CAOy FIDO kivetBisnsisccicesnnetpininitiatonedinbinstashemmndsiadiaaaca ceauas ess 12
United States v. Capeletti Bros., Inc., 621 F.2d 1309
GEE Ge OED wincidensennsiddeinecnsathieaiauaaiinaa smear 12
TABLE OF AUTHORITIES — Continued
Page
Universities Research Ass’n, Inc. v. Coutu, 450 U.S.
Fe Ce inviscid 10, 14, 15, 16, 17
Weber v. Heat Control Co., 728 F.2d 599 (3d Cir. |
SEIU iiniisicoiensscnupiniachuasonekastianeianncehonainteniieabsiaammaamaiaianal 12 |
STATUTES |
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40 U.S.C.A. § 2760-2(b).asssssccoccssccsssssssssssssocensccsessesnssenenees 3 |
1
PETITION FOR A WRIT OF CERTIORARI
American Renovation and Construction Company
(“ARC”) respectfully requests this Court issue a writ of
certiorari to review the opinion and judgment of the
‘Montana Supreme Court issued November 26, 2002.
¢
OPINIONS BELOW
The Montana Supreme Court is the court of last resort
in Montana. The Court filed its Opinion on November 26,
2002, reported at Favel v. American Renovation & Con-
struction Co., 2002 MT 266, 312 Mont. 285, 59 P.3d 412
(2002). (App. 1-45). The Montana Eighth Judicial District
Court, Cascade County, filed its unreported order granting
ARC’s Motion to Dismiss on June 12, 2001. (App. 46-51).
In a companion case brought by the same Plaintiffs in
federal court, the United States District Court for the
District of Montana, Great Falls Division, filed its unre-
ported order denying ARC’s Motion to Dismiss and staying _
the action pending a Davis-Bacon determination by the
Department of Labor on February 1, 2001, reported at
Favel v. St. Paul Fire & Marine Ins. Co., No. CV-99-60-
RFC-GF, 2001 WL 92149 (D. Mont. Feb. 1, 2001). (App. 52-
58).
¢
JURISDICTION
The Montana Supreme Court issued its Opinion on
November 26, 2002. ARC was not required to, and did not,
file a Motion for Rehearing. Accordingly, the Petition for
Writ of Certiorari is due no later than February 24, 2003.
2
ARC invokes this Court’s jurisdiction pursuant to 28
U.S.C.A. § 1257.
+
RELEVANT STATUTES
The complete text of the relevant statutes is set out
verbatim in the Appendix. (App. 70-77). Section 1 of the
Davis-Bacon Act provides that the advertised specifica-
tions for every contract in excess of $2000 to which the
United States is a party for the construction, alteration
and/or repair of public buildings:
[SJhall contain a provision stating the minimum
wages to be paid various classes of laborers and
mechanics which shall be based upon the wages
that will be determined by the Secretary of Labor
to be prevailing for the corresponding classes of
laborers and mechanics employed on projects of a
character similar to the contract work in the city,
town, village, or other civil subdivision of the
State in which the work is to be performed. ...
40 U.S.C.A. § 276a(a). Section 1 also requires that each
federal contract “shall contain a stipulation that the
contractor or his subcontractor shall pay all mechanics
and laborers employed ... the full amounts . . . computed
at wage rates not less than stated in the advertised
specifications.” Jd.
The Davis-Bacon Act sets forth a detailed administra-
tive enforcement scheme. Section 1 provides that:
[T]here may be withheld from the contractor so
much of accrued payments as may be considered
necessary by the contracting officer to pay to la-
borers and mechanics employed by the contractor
3
or any subcontractor on the work the difference
between the rates of wages required by the con-
tract to be paid laborers and mechanics on the
work and the rates of wages received by such la-
borers and mechanics. .. .
40 U.S.C.A. § 276a(a).
Section 3 of the Davis-Bacon Act authorizes the
Comptroller General of the United States 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.... ” 40 U.S.C.A. § 276a-2(a).
Section 3 further provides that:
If the accrued payments withheld under the
terms of the contract ... are insufficient to reim-
burse all of the laborers and mechanics, with re-
spect 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 intervention
against the contractor and his sureties conferred
by law upon persons furnishing labor and mate-
rials. ...
40 U.S.C.A. § 276a-2(b).
The rights of persons furnishing labor or material to
pursue bond claims are defined in 40 U.S.C.A. § 270b,
known as the Miller Act:
Every person who has furnished labor or mate-
rial in the prosecution of the work provided for in
such contract, in respect of which a payment
bond is furnished under sections 270a to 270d of
this title and who has not been paid in full there-
for before the expiration of a period of ninety
4
days after the day on which the last of the labor
was done or performed by him or material was
furnished or supplied by him for which such
claim is made, shall have the right to sue on such
payment bond for the amount, or the balance
thereof, unpaid at the time of institution of such
oust... ..
40 U.S.C.A. § 270b.
Section 270a of the Miller Act requires that:
[BJefore any contract for the construction, altera-
tion, or repair of any public building or public
work of the United States is awarded to any per-
son, such person shall furnish to the United
States ... a payment bond with a surety or sure-
ties satisfactory to such officer for the protection
of all persons supplying labor and materials in
the prosecution of the work provided for in said
contract for the use of each such person.
40 U.S.C.A. § 270a(a)(2).
The Secretary of Labor has issued detailed regulations
designed to implement the Davis-Bacon Act. The regula-
tions pertinent to this case are set out verbatim in the
Appendix. (App. 78-96).
¢
STATEMENT OF THE CASE
I. FACTUAL BACKGROUND.
At the heart of this case is a contract entered into in
March of 1998 by the United States Air Force (“United
States”) and ARC for construction of military family
housing at Malmstrom Air Force Base located in Great
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Falls, Montana. The contract contains a provision requir-
ing ARC to pay its laborers prevailing wages under the
Davis-Bacon Act. ARC entered into subcontracts with Baer
Construction and Four Winds Construction. The subcon-
tracts also contained provisions requiring the subcontrac-
tors to pay their employees prevailing wages. Plaintiffs
(“workers”) contend they were not paid prevailing wages
under the Davis-Bacon Act as required by the contract
between ARC and the United States and by the contracts
between ARC and its subcontractors.
II. PROCEDURAL HISTORY AND PRESENTA-
TION AND PRESERVATION OF FEDERAL
QUESTION.
A. The Companion Case in Federal District
Court.
On June 21, 1999, the workers filed suit in Montana
federal district court against ARC and St. Paul Fire &
Marine Insurance Company (“St. Paul”), ARC’s surety. The
workers invoked the Miller Act as the basis for federal
jurisdiction. The workers alleged that: (1) they were the
intended beneficiaries of the contract between ARC and
the United States and that ARC breached the contract
because they were misclassified and not paid appropriate
Davis-Bacon wages; and (2) they were wrongfully dis-
charged for complaining they were not being paid Davis-
Bacon wages.
ARC moved to dismiss the workers’ complaint for lack
of subject matter jurisdiction. ARC argued that although
the workers alleged their action was premised upon the
Miller Act, the workers’ claims were based only upon
alleged violations of the Davis-Bacon Act. ARC contended
6
that the workers’ federal court action was premature
because they had not first brought the wage dispute before
the Department of Labor as required by the federal regu-
lations implementing the Davis-Bacon Act. Relying upon
federal case law, ARC argued the workers could not
sustain their action because section 1 of the Davis-Bacon
Act does not provide for a private cause of action.
In an order dated February 1, 2001, the Honorable
Richard F. Cebull agreed with ARC that all of the workers’
claims were premised on alleged violations of the Davis-
Bacon Act. (App. 54). Judge Cebull held that “the import of
this is that the Davis-Bacon Act does not provide for a
private right of action under the circumstances provided
here — at least not at this time.” (App. 54). Judge Cebull
then found that the workers were entitled to bring a claim
against ARC and St. Paul under the Miller Act. (App. 55-
56). However, Judge Cebull noted that the workers had
not pursued their administrative remedies, which are a
condition precedent to filing a claim in federal district
court under the Miller Act. (App. 56). Judge Cebull stayed
the action to allow the workers to pursue their
administrative remedies by obtaining Department of
Labor determinations regarding whether Davis-Bacon Act
violations occurred, the extent of such violations, and
whether the payments to ARC withheld by the United
States were sufficient to compensate the workers. (App.
58).
After Judge Cebull issued his order, the workers
voluntarily dismissed their action in federal district court.
B. The Proceedings in State District Court.
On October 16, 1999, the workers filed an action in
Montana state district court, naming ARC as the only
Defendant. Unlike the federal case, the workers did not
sue the surety. The workers’ allegations are nearly identi-
cal to their allegations in the federal district court action
except the workers additionally allege that ARC was
negligent in failing to pay them Davis-Bacon wages and
that ARC acted with malice by not paying them Davis-
Bacon wages. (App. 59-69). Their complaint also contains a
private attorney general/common fund claim.
ARC moved to dismiss the workers’ state court action
for lack of subject matter jurisdiction. ARC again argued
that the workers’ claims are based only upon alleged
violation of the Davis-Bacon Act and that the action was
premature because the workers had not first brought the
dispute before the Department of Labor as required by the
federal regulations. Relying upon federal case law, ARC
also contended that the state court did not have jurisdic-
tion over the workers’ claims because they were premised
on the Davis-Bacon Act, which did not confer a private
right of action on aggrieved employees. Finally, ARC
argued that the workers’ remedy lay in a Miller Act claim
against ARC’s surety and that the workers had failed to
pursue such a claim by first initiating their administrative
remedies before the Department of Labor and then, if
necessary, pursuing a Miller Act claim in federal district
court.
On June 12, 2001, Judge Julie Macek granted ARC’s
motion to dismiss for lack of subject matter jurisdiction.
(App. 51). Judge Macek applied the four-part test for a
private right of action delineated by this Court in Cort uv.
re _
8
Ash, 422 U.S. 66, 78 (1975), and concluded that the Davis-
Bacon Act does not provide for such a claim. (App. 49-50).
Judge Macek also recognized that the workers had a
potential Miller Act claim against St. Paul, and accord-
ingly dismissed the workers’ complaint without prejudice
to allow the workers to obtain Department of Labor
determinations and to name St. Paul as a defendant if
they felt a Miller Act claim existed. (App. 50-51).
C. The Proceedings in the Montana Supreme
Court. .
The workers timely appealed the state district court’s
order of dismissal to the Montana Supreme Court. On
appeal, ARC argued that despite the fact the workers
styled their wage claims as state “common law” claims, the
claims are based only upon alleged violations of the Davis-
Bacon Act. ARC asserted the workers’ action is one to
privately enforce the Davis-Bacon Act and that a private
right of action does not exist under the Act. ARC also
contended the workers’ argument that the Davis-Bacon
Act does not preempt state common law claims is mis-
placed because there is no conflicting or competing state
law which would trigger a preemption analysis.
The Montana Supreme Court reversed the district
court’s order dismissing the workers’ action. (App. 31). The
court stated that it “declined to consider” whether the
workers have a private right of action under the Davis-
Bacon Act. (App. 29). Instead, even though the state
court’s order does not address the issue of preemption, the
Montana Supreme Court held that the state court has
subject matter jurisdiction over the workers’ action be-
cause the Davis-Bacon Act does not preempt the workers’
state common law claims. (App. 27-28). The Montana
Supreme Court remanded the case to the state district
court and allowed the workers to proceed with their
common law breach of contract claim against ARC. (App.
31). 9
¢
REASONS FOR GRANTING THE WRIT
The impact of the Montana Supreme Court’s decision
is significant. The decision allows federal laborers to
completely side-step the administrative process set forth
in the Davis-Bacon Act and the federal regulations imple-
menting the Act. The decision allows laborers to circum-
vent the remedies crafted by Congress and contained in
the Davis-Bacon Act, the Miller Act, and the regulations
implementing the Acts. Under the decision, laborers need
not obtain Department of Labor determinations that
Davis-Bacon violations have occurred or that the funds
withheld by the contracting officer are insufficient to
reimburse the laborers for back wages. Instead, laborers
may proceed directly to state court and file state common
law claims against the contractor, and state district court
judges and juries will decide the complex wage determina-
tions that Congress has declared are within the exclusive
jurisdiction of the Department of Labor. Additionally,
laborers may name the contractor as the only defendant,
leaving the contractor without the protection of the pay-
ment bond it was required by federal law to procure to
cover the payment of back wages in the event of a wage
dispute.
The Montana Supreme Court’s decision on an impor-
tant federal question conflicts with the decisions of at least
10
four circuit courts of appeals and at least one state court of
last resort. The Montana Supreme Court also decided an
important question of federal law which this Court ex-
pressly declined to settle in Universities Research Ass’n,
Inc. v. Coutu, 450 U.S. 754 (1981). Further, the court
decided the question in a way that is inconsistent with the
guidance provided by this Court in Coutu.
I. THE MONTANA SUPREME COURT HAS
DECIDED AN IMPORTANT FEDERAL QUES-
TION IN A WAY THAT CONFLICTS WITH DE-
CISIONS OF AT LEAST FOUR CIRCUIT
COURTS OF APPEALS AND AT LEAST ONE
STATE COURT OF LAST RESORT.
A. The Montana Supreme Court’s decision
conflicts with decisions of the Second,
Third, Fifth, and Ninth Circuits.
The result of the Montana Supreme Court’s decision,
that laborers may bring state common law claims to
remedy alleged violations of the Davis-Bacon Act, is in
direct conflict with decisions of the Second, Third, Fifth,
and Ninth Circuits. Well-reasoned and persuasive deci-
sions from each of these circuits affirmatively hold that
the Davis-Bacon Act does not provide a private right of
action.
The Second Circuit addressed a factual situation
nearly identical to that presented to the Montana Su-
preme Court in Grochowski v. Phoenix Construction, ___
F.3d ___, No. 01-7569, 2003 WL 115712 (2d Cir. Jan. 14,
2003). The plaintiffs were bricklayers and roofers who
worked on three public works construction projects gov-
erned by contracts which contained provisions for Davis-
Bacon wages. The plaintiffs brought suit against the
11
contractors and their sureties to recover back wages under
New York State common law. The plaintiffs alleged that
they were third party beneficiaries of the federal contract
and that the contractor breached the contract by failing to
pay them prevailing wages. They also asserted a quantum
meruit claim. The district court dismissed the plaintiffs’
state common law claims on the basis that state common
law remedies were not available to recover prevailing
wages under federally funded contracts. Grochowski, 2003
WL 115712, at * 2.
The Second Circuit affirmed the district court’s
decision. Id., 2003 WL 115712, at * 4. The court noted that
its decision in Chan v. City of New York, 1 F.3d 96 (2d Cir.
1993), indicates that no private right of action exists under
the Davis-Bacon Act. Id., 2003 WL 115712, at * 3. The
Second Circuit thus decided:
[T]he plaintiffs’ state-law claims are indirect at-
tempts at privately enforcing the prevailing wage
schedules contained in the DBA [Davis-Bacon
Act]. To allow a third-party private contract ac-
tion aimed at enforcing those wage schedules
would be “inconsistent with the underlying pur-
pose of the legislative scheme and would inter-
fere with the implementation of that scheme to
the same extent as would a cause of action di-
rectly under the statute.”
Id., 2003 WL 115712, at *4 (quoting Davis v. United Air
Lines, Inc., 575 F.Supp. 677, 680 (E.D.N.Y. 1983)). The
court concluded that the plaintiffs’ efforts to bring their
claims for back wages under the Davis-Bacon Act as state
common law claims were “clearly an impermissible ‘end
run’ around the DBA.” Jd.
12
The other circuit courts which have addressed the
question, with the exception of the Seventh Circuit, have
similarly held that the Davis-Bacon Act does not confer on
laborers a private right of action for alleged unpaid or
underpaid prevailing wages. The Ninth Circuit in Operat-
ing Eng’rs Health & Welfare Trust Fund v. JWJ Contract-
ing Co., 1385 F.3d 671, 676 (9th Cir. 1998) affirmed a
district court’s order granting summary judgment to a
surety in an action brought for prevailing Davis-Bacon
wages because no private right of action exists under the
Act. The Third Circuit in Weber v. Heat Control Co., 728
F.2d 599, 600 (3d Cir. 1984), held that a district court did
not err by granting summary judgment to a defendant
contractor on plaintiff’s action for back wages on the basis
plaintiff was not possessed of a private right of action
under the Davis-Bacon Act. Similarly the Fifth Circuit in
United States v. Capeletti Bros., Inc., 621 F.2d 1309, 1317
(5th Cir. 1980) decided that no implied private right of
action exists under the Davis-Bacon Act and therefore the
district court properly dismissed plaintiffs’ claims that
they had been misclassified by their employers and as a
result had not been paid prevailing wages. The Seventh
Circuit in McDaniel v. University of Chicago, 548 F.2d 689,
695 (7th Cir. 1977), is the only court of appeals that has
held an implied private right of action does exist. In a later
opinion, however, the Seventh Circuit, in Simpson uv.
Reynolds Metal Co., 629 F.2d 1226 (7th Cir. 1980), cast ©
doubt upon its holding in McDaniel by noting it decided
that case without the guidance of this Court’s decision in
Cannon v. University of Chicago, 441 U.S. 677 (1979).
Simpson, 629 F.2d at 1240 n.27.
The Montana Supreme Court’s decision conflicts with
decisions from the Second, Third, Fifth and Ninth Circuits.
13
The Montana Supreme Court’s decision also illustrates a
dispute between the decisions of these four circuits and
that of the Seventh Circuit. The Court should grant ARC’s
petition for writ of certiorari to address this conflict over
an important question of federal law.
B. The Montana Supreme Court’s decision
conflicts with a decision by the Arkansas
Supreme Court.
The Montana Supreme Court’s conclusion that the
state district court has subject matter jurisdiction over the
workers’ state common law claim based on alleged viola-
tions of the Davis-Bacon Act also conflicts with a decision
of the Arkansas Supreme Court, Davis v. Hardaway
Contracting Co., 386 S.W.2d 707 (Ark. 1965). In Davis, the
plaintiffs performed labor and services for subcontractors
on a federal project under a contract which provided for
Davis-Bacon wages. The plaintiffs brought an action in
state court, alleging the subcontractors misclassified them
and thus failed to pay them appropriate Davis-Bacon
wages. The district court dismissed the plaintiffs’ action
for lack of jurisdiction on the basis that the classification
of laborers is an issue to be determined by the Department
of Labor. Davis, 286 S.W.2d at 708.
The Arkansas Supreme Court affirmed. Jd., at 710.
The court noted that under the relevant federal regula-
tions, disputes regarding classifications of workers are to
be resolved by the Secretary of Labor. Jd., at 708. The
court also recognized that under the regulations, the
federal contracting agency is required to investigate and
insure compliance with labor standard stipulations, and
that the regulations provided for contractor penalties for
14
not complying with such stipulations. Jd., at 709. The
court concluded:
It is apparent that these regulations are compre-
hensive, and are designed to afford relief to ag-
grieved laborers. The Davis-Bacon Act itself
(Sections 276a to 276a-5 of Title 40 U.S.C.A.) also
sets out remedies for laborers who have been
paid less wages than the rate (of wages) required
to be paid under a contract. We are persuaded
that this act, together with the rules and regula-
tions promulgated, and heretofore set out (Title
29, Subtitle A, Part 5), provides full and complete
relief, and state courts are without jurisdiction to
entertain the type of litigation here under dis-
cussion.
Id.
The Montana Supreme Court reached the opposite
result of the Arkansas Supreme Court by concluding that
the state district court had jurisdiction over the workers’
state common law breach of contract claim based solely on
alleged violations of the federal Davis-Bacon Act. This
Court should grant this petition in order to resolve the
conflict between the two state courts of last resort regard-
ing this important issue of federal law.
II. THE MONTANA SUPREME COURT DECIDED
AN IMPORTANT QUESTION OF FEDERAL
LAW IN A WAY THAT CONFLICTS WITH THE
GUIDANCE PROVIDED BY THIS COURT IN
UNIVERSITIES RESEARCH ASS’N v. COUTU.
In Universities Research Ass’n, Inc. v. Coutu, 450 U.S.
754 (1981), this Court expressly declined to do what the
Montana Supreme Court’s decision has done. In Coutu, an
15
employee of a federal contractor brought suit in federal
court claiming the contractor violated the Davis-Bacon Act
by failing to pay prevailing wages for work performed
under a federal contract. The federal contract in question
did not contain a stipulation requiring the contractor to
pay Davis-Bacon wages and the contract was administra-
tively determined not to call for Davis-Bacon work. On
appeal to this Court, the contractor argued that Congress
did not intend that the Davis-Bacon Act be enforced
through private action.
This Court held that the Davis-Bacon Act does not
confer a private right of action for back wages under a
contract that is administratively determined not to call for
Davis-Bacon work. Coutu, 450 U.S. at 767-768. Although
the Court found it unnecessary to reach the “broader”
issue of whether the Act creates an implied private right of
action to enforce a contract that does contain Davis-Bacon
Act stipulations,’ it affirmatively recognized that “some of
our reasoning arguably applies to the question whether
the Act creates any implied right of action.” Jd., at 769
n.19.
This Court turned first to the language of the Davis-
Bacon Act. It explained that although its previous opinions
recognize that the Act was designed for the benefit of
construction workers, the question remains whether the
' In declining to decide the issue of whether an implied private
right of action exists under a contract containing Davis-Bacon stipula-
tions, this Court also noted that it is questionable whether the issue
was properly before it in light of counsel's comments at oral argument
that they had not directly raised the issue in the Seventh Circuit.
Coutu, 450 U.S. at 769 n.19.
16
language of the statute indicates Congress intended it to
be enforced through private litigation. Jd., at 771. The
Court noted that section 1 of the Act requires that certain
stipulations be placed in federal contracts for the benefit of
laborers but does not conier rights directly on those
individuals. Jd., at 772. The Court found since section 1 of
the Act is “simply ‘phrased as a directive to federal agen-
cies engaged in the disbursement of federal funds,’” its
language provides no support for the implication of a
private remedy. Id., at 772-773 (quoting Cannon v. Univer-
sity of Chicago, 441 U.S. 677, 693 (1979)).
The Court then considered the import of section 3 of
the Act, conferring on laborers the same “right of action
and/or intervention” conferred by the Miller Act if the
wages withheld by the contracting agency under section 1
were insufficient to reimburse the laborers. Coutu, 450
U.S. at 773. The Court states in a footnote:
The Court has observed that when legislation
expressly provides a particular remedy or reme-
dies, courts should not expand the coverage of
the statute to subsume other remedies. (citation
omitted). There is some evidence that Congress
intended the suit on the contractor’s bond to be
the sole method of enforcing the obligations im-
posed by the Act.
Id. at 773 n.24.
Finally, the Court considered the legislative history of
the Act. It explained that the Act does not contain any
provision for predetermination of prevailing wages by the
Secretary or any enforcement provision until 1935. Id., at
774-775. The Court stated that in adopting the two provi-
sions, the intent of Congress was to make it easier for
contractors to know in advance what their labor costs
17
would be before submitting a bid, and to give laborers and
mechanics only the same right of action against a contrac-
tor and its sureties in court which was then allowed by the
Heard Act, the precursor to the Miller Act. Jd., at 776-777
n.27. The Court noted that “[t]o imply a private right of
action here would be to defeat each of these congressional
objectives.” Jd., at 777.
The Montana Supreme Court’s decision improperly
resolves the federal question left open by this Court in
Coutu. Although this Court declined to rule on the ques-
tion, the reasoning applied by the Court indicates that a
private right of action does not exist under section 1 of the
Davis-Bacon Act even if the federal contract contains
Davis-Bacon stipulations. The Montana Supreme Court’s
decision leads to an opposite result. This Court should
remedy the inconsistency between its decision in Coutu
and the Montana Supreme Court’s decision by granting
this petition for a writ of certiorari.
¢
CONCLUSION
For the reasons stated above, ARC respectfully re-
quests this Court grant this petition for a writ of certiorari.
Respectfully submitted,
MARCiA DAVENPORT
CROWLEY, HAUGHEY, HANSON,
TOOLE & DIETRICH, P.L.L.P.
100 North Park Avenue, Suite 300
P.O. Box 797
Helena, MT 59624-0797
(406) 449-4165
Counsel for Petitioner
|
App. 1
No. 01-514
IN THE SUPREME COURT OF THE
STATE OF MONTANA
2002 MT 266
BILL FAVEL, JOHN PITZER,
JOE LaMERE, TOBY LaMERE
and ALVIN BELGARDE,
Plaintiffs/Appellants,
STATE OF MONTANA
¥.
AMERICAN RENOVATION
AND CONSTRUCTION CO.,
a California corporation;
JOHN DOES I and II,
Defendants/Respondents.
(Filed Nov. 26, 2002)
APPEAL FROM: District Court of the Eighth Judicial
District,
In and for the County of Cascade,
The Honorable Julie Macek,
Judge presiding.
COUNSEL OF RECORD:
For Appellants:
Lawrence A. Anderson (argued),
Great Falls, Montana
For Respondents:
Marcia Davenport (argued), Crowley,
Haughey, Hanson, Toole & Dietrich,
Helena, Montana; Neil Westesen,
Crowley, Haughey, Hanson, Toole &
Dietrich, Bozeman, Montana
App. 2
Heard: March 12, 2002
Submitted: March 19, 2002
Decided: November 26, 2002
Filed:
/s/ Ed Smith
Clerk
Justice Patricia O. Cotter delivered the Opinion of the
Court.
4 1 This case was brought by a group of construction
workers (Workers) who performed labor under a federal
contract (Contract) between the American Renovation and
Construction Company (ARC) and the United States Air
Force (USAF or Air Force) to construct military housing at
Malmstrom Air Force Base (Malmstrom AFB) in Great
Falls, Cascade County, Montana. The Workers sued for
breach of contract, alleging that they were not paid pre-
vailing wages under the federal Davis-Bacon Act as
required by the Contract. The Eighth Judicial District
Court of Cascade County dismissed the suit on June 12,
2001, ruling that the Davis-Bacon Act did not provide the
Workers with a private right of action; therefore, it lacked
jurisdiction to hear the Workers’ claims. We reverse.
ISSUES
4 2 Arestatement of the issue presented by the parties is
whether the Montana District Court has subject matter
jurisdiction to hear and determine Workers’ common law
claims for breach of a Contract under which they were
| |
App. 3
guaranteed wages based upon wage standards established
by the federal Davis-Bacon Act.
FACTUAL BACKGROUND
73 In March 1998, the USAF and ARC entered into a
Contract under which ARC would construct military
housing at Malmstrom Air Force Base in Great Falls,
Cascade County, Montana. While the Contract was not
provided for this Court’s review, it is undisputed that the
Contract required ARC to pay its laborers federal Davis-
Bacon Act wages (hereinafter wages). Subsequently, ARC
entered into subcontracts with Baer Construction and
Four Winds Construction. Under ARC’s Contract with the
Air Force, ARC was required to include in any subcon-
tracts the provision that all subcontractors working on the
project would pay their laborers in accordance with the
Davis-Bacon Act. The contracts between ARC and its
subcontractors were not provided for our review, but it is
undisputed that these contracts included the required
Davis-Bacon wage provision.
{4 Workers are former employees of Baer Construction
(Baer) and/or Four Winds Construction (Four Winds) ' who
worked on the Malmstrom AFB project as iron workers,
carpenters, cement masons and other “skilled trades.”
Workers claim they were improperly paid unskilled
laborer wages. Additionally, Workers maintain that when
they complained tc Baer that they were not being paid in
' Baer and Four Winds are referenced in the caption of this case as
John Does I and II because Workers claim that these companies are not
legal entities authorized to do business in Montana.
App. 4
accordance with the contract between Baer and ARC, Baer
fired them. They then began working for Four Winds and
claim that Four Winds likewise failed to pay them the
skilled wages required under Four Winds’ contract with
ARC. (We note, however, that no precise allegations were
made against Four Winds nor were any administrative
decisions made pertaining to Four Winds.) In November
:1998, the Workers complained to ARC that ARC’s subcon-
tractors were not paying them in accordance with the
‘wage provisions of their contracts with ARC. Prior to this
November meeting between Workers and ARC, and
subsequent +, it, ARC consistently represented to the
USAF that it and its subcontractors were paying all
laborers appropriate Davis-Bacon wages.
45 Workers complained to the USAF Contracting Officer
(Contracting Officer) who agreed that the Workers should
have been paid “skilled laborer” wages. The Contracting
Officer notified ARC that it was ARC’s responsibility to
insure that subcontractors’ employees were accurately
paid in accordance with the contractually-prescribed
Davis-Bacon job classifications and wage rates. There is no
evidence in the record that the Contracting Officer notified
the DOL of the complaint or consulted with the DOL
regarding Workers’ claims. ARC forwarded a copy of the
Contracting Officer’s letter to Baer and instructed Baer to
resolve the matter as directed by the USAF. Baer refused
to do so despite multiple requests by ARC. Subsequently,
ARC withheld funds that it would have paid to Baer and
dispersed these funds to the underpaid Workers. The total
amount paid by ARC, however, was significantly less than
the amounts the USAF and the Workers claimed were
owed. The above facts provide a short factual summary
App. 5
but additional facts will be discussed as necessary in our
analysis.
PROCEDURAL HISTORY
16 Workers filed a law suit in June 1999, in the United
States District Court, Great Falls Division, against ARC,
ARC’s surety, St. Paul Fire and Marine Insurance Com-
pany, and ARC’s subcontractors. Workers sought damages
directly from ARC and its subcontractors under the Davis-
Bacon Act and from ARC’s surety under the Miller Act.
The federal district court judge characterized Workers’
claim as a claim for back wages under the Davis-Bacon
Act. The court concluded that 40 U.S.C. § 276a of the
Davis-Bacon Act did not give Workers a private right of
action but that 40 U.S.C. § 276a-2(b) did, vis-a-vis a Miller
Act claim. The federal court, therefore, stayed the Miller
Act proceeding, holding that a yet-to-be-obtained DOL
wage determination was a condition precedent to such a
proceeding. Workers, having presented extensive USAF
documentation of underpayment to the federal court to no
avail, then dismissed their federal action without preju-
dice and sought relief in state court. The Workers thereaf-
ter pursued their state remedies and did not reinstitute
their federal proceeding before the statute of limitations
expired. ”
* Voluntary dismissal of a federal action without prejudice does not
toll the statute of limitations. Brown v. Hartshorne Public School Dist.
No. 1 (10th Cir. 1991), 926 F.2d 959 (“It is hornbook law that, as a
general rule, a voluntary dismissal without prejudice leaves the parties
as though the action had never been brought.” (citation omitted)).
App. 6
9 7 Workers sued ARC and its subcontractors in the
District Court of the Eighth Judicial District, Cascade
County. They sought recovery on various common law
grounds including, but not limited to, breach of contract,
negligence, and wrongful discharge. ARC moved to dismiss
the complaint on the grounds that it failed to state a claim
for which relief may be granted. The state court dismissed
the complaint without prejudice for lack of subject matter
jurisdiction holding that the Davis-Bacon Act did not grant
Workers a private right of action. The state court agreed
with the federal court that Workers had failed to exhaust
their administrative remedies. Workers filed a timely
appeal.
STANDARD OF REVIEW
48 The State District Court dismissed this case for lack
of subject matter jurisdiction. “Motions to dismiss should
not be granted unless it appears beyond doubt that the
plaintiff can prove no set of facts in support of his claim
which would entitle him to relief.” Winslow v. Montana
Rail Link, Inc., 2000 MT 292, 4 13, 302 Mont. 289, ¥ 13,
16 P.3d 992, 7 13 (citing Hilands Golf Club v. Ashmore
(1996), 277 Mont. 324, 328, 922 P2d 469, 471-72). “In
considering such motions, the complaint is construed in
the light most favorable to the plaintiff and all allegations
of fact contained therein are taken as true. The District
Court’s determination that it did not have jurisdiction over
this case is a conclusion of law.” Winslow, { 13 (citing Pike
v. Burlington N.R.R. Co. (1995), 273 Mont. 390, 392-93,
903 P.2d 1352, 1353). “We review a district court’s conclu-
sions of law to determine whether the court’s interpreta-
tion of the law is correct.” Winslow, { 13 (citing Hilands
Golf Club, 277 Mont. at 328, 922 P.2d at 472).
App. 7
DISCUSSION
49 The primary question before this Court is whether
the Montana District Court has subject matter jurisdiction
to hear and determine Workers’ common law claims for
breach of a contract under which they were guaranteed
wages based upon wage standards established by the
federal Davis-Bacon Act.
{| 10 ARC argues that because all of Workers’ claims are
based on failure to pay wages established by the Davis-
Bacon Act, Workers are limited to Davis-Bacon-prescribed
remedies. It maintains that the state district court cor-
rectly held that it did not have jurisdiction over Workers’
claims because there is no “private right of action” under
the Davis-Bacon Act. In other words, Workers may not sue
a contractor or subcontractor in state or federal court,
under the Davis-Bacon Act, for a violation of the Davis-
Bacon Act. Rather, ARC maintained and the state court
agreed, Workers must first obtain a DOL determination
that a violation occurred, that Workers are owed money,
and how much money each individual Worker is due. Upon
an administrative determination that Workers had been
underpaid, Workers would be paid from any funds that
had been withheld in accordance with the regulations. If
such withheld funds were insufficient to pay the full
amount due, Workers could then sue ARC’s surety under
the Miller Act’.
* The Miller Act requires that before a contractor may be awarded
a federal construction contract, the contractor must post a payment
bond for the protection of persons providing labor and material to the
construction project. 40 U.S.C. § 270a(a)(2).
App. 8
49 11 Workers, on the other hand, claim that this is not a
“private right of action” case but rather a “preemption”
case. Workers seek to enforce a labor contract that incor-
porated the Davis-Bacon Act and included wages estab-
lished under the Act. Therefore, they are seeking a state
common law remedy for breach of contract. Thus, the
question is not whether they have the right to bring a
private action under the Davis-Bacon Act, but rather, is
whether the Davis-Bacon Act expressly or impliedly
preempts alternative or supplemental state remedies.
4 12 Additionally, Workers argue that, in this case, an
administrative remedy is non-existent, or, at best, inade-
quate. Workers claim that numerous relevant administra-
tive decisions were made in their favor and that ARC and
Baer accepted these decisions without challenge or a
request for DOL review. Therefore, Workers argue, ARC
and Baer are estopped from now claiming that additional
unexhausted administrative remedies exist. The District
Court did not address these issues.
The Davis-Bacon Act
4 13 The Davis-Bacon Act, 40 U.S.C. § 276(a), et seg., was
passed in 1931 during the Depression to protect workers
on federal construction projects. Under the Act, the Secre-
tary of Labor sets minimum wages for various job classifi-
cations that reflect “prevailing wages” in the area of the
project. The Act mandates that no contractor may pay less
than these prevailing wages to their employees working on
any construction project over $2,000 to which the United
States is a party. This prevents companies from competing
for federal contracts using bids based on importing labor-
ers from distant areas who would work for lower wages
App. 9
than local laborers. See 40 U.S.C. § 276a(a). See also,
Vulcan Arbor Hill Corp. v. Reich (D.C. Cir. 1996), 81 F.3d
1110, 1111 (citation omitted). Numerous courts have held
that the Act was designed specifically to protect the
interests of laborers. See, U.S. v. Binghamton Construction
Co. (1954), 347 U.S. 171, 177 and 178, 74 S.Ct. 438, 441
and 442, 98 L.Ed. 594, 599 and 600; Thompkins v. Fuller
(1983), 205 Mont. -168, 667 P.2d 944: Building and Const.
Trades Dept., AFL-CIO v. Reich (D.C. Cir. 1994), 40 F.3d
1275.
{14 After the Davis-Bacon Act was passed into law, the
Department of Labor promulgated detailed regulations for
its implementation. 29 C.F.R. §§ 5, 6, and 7. In addition to
the regulations defining how the Secretary of Labor will
establish prevailing wage rates, the regulations also
dictate specific contract provisions that must be included
in federal construction contracts, provide debarment
procedures for contractors who violate the Davis-Bacon
Act, and identify those entities who may initiate a pro-
ceeding in the event of a wage dispute. 29 C.F.R. §§ 5.5,
5.12 and 5.11 respectively.
{15 The state court held that Workers cannot sue ARC
and Baer in state court but rather they must avail them-
selves of the administrative remedies set out in the DOL’s
regulations. The court stated that Workers must obtain a
DOL determination that wages are due, then seek recov-
ery under the Miller Act. Workers claim they have utilized
the administrative procedure extensively, without remedy.
The facts set forth below support the Workers’ claim.
{16 Baer and ARC entered into their contract in March
1998. At some time between March 1998 and November
App. 10
1998, Workers complained to Baer that they were perform-
| ing skilled labor, as defined by the DOL job classifications
applicable to the construction project, but were being paid
unskilled laborer wages. Baer fired them. In November
1998, Workers met with representatives of ARC, the
Montana Labor Management Alliance (MLMA) and Baer.
They complained that Baer was breaching its contract
with ARC by not paying contractually-agreed upon wages
to its skilled laborers and that Baer had fired them for
complaining about it. The MLMA representative suggested
that ARC submit a request to DOL for “new” job classifica-
tion and wages rates for jobs performed by the Workers.
He said he would inform the meeting attendees of the
DOL’s determination and they could accept it or appeal it
at that time. ARC submitted the classification/wage
request to DOL in December 1998. No USAF or DOL
response to this request was provided to this Court.
47 17 By early April 1999, the USAF Contracting Officer
had received notice of the complaints. She responded by
sending a letter dated April 9, 1999, to ARC in which she
notified ARC that, as general contractor, it was ARC’s
responsibility to insure that its subcontractors complied
with the Davis-Bacon Act. She noted that ARC was re-
sponsible for reviewing the payrolls for discrepancies and
having those discrepancies corrected prior to submitting
them to the USAF. The Contracting Officer noted that,
“La]lecording to the Department of Labor,” the work being
performed by the complaining Baer laborers fell within
specific job classifications with prescribed wages. She
determined that Workers and other laborers had been
underpaid by Baer. She included in her letter to ARC a list
of Baer employees, which included Workers, who had h’cx
underpaid. She classified them within the correct DOL job
App. 11
classification and calculated the amount of unpaid wages
each of these employees was owed by Baer.
7118 Also on April 9, 1999, ARC sent a letter to Baer
informing Baer that it had received a determination from
the MLMA that Baer had underpaid the complaining
laborers. ARC notified Baer that failure to pay wages in
accordance with the Davis-Bacon Act was a direct breach
of their contract. It instructed Baer to fully compensate
the underpaid employees in accordance with the MLMA’s
directive.
719 In May and June 1999, ARC submitted several
other requests for “new” job classifications to the DOL. On
the DOL request form, ARC recommended hourly wage
rates for these “new” job classifications. The Contracting
Officer, after conferring with DOL, notified ARC that each
of its requests was denied because job classifications for
the job descriptions included in the requests were not
“new” but already existed and were part of the project
Contract. The “new” job classifications ARC sought were
for work performed by the Workers, as well as other
laborers. The hourly wage rate recommended by ARC in
its requests was lower than the hourly wage rates as-
signed under the Davis-Bacon Act to the existing job
classifications. ARC did not challenge or seek further DOL
review of the USAF and DOL’s denial of its job classifica-
tion and wage rate requests.
{ 20 Immediately thereafter, on July 9, 1999, ARC sent a
letter to Baer attaching the Contracting Officer’s April 9,
1999 letter and instructing Baer to pay the listed employ-
ees in accordance with the USAF letter. Baer refused to do
so. Also in July 1999, ARC notified the Contracting Officer
that it was processing “an equitable amount” to be paid to
App. 12
the “parties concerned” and that a settlement was being
negotiated. Subsequently, ARC withheld some funds due to
Baer and paid these funds to Workers. These funds,
however, were insufficient to pay Workers the amount of
money owed to them according to the Contracting Officer.
No settlement was ever reached.
DOL Regulations
4¥ 21 The DOL regulations implementing the Davis-
Bacon Act contain specific provisions and grant broad
authority to federal contracting officers. The regulations
dictate precise language that must be included in each
federal construction project contract. 29 C.F.R. §5.5.
Section 5.5(a)(1)(iiMA) authorizes the contracting officer
for the federal agency to approve or disapprove any new
job classifications, wage rates and fringe benefits applica-
ble to the project. If the contractor or the laborers to be
employed in the classification disagree with the contract-
ing officer’s determination, the contracting officer is
required to notify the DOL and seek a DOL determination.
29 C.F.R. § 5.5(a)(1)(ii(C). In the case at bar, the Contract-
ing Officer conferred with the DOL before making the final
decision to deny the requests. ARC did not challenge or
seek further review of the Contracting Officer’s and DOL’s
denial. We conclude that these decisions became final
agency determinations.
4 22 The regulations also address enforcement of the
Davis-Bacon Act. The regulations impose upon the federal
contracting agency the responsibility to ensure that the
contract provisions in 29 C.F.R. § 5.5 are included in each
appropriate contract. In other words, the contracting
App. 13
officer has the authority to determine when the Davis-
Bacon Act applies to a federal project. 29 C.F. R. § 5.6(a)(1).
{23 The regulations require that the federal contracting
agency, in this case the USAF, “shall cause such investiga-
tions to be made as may be necessary to assure compliance
with the labor standards clauses required by §5.5....
Complaints of alleged violations shall be given priority.”
Additionally, contracting officers are instructed that
“particular care shall be taken to determine the correct-
ness of classifications.” 29 C.F.R. § 5.6(a)(3). This plain
language indicates that when the federal contracting
agency is aware of allegations of Davis-Bacon wage viola-
tions, the contracting agency undertakes an administra-
tive investigation to determine if violations have occurred
and, if so, what monies are owed to which persons. The
DOL provides to contracting agencies investigatory mate-
rial to utilize during these authorized contractor examina-
tions, including material with which to compute back
wages and liquidated damages based upon their investiga-
tions. 29 C.F.R. § 5.6(a)(4). While the regulatory language
appears to contemplate, if not impose, a mandatory duty of
investigation, the record in this case does not reveal to
what extent a USAF investigation occurred. Nonetheless,
the Contracting Officer reached the decision that the Act
had been violated and determined what monies were owed
to which persons. Under the plain language of the regula-
tions, she had the authority to make this determination.
Again, ARC and Baer did not challenge her authorization
or determination of violation.
{24 Moreover, while the regulations provide that the
USAF “shall” withhold sufficient funds to pay the laborers
in accordance with the contract, should the contractor fail
to do so or fail to submit payroll records (29 C.FR.
App. 14
§§ 5.5(a)(2), 5.5(a)(3)(iii) and 5.9), the statute makes such
withholding on the part of the federal contracting agency
discretionary. 40 U.S.C. § 276a(a). Whether discretionary
or mandatory, the USAF Contracting Officer had the
unilateral authority to make such a decision, but there is
no evidence that such funds were withheld in this case.
When the Air Force notified ARC that ARC was responsi-
ble for paying the Workers if Baer failed to do so, there is
no mention in the letter that the USAF Contracting
Officer was withholding or would withhold payments to
ARC with which to pay Workers if ARC did not. ARC
accepted the USAF’s determination of its responsibility
and did not seek a DOL review or investigation.
4 25 Furthermore, the regulations authorize the federal
contracting agency to terminate the contract in the event
the contractor or subcontractor breach the contract by
failing to comply with any of its terms. 29 C.F-R. § 5.9. See
also, 29 C.F.R. § 5.5(a)(7). Typically, once matters have
reached this point, the contracting officer withholds
accrued funds due to the contractor and administratively
diverts those funds to the underpaid laborers. However,
and despite the USAF Contracting Officer’s determination
that the subcontractor breached the contract, the USAF
did not fire ARC. Rather, it issued a determination of
violation, defined the remedy and instructed its implemen-
tation. Had the USAF withheld funds with which to pay
Workers, upon its recognition that ARC failed to pay them
the amount owed based on the USAF’s determination, it
would have been obligated to then take the actions neces-
sary to provide payment to the Workers. The USAF, which
supported the Workers’ claims from the onset, did not
indicate the availability of such funds. This supports
App. 15
Workers’ speculation that no funds were withheld by the
USAF with which to pay Workers.
726 In addition, 29 C.F.R. § 5.11 sets forth the procedure
for resolving disputes of fact or law concerning payment of
prevailing wage rates. Significantly, these dispute proce-
dures may be initiated by the DOL Administrator, the
federal contracting agency, or upon request by the contrac-
tor or subcontractor. Unlike § 5.5(a)(1)(ii(C) (which gives
laborers dispute rights over job classifications in the
contract), § 5.11 does not list aggrieved laborers among
those who may initiate wage dispute proceedings.
{27 This omission led the Second Circuit Court of
Appeals in Chan v. City of New York (1993), 1 F.3d 96, 106,
to determine that laborers who were to be paid Davis-
Bacon wages under § 5310 of the Housing and Community
Development Act of 1974, 42 U.S.C. § 5310 (HCDA), could
invoke a remedy under 42 U.S.C. § 1983 because “[t]he
laborers who are beneficiaries of § 5310 were not and are
not allowed to initiate administrative dispute-resolution
proceedings [under 29 C.F.R. §5.11]. Nor is there any
provision for a laborer to obtain judicial review of any
administrative decision.” The Second Circuit, therefore,
concluded that the regulatory scheme under the HCDA
and the Davis-Bacon Act was not so comprehensive as to
preclude other remedies.
{28 By contrast, in Reidell v. U.S. (1999), 43 Fed. Cl.
770, plaintiff Reidell, a laborer for a subcontractor, con-
tacted the DOL directly and requested the agency to
determine whether the federal contract under which he
was working was subject to the Davis-Bacon Act. The
contracting officer for the project had concluded that the
Davis-Bacon Act did not apply. The DOL reviewed the
App. 16
project and determined that the Act did apply and that
laborers on the project should be paid Davis-Bacon wages
retroactive to the commencement of the project. An impor-
tant distinction between Reidell and the case at bar is that
Reidell was seeking a ruling as to whether the Davis-
Bacon Act applied to a specific contract. The applicability
of the Davis-Bacon Act is clearly a decision within the
DOL’s expertise and purview. The Reidell court did not cite
the regulatory provisions relied upon by Reidell to initiate
the DOL’s review. However, under 29 C.F.R. § 5.5(a)(1)
(ii(C), laborers have the express right to challenge a
contracting officer’s pre-contract decisions regarding job
classifications and wages rates, and 29 C.FR. § 1.6(f) gives
the DOL the express authority to amend an existing
contract to provide for erroneously-excluded Davis-Bacon
wages and make those wages retroactive. Reidell, there-
fore, is inapposite to the case at bar because there is no
question that the Davis-Bacon Act applied to this Contract
nor were there any other pre-contract issues to be re-
solved. Workers are seeking to be paid wages that all
parties agreed to pay in the Contract and that the federal
contracting agency has determined are due.
4 29 Under the plain language of the regulations, labor-
ers may dispute pre-contract issues but do not have the
express right to initiate proceedings concerning factual or
legal disputes over the payment of prevailing wages. The
USAF, ARC and Baer all had the express right to initiate
the formal DOL dispute resolution process. However, none
of them did.
4 30 Lastly, 29 C.F.R. § 5.13 requires that “[a]ll questions
relating to the application and interpretation of wage
determinations ... shall be referred to the Administrator
for appropriate ruling or interpretation.” This provision is
App. 17
inapplicable to Workers because they had no questions
relating to the application or interpretation of wage
determinations. If ARC or Baer had such questions, they
should have sought a ruling or interpretation from the
Administrator.
{31 The Workers took all the proper steps in their
attempt to resolve this matter. The first step, complaining
to Baer, got them fired. The second step, complaining to
ARC, appeared to fall on deaf ears for several months.
Finally, the third step, USAF involvement, resulted in a
determination by the Contracting Officer authorized to
make such a determination, that Baer and ARC were in
violation of the Davis-Bacon provisions of their contracts
and were both equally responsible for paying the Workers
the amounts determined by the Contracting Officer.
Neither company, though both were adversely affected by
the USAF’s decision, challenged it.
{32 Every decision made by the USAF supported the
Workers’ claims. From the Workers’ perspective, there was
no dispute of fact or law as to the proper classification and
wage rate due the Workers. The Air Force calculated that
and set it forth in a letter for ARC. Under these circum-
stances, there was no reason for the Workers to initiate a
DOL investigation, nor under the plain language of 29
C.F.R. § 5.11 were they expressly authorized to do so. On
the other hand, each USAF/DOL ruling was adverse to
ARC and Baer but neither ARC nor Baer challenged any of
the adverse decisions. Rather, ARC accepted them and
demanded that Baer honor the USAF rulings. Baer re-
fused but did not initiate a DOL determination as it was
authorized to do under 29 C.FR. § 5.11. Had ARC or Baer
held information that rebutted the USAF’s decision in the
App. 18
matter, presumably they would have submitted it to the
Contracting Officer.
4733 In sum, neither ARC nor Baer have demonstrated
that any further administrative review was either neces-
sary or available to the complaining Workers under the
clear-language of 29 C.F.R. § 5.11. Moreover, they have
failed to even argue that such further administrative
review would or should have resulted in a different conclu-
sion than that drawn by the USAF Contracting Officer. On
these facts, we therefore conclude that ARC and Baer are
estopped from arguing that Workers failed to seek admin-
istrative review of the dispute.
4 34 It is axiomatic that it is the contracting parties who
are adversely affected by a federal contracting officer’s or
DOL’s ruling who appeal the adverse ruling. The party
benefitted by the ruling has no reason to do so. Surely,
neither law nor reason requires the “winning party” to
initiate an appeal in order to recover the proceeds of the
victory. More to the point, when the adversely affected
parties fail to exercise their statutory right of review, they
will not be heard to blame the Workers for failing to
appeal from a favorable ruling on their claim.
7 35 While 29 C.F.R. § 5.11 does not give laborers the
express right to initiate DOL dispute resolution proceed-
ings, this does not mean that the laborers have no obliga-
tion to pursue the remedies that are available to them.
Because § 5.11 expressly authorizes the federal contract-
ing officer, contractors and subcontractors to initiate
dispute resolutions, it is implicit that, if laborers have a
“dispute” about wages or job classifications, they must
bring their complaints to the attention of these entities so
that resolution of the dispute may either be accomplished
App. 19
informally or through the formal DOL dispute resolution
process. It is only when this process fails to result in full
payment to the affected workers, as it did in this case, that
our holding here will provide such workers relief.
{386 Under the circumstances presented here, we hold
that the Workers exhausted the processes available to
them. They traveled the “administrative path” only to be
thwarted and frustrated for over two years. Unfortunately
this “administrative path” did not result in a formal DOL
determination, without which the state district court
concluded Workers were precluded from seeking recovery
under the Miller Act. While we disagree with the District
Court’s conclusion, based upon our determination here
that the authorized federal contracting party’s administra-
tive decision became final when the parties adversely
affected by it failed to pursue review of it, the question
remains whether Workers have an alternate remedy or
whether they must bear the loss for the other parties’
breaches of contract and violations of the law. We therefore
must determine whether Workers’ claim for relief in
the State District Court, once they have demonstrated
exhaustion of the Davis-Bacon regulatory requirements, is
preempted by the Davis-Bacon Act.
Preemption
7 37 ARC maintains that Workers may not seek relief in
state court but, upon exhaustion of their administrative
remedies, are limited to bringing a Miller Act claim in
federal court. Workers assert that unless the Davis-Bacon
Act preempts a state action, they are not so limited and
may seek contract enforcement before the state court.
App. 20
47 38 Workers claim they are not seeking to enforce the
Davis-Bacon Act labor standards but are seeking to
enforce a contract that includes specific Davis-Bacon wage
provisions. This distinction is subtle but important.
Workers are not challenging the job classifications estab-
lished by the DOL for the construction project, nor are
they challenging the wages or benefits assigned by the
DOL to these job classifications. Workers are seeking to
enforce a contract requiring that they be paid pre-
determined wages for well-defined job duties. The USAF
Contracting Officer determined, based upon their job
descriptions, to which classification they belonged and the
proper wage rate for that classification. She determined
the number of hours the Workers performed the tasks for
each job classification and the total wages each Worker
was underpaid. Neither ARC nor Baer, both of whom were
authorized to dispute the USAF’s findings in this regard,
disputed or challenged these findings with DOL. There-
fore, there are no disputed facts that require the special-
ized expertise of DOL. This is a simple breach of contract
action. We must now decide, however, whether the Davis-
Bacon Act preempts state law and forecloses the opportu-
nity to use state remedies as an alternative or supplement
to federal or administrative remedies.
47 39 Both the United States Supreme Court and this
Court have plainly held that preemption is not easily
favored. “Because the States are independent sovereigns
in our federal system, we have long presumed that Con-
gress does not cavalierly pre-empt state-law causes of
action. In all pre-emption cases, ... we start with the
assumption that the historic police powers of the States
were not to be superseded by the Federal Act unless that
was the clear and manifest purpose of Congress.” Sleath v.
REVO pot Fi Datei ee ete aes
App. 21
West Mont Home Health Services, 2000 MT 381, 7 23, 304
Mont. 1, J 23, 16 P.3d 1042, 4 23 (citing Medtronic, Inc. v.
Lohr (1996), 518 U.S. 470, 485, 116 S.Ct. 2240, 2250, 135
L.Ed.2d 700, 715 and Cipollone uv. Liggett Group, Inc.
(1992), 505 U.S. 504, 516, 112 S.Ct. 2608, 2617, 120
L.Ed.2d 407, 422). This presumption against preemption
“can only be overcome by evidence of a ‘clear and manifest’
intent of Congress to preempt state law.” Sleath, 161
(citing Wisconsin Public Intervenor v. Mortier (1991), 501
U.S. 597, 610, 111 S.Ct. 2476, 2484, 115 L.Ed.2d 532, 546).
740 In determining whether a federal law preempts a
state law, including a common law cause of action, we
must determine whether Congress intended the federal
law to preempt state law. There are three ways in which
state law may be superseded by federal law. First, the
legislature may expressly include in the federal statute a
preemption clause, making it clear that state law will not
apply in the area governed by the federal statute. Second,
congressional intent to preempt state law in a particular
area may be implied where the regulation of the area is so
comprehensive that it is reasonable to conclude that
Congress intended to “occupy the field” and to leave no
room for supplementary state regulation. Lastly, federal
law may supersede state law when the state law actually
conflicts with the federal law. This type of conflict mani-
fests itself as an inability to comply with both the federal
and state law, or because “the state law stands as an
obstacle to the accomplishment and execution of the full
purposes and objectives of Congress.” Hillsborough County
v. Automated Medical Labs. (1985), 471 U.S. 707, 713, 105
S.Ct. 2371, 2375, 85 L.Ed.2d 714, 721; see also, Siuslaw
Concrete Const. v. Wash., Dept. Of Transp. (9th Cir. 1986),
784 F.2d 952, 955.
EES LNT TTT
App. 22
4 41 We first consider express preemption. The Davis-
Bacon Act itself does not contain an express state law
preemption clause; therefore, we will not presume that
Congress intends the Davis-Bacon statute to preempt
state law. When Congress intends a statute to supersede
state laws, it knows how to say so and does so expressly.
See, e.g., Employee Retirement Income Security Program,
29 U.S.C. § 1144(a) (2001) (“Except as provided in subsec- ~
tion (b) of this section, the provisions of this subchapter
and subchapter III of this chapter shall supersede any and
all State laws insofar as they may now or hereafter relate
to any employee benefit plan described in section 1003(a)
of this title and not exempt under section 1003(b) of this
title.”). See also, Federal Election Campaign Act, 2 U.S.C.
§ 453 (2001); Uniform Time Act of 1966, 15 U.S.C. § 260(b)
(2001); Armored Car Industry Reciprocity Act, 15 U.S.C.
§ 5903 (2001).
4 42 We next consider whether the DOL regulations
purport to preempt state law. While the U.S. Supreme
Court has stated on several occasions that an agency’s
preemption regulations have no less preemptive effect
than statutes, Fidelity Federal Sav. Loan Assn. v. de la
Cuesta (1982), 458 U.S. 141, 153, 102 S.Ct. 3014, 3022,
73 L.Ed.2d 664, 675, the fact is there is no express pre-
emption provision in the Davis-Bacon DOL regulations.
Therefore, we continue our analysis to determine if the
regulations imply preemption or if conflict preemption
exists.
4 43 ARC argues that the DOL’s regulations “imply” that
Congress intended to occupy the entire field relating to
Davis-Bacon wages and left no room for state enforcement
of any dispute relating to the Davis-Bacon Act. While it is
well established that federal regulations may preempt
App. 23
_ other laws or remedies, the U.S. Supreme Court has
issued this caution:
We are even more reluctant to infer pre-emption
from the comprehensiveness of regulations than
from the comprehensiveness of statutes. As a re-
sult of their specialized functions, agencies nor-
mally deal with problems in far more detail than
does Congress. To infer pre-emption whenever an
agency deals with a problem comprehensively is
virtually tantamount to saying that whenever a ©
federal agency decides to step into a field, its
regulations will be exclusive. Such a rule, of
course, would be inconsistent with the federal-
state balance embodied in our Supremacy Clause
jurisprudence (citation omitted).
Moreover, because agencies normally address
problems in a detailed manner and can speak
through a variety of means, including regula-
tions, preambles, interpretive statements, and
responses to comments, we can expect that they
will make their intentions clear if they intend for
their regulations to be exclusive. Thus, if an
agency does not speak to the question of pre-
emption, we will pause before saying that the
mere volume and complexity of its regulations
indicate that the agency did in fact intend to pre-
empt.
Hillsborough, 471 U.S. at 717-18, 105 S.Ct. at 2377, 85
L.Ed.2d at 724; Siuslaw, 784 F.2d at 957.
144 The Court reiterated these concerns in Geier uv,
American Honda Motor Co. (2000) 529 U.S. 861, 908-09,
120 S.Ct. 1918, 1940, 146 L.Ed.2d 914, 949, when it
stated:
App. 24
While the presumption [against preemption] is
important in assessing the pre-emptive reach of
federal statutes, it becomes crucial when the pre-
emptive effect of an administrative regulation is
at issue. Unlike Congress, administrative agen-
cies are clearly not designed to represent the
interests of States, yet with relative ease they
can promulgate comprehensive and detailed
regulations that have broad pre-emption ramifi-
cations for state law. We have addressed the
heightened federalism and nondelegation con-
cerns that agency pre-emption raises by using
the presumption to build a procedural bridge
across the political accountability gap between
States and administrative agencies. Thus, even
in cases where implied regulatory pre-emption is
at issue, we generally “expect an administrative
regulation to declare any intention to pre-empt
state law with some specificity” (citation omit-
ted).
See also, Fidelity Fed. Sav. & Loan Assn., 458 U.S. at 154;
102 S.Ct. 3014; R.J. Reynolds Tobacco Co. v. Durham
County (1986), 479 U.S. 130, 149, 107 S.Ct. 499, 511, 93
L.Ed.2d 449, 467.
4 45 The DOL regulations are detailed and complex —
they define relevant terms, they address contract provi-
sions, they instruct contractors on payroll reporting and
permitted apprentice and trainee programs, they dictate
overtime requirements, they set forth debarment proceed-
ings, and they describe how to initiate a dispute concern-
ing payment of wages. They do not speak to the question of
preemption, however. It is reasonable to presume, there-
fore, with all the other detailed mandates of the regula-
tions, that had DOL intended the regulations to preempt
2A LS eR COE
App. 25
other laws and remedies, such an express provision would
have been inserted.
7146 Moreover, the regulatory section regarding disputes
over the payment of wages does not even give an aggrieved
laborer the express right to initiate a proceeding. Pre-
sumably, if 29 C.F.R. §5.11 had meant for an “employee”
or “laborer” to have such a right, the regulation would
have expressly provided so. Instead, the regulations
expressly authorize the laborer only to complain to the
contracting officer if the laborer disagrees with the estab-
lishment of job classifications and wage rates to which he
or she would be affected. 29 C.F.R. § 5.5(a)(1)(ii(C). Absent
the availability of an express regulatory remedy for
laborers seeking payment of established wages, we are
loathe to imply preemption of other remedies.
147 We conclude, as did the USS. Supreme Court in
Geier, 529 U.S. 861 at 908-09, that regulatory preemption
will not be implied absent some declaration of an intent to
preempt. Such a declaration being absent here, we find no
implied preemption in the Davis-Bacon regulations.
748 Finally, we analyze whether state law remedies
would actually conflict with the Federal Act. There are two
types of conflict preemption: (1) “where it is impossible to
comply with both state and federal requirements”; and (2)
“where state law stands as an obstacle to the accomplish-
ment and execution of the full purposes and objectives of
Congress.” Williamson v. General Dynamics Corp. (9th Cir.
2000), 208 F.3d 1144, 1152 (citing Industrial Truck Ass’n,
Inc. v. Henry (9th Cir. 1997), 125 F.3d 1305, 1309). “In
determining whether a state law conflicts with federal
statutes or regulations, the federal-state conflict must be
actual and unavoidable, not merely possible.” Siegel v.
App. 26
American Sav. & Loan Assn. (1989), 210 Cal.App.3d 953,
965, 258 Cal. Rptr. 746, 752 (citation omitted). Additionally,
courts must “determine whether, under the circumstances
of [a] particular case, [that State’s] law stands as an
obstacle to the accomplishment and execution of the full
purposes and objectives of Congress.” Jones v. Rath Pack-
ing Co. (1977), 430 U.S. 519, 526, 97 S.Ct. 1305, 1310, 51
L.Ed.2d 604, 614 (citations omitted). ARC argues that
allowing a state cause of action to enforce wage provisions
in an employment contract based upon the Davis-Bacon
Act results in an irreconcilable conflict between the federal
law and the state action. In this case, we disagree for three
reasons.
4749 First, DOL’s dispute regulations prescribe how
factual and legal disputes concerning payment of wages
are to be resolved through administrative proceedings. 29
C.F.R. §5.11. Here, the amount of wages and the job
classifications have already been established and agreed
upon by the contractors and subcontractors. However,
even if ARC’s and Baer’s failure to pay contractuaily-
agreed upon wages qualifies as a dispute described by
§ 5.11, the fact remains that the regulation does not give
the Workers the express right to initiate the administra-
tive proceedings. Therefore, granting a remedy to an
aggrieved laborer who has no express administrative
remedy does not frustrate the regulations.
{50 Second, the purpose of the Act is to guarantee that
workers on federal construction projects are paid a speci-
fied minimum wage. Allowing the Workers here the right
to enforce the wage provisions in the Contract in state
court will not impose a hardship on the contractors.
Because contract enforcement occurs long after contract
bidding and acceptance, the contractors are still able to
whe ee ee |
App. 27
submit bids which include “known” labor costs in accor-
dance with the Davis-Bacon Act. Additionally, in a state
contract enforcement action, laborers are simply seeking
to recover the amount of wages contemplated in the
contract. Therefore, granting laborers an aiternative
remedy in certain limited circumstances does not frustrate
or undermine the purpose of the Davis-Bacon Act, nor does
it impose greater or unexpected labor costs on the contrac-
tors.
751 Lastly, the contractor discipline provisions in the
regulations are not frustrated by our conclusion. There are
three primary means of disciplining violating contractors:
contract termination, 29 C.FR. § 5.5(a)(7); withholding or
suspension of funds, 29 C.F.R. § 5.9; and debarment, 29
C.F.R. § 5.12. The USAF Contracting Officer unilaterally
had the authority to terminate the Contract with ARC
upon her determination that ARC had breached its Con-
tract with the Air Force. She also had the unilateral
authority to withhold funds from ARC or suspend pay-
ments to ARC upon a finding of breach. While she did not
have the authority to pursue debarment of ARC and Baer,
there was nothing to preclude her from notifying the DOL
that the USAF had rendered a determination of violation
and a calculation of wages due that has not been appealed
by the adversely affected parties. Such notice to DOL by
the federal contracting agency would allow the DOL to
take any of the regulatorily-authorized steps it considered
appropriate toward the violating contractor. Quite simply,
contractors who violate the law remain subject to regula-
tory discipline, whether or not the instant action goes
forward in state court.
752 Under the circumstances presented here, we hold
that a state remedy does not stand as an obstacle to the
App. 28
accomplishment and execution of the Davis-Bacon Act.
The Workers have complied with the federal requirements
to the extent they were allowed and this additional rem-
edy, in no way, will render it impossible for the other
contracting parties to comply with federal requirements.
We therefore conclude that the Davis-Bacon Act does not
preempt Workers’ right to a state enforcement action
under these facts.
Private Right of Action
453 ARC urges us to resolve this case under a “private
right of action” analysis. There are cases in several juris-
dictions holding that laborers do not have the right to
bring a private action against a contractor under the
Davis-Bacon Act, but may only bring a Davis-Bacon wage
action vis-a-vis a Miller Act claim. See, United States, etc.
v. Capeletti Bros., Inc. (5th Cir. 1980), 621 F.2d 1309; Oper.
Eng. Health & Welfare v. JWJ Contracting Co. (9th Cir.
1998), 1385 F.3d 671; Weber v. Heat Control Co. (3d Cir.
1984), 728 F.2d 599. However, the Seventh Circuit held
that an implied private right of action exists under the
Davis-Bacon Act when, as in this case, the express reme-
dies provided by the Act are not available. McDaniel v.
University of Chicago (7th Cir. 1977), 548 F.2d 689, cert.
denied (1978), 434 U.S. 1033, 98 S.Ct. 765, 54 L.Ed.2d 780
(McDaniel II). The Seventh Circuit’s first decision, reached
in McDaniel v. University of Chicago (1975), 512 F.2d 583,
was vacated by the U.S. Supreme Court, and the matter
was remanded back to the Seventh Circuit to be reviewed
in light of the Supreme Court’s decision in Cort v. Ash
(1975), 422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26. Univer-
sity Of Chicago v. McDaniel (1975), 423 U.S. 810, 96 S.Ct.
20, 46 L.Ed.2d 30. The Seventh Circuit analyzed the
App. 29
McDaniel case under the Cort test in McDaniel II and
reached its original decision for a second time. The U.S.
Supreme Court subsequently denied cert. See also, Norling —
v. Valley Contracting and Pre-Mix (D.N_D. 1991), 773
F.Supp. 186 and Stampco Constr. Co., Inc. v. Guffey (Ind.
1991), 572 N.E.2d 510.
754 It is significant that the U.S. Supreme Court has
considered many Davis-Bacon cases but has specifically
declined to resolve the “private right of action” issue.
Universities Research Assn. v. Coutu (1981), 450 U.S. 754,
769, 101 S.Ct. 1451, 1460, 67 L.Ed.2d 662, 674 (“Similarly,
we do not decide whether the Act creates an implied
private right of action to enforce a contract that contains
specific Davis-Bacon Act stipulations.”). We likewise
decline to reach this issue. Rather, because we find pre-
emption inapplicable here, and, in keeping with Montana’s
longstanding policy and constitutional guarantee in Article
II, Section 16 granting citizens access to our courts when
they are aggrieved, we hold that under the specific facts of
this case, Workers, as third party beneficiaries to the
Contracts between the USAF, ARC and Baer, may bring
and pursue a state claim to enforce the terms of the
Contract.
7155 This decision is limited to the named Petition-
ers/Appellants. There is no proof of class certification and
we render no ruling as to other potential claimants.
Moreover, inasmuch as Workers’ claims for either negli-
gence or for penalties under § 39-3-206, MCA, were not
decided by the state court nor raised on appeal, we will not
consider those claims here.
App. 30
Summary of Analysis
456 We agree that the Davis-Bacon Act and the accom-
panying DOL regulations theoretically provide an admin-
istrative remedy under which aggrieved parties to a
contract incorporating the Act may seek relief. We further
agree that the administrative procedure, when available
and not otherwise exhausted, must be routinely pursued
to its intended conclusion. However, when an administra-
tive remedy is not available or has been exhausted, and
the underlying statute and regulations do not preempt
state law, the Montana Constitution gives citizens the
right to bring grievances to our courts. The Workers have
that right in this case.
457 We hold that the Workers satisfactorily exhausted
their available administrative remedies by obtaining
unchallenged, unappealed USAF/DOL rulings, and that
the Davis-Bacon Act does not expressly or impliedly
preempt this state common law cause of action under
these circumstances. We further conclude that the Work-
ers, as third party beneficiaries of the Contract, have the
right to sue to enforce that Contract.
458 Lastly, we do not disagree with the conclusions
reached in Justice Rice’s Concurrence. However, having
concluded that the Workers had a right to seek a contrac-
tual remedy in state court and recognizing that the Work-
ers did not reinstitute their federal action before the Miller
Act statute of limitations had expired, we saw no reason to
address the rights which might otherwise be available
under the Miller Act.
App. 31
CONCLUSION
159 We hold that the State District Court incorrectly
concluded that it lacked subject matter jurisdiction.
Therefore, we reverse and remand to allow the Workers to
proceed with their breach of contract action against the
defendants.
/s/ Patricia Cotter
Justice
We Concur:
/s/ Karla M. Gray
Chief Justice
/s/ James C. Nelson
/s/ W. William Leaphart
/s/ James Regnier
Justices
Justice Jim Rice specially concurring.
760 I concur with the holding of the Court, but do so
under a somewhat different rationale.I agree that the
District Court has subject matter jurisdiction to adjudicate
Workers’ state law claims for breach of contract. However,
in reaching that conclusion, I believe it necessary to
analyze the Miller Act. The Davis-Bacon Act specifically
prescribes an available judicial right of action under the
Miller Act for the wages at issue here and, therefore, as a
Davis-Bacon prescribed remedy, the Miller Act must be
App. 32
considered in properly assessing the rights of Workers
herein.
4% 61 In addition to the conclusion reached by the major-
ity, I would also conclude that the Miller Act, allowing
Workers to sue the contractor and its surety on the bond,
as provided for in 40 U.S.C. § 276a-2(b) of the Davis-Bacon
Act, is not an exclusive federal remedy and, as such, does
not preempt or exclude Workers’ breach of contract action
under Montana state law.
4 62 Initially, I note that ARC was correct when it
argued that Workers cannot sue in state or federal court
under the Davis-Bacon Act for violations of the Davis-
Bacon Act. Neither the statutes nor regulations prescribe
any such remedy. The regulations implementing the
Davis-Bacon Act require proactive conduct on the part of
the Federal agency (USAF) and the Department of Labor
to protect laborers and mechanics working under federal
contracts with Davis-Bacon clauses. See 29 C.FR.
§ 5.6(aX3) and (b) (requiring the Federal agency and
Department of Labor to initiate investigations to assure
compliance with Davis-Bacon contract clauses, inspect
payroll data, and to determine the correctness of classifi-
cations, giving priority to complaints of alleged violations).
In the event of failure or refusal to pay, 29 C.F.R. § 5.9
authorizes the Federal agency to cause the suspension and
withholding of funds sufficient to compensate employees
for the wages to which they are entitled. If insufficient
funds are subsequently withheld to compensate employees
their unpaid wages, there is no remedy to sue under the
Davis-Bacon Act.
4 63 Rather, 40 U.S.C. § 276a-2(b) of the Davis-Bacon Act
provides that “[i]f the accrued payments withheld under
App. 33
the terms of the contract ... 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
this Act, such laborers and mechanics shall have a right of
action and/or of intervention against the contractor and
his sureties conferred by law upon persons furnishing
labor or materials. ... ” This does not refer to a “private
action” under the Davis-Bacon Act, but a right of action by
the laborer or mechanic on the contractor’s payment bond
pursuant to the Miller Act. See Ybanez v. Anchor Construc-
tors, Inc. (Tex.Civ.App.1972), 489 S.W.2d 730, 739. See also
Universities Research Ass’n Inc., v. Coutu (1981), 450 U.S.
754, 776-77 & n.28, 101 S.Ct. 1451, 1465 & n.28, 67
L.Ed.2d 662, 679 & n.28.
764 Workers were thus correct in arguing that this is
not a “private right of action” case, but rather a “preemp-
tion” case. As the only “right of action” provided to Work-
ers is a right of action under the Miller Act, the relevant
inquiry is whether the federal Miller Act remedy is the
exclusive remedy available to Workers when the actions of
the Federal agency and Department of Labor under the
Davis-Bacon Act fail to provide Workers with sufficient
funds to compensate their unpaid wages.
765 Creating confusion in this Scenario is the question
surrounding the exhaustion of administrative dispute
resolution procedures and exhaustion of administrative
remedies under the Davis-Bacon Act. The “administrative
remedy” provided for laborers and mechanics under the
Davis-Bacon Act is the withholding of sufficient funds by
the Federal agency/Contracting Officer to reimburse
laborers and mechanics their unpaid wages. The laborers
and mechanics can initiate such “withholding action” by
App. 34
giving notice of any alleged violations via complaints to
the Federal agency. 29 C.F-R. § 5.6(a)(3).
466 Upon a Federal agency finding of an actual violation
of the Davis-Bacon clauses by the contractor or subcon-
tractor, the Federal agency has authority to cause the
suspension of sufficient funds to compensate the laborers
and mechanics their unpaid wages. 29 C.F.R. § 5.9. If the
Federal agency fails to withhold sufficient funds, the only
remaining remedy under the Davis-Bacon Act is a Miller
Act action pursuant to 40 U.S.C. § 276a-2(b).
4 67 The administrative procedural prerequisite for an
actionable Miller Act claim is that Workers must give
notice of the alleged contract clause violations to the
Federal agency — the USAF. 29 C.F.R. § 5.6(a)(3). The
Davis-Bacon regulations provide no further administrative
procedures to be completed on behalf of Workers beyond
notification to the Federal agency of the alleged violations.
4768 For an actionable Miller Act claim, the Davis-Bacon
regulations also require no further administrative deter-
mination beyond the Federal agency’s determination that
the contractor or subcontractor is in violation of the Davis-
Bacon clauses. In fact, regarding any post-contract viola-
tions by the contractor or subcontractor, the regulations
provide no option for the laborers and mechanics other
than to complain of the alleged violations to the Federal
agency, as the regulations contain no provision for the
laborers and mechanics to appeal to the Department
of Labor. Neither do the regulations require the Depart-
ment of Labor to make a post-contract determination of
App. 35
prevailing wages and employment classifications subse-
quent to the Federal agency’s proper exercise of post-
contract authority in making such determinations.'
7169 Following Workers’ complaint of the alleged viola-
tions, the only subsequent administrative determinations
essential to an actionable Miller Act claim are a determi-
nation of prevailing wages and a determination of the
correct classifications for Workers. See 40 U.S.C. §§ 276a
through 276a-2(b). These determinations cannot be made
judicially, as the judiciary has no authority or jurisdiction
to determine the correctness of prevailing wages or the
correctness of employee wage classifications under the
Davis-Bacon Act. See United States v. Binghamton Constr.
Co. (1954), 347 U.S. 171, 177, 74 S.Ct. 438, 441, 98 L.Ed.
594, 599 (“[t]he correctness of the [Department of Labor’s]
determination is not open to attack on judicial review”).
{70 Applied to the present situation, the Department of
Labor initially exercised its authority, pursuant to 40
' The “contract provisions” in 29 C.FR. § 5.5, dealing with pre-
contract determinations have been interpreted to require further post-
contract administrative determinations by the Department of Labor if
workers file a complaint alleging underpayment of wages due. See, e.g.,
Davis v. Hardaway Contracting Co. (Ark. 1965), 386 S.W2d 707.
However, such interpretation is incorrect and contrary to a plain
reading of the regulations. The contract provisions in 29 C.F.R. § 5.5,
requiring classification disputes to be referred to the Department of
Labor, refer only to disputes regarding predetermination of prevailing
wages and classification of workers, occurring prior to letting of the
contract. See Universities Research Ass’n Inc., v. Coutu (1981), 450 U.S.
754, n.9, 101 S.Ct. 1451, n.9, 67 L.Ed.2d 662, n.9 (“(t]here is currently
no administrative procedure [under the Davis-Bacon Act] that expressly
provides review of a coverage determination after the contract has been
let”).
App. 36
U.S.C. § 276a, and determined the prevailing wages and
job classifications prior to execution of the contract. The
Department of Labor was thus correct when it denied the
request by ARC for “new” job classifications, as the De-
partment of Labor had already exercised its “final” author-
ity by its pre-contract determination of prevailing wages,
correct job classifications and correct job descriptions. No
party to this action disputes these findings and there were
thus no disputes of fact or of law to be resolved by the
Department of Labor pursuant to 29 C.F.R. § 5.11.
4 71 Secondly, the Federal agency/Contracting Officer,
pursuant to 29 C.F.R. § 5.6(a)(3), determined that Workers
were correctly classified, and were, therefore, underpaid.
As noted, this determination is within the explicit author-
ity of the Federal agency. In other words, although the
Department of Labor is ultimately the final authority
regarding determinations of prevailing wages and worker
classifications, the Davis-Bacon regulations afford the
Federal agency authority to determine proper classifica-
tion of workers prior to entering into the contract, see 29
C.F.R. § 5.5(a)(1)(ii)(A) and (B), and authority to determine
the correctness of worker classifications subsequent to
contract formation, see 29 C.FR. § 5.6(a)(3).’ The latter
* Some case law from other jurisdictions hold otherwise, that
generally all disputes must be resolved by the Department of Labor.
Such case law is based upon misapplication of precedent. See, e.g.,
United States ex. rel Windsor v. DynCorp, Inc. (E.D. Va. 1995), 895
F.Supp. 844. Relying on Coutu and failing to distinguish between pre-
and post-contract determination by the Department of Labor, the
DynCorp court concluded that classification disputes must be referred
to the Department of Labor. As noted above in footnote 1, however, the
Coutu court explicitly distinguished between pre- and post-contract
determinations and specifically noted that the regulations contain no
(Continued on following page)
App. 37
authority can be exercised by the Federal agency upon its
own initiative or after complaints of alleged violations filed
by laborers and mechanics.
{72 The above two administrative determinations by the
Department of Labor and the Federal agency, as correctly
noted by the majority, fully exhausted all administrative
procedures and the administrative dispute resolution
process. The result — that Workers were not fully reim-
bursed for unpaid wages — was not a failure of the admin-
istrative dispute resolution process as the Court here
finds. To the contrary, there were no disputes to be admin-
istratively resolved and the process worked as intended.°
{73 With the successful completion of the administra-
tive process, it having been properly determined that the
accrued payments withheld were insufficient to reimburse
Workers for unpaid wages according to their correct
classifications, Workers were free to exercise the final
federal remedy provided by 40 U.S.C. § 276a-2(b) of the
Davis-Bacon Act: a judicial right of action by Workers
administrative procedure that expressly provides review of a coverage
determination after the contract has been let.
*. Pursuant to 29 C.FR. § 5.7(a)(2), it is the sole responsibility of
the Federal agency to report any violations by the contractor or
subcontractor to the Department of Labor. However, a failure of the
Federal agency to do so has no repercussions on the rights of the
complaining laborers and mechanics to receive unpaid wages or to
pursue their right of action under the Miller Act, nor does the failure of
the Federal agency to submit its mandatory report, as apparently
occurred in the present situation, imply that the laborers or mechanics
must somehow supplement such inaction by notifying the Department
of Labor of the Federal agency’s findings.
App. 38
against the contractor and its surety on the bond pursuant
to the Miller Act.
4 74 Anecessary question before this Court, therefore, is
whether the federal Miller Act remedy is intended to be
the exclusive remedy available to Workers or whether
Workers may, in the alternative, avail themselves to
available Montana state law remedies.
{75 The United States Courts of Appeals for the Second,
Fifth, Ninth and Tenth Circuits have considered the issue
of whether the federal Miller Act provides an exclusive
remedy to laborers and mechanics, and these Courts of
Appeals have concluded that it does not. See United States
v. Reid & Gary Strickland Co. (5th Cir. 1999), 161 F.3d
915, 919; Wright v. United States Postal Service (9th Cir.
1994) 29 F.3d 1426, 1431; K-W Industries v. National
Surety Corp. (9th Cir. 1988), 855 F.2d 640, 643; Active Fire
Sprinkler Corp. v. United States Postal Service (2nd Cir.
1987), 811 F.2d 747, 754; United States v. Ins. Co. of North
America (10th Cir. 1982), 695 F.2d 455, 458.
{76 The Supreme Courts of Nevada and Wisconsin have
likewise held. See Hoffmeister Cabinets of Nevada, Inc. v.
Bivins (Nev. 1971), 486 P.2d 57, 58; Voelz v. Milgram
Contracting Co. (Wis. 1956), 75 N.W.2d 305, 306 (holding
that the Miller Act is the exclusive remedy only to an
action brought “on the bond” and not to some other suit
not based on the bond directly).
7 77 Similarly, the United States District Courts in
California, Texas and Massachusetts are in agreement.
See United States v. Wausau Insurance Cos. (E.D. Cal.
1991), 755 F.Supp. 906, 909; Alvarez v. Insurance Co. of
North America (N.D. Cal. 1987), 667 F.Supp. 689, 693-95;
United States v. Robert E. McKee, Inc. (N.D. Tex. 1988),
nasa Aa lll att egg mmmamancamaemmmammae
App. 39
702 F.Supp. 1298, 1302; United States v. Sovereign Constr.
Co. (D. Mass.), 311 F.Supp. 371, 372.
7178 Finally, in another important ruling, the Eighth
Circuit Court of Appeals has held that the Davis-Bacon
and Miller Acts have different and independent aims, and
do not, either explicitly or implicitly, limit one another. See
United States v. W.H. Cates Constr. Co. Inc. (8th Cir. 1992),
972 F.2d 987, 992.
{79 I would likewise conclude that the Miller Act is not
the exclusive remedy to Workers in the present situation,
subject to any actual frustration by state law remedies of
the purposes or goals of either the Miller Act or the Davis-
Bacon Act. A breach of contract remedy under Montana
state law, however, does not frustrate or impede the goal of
the Miller Act to create a substitute lien via right of bond
action against a surety. In both a Miller Act action or
breach of contract action, Workers are provided with a
remedy to receive unpaid wages which are due. Based on
the foregoing, I conclude that workers are free to pursue
their state law claims for breach of contract.
{80 For the above reasons, I concur with the result
reached by the majority and also conclude that the Miller
Act remedy, provided in 40 U.S.C. § 276a-2(b) of the Davis-
Bacon Act, is not the exclusive remedy to Workers in this
case, but that Workers are free to pursue their breach of
contract action under Montana state law.
/s/ Jim Rice
Justice
App. 40
Justice Terry N. Trieweiler concurring and dissenting.
4 81 Iconcur with the result of the majority Opinion and
with much of what is said in that Opinion. However, I also
conclude that the majority has unnecessarily and, contrary
to our prior decisional law, limited the effect of its Opinion,
thereby depriving other aggrieved workers of its benefit.
From those limitations placed on this Opinion, I dissent.
4 82 I agree with what is said in Justice Rice’s concur-
ring Opinion except for his conclusion that an employee
cannot sue directly to enforce his rights provided by the
Davis-Bacon Act. However, I would resolve the issue in
this case more directly and without the inference that
there was an effective administrative remedy available to
| the Plaintiffs pursuant to the Davis-Bacon Act.
4 83 As noted by the majority, the contract between
American Renovation and Construction Company and the
United States Air Force required not only that ARC pay its
laborers’ prevailing wages pursuant to the Davis-Bacon
Act, but also required that ARC require its subcontractors
to pay those wages. Assuming the Plaintiffs’ allegations to
be correct, it did not do so.
4 84 The question in this case was not, as decided by the
District Court, whether the Davis-Bacon Act provides a
direct cause of action pursuant to the Supreme Court’s
analysis in Cort v. Ash (1975), 422 U.S. 66, 95 S.Ct. 2080,
45 L.Ed.2d 26. (Although I would hold as in McDaniel v.
University of Chicago (7th Cir. 1977), 548 F.2d 689, cert.
den’d., 434 U.S. 1033, 98 S.Ct. 765, 54 L.Ed.2d 780, (1978),
that it does.) The question is whether the Davis-Bacon Act
preempts the Plaintiffs’ state remedies such as their
claims for breach of contract and negligence. I agree with
the majority’s analysis of the preemption issue with the
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App. 41
exception that I would not under any circumstance infer
preemption by federal administrative regulations. The
question is whether Congress intended preemption of state
law. I do not believe comprehensive administrative regula-
tion could ever shed any light on that issue.
{ 85 I agree with the result of the majority's preemption
analysis. However, I would not limit the conclusion that a
common law breach of contract action presents no conflict
with the statutory and regulatory scheme of the Davis-
Bacon Act to the facts of this case as the majority has done
in { 48 of its Opinion. I would conclude that a breach of
contract action to enforce those protections provided to
workers through the Davis-Bacon Act can never conflict
with the Act which the majority concedes was enacted to
protect workers on federal construction projects. How
could allowing workers to enforce their right to prevailing
wages conflict with federal law requiring that they be paid
prevailing wages? It seems to me the majority’s analysis in
that regard is unnecessarily complicated and the major-
ity’s conclusion is unnecessarily limited.
7 86 Nor do I join in the majority’s conclusion at 4 33
that Baer and ARC are estopped from arguing that the
Plaintiffs failed to exhaust their administrative remedies.
I would simply conclude that there were no effective
administrative remedies available to the Plaintiffs nor,
other than the practical limitations pointed out by Justice
Rice (regarding DOL determination of the proper job
classification and prevailing wage), is there any require-
ment in our prior case law that people protected by a
federal statutory scheme exhaust that statutory remedy
before pursuing an independent state remedy. For the
same reason, I disagree with the majority’s conclusion in
{ 35 that the Plaintiffs in this case had an obligation to
App. 42
make their complaints to the contractor, subcontractor,
contracting agency or Department of Labor before bringing
a state law action for breach of contract or negligence.
While common sense and practicality suggest that those
efforts first be made, there is nothing in the law that
requires it.
7 87 Finally, I strongly disagree with the majority’s
conclusions in ] 56 of the majority Opinion that the Davis-
Bacon Act and DOL regulations provide workers an
effective remedy for contract violations or that the admin-
istrative remedy musi be pursued to its intended conclu-
sion. The first conclusion is completely inconsistent with
the majority’s observations in 7 26 and 29 of its Opinion
that only the DOL, contracting agency or private contrac-
tor can initiate dispute resolution proceedings regarding
the payment of prevailing wages. A regulatory scheme
which leaves the rights of workers totally up to federal
agencies and their private contractors is no remedy what-
soever to a worker who has been denied his or her prevail-
ing wage.
4 88 Finally, once the Court has considered whether the
Davis-Bacon Act preempts state law claims, I would
conclude it is only necessary to look to our prior case law
to determine whether Plaintiffs’ claims in this case were
properly dismissed. We have already decided this identical
issue in State ex rel. Farm Credit Bank of Spokane v. Dist.
Court of Third Jud. Dist. (1994), 267 Mont. 1, 881 P.2d
594. However, the Farm Credit decision is not even men-
tioned in either the majority Opinion or Justice Rice’s
concurring Opinion.
4 89 In Farm Credit, the Plaintiffs filed a state law claim
for damages from Farm Credit Bank of Spokane. Among
App. 43
their claims, Plaintiffs alleged that the Bank breached its
contract with them by not complying with the Agricultural
Credit Act of 1987, the terms of which were incorporated
into the contract between the parties. The District Court
dismissed the Plaintiffs’ breach of contract claim based on
preemption by the Agricultural Credit Act. On appeal, the
Bank contended, as does the Defendant in this case, that
the District Court should be affirmed because, based on
federal authority, there is no direct cause of action avail-
able to a borrower for enforcement of the terms of the
Agricultural Credit Act. Plaintiffs, on the other hand,
pointed out that they were not relying on the creation of a
private cause of action to enforce the Agricultural Credit
Act. They simply sought to enforce those provisions of the
Act which had been incorporated in the terms of their
contract with the Bank.
7190 In Farm Credit, we first held, as the majority does
in this case, that it is not necessary to analyze whether
Congress intended to permit a private right of action to
enforce the Act. We held that:
By including reference to the Act as a controlling
contract term, the FCB is bound by the terms of
the Act under the contract, and the Graveleys
have the same right to enforce the provisions of
the Act as the parties have to enforce any other
provision in the contract.
Farm Credit, 267 Mont. at 17, 881 P.2d at 603.
191 We pointed out that “while the existence of a private
cause of action is correctly analyzed under Cort v, Ash,
federal preemption is analyzed differently.” Farm Credit,
267 Mont. at 17, 881 P2dq at 603. Based on the same
analytical process employed by the majority in this case,
App. 44
we concluded that not only was there no conflict between
the private cause of action and the Act, but that the
private cause of action furthered the purpose of the federal
legislation. In relevant language, we stated:
There is no basis for concluding that simply be-
cause Congress provided for a minimum proce-
dure for reviewing a loan officer’s decision that it
meant to foreclose any other method of enforcing
the right to restructure provided for by statute.
Farm Credit, 267 Mont. at 20, 881 P.2d at 605.
9 92 We concluded that because the terms of the Act
were incorporated by the parties as a term of their con-
tract, those terms were as enforceable in a court of law as
any other contract term. Farm Credit, 267 Mont. at 20-21,
881 P.2d at 606.
493 If a minimum procedure for reviewing a loan offi-
cer’s decision does not foreclose other methods of enforcing
rights provided for by contract, certainly the administra-
tive process alluded to by the majority would not foreclose
the Plaintiffs’ claim in this case. In this case, Plaintiffs did
not even have a right to initiate a fact finding process by
which to resolve their claim that they were denied the
prevailing wage for their job classification.
4 94 For these reasons, and based on our prior decision
in Farm Credit, I would reverse the judgment of the
District Court and I concur in the majority’s decision to do
so. However, I dissent from the majority’s unnecessary and
legally incorrect limitations on the application of its
Opinion. I believe that the majority’ limiting language
will lead to confusion by future litigants and leave the door
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App. 45
open for future avoidance of what should have been a
simple and unequivocal conclusion in this case.
/s/ Terry Trieweiler
Justice
App. 46
MONTANA EIGHTH JUDICIAL DISTRICT COURT,
CASCADE COUNTY
2K 2 26 2k 9 2k 2 9K 2 2 2 2 2 2k 2k 2 2k 2k Kk
BILL FAVEL JOHN )
PITZER, JOE LAMERE,
TOBY LAMERE, and CAUSE NO.
ALVIN BELGARDE, BDV-99-657
Plaintiffs, ORDER
Vs.
)
)
)
)
)
)
AMERICAN RENOVATION )
AND CONSTRUCTION )
COMPANY, a California )
corporation and JOHN DOES )
i & Il, )
)
)
Defendants.
26 OK 26 2 kk kk OK OK OK OK KK KK
This matter was before the Court on May 22, 2001, on
the Defendants’ Motion to Dismiss. The Plaintiffs were
represented by Lawrence Anderson. The Defendants were
represented by Marcia Davenport. This decision is based
on the briefs and oral arguments of the parties.
The Plaintiffs have brought suit against the Defen-
dants alleging six causes of action; breach of contract,
negligence, wrongful discharge, class action, malice, and
private attorney/common fund. All of the causes of action
are based on the Davis-Bacon Act. The Davis-Bacon Act if
[sic] a federal act which specifies what wages are to be
paid for what job classifications on federal construction
projects. In the instant case the Plaintiffs allege that the
Defendants failed to properly classify and pay them for
Ee cern
App. 47
work they did on the construction of military housing at
Malmstrom AFB.
The Plaintiffs have filed a similar suit in the United
States District Court for the District of Montana, Great
Falls Division. The Plaintiffs’ federal suit alleges many of
the same claims as the instant case. The main difference
between the two cases is that in the federal action the
Plaintiffs have named an additional defendant, St. Paul
Fire and Marine Insurance Co. St. Paul was the surety for
American Renovation and Construction on the military
housing project.
On February 1, 2001, Judge Richard F. Cebull issued
an order staying the federal proceedings pending a deter-
mination by the Department of Labor as to the validity of
the Plaintiffs’ Davis-Bacon Act claims. In making his
ruling, Judge Cebull noted that the Plaintiffs did not have
a private right of action under § 1 of the Davis-Bacon Act.
However, he also noted that a private right of action is
available under § 3 of the Davis-Bacon Act, which allows
private rights of action against a surety once the proper
procedures of § 1 have been followed and a determination
has been made that a violation of the Davis-Bacon Act has
occurred. Because St. Paul, the surety, was named in the
federal action, Judge Cebull stayed the proceedings
pending a determination by the department of Labor as to
whether a violation of the Davis-Bacon Act had occurred in
regards to the Plaintiffs.
The Defendants have filed their Motion to Dismiss on
the basis of this Court’s lack of subject matter jurisdiction
over the Plaintiffs’ claims. The basis of the Defendants’
motion is that there is no private right of action under § 1
of the Davis-Bacon Act — that the only private right of
App. 48
action exists under § 3 of the Davis-Bacon Act, and that
§ 3 only applies to sureties. As noted by the Defendants,
the surety has not been made a party to this action. The
Defendants have referred the Court to Judge Cebulls’
February 1, 2001, Order as further support of their argu-
ment. This Court agrees with Judge Cebull’s ruling and
finds it persuasive in this case.
The Davis-Bacon Act sets forth a procedure to be
followed when any alleged violations of the Act occur. The
first step for an aggrieved party is to file the appropriate
complaint with the Department of Labor. The Department
of Labor conducts an investigation and determines
whether or not a violation of the Act occurred. There is a
fund created under the Act in which funds are set aside by
the government from monies owed to the contractors by
the government. The purpose of the fund is to have monies
available to settle claims if it is determined by the De-
partment of Labor that a violation of the Davis-Bacon Act
has occurred. If it is then determined that the payments
withheld in the fund are insufficient to compensate any
aggrieved parties, the aggrieved parties can initiate a
private action against a contractor’s surety to recover any
sums still owing. The action filed against a surety is under
§ 3 of the Davis-Bacon Act and is termed a Miller Act
claim.
The Plaintiffs have attempted to make a distinction
between the general jurisdiction of Montana state courts
and a federal private right of action. The Montana Su-
preme Court has previously addressed this issue and has
found a similar distinction to be without merit. In State
Medical Oxygen & Supply, Inc. v. American Medical
Oxygen Co., 230 Mont. 456, 750 P.2d 1085 (1988), the
plaintiff sued to recover damages from an ex-employee and
App. 49
the directors of the defendant for the alleged breach of an
employment contract based upon a purported violation of a
provision of the Social Security Act. The trial court
granted summary judgment in favor of the defendant on
the basis that a Federal Securities Act violation does not
give rise to a private civil cause of action. The Montana
Supreme Court affirmed the trial court stating:
[A]ppellant claims that it is not asserting a fed-
eral claim but a claim under § 27-1-202, MCA,
and that a breach of federal statute comes within
the context of the Montana statute. We cannot
agree with this argument. [A] private right of ac-
tion is not available to appellate through an al-
leged violation of a federal statute unless certain
criteria are met.
First, is the plaintiff “one of a class for whose es-
pecial benefit the statute was enacted,” ... that
is, does the statute create a federal right in favor
of the Plaintiff? Second, is there any indication of
legislative intent, explicit or implicit, either to
create such a remedy or to deny one? . . . Third, is
it consistent with the underlying purposes of the
legislative scheme to imply such a remedy for the
plaintiff? ... And finally, is the cause of action
one traditionally relegated to state law, in and
[sic] area basically the concern of the States, so
that it would be inappropriate to infer a cause of
action based solely on federal law? State Medical
Oxygen, supra, 230 Mont. at 460, 750 P.2d at
1087, citing Cort v. Ash, 422 U.S. 66 at 78, 95
S.Ct. 2080 at 2088, 45 L.Ed.2d 26 at 36 (1975).
The Montana Supreme Court considered the first
factor of the four-part test and stated:
App. 50
We conclude that the plaintiff is not of the class
for whom this act was enacted and therefore
hold, that as to the issue of a violation of the So-
cial Security Act giving rise to a private cause of
action pursuant to § 27-1-202, MCA, summary
judgment was properly granted in favor of re-
spondents. Jd., 230 Mont. at 460, 750 P.2d at
1087-1088.
This Court has applied the first prong of the above
four-prong test to the facts of this case to determine
whether the Davis-Bacon Act confers a private right of
action to employees for alleged violations of the Act. In
applying said test, the Court finds that no private right of
action is created under § 1 of the Davis-Bacon Act. “The
Davis-Bacon Act was intended as a ‘general prohibition or
command to a federal agency’ to require minimum wage
stipulations for federal government work contracts; it does
not generally grant a private cause of action directly to
employees.” Operating Engineers v. JWJ Contracting
Company, 135 F.3d 671 at 676 (9th Cir. 1998). !
Since the Court finds that the first prong of the four-
prong test has not been met and that, therefore, a private
right of action is not available in state court for an alleged
violation of § 1 of the Davis-Bacon Act, the Defendants’
Motion to Dismiss is granted. However, the Court also
recognizes that the Plaintiffs potentially have a private
right of action under § 3 of the Davis-Bacon Act. There-
fore, the Court is dismissing this matter without prejudice
so that the Plaintiffs, pending a determination of their
claims by the Department of Labor, may reinstatute [sic]
this action and name St. Paul, American Renovation and
Construction’s surety, as a party if they feel that a Miller
Act claim exists.
App. 51
There were other motions of the parties pending
before the Court. Because the Court has found the Defen-
dants’ Motion to Dismiss dispositive of the case, those
motions will not be addressed.
IT IS HEREBY ORDERED that:
1. The Defendants Motion to Dismiss is GRANTED.
2. The matter is dismissed without prejudice as
noted above.
3. The June 19, 2001, and June 20, 2001, hearings
scheduled in this matter are VACATED due to the Court’s
above ruling.
DATED this 12th day of June, 2001.
/s/ Julie Macek
JULIE MACEK
DISTRICT COURT JUDGE
cc: Lawrence Anderson
Marcia Davenport
App. 52
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MONTANA
GREAT FALLS DIVISION
UNITED STATES OF AMERICA, )
for the use of BILL FAVEL,
JOHN PITZER, JOE LAMERE,
TOBY LAMERE, and ALVIN CV-00-60-RFC-GF
BELGARDE,
Plaintiffs, nari
. (Filed
Feb. 2, 2001)
ST. PAUL FIRE AND MARINE
INSURANCE CO., a Minnesota
corporation; AMERICAN
RENOVATION AND
CONSTRUCTION Co., a
California corporation; and
JOHN DOES I and II,
Defendants.
Nee eee eee eee eee ee “Se”
This is a case involving a contract between the United
States and American Renovation and Construction (ARC)
for construction of family housing at Malmstrom. Defen-
dant ARC was the primary contractor, defendant Baer a
subcontractor’, and St. Paul is ARC’s surety who provided
a bond for the project in accordance with the Miller Act, 40
U.S.C. § 270. Plaintiffs here are individuals who were at
‘ Baer did not actually brief the issue, but joined in ARC/St. Paul’s
motion to dismiss and brief in support.
App. 53
one time employed by defendant Baer Construction, which
has its own Miller Act claim against St. Paul/ARC.’
Plaintiffs claim jurisdiction pursuant to the Miller
Act, 40 U.S.C. § 270, and defendants filed a motion to
dismiss for lack of subject matter jurisdiction, pursuant to
Rule 12(b\(1). The defendants requested and received,
without opposition from plaintiffs, a stay in discovery
given the potential dispositive nature of their motion.
Defendants further filed a motion to dismiss Count III,
which alleges the complaint as a class action. The motions
were briefed and oral argument was heard on J anuary 29,
2001. For the reasons given more fully below, the motion
to dismiss for lack of subject matter jurisdiction is denied,
the motion to dismiss Count III is granted, and the case is
stayed pending further proceedings before the Department
of Labor (DOL).
Defendants first contend that while the Complaint
contains a jurisdictional statement that this action is
brought pursuant to the Miller Act, the claims are in
essence alleged violations of the Davis-Bacon Act, for
which no private right of action exists. Second, the defen-
dants argue that even if the Court were to construe the
complaint as a claim under the Miller Act, plaintiffs’
failure to observe procedural requirements for filing a
Miller Act claim merit dismissal.
Although the defendants have brought the motion, the
burden of establishing subject matter jurisdiction is borne
by plaintiff. Since federal Courts are courts of limited
* Baer Construction v. ARC/St. Paul, CV-00-12-GF-RFC
App. 54
jurisdiction, the Court must presume lack of jurisdiction
until plaintiffs prove otherwise, since it is plaintiffs who
are invoking federal jurisdiction. Kokkonen v. Guardian
Life Ins. Co. of America, 511 U.S. 375, 377 (1994). I find
that the plaintiffs have met that burden, in that a Miller
Act action exists within the structure of the Davis-Bacon
Act.
Paragraph 1 of the Complaint is a jurisdictional
statement asserting the existence of a federal question (28
U.S.C. § 1331) and relying on the Miller Act, 40 U.S.C.
§ 270(b). There is no dispute that this Court has jurisdic-
tion over Miller Act claims, which provides that “every
person who has furnished labor or material in the prosecu-
tion of work ... shall have the right to sue on such pay-
ment bond for the amount, or the balance thereof, unpaid
at the time of suit.” Id.
The gravamen of the Complaint is contained in Count
I, wherein plaintiffs allege breach of contract. The thrust
of the allegations in Count I is defendants’ failure to
properly classify plaintiffs by their skilled trades and pay
them in accordance with the requirements of the Davis-
Bacon Act — essentially, a claim for back wages. Count II is
a pendent claim (wrongful discharge), and Count III
realleges all paragraphs as a class action, relying on Rule
23. A fair reading of the Complaint supports defendants’
view that the claims are premised on alleged violations of
the Davis-Bacon Act. The import of this is that the Davis-
Bacon Act does not provide for a private right of action
under the circumstances provided here — at least not at
this time. The Act provides that the United States Comp-
troller may withhold payments from contractors and
directly pay workers “any wages found to be due.” 40
U.S.C. § 276a-2.
App. 55
The majority of courts interpreting the Davis Bacon
Act, including the Ninth Circuit Court of Appeals, have
found that no private right of action is created by Section 1
of the Act. “The Davis-Bacon Act was intended as a ‘gen-
eral prohibition or command to a federal agency’ to require
minimum wage stipulations for federal government work
contracts; it does not generally grant a private cause of
action directly to employees.” Operating Engineers v. JWJ
Contracting Co., 135 F.3d 671, 676 (9th Cir. 1998) (internal
cites omitted). This holding was in agreement with “the
majority of circuit courts that have reached the issue”
following the reasoning in Universities Research Associa-
tion v. Coutu, 450 U.S. 754 (1980), in which the Supreme
Court stopped just short of reaching the broad issue of
whether any private right of action exists under the Davis-
Bacon Act. Coutu, at 769.
Plaintiffs rely primarily on a decision from the Sev-
enth Circuit and other district court cases relying on that
case to support their contention that the Davis-Bacon Act
does contain a private right of action. McDaniel v. Univer-
sity of Chicago, 548 F.2d 689 (7th Cir. 1976). The case pre-
dates Coutu, is at odds with the Ninth Circuit holding in
Operating Engineers, and does not control the issue
presented here.
However, defendants’ position that no private right of
action exists under the Davis-Bacon Act is not well-
reasoned. Should workers find that insufficient funds were
withheld by the United States to satisfy Davis-Bacon Act
claims, a remedy nonetheless must exist for those workers
in order to achieve Congressional intent that workers on
federal projects be paid prevailing wages. I find that
plaintiffs have a private right of action that is contained
within Section 3 of the Davis Bacon Act, codified at 40
App. 56
U.S.C. § 276a-2(b).’ Section 3 allows what appears to be a
Miller Act action against a contractor and his surety “if the
accrued payments withheld under the terms of the con-
tract ... are insufficient to reimburse” the workers found
to have been underpaid. See Peatross v. Global Associates,
849 F.Supp. 746 (D.Hawaii, 1994).
Plaintiffs’ difficulty is that this condition precedent
has yet to be satisfied. Beyond the contracting officer for
the Air Force informing ARC that it had found mis-
classifications and under payments to twelve employees
who are plaintiffs in this action, no other administrative
determination was ever made. Disputes over classifica-
tions and payment “shall be resolved in accordance with
the procedures of the Department of Labor.” 29 C.F.R.
§ 5.5. All questions regarding classification and disputes
over rates of pay “shall be referred to the Administrator
for appropriate ruling or interpretation.” 29 C.F.R. § 5.13.
In the plaintiffs’ Memorandum (docket # 57, p. 19),
they request that if this Court concludes that the Depart-
ment of Labor must first make its determination on the
Davis-Bacon Act claims, then the Court stay this action
pending such determination rather than dismiss the
claim. This course is legally correct, and is effectively
supported by defendants in their reply brief (docket # 60,
p. 5) wherein they list the practical difficulties for jury
understanding at trial absent a DOL determination, and
in their further reply to the motion to dismiss Count III
* Cases cited to by the parties on the issue of whether a private
right of action exists under Davis-Bacon focused on Section 1 of the Act.
App. 57
(docket # 80, p. 5) wherein they state “without a determi-
nation by the Department of Labor that there has been a
Davis-Bacon Act violation, plaintiffs have no Miller Act
claim.”
Finally, as previously mentioned, defendants argue in
the alternative that the action should be dismissed for
plaintiffs’ failure to follow the procedural requirements of
a Miller Act claim. Whether the notice requirements were
met before filing this action presents mixed questions of
law and fact better made as a motion for summary judg-
ment. They do not fit within the confines of a motion to
dismiss for lack of subject matter jurisdiction, and are not
alternative grounds for dismissal under Rule 12(b)(1).
In conclusion, a determination must first be made by
the Department of Labor as to whether Davis-Bacon Act
violations occurred, and to what extent. If violations were
present, and if payments to the contractor withheld by the
United States are insufficient to compensate the plaintiffs,
the Davis-Bacon Act allows this action for recovery from
the surety.
As for Count III, defendants seek to have the class
action count dismissed, arguing that Rule 23 does not
govern Davis-Bacon Act claims. Defendants argue that the
action is governed by the “opt-out” procedures of the Portal
to Portal Act, 29 U.S.C. § 255. This claim is a hybrid of
sorts — a Miller Act claim authorized by Section 3 of the
Davis-Bacon Act. Plaintiffs argue that the court is under a
duty to certify a class, but that is not a correct statement
of law. Moreover, plaintiffs reliance on Hoffman-LaRoche
v. Sperling, 493 U.S. 165 (1989) is unavailing. Rather than
create such a duty as plaintiffs suggest, the Court in
LaRoche simply held that courts have discretion to
App. 58
facilitate notice to potential plaintiffs in a claim brought
under the Age Discrimination in Employment Act.
As a practical matter, the class could not be so numer-
ous that simple joinder pursuant to Rule 20 would not
ensure that all potential plaintiffs here are given the
opportunity to join the suit. Indeed, since a determination
must be made by DOL before this action can further
proceed, the employment records will establish the set of
workers who may be potential plaintiffs.
Accordingly, IT IS HEREBY ORDERED that:
1) defendants’ 12(b)(1) motion to dismiss for lack of
subject matter jurisdiction (docket # 53) is DENIED;
2) defendants’ motion to dismiss Count III (docket #
70) is GRANTED, subject to plaintiffs being allowed to
amend the complaint to join other parties pursuant to
Rule 20 following the DOL inquiry;
3) this action is STAYED pending a Davis-Bacon
determination by the DOL;
4) the parties shall provide a joint status report by
May 1, 2001 and every 3 months thereafter during the
stay in the case;
5) the final pretrial conference set for April 12, 2001
and the trial set to begin April 23, 2001 are VACATED.
DATED this Ist day of February, 2001.
/s/ Richard F. Cebull
Richard F. Cebull
United States
Magistrate Judge
App. 59
Lawrence A. Anderson
Attorney at Law
18 Sixth Street North
P.O. Box 2608
Great Falls, MT 59405
Telephone (406) 727-8466
Attorney for Plaintiff
EIGHTH JUDICIAL DISTRICT COURT,
CASCADE COUNTY
BILL FAVEL, JOHN ) Cause No. BDV-99-657
PITZER, JOE LaMERE, ) AMENDED
TOBY LaMERE, and ) LAINT AND
ALVIN BELGARDE —
: JURY DEMAND
Plaintiffs,
vs.
AMERICAN RENOVATION
AND CONSTRUCTION
CO., a California
corporation; JOHN DOES I
and II
Nee NN eee ewe we GS
Defendants.
COMES NOW the Plaintiffs, and for their cause of
action against the Defendants, allege and state as
follows:
GENERAL ALLEGATIONS
1. The Plaintiffs are residents of the State of
Montana.
App. 60
2. Defendant American Renovation and Construc-
tion Co. is a California corporation which does business
in the state of Montana.
3. Defendant American Renovation and Construc-
tion Co. has a contract with the United States of Amer-
ica and/or its agencies to design/build military family
housing at Malmstrom AFB in Cascade County, Mon-
tana, and has performed construction work under this
contract since March 1998 in Cascade County, Montana.
4. John Doe I does business as Baer Construction.
However, Baer Construction is not a legal entity author-
ized to do business in the state of Montana, and therefore
its legal name is unknown at this time, but will become
known in the course of this litigation.
5. John Doe I is a sub-contractor of American Reno-
vation and Construction Company in its construction of
new family housing at Malmstrom AFB in Cascade
County, Montana.
6. John Doe II does business as Four Winds Con-
struction. However, Four Winds Construction is not a legal
entity authorized to do business in the state of Montana,
and therefore its legal name is unknown at this time, but
will become known in the course of this litigation.
7. John Doe II is a sub-contractor of American
Renovation and Construction Company in its construction
of new family housing at Malmstrom AFB in Cascade
County, Montana.
App. 61
COUNT NO. 1
BREACH OF CONTRACT
8. Plaintiffs reallege and incorporate by reference
paragraphs 1 through 7 above as if fully set forth herein.
9. The Plaintiffs were employees of Defendants John
Does I and II under the contract of Defendant American
Renovation and Construction Company with the United
States of America to construct military family housing at
Malmstrom AFB in Cascade County, Montana, under the
construction contract starting March 16, 1998.
10. The Plaintiffs are intended beneficiaries of the
contract by and between American Renovation and Con-
struction and the United States of America.
11. American Renovation and Construction Com-
pany’s contract with the government obligated American
Renovation to pay laborers working on the project in
accordance with the Davis-Bacon Act, including the Act’s
prevailing wage rate requirements.
12. The sub-contracts of Defendants John Does I and
II with Defendant American Renovation Co. also required
said sub-contracts to pay laborers working on the project
in accordance with the Davis-Bacon Act, including the
provisions of the Act requiring that persons employed on
federally-funded construction projects be compensated at
the rate prevailing for comparable work in the area (40
U.S.C. § 276, etc.).
13. Plaintiffs were working under wage classifica-
tions for iron workers, carpenters and cement masons, and
other skilled tradesmen; yet, contrary to the provisions of
the Davis-Bacon Act and the American Renovation and
Se ee
App. 62
Construction Co. contract with the government, Plaintiffs
were only being paid as unskilled laborers.
14. The Defendants have failed to properly classify
the Plaintiffs; and as a result, have failed to pay wages
and have failed to pay wages when due in violation of
provisions of § 39-3-206 M.C.A.; and, as a result, the
Plaintiffs are entitled to recover unpaid wages and penal-
ties in the amount of 110% of the wages due and unpaid.
15. As a result of the Defendants’ failure to pay
wages when due, the Plaintiffs have been required to
retain counsel to maintain this suit for the collection of
wages; and as a result, Plaintiff’s are entitled to recover
their attorney's fees and costs incurred herein under the
provisions of § 39-3-214, M.C.A.
WHEREFORE, the Plaintiffs pray ‘or relief as more
fully set forth in the Prayer for Relief.
COUNT NO. 2
NEGLIGENCE
16. Plaintiffs reallege and incorporate by reference
paragraphs 1 through 15 above as is fully set forth herein.
17. Under the Davis-Bacon Act and the U.S. De-
partment of Labor regulations, Defendant American
Renovation and Construction Company had a duty to it’s
[sic] own employees and to the employees of it’s [sic]
subcontractors to pay prevailing wages and to monitor
subcontractors to assure that prevailing wages were paid.
18. Defendant American Renovation and Construc-
tion Company failed to use reasonaHe care to pay its
App. 63
employees and employees of its subcontractors prevailing
wages and benefits.
19. As a result of Defendant American Renovation
and Construction Companies failure to use reasonable
care, the Plaintiffs have not been paid the prevailing
wages, including fringe benefits as prescribed by federal
law.
20. As a result, the Defendant American Renovation
and Construction Companies failure to use reasonable
care the Plaintiff’s have suffered damages including
unpaid wages, fringe benefits, and legal penalties.
WHEREFORE, the Plaintiff’s pray for relief is more
fully set forth in the Prayer for Relief.
COUNT NO. 3
WRONGFUL DISCHARGE
21. Plaintiffs reallege and incorporate by reference
paragraphs 1 through 20 above as is fully set forth herein.
22. The Plaintiffs were successfully employed by
Defendant Baer Construction Co.
23. The Plaintiffs reported to Defendant Baer
Construction Co. and Defendant American Renovation and
Construction their objections to the improper wage rates
they were being paid in violation of the prevailing wage
provisions of the Davis-Bacon Act.
24. Defendants Baer Construction, in retaliation for
Plaintiffs’ complaints, terminated their employment.
25. Defendant American Renovation and Construc-
tion Co. had a duty to its own workers and to the workers
seen apie
App. 64
of subcontractors to pay prevailing wages under the Davis-
Bacon Act.
26. Defendant American Renovation and Construc-
tion Co. knew or should have known that Plaintiffs were
being terminated in retaliation for their complaints to
John Doe I and to American Renovation and Construction
Co. in regard the violations of the Davis-Bacon Act.
27. Defendant American Renovation and Construc-
tion Co. had the power and the duty to prevent Defendants
John Doe I’s violations of the Davis-Bacon Act, and to
prevent the Plaintiffs’ termination by Defendant John Doe
I; and American Renovation Construction Co. neglected
and/or refused to prevent Defendant John Doe I’s wrongful
conduct.
28. Defendants John Doe I and American Renova-
tion and Construction Co., jointly and severally, knew that
their conduct would injure and did injure the Plaintiffs,
and proceeded to act in spite of their knowledge that their
wrongful conduct would cause injury to the Plaintiffs.
29. As a result of the Defendants’ wrongful conduct
herein, the Plaintiffs have suffered damages in an amount
to be proved at trial.
WHEREFORE, Plaintiffs pray for relief as more fully
set forth in the Prayer for Relief.
COUNT NO. 4
CLASS ALLEGATIONS
30. Plaintiffs reallege and incorporate by reference
paragraphs 1 through 29 above as if fully set forth herein.
App. 65
31. Plaintiffs bring this action pursuant to the
provisions of Rules 23(a) and 23(b)\(3) of the Montana
Rules of Civil Procedure as a class action for themselves
and as representatives of and on behalf of all other per-
sons similarly situated, to wit: all employees of American
Renovation and Construction Co. and the employees of the
subcontractors of American Renovation and Construction
Co.’s contract with the government of the United States of
America to build military housing at Malmstrom AFB in
Cascade County, Montana, who are subject to the prevail-
ing wage provisions of the Davis-Bacon Act, who have not
been paid proper wages in violation of the Davis-Bacon
Act.
32. This class action satisfies the prerequisites set
forth in Rule 23(a) for maintaining a class action:
(a) the class is so numerous that joinder of all
members is impracticable;
(b) There are questions of law and fact common
to the class, to wit, whether American Reno-
vation and Construction Co. and its subcon-
tractors down-classified skilled tradespersons
to common labor rates in violation of the
Davis-Bacon Act; and whether American
Renovation and Construction Company,
failed to use reasonable care in the payment
.of wages and fringe benefits to it’s [sic] em-
ployees and subcontractors employees.
(c) The Plaintiffs’ claims in Count No. 1 herein
are typical of the class, to wit: Plaintiffs are
employees of subcontractors of American
Renovation and Construction Co., and said
employees have been paid common labor
rates for skilled trades work, in violation of
the Davis-Bacon Act.
App. 66
(d) The Plaintiffs will fairly and adequately pro-
tect the interests of the class.
33. In addition, Defendant American Renovation and
Construction Co. has acted or refused to act on grounds
generally applicable to the class.
34. Further, the questions of law or fact common to
the members of the class predominate over any questions
effecting [sic] individual members, and a class action is
superior to other available methods for the fair and effi-
cient adjudication of the controversy.
WHEREFORE, the Plaintiffs pray for relief as more
fully set forth in the Prayer for Relief.
COUNT NO. 5
MALICE
35. Plaintiff’s [sic] reallege and incorporate by
reference paragraphs 1 through 34 above as if fully set
forth herein.
36. Defendant American Renovation and Construc-
tion Company had knowledge that it and subcontractors
were not paying wages and fringe benefits as prescribed by
law.
37. Defendant American Renovation and Construc-
tion Company had knowledge that its employees and the
employees of subcontractors would be injured by its and
its subcontractors failure to pay prevailing wages and
fringe benefits as required by law.
38. Defendant American Renovation and Construc-
tion Company deliberately proceeded to act in conscience
or in intentional disregard or deliberately proceeded to act
App. 67
with indifference to the high probability of injury to the
Plaintiffs and all other similarly situated as a result of its
failure to pay prevailing wages and fringe benefits as
required by law.
WHEREFORE, Plaintiffs pray for relief is more fully
set forth in the Prayer for Relief.
COUNT NO. 6
PRIVATE ATTORNEY
GENERAL/COMMON FUND
39. Plaintiffs reallege and corporate by reference
paragraphs 1 through 38 as if fully set forth herein.
40. Defendant American Renovation and Construc-
tion Company has failed to pay its employees and its
subcontractors employees or has failed to use reasonable
care to see that its employees and subcontractors employ-
ees are paid the prevailing rates of wages and benefits as
prescribed by law.
41. The United States of America has declined or
failed to enforce the provisions of the Davis-Bacon Act to
ensure that all employees of American Renovation and its
subcontractors are paid the prevailing rates of wages to
which they are entitled.
42. Plaintiffs [sic] bring this action on behalf of
themselves and all employees of Defendant American
Renovation and Construction Company and the employees
and all employees of subcontractors for the purpose of
creating a common fund for which all such employees
similarly situated are paid the wages, fringe benefits and
penalties to which they are entitled.
App. 68
WHEREFORE, the Plaintiffs pray for relief as more
fully set forth in the Prayer for Relief.
PRAYER FOR RELIEF
WHEREFORE, Plaintiffs pray for relief as follows:
1. For past-due wages;
2. For penalties as provided by law;
3. For attorney’s fees and costs as provided by law;
4
For damages in an amount sufficient to fully
compensate the Plaintiffs for their wrongful dis-
charge;
o
For exemplary damages;
6. For certification of this matter as a class action as
prescribed by Montana law;
7. For such other and further relief as to [sic] the
Court seems just.
JURY DEMAND
Plaintiffs request a trial by jury of all issues triable by
jury in this cause.
DATED this 16 day of October, 1999.
Lawrence A. Anderson
Attorney at Law
#18 Sixth Street North
P.O. Box 2608
Great Falls, MT 59403
/s/ Lawrence A. Anderson
Attorney for Plaintiffs
App. 69
CERTIFICATE OF SERVICE
I hereby certify that the foregoing was duly served
upon the following by mail, hand delivery, Federal
Express, or facsimile transmission, as indicated:
Marcia Davenport
CROWLEY, HAUGHEY, HANSON, TOOLE &
DIETRICH, P.L.L.P.
P.O. Box 797
Helena, MT 59624
Neil G. Westesen
CROWLEY, HAUGHEY, HANSON, TOOLE &
DIETRICH, P.L.L.P.
P.O. Box 10969
Bozeman, MT 59719-0969
[“~] U.S. Mail
[ ] Federal Express
[ ] Hand Delivery
[ ] Facsimile transmission
DATED this 16 day of October, 2000
/s/ Laura A. Jarvis
Secretary to Lawrence A.
Anderson
App. 70
40 USC Sec. 276a
Sec. 276a. Rate of wages for laborers and mechanics
(a) The advertised specifications for every contract in
excess of $2,000, to which the United States or the District
of Columbia is a party, for construction, alteration, and/or
repair, including painting and decorating, of public build-
ings or public works of the United States or the District of
Columbia within the geographical limits of the States of
the Union or the District of Columbia, and which requires
or involves the employment of mechanics and/or laborers-
shall contain a provision stating the minimum wages to be
paid various classes of laborers and mechanics which shall
be based upon the wages that will be determined by the
Secretary of Labor to be prevailing for the corresponding
classes of laborers and mechanics employed on projects of
a character similar to the contract work in the city, town,
village, or other civil subdivision of the State in which the
work is to be performed, or in the District of Columbia if
the work is to be performed there; and every contract
based upon these specifications shall contain a stipulation
that the contractor or his subcontractor shall pay all
mechanics and laborers employed directly upon the site of
the work, unconditionally and not less often than once a
week, and without subsequent deduction or rebate on any
account, the full amounts accrued at time of payment,
computed at wage rates not less than those stated in the
advertised specifications, regardless of any contractual
relationship which may be alleged to exist between the
contractor or subcontractor and such laborers and me-
chanics, and that the scale of wages to be paid shall be
posted by the contractor in a prominent and easily acces-
sible place at the site of the work; and the further stipula-
tion that there may be withheld from the contractor so
App. 71
much of accrued payments as may be considered necessary
by the contracting officer to pay to laborers and mechanics
employed by the contractor or any subcontractor on the
work the difference between the rates of wages required by
the contract to be paid laborers and mechanics on the
work and the rates of wages received by such laborers and
mechanics and not refunded to the contractor, subcontrac-
tors, or their agents.
(b) As used in sections 276a to 276a-5 of this title the
term “wages”, “scale of wages”, “wage rates”, “minimum
wages”, and “prevailing wages” shall include —-
(1) the basic hourly rate of pay; and
(2) the amount of —
(A) the rate of contribution irrevocably
made by a contractor or subcontractor to a
trustee or to a third person pursuant to a
fund, plan, or program; and
(B) the rate of costs to the contractor
or subcontractor which may be reasonably
anticipated in providing benefits to laborers
and mechanics pursuant to an enforcible
[sic] commitment to carry out a financially
respensible plan or program which was com-
municated in writing to the laborers and
mechanics affected,
for medical or hospital care, pensions on retirement or
death, compensation for injuries or illness resulting
from occupational activity, or insurance to provide
any of the foregoing, for unemployment benefits, life
insurance, disability and sickness insurance, or acci-
dent insurance, for vacation and holiday pay, for de-
fraying costs of apprenticeship or other similar
programs, or for other bona fide fringe benefits, but
App. 72
only where the contractor or subcontractor is not re-
quired by other Federal, State, or local law to provide
any of such benefits:
Provided, That the obligation of a contractor or subcon-
tractor to make payment in accordance with the prevailing
wage determinations of the Secretary of Labor, insofar as
sections 276a to 276a-5 of this title and other Acts incorpo-
rating sections 276a to 276a-5 of this title by reference are
concerned may be discharged by the making of payments
in cash, by the making of contributions of a type referred
to in paragraph (2)(A), or by the assumption of an en-
forcible [sic] commitment to bear the costs of a plan or
program of a type referred to in paragraph (2)(B), or any
combination thereof, where the aggregate of any such
payments, contributions, and costs is not less than the
rate of pay described in paragraph (1) plus the amount
referred to in paragraph (2).
In determining the overtime pay to which the laborer
or mechanic is entitled under any federal law, his regular
or basic hourly rate of pay (or other alternative rate upon
which premium rate of overtime compensation is com-
puted) shall be deemed to be the rate computed under
paragraph (1), except that where the amount of payments,
contributions, or costs incurred with respect to him ex-
ceeds the prevailing wage applicable to him under sections
276a to 276a-5 of this title, such regular or basic hourly
rate of pay (or such other alternative rate) shall be arrived
at by deducting from the amount of payments, contribu-
tions, or costs actually incurred with respect toe him, the
amount of contributions or costs of the types described in
paragraph (2) actually incurred with respect to him, or the
App. 73
amount determined under paragraph (2) but not actually
paid, whichever amount is the greater.
40 USC Sec. 276a-2
Sec. 276a-2. Payment of wages by Comptroller General
from withheld payments; listing contractors violat-
ing contracts
(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 lift to all
departments of the Government giving the names of
persons or firms whom he has found to have disregarded
their obligations to employees and subcontractors. No
contract shall be awarded to the persons or firms appear-
ing on this list or to any firm, corporation, partnership, or
association in which such persons or firms have an inter-
est until three years have elapsed from the date of publi-
cation 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
App. 74
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 USC Sec. 2706
Sec. 270b. Rights of persons furnishing labor or material
(a) Right to sue on payment bond
Every person who has furnished labor or material in
the prosecution of the work provided for in such contract,
in respect of which a payment bond is furnished under
sections 270a to 270d-1 of this title and who has not been
paid in full therefor before the expiration of a period of
ninety days after the day on which the last of the labor
was done or performed by him or material was furnished
or supplied by him for which such claim is made, shall
have the right to sue on such payment bond for the
amount, or the balance thereof, unpaid at the time of
institution of such suit and to prosecute said action to final
execution and judgment for the sum or sums justly due
him: Provided, however, That any person having direct
contractual relationship with a subcontractor but no
contractual relationship express or implied with the
contractor furnishing said payment bond shall have a
right of action upon the said payment bond upon giving
written notice to said contractor within ninety days from
the date on which such person did or performed the last of
the labor or furnished or supplied the last of the material
for which such claim is made, stating with substantial
accuracy the amount claimed and the name of the party to
whom the material was furnished or supplied or for whom
App. 75
the labor was done or performed. Such notice shall be
served by any means which provides written, third-party
verification of delivery. (FOOTNOTE 1) to the contractor
at any place he maintains an office or conducts his busi-
ness, or his residence, or in any manner in which the
United States marshal of the district in which the public
improvement is situated is authorized by law to serve
summons.
(FOOTNOTE 1) So in original. The period probably
should not appear.
(b) Civil action; jurisdiction; statute of limitations; costs
and expenses
Every suit instituted under this section shall be
brought in the name of the United States for the use of the
person suing, in the United States District Court for any
district in which the contract was to be performed and
executed and not elsewhere, irrespective of the amount in
controversy in such suit, but no such suit shall be com-
menced after the expiration of one year after the day on
which the last of the labor was performed or material was
supplied by him. The United States shall not be liable for
the payment of any costs or expenses of any such suit.
(c) Nonwaiver of rights
Any waiver of the right to sue on the payment bond
required by sections 270a to 270d-1 of this title shall be
void unless it is in writing, signed by the person whose
right is waived, and executed after such person has first
furnished labor or material for use in the performance of
the contract.
App. 76
40 USC Sec. 270a
Sec. 270a. Bonds of contractors of public buildings or
works
(a) Type of bonds required
Before any contract for the construction, alteration, or
repair of any public building or public work of the United
States is awarded to any person, such person shall furnish
to the United States the following bonds, which shall
become binding upon the award of the contract to such
person, who is hereinafter designated as “contractor”:
(1) A performance bond with a surety or
sureties satisfactory to the officer awarding such
contract, and in such amount as he shall deem
adequate, for the protection of the United States.
(2) A payment bond with a surety or sure-
ties satisfactory to such officer for the protection
of all persons supplying labor and material in the
prosecution of the work provided for in said con-
tract for the use of such person. The amount of
the payment bond shall be equal to the total
amount payable by the terms of the contract
unless the contracting officer awarding the con-
tract makes a written determination supported
by specific findings that a payment bond in that
amount is impractical, in which case the amount
of the payment bond shail be set by the contract-
ing officer. In no case shall the amount of the
payment bond be less than the amount of the
performance bond.
(b) Waiver of bonds for contracts performed in foreign
countries
The contracting officer in respect of any contract is
authorized to waive the requirement of a performance
App. 77
bond and payment bond for so much of the work under
such contract as is to be performed in a foreign country if
he finds that it is impracticable for the contractor to
furnish such bonds.
(c) Authority to require additional bonds
Nothing in this section shall be construed to limit the
authority of any contracting officer to require a perform-
ance bond or other security in addition to those, or in cases
other than the cases specified in subsection (a) of this
section.
(d) Coverage for taxes in performance bond
Every performance bond required under this section
shall specifically provide coverage for taxes imposed by the
United States which are collected, deducted, or withheld
from wages paid by the contractor in carrying out the
contract with respect to which such bond is furnished.
However, the United States shall give the surety or
sureties on such bond written notice, with respect to any
such unpaid taxes attributable to any period, within
ninety days after the date when such contractor files a
return for such period, except that no such notice shall be
given more than one hundred and eighty days from the
date when a return for the period was required to be filed
- under title 26. No suit on such bond for such taxes shall be
commenced by the United States unless notice is given as
provided in the preceding sentence, and no such suit shal]
be commenced after the expiration of one year after the
day on which such notice is given.
App. 78
29 C.F.R. § 5.5
Sec. 5.5 Contract provisions and related matters.
(a) The Agency head shall cause or require the
contracting officer to insert in full in any contract in excess
of $2,000 which is entered into for the actual construction,
alteration and/or repair, including painting and decorat-
ing, of a public building or public work, or building or work
financed in whole or in part from Federal funds or in
accordance with guarantees of a Federal agency or fi-
nanced from funds obtained by pledge of any contract of a
Federal agency to make a loan, grant or annual contribu-
tion (except where a different meaning is expressly indi-
cated), and which is subject to the labor standards
provisions of any of the acts listed in Sec. 5.1, the following
clauses (or any modifications thereof to meet the particu-
lar needs of the agency, Provided, That such modifications
are first approved by the Department of Labor):
(1) Minimum wages. (i) All laborers and mechanics
employed or working upon the site of the work (or under
the United States Housing Act of 1937 or under the
Housing Act of 1949 in the construction or development of
the project), will be paid unconditionally and not less often
than once a week, and without subsequent deduction or
rebate on any account (except such payroll deductions as
are permitted by regulations issued by the Secretary of
Labor under the Copeland Act (20 CFR part 3)), the full
amount of wages and bona fide fringe benefits (or cash
equivalents thereof) due at time of payment computed at
rates not less than those contained in the wage determina-
tion of the Secretary of Labor which is attached hereto and
made a part hereof, regardless of any contractual relation-
ship which may be alleged to exist between the contractor
and such laborers and mechanics.
App. 79
Contributions made or costs reasonably anticipated for
bona fide fringe benefits under section 1(b)(2) of the Davis-
Bacon Act on behalf of laborers or mechanics are consid-
ered wages paid to such laborers or mechanics, subject to
the provisions of paragraph (a)(1)(iv) of this section; also,
regular contributions made or costs incurred for more than
a weekly period (but not less often than quarterly) under
plans, funds, or programs which cover the particular
weekly period, are deemed to be constructively made or
incurred during such weekly period. Such laborers and
mechanics shall be paid the appropriate wage rate and
fringe benefits on the wage determination for the classifi-
cation of work actually performed, without regard to skill,
except as provided in Sec. 5.5(a)(4). Laborers or mechanics
performing work in more than one classification may be
compensated at the rate specified for each classification for
the time actually worked therein: Provided, That the
employer’s payroll records accurately set forth the time
spent in each classification in which work is performed.
The wage determination (including any additional classifi-
cation and wage rates conformed under paragraph
(a)(1)(ii) of this section) and the Davis-Bacon poster (WH-
1321) shall be posted at all times by the contractor and its
subcontractors at the site of the work in a prominent and
accessible place where it can be easily seen by the work-
ers.
(ii(A) The contracting officer shall require that any
class of laborers or mechanics, including helpers, which is
not listed in the wage determination and which is to be
employed under the contract shall be classified in confor-
mance with the wage determination. The contracting
officer shall approve an additional classification and wage
App. 80
rate and fringe benefits therefore only when the following
criteria have been met:
(1) The work to be performed by the classification
requested is not performed by a classification in the wage
determination; and
(2) The classification is utilized in the area by the
construction industry; and
(3) The proposed wage rate, including any bona fide
fringe benefits, bears a reasonable relationship to the
wage rates contained in the wage determination.
(B) If the contractor and the laborers and mechanics
to be employed in the classification (if known), or their
representatives, and the contracting officer agree on the
classification and wage rate (including the amount desig-
nated for fringe benefits where appropriate), a report of
the action taken shall be sent by the contracting officer to
the Administrator of the Wage and Hour Division, Em-
ployment Standards Administration, U.S. Department of
Labor, Washington, DC 20210. The Administrator, or an
authorized representative, will approve, modify, or disap-
prove every additional classification action within 30 days
of receipt and so advise the contracting officer or will
notify the contracting officer within the 30-day period that
additional time is necessary.
(C) In the event the contractor, the laborers or
mechanics to be employed in the classification or their
representatives, and the contracting officer do not agree on
the proposed classification and wage rate (including the
amount designated for fringe benefits, where appropriate),
the contracting officer shall refer the questions, including
the views of all interested parties and the recommendation
App. 81
of the contracting officer, to the Administrator for deter-
mination. The Administrator, or an authorized representa-
tive, will issue a determination within 30 days of receipt
and so advise the contracting officer or will notify the
contracting officer within the 30-day period that additional
time is necessary.
(D) The wage rate (including fr
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