USDOL/OALJ Reporter
Davis-Bacon Act/ Service Contract Act
Recent DBA/SCA Federal Court Decisions


SCOPE OF ARB REVIEW; SUFFICIENCY OF EVIDENCE TO ESTABLISH OR NEGATE AN INFERENCE IS A LEGAL QUESTION ON WHICH THE ARB DOES NOT NEED TO DEFER TO THE ALJ'S DETERMINATION

In Pythagoras General Contracting Corp. v. USDOL,     F.Supp.2d    , 2013 WL 646652 (S.D.N.Y. Feb. 20, 2013) (No. 11-cv-2775), the Plaintiff, which had been found to have misclassified and underpaid certain employees on a public improvement contract subject to the Davis-Bacon Act, and the Contract Work Hours and Safety Standards Act, argued that the Administrative Review Board improperly acted as a fact-finder and performed a de novo review of the evidence when it vacated the ALJ's back pay awards to eight of the Plaintiff's employees, and instead adopted the Administrator's higher calculation of the back pay awards. Following a hearing, the ALJ reduced back wage calculations made by the DOL investigator based on testimony from the Plaintiff's project manager and documentation from the Plaintiff's own internal investigation as to work that had been done by the employees. The ARB vacated the ALJ's awards on the ground that the generalized records that the Plaintiff used to rebut the Administrator's reasonable showing of the back wages owed were insufficient as a matter of law. The ARB relied on Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 66 S.Ct. 1187, 90 L.Ed. 1515 (1946), which provides that rebuttal evidence is sufficient only if it "(1) is based on individualized records, and (2) fully accounts for the work hours in question, consistent with the project as a whole." Accordingly, the ARB increased the awards to the eight employees by $344,725.83, with the total award amounting to $792,396.19.

The district court found that the ARB did not exceed its authority in vacating the ALJ's reduction of the Administrator's calculation of the back pay awards because it is within the ARB's purview to consider the legal sufficiency of the Plaintiff's evidence presented before the ALJ. The court wrote:

    Despite the fact that this matter was initially heard before an Administrative Law Judge and appealed to the agency, there are still trial court corollaries that guide an agency when it operates in a quasi-judicial capacity. One such corollary is that rebutting an inference for the plaintiff requires that "the defendant ... meet its burden of production" i.e., "to introduce evidence which, taken as true, would permit" the negating of the inference. Cabrera v. Jakabovitz, 24 F.3d 372, 382 (2d Cir.1994). Questions regarding the sufficiency of evidence to establish or negate an inference are not simple, especially in an administrative agency proceeding where the trier of fact and the trier of law are the same person, and hearings are less formal than in a trial court. Before the ALJ gets to the factual determination of whether rebuttal evidence outweighs the evidence that established the inference in the adversary's favor, it must adjudge said rebuttal evidence legally sufficient. The ARB then considers factual findings with a high level of deference to the trier of fact, but will consider the threshold matter, i.e. the legal question, with less deference. The reviewing body, then, is empowered to find that the evidence is insufficient as a matter of law to rebut an inference, and the factual matter is never reached.

Pythagoras General Contracting Corp., supra, slip op. at 17 (emphasis as in original). The court found that the record was replete with documentation that the Plaintiff's superintendent had failed to comply with the regulatory requirement for comprehensive recording-keeping, see 29 C.F.R. § 5.5(a)(3)(i),and that the Plaintiff's records merely listed the daily number of hours worked.

DISTRICT COURT JURISDICTION; NO GENERAL PRIVATE RIGHT OF ACTION FOR WORKERS SEEKING BACK PAY; WAGE AND HOUR DIVISION LETTERS TO PLAINTIFF FOUND NOT TO BE FINAL AGENCY ACTION WHERE THEY DID NOT STATE THAT THEY WERE FINAL RULINGS OR PROVIDE NOTICE OF RIGHT TO APPEAL TO THE ARB, AND SUGGESTED THAT FURTHER FACTUAL DEVELOPMENT COULD LEAD TO A DIFFERENT DECISION

In McClean v. Philadelphia Housing Authority, No. 12-cv-4706 (E.D.Pa. Mar. 1, 2013) (2013 WL 787032), the Plaintiff brought an action in federal district court against the Philadelphia Housing Authority (PHA), DOL, and HUD seeking to recover unpaid wages and fringe benefits which he claims the Defendants owe him pursuant to the Davis-Bacon Act. The Plaintiff was a probationary plumber trainee in a program jointly administered by the PHA and a local plumbers union. The Plaintiff was eventually terminated from the program. The Plaintiff subsequently filed complaints with local HUD officials, claiming that PHA had incorrectly paid him less than the relevant DBA wages. HUD agreed and instructed PHA to pay the Plaintiff relevant DBA prevailing wage rate. The Plaintiff, however, contended that PHA should have compensated him at an even higher rate, and filed a complaint with the DOL Wage and Hour Division offices in Philadelphia and in DC. Both Wage and Hour Division offices wrote back to the Plaintiff letters announcing their conclusion that the Davis-Bacon Act did not apply to his work for the PHA at all. The Plaintiff then filed the district court action. Each Defendant filed Rule 12(b)(1) motions to dismiss for lack of jurisdiction. The district court granted the motions.

The district court dismissed the action against PHA with prejudice because the DBA does not contain a general private right of action for workers seeking back pay; rather, the Act only authorizes a private right of action after certain administrative mechanisms designed to ensure adequate payment have failed. The court also dismissed a state law claim against PHA because there was no diversity jurisdiction or supplemental jurisdiction.

The district court dismissed the action against DOL without prejudice because the Administrative Procedure Act only permits judicial review of "final agency action" and the Wage and Hour Division letters to the Plaintiff did not constitute final agency action within the meaning of the APA. The court wrote: "In contrast to other formal rulings or interpretations by the Administrator or his or her subordinates, the letters the Plaintiff received do not state that they are final rulings pursuant to 29 C.F.R. § 5.13, nor do they inform the Plaintiff of his right to appeal any such final ruling to the DOL's Administrative Review Board pursuant to the regulations set forth in 29 C.F.R. part 7." McClean, supra, slip op. at 11 (footnote omitted). The court also noted that both letters suggested that further factual development could lead the Administrator to reverse his or her conclusion, so the dispute between the Plaintiff and the DOL does not concern a pure question of law. The court stated that "Before [the Plaintiff] seeks review in this Court, the Plaintiff must formally comply with 29 C.F.R. § 5.13 by making a request to the Administrator for a formal ruling about whether and to what extent the Davis-Bacon Act covered his work for the PHA." McClean, supra, slip op. at 12 (footnote omitted)

The district court also dismissed the action against HUD without prejudice. The court wrote: "Although the regulations obligate HUD to determine, in the first instance, whether the Davis-Bacon Act applies in a given circumstance, see 29 C.F.R. § 5.6, the regulations contemplate that, in the event of a dispute about Davis-Bacon Act coverage, the Administrator makes the final determination, see 29 C.F.R. § 5.13. It follows that none of the action which HUD has taken in this matter is 'final' within the meaning of 5 U.S.C. § 704. "McClean, supra, slip op. at 13.