Opinion ID: 6641633
Heading Depth: 2
Heading Rank: 2

Heading: The Present Lawsuit and the District Court’s Decision

Text: In 1990, plaintiffs commenced the present action, alleging that they were CPC employ-: ees who had performed construction, repair, or rehabilitation work on the projects covered by these Contracts and that from September 1986 to December 1989, (1) the wage rates specified in the Contracts were lower than the then-current federally recognized prevailing rates, and (2) CPC paid plaintiffs at rates even lower than those specified in the Contracts. The Complaint alleged that HPD “knowingly consented to, condoned, authorized, acquiesced in, and acted with deliberate indifference to, the repeated failures and refusals of CPC to pay plaintiffs at the federally mandated prevailing wage rates.” (Complaint ,¶ 53.) Plaintiffs contended principally that CPC in failing to pay federally recognized prevailing rates, and HPD in consenting, condoning, and authorizing that failure, deprived plaintiffs of their rights under § 5310, in violation of § 1983. As damages, plaintiffs requested, inter alia, the difference between the federally mandated wages and the wages they actually received. Defendants moved pursuant to, inter alia, Fed.R.Civ.P. 12(b)(6) to dismiss plaintiffs’ federal claims on the grounds that (1) no implied private right of action exists under § 5310, (2) the HCDA did not create a right that is enforceable under § 1983, and (3) in any event, the Complaint did not sufficiently allege that CPC acted under color of state law within the meaning of § 1983. In an opinion reported at 803 F.Supp. 710 (1992), the district court dismissed plaintiffs’ claims to the extent that they were asserted directly under § 5310 but denied defendants’ motions to dismiss to the extent that the claims were asserted under § 1983. In determining that § 5310 itself did not grant plaintiffs a private right of action, the district court principally applied the analysis set out in Cort v. Ash, 422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26 (1975). Noting that Congress had created other tools for the enforcement of § 5310 and that there was “no strong indication that Congress intended to create additional remedies,” the court concluded that no private right of action is to be implied under § 5310. 803 F.Supp. at 731. The court ruled, howéver, that § 5310 created a federal right that is enforceable under § 1983. Reading § 5310 literally and finding that its wording reflected an “unambiguous focus on construction workers,” 803 F.Supp. at 723, the court concluded that there was “little doubt that § 5310 [wa]s intended to provide laborers with higher wages than they would receive in the absence of this section,” 803 F.Supp. at 723, and that by using the command “ ‘shall ’ ” in requiring payment of wages at rates not less than the federally recognized prevailing rates, id. (emphasis in opinion), Congress indicated its intent to create a binding obligation, id. at 725. Given that the Secretary of Labor is required to establish with specificity the minimum rates to be paid laborers and mechanics, the court concluded that plaintiffs’ interests were not vague, ambiguous, or amorphous: The contractor knows exactly what wage rates will need to be paid and ... [what] rights are unambiguously conferred on laborers and mechanics. Finally, because the “shall” requirement of § 5310 is directed at the payment of workers’ wages, rather than compelling the inclusion of a contract provision ... the requirement is substantive, not procedural. Id. The court found “no evidence in the legislative history of the HCDA itself that Congress sought to foreclose a § 1983 remedy under § 5310.” 803 F.Supp. at 729. It noted that the administrative scheme established for enforcement of § 5310, though sufficient to contraindicate a private right of action directly under that section, was not sufficiently comprehensive to preclude a § 1983 right of action, since there was no provision in the statute for judicial remedies and no provision in the federal regulations for an employee to initiate a proceeding for resolution of disputes. 803 F.Supp. at 727-28. The court also concluded that the Complaint sufficiently alleged the state action necessary for a § 1983 suit because there was a close nexus between CPC and the municipal defendants: Under the close nexus test and the facts presently before the Court, ... CPC can be said to be a state actor. On the basis of the CPC/HPD Contracts and the RFPs, plaintiffs have alleged facts which, if proven true, would demonstrate that municipal defendants had “exercised coercive power or ha[d] provided such significant encouragement, either overt or covert, that the choice must in law be deemed to be that of the government.” San Francisco Arts & Athletics, Inc. v. United States Olympic Comm., 483 U.S. [522] at 546, 107 S.Ct. [2971] at 2986 [97 L.Ed.2d 427 (1987)] (citations omitted). In particular, plaintiffs assert that the $90-95 cap on the Person Day Rate, which was required by municipal defendants as a condition for awarding the contract, was so low as to make it financially impossible for CPC to pay prevailing wage rates as required under 42 U.S.C. § 5310. In short, plaintiffs have alleged facts asserting that the municipal defendants ensured that any successful bidder would be forced, for economic reasons, to violate 42 U.S.C. § 5310. If proven true, these facts would be sufficient to demonstrate that the municipal defendants “exercised coercive power or ... provided such significant encouragement” as to establish 42 U.S.C. § 1983 state action under the close nexus test. 803 F.Supp. at 720-21. Accordingly, the district court denied defendants’ motions to dismiss to the extent that the Complaint asserted claims under § 1983. Pursuant to 28 U.S.C. § 1292(b) (1988), the court certified for interlocutory appeal so much of its order as denied defendants’ motions to dismiss the § 1983 claims, and this Court granted defendants permission to appeal from that portion of the district court’s order. Thereafter, pursuant to Fed.R.Civ.P. 54(b), the district court directed that a final judgment be entered with respect to so much of its order as had granted defendants’ motions to dismiss plaintiffs’ claims directly under § 5310, finding that there was no just reason for delay and that the relationship between those claims and the § 1983 claims was sufficiently close to make it desirable for this Court to have the opportunity to review both rulings together. Plaintiffs’ cross-appeal followed and was consolidated with defendants’ appeal.