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(A
revised version of this article will appear in The Construction
Lawyer, Volume 24, No. 3, Summer 2003, published by
the American Bar Association's Forum on the Construction
Industry.)
By
John W. Ralls
Thelen LLP
In
separate cases, plumbers union locals sued contractors,
alleging failure to pay the prevailing wage as required
by the Davis-Bacon Act and the Copeland Act. Both contractors
performed work on water treatment projects that were federally
funded. On both jobs, the contractors certified that they
had paid prevailing wages, including wages for piping work.
Both contractors paid the craft performing piping work as
laborers rather than plumbers. The suits were brought under
the federal False Claims Act.
In
both suits, the trial courts granted summary judgment in
favor of the defendants. The 9th U.S. Circuit Court of Appeals
consolidated the appeals and affirmed. United States
ex rel. Local 342 Plumbers and Steamfitters v. Dan
Caputo Co., 321 F.3d 926 (9th Cir. 2003).
The
9th Circuit previously had held that the False Claims Act
was a proper vehicle to enforce Davis-Bacon. On appeal,
the principal issue was whether the unions had put forward
evidence of the prevailing wage rate and job classifications
claimed to have been violated by the contractors.
In
support of their contention that the contractors had failed
to pay prevailing wages, the union pointed to letters from
the Department of Labor. The background for the letters
was a jurisdictional dispute between the laborers and the
plumbers regarding piping work on water treatment plants.
This jurisdictional dispute was resolved by an agreement
between the unions that plumbers' wages would be paid for
all piping work on water treatment plants except that laborers'
wages would be paid for the installation of nonpressurized
surface and stormwater drain piping.
After
this agreement was reached, the District Director for the
Wage and Hour Division of the Department of Labor wrote
a letter to counsel for the plumbers confirming that the
agreement reached between the laborers and the plumbers
"establishes the prevailing practice in Northern California
for the construction of wastewater treatment plants…."
The laborers later notified the plumbers that they were
terminating the agreement on the jurisdictional issue (after
which the District Director issued letters to the plumbers'
counsel retracting and then reinstating the finding that
the agreement established the prevailing practice).
A
subsequent letter by a more senior Labor Department official
stated, "These letters [finding that the agreement
established prevailing practice] were erroneous…. [A]n
agreement between unions has weight with regard to Wage
and Hour Division enforcement of prevailing wage rates under
the Davis-Bacon and related acts only if it reflects the
actual prevailing practice among union contractors whose
employees perform the work in question in the local area…."
The
9th Circuit rejected the unions' argument that these letters
established the prevailing wage rates and job classifications.
A contractor or labor organization may obtain a ruling on
a disputed classification of workers from the Secretary
of Labor under 29 CFR §5.11 or §5.13. In the absence
of a Labor Department ruling, prevailing wage rates and
job classifications may be derived from collective bargaining
agreements or established by actual area surveys.
The
9th Circuit held that the District Director's letters "were
not the final agency action as they were not treated as
such by the agency but repudiated by the Department."
Also, there was no evidence of a collective bargaining agreement
or of an actual area survey. "[T]he evidence offered
is a jurisdictional agreement between two labor unions,"
which the 9th Circuit held was insufficient to support the
unions' claims.
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For more information about the issues covered in this report, please contact John Ralls in our San Francisco office at 415-369-7210 or at jralls@thelen.com or contact your Thelen attorney. For more information about Thelen's Construction and Government Contracts Department, click here.
©2003 Thelen LLP
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