USA. v. C.W. Roen Construction

• Decision Date: 13 April 1999
• Docket Number: No. 97-17204,97-17204
• Citation: 183 F.3d 1088
• Parties: (9th Cir. 1999) UNITED STATES OF AMERICA, ex rel. PLUMBERS AND STEAMFITTERS LOCAL UNION NO. 38 and LAWRENCE J. MAZZOLA, Plaintiffs-Appellants, v. C.W. ROEN CONSTRUCTION CO.; BRUCE A. ROEN; and JERALDINE C. BREAULT, Defendants-Appellees
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1088

183 F.3d 1088 (9th Cir. 1999)

UNITED STATES OF AMERICA, ex rel. PLUMBERS AND STEAMFITTERS LOCAL UNION NO. 38 and LAWRENCE J. MAZZOLA, Plaintiffs-Appellants, v. C.W. ROEN CONSTRUCTION CO.; BRUCE A. ROEN; and JERALDINE C. BREAULT, Defendants-Appellees.

No. 97-17204

UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT

Argued and Submitted April 13, 1999--San Francisco, California

Filed July 13, 1999

John J. Davis, Jr., McCarthy, Johnson, & Miller, San Fran- cisco, California, for the plaintiffs-appellants.

James P. Watson, Stanton, Kay & Watson, San Francisco, California, for the defendants-appellees.

Appeal from the United States District Court for the Northern District of California; Susan Illston, District Judge, Presiding. D.C. No. CV-96-02976-SI.

Before: Mary M. Schroeder, Stephen Reinhardt, and Barry G. Silverman, Circuit Judges.

Opinion by Judge Reinhardt; Dissent by Judge Silverman

REINHARDT, Circuit Judge:

In this quitam action, Plumbers and Steamfitters Local No. 38 alleges that C.W. Roen Construction Company and its president and office manager violated the False Claims Act (FCA), 31 U.S.C. SS 3729-33, by certifying falsely that the Company had paid the applicable prevailing wage as required by the Davis-Bacon Act and related federal laws, when in fact it had paid its employees at a lower rate. The district court found that because the Department of Labor had not conducted an area practice survey for the area in question, and because the Department's other efforts to establish the prevailing wage were "uncertain," no reasonable juror could find that the defendants acted with the scienter necessary to violate the FCA. The court then granted summary judgment for the defendants. We conclude, however, that an area practice survey is not necessary in all cases to establish the prevailing wage, and that the status of the Department of Labor's determinations did not compel the conclusion that the plaintiffs could under no circumstances prove that the defendants acted with the requisite scienter. Given these determinations, and the presence of complex legal and factual issues that are not resolvable on the current state of the record, we hold that the district court erred in granting summary judgment to the defendants. We therefore reverse and remand for further proceedings.

Background

On September 1, 1994, C.W. Roen Construction Company entered into a construction contract with the City of Santa Rosa, California, to make improvements to the Laguna Wastewater Treatment Plant. (ER 158). The Laguna Plant was a federally funded project, and hence subject to the prevailing wage and reporting requirements set forth in the Davis-Bacon Act, 40 U.S.C. SS 276a, et seq., and the Copeland AntiKickback Act, 40 U.S.C. S 276c. These statutes required Roen to pay its workers prevailing wages, and to submit weekly statements reflecting the wages it paid. See 40 U.S.C. S 276a & 276c. Under federal law, Roen was also required to certify its payments of the applicable wage rates. Under the relevant regulations:

Each payroll submitted [to the Department of Labor] shall be accompanied by a "Statement of Compli ance," signed by the contractor or subcontractor or his her or agent who pays or supervises the payment of persons employed under the contract and shall certify the following:

. . .

(3) That each laborer or mechanic has been paid not less than the applicable wage rates . . . .

29 CFR S 5.5(a)(3)(ii)(B). The regulations also dictate that:

(D) The falsification of any of the above certifica tions may subject the contractor or subcontractor to civil or criminal prosecution under . . . section 231 of title 31 of the United States Code [The False Claims Act].

29 C.F.R. S 5.5(a)(3)(ii)(D). It is undisputed that Roen did submit the certifications as required by federal law. The plaintiffs allege, however, that Roen's certifications amounted to false statements because the Company paid employees performing certain types of work less than the prevailing wage rate.

At issue in this case is the classification and payment of workers who performed certain types of piping work on the Laguna project (namely "mechanical, pressure, process, soil, waste, vent, potable, and non-potable water piping " (Complaint P 14, ER 4)) between August 15, 1994 and February 1997. Roen classified workers who performed this piping work as Laborers, and paid them at the Laborer wage rate. It then certified that it was paying these workers the appropriate wage rates under Davis-Bacon. The plaintiffs claim that Roen thereby misclassified these workers; according to the plaintiffs, all workers who perform this type of piping work on wastewater treatment plants in Northern California must, under Davis-Bacon, be classified as Plumbers & Steamfitters and paid at the higher Plumbers & Steamfitters wage rate. The plaintiffs argue that as a result of misclassifying and underpaying the workers, Roen violated the FCA.

The plaintiffs point out that in May 1992, the United Association of Journeymen and Apprentices of the Plumbing and Pipe Fitting Industry, AFL CIO, Pipe Trades District Council No. 51 (UA) and the Northern California District Council of Laborers signed a jurisdictional agreement (1992 Agreement) that resolved the classification of piping workers on Northern California water treatment plant projects. According to the 1992 Agreement:

[i]n the construction of water treatment plants, wastewater (i.e., sewage) treatment plants, water rec lamation plants, and all pumping facilities related to such plants, for work performed both inside and out side of buildings, the prevailing rate of per diem wages established for Plumber-Steamfitter-Pipefitter is paid to those employess who perform all piping work of every description and material (except as noted in paragraph 2), including but not limited to . . . all process piping, soil, waste, vent, . . . domestic and process water piping, . . . all mechanical process equipment.

(ER 4). Paragraph 2 of the 1992 Agreement states that "[t]he prevailing rate of per diem wages established for Laborers is paid to those employees who, on the facilities decribed above, perform the installation of non-pressurized surface and storm drain piping . . . ." (ER 40). That is, according to the 1992 Agreement, the workers who performed the piping work at issue in this case (again, "mechanical, pressure, process, soil, waste, vent, potable, and non-potable water piping " (Complaint P 14, ER 4)) were classified as Plumber-SteamfitterPipefitters.

In January 1994, the District Director of the U.S. Department of Labor's Wage and Hour Division, Frank Conte, determined that the 1992 Agreement between the Plumbers and the Laborers established the appropriate classifications and wages for work done on water treatment plants in Northern California. In a letter to John Davis, counsel for the Plumbers and Steamfitters Local 38, the District Director wrote that:

As of September, 1992, the agreement [between Northern Californi District Council of Laborers and Pipe Trades District Council No. 51] establishes the prevailing practice in Northern California for the construction of water treatment plants, wastewater treatment plants, water reclamation plants and all pumping facilities related to such plants in Northern California. For contracts for the construction of such plants awarded after September, 1992 and subject to Davis-Bacon and Related Acts the Wage and Hour Division will require the payment of prevailing wages in accordance with the agreement.

(ER 39). In July 1994, Davis sent a copy of the District Director's 1994 letter to Roen Construction, putting Roen on notice of the Wage and Hour Division's determination that the relevant wage rate and job classifications would be derived from the 1992 Agreement. (ER 36-40).

In June 1994, the business manager of the Laborers District Council sent a letter to the UA purporting to terminate the 1992 Agreement that formed the basis of the original Conte letter. (ER 43). The UA, however, refused to accept the termination of the Agreement, and as far as the rather sparse record before us reflects, the Laborers took no further action to validate its position. In any event, in March 1996, nearly two years after the purported termination of the Agreement, Conte, along with Richard Cheung, a Labor Department Regional Wage Specialist, again wrote to Mr. Davis and reconfirmed the Department's earlier conclusion that the relevant wage classifications were those set forth in the Agreement. In this letter, the District Director stated:

The Wage and Hour Division has determined that the Agreement between Northern California District Council of Laborers and Pipe Trades District Coun cil No. 51 . . . reflects a longstanding prevailing practice. The Department of Labor will therefore accept this Agreement as reflecting the prevailing practice.

Accordingly, for contracts for the construction of such plants awarded after September, 1992 and sub ject to the Davis-Bacon and Related Acts, the Wage and Hour Division will require the payment of pre vailing wages in accordance with the Agreement.

(ER 24). It does not appear that the Labor Department's 1996 letter was ever sent to Roen.

In March 1997, following the time period charged in the plaintiffs' False Claims Act complaint, the Labor Department sent Davis another letter. In this letter, signed by John Fraser, the Acting Administrator of the Wage and Hour Division, the Department stated that it had "reexamined [its ] position regarding Wage and Hour Division's ability to enforce the 1992 jurisdictional agreement." (ER 27). The letter concluded that the Department was unable to enforce that agreement because "there are indications that the written agreement was not followed." (ER 27). In such circumstances, the letter stated, an area practice survey is required to determine the actual practice before classifications may be enforced....