Call Henry, Inc. v. United States, 14-989 C

CourtCourt of Federal Claims
Writing for the CourtSMITH, Senior Judge
PartiesCALL HENRY, INC., Plaintiffs, v. THE UNITED STATES, Defendant.
Docket NumberNo. 14-989 C,14-989 C
Decision Date17 February 2016

CALL HENRY, INC., Plaintiffs,

No. 14-989 C

United States Court of Federal Claims

February 17, 2016

RCFC 12(b)(6); Failure to State a Claim

Brian Koji, Allen, Norton & Blue, P.A., Tampa, Florida, for plaintiff.

James T. Mahoney, National Aeronautics and Space Administration, Washington, DC, and Joyce R. Branda and Robert M. Norway, United States Department of Justice, Civil Division, Washington, DC, for defendant.


SMITH, Senior Judge

This action is before the court on defendant's motion to dismiss. Plaintiff's complaint contests a final decision of the Contracting Officer of the United States National Aeronautics and Space Administration ("NASA") denying Call Henry, Inc.'s (CHI) certified request for reimbursement in the amount of $1,897,627 plus associated fees and costs under the contract and by operation of the Services Contract Act, 41 U.S.C. §§ 6701-6707.

On January 28, 2015, defendant filed a motion to dismiss plaintiff's breach of contract claim for failure to state a claim, pursuant to Rule 12(b)(6) of the Rules of the U.S. Court of Federal Claims ("RCFC"). For the following reason, the court grants defendant's motion to dismiss.

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I. Background

A. Factual History

On April 23, 2003, Plaintiff, Call Henry, Inc., entered into a contract with Defendant, the National Aeronautics and Space Administration ("NASA"), whereby plaintiff agreed to provide inspection, maintenance, and testing services for the John H. Glenn Research Center in Brook Park, Ohio. This contract has a base period of three years followed by up to seven one-year option periods and is a services contract governed by the Service Contract Act.

At the commencement of the contract, plaintiff's employees were members of the International Brotherhood of Teamsters Local Union No. 416 ("the Teamsters"), and, as such, plaintiff was subject to a collective bargaining agreement with the Teamsters pursuant to the Services Contract Act. 41 U.S.C. § 6701 et seq. (2012). This collective bargaining agreement, which included wage and fringe benefit provisions, was incorporated into plaintiff's contract with defendant. Compl. ¶ 20. Article XXIII of the collective bargaining agreement required plaintiff to pay contributions to the Teamsters' pension fund as follows:

Effective January 1, 2003 and thereafter, the Employer agrees to pay into the Teamsters Local 416's Pension Fund...the agreed amount during the term of this Agreement, for all hours for which said employee received pay, but not to exceed a total of forty (40) hours per week, for each employee covered under the classifications of this agreement.


Contributions to the Pension Fund must be made for each month on each eligible employee. Company contributions to the Pension Fund will in no way be distributed as wages.

Compl. Ex. 1, at 2. Pursuant to the SCA, this collective bargaining agreement was incorporated into the contract between the parties, along with a price adjustment clause which required Defendant to pay Plaintiff for "increase[s] applicable wages and fringe benefits to the extent that the increase is made to a result of [the] Department of Labor wage determination applicable of the anniversary date of the multiple year contract...." 48 CFR § 52.222-431.

In 2012, Plaintiff's employees chose to decertify Teamsters as the representative for the bargaining unit and voted for the International Association of Machinists and

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Aerospace Workers District Lodge 60 as the new employee representative. After the decertification, plaintiff was informed that it was deemed to have withdrawn from the Teamsters' pension fund pursuant to the Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA"). 29 U.S.C. § 1381 et seq. (2012). This constituted a complete withdrawal under the Employee Retirement Income Security Act ("ERISA"), and plaintiff was required to pay a withdrawal liability for the unfunded vested benefits, which initially amounted to $3,304,727. Plaintiff initiated ERISA arbitration procedures to contest portions of the liability, and the pension plan recalculated the withdrawal liability amount as totaling $1,686,646.

Plaintiff submitted a claim for increased costs associated with providing the pension plan and the professional costs incurred through arbitration. The claim was denied by NASA on September 11, 2014, and plaintiff filed this claim for breach of contract on October 15, 2014.

B. Procedural History

Plaintiff originally filed suit on October, 15, 2014, contesting a final decision of the Contracting Officer of NASA, denying plaintiff's claim for reimbursement in the amount of $1,897,627 under the Contract's price adjustment clause for increased fringe benefit costs incurred by plaintiff and associated with providing benefits mandated by application of a wage determination by operation of the Service Contract Act, 41 USC §§6701-6707. See Original Compl., Call Henry, Inc., No. 14-989, ECF No. 1. On January 28, 2015, defendant, filed a motion to dismiss for failure to state a claim, alleging that plaintiff's withdrawal liability is not a fringe benefit, but a statutory liability. Call Henry, Inc., No. 14-989, ECF No. 8.

On July 7, 2015, this Court issued an order for supplemental briefing so that both plaintiff and defendant might answer the following questions:

1. Whether the defendant was required by contract between itself and plaintiff, or by some other authority, to reimburse plaintiff for any contributions to or costs associated with the pension plan, and, if so, the source of that authority.

2. If there was a reimbursement requirement, whether that requirement was incorporated into the contract between plaintiff and defendant.

3. Whether the defendant is considered an employer under 29 U.S.C. § 1002(5), where an employer is any person acting directly as an employer, or indirectly in the interest of an employer, in relation to an employee benefit plan.

4. If the defendant reimbursed plaintiff for any contributions to or costs associated with the pension plan, whether defendant is considered an employer and is liable to the plan for the amount of the withdrawal liability pursuant to 29 U.S.C. § 1381(a).

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5. If defendant is considered an employer and it is required to pay the withdrawal liability, whether a failure to pay would constitute a breach of its contract with plaintiff.

Call Henry, Inc., No. 14-989, ECF No. 13. Both plaintiff and defendant filed opening supplemental briefs on November 9, 2015. Call Henry, Inc., No. 14-989, ECF Nos. 18 and 19. Plaintiff and Defendant both responded to each other's opening supplemental briefs on November 23, 2015. Call Henry, Inc., No. 14-989, ECF Nos. 20 and 21. Defendant's motion is now ripe for review.

II. Discussion

Motions to dismiss under RCFC Rule 12(b)(6) test the legal sufficiency of a complaint in light of RCFC Rule 8(a), which requires "a plausible 'short and plain' statement of the plaintiff's claim, showing that the plaintiff is entitled to relief." K-Tech Telecommunications, Inc. v. Time Warner Cable, Inc., 714 F.3d 1277, 1282 (Fed. Cir. 2013) (quoting Skinner v. Switzer, 131 S. Ct. 1289, 1291 (2011)). Although a complaint "does not need detailed factual allegations," the plaintiff must plead enough factual allegations "to raise a right to relief above the speculative level." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007). When considering a motion to dismiss for failure to state a claim, the court must accept plaintiff's factual allegations as true and draw all reasonable inferences in favor of the plaintiff. Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986). Nonetheless, the court should dismiss a complaint "when the facts asserted by [the] claimant do not entitle him to a legal remedy." Lindsay v. United States, 295 F.3d 1252, 1257 (Fed. Cir. 2002).

A. The Contract Obligations

As an initial matter, it is important to determine whether or not NASA had a contractual obligation to reimburse CHI for contributions to or costs associated with the pension plan. Plaintiff argues that the contract specifically incorporated the Teamsters Local 416 collective bargaining agreement as the applicable wage determinations. The clause plaintiff refers to (H.6) states, in pertinent part, that "in absence of the [Department of Labor Wage Determination's] incorporation, all economic provisions, including all prospective increases, of the current Collective Bargaining Agreement...shall apply." (Emphasis added). Plaintiff further argues that a reimbursement requirement is inherent in the incorporation of Clause 52.222-41 of the Services Contract Act, which states that "[e]ach employee employed in the performance of this contract by the Contractor or any subcontractor shall be paid not less than the minimum monetary wages and shall be furnished fringe benefits in accordance with the wages and fringe benefits determined by the Secretary of Labor, or authorized representative, as specified in any wage determination attached to this contract." FAR 52.222-41(c) (May 1989). Finally, plaintiff argues for the reimbursement requirement by

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pointing to the incorporation of the price adjustment clause set forth in FAR 52.222-44, which requires reimbursement for any increases incurred by CHI associated with providing wage and fringe benefits mandated by the Services Contract Act. Pl.'s Opening Brief. Call Henry, Inc., No. 14-989, ECF Nos. 18.

While we agree that the contract incorporated both a price adjustment clause and wage determination clause, plaintiff has misconstrued the language and intent of the Services Contract Act. The purpose of the Services Contract Act is to protect employees, not contractors, from suffering financial disadvantage when a successor contractor undertakes workforce management. See American Fed'n of Labor & Congress of Indus. Org. v. Donovan, 757 F.2d 330, 352 (D.C. Cir. 1985)). Furthermore, the previously mentioned contractual...

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