Chan v. City of New York
| Decision Date | 26 July 1993 |
| Docket Number | 2194,1231,D,Nos. 1230,s. 1230 |
| Citation | 1 F.3d 96 |
| Parties | , 126 Lab.Cas. P 33,031, 1 Wage & Hour Cas. 2d 956 Kam Shing CHAN, Kam Tai Chan, Jing Yi Chen, Shan Non Chiu, Bak Lok Chu, Kok Kun Chu, Israel Gonzalez, Sui Bin Huang, Jian Ning Jiang, Kam Fai Kwok, Moon Shuen Kwong, Wei Xiang Lee, Yang I Lee, Young Shi Lee, Bing Zhao Li, Hao Hui Li, Kei Man Li, Wai Tai Li, Chi Kwong Liu, Jack Ye Louie, Sheng Hua Lu, Tian Guang Mai, Cheuk Mink Ng, Kin Chung Ng, Kin Hin Ng, Shun Gao Shen, Ten Jen Shen, Hau Wing Sin, Vein Dinh Sintruong, Wing Shing Tse, Wai Man Wan, Kong Htyan Wu, Xu Ming Wu, Guo Xuan and Yue Nam Zhu, Plaintiffs-Appellees-Cross-Appellants, v. CITY OF NEW YORK, Department of Housing Preservation & Development of New York City and Chinese-American Planning Council, Inc., Defendants-Appellants-Cross-Appellees. ockets 92-9236, 92-9238 and 93-7038. |
| Court | U.S. Court of Appeals — Second Circuit |
James Reif, New York City (Ellen Dichner, Gladstein, Reif & Meginniss, Shneyer & Shen, Asian American Legal Defense & Educ. Fund, on the brief), for plaintiffs-appellees-cross-appellants.
Fay Ng, New York City (O. Peter Sherwood, Corp. Counsel, City of New York, Pamela Seider Dolgow, John P. Woods, Goodwin E. Benjamin, on the brief), for defendants-appellants City of New York and Department of Housing Preservation & Development of New York City.
Peter A. Walker, New York City (Jay W. Waks, Brian G. Cesaratto, Kaye, Scholer, Fierman, Hays & Handler, on the brief), for defendant-appellant Chinese-American Planning Council, Inc.
Before: KEARSE and CARDAMONE, Circuit Judges, and BURNS, District Judge *.
Defendants City of New York ("City"), Department of Housing Preservation & Development of New York City ("HPD") (collectively "municipal defendants"), and the Chinese-American Planning Council, Inc. ("CPC"), appeal from so much of an order of the United States District Court for the Southern District of New York, Robert J. Ward, Judge, as denied their motions pursuant to Fed.R.Civ.P. 12(b)(6) to dismiss claims of plaintiffs Kam Shing Chan et al., asserted under 42 U.S.C. Sec. 1983 (1988) for payment of subminimum wages, in violation of Sec. 5310 of the Housing and Community Development Act of 1974, 42 U.S.C. Sec. 5301 et seq. (1988 & Supp. II 1990) ("HCDA" or the "Act"). The district court ruled that although there is no private right of action directly under Sec. 5310, plaintiffs' claims for violation of that section could be pursued under Sec. 1983. On appeal, defendants contend principally (a) that Sec. 5310 does not create a right that can be enforced under Sec. 1983, and (b) that a Sec. 1983 action cannot be maintained because CPC cannot be considered a state actor. Plaintiffs cross-appeal, challenging the district court's ruling that Sec. 5310 affords them no private right of action directly under that section. For the reasons below, we reject these challenges and affirm in all respects.
Plaintiffs were employees of CPC who worked on federally funded construction projects. The present controversy arises out of their claims that CPC paid them less than the minimum wage rates federally required for such projects. For purposes of both the appeal and the cross-appeal, we accept as true the allegations of the First Amended Verified Complaint ("Complaint"), as clarified by the actual terms of the contracts invoked by the Complaint and presented to the district court, see Cortec Industries, Inc. v. Sum Holding L.P., 949 F.2d 42, 47 (2d Cir.1991), cert. denied, --- U.S. ----, 112 S.Ct. 1561, 118 L.Ed.2d 208 (1992).
A. The Contracts Between CPC and HPD
From 1986 to 1989, CPC was party to a series of three contracts with HPD for the construction, repair, and rehabilitation of certain housing owned by the City (collectively The Contracts between CPC and HPD contained certain terms and conditions required by the HCDA. One such provision, entitled "Federal Supplemental Terms and Conditions," stated that
the "Contracts"). The Contracts were funded in whole or in part by federal grants under the HCDA. Section 5310 of that Act provides generally that laborers employed on construction work financed in whole or in part by HCDA grants "shall be paid wages at rates not less than those prevailing on similar construction in the locality" as determined by the Secretary of Labor (hereinafter "federally recognized prevailing rates") in accordance with the Davis-Bacon Act, 40 U.S.C. Secs. 276a to 276a-5 (1988) ("Davis-Bacon"). See 42 U.S.C. Sec. 5310.
[t]he Contractor acknowledges that this Agreement is funded under a program providing direct financial assistance from the Federal government to the City and HPD and is subject to, and the Contractor shall comply with, the requirements of all applicable Federal Statutes, rules and regulations, including, but not limited to, those set forth in Exhibit F attached to this Agreement.
(1986-87 Contract, Article 18, p 18.1.) Exhibit F specified that the Contracts were subject to the conditions of, inter alia, the HCDA and Davis-Bacon:
The Davis-Bacon Act: In construction contracts involving an excess of $2000, unless exclusively in connection with the rehabilitation of a structure designed for residential use by less than 8 families, all laborers and mechanics must be payed at a rate not less than those determined by the Secretary of Labor to be prevailing for the locality, which rates are annexed hereto as Exhibit A. These wage rates are a federally mandated minimum....
(1986-87 Contract, Exhibit F, Article 3(b)(i) (emphasis in original).)
Each Contract was awarded following the submission of bids in response to HPD's Requests for Proposals ("RFPs"). The RFPs, which were incorporated in the Contracts, contained express provisions with respect to the wages to be paid workers on projects covered by the Contracts. For example, the RFP for the 1986-87 Contract stated:
A Person-Day Rate, which shall be all inclusive of costs within each Proposal, will be the proper method of establishing the overall budget. For example, if $75.00 is the Person-Day Rate, all costs to run the program, pay the staff and trainees and provide training equipment and administrative services would be covered by said rate multiplied by the number of trainees multiplied by the number of days worked.
(1986-87 RFP General Guidelines p 1 (emphasis omitted).) This RFP also provided that "[t]here shall be 246 work days in the term of the Contract" (id. p 6 (emphasis omitted)), and that "[a] maximum Person-Day Rate is being set at $90.00" (id. p 2). The Contract prohibited CPC from receiving any additional funding for "Program Work performed pursuant to this Agreement." (1986-87 Contract, Article 15, p 15.2.)
CPC bid for and won the 1986-87 Contract with a budget that called for 30 trainees working 246 days at the $90 Person-Day Rate. The total contract price was thus $664,200. The 1988 and 1989 Contracts awarded to CPC were similar, though the RFPs permitted, and the Contracts called for, Person-Day Rates of $95.
B. The Present Lawsuit and the District Court's Decision
In 1990, plaintiffs commenced the present action, alleging that they were CPC employees 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 p 53.) Plaintiffs contended principally that CPC in failing to pay federally 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 Sec. 5310, (2) the HCDA did not create a right that is enforceable under Sec. 1983, and (3) in any event, the Complaint did not sufficiently allege that CPC acted under color of state law within the meaning of Sec. 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 Sec. 5310 but denied defendants' motions to dismiss to the extent that the claims were asserted under Sec. 1983.
recognized prevailing rates, and HPD in consenting, condoning, and authorizing that failure, deprived plaintiffs of their rights under Sec. 5310, in violation of Sec. 1983. As damages, plaintiffs requested, inter alia, the difference between the federally mandated wages and the wages they actually received.
In determining that Sec. 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 Sec. 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 Sec. 5310. 803 F.Supp. at 731.
The court ruled, however, that Sec. 5310 created a federal right that is enforceable under Sec. 1983. Reading Sec. 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 Sec. 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. ...
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