Curtiss-Wright Corporation v. McLucas, Civ. No. 807-73.

• Decision Date: 27 August 1974
• Docket Number: Civ. No. 807-73.
• Citation: 381 F. Supp. 657
• Parties: CURTISS-WRIGHT CORPORATION, Plaintiff, v. John L. McLUCAS, Secretary of the Air Force, Defendant, and Southwest Airmotive Company, a division of Cooper Airmotive, Inc., Intervenor-Defendant.
• Court: U.S. District Court — District of New Jersey

381 F. Supp. 657

CURTISS-WRIGHT CORPORATION, Plaintiff, v. John L. McLUCAS, Secretary of the Air Force, Defendant, and Southwest Airmotive Company, a division of Cooper Airmotive, Inc., Intervenor-Defendant.

Civ. No. 807-73.

United States District Court, D. New Jersey.

August 27, 1974.

Meyner & Wiley by John N. Malyska, Newark, N. J., Pettit, Evers & Martin by David V. Anthony, Sellers, Conner & Cuneo by William H. Butterfield, Washington, D. C., for plaintiff.

Robinson, Wayne & Greenberg by Stephen M. Greenberg, Newark, N. J., Reavis, Pogue, Neal & Rose by W. Stanfield Johnson and Jean-Pierre Swennen, Washington, D. C., for intervenor-defendant.

Jonathan L. Goldstein, U. S. Atty. by Richard R. Hellstern, First Asst. U. S. Atty., and Amos Gern, Asst. U. S. Atty., Newark, N. J., for defendant.

OPINION

COOLAHAN, District Judge.

In its earlier opinion in this action, Curtiss-Wright Corp. v. McLucas, 364 F. Supp. 750 (D.N.J.1973), this Court held that plaintiff had failed to show violations of the Armed Services Procurement Act by the Air Force, 10 U.S.C. § 2304 et seq., in the formulation of contract No. F34601-73-D-1444. The Court further determined that the Secretary of Labor (Secretary) was the proper official to review the contract to determine whether it was subject to the Service Contract Act (SCA), 41 U.S.C. § 351 et seq. The opinion of the Court intimated that a finding by the Secretary that the SCA was applicable would annul the contract at issue (364 F.Supp. at 774):

. . . there exists a possibility that plaintiff could ultimately succeed in gaining a declaration of coverage under the Service Contract Act, which, in effect, would be a declaration that the contract as presently constituted, without statements of wage and benefits as required by the Act, 41 U.S.C. § 351(a)(1), (2), is illegal on its face.

And earlier in the opinion it is stated (364 F.Supp. at 772):

Had the Secretary issued a decision as to the particular contract at hand, the Court would have been bound to accept his conclusion.

The instant motions were prompted by the decision of the Secretary of March 19, 1974 holding contract No. F34601-73-D-1444 to be subject in part to the SCA. The opinion stated:

we conclude that none of the work in performing this contract which is done prior to the selection of the parts for assembly into particular engines is work in accordance with the provisions of the Walsh-Healey Act, within the meaning of Section 7(2) 41 U.S. C. § 356(2) of the Service Contract Act. All the work not within such exemption is, as previously stated, subject to the Service Contract and the wage determinations made thereunder.¹

On the strength of this ruling and this Court's earlier opinion, plaintiff Curtiss-Wright has moved for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. Intervenor-defendant Southwest Airmotive and the Air Force have also made motions to dismiss the action pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure or, in the alternative, for summary judgment.

The central issue before the Court is whether it should accept a newly argued legal theory advanced by the Air Force and Southwest Airmotive (defendants) and rule in their favor, irrespective of the decision of the Department of Labor. Essentially, defendants contend that annulment of the contract is not a legally required consequence of the Secretary's decision.² It is averred that the SCA can be lawfully enforced through modification of the contract to reflect the ruling of the Secretary.

At the outset, this Court recognizes that the language from its earlier opinion set forth above could be interpreted to mean that the March 19, 1974 opinion of the Secretary should automatically trigger summary judgment for plaintiff. It is incumbent upon this Court, however, to address the new issues defendants have introduced. It is not infrequently the responsibility of courts to "recede from the implications of . . . dicta in . . . earlier cases" when being "squarely presented" with a new issue. NLRB v. Boeing Co., 412 U.S. 67, 72, 93 S.Ct. 1952, 1956, 36 L.Ed.2d 752 (1973). A reconsideration on new grounds of the summary judgment motions of defendants does not moot the discussion of the SCA in the earlier opinion of this Court or the decision of this Court to refer the question of SCA coverage to the Secretary. A determination by the Secretary that the SCA did not apply to the instant contract would have obviated the need for this Court to consider the issues now before it.

Defendants opine that the instant contract is valid unless the Air Force violated 29 C.F.R. § 4.4(a), which provides:

Not less than 30 days prior to any invitation for bids, request for proposals, or commencement of negotiations for any contract exceeding $2,500 which may be subject to the Act, the contracting agency shall file with the Office of Special Wage Standards, Employment Standards Administration, Department of Labor, its notice of intention to make a service contract. Such notice shall be submitted on Standard Form 98, Notice of Intention to Make a Service Contract, which shall be completed in accordance with the instructions provided and shall be supplemented by the information required under paragraphs (b) and (c) of this section.

Defendants would have this Court conclude, as did the Comptroller General in the Lockheed Protest, n. 2 supra, that the Air Force contract officer in charge of reviewing the instant contract made a good faith decision that it was not one which "may be subject" to the provisions of the SCA. In support of this argument, defendants cite a footnote in this Court's earlier opinion which stated that it was the view of the Court that the Air Force had not acted unreasonably (364 F.Supp. at 772 n. 21):

It should be emphasized that in no way whatsoever does this Court intimate any wrongdoing or bad faith on the part of Air Force personnel in determining the application of the Service Contract Act to contracts for jet engine overhaul, repair, modification or maintenance. In the earlier years of the Act, coverage under the Act was mooted by the Secretary of Labor's nonissuance of wage and benefits determinations. The problem of dual coverage under the Service Contract Act and Walsh-Healey Act, an extremely complicated one from the viewpoint of practical administration, to say the least, is one with which the Secretary is still grappling.

The Air Force has cited to this Court rulings and statements of the Department of Labor over the years leaving the question of SCA applicability to jet engine overhaul contracts an open one.³ Further, the Air Force cites an affidavit of one of the draftsmen of the contract indicating the good faith basis for the Air Force decision not to incorporate an SCA clause in the instant contract.⁴

Defendants have, in addition, stressed the traditional reluctance of courts to void contracts in the absence of a clear expression by the legislature that contract abrogation is the required remedy. This Court has been urged to apply the doctrine of G. L. Christian & Associates v. United States, 312 F.2d 418, 160 Ct. Cl. 1 (1963), cert. den. 375 U.S. 954, 84 S.Ct. 444, 11 L.Ed.2d 314, 376 U.S. 929, 84 S.Ct. 657, 11 L.Ed.2d 627, 377 U.S. 1010, 84 S.Ct. 1906, 12 L.Ed.2d 1059 (1964). Plaintiffs in that case sued the Government for losses sustained when the Government canceled a contract for the construction of a housing project at a military base to which the plaintiff was a party. One of the damage items for which plaintiff sued was anticipated profits. The Court determined that the Christian plaintiffs would be entitled to recovery for anticipated profits "only if the termination of the contract by the Government is wrongful and constitutes a breach." 312 F.2d at 423. The Government argued that there had been no breach, even in the absence of a clause specifying that the Government could cancel the contract. The Government averred that the Armed Services Procurement Regulations required that a termination clause be made part of every construction contract, and if such a clause were not actually written into the contract, such a provision would exist as a requirement of law. The Court endorsed the Government's theory and stated (312 F.2d at 424):

. . . if the regulations applied here, there was a legal requirement that the plaintiff's contract contain the standard termination clause and the contract must be read as if it did.

The Court stated further that a termination clause could well be read into the contract because "that limitation is a deeply ingrained strand of public procurement policy." 312 F.2d at 426.

Defendants opine that the Christian doctrine is not, by itself, the only legal vehicle by which this Court may incorporate the SCA requirements into the instant contract. Defendants cite 29 C. F.R. § 4.5(c), propounded by the Department of Labor, providing for cure of contract deficiency through contract amendment:⁵

If the notice of intention required by § 4.4 is not filed with the required supporting documents within the time provided in such section, the contracting agency shall exercise any and all of its power that may be needed (including, where necessary, its power to negotiate, its power to pay any necessary additional costs, and its power under any provision of the contract authorizing changes) to include in the contract any wage determinations communicated to it within 30 days of the filing of such notice or of the discovery by the Employment Standards Administration, U.S. Department of Labor, of such omission.

In addition, the Department of Labor has sent, as promised,⁶ a wage ruling to the Air Force to cover the work which the instant contract is designed to accomplish.⁷

Plaintiff has interposed several arguments against the summary judgment motions of defendants. Plaintiff initially avers that the instant contract must be found to be invalid under section 10(e) of...