General Elec. Co. v. New York State Dept. of Labor, 88 Civ. 5154 (RLC).

• Citation: 742 F. Supp. 80
• Decision Date: 07 June 1990
• Docket Number: No. 88 Civ. 5154 (RLC).,88 Civ. 5154 (RLC).
• Parties: GENERAL ELECTRIC COMPANY, Plaintiff, v. NEW YORK STATE DEPARTMENT OF LABOR; Thomas F. Hartnett, Industrial Commissioner of the State of New York; Charles Drobner, Director of Public Work, New York State Department of Labor; Robert Abrams, Attorney General of the State of New York, Defendants.
• Court: United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York

742 F. Supp. 80

GENERAL ELECTRIC COMPANY, Plaintiff, v. NEW YORK STATE DEPARTMENT OF LABOR; Thomas F. Hartnett, Industrial Commissioner of the State of New York; Charles Drobner, Director of Public Work, New York State Department of Labor; Robert Abrams, Attorney General of the State of New York, Defendants.

No. 88 Civ. 5154 (RLC).

United States District Court, S.D. New York.

June 7, 1990.

COPYRIGHT MATERIAL OMITTED

Vedder, Price, Daufman, Kammholz & Day (Virgil B. Day, Marc S. Wenger, Neil A. Capobianco, of counsel,) New York City, for plaintiff.

Robert Abrams, Atty. Gen., State of N.Y. (Jane Lauer Barker, Asst. Atty. Gen., in Charge of Labor Bureau, M. Patricia Smith, Asst. Atty. Gen., of counsel), New York City, for defendants.

OPINION

ROBERT L. CARTER, District Judge.

Plaintiff General Electric ("GE") seeks an order declaring invalid New York's prevailing wage law, N.Y.Lab.Law § 220 (McKinney 1986 & Supp.1990), on various grounds, and enjoining the statute's enforcement or incorporation into state contracts. Presently before the court are motions for summary judgment by both GE and defendants, New York State's Department of Labor (the "Department"), Industrial Commissioner, Director of Public Work of the Department, and Attorney General (collectively, the "State").

BACKGROUND INFORMATION

The facts relevant to this case are described in detail in the court's prior opinion in this case, General Electric Co. v. New York State Department of Labor, 698 F.Supp. 1093, 1094-95 (S.D.N.Y.1988) (Carter, J.), familiarity with which is presumed. In that decision, the court denied GE's motion for a preliminary injunction, finding that Section 220 was not preempted either by the Employment Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001, et seq., or by the National Labor Relations Act ("NLRA"), 29 U.S.C. § 151, et seq. An appeal followed and on November 29, 1989, the United States Court of Appeals for the Second Circuit vacated this court's decision. The Court of Appeals held that the provisions of Section 220 concerning "supplements" were preempted by Section 514(a) of ERISA, though not by the NLRA. General Electric Co. v. New York State Department of Labor, 891 F.2d 25 (2d Cir.1989). The Court of Appeals also remanded to this court for determination of whether the manner in which wage and supplement rates are established under Section 220 constitutes an unconstitutional delegation of legislative power. 891 F.2d at 27. Each party now moves for summary judgment pursuant to Rule 56, F.R.Civ.P.

PARTIES' CONTENTIONS

In support of its motion, plaintiff first argues that the supplement provisions of Section 220 are part of a unitary statutory scheme and, the Court of Appeals having established that those provisions are preempted by ERISA, the non-supplement provisions must also fall. Plaintiff asserts that the severability of a statute is a question of legislative intent and that the New York legislature did not intend that the supplement and non-supplement provisions be severable.

Plaintiff next argues that if Section 220 is found severable by the court, all statutory references to "supplements," not just those concerning supplements which are to be provided through employee benefit plans, must be declared preempted by ERISA. Plaintiff also reasons that the Department's disparate treatment of contractors according to whether they provide benefits through ERISA plans would violate the equal protection clause of the Fourteenth Amendment.

As in its motion for a preliminary injunction, plaintiff asserts that Section 220 violates due process by delegating the legislative power to set prevailing wage rates to private parties — i.e., parties to collective bargaining agreements ("CBAs") negotiated in the locality — without providing adequate standards governing the exercise of that power.

Finally, although the Court of Appeals affirmed this court's finding that Section 220 is not preempted on its face by the NLRA, 891 F.2d at 27, plaintiff argues that it now submits additional information tending to show that the Department's application of the statute intrudes upon areas prohibited to the states and is therefore preempted.

In opposing plaintiff's motion for summary judgment, the State responds that the wage provisions of Section 220 are independent from the supplement provisions and readily severable, that the non-ERISA supplement aspects of the statute were not held preempted by the Court of Appeals and are severable from the ERISA supplement provisions, and that the valid provisions of the statute have a rational basis as applied to plaintiff and therefore do not violate equal protection.

Defendants also contend that the United States Constitution does not prohibit state legislation which looks to the dealings of private parties to give specific meaning to its substantive provisions. They further argue that this court and the Court of Appeals have resolved the NLRA preemption issue in their favor.

In addition to these arguments, the State asserts in support of its own motion for summary judgment on counts one, three, four and five of plaintiff's complaint that the court has previously found that it lacks subject matter jurisdiction over plaintiff's state law claims. Plaintiff does not refute this contention.

DISCUSSION

I.

A.

In determining whether the remaining provisions of Section 220 are severable from those ruled invalid, the court must consider how the New York state courts would interpret the statute in light of its partial invalidation. Doyle v. Suffolk County, 786 F.2d 523, 526 (2d Cir.), cert. denied, 479 U.S. 825, 107 S.Ct. 98, 93 L.Ed.2d 49 (1986). Legislative intent is paramount. People ex rel. Alpha Portland Cement Co. v. Knapp, 230 N.Y. 48, 60, 129 N.E. 202 (1920), cert. denied sub nom. State Tax Commissioner v. New York, 256 U.S. 702, 41 S.Ct. 624, 65 L.Ed. 1179 (1921); Allen v. City of Buffalo, 143 Misc.2d 1054, 1058, 541 N.Y.S.2d 876, 880 (Sup.Ct. Erie County 1989). Looking to the intent of the legislature in enacting Section 220, the New York courts could conclude that the statute's framers would now choose either: a) to impose no prevailing wage requirements on contractors performing public works contracts, or b) to retain those provisions which do not "relate to" ERISA supplements.¹

Since our conclusion is that New York courts would find that the framers of Section 220 would have endorsed the continued vitality of the statute's non-supplement provisions, it follows that Section 220 is not wholly invalidated by the preemption of the supplement provisions. Plaintiff contends that the central objective of the Section 220 supplement provisions — equalizing competition among public works contractors — is frustrated by the Court of Appeals' ruling and therefore the statute's framers would wish the statute repealed entirely. However, while inequality will undoubtedly be increased in the absence of the supplement provisions, to say that the prevailing wage law will be less effective in equalizing competition absent the offending provisions is not to say that the remaining provisions are at odds with or fail to effectuate the core purpose of the statute.

First, the non-supplement provisions of Section 220 continue to promote competitive equality, albeit to a more limited degree. The wages regulated by those provisions are undoubtedly a major labor cost expended by contractors and the mandate that these employers provide the prevailing level of wages in the locality ensures that such costs will be equal.²

Second, and perhaps more damaging to plaintiff's argument, is the fact that Section 220 was enacted and enforced for some time without the supplement provisions. See General Electric v. Dept. of Labor, supra, 891 F.2d at 28. Contrary to plaintiff's position, the fact that the legislature sought to amend the statute to enhance competitive equality does not detract from the conclusion that that body saw the wage provisions as independently viable.

While the legislative purpose in enacting the supplement provisions, added as an amendment to the statute in 1956, was clearly "to equalize contractors' minimum labor costs," Action Electrical Contractors Co. v. Goldin, 64 N.Y.2d 213, 222, 485 N.Y.S.2d 241, 245, 474 N.E.2d 601, 605 (1984), Section 220 as originally enacted focused on "guaranteeing to laborers and mechanics employed by municipalities on public works the prevailing rate of wages paid to others similarly employed in the locality." Smith v. Joseph, 275 App.Div. 201, 203, 88 N.Y.S.2d 818, 820, aff'd, 300 N.Y. 516, 89 N.E.2d 248 (1949) (citing Gaston v. Taylor, 274 N.Y. 359, 9 N.E.2d 9 (1937); Campbell v. City of New York, 244 N.Y. 317, 155 N.E. 628 (1927)). See also, Fata v. S.A. Healy Co., 289 N.Y. 401, 405, 46 N.E.2d 339 (1943) (statute "was intended for the direct benefit of laborers...."); Austin v. City of New York, 258 N.Y. 113, 117, 179 N.E. 313 (1932) ("The present statute is an attempt by the state to hold its territorial subdivisions to a standard of social justice in their dealings with laborers, workmen, and mechanics"), quoted in, Smith v. Joseph, supra, 275 App.Div. at 203, 88 N.Y.S.2d at 820.

This goal remains relevant today and is not fundamentally impaired by the invalidation of the supplement provisions of the statute. Although with diminished effectiveness, the provisions of Section 220 left intact by the Court of Appeals will continue to promote the goal of maintaining adequate wages on public works projects,³ and to a lesser extent, of equalizing competition for such projects. Consequently, the court is not at liberty to strike down these provisions. Doyle v. Suffolk County, supra, 786 F.2d at 527 ("legislative policy should be given effect unless application of the portion of a statute remaining after partial invalidation yields results that the legislature seems unlikely to have wanted or if the remaining portion is such a minor fragment of a...