General Elec. Co. v. New York State Dept. of Labor, 692

• Court: United States Courts of Appeals. United States Court of Appeals (2nd Circuit)
• Writing for the Court: CARDAMONE
• Citation: 936 F.2d 1448
• Parties: 30 Wage & Hour Cas. (BN 657, 60 USLW 2069, 119 Lab.Cas. P 56,699 GENERAL ELECTRIC COMPANY, Plaintiff-Appellant, 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-Appellees. ocket 90-7672.
• Docket Number: D,No. 692,692
• Decision Date: 28 June 1991

Page 1448

936 F.2d 1448

30 Wage & Hour Cas. (BN 657, 60 USLW 2069,

119 Lab.Cas. P 56,699

GENERAL ELECTRIC COMPANY, Plaintiff-Appellant, 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-Appellees.

No. 692, Docket 90-7672.

United States Court of Appeals,

Second Circuit.

Argued Jan. 18, 1991.

Decided June 28, 1991.

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

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

Before OAKES ^*, Chief Judge, and CARDAMONE and MAHONEY, Circuit Judges.

CARDAMONE, Circuit Judge:

This appeal challenges the validity of New York Labor Law Sec. 220 (McKinney 1990). Appellant General Electric Company (GE) claims that the statute violates the due process clause of the Fourteenth Amendment, both on its face and as applied in this case because it unconstitutionally delegates authority to private parties to set prevailing wage rates. It also claims Sec. 220 is unconstitutionally vague and is preempted by the National Labor Relations Act, 29 U.S.C. Sec. 151, et seq. Finally, GE argues that Sec. 220's provisions relating to wage supplements--which we have previously held are preempted by Sec. 514(a) of the Employment Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. Sec. 1144(a), see General Electric Co. v. New York State Dep't of Labor, 891 F.2d 25 (2d Cir.1989)--are non-severable.

For the reasons stated below, we reverse and remand with respect to GE's due process claim for further discovery and a trial on the merits, if necessary. In all other respects, we affirm.

BACKGROUND

A. New York Labor Law Sec. 220

New York's Labor Law Sec. 220(3) requires that workers employed by a contractor or person doing work in connection with any contract to which the state is a party shall be paid not less than the prevailing rate of wages and wage supplements paid to workers in the private sector who perform similar work in the same locality.

The prevailing wage rate, as amended on July 15, 1983, is fixed "by virtue of collective bargaining agreements between bona fide labor organizations and employers of the private sector, performing public or private work provided that said employers employ at least thirty per centum of workers, laborers or mechanics in the same trade or occupation in the locality where the work is being performed." Sec. 220(5)(a). "Supplements" or fringe benefits include "all remuneration for employment paid in any medium other than cash, or reimbursement for expenses, or any payments which are not 'wages' within the meaning of the law," Sec. 220(5)(b), and are determined in the same manner as are wages, by collective bargaining agreements under Sec. 220(5)(c). Wages and wage supplements wrongfully withheld by an employer must be repaid and the law provides for civil and criminal penalties. Labor Law Sec. 220(7), (9).

The "locality" or geographic area used to fix the prevailing wage rate and supplements is defined by reference to the scope of the same "current collective bargaining agreements between bona fide labor organizations

and employers of the private sector, performing public and private work." Sec. 220(5)(d)

B. Facts

Because the instant litigation has been before us once before and has been the subject of two district court opinions, we set forth only those facts necessary to our discussion. In January 1987 GE entered into a contract with the Long Island Railroad (Railroad) to service and repair electric transformers located in Kings, Queens, Nassau, and Suffolk counties in New York. Performance of the contract was undertaken by General Electric Apparatus and Engineering Services--New York Service Center, a sub-entity of GE. The Service Center is headquartered in North Bergen, New Jersey, but the work at issue was performed in New York State. The Service Center's employees are represented by Local 3, International Brotherhood of Electrical Workers (IBEW, Local 3 or union), and collective bargaining agreements between Local 3 and GE were in force during the relevant period.

In 1987 the New York State Department of Labor (Department) commenced an investigation into the wages and supplements GE paid its employees working on the Railroad project, and determined preliminarily that they had been underpaid, including penalty and interest, by $676,118. The Department determined the applicable prevailing wage and supplement rates for work done in Kings and Queens Counties through rates set in the collective bargaining agreement between Local 3 and an electrical contractors association, and for the work done in Nassau and Suffolk counties through rates set in the collective bargaining agreement between Local 25, IBEW and an electrical contractors association. These agreements provide for the payment of wages and supplements that are different from, and in some cases more than, those provided by GE to its employees working on the Railroad contract. Both agreements have two different wage scales, accompanied by explicit statements that the lower wages--which in both cases establish wages approximately one-half the higher wage scale--are not applicable to public works projects. In calculating GE's delinquency, the Department relied on the higher of the two wage scales to set in the four named counties the prevailing wages. At the Department's request, the Railroad withheld $439,294 in contract payments from GE.

C. Procedural History

On July 22, 1988 GE commenced the instant action seeking declaratory and injunctive relief against enforcement of Labor Law Sec. 220 and for recovery of the withheld funds. It alleged that the statute's prevailing wage provisions, as applied to its contract with the Railroad, are preempted by ERISA and by the National Labor Relations Act, 29 U.S.C. Sec. 151, et seq., (NLRA), and that the statute is an unconstitutional delegation of legislative power to private parties in violation of the Due Process Clause of the Fourteenth Amendment. GE also raised two state law claims.

On September 29, 1988 the United States District Court for the Southern District of New York (Carter, J.) denied GE's motion for a preliminary injunction, holding that Labor Law Sec. 220 was not preempted by the NLRA, ERISA or other federal statutes. It did not reach the due process claim. On November 29, 1989 we vacated the district court's order on the ground that ERISA does preempt the portion of Labor Law Sec. 220 dealing with supplements. General Electric Co. v. New York State Dep't of Labor, 891 F.2d at 30. The district court's holding that the state statute is not preempted by the NLRA was affirmed because, as a minimum labor standard, the statute does not interfere with the collective bargaining process. Id. at 27-28. We remanded the due process claim for initial consideration by the district court.

Upon remand, GE conducted discovery on its constitutional claim. On February 1, 1990 the district court denied GE's motion for further discovery and instead ordered the parties to submit cross-motions for

summary judgment. On March 2, 1990 the parties stipulated that the Department would permit the release of all money withheld by the Railroad from GE in return for GE's posting a bond payable in accordance with a final order of the district court, after exhaustion of all appeals and collateral proceedings

On June 7, 1990 the district court granted summary judgment dismissing GE's due process challenge to Labor Law Sec. 220, stating that "[t]o the extent, if any, that the federal constitution limits the states' delegation of 'governmental' decisions to self-interested third parties, these limitations are certainly respected by Section 220." 742 F.Supp. 80. The district court reaffirmed its prior holding that Labor Law Sec. 220 is not preempted by the NLRA, and also decided that our prior opinion "was not intended to preempt the non-ERISA elements of the supplement provisions," and that the portions of the statute held by us to be preempted by ERISA were severable from the rest of the statute. The district court's decision to sever the offending portion was based on its conclusion "that the framers of Section 220 would have preferred severance to the greater inequality that would result from wholesale invalidation of the supplement provisions." On July 13, 1990 the district court entered judgment in accordance with its opinion. From that judgment GE appeals.

DISCUSSION

Because summary judgment was granted dismissing GE's due process claim, we examine the standard of review. In determining whether summary judgment was properly granted, the same standard is applied on appeal as that used by the district court under Federal Rule of Civil Procedure 56(c). See Burtnieks v. City of New York, 716 F.2d 982, 985 (2d Cir.1983). Under Rule 56(c) the moving party has the burden of showing the absence of any genuine issue of material fact, see Adickes v. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 1608, 26 L.Ed.2d 142 (1970). A fact is material when its resolution would "affect the outcome of the suit under the governing law," and a dispute about a material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986).

We view the evidence in the light most favorable to the party opposing the motion, see United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962) (per curiam), taking as true any factual allegations in that party's pleadings,...