Pythagoras Gen. Contracting Corp. v. U.S. Dep't of Labor

• Decision Date: 20 February 2013
• Docket Number: No. 11 Civ. 2775(DAB).,11 Civ. 2775(DAB).
• Parties: PYTHAGORAS GENERAL CONTRACTING CORP., Plaintiff, v. UNITED STATES DEPARTMENT OF LABOR, and Hilda Solis, United States Secretary of Labor, Defendants.
• Court: U.S. District Court — Southern District of New York

926 F.Supp.2d 490

PYTHAGORAS GENERAL CONTRACTING CORP., Plaintiff,

v.UNITED STATES DEPARTMENT OF LABOR, and Hilda Solis, United States Secretary of Labor, Defendants.

No. 11 Civ. 2775(DAB).

United States District Court,

S.D. New York.

Feb. 20, 2013.

Joyce J. Sun, New York City Housing Authority Law Department, Chris Georgoulis, Georgoulis & Associates PLLC, New York, NY, for Plaintiff.

Bertrand Rolf Madsen, New York, NY, for Defendants.

MEMORANDUM AND ORDER

DEBORAH A. BATTS, District Judge.

This action arises from the allegation that Defendants, United States Department of Labor (“USDOL”) and Hilda Solis (“Solis”), United States Secretary of Labor, through the Administrative Review Board ¹ (“ARB”) acted unlawfully under the Administrative Procedure Act (“APA”), 5 U.S.C. § 701 et seq. Plaintiff, Pythagoras General Contracting Corp. (“Plaintiff” or “Pythagoras”), alleges that the ARB's Final Decision and Order, which vacated Administrative Law Judge (“ALJ”) Thomas Burke's (“Burke”) awards to eight Pythagoras employees, was unlawful under 5 U.S.C. § 706(2)(A)-(E), and consequently denied Pythagoras Procedural Due Process as guaranteed by the Fifth Amendment to the United States Constitution.

This matter is now before the Court on Defendants' Motion for Summary Judgment and on Plaintiff's Cross–Motion for Summary Judgment, both pursuant to Fed.R.Civ.P. 56(d). For the reasons that follow, Defendant's Motion is GRANTED, Plaintiff's Motion is DENIED, and the Complaint is DISMISSED.

I. BACKGROUND

The following facts are undisputed.² The parties' familiarity with the facts is assumed, and the facts are laid out here only as needed for resolution of the Motions currently before the Court.

In June 2000, Pythagoras entered into a public improvement contract, identified as Contract No. DC9800015, with the New York City Housing Authority (“NYCHA”) for renovation work on the Vladeck Houses, a residential public housing development in Manhattan. (Admin. R. 745–746, 2075, 4109–4112.) The project received federal funding, and thus was subject to the Davis–Bacon Act (“DBA”), the Davis–Bacon labor standards provisions of the U.S. Housing Act of 1937, and the Contract Work Hours and Safety Standards Act (“CWHSSA”) (collectively referred to as “Davis–Bacon and Related Acts” or “DBRA”). ( Id. at 2075, 3849–3864, 4109–4110.) The eight employees who are the subject of the instant action-Patrick Richards (“Richards”), Clive Hall (“Hall”), Delroy Green (“Green”), Edward Riley (“Riley”), Fabio Arbelaez (“Arbelaez”), Philbert Franklin (“Franklin”), Raymond Jesse Garcia (“Garcia”), and Jude Merzy (“Merzy”)-worked for Pythagoras on the Vladeck Houses Project. ( Id. at 207–233, 338, 569, 1999–2000.)

In November 2002, the USDOL began investigating Pythagoras after Pythagoras' employees complained that they were not being paid for overtime work. ( Id. at 744, 2094.) Investigator Peter Zhu (“Zhu”) conducted the investigation on the agency's behalf, and ultimately met with representatives of Pythagoras, interviewed approximately thirty employees, visited the Vladeck Houses site, and reviewed certified payrolls, home payroll records, payment requisitions, and “Daily Look Aheads,” i.e. documents that listed the type of work that Pythagoras anticipated performing on a specified date. ( Id. at 745, 747, 749–754, 756–774, 777–801, 1112–1113, 2302–3314.) In June of 2003, Zhu informed Pythagoras that the investigation showed that Pythagoras had failed to maintain complete and accurate records of hours worked and that a number of workers had been misclassified and underpaid. ( Id. at 747–749, 801–802, 2100, 5773–5780.) On October 15, 2004, upon conclusion of the investigation, the Administrator issued a Charging Letter to Pythagoras which alleged that Pythagoras had (1) mis-classified employees, (2) failed to pay prevailing wages, (3) failed to pay wages for all hours worked, (4) submitted certified payroll records containing falsified information, and (5) failed to pay overtime compensation for work in excess of forty hours per week, all of which amounted to violations of the labor standards provision of the DBRA and the CWHSSA. ( Id. at 1–5.) The Administrator calculated Pythagoras' total underpayment to be $731,343.79, affecting 87 employees, ( id. at 5), and noted that the violations had been “aggravated and willful[,]” and that Pythagoras would be “barred from doing business with the Government as a contractor” unless it requested a hearing before an ALJ of the USDOL. ( Id. at 2–3.) Pythagoras responded in a letter dated November 8, 2004, in which it contested the alleged violations and requested a hearing before an ALJ. ( Id. at 6–7.) In June 2005, the USDOL filed a Reference and Certificate of Service in the matter, which officially commenced the administrative proceedings before the ALJ. ( Id. at 8–11.)

A. Proceedings Before the Administrative Law Judge

The case was assigned to Associate Chief ALJ Thomas M. Burke, and it was conducted over the course of about one and one-half years, including an eleven-day hearing between February and June 2007. ( Id. at 72–73, 153–2157.) At the hearing's conclusion, the parties submitted briefs, and on June 4, 2008, ALJ Burke issued his decision. ( Id. at 6198–6256, 6257–6401, 6404–6438.) The decision addressed the evidence regarding each of the eight employees at issue in this case ³ ( id. at 6413–6422), and made the following findings:

(1) Investigator Zhu calculated the amount in back wages owed to Richards and Hall by multiplying the prevailing wage for carpenters by the number of days that Richards and Hall had worked on the project, which was taken from the Pythagoras certified payroll sheets, and deducting the amount of wages that Pythagoras had already paid the two employees at the Tier B laborer rate. ( Id. at 4941–5065, 5460–5465.) Based on Zhu's calculations, Richards and Hall had been underpaid by $116,947.31 and $75,031.63, respectively. ( Id. at 4950–4952, 5464, 6413, 4942–4943, 5462, 6414, 6721.) The Administrator had met its burden of proving that both Richards and Hall had “performed carpentry work” for which they had not been compensated, and had “shown the amount and extent of this work as a matter of just and reasonable inference.” ( Id. 6414.)

Pythagoras did not dispute the employees' performance of carpentry work, but did dispute the Investigator's determination of back wages owed to them. Pythagoras rebutted the Administrator's back wage calculation by showing that they were only entitled to 118 days of wages for work as carpenters. (Admin.R. 167–168, 4950–4952, 5966, 5968, 6759.) Pythagoras relied on Louisdor testimony that Richards, working with Hall, had been initially hired as a Tier B laborer and had been promised carpentry work only when it was available. ( Id. at 1998.) Pythagoras also relied on its own document, Exhibit 00, which it prepared as a result of its internal investigation; the document listed Richards and Hall as being owed $5,053.35 in back wages for 118 days of carpentry work. ( Id. at 2103–2110, 5966, 5968.) ALJ Burke found “sufficient evidence to negate the reasonableness of the inference that Richards spent all of his time performing carpentry work by questioning the accuracy and credibility of his statements,” and concluded that Richards and Hall were each entitled to pay for 118 days of carpentry work as listed in Exhibit 00. ( Id. at 5966, 5968, 6414–6415.)

(2) The Administrator satisfied its burden of demonstrating that the employees Green, Riley, Arbelaez, and Franklin, performed work at the mason tender classification for which they had been improperly compensated. (Admin. R. at 6416–6420.) Green had done work assembling and disassembling scaffolding and sidewalk sheds, performing demolition work in bathrooms, and laying and removing plastic sheeting. ( Id. 207–233.) Riley worked on scaffolding and, in addition, built holes, poured cement, built fences, and laid bricks. ( Id. at 281–317, 5827–5831.) Arbelaez, likewise, assembled and disassembled scaffolding, and also made cement and cut bricks. ( Id. at 407–433, 5851–5852.) Franklin performed demolition work in bathrooms, chipped ceilings and broke concrete floors, built scaffolds, and laid plastic sheeting. ( Id. at 234–256, 5825–5826.) The report notes that these employees were not paid for the mason tender work and, therefore, were owed back wages. ( Id. at 826, 1046–1058, 1189, 1566, 1625, 1855, 5400–5465.) Under Zhu's blended rate–70% mason tender rate and 30% of the Tier B laborer rate-Green was owed $51,215.37, Riley, $28,237.84, Arbelaez, $44,576.63, and Franklin, $38,347.49. ( Id. at 5416–5418, 5462; 5429–5431, 5464; 5405–5410, 5462; 5965, 5966, 5968.)

Again relying on Exhibit OO, Pythagoras rebutted the showing by arguing that Green and Riley were only entitled to 45 days of work at the mason tender rate, Arbelaez was owed $3,958.00, and Franklin, $5,832.60. ( Id. at 5965–5968.) Pythagoras' rebuttal, according to ALJ Burke, showed that the employees had performed less work than what was demonstrated by the Administrator, and that not all work was performed at the mason tender classification. ( Id. at 6418.) Pythagoras had “presented a precise amount of work performed to rebut the reasonableness of the Administrator's assessment.” ( Id.)

(3) The Administrator established its burden, demonstrating that Garcia was not properly compensated for his time spent working as a mason tender. (Admin.R. 6422.) Garcia performed scaffolding work and put up fences every day for “the first three and a half months,” in addition to having worked with the demolition in bathrooms, worked on the roof, and worked with bricklayers. ( Id. at 338–40.) Investigator Zhu's report showed that Garcia was owed back wages from July 20, 2001 to November 2, 2001, and again from September 12, 2003 to October 24, 2004; he calculated the wages owed from that period at a blended rate, but left untouched the remainder...