System Management, Inc. v. Loiselle
| Decision Date | 19 March 2001 |
| Docket Number | No. CIV.A. 99-10744-WGY.,CIV.A. 99-10744-WGY. |
| Citation | 138 F.Supp.2d 78 |
| Parties | SYSTEM MANAGEMENT, INC., Forget Me Not Services, Inc., Jose R. Cruz, Victor Laboy, Juan Ayala, Juan Ortega, Gabriel Ochoa, Martin Restrepo, Lucio Ardon and Cestlio Rodas, Plaintiffs, v. Kenneth LOISELLE, Defendant. |
| Court | U.S. District Court — District of Massachusetts |
Gabriel O. Dumont, Jr., Law Offices of Gabriel Dumont, Boston, MA, for Plaintiffs.
Armando E. Batastini, Edwards & Angell, LLP, Providence, RI, Matthew T. Oliverio, Shakespeare Hall-Penthouse, Providence, RI, Patricia A. Sullivan, Edwards & Angell, LLP, Providence, RI, for Defendants.
FINDINGS OF FACT, RULINGS OF LAW, AND ORDER
This is a case abounding in ironies. The real winner is a non-party — the labor union that recruited these corporate and individual plaintiffs, provided them with its hand-picked counsel, and financed this entire litigation, all to pursue a vendetta against a non-union company. Were it not for labor union backing, this lawsuit (which cost the taxpayers of the United States at least $108,000.00)1 would never have been brought. The entire case smacks of champerty.2 The case says much about the state of public sector labor relations in Massachusetts today and illustrates how the language of statutes can be put to uses far beyond the actual intent of the framers. Even so, it does expose repeated instances of the exploitation of the weakest members of our work force by those wielding economic power. Perhaps Congress has wrought better than it knew.
The plaintiffs originally named in this action, System Management, Inc. ("System Management"), Forget Me Not Services, Inc. ("Forget Me Not"), Jose R. Cruz, Victor Laboy, Juan Ayala, and Juan Ortega, brought a putative class action pursuant to the civil remedies provision of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. §§ 1962(a) and 1962(c), against Kenneth Loiselle ("Loiselle"), the founder, sole owner, and chief executive officer of Aid Maintenance Co., Inc. ("Aid Maintenance"), a non-union cleaning and janitorial services company located in Pawtucket, Rhode Island. Am. Compl. ¶¶ 1, 5, 6. As the claim was originally brought, the named plaintiffs consisted of two corporations engaged in the business of providing janitorial and custodial services throughout Massachusetts (System Management and Forget Me Not) and four named individuals who have been employed as janitors or custodians at various locations within Massachusetts (Cruz, Laboy, Ayala, and Ortega). System Mgmt., Inc. v. Loiselle, 91 F.Supp.2d 401 (D.Mass. 2000). Aid Maintenance, engaged in providing janitorial and custodial services within Massachusetts, Rhode Island, Connecticut, and New Hampshire, was originally named a codefendant, but ceased to be a party to this action when the amended complaint dropped it and named only Loiselle. Am. Compl. ¶ 5.
The crux of the action, as brought against Loiselle, involved allegations that Loiselle engaged in a pattern of hiring underpaid cleaners to work as janitors or custodians at various work sites that are under cleaning contracts with Aid Maintenance. Id. ¶¶ 15-17. The amended complaint alleges that Loiselle underpaid these employees in violation of the Massachusetts law relating to the wage rate for the cleaning of public buildings, neglected to provide paid holidays, and under-represented the number of hours the janitors worked in order to pay a lower actual hourly rate. Id. ¶¶ 12, 16.
This Court, orally on September 29, 1999, and by Memorandum of March 9, 2000, dismissed all claims in this case, save a claim under RICO with the predicate act of mail fraud. System Mgmt., 91 F.Supp.2d at 401. On January 18, 2000, and again on May 15, 2000, the Court rebuffed two attempts to certify the case as a class action. The plaintiffs Martin Restrepo ("Restrepo"), Lucio Ardon ("Ardon"), and Cestlio Rodas ("Rodas") were thereupon added to this lawsuit by amended complaint on June 13, 2000.
System Management (Forget Me Not had been dismissed from the case prior to trial) alleged in the amended complaint that Loiselle's practices enabled Aid Maintenance to underbid on cleaning contracts, thereby resulting in a loss of business to it. Am. Compl. ¶¶ 39-41, 45. The individual plaintiffs Cruz, Laboy, Ayala, Ortega, Ochoa, Restrepo, Ardon, and Rodas claim lost work, wages, and benefits. Second Am. Compl. ¶ 4. Collectively, System Management and these individuals will be referred to as "the Plaintiffs." A six-day non-jury trial commenced on June 15, 2000.
Aid Maintenance is a cleaning and janitorial services company located in Pawtucket, Rhode Island, founded by Loiselle in 1968. Am. Compl. ¶ 6; Loiselle's Proposed Findings of Fact ¶ 1 (hereinafter "Proposed Findings"). Loiselle was at all material times the sole owner and chief executive officer of Aid Maintenance.
Russell Bizier ("Bizier") has been Aid Maintenance's Operations Manager since 1980 and is in charge of staffing and managing its cleaning contracts. Aff. of Russell Bizier ¶ 1. He is responsible for hiring and firing the workers, staffing a particular job site, setting compensation and work schedules, keeping track of who works when, dealing with customers, and resolving any compensation problems that might arise, such as a complaint by a cleaner regarding the level of pay. Bizier supervises the company's "Road Supervisors," who themselves make hiring and firing decisions, staffing decisions, and recruit workers for the job sites for which they are responsible. Bizier reports to Loiselle. Supp. Aff. of Dumont Ex. A at 5.
Daniel Noury ("Noury") is in charge of the financial side of the business, including the supervision of clerical workers who prepare invoices, process the checks and payroll (with an outside payroll company). Aff. of Daniel Noury ¶ 1. Like Bizier, Noury reports to Loiselle.
Prior to the events giving rise to this lawsuit, Loiselle had formed a second company called Commercial Maintenance Consultants ("CMC"). In the early 1990s, based on the advice of its accountants, Aid Maintenance used the CMC payroll for new cleaners to reduce its unemployment insurance based on the relatively high turnover of such new cleaners during the first few weeks of work as a result of compliance with Immigration and Naturalization Service requirements and cleaner unsuitability. New hires — persons expected to have a high rate of turnover — were first assigned for a time to CMC's payroll. This had the effect of reducing the loss experience factor of Aid Maintenance and thus reducing the overall state unemployment taxes. Aid Maintenance and CMC workers were intermingled and otherwise indistinguishable by Loiselle's entities in terms of work assignments.3
The employees of Aid Maintenance are primarily recent immigrants. They are paid no benefits and get to their cleaning assignments by riding with co-workers. Aid Maintenance pays the employee drivers and deducts the transportation costs from the riders.4
In 1993, the non-unionized Aid Maintenance came to the attention of the Service Employees International Union, Local 254 ("Local 254") which represents cleaning workers.5 Aff. of Donald Coleman Ex. A. Led by Donald Coleman ("Coleman") and Edward Sullivan ("Sullivan"), Local 254 targeted Aid Maintenance as a company that needed to be "put ... out of business ... or [driven] back to Rhode Island" if it would not accept unionization. Trial Ex. 306 (Letter from Sullivan to John J. Sweeney, May 24, 1993).6
Until 1994, Aid Maintenance's work was principally in Rhode Island. It also had a few private customers in southeastern Massachusetts. In the spring of 1994, Aid Maintenance became aware of a competitive bid for cleaning services during the 1994-1995 term at the Massachusetts Bay Community College (the "College"). Trial Ex. 152. The College is part of the Massachusetts State College system and has campuses in Wellesley and Framingham, Massachusetts. The invitation to bid called for the bidders to submit their price at an hourly rate.7 Trial Ex. 1 at 2.
The Commonwealth of Massachusetts, at all material times, has a Prevailing Wage statute governing the payment of wages to cleaning workers at its public buildings. The relevant portion of the Massachusetts Prevailing Wage statute provides:
No agreement or contract providing for the cleaning and maintenance of public buildings or space rented by the commonwealth, shall be entered into or given by the commonwealth unless said contract or agreement contains a stipulation requiring prescribed rates of wages, as determined by the commissioners, to be paid to the employees of the maintenance or cleaning contractor. Any such contract which does not contain said stipulation shall be invalid, and no payment shall be made thereunder.
Mass. Gen. Laws ch. 149, § 27H (1999).8 Violations of this statute result in punishment, civil citation, and the statute provides aggrieved employees with a civil right of action for injunctive relief, treble damages and attorney's fees.9 Id.
The specifications for the College's 1994-1995 bid made no mention of any prevailing wage requirement, an oversight on the part of the College officials responsible for preparing the bid specifications. Trial Exs. 1, 152. The bid specifications provided for annual renewal options for up to five years and stated that the College reserved the right "to increase or decrease the number of personnel required without impacting the cost of the contract." Trial Ex. 152. All of the cleaning contracts between Aid Maintenance and the College during the 1994 to 1997 period contained these provisions.
Aid Maintenance's bid was $10.00 per hour, which was the lowest bid and only slightly lower than the next lowest bid of $10.22. Trial Ex. 156. Loiselle testified that if Aid Maintenance had been aware of the Prevailing Wage requirement, it would not have...
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