United States ex rel. Wall v. Circle C Constr., L.L.C.

• Decision Date: 01 October 2012
• Docket Number: No. 10–5645.,10–5645.
• Citation: 697 F.3d 345
• Court: U.S. Court of Appeals — Sixth Circuit
• Parties: UNITED STATES of America, ex rel. Brian WALL, Plaintiffs–Appellees, v. CIRCLE C CONSTRUCTION, L.L.C., Defendant–Appellant, Phase Tech, LLC, Defendant.

697 F.3d 345

UNITED STATES of America, ex rel. Brian WALL, Plaintiffs–Appellees,

v. CIRCLE C CONSTRUCTION, L.L.C., Defendant–Appellant,Phase Tech, LLC, Defendant.

No. 10–5645.

United States Court of Appeals, Sixth Circuit.

Argued: Jan. 11, 2012.

Decided and Filed: Oct. 1, 2012.

ARGUED:John B. Carlson, Nashville, Tennessee, for Appellants. Ellen Bowden McIntyre, United States Attorney's Office, Nashville, Tennessee, for Appellee. ON BRIEF:John B. Carlson, Nashville, Tennessee, for Appellants. Ellen Bowden McIntyre, United States Attorney's Office, Nashville, Tennessee, for Appellee.

Before: SILER and GRIFFIN, Circuit Judges; and TARNOW, District Judge.^*

OPINION

GRIFFIN, Circuit Judge.

In this action alleging a violation of the federal False Claims Act (“FCA”), 31 U.S.C. § 3729(a)(2) (2006), defendant Circle C Construction, LLC (“Circle C”) appeals an order of the district court denying its motions for summary judgment and to dismiss the amended complaint, and granting summary judgment in favor of plaintiffs United States of America, ex rel. Brian Wall (“plaintiffs”) in the treble damages amount of $1,661,423.13.

We affirm the grant of summary judgment in favor of plaintiffs, but reverse the award of damages and remand for a recalculation of the damages.

I.

The relevant underlying facts are set forth in the district court's Memorandum Opinion:

Circle C signed an agreement with the Army to construct buildings at the Fort Campbell military base. Circle C's agreement included determinations of hourly wages for electrical workers with a base hourly rate of $19.19, plus fringe benefits of $3.94 an hour. Prior to this contract, Circle C has had government contracts for almost twenty (20) years. Frances Cates, a Circle C co-owner, and Dorothy Tyndall, Circle C's bookkeeper, attended a training session at Fort Campbell on the prevailing wage requirement for federal government contracts. In this Fort Campbell contract, Circle C acknowledged its “familiarity with” the prevailing wage requirements in all of its contracts. (Docket Entry No. 91, Defendant's Response to Plaintiffs Statement of Undisputed Facts at ¶ 11). John W. Cates, Circle C's corporate representative[,] conceded Circle C's knowledge of various Davis–Bacon Act requirements. Id. at ¶ 14.

Among Circle C's contractual obligations on the Fort Campbell project were Circle C's obligations to pay electricians according to the wage determinations in the contract, to ensure that persons doing electrical work were paid as electricians; to submit payroll certifications to Fort Campbell as a condition of payment; and to ensure that its subcontractors complied with [the] Davis–Bacon Act and that the payroll certification submitted to Fort Campbell were complete and accurate, including information on Circle C's subcontractors. Circle C conceded that it “should submit payroll certifications for all employees on the Fort Campbell project.” (Docket Entry No. 75–1 at 12, Exhibit 3). Circle C submitted its payroll certifications for the original certifications, but did not list Phase Tech's employees. Circle C asserts that it never promoted itself as the prime contractor on this project. Yet, during this same period, Circle C submitted separate certified payrolls for its other subcontractors. Phase Tech did not submit any payroll certification for 2004 and 2005.

Phase Tech was Circle C's subcontractor on at least 98 percent of the electrical work on the Fort Campbell project, but did not sign a written contract with Circle C. Circle C provided Phase Tech with the wage determination excerpts from its contract, but did not discuss the Davis–Bacon Act requirements with Phase Tech nor verify whether Phase Tech submitted its own payroll certifications to Fort Campbell. Circle C did not provide a blank payroll certification form to Phase Tech. Circle C lacked a protocol or procedure to monitor Phase Tech's employees' work on the Fort Campbell project and did not take measures to ensure payment of proper wages under the Davis–Bacon Act to Phase Tech's employees. According to Charles Cooper, Phase Tech co-owner and certified electrician, Circle C did not inform Phase Tech of the need to submit certified payrolls for the Fort Campbell project until approximately 2006, two years after the project commenced.

Phase Tech had eight employees, including [Relator] Wall, who worked on the Fort Campbell contract, performed electrical and conduit work as electricians. Wall, the relator, and Ryan McPherson were Phase Tech employees on a construction project for which Circle C was the prime contractor and Phase Tech was a subcontractor. Wall also performed preparatory and finishing work for the electrical wiring on the Fort Campbell project. According to John W. Cates, Circle C's corporate representative for this project, Circle C neither supervised, directed nor paid for Wall's or McPherson's work on Fort Campbell's contract. Circle C notes that it was neither asked or requested to pay or supervise the payment of Wall or McPherson.

After this action was filed, Circle C asked Phase Tech to provide new payroll certifications for the years when Phase Tech's employees were not included on any certified payrolls. Phase Tech provided this information to Circle C in December 2008. Phase Tech's contemporaneous records include daily calendars with the names of Phase Tech employees and their assigned job sites as well as dates and times of their work. Phase Tech also has pay stubs, but not for Phase Tech employees on the Fort Campbell project. According to Cooper, Phase Tech's owner at the time that these certifications were completed, “I'm sure I told [John W. Cates] they weren't—they weren't complete.” (Docket Entry No. 75–8 at p. 50). Circle C never verified these 2008 certifications for completeness and accuracy, but submitted them to Fort Campbell officials.

Edison Gunter, Special Agent with the United States Department of Labor (“DOL”) reviewed Circle C's and Phase Tech's certifications for the Fort Campbell contract as well as Phase Tech's daily calendars and pay stubs. Gunter found 62 inaccurate or false payroll certifications of which 53 were Circle C's original payroll certifications from 2004 and 2005. Despite contemporaneous records of Phase Tech employees on the project, Circle C did not list Phase Tech's employees. Of the payroll certifications Phase Tech signed and Circle C submitted in December 2008, nine (9) certifications were inaccurate because certification for Phase Tech workers did not match Phase Tech's contemporaneous documents for workers on the project.

In the December 2008 payroll certifications, Circle C listed one certified electrician for this project who was paid at the hourly wage of $12 to $16 an hour. Id. The wages on these certifications are below the rates on the Circle C's contract for its subcontractors' electrical workers that required a wage of $19.19 per hour, plus fringe benefits of $3.94 an hour for work in Kentucky. The pay stubs of the original 2004 and 2005 Circle C payroll certifications also reflect the workers' pay between $12 and $16 an hour. Thus, 62 payroll certifications contained non-complying hourly wages for laborers as well as an electrical worker on the payroll, with the exception of one worker who was paid about $17 an hour.

Karen Garnett, assistant district director in the DOL's Louisville Office found Circle C's original payroll certifications to be false, because Circle C knew its subcontractor Phase Tech had employees working on the contract, but failed to list those employees on its certified payrolls. According to Garnett, Circle C is also responsible for the false December 2008 certifications because Circle C was responsible for the inaccurate submissions of its subcontractor. For all certifications, Phase Tech's employees should have been categorized and paid as electricians because they performed electrical work. Garnett considered listing only one electrician with all other employees as laborers to be a red flag.

Cates and Cooper who were shown comparisons of Circle C's payroll certifications and Phase Tech's contemporaneous documents, admitted that the certifications and records were inaccurate. Cates acknowledged that the wages listed for Phase Tech employees in the certification were less that the Davis–Bacon Act requirement for electrical workers. Circle C's and Phase Tech's December 2008 certifications include the provision that certifying representative states that “I pay or supervise the paymentof the persons employed by [Circle C or Phase Tech and] that during the payroll period ... all persons employed on said project have been paid the full weekly—the full weekly wages earned ... [and that] any payrolls ... are correct and complete.” (Docket Entry No. 80, Gunter Declaration at pp. 3–4). The certifying agents also know that false statements in these certifications could subject the contractor or subcontractor to civil prosecution.

For this Fort Campbell project, the United States paid Circle C a total five hundred sixty-five thousand, one hundred nine dollars ninety one cents ($565,109.91) for the electrical portion of this project based upon specific delivery work orders for electrical work cites without dispute that all of Phase Tech's employees performed electrical works on this project. (Docket Entry No. 75, Plaintiff's Statement of Undisputed Facts at Exhibit 6, Cooper Deposition at p. 42). Phase Tech performed 98% of this project's electrical work that represents a total payment of five hundred fifty-three thousand eight hundred seven dollars seventy-one cents ($553,807.71), that was given to Circle C and is the actual amount that should have been paid to Phase Tech's electrical and other workers.

United States ex rel. Wall v. Circle Constr., LLC, 700 F.Supp.2d 926, 930–32 (M.D.Tenn.2010) (hereinafter the “Wall ” decision).

II.

On January 25, 2007, Relator Wall filed the present action on behalf of the...