United States ex rel. Int'l Bhd. of Elec. Workers Local Union No. 98 v. Farfield Co.
| Decision Date | 05 February 2020 |
| Docket Number | CIVIL ACTION NO. 09-4230 |
| Citation | 438 F.Supp.3d 348 |
| Parties | UNITED STATES of America, EX REL. INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS LOCAL UNION NO. 98 v. The FARFIELD COMPANY |
| Court | U.S. District Court — Eastern District of Pennsylvania |
James E. Goodley, Marc L. Gelman, Richard B. Sigmond, Jennings Sigmond, Ryan P. McCarthy, Jennings Sigmond, P.C., Philadelphia, PA, for International Brotherhood of Electrical Workers, Local Union No. 98.
Susan R. Friedman, Gary D. Melchionni, Stevens & Lee, Lancaster, PA, Harry A. Horwitz, Stevens & Lee PC, Zachary R. Davis, Day & Zimmermann, Philadelphia, PA, for the Farfield Company.
A union bringing claims on behalf of the United States under the False Claims Act challenged a construction contractor's payroll invoices submitted to SEPTA for the contractor's services under contract for a federally funded rail improvement project from 2002-2007. After a decade of back and forth, the parties agreed on the eve of trial to present their evidence over eight days of hearings to a Special Master chosen by the parties. In a timely and exhaustive Report and Recommendation, the Special Master recommended we enter judgment of $1,055,320.62 against the contractor after specific findings the contractor violated the False Claims Act. The contractor now objects to the Report and Recommendation on seven grounds with multiple sub-arguments. It asks we instead adopt the entirety of its findings offered to the Special Master. Many of its present objections dispute the Special Master's credibility findings to which we defer with the parties' consent. Although we defined the burden shifting and legal issues before the close of evidence after full briefing, the contractor repeats its objections. At the contractor's request and consistent with Rule 53, we revisited these legal findings and reviewed each objection based on our separate analysis of the transcribed record. After this exhaustive analysis, we overrule the contractor's objections and today adopt the Special Master's Report and Recommendation finding the contractor violated the False Claims Act requiring compensation mandated by Congress.
In March 2002, construction contractor The Farfield Company agreed to provide Southeastern Pennsylvania Transportation Authority ("SEPTA") with requested services for a track and signal improvement project along a seven and a half-mile stretch of railroad track ("Wayne Junction Project") funded in part by the federal government.2 Section VIII.S. of the SEPTA contract provides: 3
The work under the SEPTA contract involved, among other things, running and laying electrical conduit in trenches alongside railroad track, cleared and dug by Farfield's employees.4 After opening and securing trenches, Farfield employees installed electrical conduit and pulled electrical wires through the conduit. Installing or laying of conduit included bending conduit so it could go around bends or obstacles, keeping conduit off the ground, preparing conduit by gluing or otherwise connecting multiple pieces of conduit together, physically laying conduit in the ground, and coring manholes to connect conduit.5
Farfield's work on the Wayne Junction Project began in August or September 2002 and continued to September 2007. SEPTA's contract required Farfield to comply with the Davis-Bacon Act including federal regulations implementing the Davis-Bacon Act.6 The SEPTA contract required Farfield to, among other things, certify "each laborer or mechanic has been paid not less than the applicable wage rates and fringe benefits or cash equivalents for the classification of work performed, as specified in the applicable wage determination incorporated into the Contract."7
The issues before us involve Farfield's classification of employees' work on the Wayne Junction Project as it affects the wages they are paid. The International Brotherhood of Electrical Workers Local Union No. 98 alleges Farfield falsely certified payrolls submitted to SEPTA of paying its employees the prevailing wages which did not match the prevailing wages for persons doing this work. In other words, Local 98 claims Farfield represented it paid workers at lower wages for work which the federal government requires be paid at a higher prevailing wage based on the experience and skill involved. Farfield submitted its payrolls to SEPTA which in turn submitted claims for payment to the Federal Transportation Administration. Local 98 contends Farfield employees classified as "groundmen" and "laborers" performed "journeyman electrician" or "journeymen linemen" work—a higher skilled classification—and should have been paid at the higher wage rate. Farfield denies this, arguing it properly classified and paid its employees and, even if it paid some of its employees under the wrong classification, it did not do so "knowingly" as to violate the False Claims Act.
The difference among the classifications of groundmen, laborers, and journeyman linemen and journeymen electricians is based on the skill needed for each position. Groundmen are unskilled. Journeymen linemen and electricians are highly trained workers. SEPTA and Farfield recognized this distinction in their contract defining the prevailing wage for a "groundman" at $19.34 per hour plus fringes; a "lineman" (also known as a "journeyman lineman") at $32.23 per hour plus fringes; "electricians" (also known as "journeyman electricians") at $32.95 per hour plus fringes; and "laborers" between $20.05 and $20.25 per hour plus fringes.8 Although the SEPTA contract does not require an employee performing "journeyman" work actually be a journeyman, the contract requires an employee performing journeyman work be paid at the journeyman rate.9
One way of determining the proper wage is the type of work performed. The process of installing electrical wire from one point to another is known as a "wire pull."10 Apprentices and journeymen receive training on wire pulls; groundmen do not receive training on wire pulls.11 An apprentice must complete 7,000 hours of training before becoming a journeyman.12 Groundmen may assist journeymen in connecting wire, putting plastic pipe in a trench, laying conduit and security cable, pulling wire, cable pulls, bending conduit, threading conduit, and other tasks.13
Local 98 filed a sealed qui tam complaint in 2009 alleging Farfield paid forty-two workers who performed journeymen work at wages lower than required by the Davis-Bacon Act14 on the Wayne Junction Project, as well as five other federally-funded projects, and then submitted claims for payment based on false payroll certifications in violation of the False Claims Act.15 Two years later, the United States declined to intervene in the action. We unsealed the complaint and Local 98 filed an amended complaint on February 3, 2012.16 In its amended complaint, Local 98 alleged Farfield misclassified its workers performing electrician's work to gain a competitive bidding advantage on the same federally funded construction projects between 2001 and 2009.17 Local 98 alleged Farfield submitted fraudulent certified payroll records to SEPTA intending SEPTA to use those records to submit false invoices to the federal government. Farfield alleges those false payroll records are material in the federal government's decision to pay SEPTA's false invoices under Section 3729(a)(1)(B) of the False Claims Act.18
After years of discovery, the Clerk of Court assigned this matter to us in late September 2018. We directed a second round of motion practice on the issue of the Department of Labor's jurisdiction under the primary jurisdiction doctrine and, after finding we could proceed to resolve this case, we issued a scheduling order setting the parties' pre-trial obligations and a trial date.19
On August 26, 2019, we found genuine issues of material fact regarding the work groundmen performed on the Wayne Junction Project precluded the entry of summary judgment in Farfield's favor.20 On August 27, 2019, with a seven-day non-jury trial scheduled to begin on September 19, 2019, we asked the parties to present their good faith evaluation, after fulsome consultation among counsel, why we should not appoint a Special Master under Federal Rule of Civil Procedure 53.21 We advised counsel the Special Master will be required to file a Report and Recommendation with findings as to liability and damages, if any, and we will review questions of law on a de novo standard by evaluating fact and credibility decisions based on an abuse of discretion standard of review.22
Local 98 and Farfield agreed to the appointment of a Rule 53 Special Master to hear evidence and make findings as to liability and damages, if any, but applying a standard of review under Rule 53(f)(3).23 Rule 53(f)(3) sets the standard of review on a Special Master's Report and Recommendation: we must apply de novo review to all objections to conclusions of law made or recommended by a master as well as to findings of fact unless the parties, with our approval, stipulate (a) "the findings will be review for clear error; or" (b) "the findings of a master appointed under Rule 53(a)(1)(A) or (C) will be final."24
On September 3, 2019, we discussed the applicable standard of review with counsel and our particular concern with de novo review of the...
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...overcharges, and federal approval of tenancy if rent is unreasonable); United States ex rel. Int'l Bhd. of Elec. Workers Local Union No. 98 v. Farfield Co. , 438 F. Supp. 3d 348, 362 (E.D. Pa. 2020) (defendant's alleged misrepresentations pertained to its compliance with the federal Davis-B......