|
<![CDATA[
CCASE:
LLOYD T. DANIELSEN, et al.
DDATE:
19920930
TTEXT:
~1
[1] BOARD OF SERVICE CONTRACT APPEALS
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matter of:
LLOYD T. DANIELSEN, et al. BSCA Case Nos. 92-15
92-16
92-17
BEFORE: Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
Anna Maria Farias, Member
DATED: September 30, 1992
DECISIONS OF THE BOARD OF SERVICE CONTRACT APPEALS
These cases are before the Board of Service Contract Appeals
on the petitions of Lloyd T. Danielsen, David W. King, Jack
Wagstaff, and other similarly situated employees ("Petitioners"),
pursuant to the McNamara-O'Hara Service Contract Act of 1965, as
amended (41 U.S.C. [sec] 351 et seq.; "SCA"). Case Nos. 92-15 and
92-17 concern the general questions of whether, how much, and by
whom alleged back wages are owed under the so-called TH-57
helicopter maintenance contracts performed (by several different
contractors) for the U.S. Department of the Navy ("Navy") at
Whiting Field, Florida; Case No. 92-16 concerns the similar
questions of purported liability under the so-called T-2 and
T-34/-44 fixed-wing aircraft maintenance contracts performed by one
contractor (which also held one of the TH-57 contracts.) /FN1/ All
contracts were subject to the labor standards provisions of the SCA
and each of the two separate matters has a long history before the
Offices of the Wage and Hour Division, the Deputy Secretary of
Labor, /FN2/ and the Federal courts. The Board has consolidated
the [1]
/FN1/ The petition for review in No. 92-16 also references the TH-
57 contracts.
/FN2/ The Board of Service Contract Appeals was established on July
10, 1992 by Secretary's Order No. 3-92, 57 Federal Register 33,414
(July 28, 1992). Previously, petitions for review [1] [FN1
CONTINUED ON P. 2] regarding SCA matters were received and reviewed
by the Office of Administrative Appeals on behalf of the Deputy
Secretary of Labor.
~2
[2] captioned matters sua sponte based on our conclusion that the
three cases have similarity of parties, interested persons,
contracts, wage determinations, and issues of law and
administrative enforcement discretion to such a significant degree
that the best interests of justice are served by consolidating the
matters for consideration.
For the reasons stated below, the ruling of the Acting
Administrator in Case No. 92-15 is affirmed and the petition for
review is denied; the petitions for review in Case Nos. 92-16 and
92-17 are dismissed without prejudice, subject to the terms of this
decision.
I. BACKGROUND
A. History of the TH-57 Contracts
As regards these proceedings, the TH-57 contract was first
performed by Burnside-Ott Aviation Training Center, Inc. from
December 1981 through the end of November 1984; at that time,
Burnside-Ott was an independent corporate entity with no legal
relation to UNC, Inc. ("UNC"). Dynalectron Corporation (now known
as DynCorp) held a successor contract from December 1984 to
November 1985, when the independent Burnside-Ott reobtained the
next follow-on TH-57 contract. Also in November 1985 Petitioners
Danielsen and King filed a complaint with a Wage and Hour Division
regional office, alleging wage underpayments. Shortly thereafter,
Burnside-Ott sold most of assets (including the helicopter
maintenance contract and its name) to UNC and changed its name to
BOC of Miami, Inc. ("BOC"). UNC and the wholly-owned subsidiary
Burnside-Ott have held and performed the TH-57 maintenance work for
all relevant times since the purchase agreement.
After the purchase agreement, Burnside-Ott (through the Navy's
contracting officer) submitted a request for conformed
classifications and wage rates for classifications of work
purportedly not included in the SCA wage determination at issue in
the contract (No. N68520-86-D-0101) then being performed. (The
applicable wage determination was effective for contracts performed
at Whiting Field, Florida for TH-57 work and also at Eglin and
Tyndall Air Force Bases, Florida.) The Wage and Hour Division
issued a conformance ruling on December 15, 1986 and the ruling was
reaffirmed on December 4, 1987; several proposed conformance
actions were denied on the bases that conformed classifications
were not appropriate because the work was [2]
~3
[3] performed by classifications already contained in the wage
determination or that conformance are not issued for trainee
classifications. Some proposed classifications were approved and the
rates were conformed by use of Wage and Hour's "standard slotting
methodology," where rates are determined by equating duties, levels of
responsibility, and Federal grade equivalencies. The Wage and Hour
Division also ruled that the conformed rates were required to be paid
employees retroactive to the beginning of the contract.
Burnside-Ott appealed the conformance reconsideration ruling
(with the exception of the trainee issue). Petitioners King and
Danielsen participated in that proceeding and filed an opposition
to the Burnside-Ott petition for review. By Final Decision and
Order, the Deputy Secretary of Labor affirmed all of the
conformance determinations and ordered that "the Burnside-Ott
employees shall be paid the wage rates as determined by the
Administrator retroactive to the commencement of contract No.
N68520-86-D-0101." Burnside-Ott, Case No. 87-SCA-OM-2 (Dec. of the
Deputy Secretary)(Jan. 10, 1989).
The Burnside-Ott contract subject to the Decision and Order in
Case No. 87-SCA-OM-2 commenced on December 1, 1985. The Wage and
Hour Division computed back wages due for the period from December
1985 through March 1989 (when UNC/BOC came into compliance with the
conformance decision) and all back wages for this contract have
been paid by UNC.
The Wage and Hour Division has also sought back wages for the
two-year period prior to commencing its investigation of the
Burnside-Ott/UNC performance periods. This enforcement effort,
states the Acting Administrator, was conducted "pursuant to Wage
and Hour's own policy and discretion, not the Deputy Secretary's
decision in Case No. 87-SCA-OM-2." Statement (92-16, 92-17), p. 4.
The 1984-1985 contract was, as noted, performed by DynCorp;
that contract term from 1983-1984 was held by the independent
Burnside-Ott. DynCorp has now computed its liability for back
wages during its period of performance and those computations are
now the subject of review by the Wage and Hour Division and the
Navy.
The 1983-1984 period was performed by the independent
Burnside-Ott, which, pursuant to the terms of the purchase
agreement with UNC, changed its name. Efforts by the Wage and Hour
Division to collect back wages from BOC of Miami, Inc. have been
unavailing. The record indicates that the Wage and Hour Division
has been informed by a former principal that "BOC of Miami, Inc.
was dissolved in the mid 1980's and ceases to operate or exist;"
further, it is purported that the existence or location of payroll
records from that period was not certain. Id. [3]
~4
[4] B. History of the T-2 and T-34/-44 contracts
DynCorp has been the sole contractor whose payroll practices
have been challenged under the two fixed-wing maintenance
contracts. These contracts were performed at multiple locations
throughout the southeastern United States, including Whiting Field,
Florida. The Navy and DynCorp submitted a request for conformed
classifications to the Wage and Hour Division which issued a final
ruling on the matters on April 3, 1987.
DynCorp appealed the ruling in Case No. 87-SCA-OM-5. During
that matter before the Deputy Secretary, Petitioners through
counsel requested that they be granted the status of "interested
parties," with rights to participate fully in all related matters
-- including the filing of briefs and statements on the legal
merits of the conformance questions and, further, the
representation of themselves and all similarly situated employees
in the ongoing administrative process of settlement, negotiation of
back wages and further conformance determinations. The request to
file statements limited to the legal merits was granted; however,
ruling that the SCA confers no private right of action, the Deputy
Secretary denied the request for further levels of participation by
the present and former employees. DynCorp (Formerly Dynalectron
Corporation), Case No. 87-SCA-OM-5, Order of the Deputy Secretary
(Feb. 15, 1990).
During the pendency of this matter before the Deputy
Secretary, DynCorp requested a stay of proceedings so that the
parties could engage in settlement discussions. Subsequently, the
parties in DynCorp, jointly requested that the case be remanded to
the Wage and Hour Division so that the April 3, 1987 conformance
ruling could be withdrawn and a new determination be issued. The
employees filed an opposition to the request for remand and further
requested that the matter be stayed, based, in part on their
previously rejected assertions that the employees had a right to
participate fully in any determination of liability and back wages.
The Deputy Secretary remanded the matter to the Wage and Hour
Division for further action as requested by the parties.
C. Federal court litigation concerning all contracts
The employees who have filed the three instant petitions also
filed a civil action in the United States District Court for the
District of Columbia (Civil Action No. 89-3143), seeking a writ of
mandamus to compel the Secretaries of Labor and Navy to issue and
enforce retroactive wage determinations against Burnside-Ott (and
presumably its parent corporation UNC) and DynCorp for each of the
corporation's respective periods of contract performance under all
the contracts -- TH-57, T-2 and T-34/-44.
With respect to all of the contracts, the employee-plaintiffs
in the district court mandamus litigation sought to compel
immediate determination of the all [4]
~5
[5] purported wage underpayments; wage restitution (with interest) from
all the contractors; court costs and attorneys fees; contract
withholding action by the Wage and Hour Division to sequester alleged
back wages; and the establishment of a trust fund supervised and
administered by the district court for the benefit of all affected
past and present employees.
The Court denied the request for a writ of mandamus compelling
the foregoing actions. The District Court analyzed the legal
requirements necessary for the extraordinary writ of mandamus to
issue and ruled: (1) the employees had no clear right to relief;
(2) the federal defendants had no clear duty to act; and (3) other,
adequate remedies were available to the employees. Danielsen v.
Dole, 746 F.Supp. 160, 166-169 (D.D.C. 1990), aff'd No. 90-5032
(D.C. Cir. Jan. 3, 1991).
In these questions, the Court first held that the "SCA does
not confer a private right of action, but rather provides for
exclusive administrative enforcement authority with the Secretary
of Labor." Id. at 166. After thorough analysis of the pertinent
SCA provisions, the Court held that there was no "clearly defined
or specific duty under the SCA to enforce retroactive wage
determinations or to institute enforcement proceedings in every
case." Id. at 168. Finally, it was held that the employees had
other, adequate SCA remedies in that they were able to file the
administrative complaint commencing the TH-57 investigation and had
participated in both of the proceedings before the Deputy
Secretary, where they were able to address the legal merits of the
conformance rulings. Id. at 169. (The Court also noted the
failure of Petitioners King and Wagstaff to participate in the T-2
and T-34/-44 conformance consideration before the Wage and Hour
Division.)
Finally the District Court held that even if the three
requirements for a writ of mandamus had been found, the Court would
have denied the request in any event, based upon the exercise of
its own sound discretion. Id. Given the TH-57 enforcement efforts
of the Wage and Hour Division (successful in large part) and the
ongoing settlement negotiations on the T-2 and T-34/-44 contracts,
and the terms of the SCA which grant broad authority to administer
its provisions, the Court refused to substitute its judgment for
that of the Secretary of Labor and the Wage and Hour Division.
II. DISCUSSION
A. The remaining TH-57 contract and the
timeliness of the petition for review in No.
92-15
In No. 92-15, Petitioners seek to appeal the October 18, 1990
final determination of the Wage and Hour Division that UNC, Inc.
and UNC/Burnside- [5]
~6
[6] Ott are not liable for back wages under
the TH-57 contracts prior to December 1, 1985. The Acting
Administrator characterizes the ruling as a "final written
determination" which is appealable under the Board's regulation at
29 C.F.R. 8.7(b); however, both the Acting Administrator and
UNC/Burnside-Ott argue further that the petition for review (filed
April 3, 1991) is untimely, because it was filed long after the 60-
day period specified by the regulation for timely appeals.
Both Wage and Hour and UNC/Burnside Ott concede that the
October 19, 1990 ruling letter was never served upon the
Petitioners or their counsel. The Acting Administrator attributes
this to an "oversight." However, both Wage and Hour and
UNC/Burnside-Ott argue that Petitioners were made aware of the
ruling no later than mid-November 1990, when references were made
to the ruling by the government, the contractor and Petitioners in
the appeal of the related district court decision to the United
States Court of Appeals for the District of Columbia. Petitioners
contend that "notice" of the ruling was insufficient to start
running the time for appeal and that they filed their petition for
review of the October 18 ruling within 60 days of "acquiring" a
copy of the ruling.
We agree that the failure to serve Petitioners with a copy of
the October 18, 1990 ruling is unfortunate. Petitioners had
participated in the administrative proceedings concerning the TH-57
contracts and had every right to be served with a copy of the
ruling which had clear impact on their ability possibly to receive
back wages from UNC/Burnside-Ott, stemming from employment prior to
December 1985 -- specifically the period of contract performance by
the independent Burnside-Ott.
However, on the facts and circumstances of this issue, we hold
that the petition for review was not timely filed. UNC/Burnside-
Ott's opposition to the petition for review does demonstrate that
the Petitioners were put on notice of the no-liability ruling's
issuance on or about November 14, 1990. We find that the
Petitioners' characterizations of the "notice" are unavailing,
where, as here, the references to the ruling letter were made in
closely-related proceedings in the Court of Appeals (Motion for
Summary Affirmance of the district court decision and order denying
the request for a writ of mandamus); the petition for review was
filed nearly 4 months after the date notice of the substantive
terms of the ruling were given; and physical receipt of the ruling
at an earlier time would not have materially added to Petitioners'
knowledge of the terms of the no-liability ruling.
B. The merits of the October 18, 1990 ruling and
the TH-57 contracts
Alternative to our conclusion that the petition for review in
this matter was not timely filed, we also find that the Acting
Administrator's ruling that [6]
~7
[7] UNC/Burnside-Ott has no liability for the pre-December 1985 back
wages is otherwise correct. The decision to hold UNC/Burnside-Ott
harmless for this period is based on the general principle of contracts
that "a corporation that purchases or otherwise acquires the assets of
a second corporation does not assume the debts and liabilities of the
second corporation." Bud Antle, Inc. v. Eastern Foods, Inc., 758
F.2d 1451, 1456 (11th Cir. 1985). We find the general principle
applicable here.
Exceptions to the general rule are made where it can be
demonstrated that:
(1) the buyer agrees, expressly or implicitly, to
assume the seller's liabilities;
(2) the transaction is a de facto merger of the
two corporations;
(3) the buyer is a "mere continuation" of the
seller; or
(4) the transaction is fraudulently entered to
avoid liability.
We find that the record does not support a finding of any of the
above exceptions to the general rule governing purchase of
corporate assets. The UNC purchase agreement is part of the record
and it demonstrates in great detail the care taken by UNC to
establish comprehensive disclaimers of pre-existing liabilities
under the TH-57 contract. It is true that BOC of Miami, Inc. did
agree to indemnify UNC for liabilities arising from operations
prior to the October 31, 1986 purchase agreement. However, we
believe it would be overreaching to consider this an express or
implied agreement for UNC to assume the earlier liabilities.
Neither are we persuaded that the employment by UNC of two
former stockholders of the independent Burnside-Ott brings this
matter within the "mere continuation" exception. These individuals
became employees of the purchasing corporation and did not have an
ownership or managerial interest in UNC/Burnside-Ott after the
purchase agreement was concluded.
C. The absence of written determinations under
the remaining TH-57 and T-2 and T-34/-44
contracts
The Board's rules of practice and procedure specify at 29
C.F.R. 8.7(b) specify that we have jurisdiction to review and
decide a "final written decision (other than a wage determination)
of the Administrator or other authorized representative."
Jurisdiction is also limited by the terms of 29 C.F.R. 8.1(b) to
"final decisions of the Administrator of the Wage and Hour Division
or authorized representative." [7]
~8
[8] Petitioners allege that the Wage and Hour Division has made
the "final decision" to take no action with respect to the
independent Burnside-Ott's liability. It is uncontested that there
is no "final written decision" concerning enforcement of the
outstanding liability for the earliest period of the TH-57
contract. Further, review is sought concerning the fixed-wing
aircraft maintenance contracts; as noted, supra, there was a final
written determination on April 3, 1987. However, that ruling was
withdrawn by the Wage and Hour Division on January 22, 1991, the
date the Deputy Secretary remanded Case No. 87-SCA-OM-5 to the
Acting Administrator for further consideration and negotiation.
We find that our jurisdiction to hear and decide the issues
alleged by Petitioners is limited under these circumstances by the
terms of our rules of practice. Notwithstanding the "final
decision" language of Section 8.1, it is abundantly clear under
Section 8.7 that the final decision must be "written." In both
Case Nos. 92-16 and 92-17, there are no final written decisions
from which appeal to the Board may properly be taken.
D. General considerations of standing,
enforcement discretion, and private rights of
action
The SCA delegates to the Secretary of Labor the authority to
enforce its minimum prevailing wage provisions. In the Board's
view, therefore, all of the remaining issues raised by the three
petitions for review were settled by the district court in refusing
to grant a writ of mandamus and by the Court of Appeals in granting
summary affirmance of the district court's decision and order.
There are simply no provisions in the SCA or its regulations
governing enforcement or conformance matters which would allow for
the Petitioners' participation in these matters to the extent
argued by the employees. We agree that there is no private right
of action available under the SCA, which instead provides for
exclusive administrative enforcement by the Secretary of Labor.
See, District Lodge No. 166, Int'l Assoc. of Machinists and
Aerospace Workers, AFL-CIO v. TWA Services, Inc., 731 F.2d 711, 716
(11th Cir. 1984), cert. denied 469 U.S. 1204 (1985). To some
extent the SCA does impose a duty on the Secretary to investigate
allegations of violations and enforce its provisions; see, Carpet,
Linoleum and Resilient Tile Layers, et al. v. Brown, 656 F.2d 564
(10th Cir. 1981). However, in these cases, the Secretary's broad
discretion to enforce the SCA has not been abused where, as here,
years of enforcement efforts, conformance proceedings, and
administrative litigation have been conducted to enforce employee
rights under the SCA. Moreover, millions of dollars have already
been paid as back wages as a result of all this governmental
effort. The question of additional back wages is still under
negotiation between the Wage and Hour Division and DynCorp and
ultimate disposition, if any, against BOC of Miami, Inc. is still
an open question. [8]
~9
[9] Petitioners have made numerous allegations of bad faith and
secret dealing between the government and several of the
contractors in these matters; they also claim to have "due process"
rights to participate in these contract labor standards matters at
the level of agency enforcement. We see the situation differently:
Petitioners have no right to participate in the ongoing processes
of discretionary enforcement and back wage negotiation; this was
made abundantly clear in the District Court and Court of Appeals
litigation concerning the same issues now brought before the Board.
The employees are not parties to the disputes; the government and
the contractors are. Before the Board in appropriate circumstances
employees can be "interested persons," within the meaning of 29
C.F.R. 8.11. Final enforcement decisions (whether written and
appealable or unwritten and unappealable) will affect them. These
are functions delegated to the Secretary of Labor and we can
provide to Petitioners no remedy which will encroach upon that
authority.
In sum and for the foregoing reasons, the Petition for Review
in Case No. 92-15 is denied and the final written decision of the
Acting Administrator is affirmed; the Petitions for Review in Case
Nos. 92-16 and 92-17 are dismissed without prejudice subject to the
terms of this decision.
BY ORDER OF THE BOARD:
Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
Anna Maria Farias, Member
Gerald F. Krizan, Esq.
Executive Secretary [9]
]]>
|
