PRIME ROOFING, INC., WAB No. 92-15 (WAB July 16, 1993)
CCASE:
PRIME ROOFING INC. & RONALD HUEBNER
DDATE:
19930716
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matter of:
PRIME ROOFING, INC., WAB Case No. 92-15
Prime Contractor &
RONALD HUEBNER, Individually
and as President
BEFORE: Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
DATED: July 16, 1993
DECISION OF THE WAGE APPEALS BOARD
This matter is before the Wage Appeals Board on the petition of
Prime Roofing, Inc., seeking review of the October 27, 1990 and
August 4, 1992 Decisions and Orders issued by Administrative Law
Judge ("ALJ") Henry B. Lasky regarding issues of unpaid wages and
debarment of Prime Roofing, Inc. and Ronald Huebner, individually
and as President of Prime Roofing, Inc. For the reasons stated
below, the Board denies the petition for review. /FN1/
I. BACKGROUND
A. Factual Background
Prime Roofing, Inc. ("Petitioner" or "PRI"), is a California
corporation self-described as a "[r]oofing contractor dealing
exclusively with federal government contracts." Pertinent to these
proceedings, PRI was awarded five [1]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN1/ The instant Petition for Review -- as well as an earlier
appeal (see page 3, infra) was filed only on behalf of PRI. Both
ALJ Decisions and Orders are therefore final as to named party
Ronald Huebner, individually and as President of PRI. [1]
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[2] government contracts by the Department of the Army and one by
the Department of the Air Force for roofing repair and
construction. The contracts were awarded during 1981 and 1982;
each of the contracts was subject to and contained the labor
standards provisions of the Davis-Bacon Act (40 U.S.C. 276a et
seq.) and the Contract Work Hours and Safety Standards Act (40
U.S.C. 327 et seq.), requiring payment of prevailing wages as
determined by the Secretary of Labor and overtime wages for hours
worked over eight hours per day or 40 hours per week /FN2/,
respectively. The five Army contracts were performed at the Pueblo
Army Depot in Pueblo, Colorado and the sixth, Air Force contract
was performed at Holloman Air Force Base, New Mexico.
An investigation of PRI's compliance with prevailing wage and
overtime requirements under the contracts was conducted by the Wage
and Hour Division. The investigation reported that PRI and its
president had failed to pay certain employees their applicable
prevailing rate or overtime wages, misclassified employees and
failed to maintain payroll records required by the Copeland Act (40
U.S.C. 276c) and Department of Labor regulations. The Wage and
Hour Division requested the Army to withhold contract funds
otherwise due PRI under the contracts pending final determination
of the prevailing and overtime back wage allegations.
B. Procedural History
On September 16, 1985, the wage and recordkeeping disputes were
referred to the Office of Administrative Law Judges for a hearing.
Subsequently, PRI filed a motion with the ALJ to stay the
administrative proceeding, but the motion was denied. A trial date
was set by the ALJ for May 1987, but the case was continued.
Another date was set for a hearing in May 1988, but the matter was
once more continued because PRI had obtained a United States
district court restraining order in a companion action. After this
order was dissolved by the district court, another date was set for
hearing in April 1989, but another continuance -- again at PRI's
request -- was granted. Finally, ALJ Lasky entered an order
setting a hearing date for August 16-18, 1989.
On the first day of the hearing, counsel for the Wage and Hour
Division appeared before ALJ Lasky and was prepared to present the
government's case. However, no appearance was made by PRI, Ronald
Huebner or counsel for either. The ALJ permitted the hearing to
proceed and counsel for the Wage and Hour Division presented its
case-in-chief, calling 20 witnesses and offering 296 exhibits into
evidence. The hearing was concluded after the first day. [2]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN2/ The eight-hour day requirement for overtime was in effect at
the time the subject contracts were awarded and performed but has
since been repealed. [2]
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[3] The next day, ALJ Lasky issued an Order to Show Cause why
default judgment should not be entered against PRI and Huebner for
their failure to appear and defend at the August 16 hearing. No
response was made by PRI's counsel of record in the ALJ proceeding;
rather, on August 30 -- within the time prescribed by the ALJ for
a response -- PRI's counsel in bankruptcy court notified the ALJ
that PRI had filed a bankruptcy petition on August 15, 1989 and
counsel advanced the position that the ALJ's proceeding was
therefore automatically stayed by provisions of the Bankruptcy
Code. No response to the Show Cause Order was filed by Huebner.
ALJ Lasky entered his first Decision and Order in this matter -
- by default judgment -- on October 27, 1990, holding in part that
the Department of Labor's administrative proceeding seeking
determination of back wages and debarment of PRI and Huebner was
excepted from the automatic stay provisions of the Bankruptcy Code
as a proceeding to enforce government police or regulatory powers,
pursuant to 11 U.S.C. 362(b)(4). ALJ Lasky concluded that PRI
was liable for back wages in the amount of $69,016.50. The
violations were principally the misclassification of laborers who
were actually performing the duties of roofers; however, additional
prevailing wage violations were found in the misclassification of
employees performing numerous other skilled classificatons as
laborers and the use of so-called "helpers," a classificaton not
permitted under the administration of the Davis-Bacon Act at the
time the subject contracts were performed. ALJ Lasky also
determined that the PRI and Huebner were subject to debarment from
government contracting for three years for "disregard of
obligations to employees" within the meaning of section 3(a) of the
Davis-Bacon Act.
PRI appealed the adverse ALJ rulings to this Board, arguing
that the October 27, 1989 Decision and Order should be vacated on
the basis that proceeding was conducted in violation of the
Bankruptcy Code's automatic stay provisions. As noted, PRI had
filed its petition in bankruptcy on the eve of the ALJ hearing and,
in the bankruptcy proceeding, moved the court for an order holding
the Department of Labor in contempt for violating the automatic
stay provisions. On April 6, 1990, the bankruptcy court entered an
order concluding that the ALJ proceeding was a proper exercise of
the federal government's police powers -- to the extent of
determining back wage liability and debarment under the Davis-Bacon
Act -- and was therefore exempt from the stay provisions of
bankruptcy law. However, the bankruptcy court further ruled that
determination of the actual amount of back wages was subject to
stay under the Bankruptcy Code.
Subsequently, the Department of Labor requested a determination
from the bankruptcy court that the withheld contract funds were not
a part of the PRI's estate in bankruptcy or, alternatively, that
relief from the automatic stay be granted. The bankruptcy court
issued a decision on December 20, 1990, granting [3]
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[4] the Department of Labor's request for relief from the stay and
noting that in a supplemental administrative proceeding,
[p]rinciples of res judicata and collateral estoppel will
apply to findings necessarily made in finding violations
of the Acts by [PRI] and made in support of the
determination to debar [PRI] from further contracts.
PRI requested the bankruptcy court to amend its judgment so that
PRI would be able to litigate "determination of the proper wage
classification applicable to each employee and the amount of wages
due to each employee." On April 1, 1991, the bankruptcy court
summarily denied this motion.
On June 18, 1991 -- based on the Acting Administrator's motion
-- the Wage Appeals Board remanded this case to the ALJ for
additional proceedings to redetermine the amount of back wage wages
due PRI's employees under the six roofing contracts. PRI filed a
motion with the ALJs' office to reopen the proceeding for the
purpose of admitting "newly discovered" evidence, i.e., the payroll
records of other contractors who performed roofing installation at
the Pueblo Army Depot. PRI stated that these payroll records had
been obtained from the contracting agency pursuant to the Freedom
of Information Act during the pendency of the bankruptcy proceeding
(which would have been after the first ALJ hearing was held). PRI
argued that these 29 pages of payrolls from two contractors tended
to show that "the prevailing practices applicable to [PRI's]
performance on Government contracts included the employment of
laborers on roof repair projects and the payment of wages to them
at the rate of laborers rather than that of roofers."
The Acting Administrator opposed the motion and on April 1,
1992, ALJ Edward J. Burch denied the motion to reopen the hearing
for admitting new evidence on the merits from PRI. ALJ Burch also
ordered counsel for the parties to propose three alternative trial
dates which were acceptable to both counsel. PRI requested
reconsideration of the order denying the motion to reopen the
record and PRI's counsel further stated that he would not select a
trial date and would not appear at a "truncated" hearing if the
motion to reopen was not granted. ALJ Burch denied the motion for
reconsideration of the April 1, 1992 Order and set the matter for
rehearing on July 15, 1992.
Once more, ALJ Lasky presided over the hearing on remand and
counsel for the Acting Administrator made an appearance. However,
PRI, Mr. Huebner and their counsel again failed to appear, as
previously advised. The Acting Administrator moved for default
judgment and on August 4, 1992, ALJ Lasky granted default judgment,
relying on 29 C.F.R. 6.7(b), which provides that where a party
fails to appear at a scheduled hearing and fails to show good cause
for [4]
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[5] doing so, an ALJ is authorized to find facts as alleged
in the complaint and enter a default judgement.
ALJ Lasky further held that PRI's willful failure to comply
with the pretrial order and the order setting the matter for
hearing further warranted the issuance of an adverse decision
against PRI and Huebner as "noncomplying parties" pursuant to 29
C.F.R. 18.6(d)(2). The ALJ also ruled that PRI's failure to appear
at either the 1989 or 1992 hearings constituted abandonment of the
PRI's request for a hearing, pursuant to 29 C.F.R. 18.39(b).
In his default judgment, ALJ Lasky adopted the findings of fact
and conclusions of law proposed in the Acting Administrator's
submission and found that PRI was responsible for $63,754.17 in
back wages under the five Pueblo Army Depot contracts and for an
additional $10,083.58 in back wages under the Holloman Air Force
Base contract -- a total of $73,837.75. This petition for review
followed.
II. DISCUSSION
Petitioner states two bases for this appeal: 1) that the first
ALJ Decision and Order -- finding prevailing and overtime wage
violations and debarment --was based on evidence known or
reasonably knowable by government counsel to be false; and 2) that
the second Decision and Order -- establishing the amount of back
wages due employees -- was an abuse of discretion, given the ALJ's
denial of PRI's motion for a new trial to present new evidence.
These issues are interrelated and the Board addresses them in one
discussion.
As noted in the foregoing procedural history of this matter,
PRI failed to appear at the first ALJ hearing and, in response to
the ALJ's Order to Show Cause why default judgment should not be
entered, posed the purported defense that the ALJ proceeding should
have been stayed pursuant to provisions of the Bankruptcy Code.
This contention, however, was rejected by the bankruptcy court
which held that the Department of Labor's determination of wage
violations and debarment were not stayed.
Petitioner has cited no authority for the proposition that the
first administrative proceeding should have been stayed. On the
other hand, precedent available at the time of the first hearing in
1989 clearly excepted such a proceeding from automatic stay under
the Bankruptcy Code. In re Quinta Contractors, Inc., 34 B.R. 129
(Bk. Ct. M.D. Pa. 1983). See also, Brock v. Rusco Industries,
Inc., 842 F.2d 270 (11th Cir. 1988); EEOC v. Rath Packing Co., 787
F.2d 318 (8th Cir. 1986). PRI therefore had no reasonable basis
for failing to appear at the first hearing. Of course, Huebner --
who did not file for bankruptcy -- had no basis whatsoever for his
failure to appear at the first [5]
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[6] hearing. Given the state of the law in 1989, the Board concludes
that ALJ Lasky did not abuse his discretion in finding that Petitioner
did not show good cause for failing to appear for the first hearing and
present substantive defenses.
The Board agrees with the Acting Administrator that Petitioner
acted at its own peril in failing to appear for the first hearing.
Moreover, the procedural history of this case subsequent to the
December 20, 1991 bankruptcy court decision has been entirely
consistent with the ruling of that court. As noted, the bankruptcy
court specifically foreclosed the possibility of new litigation on
the questions of wage violations and debarment /FN3/. The Board's
Order of Remand specifically directed the ALJ to conduct such
additional proceedings as were consistent with the decision of the
bankruptcy court. Had the ALJ reopened the entire case, that
decision would have been properly subject to reversal by this
Board.
The first ALJ Decision and Order was not clearly erroneous. It
was based on substantial evidence which was the only evidence
before the ALJ. The government's evidence established the area
practice concerning duties of roofers and laborers on building
construction projects at the Pueblo Army Depot and the consequent
misclassification and underpayment of prevailing and overtime
wages. Moreover, there was no manifest injustice demonstrated by
the ALJ's refusal to reconsider his first Decision and Order's
determinations concerning the existence of wage violations and
debarment, given that Petitioner failed to demonstrate good cause
for failing to appear and defend its position.
PRI argues that the Department of Labor intentionally
suppressed relevant evidence -- two other Pueblo Army Depot roofing
contractors' payroll forms --prior to the 1989 hearing and that the
subsequent "discovery" of this evidence is adequate grounds for
granting a new fact-finding hearing on the issues of back wage
liability and debarment. Petitioner contends that its motion for
a new hearing should be granted under either Federal Rule of Civil
Procedure 59 or 60 /FN4/. The Board rejects these contentions for
the following reasons.
Rule 59(a) allows a court to grant a motion for a new trial in
order to open the judgment if one has been entered, take additional
testimony, amend findings of fact and conclusions of law or make
new findings and conclusions, [6]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN3/ Although the bankruptcy court framed this question in terms
of "res judicata" and "collateral estoppel," the Acting
Administrator has correctly stated the controlling principle to be
the related principle of the "law of the case," which precludes
relitigation of the determinations of violations and debarment in
the ALJ's first Decision and Order.
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/FN4/ Under the rules governing Department of Labor ALJ hearings,
the Federal Rules of Civil Procedure are made applicable "in any
situation not provided for or controlled by," the ALJ rules of
practice. 29 C.F.R. 18.1(a). [6]
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[7] and direct the entry of a new judgment." However, under Rule
59(b), such a motion must be served not later than 10 days after
the entry of the judgment. Rule 60(b)(2) allows a court to grant
relief from a judgment, given "newly discovered evidence which by
due diligence could not have discovered in time to move for a new
trial under Rule 59(b)" and also requires that a Rule 60 motion be
made within "a reasonable time, . . . not more than one year after
the judgment, order, or proceeding was entered or taken." In this
case, PRI did not file a Rule 59 motion within 10 days of the
October 27, 1989 Decision and Order; neither did Petitioner file a
Rule 60(b) motion within a reasonable time after entry of the
judgment. PRI's request for a new hearing was not filed with he
ALJ until March 3, 1992, nearly three years after the October 27,
1989 Decision and Order. Moreover, the payroll records which PRI
sought to introduce at the second hearing were obtained in March
and April 1990, almost two years prior to the filing of the new
hearing request. Such a history does not demonstrate "due
diligence."
Due diligence in obtaining new evidence is a further
requirement for granting a new hearing, but the record here merely
demonstrates an additional element of delay on Petitioner's part.
With respect to PRI's contention that the Department of Labor
deliberately suppressed these payrolls, the Board finds this
proposition to be unsupported. The payroll records were clearly in
the possession of the contracting agency, not the Department of
Labor. 29 C.F.R. 5.6(a)(2). As an experienced federal government
construction contractor, PRI was or should have been well aware
that certified payrolls are submitted to contracting agencies, not
the Department of Labor. The fact that the Wage and Hour Division
obtained copies of Petitioner's certified payrolls is of no
consequence; PRI was, after all, the subject of a compliance
investigation. Petitioner's allegations concerning suppression of
evidence is baseless, given the fact that the contracting agency
provided the requested documents after an appropriate request was
made.
Secondly, the Board concludes that the so-called "new evidence"
would not warrant granting a new hearing, even if a request for a
new hearing been filed in a timely manner. Under Rule 60(b), new
evidence "must be of such a material and controlling nature as will
probably change the outcome." 7 Moore's Federal Practice,
60.23[4] at 60-201-202 (2d ed. 1982), citing Baruch v. Beech
Aircraft Corp., 172 F. 2d 445 (10th Cir. 1949); cert. denied, 338
U.S. 900 (1949). PRI's "new evidence" is not material to the issue
of prevailing practice on the facts of this case and therefore it
could not be controlling. The Board --having examined the proposed
new evidence (as attached to the Petition for Review) -- concludes
that it would not change the outcome of the original proceeding.
PRI's new "evidence" demonstrates only that two contractors
employed both roofers and laborers under their respective
contracts. The payrolls do nothing to explain the duties performed
by the two classifications. If the bare [7]
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[8] payrolls were supplemented with explanation of duties performed --
favorable to Petitioner's contention -- such evidence would still not be
controlling on the facts of this dispute. The record establishes that
the wage determinations applicable to the Pueblo Army Depot contracts
had been issued pursuant to the Department of Labor's findings that
payment of union wages prevailed on building construction in the
applicable locality. Accordingly, under long- established precedent,
the classification practices followed by contractors signatory to the
underlying union collective bargaining agreements must also be followed
in order to give substantive meaning to the Secretary's determination of
union wage prevailing area practice. Fry Brothers Corporation, WAB Case
No. 76-06 (June 14, 1977). Moreover, Petitioner would not have been
permitted to present evidence challenging the correctness of the
applicable wage determinations after the award of contracts or the start
of contract performance. Dairy Development, Ltd., WAB Case No. 88-35
(Aug. 24, 1990).
Petitioner's history of delay and obstruction for the last
eight years of these administrative proceedings is deplorable. The
final ploy of seeking to introduce "new evidence" in yet another
hearing -- after intentionally failing to appear at two previous
hearings without good cause -- is another delaying tactic which ALJ
Lasky properly rejected and the Board refuses to countenance.
For the foregoing reasons, the Petition for Review is denied.
ALJ Lasky's first Decision and Order is affirmed to the extent of
his findings concerning the existence of prevailing and overtime
wage violations and PRI's and Huebner's liability for debarment.
The second ALJ Decision and Order is affirmed in its entirety.
BY ORDER OF THE BOARD:
Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
Gerald F. Krizan, Esq.
Executive Secretary [8]
