Ramos v. SimplexGrinnell LP

A group of workers who installed, maintained, repaired, tested, and inspected fire alarm and suppression systems in New York for SimplexGrinnell LP (“Simplex”) brought suit against their employer. Plaintiffs claimed that Simplex had not paid them “prevailing wages” for their labor on “public works” since at least February 2011, in violation of New York Labor Law (“NYLL”) section 220. N.Y. LAB. LAW § 220 (McKinney 2011). Two questions were at issue: (1) whether this type of work was covered by the statute, which would require prevailing wages to be paid, and (2) whether the parties expressly contracted to have prevailing wages paid for this type of work.

Simplex argued that testing and inspection work was not covered by the statute, and therefore not entitled to the payment of prevailing wages. Subsequently, the then-Commissioner of the Department of Labor (“DOL”), Patricia Smith, issued an opinion letter on December 31, 2009, stating that testing and inspection work was covered under section 220 of the NYLL, based on the conclusion that such work was a form of “maintenance work,” a category covered under the statute. However, the DOL further stated that this decision was to be enforced “prospectively only,” in light of the past uncertainty as to whether this type of work was in fact covered by the statute.

This case was moved to the United States District Court for the Eastern District of New York after initially bring brought in New York state court in 2007. After the DOL issued its letter, the parties completed discovery in the Eastern District and filed cross-motions for summary judgment.

The district court granted Simplex’s motion to dismiss Plaintiffs’ claims relating to testing and inspection work. The court held that Plaintiffs’ testing and inspection claims for the period of the litigation could not proceed since the DOL, in its own enforcement, required that prevailing wages only be paid prospectively, and that there was nothing irrational or unreasonable about this interpretation.

In addition, the district court held that Plaintiffs’ third-party breach of contract claim could not be brought for the testing and inspection work. The district court reasoned that while Simplex generally agreed to pay prevailing wages in its contracts, in light of the uncertainty as to whether testing and inspection work was covered, Simplex could not have had reason to believe it would be required to pay wages for that type of work. The general agreement to pay wages required by the statute applied only to work that was clearly understood by the parties to be covered at the time the contract was made, and not to work subsequently held to be covered, unless such work was already explicitly required by the contract.

Though the district court held that the DOL was entitled to some deference, what remained disputed was whether such deference was due here (or even appropriate) not only to the DOL’s construction of the statute, but also to its administrative decision to apply that construction in its own enforcement prospectively only. The overall scope of deference to be granted to the DOL remained unclear, primarily because judicial review of such an agency construction is limited to whether that determination was arbitrary, capricious, or an abuse of discretion. Whether testing and inspection work was covered by the statute and whether this level of deference should be given to any agency were unsettled matters in New York courts. Because New York courts have not clarified whether the work in question is covered under the NYLL, or whether such agency deference should have been granted, the circuit court decided that the issue was appropriate for certification.

The circuit court also felt the need to certify the issue pertaining to whether Simplex had in fact contracted to pay prevailing wages for the relevant work. Simplex expressly agreed to be bound to pay prevailing wages for every kind of work covered by NYLL section 220, so it could easily be reasoned that it contracted to be bound by what the statute ultimately required, even if such requirements were unclear at the time the parties signed. However, under current New York law, it is uncertain if such a reading would prevail over the district court’s determination.

As a result, the circuit court certified the following questions to the New York Court of Appeals:

1) What deference, if any, should a court pay to an agency’s decision, made for its own enforcement purposes, to construe section 220 of the NYLL prospectively only, when the court is deciding the meaning of that section for a period of time arising before the agency’s decision?

2) Does a party’s commitment to pay prevailing wages pursuant to NYLL section 220 bind it to pay those wages only for work activities that were clearly understood by the parties to be covered by section 220, or does it require the party to pay prevailing wages for all the work activities that are ultimately deemed by a court or agency to be “covered” by that portion of the statute?

The United States Court of Appeals for the Second Circuit retained jurisdiction to decide the case once it has had the benefit of the view of the New York Court of Appeals, or once that court declines certification.

View Full Decision on Westlaw

2014 WL 243404 (2d Cir. 2014)

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