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DANIELSEN v. BURNSIDE-OTT AVIATION TRAINING CTR.

August 27, 1990

LLOYD T. DANIELSEN, et al., Plaintiffs,
v.
BURNSIDE-OTT AVIATION TRAINING CENTER, INC., et al., Defendants


Stanley Sporkin, United States District Judge.


The opinion of the court was delivered by: SPORKIN

STANLEY SPORKIN, UNITED STATES DISTRICT JUDGE

 This litigation arises out of alleged violations of the McNamara-O'Hara Service Contract Act, as amended, 41 U.S.C. § 351 et seq., by several defense contractors during the performance of five United States Department of Navy ("Navy") service contracts. Plaintiffs Lloyd T. Danielsen, David W. King, and Jack Wagstaff *fn1" contend that defendants Burnside-Ott Aviation Training Center Inc.; UNC Support Services; UNC, Inc.; DynCorp; BOC of Miami, Inc. ("BOC of Miami"); William V. Ott; Robert C. Ott; Donald Burnside; *fn2" and Marjorie Burnside engaged in a scheme to defraud employees of the minimum wages and fringe benefits to which they were entitled in violation of the civil provisions of the Racketeer Influenced and Corrupt Organizations Act of 1970 ("RICO"), 18 U.S.C. § 1961 et seq. Currently pending before the Court are defendants' motion to dismiss.

 I. Background

 Plaintiffs allege that they and other employees were underpaid for work performed on five Navy service contracts. Three of the contracts were for aircraft maintenance services on the Navy's TH-57 helicopter training squadrons based in Florida. The remaining two maintenance service contracts at issue were for the Navy's T-2 and T-34/44 aircraft training squadrons based throughout the southern United States. The seeds of the present dispute were sown in November, 1985 when plaintiffs David King and Lloyd Danielsen filed a complaint with the regional office of the United States Department of Labor's Wage and Hour Division ("Wage and Hour Division") concerning the performance of the Navy's three contracts for maintenance of its TH-57 helicopter aircraft.

 Prior to 1981, the Navy performed its own maintenance services for its TH-57 helicopter aircraft and its T-2 and T-34/44 fixed wing aircraft. Complaint para. 21. On September 28, 1981, the Navy contracted out the maintenance services for its TH-57 helicopters to BOC of Miami *fn3" for a three year period. BOC of Miami continued to perform this contract, the first of three TH-57 contracts at issue, under option until December 1, 1984 (Contract No. N00612-81-C-8007, "B-O Contract #1"). Id. PP 6, 28. From December 1, 1984, until December 1, 1985, the TH-57 contract was performed by the Dynalectron Corporation, now known as DynCorp (Contract No. N00612-84-C-8002, "DynCorp Contract #1"). Id. PP 9, 61. On December 1, 1985, BOC of Miami was awarded the third TH-57 maintenance contract (Contract No. 68520-86-D-0101, "B-O Contract #2") through the competitive bidding process. Id. PP 6, 92. On October 31, 1986, BOC of Miami assigned B-O Contract #2 to UNC-Burnside-Ott, which has continued to hold this contract though the present time.

 The remaining two contracts at issue, for the maintenance of the Navy's T-2 and T-34/44 fixed wing aircraft, were awarded to Dynalectron, now known as DynCorp. The T-2 maintenance service contract was awarded to DynCorp on February 4, 1985 (Contract No. N68520-85-D-9053, "DynCorp Contract #2"). Id. PP 9, 68. The T-34/44 maintenance service contract was awarded to DynCorp on September 22, 1985 (Contract No. N68520-85-D-0033, DynCorp Contract #3). Id. PP 9, 112.

 Because all five contracts are for the provision of services to the federal government, they are governed by the Service Contract Act ("the SCA" or "the Act"). Under the Act, Congress has delegated broad authority to the Department of Labor ("DOL") to determine the wages to be paid and fringe benefits to be furnished to all employees under government service contracts. DOL exercises this authority through the issuance of wage determinations and other wage-related decisions and has comprehensive powers to enforce those determinations. Under DOL regulations, when the performance of a contract requires the employment of a class of service employee not listed on the wage determination, the contractor must classify such employee "so as to provide a reasonable relationship (i.e. appropriate level of skill comparison) between such unlisted classifications and the classifications listed in the wage determination." 29 C.F.R. § 4.6(B)(2)(i). Such a "conformance action" is subject to the approval of the Administrator of the Wage and Hour Division.

 A. The TH-57 Contracts

 As a result of plaintiffs' complaint concerning the TH-57 contracts, *fn4" DOL investigated the payment practices of the contractors on the TH-57 contract. Complaint para. 124. In December 1986, shortly after UNC-Burnside-Ott was assigned B-O Contract #2, the Administrator of the Wage and Hour Division concluded that the SCA had been violated. Id. P 144. In particular, the Administrator concluded that workers classified as "technicians" should be reclassified as "aircraft workers" and paid the correspondingly higher wage. Id.; see also Affidavit of William W. Gross, Acting Assistant Administrator, Office of Program Operations for the Wage and Hour Division ("Gross Aff.") at para. 9, attached as Exhibit B, to Memorandum in Support of DynCorp's Motion to Dismiss or for Summary Judgment ("Dyn. Mem.").

 The Navy requested review and reconsideration of the Administrator's determination on the grounds that the lower paid technician classification rather than the aircraft worker classification was the primary classification required on the contract. Gross Aff. para. 10. The Administrator rejected the Navy's position on December 4, 1987, and reaffirmed the earlier decision that the workers should be classified as aircraft workers. Id.

 Subsequently, UNC-Burnside-Ott appealed the Administrator's decision to the Deputy Secretary of Labor ("Deputy Secretary") pursuant to 29 C.F.R. § 8.7(b). Gross Aff. para. 13. Plaintiffs King and Danielsen participated as interested parties, pursuant to DOL regulations, by submitting exhibits and statements in support of the Administrator's determination. Id.; see also 29 C.F.R. § 8.11. In January 1989, the Deputy Secretary affirmed the Administrator's decision and directed that back wages should be paid from December 1, 1985, the effective date of B-O Contract #2. *fn5" Complaint paras. 157-158. The Deputy Secretary's decision applied only to B-O Contract #2, not the earlier TH-57 contracts. The respective liability of BOC Miami and DynCorp for violations of the SCA under B-O Contract #1 and DynCorp Contract #1 is still pending before DOL. Id. PP 159-160.

 B. The T-2 and T-34/44 Service Contracts

 Once again, as with the TH-57 contracts, the primary dispute was the contractor's proposed use of workers classified as "technicians" to perform aircraft maintenance. While the Administrator accepted the classifications proposed by DynCorp, she also increased most of the proposed wage rates for the classifications and directed DynCorp to apply these conformed wage rates ...


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