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DOW v. HC2, Inc.

United States District Court, District of Columbia

November 13, 2019

ROSEMARIE DOW, et al. Plaintiffs,
HC2, INC., et al., Defendants.


          Amit P. Mehta United States District Court Judge



         Plaintiffs Rosemarie Dow, Sherry Beshay, Kamaldeep Kohli, Kathy Ludunge, and Evan Stephens bring this action to recover unpaid wages from Defendants HC2, Inc., doing business as Hire Counsel, and PAE Government Services, Inc. (“PAE”). According to the Complaint, each Plaintiff was hired by Defendants to perform work on a long-term document review project for the United States Department of Justice (“DOJ”). Complaint, ECF No. 1 [hereinafter Compl.], ¶ 19. Plaintiffs worked for Defendants pursuant to a subcontract between Hire Counsel and PAE. Id. ¶ 20. The prime contract was between PAE and the DOJ. Id. The prime contract identified various “Labor Categories, ” which corresponded to certain “Occupation Codes.” Id. ¶ 21. The Occupation Codes are set forth in the Register of Wage Determinations Under the Service Contract Act, published by the Department of Labor's Division of Wage Determinations. Id. The Register establishes different wage requirements for each Occupation Code. Those requirements were incorporated by reference into the prime contract with the DOJ, the subcontract between Hire Counsel and PAE, and each individual Plaintiff's employment and compensation agreement. Id. ¶ 23. Pursuant to the contracts, Defendants agreed to pay Plaintiffs in accordance with the wage requirements of the Register and to pay the wages that corresponded to each Plaintiff's Occupation Code. Id. ¶¶ 24, 27.

         Plaintiffs allege, however, that “[d]uring the relevant period, Defendants intentionally misclassified Plaintiffs as performing job duties of a lesser skill and classification than Plaintiffs actually performed.” Id. ¶ 28. The Complaint identifies in detail the work performed by Plaintiffs, the classifications Plaintiffs believe they were entitled to, and the amount of backpay and overtime wages they claim is due to them. Id. ¶¶ 34-58. “By misclassifying [them], ” Plaintiffs contend, “Defendants wrongly and intentionally paid Plaintiffs lower hourly rates corresponding with the false and less sophisticated Occupational Code classifications.” Id. ¶ 29. Accordingly, “Defendants now owe Plaintiffs unpaid wages for all hours worked equal to the difference between the lower hourly rate Defendants paid Plaintiffs and the hourly rate Defendants were contractually obligated to pay Plaintiffs for the proper Occupational Code and classification for the actual work each Plaintiff performed.” Id. ¶ 30.


         On March 25, 2019, Plaintiffs filed suit in this court, seeking damages for violations of the District of Columbia Wage Payment and Wage Collection Act (“DCWPA”) and the Federal Fair Labor Standards Act (“FLSA”). Compl. ¶¶ 59-76. Defendants move to dismiss the Complaint under Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim, arguing that administrative relief through the Department of Labor is Plaintiffs' exclusive remedy. More specifically, Defendants assert that the court “cannot grant the[] requested relief without deciding whether [Plaintiffs] were classified in the correct labor categories under the [Service Contract Act], and Congress has vested the Secretary of Labor with exclusive authority to make those determinations.” Defs.' Mem. in Supp. of Defs' Mot. to Dismiss, ECF No. 5-1 [hereinafter Defs.' Mot.], at 6.

         For the reasons that follow, the court agrees with Defendants and grants their Motion to Dismiss.


         “To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.'” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is plausible on its face when “the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556). At the motion to dismiss stage, the court must accept as true a plaintiff's well-pleaded factual contentions and draw all reasonable inferences, but it need not accept thread-bare recitals of the elements of standing or legal conclusions disguised as factual allegations. See Arpaio v. Obama, 797 F.3d 11, 19 (D.C. Cir. 2015). Factual allegations are not required to be “detailed, ” but they must be more than “an unadorned, the defendant-unlawfully-harmed-me accusation.” Iqbal, 556 U.S. at 678 (citing Twombly, 550 U.S. at 557).


         The sole issue before the court is whether Plaintiffs' claims are properly raised here, or whether instead they should be submitted for administrative review before the Department of Labor. The McNamara-O'Hara Service Contract Act (“SCA”) sets forth labor standards applicable to service contracts with the federal government. See 41 U.S.C. §§ 6701-6707. The SCA requires such contracts “to contain minimum wage provisions for each class of service employees in the performance of the contract.” Danielsen v. Burnside-Ott Aviation Training Center, Inc., 941 F.2d 1220, 1223 (D.C. Cir. 1991). “[T]he statute requires the Secretary of Labor to make a determination of the applicable minimum wages and fringe benefits based on prevailing rates in the locality of the performance of the contract.” Id. The regulations adopted pursuant to the SCA contain an exhaustive scheme for “interested parties” to seek administrative reconsideration of wage determinations. See id.[1]

         Defendants argue that the D.C. Circuit's decision in Danielsen controls the outcome of this case. Defs.' Mot. at 2, 6-8. In Danielsen, the D.C. Circuit addressed whether violations of the SCA could “give rise to a private civil action under [the Racketeer Influenced and Corrupt Organizations Act (“RICO”)] in addition to the remedies provided under the SCA, ” and held that they could not. 941 F.2d at 1227. There, employees of service corporations contracting with the United States brought claims under RICO, challenging their classifications as “technicians” in several contracts and arguing that they were due backpay for any misclassifications. Id. at 1224- 26. The circuit court held that “the implication of a private right under the SCA would undercut the specific remedy prescribed by Congress.” Id. at 1228 (citing Miscellaneous Service Workers, Local 427 v. Philco-Ford Corp., 661 F.2d 776, 781 (9th Cir. 1981)). The Department of Labor alone could decide, in the first instance, whether the classifications were proper. See id.

         Just over a decade after deciding Danielsen, the D.C. Circuit reaffirmed its holding, albeit in a different context, in C&E Services, Inc. of Washington v. District of Columbia Water and Sewer Authority. In C&E Services, the plaintiff, a losing bidder for a District of Columbia government contract, challenged the city's refusal to award it the contract under the Due Process Clause and the SCA.[2]310 F.3d 197, 198 (D.C. Cir. 2002). The plaintiff sought a declaratory judgment that the defendant had violated the SCA by requiring bidders to offer wages under a different federal statue, the Davis-Bacon Act (“DBA”), instead of the SCA. See Id. at 201. The court reaffirmed that “the SCA creates no private remedy” in the federal courts. Id. (internal quotation marks omitted). “Instead, disputes arising under the SCA must be resolved, in the first instance, ” the court held, “by ‘the statutory scheme for administrative relief set forth by Congress in the SCA' and administered by the Department of Labor.” Id. (quoting Danielsen, 941 F.2d at 1226). The court ...

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