Opinion
C.A. No. 09C-11-063 JAP.
Submitted: March 1, 2010.
Decided: March 3, 2010.
On Defendant's Motion to Dismiss DENIED.
G. Kevin Fasic, Esquire, Cooch and Taylor, P.A., Wilmington, DE.
Linda M. Carmichael, Esquire, Department of Justice, Wilmington, Delaware.
Dear Counsel:
This case arises from a dispute over the proper classifications of certain workers on public works construction projects under the Prevailing Wage Law ("PWL"). Defendant the Delaware Department of Labor ("DDOL") has moved to dismiss Plaintiff's complaint on the basis that Plaintiff did follow the proper appeal procedure as provided in the Prevailing Wage Regulations and therefore did not exhaust its administrative remedies. For the reasons stated below, Defendant's motion is DENIED.
Facts
Defendant the Delaware Department of Labor ("DDOL") is charged with enforcing the PWL, which governs wage rates to be paid to various classifications of workers on public works construction projects. Pursuant to this responsibility, the DDOL opened an investigation concerning the installation a metal roof, including the installation of insulation and metal wall panels, on the Smyrna High School Central Plant done by Plaintiff Tri-State The Roofers ("Tri-State"). The underlying dispute concerns the proper wage rates paid to these workers. Tri-State paid the workers installing the insulation the rate established for "Roofer-Composition," as defined by the PWL, and paid the workers installing the wall panels the rate established for "Carpenters." The DDOL contends that all of those workers should have been paid the rate established for "Sheet Metal Workers."
On June 1, 2009, the DDOL sent Tri-State a letter alleging that it was in violation of the PWL. The letter did not specify the basis for the violation, but demanded that Tri-State pay $9,005.46 within fifteen days in order to remedy the prevailing wage deficiency. The letter further stated that if Tri-State disputed the violation, the case could be forwarded to the Attorney General's Office and Tri-State could be liable for treble damages, interest, court costs, attorney fees and fines. Counsel for Tri-State promptly responded to the DDOL by letter requesting the basis for the DDOL's claim. The DDOL wrote to Tri-State's counsel on June 19, 2009 stating the Tri-State was not paying the prevailing wage in accordance with the PWL for "Sheet Metal Workers," "Laborers" and "Power Equipment Operators." The DDOL again wrote to Tri-State's counsel on June 23, 2009 requesting records and documents to assist with the investigation. None of the DDOL's three letters mentioned how to appeal or challenge the alleged violation.
In late July, the DDOL sent a notice of determination of a prevailing wage violation to Tri-State's counsel, seeking $13,488.61 within 15 days. The letter stated that the DDOL could forward the matter to the Attorney General's Office for prosecution and listed Tri-State's potential liabilities associated with that action. Again, the letter did not mention any right to an appeal. In response, counsel for Tri-State wrote to the DDOL disputing the violation and requesting that the dispute be heard by the Prevailing Wage Advisory Council ("Council"). The PWL provides for the establishment of the Council to advise the DDOL on classification issues and otherwise assist the DDOL in carrying out its duties under the PWL.
Before receiving the DDOL's July letter, Tri-State made arrangements to meet with the Secretary of Labor ("Secretary") on August 11 to discuss the on-going classification dispute. According to Tri-State's complaint, Tri-State considered this meeting to be an appeal of the DDOL's classification position. At the meeting, Tri-State along with its counsel discussed the classification dispute with the Secretary. The Secretary allegedly agreed to looked into the issue and speak with his investigators; however, Tri-State never received a written response as to the outcome of the meeting. Instead, two weeks after the meeting, the DDOL sent a letter to the prime contractor, directing it to withhold funds from Tri-State on the Smyrna High School project due to the on-going investigation. Counsel for Tri-State responded to the contractor and the DDOL by offering to meet to resolve the matter.
On September 21, 2009, the DDOL requested more materials as part of its investigation and Tri-State complied with that request. Thereafter, on October 7, 2009, a deputy attorney general sent a letter stating that because the classification issue was never properly appealed to the Secretary the matter was resolved and that the prime contractor should turn over the withheld funds to the DDOL.
The claims
Tri-State filed an action in the Court of Chancery seeking a temporary restraining order to prevent the release of funds by the prime contractor. That suit was resolved by agreement that the prime contractor would continue to hold the funds pending the resolution of the classification issue.After again attempting to resolve the matter, Tri-State filed a complaint in this Court. Count I seeks a writ of mandamus directing the DDOL to:
(a) Establish a credible, objective system for the proper classification of workers under the Prevailing Wage Law, that conforms with the requirements of the Administrative Procedures Act;
(b) Establish a mechanism for the appeal of classification determination that conforms with the requirements of the Administrative Procedures Act;
(c) Establish a mechanism for the appeal of decisions to withhold funds that conforms with the requirements of the Administrative Procedures Act;
(d) Award Tri-State's costs and expenses of this suit, and the prior litigation related to this action, including an award of its reasonable attorney's fees and costs of suit;
(e) and for such further relief as the Court determine[s] to be just and equitable.
Compl. at 15.
Count II seeks a declaratory judgment that:
(a) The DDOL's position on the classification of the workers in question is invalid and may not be enforced;
(b) That Tri-State should have returned to it the funds currently being withheld by Whiting Turner (at the DDOL's direction);
(c) That the DDOL's system for appealing classifications is invalid and may not be enforced;
(d) That the DDOL has no system for the appeal of the withholding of funds and that such system is invalid and may no longer be enforced or applied;
(e) That Tri-State be awarded its costs and expenses of this suit, including but not limited to its reasonable attorney's fees and cost; and
(f) For such further relief as the Court determines to be equitable and just.
Id. at 18-19.
Why the motion to dismiss is denied
The DDOL has moved to dismiss Tri-State's complaint pursuant to Superior Court Rule 12(b)(6), claiming that Tri-State failed to exhaust its administrative remedies because it did not file a written notice of appeal with the Secretary. The Prevailing Wage Regulations, established by the DDOL pursuant to the PWL, provide that "appeals from the Office of Labor Law Enforcement's decision must be made in writing and must be received by the Secretary within fifteen (15) days from receipt of the Department's certified letter." The DDOL contends that Tri-State never appealed to the Secretary in writing and therefore, the Court must dismiss the complaint for failure to exhaust administrative remedies.A motion to dismiss under Rule 12(b)(6) requires the Court to determine whether a claimant may recover "under any reasonably conceivable set of circumstances susceptible of proof." When deciding a motion to dismiss, the Court accepts as true all well-pleaded allegations, and draws all reasonable inferences in favor of the claimant. Therefore, dismissal will only be warranted where the Court finds that under no reasonable interpretation of the facts alleged could the claim entitle the claimant to relief.
Spence v. Funk, 396 A.2d 967, 968 (Del. 1978).
Ramunno v. Crawley, 705 A.2d 1029 (Del. 1998).
Luscavage v. Dominion Dental USA, Inc., 2007 WL 901641, at *2 (Del. Super.).
The DDOL's motion to dismiss fails for two reasons. First, the complaint raises several matters distinct from the DDOL's determination that Tri-State violated the PWL. The greater portion of the complaint focuses on the adequacy of the process by which violations are determined and contested under state law. Second, although Tri-State may not have sent a formal written notice of appeal to the Secretary, the complaint alleges, and this Court must accept as true at this point, that Tri-State in fact had a meeting with the Secretary to contest the alleged violation. Given that Tri-State aired its grievances to the Secretary, the technical failure to send a written notice of appeal before doing so does not amount to a material departure from the DDOL regulations.
Moreover, the Court notes that the purpose of the exhaustion doctrine "is to prevent judicial interference in the administrative process and to allow the administrative agency to apply its expertise and discretion, and possibly resolve the conflict without judicial intervention." That purpose would not be served here where the Secretary had an opportunity to resolve the conflict after meeting with Tri-State to discuss the classification issue and failed to do so. After Tri-State's attempts to resolve the issue below, it was left with little choice but to resort to judicial intervention and file its complaint with this Court.
Christiana Town Center, LLC v. New Castle Center, 2003 WL 21314499, at *4 (Del. Ch.) (citing Levinson v. Delaware Compensation Rating Bureau, 616 A.2d 1182, 1186 (Del. 1992)).
Accordingly, the DDOL's motion to dismiss is DENIED.