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Leer Electric, Inc. v. Commonwealth

December 23, 2008


The opinion of the court was delivered by: A. Richard Caputo United States District Judge



Now before the Court are Defendants' "Motion to Stay Pending Leer Electric, Inc.'s Administrative Hearing" (Doc. 11) and Plaintiffs' "Cross Motion to Stay Administrative Action" (Doc. 19). For the reasons detailed below, the Court will deny both motions.

The Court has jurisdiction in this matter pursuant to 28 U.S.C. §§ 1331 and 1367.


Plaintiff Leer Electric ("Leer") is a contractor who does millions of dollars of work relating to public work projects. (Compl., Doc. 1 ¶¶ 11, 13.) This work on public projects requires Leer to comply with Pennsylvania's Prevailing Wage Act (the "Act") which requires that workers on public projects be paid the prevailing minimum wage as determined by the Secretary of Labor and Industry. Pa. Stat. Ann., tit 43 §§ 165-2(6), 165-4, 165-5. Approximately three years ago, the Pennsylvania Department of Labor and Industry ("DLI") began auditing Leer. (Compl. ¶ 18.) On June 15, 2005, the DLI issued an Order to Show Cause ("OSC") against Leer, commencing an administrative agency action to have Leer "debarred" from future public works contracts due to alleged intentional violations of the Prevailing Wage Act. (Id. ¶ 24.) The DLI alleges that Leer underpaid its electrician employees by misrepresenting the type of work performed by these employees as general labor rather than electrical work. (Id. ¶¶ 28-30.) In 2007, Leer consulted with representatives at the DLI in effort to resolve the claims in the OSC, but in July of 2008, the DLI served Leer with a second OSC renewing the earlier allegations. (Id. ¶¶ 35, 37.)

On September 26, 2008, Leer filed a complaint alleging that the DLI has persisted in its efforts to debar Leer from future public works projects "for no other reason than [Leer's] employees have chosen to exercise their Section 7 rights under the National Labor Relations Act. . . to remain non-union." (Id. ¶ 41.) According to Leer, decision makers within the DLI are former union business agents and representatives who were previously unsuccessful in their attempts to unionize Leer's employees. (Id. 42.) Leer alleges that these former union officials are now unlawfully using the authority of the DLI to carry out their plan to put Leer out of business for its decision to remain union-free. (Id. ¶ 43.) Stating that a debarment from public works contracts would destroy its business and require the company to lay off over one hundred (100) employees, Leer brings ten (10) counts against the DLI, including a count seeking a permanent injunction of the state proceedings, three counts brought pursuant to 42 U.S.C. § 1983 alleging violations of Leer's due process and equal protection rights, three counts alleging violations of Leer's due process and equal protection rights as guaranteed by the Pennsylvania Constitution, and counts for interference with business practices, civil conspiracy, and respondeat superior liability. (Id.¶¶ 49-128.)

On October 20, 2008, the Defendants filed a motion to dismiss the Plaintiffs' complaint pursuant to Federal Rules of Civil Procedure 12(b)(1) & (6). (Doc. 7.) Shortly thereafter, on November 4, 2008, the Defendants filed a motion to stay the current proceeding pending Leer Electric's state administrative hearing. (Doc. 11.) A corresponding brief in support was filed on November 18, 2008. (Doc. 14.) On November 19, 2008, the Plaintiffs filed their brief in opposition to Defendants' motion to dismiss, (Doc. 13), and on December 8, 2008, the Plaintiffs filed a cross motion to stay the state administrative action pending the outcome of the federal court litigation, (Doc. 19), with a corresponding brief in support filed on December 9, 2008, (Doc. 21). The two motions to stay (Docs. 11, 19) have been adequately briefed and are currently ripe for disposition.


I. Defendants' Motion to Stay Federal Proceedings Pending State Administrative Outcome

The Defendants offer three arguments in support of their motion to stay the current proceeding pending the resolution of the state administrative proceedings underlying this case. First, Defendants argue that the Eleventh Amendment to the United States Constitution prevents this Court from exercising jurisdiction over the Commonwealth of Pennsylvania and its agencies, including the Department of Labor and Industry. Second, Defendants argue that the doctrine established by the Supreme Court in Younger v. Harris, 401 U.S. 37 (1971), requires this Court to abstain from adjudicating Plaintiffs' claims. Finally, the Defendants argue that the claims in Plaintiffs' complaint are not currently ripe and that this Court should require Plaintiffs to exhaust administrative remedies before seeking relief in this Court.

A. Eleventh Amendment

The Eleventh Amendment to the United States Constitutions provides: The Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against on the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.

U.S. CONST. amend. XI. The United States Supreme Court has consistently held that this amendment bars suit against a state and its associated agencies by that state's own citizens. Edelman v. Jordan, 415 U.S. 651 (1974); Missouri v. Fiske, 290 U.S. 18 (1923); Hans v. Louisiana, 134 U.S. 1 (1890). The Supreme Court has especially extended Eleventh Amendment sovereign immunity to cases where plaintiffs seek monetary damages against a state or a state officer. See Ford Motor Co. v. Department of the Treasury, 323 U.S. 459, 464 (1945) ("when the action is in essence one for the recovery of money from the state, the state is the real, substantial party in interest and is entitled to invoke its sovereign immunity from suit even though individual officials are nominal defendants"). However, in Ex parte Young, the Supreme Court held that "a suit against individuals for the purpose of preventing them as officers of a State from enforcing an unconstitutional enactment to the injury of the rights of the plaintiff, is not a suit against the State within the meaning of [the Eleventh] Amendment." 209 U.S. 123, 154 (1908) (quoting Smyth v. Ames, 169 U.S. 466 (1898)). In short, the Young court's holding established that the Eleventh Amendment does not bar suits against state officers to prevent violations against the laws or Constitution of the United States. Young, 209 U.S. at 159-160. The Supreme Court has subsequently applied this principle in several cases allowing federal courts to give injunctive or "prospective" relief against state officers, even in instances when compliance with the injunction would require expenditure from a state treasury. See Edelman v. Jordan, 415 U.S. 651 (1974) (articulating a prospective-retroactive relief distinction and allowing federal courts to order future compliance by state officials while forbidding those courts from ordering payment of compensatory damages for past harms); see also Quern v. Jordan, 440 U.S. 332 (1979); Milliken v. Bradley, 433 U.S. 267 (1977). In Pennhurst State Sch. and Hosp. v. Halderman, a well-known decision from the Younger case progeny, the Supreme Court summarizes, saying that when a plaintiff sues a state official alleging a violation of federal law, the federal court may award an injunction that governs the official's future conduct, but not one that awards retroactive monetary relief. Under the theory of Young, such a suit would not be one against the State since the federal-law allegation would strip the state officer of his official authority. 465 U.S. 89, 102-103 (1984).

In support of their motion currently before the Court, the Defendants rely on the Pennhurst court's further finding that "Young and Edelman are inapplicable in a suit against state officials on the basis of state law." Pennhurst, 465 U.S. at 106.*fn1 In response, the Plaintiffs acknowledge that the Eleventh Amendment does bar claims for monetary relief from individual Defendants in their official capacities and state that "Plaintiffs primarily seek injunctive relief, not monetary relief. . .." (Pls.' Br. in Opp., Doc. 20, at 11.) The Plaintiff's further respond to the Defendants' argument by pointing out that "[i]t has been widely recognized. . . that the 'jurisdictional limitation recognized in Pennhurst does not apply to an individual capacity claim seeking damages against a state official, even if the claim is based on state law.'" Bangura v. City of Philadelphia, No. 07-127, 2007 WL 3376676 at *4 (E.D. Penn 2007) (quoting Bad Frog Brewery, Inc. v. New York State Liquor Auth., 134 F.3d 87, 102 (2d Cir. 1998); citing Cholla Ready Mix, Inc. v. Civish, 382 F.3d 969, 974 n. 4 (9th Cir. 2004); Williams v. Kentucky, 24 F.3d 1526, 1543 (6th Cir.1994)).

In the current case, Leer brings claims under the due process and equal protection guarantees of both the United States and Pennsylvania Constitutions and seeks relief in the form of an injunction preventing Leer's disbarrment along with the costs and fees of this litigation and any other relief that this Court finds appropriate. Accordingly, Plaintiffs' complaint invokes this Court's federal question and pendant jurisdiction. "[N]either pendent jurisdiction nor any other basis fo jurisdiction may override the Eleventh Amendment. A federal court must examine each claim in a case to see if the court's jurisdiction over that claim is barred by the Eleventh Amendment." Pennhurst, 465 U.S. at 121.

Reviewing the complaint in the current case, the Court finds that the Eleventh Amendment denies the Court jurisdiction over the plaintiff's claims brought under Pennsylvania law. As stated by the Supreme Court, "[a] federal court's grant of relief against state officials on the basis of state law, whether prospective or retroactive, does not vindicate the supreme authority of federal law." Pennhurst, 465 U.S. at 106. As such, if the Court were to instruct the Pennsylvania officials on how to conform their conduct to Pennsylvania law, it would engage in a practice that "conflicts directly with the principles of federalism that underlie the Eleventh Amendment." Pennhurst, 465 U.S. at 106.

In contrast, however, the Court finds that the Eleventh Amendment does not bar jurisdiction over the claims that Plaintiffs bring pursuant to the United States Constitution. In Counts I, II, III, IX and X, Leer ask this Court to provide relief from the Defendants' alleged ongoing or imminent violations of the rights guaranteed to Leer by the Fourteenth Amendment to the United States Constitution. The Plaintiffs pray for relief in the form of an injunction preventing what they allege to be a violation by state officials of the Plaintiffs' federal due process and equal protection rights. This is the type of prospective relief that the Edelman and other ...

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