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Leer Electric, Inc. v. Commonwealth

January 30, 2009

LEER ELECTRIC, INC. AND STEPHEN C. LEER, PLAINTIFFS,
v.
COMMONWEALTH OF PENNSYLVANIA, DEPARTMENT OF LABOR AND INDUSTRY, ET AL., DEFENDANTS.



The opinion of the court was delivered by: Judge Caputo

MEMORANDUM

Now before the Court is Defendants' Motion to Dismiss Plaintiff's Complaint (Doc. 7). For the reasons detailed below, the motion will be granted in part and denied in part. The Court has jurisdiction in this matter pursuant to 28 U.S.C. § 1331.

BACKGROUND

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 "disbarred" 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 (Count I), three counts brought pursuant to 42 U.S.C. § 1983 alleging violations of Leer's due process and equal protection rights (Counts II, III & IV), three counts alleging violations of Leer's due process and equal protection rights as guaranteed by the Pennsylvania Constitution (Counts V, VI & VII), and counts for interference with business practices (Count VIII), civil conspiracy (Count IX), and respondeat superior liability (Count X). (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.) Defendants also filed a supporting brief along with the motion to dismiss. 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). Plaintiffs filed a brief in opposition to Defendants' motion to dismiss on November 19, 2008 (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). The Court denied both motions to stay (Docs. 11, 19) in an Order dated December 23, 2008. The Defendants did not reply to the Plaintiffs' brief in opposition to their motion to dismiss. Accordingly, Defendants' motion has been fully briefed and is currently ripe for disposition.

LEGAL STANDARD

Rule 12(b)(6) of the Federal Rules of Civil Procedure provides for the dismissal of a complaint, in whole or in part, for failure to state a claim upon which relief can be granted. Dismissal is appropriate only if, accepting as true all the facts alleged in the complaint, Plaintiff has not plead "enough facts to state a claim to relief that is plausible on its face," Bell Atlantic Corp. v. Twombly, 550 U.S. ----, 127 S.Ct. 1955, 1960, 167 L.Ed.2d 929 (2007), meaning, enough factual allegations "to raise a reasonable expectation that discovery will reveal evidence of" each necessary element. Phillips v. County of Allegheny, 515 F.3d 224, 234 (3d Cir. 2008); see also Kost v. Kozakiewicz, 1 F.3d 176, 183 (3d Cir. 1993) (requiring complaint to set forth information from which each element of a claim may be inferred). In light of Federal Rule of Civil Procedure 8(a)(2), the statement need only "give the defendant fair notice of what the . . . claim is and the grounds upon which it rests." Erickson v. Pardus, --- U.S. ----, 127 S.Ct. 2197, 2200, 167 L.Ed.2d 1081 (2007) (per curiam). "[T]he factual detail in a complaint [must not be] so undeveloped that it does not provide a defendant the type of notice of claim which is contemplated by Rule 8." Phillips, 515 F.3d at 232; see also Airborne Beepers & Video, Inc. v. AT&T Mobility LLC, 499 F.3d 663, 667 (7th Cir. 2007).

In deciding a motion to dismiss, the Court should consider the allegations in the complaint, exhibits attached to the complaint and matters of public record. See Pension Benefit Guar. Corp. v. White Consol. Indus., Inc., 998 F.2d 1192, 1196 (3d Cir. 1993), cert. denied, 510 U.S. 1042 (1994). The Court may also consider "undisputedly authentic" documents where the plaintiff's claims are based on the documents and the defendant has attached a copy of the document to the motion to dismiss. Id. The Court need not assume that the plaintiff can prove facts that were not alleged in the complaint, see City of Pittsburgh v. West Penn Power Co., 147 F.3d 256, 263 (3d Cir. 1998), nor credit a complaint's "bald assertions" or "legal conclusions." Morse v. Lower Merion Sch. Dist., 132 F.3d 902, 906 (3d Cir. 1997).

When considering a Rule 12(b)(6) motion, the Court's role is limited to determining whether the plaintiff is entitled to offer evidence in support of the claims. See Scheuer v. Rhodes, 416 U.S. 232, 236 (1974). The Court does not consider whether the plaintiff will ultimately prevail. See id. The defendant bears the burden of establishing that the plaintiff's complaint fails to state a claim upon which relief can be granted. See Gould Elecs. v. United States, 220 F.3d 169, 178 (3d Cir. 2000).

DISCUSSION

I. Eleventh Amendment Sovereign Immunity

In the current action, Plaintiffs bring ten claims against the Pennsylvania Department of Labor and Industry and four officials within the Department of Labor and Industry in those officials' individual and official capacities. The Court has already extensively discussed the implications of Eleventh Amendment sovereign immunity with respect to these claims in the Memorandum accompanying the Court's December 23, 2008 Order denying Plaintiffs' and Defendants' respective motions to stay state and federal proceedings. As the Court stated in its prior Memorandum:

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 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 of jurisdiction may override the Eleventh Amendment. A federal court must ...


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