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Connection Training Services v. City of Philadelphia

IN THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA


February 25, 2009

CONNECTION TRAINING SERVICES, A PENNSYLVANIA NON-PROFIT CORPORATION
v.
THE CITY OF PHILADELPHIA, DIVIRGILIO, INDIVIDUALLY, AND JAMES FERRARO, INDIVIDUALLY

The opinion of the court was delivered by: Norma L. Shapiro, S.J.

MEMORANDUM AND ORDER

Plaintiff Connection Training Services ("CTS") filed an action against defendants the City of Philadelphia ("City"), Perritti DiVirgilio ("DiVirgilio") and James Ferraro ("Ferraro"), director and deputy director, respectively, of the City Labor Standards Unit. Count I of the CTS amended complaint alleged violations of 42 U.S.C. § 1983 by the City. Count II alleged violations of 42 U.S.C. § 1983 by DiVirgilio and Ferraro. Count III alleges violations by defendants DiVirgilio and Ferraro of the Pennsylvania Public Official and Employee Ethics Act, 65 Pa. C.S.A. § 1101, et seq. Plaintiff's motion for reconsideration of the court's grant of summary judgment on counts I and II will be denied. The court will also deny defendants' motion that the court exercise supplemental jurisdiction and will dismiss count III of plaintiff's complaint without prejudice.

I. MOTION FOR RECONSIDERATION

The court's memorandum and order of December 31, 2008, (paper no. 61) ("Opinion") granted summary judgment against CTS for violations of its rights to due process and equal protection under the Fourteenth Amendment of the U.S. Constitution.*fn1 Before the court is the timely motion for reconsideration of the denial of the due process claim.

Reconsideration serves to correct manifest errors of law or fact. Harsco Corp. v. Zlotnicki, 779 F.2d 906 (3rd Cir. 1985). A court should grant a motion for reconsideration only if there is: 1) newly available evidence; 2) an intervening change in controlling law; or 3) a need to correct a clear error of fact or to prevent manifest injustice. Haymond v. Lundy, 205 F. Supp. 2d 390, 395 (E.D. Pa. 2002). "Motions for reconsideration are not to be used to reargue or relitigate matters already decided." Id. CTS asserts a clear error of material fact.

The Opinion held the due process claim insufficient because the property right alleged to have been violated depended on precluding the defendants from denying Philadelphia Code § 17-107(2)(b)(.2) ("(2)(b)(.2)" or "the trainee provision") became effective.*fn2 The trainee provision was added to Philadelphia Code Chapter 17-100 together with some other provisions by Ordinance No. 990221-A, passed on September 28, 1999. Ordinance No. 990221-A stated that the provisions it created were not to become effective until the Minority Business Enterprise Council ("MBEC") certified a minimum minority participation in union apprenticeship programs*fn3; MBEC never issued that certification.*fn4 CTS claimed the defendants acted as if the trainee provision were in effect,*fn5 and that defendants should have known that CTS might have relied on their negligent misrepresentation that the trainee provision was in effect. (Opinion, p. 12.) CTS did not present evidence that: it created its training program in reliance on the City's misrepresentation; such reliance was justifiable; and its reasonable reliance was detrimental to CTS. Id.

CTS, in its motion for reconsideration, claims that it created training programs in reliance on (2)(b)(.2) being in effect. According to CTS, Garnett Littlepage, in his deposition, stated:

* in 2004 he investigated and read § 17-107 by going to the City's website and reading a document that did not include any footnotes ([Littlepage Deposition] at 105);

* based upon the trainee exemption in § 17-107, CTS conceived a training program in conjunction with the Philadelphia Workforce Development Corporation (PWDC) that would . . .train ex-offenders as trainees and pay these trainees a wage of $15.89 an hour (Id. at 105-06);

* developed a curriculum and submitted it to PWDC, a City Related Agency, which approved the program and funded the first cycle of the program (see eg. Id. at 82-83);

* CTS subsequently trained the employees. (Pl.'s Mot. for Reconsideration, pp. 4-5.) CTS asserts there are remaining questions of material fact whether its reliance was genuine, justified, and detrimental, so its due process claim should have survived summary judgment.

Assuming that CTS can show a negligent misrepresentation by defendants, that the defendants should have known CTS would rely on their misrepresentation,*fn6 and that reliance was justifiable,*fn7 CTS has not produced evidence that its reliance caused it detriment. Strunk v. Zoning Hearing Bd. of Upper Milford Tp., 684 A.2d 682, 685 (Pa.Cmwlth. 1996). The detriment alleged in an estoppel claim must be actual and quantifiable, and not merely presumptive. See Card v. Commonwealth, Pennsylvania School Employes' Retirement Bd., 478 A.2d 510, 514 (Pa. Cmwlth.1984) (denying an estoppel claim where the alleged damages stemmed from a refusal to allow plaintiff to apply for pension credits).*fn8

CTS submitted a grant proposal to the PWDC and other agencies for funding to train ex-offenders as construction workers. The grant process required CTS to name an employer committed to hiring CTS trainees on construction projects at below prevailing wage for the hands-on second half of the training cycle. LP Group[2] ("LP2"), a for-profit construction firm of whom Littlepage was a minority owner, was listed in the first CTS grant proposal. (Deposition of Douglas Kissel, pp. 52-53.)

CTS was not harmed as a result of expending time, effort, and money in designing and submitting that grant proposal, because the grant was approved and paid in full. Id. at 51. CTS does not allege that any grantor actually withheld funds it was legally obligated to provide CTS as a result of defendants' actions. When the City refused to honor LP2's construction contracts for failure to pay the prevailing wage,*fn9 CTS chose not to proceed with subsequent training cycles rather than seek other employers who might commit to hiring CTS trainees. (Littlepage Deposition, pp. 146, 174-75.)

CTS has not averred that the City withdrew or withheld any funding to CTS that it had promised. CTS asserts it has not received $500,000 in grant funds that it was likely to receive had it been able to place its trainees in City construction projects where LP2 could pay them less than prevailing wage. (Opinion, pp. 2-3.) This injury is speculative;*fn10 even had the City paid LP2's contracts, and LP2 had committed to subsequent training cycles, the City was not obligated to fund more than one cycle. Estoppel fails absent a showing of detrimental reliance. CTS may have justifiably relied on the City's negligent misrepresentation that the trainee provision was in effect, but it has not produced evidence that its reliance led to any detriment to CTS. The motion for reconsideration will be denied.

II. COUNT III

Count III alleges violations of the Pennsylvania Public Official and Employee Ethics Act ("POEEA"), 65 Pa. C.S.A. § 1101, et seq. by defendants DiVirgilio and Ferraro, in their individual capacities.*fn11 Having decided all federal claims against CTS, the court may exercise supplemental jurisdiction over count III pursuant to 28 U.S.C. § 1367 or dismiss without prejudice. CTS and Defendants DiVirgilio and Ferraro move for the court to exercise supplemental jurisdiction and decide count III. DiVirgilio and Ferraro claim no relief is available to private litigants under the POEEA. CTS asserts the POEEA permits an implied private cause of action.

Supplemental jurisdiction over count III is undisputed; count III is clearly "so related" to counts I and II that it forms "part of the same case or controversy." 28 U.S.C. § 1367(a). The court may decline to exercise jurisdiction over supplemental state claims when "the claim raises a novel or complex issue of State law," or "the district court has dismissed all claims over which it has original jurisdiction." 28 U.S.C. § 1367(c)(1,3).

The POEEA provides no express private cause of action against Pennsylvania public officials for damages resulting from official corruption or ethical violations. Section 8 of the POEEA, 65 Pa. C.S.A. § 1108, states that the State Ethics Commission has jurisdiction to hear complaints against public officials in Pennsylvania; the Commission then initiates its own investigation into whether criminal charges should be brought against the allegedly corrupt official. The POEEA does not provide any other procedure for holding public officials civilly or criminally liable.

A statute may permit an implied cause of action under Pennsylvania law if: 1) the plaintiff is "one of the class for whose especial benefit the statute was enacted;" 2) there is clear legislative intent to create a private remedy; and 3) such a private remedy would be consistent with the underlying purposes of the legislative scheme. See Estate of Witthoeft v. Kiskaddon, 733 A.2d 623, 626 (Pa. 1999) (adopting part of the analytical framework established by Cort v. Ash, 422 U.S. 66, 78 (1975) for determining whether a statute permits implying a private cause of action). Witthoeft held that the Pennsylvania Motor Vehicle Code did not permit an an implied private cause of action by an automobile accident victim against the physician who failed to notify the state Department of Transportation of a driver's impaired eyesight. Id., 733 A.2d at 626-27.

The Pennsylvania Supreme Court, applying Witthoeft, found an implied private cause of action under the Pennsylvania Motor Vehicle Financial Responsibility Law, 75 Pa. C.S. § 1701 et seq., actionable against an insurer who refused to pay statutorily-mandated interest. Schappel v. Motorists Mut. Ins. Co., 934 A.2d 1184, 1190 (Pa. 2007); see 75 Pa. C.S. § 1716. However, the Superior Court held that a medical provider does not have an implied cause of action under the Pennsylvania Quality Health Care Accountability and Protection Act, 40 P.S. §§ 991.2101 et seq., against an insurer who refused to honor a claim for payment. Solomon v. U.S. Healthcare Systems of Pennsylvania, Inc., 797 A.2d 346, 352-53 (Pa. Super. 2002); see 40 P.S. § 991.2102.

No Pennsylvania court since Witthoeft was decided whether the POEEA permits a private cause of action against public officials for its violation. The Pennsylvania Supreme Court recently held that the POEEA's requirement that all complaints of corruption and ethics violations by public officials and employees be filed with the State Ethics Commission does not preempt a "qualified private party" from objecting to a Statement of Financial Interest ("SFI"), which the Election Code, 65 Pa.C.S. § 1105(b)(5) requires a candidate for public office to file.

In re DeYoung, 903 A.2d 1164 (Pa.. 2006). The court in DeYoung based its holding on four considerations: 1) the POEEA does not grant the State Ethics Commission authority to remove a candidate from a ballot, but the Election Code allows private citizens to petition to remove a candidate from a ballot, 25 P.S. § 2937 ("§ 2937"); 2) candidates for local and county offices frequently do not forward their SFI to the State Ethics Commission; 3) review of many SFIs would be impractical if not impossible in the time available; and 4) the POEEA does not trump the private cause of action for ballot removal under § 2937. DeYoung, 903 A.2d at 1168-70. The Pennsylvania Supreme Court did not determine whether the POEEA itself provides an implied private cause of action. The only issue in DeYoung was whether the Election Code's pre-existing private cause of action to remove a candidate from the ballot was valid after passage of the POEEA.

Before the Pennsylvania Supreme Court decided Witthoeft, the Commonwealth Court had denied there was an implied private cause of action under the POEEA Sheers v. Higgins, 549 A.2d 614, 616 (Pa. Commw. Ct. 1988). Whether the Pennsylvania Supreme Court will overturn Sheers using the Witthoeft analytical framework presents a novel issue of state law that should be decided by the Pennsylvania Supreme Court. The court will decline to exercise supplemental jurisdiction over count III, under 28 U.S.C. § 1367(c); count III will be dismissed.

IV. CONCLUSION

CTS has not shown that it relied on defendants' alleged misrepresentations to its detriment. CTS has not shown that defendants violated its due process rights under the Fourteenth Amendment. Its motion for reconsideration of the Court's Opinion of December 31, 2008, will be denied. Count III of CTS' complaint, under the Pennsylvania Public Official and Employee Ethics Act, 65 Pa. C.S.A. § 1101, et seq., presents a novel issue of state law. The court will decline to exercise supplemental jurisdiction and will dismiss count III without prejudice. The motion by defendants DiVirgilio and Ferraro to dismiss Count III will be denied as moot.

ORDER

AND NOW, this 25th day of February, 2009, upon consideration of plaintiff's motion for consideration and defendants' response, as well as the parties' briefs on whether the court should exercise supplemental jurisdiction over plaintiff's count III, it is ORDERED:

1. Plaintiff's motion for reconsideration (paper no. 44) is DENIED.

2. The court declines to exercise jurisdiction over count III of plaintiff's complaint, under the Pennsylvania Public Official and Employee Ethics Act, 65 P.S.A. § 1101 et seq. See 28 U.S.C. § 1367(c)(3). Count III of plaintiff's complaint is DISMISSED WITHOUT PREJUDICE.

3. Defendants DiVirgilio and Ferarro's motion to dismiss count III for failure to state a claim upon which relief can be granted is DENIED AS MOOT.

Norma L. Shapiro J.


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