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Ali v. DLG Development Corp.

United States District Court, E.D. Pennsylvania

October 23, 2017

HAROON ALI, Plaintiff,
DLG DEVELOPMENT CORP., et al., Defendants.


          Anita B. Brody, J.


         This case addresses whether state law claims with an embedded federal issue involving the Davis-Bacon Act “arise under” federal law. Based on the test laid out in Grable & Sons Metal Products, Inc. v. Darue Engineering & Manufacturing., 545 U.S. 308 (2005), the Davis-Bacon issue is not substantial. Thus, there is no federal question jurisdiction. The Supreme Court has likened jurisprudence in this area to a Jackson Pollock painting. Gunn v. Minton, 568 U.S. 251, 258 (2013). Today, in an effort to clarify the image, I add another brush stroke.

         On February 24, 2016, Plaintiff Haroon Ali filed a class action complaint in the Philadelphia County Court of Common Pleas on behalf of himself and other similarly situated individuals. The complaint pled state law claims against Defendants Dale Construction, [1] DLG Development Corporation, Evette Smith, David Gross, and Eric Smith.[2] Plaintiff later joined the Philadelphia Housing Authority (“PHA”) as a defendant. All parties were residents of Pennsylvania, and the complaint alleged only state law claims with no reference to federal law. On March 31, 2017, Ali filed a Motion for Class Certification that made clear-for the first time-that his prior state law claims relied on the Davis-Bacon Act. On April 5, 2017, Defendants removed to federal court based on federal question jurisdiction. On May 4, 2017, Ali filed a Motion to Remand. For the reasons stated below, I will grant Ali's motion and remand the case to state court.[3]

         II. BACKGROUND[4]

         Ali worked as a laborer on a Philadelphia Housing Authority (“PHA”)[5] development project called Oakdale. On the project, he was directly employed by DLG Development, a subcontractor for Dale Construction. Ali worked for DLG from April 1, 2014 through April 10, 2015. Compl. ¶ 13, ECF No. 1-1. During his employment his wages were reduced from $48.65 per hour to $25.65 per hour. Compl. ¶ 18. The money subtracted from his wages-$23 per hour-was paid to the union, ostensibly to provide fringe benefits to workers. See Compl. ¶¶ 18- 20. Ali could not benefit from those payments to the union because he was not a union member. Compl. ¶ 22.

         On August 17, 2015, the PHA's Wage Compliance Unit (“WCU”) issued a citation to Dale and DLG for a violation of the Davis-Bacon Act (“DBA”)[6] on the Oakdale project. See August 17, 2015 Citation Notice to Dale Corporation, ECF 11-14 [hereinafter August 17, 2015 Citation]. The citation concluded that Dale and DLG owed back wages to six individuals- including Haroon Ali. See August 17, 2015 Wage Compliance Review 3, ECF No. 11-14. The citation stated that Dale and DLG had submitted part of the six individuals' prevailing wage to the Laborer's District Council Benefits Fund (“Fund”) to pay for fringe benefits. August 17, 2015 Citation. Those individuals, however, were not members of the union and therefore had “no access to the fringe benefits through the Fund.” Id. To remedy the Davis-Bacon Act violation, the citation instructed Dale and DLG to pay the fringe benefit portion of the prevailing wages directly to the six individuals. Id. Three more citations were issued on similar Davis-Bacon violation grounds. In response, Dale issued additional checks to the Fund rather than to the individuals. See Pl.'s Mot. Class Certification 1-2, ECF No. 7-2, at 20. Ali was never paid the additional wages.

         On February 24, 2016, Ali filed a class action complaint in the Philadelphia County Court of Common Pleas seeking the money from DLG and Dale that he was owed. The complaint makes no reference to the Davis-Bacon Act or the citations issued by the PHA.[7] Instead, Ali merely alleged that Oakdale was a “Prevailing Wage assignment”-entitling him to a “Prevailing Wage”-with no mention of federal law. Compl. ¶¶ 15-16. Based on that entitlement, Ali asserted claims for a violation of the Pennsylvania Wage Payment & Collection Law (PWPCL), a violation of the Pennsylvania Minimum Wage Act (PWA), and conversion. See Compl. ¶¶ 31-51. The complaint is vague as to the exact source of the prevailing wage entitlement and how that entitlement fits into Ali's state law claims.

         The case was litigated in state court for over a year. During that time the parties conducted extensive discovery, including depositions. On March 31, 2017, Ali filed a motion for class certification. The motion refers to the PHA citations against Dale and DLG, and the Davis-Bacon Act is the only statutory source of law it discusses to establish a prevailing wage entitlement. See Pl.'s Mem. Class Certification 1-4, ECF No. 7-2, at 27. The allegations in the motion mirror the findings made by the PHA in the April 2015 citation. The motion also mentions that class members had tried to access the Fund but were denied for various reasons. See Id. at 2 n.13. Therefore, the motion brings into clarity for the first time that Ali, in his original complaint, was seeking direct payment for the fringe benefits that Dale and DLG had paid into the Fund, and that those benefits were guaranteed as part of the prevailing wage under the Davis-Bacon Act.

         Once Dale realized that Ali's claims were predicated on the Davis-Bacon Act, it removed to federal court. On April 5, 2017, Dale, with the consent of the other Defendants, filed for removal.[8] On May 4, 2017, Ali filed a motion to remand.


         Ali presents two arguments in favor of remand. First, he argues that Dale's removal was untimely. Second, he argues that Dale[9] has failed to raise a sufficient federal issue to merit federal question jurisdiction. Although Dale's removal was timely, Ali's motion to remand will be granted.

         A. Timeliness of Removal

         Ali argues that because Dale's notice of removal was filed more than thirty days after his complaint was filed in state court, the removal was untimely. Ali is correct that typically a notice of removal must be filed within thirty days after the defendant receives the complaint. 28 U.S.C. § 1446(b)(2)(B). But, the removal statute allows an exception. If a subsequent “amended pleading, motion, order or other paper” establishes that a case can be removed, then a defendant may remove thirty days from receipt of the subsequent material. 28 U.S.C § 1446(b)(3) (emphasis added).

         Here, although Ali's original complaint made no reference to federal law or the Davis-Bacon Act, his subsequent motion for class certification squarely presented the federal issue. The motion for class certification stated that “Mr. Ali is pursuing claims for failure of the Defendants to pay him the fringe benefit portion of the prevailing wage.” Pl's Mem. Class Certification 9. The motion argues that Dale and DLG were obligated to make the fringe benefit contributions in cash as part of “the prevailing wage under [the Davis-Bacon Act].” Id. at 8. The motion makes clear that Ali is asserting his state law claims based on a violation the Davis-Bacon Act. Defendants were not on notice of this federal issue until the Motion for Class Certification. Thus, Dale had thirty days from that point to remove. On March 31, 2017, Ali filed the motion. On April 5, 2017, Dale filed the notice of removal. Therefore, Dale's notice of removal was timely.[10]

         B. Federal ...

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