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CNP Mechanical, Inc. v. Alung

November 15, 2007


The opinion of the court was delivered by: Michael A. Telesca United States District Judge



Plaintiff CNP Mechanical, Inc., ("CNP"), brings this action against defendants Christopher Alund ("Alund"), Dale Stanley ("Stanley"), Brian Robison ("Robison"), Timothy Hoak ("Hoak") and Patrick Danieu ("Danieu") (collectively "defendants") pursuant to 42 U.S.C. § 1983 claiming that its civil rights have been violated by the defendants.*fn1 Specifically, CNP contends that its right to due process and equal protection of the laws has been violated in connection with an action brought by the Department of Labor ("DOL") against CNP to enforce New York State's prevailing wage law. The Complaint also alleges violations of the Constitution of the State of New York. In particular, CNP claims it has been denied earned contract funds and has been deprived of liberty and property interests protected by the New York State Constitution. Further, CNP alleges that the activities of Hoak and Danieu implicate the Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. § 1962 and 18 U.S.C. § 1951.

By motion dated May 31, 2005, defendants moved to dismiss the Complaint under Fed. R. Civ. P. 12(b)(1) and 12(b)(6). Plaintiff opposed the motion to dismiss on July 27, 2005. When the motion to dismiss was filed, there was also a pending separate proceeding concerning related Prevailing Wage Law violations brought in New York State Supreme Court, Monroe County, pursuant to Article 78 of the Civil Practice Law and Rules of the State of New York.*fn2 The Commissioner's determination was on Appeal to the New York State Appellate Division during this period. Accordingly, the pending motion before this Court brought by defendants for dismissal of the plaintiff's complaint was stayed on January 3, 2006 pending the final determination of the Article 78 proceeding. On July 13, 2006, the Appellate Division of the New York Supreme Court, Third Department ("Appellate Division") substantially affirmed the Commissioner's determination which found that classifying the disputed work as that of a plumber, as opposed to a building laborer, was not arbitrary and capricious. CNP subsequently filed a Motion for Leave to Appeal to the New York State Court of Appeals, which was denied. Thus, the Appellate Division's determination is now final and the motion before this Court is ripe for determination.

CNP concedes that to the extent that the Complaint alleges that the DOL's work classification was unconstitutional, these arguments are now foreclosed by the final decision of the Appellate Division. However, CNP contends that insofar as the Complaint is based upon allegations of unlawful abuse of their investigative and regulatory powers by defendants, it is unaffected by the decision of the Appellate Division.


Plaintiff CNP is a commercial plumber whose work in New York is "comprised almost exclusively of public works contracts." See Complaint at ¶10. The DOL's Bureau of Public Works ("Bureau") commenced its investigation of CNP's compliance with Labor Law Article 8 in 2000, after a former CNP employee complained that CNP paid him only $11 per hour, which is less than any "prevailing rate" under Article 8.*fn3 See id. at ¶13. Based on this information, between November 30, 2001 and January 7, 2002, the Bureau wrongly published audit reports and Notices of Labor Law Inspection Findings ("Notices") asserting that CNP owed employees over $765,000. See id. at ¶ 25. However, as soon as CNP complained, the Bureau immediately reviewed the erroneous audits, corrected its assumptions, and informed CNP's school district clients that the notices were being withdrawn and replaced by new Notices claiming underpayments in a lesser amount. See id. at ¶29.

After withdrawal of the initial audits, the DOL's main focus centered around the Prevailing Wage Law violations by CNP, namely payment at a laborer's rate for pipelaying and demolition work, which the Bureau contended, should have been paid at a significantly higher plumber's rate as published on the DOL wage schedules. In its Complaint (as well as in the three prior proceedings), CNP claims that the Bureau's classification of the work as payable at a plumber's wage was belied by the published wage schedules, and was "dreamed up" by a hostile labor union, Local Union No. 13 of the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada ("Local 13"). See id. at ¶15. However, the Appellate Division has since held that the subject work performed by CNP employees constituted plumber's work.

CNP also contends that most of the claims the Bureau has advanced against it have been either fraudulent or baseless. See id. at ¶ 45. Moreover, CNP alleges that the Bureau has caused school districts to withhold earned contract funds from CNP from February 2002. See id. According to the Complaint, the Bureau has also damaged CNP's reputation with its municipal customers and construction managers and architects who serve them. See id. Further, CNP alleges that Local 13 (although they have not been sued) is engaged in a campaign against CNP, and "[u]pon information and belief," the defendants acted to help Local 13. See Defs. Br. at 5. Defendants contend that CNP made substantially the same claims in three earlier proceedings, namely CNP's First Complaint in Federal Court in March 2002,*fn4 CNP's State Complaint filed in July 2002*fn5 and the DOL Administrative Proceeding.*fn6 See id. at 6-7.

The current Complaint makes the following specific allegations concerning the five defendants. With respect to Alund, CNP alleges that other defendants' conduct was "endorsed by ... Alund, or was the direct result of policies and procedures adopted for the Bureau by ... Alund." See Complaint at ¶47. As to Stanley and Robison, the Complaint alleges that they agreed or acquiesced that Hoak would retain responsibility for CNP investigations after Hoak's transfer from Rochester to Buffalo. See id. at ¶¶18, 20. Moreover, CNP contends that both defendants failed to discipline Hoak, "endorsed Hoak's plan" to apply the plumber's rather than the laborer's rate, gave him "additional time to make a case that CNP had falsified its payroll records," and approved the Administrative Proceeding See id. at ¶¶ 29-31, 34, 38.

With respect to Hoak, the Complaint states "[B]etween November 30, 2001 and January 7, 2002 Hoak, at [Local 13's] urging and by agreement with Danieu," issued the Notices which estimated that CNP had underpaid over $765,000 allegedly, knowing that these Notices "were false ..., would likely cause the affected schools to suspend payment" to CNP, and "might cause CNP to be disqualified from obtaining new public work contracts." Id. at ¶¶25-26. The Complaint further alleges that Hoak approved or participated in the Administrative Proceeding and in responding to the directives of his supervisors, solicited the assistance of Local 13, which gathered several former CNP employees, who along with Local 13 and Hoak, devised false claims that CNP had improperly failed to pay its employees. See id. ¶¶ 31, 35, 38.

As to Danieu, the Complaint alleges that he assigned Hoak to investigate CNP after receiving the initial complaint against CNP, which "[u]pon information and belief, [Local 13], Danieu or both" assisted a former CNP employee prepare, "with actual or constructive knowledge of its falsity." See id. at ¶¶ 13-14. Further, CNP claims that Danieu directed Hoak to obtain information from Local 13 and later Danieu directed Hoak to begin other investigations of CNP and agreed to the initial audits even though he "knew the audit reports ... were false, ... would likely cause the affected schools to suspend payment," and might cause the disqualification of CNP from getting new public work contracts. See id. at ¶¶15, 20, 25-26. In addition, Danieu, approved the Administrative Proceeding. See Id. at ¶¶ 31, 34, 38.


I. Motion To Dismiss

Rule 12(b)(6) of the Federal Rules of Civil Procedure provides for dismissal of the complaint where the plaintiff has failed to state a claim upon which relief can be granted. When evaluating a Rule 12(b)(6) motion, the court must ascertain, after presuming all factual allegations in the pleading to be true and viewing them in the light most favorable to the plaintiff, whether or not the plaintiff has stated any valid ground for relief. See Ferran v. Town of Nassau, 11 F.3d 21, 22 (2nd Cir. 1993), cert. denied, 513 U.S. 1014, 115 S.Ct. 572 (1994). The court may grant a Rule 12(b)(6) motion only where "`it appears beyond doubt that the plaintiff can prove no set of facts in ...

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