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People v. M & E Technical Services

September 1, 2009


The opinion of the court was delivered by: Hon. Glenn T. Suddaby, United States District Judge


Currently before the Court in this special proceeding, brought by the People of the State of New York ("Petitioner") through the Attorney General's Office against M & E Technical Services, LLC, and Michael Donnelly, president and chief officers thereof ("Respondents"), is Petitioner's motion to remand the action to state court. (Dkt. No. 6.) For the reasons that follow, Petitioner's motion is denied.


A. Relevant Procedural Background

On January 28, 2009, the New York State Attorney General filed, by way of an Order to Show Cause, a Verified Petition (the "Petition"), and supporting affidavits, in New York State Supreme Court, Jefferson County. (Dkt. No. 1, Part 2.) The Petition named two Respondents:

(1) M & E Technical Services, LLC, a government contracting firm located in Austin, Texas; and (2) Michael Donnelly, the president and chief officer thereof. (Id.)

The Petition originated from complaints made by temporary workers at the Army base located at Fort Drum, New York ("Fort Drum"), who had been hired by Respondents to perform what is known as "Up Armor" tasking (which involved applying armor to military vehicles), and who were subsequently either laid off or terminated by Respondents. (Dkt. No. 1, Part 2, at ¶¶ 21, 27.) The Petition attaches 72 such complaints. (Dkt. No. 1, Parts 8-13.) Essentially, the Petition allege as follows: (1) Respondents promised them six months of employment, which they did not receive; (2) Respondents promised them health benefits, which they did not receive; (3) Respondents failed to pay some employees at a promised rate or for hours worked; and (4) Respondents failed to reimburse some employees for tools that were lost or damaged during the tasking. (Dkt. No. 1, Part 2, at ¶¶ 5-18.)

As a result, the Petition alleges that Respondents (1) systematically and fraudulently lured individuals into employment by falsely promising six months of employment and benefits, while knowing that they were under orders (sent September 12, 2008) to have all work completed on or before October 14, 2008, (2) failed to pay wages that they promised in the job solicitation, and in some instances failed to pay any wages at all, and (3) otherwise defrauded employees. (Id. at ¶¶ 19-40.) More specifically, the Petition alleges that these actions constitute a pattern of "fraudulent, deceptive, and illegal," conduct in violation of New York Executive Law § 63(12),*fn1 New York General Business Law § 349, and New York Business Corporation Law § 1303. (Id.) The Petition seeks significant monetary and equitable relief, including an order that Respondents be prohibited from conducting business in the State of New York. (Id. at "Wherefore" Clause.)

On March 4, 2009, Respondents removed the action to this Court pursuant to 28 U.S.C. §§ 1441, 1442, and 1446. (Dkt. 1, Part 1.) On March 11, 2009, Respondents interposed a Verified Answer to the Petition and asserted a Counterclaim, in equity, against the New York State Attorney General's Office. (Dkt. No. 4.) On March 30, 2009, Petitioner replied to Respondents' counterclaim, and filed a motion to remand seeking an order remanding this proceeding back to New York State Supreme Court. (Dkt. Nos. 5, 6.) Petitioner argues that removal was not proper under either 28 U.S.C. § 1441, or 28 U.S.C. § 1442. (Dkt. No. 6.)

B. Relevant Factual Background

In September of 2008, Respondents entered into a contract with Stanley Associates, Inc. ("Stanley"), a government general contractor, to perform work on United States Army military vehicles at Fort Drum. (Dkt. No. 1, Part 2, ¶ 7.) Specifically, on or about September 12, 2008, Stanley tasked Respondents with a four-week job on Fort Drum, applying armor to military vehicles. (Dkt. No. 1, Part 18, at 5-6.) Respondents were to complete their job no later than October 14, 2008, per the orders. (Id.)

As part of the contract, Respondents were to maintain operations in Kentucky, but have the capability to deploy maintenance teams to provide services on an urgent basis in remote locations. (Id.) As a result, according to Respondents, on September 18, 2008, they sent a Program Manager, Reginald Booker, to Fort Drum, along with approximately twenty (20) experienced laborers. (Dkt. No. 9, at ¶¶ 1, 9.) On September 19, 2008, Mr. Booker arrived at the Fort Drum maintenance site to take stock of the tasking. (Id. at ¶ 9.) Present at the site were other military contractors, as well as Department of Defense ("DOD") Quality Assurance Representative ("QAR") Henry Meadows, who informed Mr. Booker that "he (Mr. Meadows) was in charge of the operation," and that Mr. Booker needed "to hire approximately 140 workers to form crews to install armor on military vehicles." (Id. at ¶¶ 5, 9.) According to Mr. Booker, because he only had approximately twenty (20) laborers on the site, he needed to hire another 120 laborers from the local labor force. (Id. at ¶ 9.)

According to Petitioner, in an effort to hire these workers, Respondents "launched an aggressive hiring effort in New York State." (Dkt. No. 6.) On September 22, 2008, and September 23, 2008, as part of Respondents' hiring efforts, Mr. Booker attended a job fair and represented to certain applicants (some of whom would become employees) that "the job was to install armor on vehicles and was supposed to last through March of 2009." (Dkt. No. 9, at ¶¶ 11-13.) In addition, all new hires filled out an employment application, which indicated that employment with Respondents was not for any fixed period of time, and which gave new hires the option of filling out a health benefits application. (Id. at ¶¶ 16-18.) The health benefits application stated that "the benefits are subject to a waiting period of '30 Days.'" (Id. at ¶ 18.)

According to Respondents, "the representations made to laborer applicants regarding the length and nature of the tasking that are alleged to be fraudulent were founded upon information provided by the government's contracting representatives." (Dkt. No. 8; Dkt. No. 9, at ΒΆΒΆ 6-15.) More specifically, Mr. Booker states that the Government, through Henry Meadows, informed him that "the work was to consist of four waves of 'up armoring' vehicles, with the first wave to constitute 151-167 vehicles, to be followed by successive waves of vehicles requiring pre-deployment up ...

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