Favel v. American Renovation & Construction Co.

No. 01-514

IN THE SUPREME COURT OF THE STATE OF MONTANA

2002 MT 266

BILL FAVEL, JOHN PITZER, JOE
LaMERE, TOBY LaMERE, and
ALVIN BELGARDE,

Plaintiffs/Appellants,
v.

AMERICAN RENOVATION AND
CONSTRUCTION CO., a California
corporation; JOHN DOES I and II,

Defendants/Respondents.

APPEAL FROM: District Court of the Eighth Judicial District,
In and for the County of Cascade,
The Honorable Julie Macek, Judge presiding.

COUNSEL OF RECORD:

For Appellants:

Lawrence A. Anderson (argued), Great Falls, Montana

For Respondents:

Marcia Davenport (argued), Crowley, Haughey, Hanson, Toole & Dietrich,
Helena, Montana; Neil Westesen, Crowley, Haughey, Hanson, Toole &
Dietrich, Bozeman, Montana

Heard: March 12, 2002
Submitted: March 19, 2002
Decided: November 26, 2002
Filed:

__________________________________________
Clerk
Justice Patricia O. Cotter delivered the Opinion of the Court.

¶1 This case was brought by a group of construction workers (Workers) who performed labor

under a federal contract (Contract) between the American Renovation and Construction Company

(ARC) and the United States Air Force (USAF or Air Force) to construct military housing at

Malmstrom Air Force Base (Malmstrom AFB) in Great Falls, Cascade County, Montana. The

Workers sued for breach of contract, alleging that they were not paid prevailing wages under the

federal Davis-Bacon Act as required by the Contract. The Eighth Judicial District Court of Cascade

County dismissed the suit on June 12, 2001, ruling that the Davis-Bacon Act did not provide the

Workers with a private right of action; therefore, it lacked jurisdiction to hear the Workers' claims.

We reverse.

ISSUES

¶2 A restatement of the issue presented by the parties is whether the Montana District Court has

subject matter jurisdiction to hear and determine Workers' common law claims for breach of a

Contract under which they were guaranteed wages based upon wage standards established by the

federal Davis-Bacon Act.

FACTUAL BACKGROUND

¶3 In March 1998, the USAF and ARC entered into a Contract under which ARC would

construct military housing at Malmstrom Air Force Base in Great Falls, Cascade County, Montana.

While the Contract was not provided for this Court's review, it is undisputed that the Contract

required ARC to pay its laborers federal Davis-Bacon Act wages (hereinafter wages). Subsequently,

ARC entered into subcontracts with Baer Construction and Four Winds Construction. Under ARC's

Contract with the Air Force, ARC was required to include in any subcontracts the provision that all

2
subcontractors working on the project would pay their laborers in accordance with the Davis-Bacon

Act. The contracts between ARC and its subcontractors were not provided for our review, but it is

undisputed that these contracts included the required Davis-Bacon wage provision.

¶4 Workers are former employees of Baer Construction (Baer) and/or Four Winds Construction

(Four Winds) 1 who worked on the Malmstrom AFB project as iron workers, carpenters, cement

masons and other "skilled trades." Workers claim they were improperly paid unskilled laborer

wages. Additionally, Workers maintain that when they complained to Baer that they were not being

paid in accordance with the contract between Baer and ARC, Baer fired them. They then began

working for Four Winds and claim that Four Winds likewise failed to pay them the skilled wages

required under Four Winds' contract with ARC. (We note, however, that no precise allegations were

made against Four Winds nor were any administrative decisions made pertaining to Four Winds.) In

November 1998, the Workers complained to ARC that ARC's subcontractors were not paying them

in accordance with the wage provisions of their contracts with ARC. Prior to this November

meeting between Workers and ARC, and subsequent to it, ARC consistently represented to the

USAF that it and its subcontractors were paying all laborers appropriate Davis-Bacon wages.

¶5 Workers complained to the USAF Contracting Officer (Contracting Officer) who agreed that

the Workers should have been paid "skilled laborer" wages. The Contracting Officer notified ARC

that it was ARC's responsibility to insure that subcontractors' employees were accurately paid in

accordance with the contractually-prescribed Davis-Bacon job classifications and wage rates. There

is no evidence in the record that the Contracting Officer notified the DOL of the complaint or

1
Baer and Four Winds are referenced in the caption of this case as John Does I and II
because Workers claim that these companies are not legal entities authorized to do business in
Montana.

3
consulted with the DOL regarding Workers' claims. ARC forwarded a copy of the Contracting

Officer's letter to Baer and instructed Baer to resolve the matter as directed by the USAF. Baer

refused to do so despite multiple requests by ARC. Subsequently, ARC withheld funds that it would

have paid to Baer and dispersed these funds to the underpaid Workers. The total amount paid by

ARC, however, was significantly less than the amounts the USAF and the Workers claimed were

owed. The above facts provide a short factual summary but additional facts will be discussed as

necessary in our analysis.

PROCEDURAL HISTORY

¶6 Workers filed a law suit in June 1999, in the United States District Court, Great Falls

Division, against ARC, ARC's surety, St. Paul Fire and Marine Insurance Company, and ARC's

subcontractors. Workers sought damages directly from ARC and its subcontractors under the Davis-

Bacon Act and from ARC's surety under the Miller Act. The federal district court judge

characterized Workers' claim as a claim for back wages under the Davis-Bacon Act. The court

concluded that 40 U.S.C. § 276a of the Davis-Bacon Act did not give Workers a private right of

action but that 40 U.S.C. § 276a-2(b) did, vis-à-vis a Miller Act claim. The federal court, therefore,

stayed the Miller Act proceeding, holding that a yet-to-be-obtained DOL wage determination was a

condition precedent to such a proceeding. Workers, having presented extensive USAF

documentation of underpayment to the federal court to no avail, then dismissed their federal action

without prejudice and sought relief in state court. The Workers thereafter pursued their state

remedies and did not reinstitute their federal proceeding before the statute of limitations expired.2

2
Voluntary dismissal of a federal action without prejudice does not toll the statute
of limitations. Brown v. Hartshorne Public School Dist. No. 1 (10th Cir. 1991), 926 F.2d
959 ("It is hornbook law that, as a general rule, a voluntary dismissal without prejudice

4
¶7 Workers sued ARC and its subcontractors in the District Court of the Eighth Judicial District,

Cascade County. They sought recovery on various common law grounds including, but not limited

to, breach of contract, negligence, and wrongful discharge. ARC moved to dismiss the complaint on

the grounds that it failed to state a claim for which relief may be granted. The state court dismissed

the complaint without prejudice for lack of subject matter jurisdiction holding that the Davis-Bacon

Act did not grant Workers a private right of action. The state court agreed with the federal court that

Workers had failed to exhaust their administrative remedies. Workers filed a timely appeal.

STANDARD OF REVIEW

¶8 The State District Court dismissed this case for lack of subject matter jurisdiction. "Motions

to dismiss should not be granted unless it appears beyond doubt that the plaintiff can prove no set of

facts in support of his claim which would entitle him to relief." Winslow v. Montana Rail Link, Inc.,

2000 MT 292, ¶ 13, 302 Mont. 289, ¶ 13, 16 P.3d 992, ¶ 13 (citing Hilands Golf Club v. Ashmore

(1996), 277 Mont. 324, 328, 922 P.2d 469, 471-72). "In considering such motions, the complaint is

construed in the light most favorable to the plaintiff and all allegations of fact contained therein are

taken as true. The District Court's determination that it did not have jurisdiction over this case is a

conclusion of law." Winslow, ¶ 13 (citing Pike v. Burlington N.R.R. Co. (1995), 273 Mont. 390,

392-93, 903 P.2d 1352, 1353). "We review a district court's conclusions of law to determine

whether the court's interpretation of the law is correct." Winslow, ¶ 13 (citing Hilands Golf Club,

277 Mont. at 328, 922 P.2d at 472).

leaves the parties as though the action had never been brought." (citation omitted)).

5
 DISCUSSION

¶9 The primary question before this Court is whether the Montana District Court has subject

matter jurisdiction to hear and determine Workers' common law claims for breach of a contract

under which they were guaranteed wages based upon wage standards established by the federal

Davis-Bacon Act.

¶10 ARC argues that because all of Workers' claims are based on failure to pay wages

established by the Davis-Bacon Act, Workers are limited to Davis-Bacon-prescribed remedies. It

maintains that the state district court correctly held that it did not have jurisdiction over

Workers' claims because there is no "private right of action" under the Davis-Bacon

Act. In other words, Workers may not sue a contractor or subcontractor in state or

federal court, under the Davis-Bacon Act, for a violation of the Davis-Bacon Act.

Rather, ARC maintained and the state court agreed, Workers must first obtain a DOL

determination that a violation occurred, that Workers are owed money, and how much

money each individual Worker is due. Upon an administrative determination that

Workers had been underpaid, Workers would be paid from any funds that had been

withheld in accordance with the regulations. If such withheld funds were insufficient to

pay the full amount due, Workers could then sue ARC's surety under the Miller Act 3 .

¶11 Workers, on the other hand, claim that this is not a "private right of action" case

but rather a "preemption" case. Workers seek to enforce a labor contract that

3
The Miller Act requires that before a contractor may be awarded a federal construction
contract, the contractor must post a payment bond for the protection of persons providing labor
and material to the construction project. 40 U.S.C. § 270a(a)(2).

6
incorporated the Davis-Bacon Act and included wages established under the Act.

Therefore, they are seeking a state common law remedy for breach of contract. Thus,

the question is not whether they have the right to bring a private action under the

Davis-Bacon Act, but rather, is whether the Davis-Bacon Act expressly or impliedly

preempts alternative or supplemental state remedies.

¶12 Additionally, Workers argue that, in this case, an administrative remedy is non-

existent, or, at best, inadequate. Workers claim that numerous relevant administrative

decisions were made in their favor and that ARC and Baer accepted these decisions without

challenge or a request for DOL review. Therefore, Workers argue, ARC and Baer are

estopped from now claiming that additional unexhausted administrative remedies exist. The

District Court did not address these issues.

7
The Davis-Bacon Act

¶13 The Davis-Bacon Act, 40 U.S.C. § 276(a), et seq., was passed in 1931 during the Depression

to protect workers on federal construction projects. Under the Act, the Secretary of Labor sets

minimum wages for various job classifications that reflect "prevailing wages" in the area of the

project. The Act mandates that no contractor may pay less than these prevailing wages to their

employees working on any construction project over $2,000 to which the United States is a party.

This prevents companies from competing for federal contracts using bids based on importing

laborers from distant areas who would work for lower wages than local laborers. See 40 U.S.C. §

276a(a). See also, Vulcan Arbor Hill Corp. v. Reich (D.C. Cir. 1996), 81 F.3d 1110, 1111 (citation

omitted). Numerous courts have held that the Act was designed specifically to protect the interests

of laborers. See, U. S. v. Binghamton Construction Co. (1954), 347 U.S. 171, 177 and 178, 74 S.Ct.

438, 441 and 442, 98 L.Ed. 594, 599 and 600; Thompkins v. Fuller (1983), 205 Mont. 168, 667 P.2d

944; Building and Const. Trades Dept., AFL-CIO v . Reich (D.C. Cir. 1994), 40 F.3d 1275.

¶14 After the Davis-Bacon Act was passed into law, the Department of Labor promulgated

detailed regulations for its implementation. 29 C.F.R. §§ 5, 6, and 7. In addition to the regulations

defining how the Secretary of Labor will establish prevailing wage rates, the regulations also dictate

specific contract provisions that must be included in federal construction contracts, provide

debarment procedures for contractors who violate the Davis-Bacon Act, and identify those entities

who may initiate a proceeding in the event of a wage dispute. 29 C.F.R. §§ 5.5, 5.12 and 5.11

respectively.

¶15 The state court held that Workers cannot sue ARC and Baer in state court but

rather they must avail themselves of the administrative remedies set out in the DOL's

8
regulations. The court stated that Workers must obtain a DOL determination that

wages are due, then seek recovery under the Miller Act. Workers claim they have

utilized the administrative procedure extensively, without remedy. The facts set forth

below support the Workers' claim.

¶16 Baer and ARC entered into their contract in March 1998. At some time between March 1998

and November 1998, Workers complained to Baer that they were performing skilled labor, as

defined by the DOL job classifications applicable to the construction project, but were being paid

unskilled laborer wages. Baer fired them. In November 1998, Workers met with representatives of

ARC, the Montana Labor Management Alliance (MLMA) and Baer. They complained that Baer

was breaching its contract with ARC by not paying contractually-agreed upon wages to its skilled

laborers and that Baer had fired them for complaining about it. The MLMA representative

suggested that ARC submit a request to DOL for "new" job classification and wages rates for jobs

performed by the Workers. He said he would inform the meeting attendees of the DOL's

determination and they could accept it or appeal it at that time. ARC submitted the

classification/wage request to DOL in December 1998. No USAF or DOL response to this request

was provided to this Court.

¶17 By early April 1999, the USAF Contracting Officer had received notice of the complaints.

She responded by sending a letter dated April 9, 1999, to ARC in which she notified ARC that, as

general contractor, it was ARC's responsibility to insure that its subcontractors complied with the

Davis-Bacon Act. She noted that ARC was responsible for reviewing the payrolls for discrepancies

and having those discrepancies corrected prior to submitting them to the USAF. The Contracting

Officer noted that, "[a]ccording to the Department of Labor," the work being performed by the

9
complaining Baer laborers fell within specific job classifications with prescribed wages. She

determined that Workers and other laborers had been underpaid by Baer. She included in her letter

to ARC a list of Baer employees, which included Workers, who had been underpaid. She classified

them within the correct DOL job classification and calculated the amount of unpaid wages each of

these employees was owed by Baer.

¶18 Also on April 9, 1999, ARC sent a letter to Baer informing Baer that it had received a

determination from the MLMA that Baer had underpaid the complaining laborers. ARC notified

Baer that failure to pay wages in accordance with the Davis-Bacon Act was a direct breach of their

contract. It instructed Baer to fully compensate the underpaid employees in accordance with the

MLMA's directive.

¶19 In May and June 1999, ARC submitted several other requests for "new" job classifications to

the DOL. On the DOL request form, ARC recommended hourly wage rates for these "new" job

classifications. The Contracting Officer, after conferring with DOL, notified ARC that each of its

requests was denied because job classifications for the job descriptions included in the requests were

not "new" but already existed and were part of the project Contract. The "new" job classifications

ARC sought were for work performed by the Workers, as well as other laborers. The hourly wage

rate recommended by ARC in its requests was lower than the hourly wage rates assigned under the

Davis-Bacon Act to the existing job classifications. ARC did not challenge or seek further DOL

review of the USAF and DOL's denial of its job classification and wage rate requests.

¶20 Immediately thereafter, on July 9, 1999, ARC sent a letter to Baer attaching the Contracting

Officer's April 9, 1999 letter and instructing Baer to pay the listed employees in accordance with the

USAF letter. Baer refused to do so. Also in July 1999, ARC notified the Contracting Officer that it

10
was processing "an equitable amount" to be paid to the "parties concerned" and that a settlement was

being negotiated. Subsequently, ARC withheld some funds due to Baer and paid these

funds to Workers. These funds, however, were insufficient to pay Workers the amount

of money owed to them according to the Contracting Officer. No settlement was ever

reached.

DOL Regulations

¶21 The DOL regulations implementing the Davis-Bacon Act contain specific provisions and

grant broad authority to federal contracting officers. The regulations dictate precise language that

must be included in each federal construction project contract. 29 C.F.R. § 5.5. Section

5.5(a)(1)(ii)(A) authorizes the contracting officer for the federal agency to approve or disapprove

any new job classifications, wage rates and fringe benefits applicable to the project. If the contractor

or the laborers to be employed in the classification disagree with the contracting officer's

determination, the contracting officer is required to notify the DOL and seek a DOL determination.

29 C.F.R. § 5.5(a)(1)(ii)(C). In the case at bar, the Contracting Officer conferred with the DOL

before making the final decision to deny the requests. ARC did not challenge or seek further review

of the Contracting Officer's and DOL's denial. We conclude that these decisions became final

agency determinations.

¶22 The regulations also address enforcement of the Davis-Bacon Act. The regulations impose

upon the federal contracting agency the responsibility to ensure that the contract provisions in 29

C.F.R. § 5.5 are included in each appropriate contract. In other words, the contracting officer has the

authority to determine when the Davis-Bacon Act applies to a federal project. 29 C.F.R. § 5.6(a)(1).

¶23 The regulations require that the federal contracting agency, in this case the USAF, "shall

11
cause such investigations to be made as may be necessary to assure compliance with the labor

standards clauses required by § 5.5 . . . . Complaints of alleged violations shall be given priority."

Additionally, contracting officers are instructed that "particular care shall be taken to determine the

correctness of classifications." 29 C.F.R. § 5.6(a)(3). This plain language indicates that when the

federal contracting agency is aware of allegations of Davis-Bacon wage violations, the contracting

agency undertakes an administrative investigation to determine if violations have occurred and, if so,

what monies are owed to which persons. The DOL provides to contracting agencies investigatory

material to utilize during these authorized contractor examinations, including material with which to

compute back wages and liquidated damages based upon their investigations. 29 C.F.R. § 5.6(a)(4).

While the regulatory language appears to contemplate, if not impose, a mandatory

duty of investigation, the record in this case does not reveal to what extent a USAF

investigation occurred. Nonetheless, the Contracting Officer reached the decision that

the Act had been violated and determined what monies were owed to which persons.

Under the plain language of the regulations, she had the authority to make this

determination. Again, ARC and Baer did not challenge her authorization or

determination of violation.

¶24 Moreover, while the regulations provide that the USAF "shall" withhold sufficient funds to

pay the laborers in accordance with the contract, should the contractor fail to do so or fail to submit

payroll records (29 C.F.R. §§ 5.5(a)(2), 5.5(a)(3)(iii) and 5.9), the statute makes such

withholding on the part of the federal contracting agency discretionary. 40 U.S.C. §

276a(a). Whether discretionary or mandatory, the USAF Contracting Officer had the

12
unilateral authority to make such a decision, but there is no evidence that such funds

were withheld in this case. When the Air Force notified ARC that ARC was responsible

for paying the Workers if Baer failed to do so, there is no mention in the letter that the

USAF Contracting Officer was withholding or would withhold payments to ARC with

which to pay Workers if ARC did not. ARC accepted the USAF's determination of its

responsibility and did not seek a DOL review or investigation.

¶25 Furthermore, the regulations authorize the federal contracting agency to terminate the

contract in the event the contractor or subcontractor breach the contract by failing to comply with

any of its terms. 29 C.F.R. § 5.9. See also, 29 C.F.R. § 5.5(a)(7). Typically, once matters have

reached this point, the contracting officer withholds accrued funds due to the contractor and

administratively diverts those funds to the underpaid laborers. However, and despite the USAF

Contracting Officer's determination that the subcontractor breached the contract, the

USAF did not fire ARC. Rather, it issued a determination of violation, defined the

remedy and instructed its implementation. Had the USAF withheld funds with which

to pay Workers, upon its recognition that ARC failed to pay them the amount owed

based on the USAF's determination, it would have been obligated to then take the

actions necessary to provide payment to the Workers. The USAF, which supported the

Workers' claims from the onset, did not indicate the availability of such funds. This

supports Workers' speculation that no funds were withheld by the USAF with which to

pay Workers.

¶26 In addition, 29 C.F.R. § 5.11 sets forth the procedure for resolving disputes of fact or law

13
concerning payment of prevailing wage rates. Significantly, these dispute procedures may be

initiated by the DOL Administrator, the federal contracting agency, or upon request by the

contractor or subcontractor. Unlike § 5.5(a)(1)(ii)(C) (which gives laborers dispute rights over job

classifications in the contract), § 5.11 does not list aggrieved laborers among those who may initiate

wage dispute proceedings.

¶27 This omission led the Second Circuit Court of Appeals in Chan v. City of New York

(1993), 1 F.3d 96, 106, to determine that laborers who were to be paid Davis-Bacon wages

under § 5310 of the Housing and Community Development Act of 1974, 42 U.S.C. § 5310

(HCDA), could invoke a remedy under 42 U.S.C. § 1983 because "[t]he laborers who are

beneficiaries of § 5310 were not and are not allowed to initiate administrative dispute-

resolution proceedings [under 29 C.F.R. § 5.11]. Nor is there any provision for a laborer to

obtain judicial review of any administrative decision." The Second Circuit, therefore,

concluded that the regulatory scheme under the HCDA and the Davis-Bacon Act was not so

comprehensive as to preclude other remedies.

¶28 By contrast, in Reidell v. U.S. (Fed. Cl. Ct., 1999), 43 Fed. Cl. 770, plaintiff Reidell, a

laborer for a subcontractor, contacted the DOL directly and requested the agency to determine

whether the federal contract under which he was working was subject to the Davis-Bacon Act. The

contracting officer for the project had concluded that the Davis-Bacon Act did not apply. The DOL

reviewed the project and determined that the Act did apply and that laborers on the project should be

paid Davis-Bacon wages retroactive to the commencement of the project. An important distinction

between Reidell and the case at bar is that Reidell was seeking a ruling as to whether the Davis-

Bacon Act applied to a specific contract. The applicability of the Davis-Bacon Act is clearly a

14
decision within the DOL's expertise and purview. The Reidell court did not cite the regulatory

provisions relied upon by Reidell to initiate the DOL's review. However, under 29 C.F.R. §

5.5(a)(1)(ii)(C), laborers have the express right to challenge a contracting officer's pre-contract

decisions regarding job classifications and wages rates, and 29 C.F.R. § 1.6(f) gives the DOL the

express authority to amend an existing contract to provide for erroneously-excluded Davis-Bacon

wages and make those wages retroactive. Reidell, therefore, is inapposite to the case at bar because

there is no question that the Davis-Bacon Act applied to this Contract nor were there any other pre-

contract issues to be resolved. Workers are seeking to be paid wages that all parties agreed

to pay in the Contract and that the federal contracting agency has determined are due.

¶29 Under the plain language of the regulations, laborers may dispute pre-contract issues but do

not have the express right to initiate proceedings concerning factual or legal disputes over the

payment of prevailing wages. The USAF, ARC and Baer all had the express right to initiate the

formal DOL dispute resolution process. However, none of them did.

¶30 Lastly, 29 C.F.R. § 5.13 requires that "[a]ll questions relating to the application and

interpretation of wage determinations . . . shall be referred to the Administrator for appropriate

ruling or interpretation." This provision is inapplicable to Workers because they had no questions

relating to the application or interpretation of wage determinations. If ARC or Baer had such

questions, they should have sought a ruling or interpretation from the Administrator.

¶31 The Workers took all the proper steps in their attempt to resolve this matter. The first step,

complaining to Baer, got them fired. The second step, complaining to ARC, appeared to fall on deaf

ears for several months. Finally, the third step, USAF involvement, resulted in a determination by

the Contracting Officer authorized to make such a determination, that Baer and ARC were in

15
violation of the Davis-Bacon provisions of their contracts and were both equally responsible for

paying the Workers the amounts determined by the Contracting Officer. Neither company, though

both were adversely affected by the USAF's decision, challenged it.

¶32 Every decision made by the USAF supported the Workers' claims. From the Workers'

perspective, there was no dispute of fact or law as to the proper classification and wage rate due the

Workers. The Air Force calculated that and set it forth in a letter for ARC. Under these

circumstances, there was no reason for the Workers to initiate a DOL investigation, nor

under the plain language of 29 C.F.R. § 5.11 were they expressly authorized to do so.

On the other hand, each USAF/DOL ruling was adverse to ARC and Baer but neither

ARC nor Baer challenged any of the adverse decisions. Rather, ARC accepted them

and demanded that Baer honor the USAF rulings. Baer refused but did not initiate a

DOL determination as it was authorized to do under 29 C.F.R. § 5.11. Had ARC or

Baer held information that rebutted the USAF's decision in the matter, presumably

they would have submitted it to the Contracting Officer.

¶33 In sum, neither ARC nor Baer have demonstrated that any further administrative review was

either necessary or available to the complaining Workers under the clear language of 29 C.F.R. §

5.11. Moreover, they have failed to even argue that such further administrative review would or

should have resulted in a different conclusion than that drawn by the USAF Contracting Officer. On

these facts, we therefore conclude that ARC and Baer are estopped from arguing that

Workers failed to seek administrative review of the dispute.

¶34 It is axiomatic that it is the contracting parties who are adversely affected by a federal

16
contracting officer's or DOL's ruling who appeal the adverse ruling. The party benefitted by the

ruling has no reason to do so. Surely, neither law nor reason requires the "winning party" to initiate

an appeal in order to recover the proceeds of the victory. More to the point, when the adversely

affected parties fail to exercise their statutory right of review, they will not be heard to blame the

Workers for failing to appeal from a favorable ruling on their claim.

¶35 While 29 C.F.R. § 5.11 does not give laborers the express right to initiate DOL

dispute resolution proceedings, this does not mean that the laborers have no obligation to

pursue the remedies that are available to them. Because § 5.11 expressly authorizes the

federal contracting officer, contractors and subcontractors to initiate dispute resolutions, it is

implicit that, if laborers have a "dispute" about wages or job classifications, they must bring

their complaints to the attention of these entities so that resolution of the dispute may either

be accomplished informally or through the formal DOL dispute resolution process. It is only

when this process fails to result in full payment to the affected workers, as it did in this case,

that our holding here will provide such workers relief.

¶36 Under the circumstances presented here, we hold that the Workers exhausted the processes

available to them. They traveled the "administrative path" only to be thwarted and

frustrated for over two years. Unfortunately this "administrative path" did not result

in a formal DOL determination, without which the state district court concluded

Workers were precluded from seeking recovery under the Miller Act. While we

disagree with the District Court's conclusion, based upon our determination here that

the authorized federal contracting party's administrative decision became final when

17
the parties adversely affected by it failed to pursue review of it, the question remains

whether Workers have an alternate remedy or whether they must bear the loss for the

other parties' breaches of contract and violations of the law. We therefore must

determine whether Workers' claim for relief in the State District Court, once they have

demonstrated exhaustion of the Davis-Bacon regulatory requirements, is preempted by

the Davis-Bacon Act.

Preemption

¶37 ARC maintains that Workers may not seek relief in state court but, upon exhaustion of their

administrative remedies, are limited to bringing a Miller Act claim in federal court. Workers assert

that unless the Davis-Bacon Act preempts a state action, they are not so limited and may seek

contract enforcement before the state court.

¶38 Workers claim they are not seeking to enforce the Davis-Bacon Act labor standards

but are seeking to enforce a contract that includes specific Davis-Bacon wage provisions.

This distinction is subtle but important. Workers are not challenging the job classifications

established by the DOL for the construction project, nor are they challenging the wages or

benefits assigned by the DOL to these job classifications. Workers are seeking to enforce a

contract requiring that they be paid pre-determined wages for well-defined job duties. The

USAF Contracting Officer determined, based upon their job descriptions, to which

classification they belonged and the proper wage rate for that classification. She determined

the number of hours the Workers performed the tasks for each job classification and the total

wages each Worker was underpaid. Neither ARC nor Baer, both of whom were authorized to

18
dispute the USAF's findings in this regard, disputed or challenged these findings with DOL.

Therefore, there are no disputed facts that require the specialized expertise of DOL. This is a

simple breach of contract action. We must now decide, however, whether the Davis-Bacon

Act preempts state law and forecloses the opportunity to use state remedies as an alternative

or supplement to federal or administrative remedies.

¶39 Both the United States Supreme Court and this Court have plainly held that preemption is not

easily favored. "Because the States are independent sovereigns in our federal system, we

have long presumed that Congress does not cavalierly pre-empt state-law causes of

action. In all pre-emption cases, . . . we start with the assumption that the historic

police powers of the States were not to be superseded by the Federal Act unless that was

the clear and manifest purpose of Congress." Sleath v. West Mont Home Health Services,

2000 MT 381, ¶ 23, 304 Mont. 1, ¶ 23, 16 P.3d 1042, ¶ 23 (citing Medtronic, Inc. v. Lohr

(1996), 518 U.S. 470, 485, 116 S.Ct. 2240, 2250, 135 L.Ed.2d 700, 715 and Cipollone v.

Liggett Group, Inc. (1992), 505 U.S. 504, 516, 112 S.Ct. 2608, 2617, 120 L.Ed.2d 407, 422).

This presumption against preemption "can only be overcome by evidence of a 'clear and

manifest' intent of Congress to preempt state law." Sleath, ¶ 61 (citing Wisconsin Public

Intervenor v. Mortier (1991), 501 U.S. 597, 610, 111 S.Ct. 2476, 2484, 115 L.Ed.2d 532,

546).

¶40 In determining whether a federal law preempts a state law, including a common law

cause of action, we must determine whether Congress intended the federal law to preempt

state law. There are three ways in which state law may be superseded by federal law. First,

19
the legislature may expressly include in the federal statute a preemption clause, making it

clear that state law will not apply in the area governed by the federal statute. Second,

congressional intent to preempt state law in a particular area may be implied where the

regulation of the area is so comprehensive that it is reasonable to conclude that Congress

intended to "occupy the field" and to leave no room for supplementary state regulation.

Lastly, federal law may supersede state law when the state law actually conflicts with the

federal law. This type of conflict manifests itself as an inability to comply with both the

federal and state law, or because "the state law stands as an obstacle to the accomplishment

and execution of the full purposes and objectives of Congress." Hillsborough County v.

Automated Medical Labs. (1985), 471 U.S. 707, 713, 105 S.Ct. 2371, 2375, 85 L.Ed.2d

714, 721; see also, Suislaw Concrete Const. v. Wash., Dept. Of Transp. (9th Cir. 1986),

784 F.2d 952, 955.

¶41 We first consider express preemption. The Davis-Bacon Act itself does not contain an

express state law preemption clause; therefore, we will not presume that Congress intends the Davis-

Bacon statute to preempt state law. When Congress intends a statute to supersede state laws, it

knows how to say so and does so expressly. See, e.g., Employee Retirement Income Security

Program, 29 U.S.C. § 1144(a) (2001) ("Except as provided in subsection (b) of this section, the

provisions of this subchapter and subchapter III of this chapter shall supersede any and all State laws

insofar as they may now or hereafter relate to any employee benefit plan described in section

1003(a) of this title and not exempt under section 1003(b) of this title."). See also, Federal Election

Campaign Act, 2 U.S.C. § 453 (2001); Uniform Time Act of 1966, 15 U.S.C. § 260(b) (2001);

20
Armored Car Industry Reciprocity Act, 15 U.S.C. § 5903 (2001).

¶42 We next consider whether the DOL regulations purport to preempt state law. While the U.S.

Supreme Court has stated on several occasions that an agency's preemption regulations have

no less preemptive effect than statutes, Fidelity Federal Sav. & Loan Assn. v. De la

Cuesta (1982), 458 U.S. 141, 153, 102 S.Ct. 3014, 3022, 73 L.Ed.2d 664, 675, the fact is

there is no express preemption provision in the Davis-Bacon DOL regulations.

Therefore, we continue our analysis to determine if the regulations imply preemption or if

conflict preemption exists.

¶43 ARC argues that the DOL's regulations "imply" that Congress intended to occupy the entire

field relating to Davis-Bacon wages and left no room for state enforcement of any dispute relating to

the Davis-Bacon Act. While it is well established that federal regulations may preempt other laws or

remedies, the U.S. Supreme Court has issued this caution:

We are even more reluctant to infer pre-emption from the comprehensiveness
of regulations than from the comprehensiveness of statutes. As a result of their
specialized functions, agencies normally deal with problems in far more detail
than does Congress. To infer pre-emption whenever an agency deals with a
problem comprehensively is virtually tantamount to saying that whenever a
federal agency decides to step into a field, its regulations will be exclusive.
Such a rule, of course, would be inconsistent with the federal-state balance
embodied in our Supremacy Clause jurisprudence (citation omitted).

Moreover, because agencies normally address problems in a detailed
manner and can speak through a variety of means, including regulations,
preambles, interpretive statements, and responses to comments, we can
expect that they will make their intentions clear if they intend for their
regulations to be exclusive. Thus, if an agency does not speak to the
question of pre-emption, we will pause before saying that the mere volume
and complexity of its regulations indicate that the agency did in fact
intend to pre-empt.

21
Hillsborough, 471 U.S. at 717-18, 105 S.Ct. at 2377, 85 L.Ed.2d at 724; Suislaw, 784

F.2d at 957.

¶44 The Court reiterated these concerns in Geier v. American Honda Motor Co. (2000) 529 U.S.

861, 908-09, 120 S.Ct. 1913, 1940, 146 L.Ed.2d 914, 949, when it stated:

While the presumption [against preemption] is important in assessing the pre-
emptive reach of federal statutes, it becomes crucial when the pre-emptive effect of
an administrative regulation is at issue. Unlike Congress, administrative agencies are
clearly not designed to represent the interests of States, yet with relative ease they
can promulgate comprehensive and detailed regulations that have broad pre-emption
ramifications for state law. We have addressed the heightened federalism and
nondelegation concerns that agency pre-emption raises by using the presumption to
build a procedural bridge across the political accountability gap between States and
administrative agencies. Thus, even in cases where implied regulatory pre-emption
is at issue, we generally "expect an administrative regulation to declare any intention
to pre-empt state law with some specificity" (citation omitted).

See also, Fidelity Fed. Sav. & Loan Assn., 458 U.S. at 154; R.J. Reynolds Tobacco Co. v. Durham

County (1986), 479 U.S. 130, 149, 107 S.Ct. 499, 511, 93 L.Ed.2d 449, 467.

¶45 The DOL regulations are detailed and complex - they define relevant terms, they address

contract provisions, they instruct contractors on payroll reporting and permitted apprentice and

trainee programs, they dictate overtime requirements, they set forth debarment proceedings, and they

describe how to initiate a dispute concerning payment of wages. They do not speak to the question

of preemption, however. It is reasonable to presume, therefore, with all the other detailed mandates

of the regulations, that had DOL intended the regulations to preempt other laws and remedies, such

an express provision would have been inserted.

¶46 Moreover, the regulatory section regarding disputes over the payment of wages does not

even give an aggrieved laborer the express right to initiate a proceeding. Presumably, if 29 C.F.R. §

5.11 had meant for an "employee" or "laborer" to have such a right, the regulation would have

22
expressly provided so. Instead, the regulations expressly authorize the laborer only to complain to

the contracting officer if the laborer disagrees with the establishment of job classifications and wage

rates to which he or she would be affected. 29 C.F.R. § 5.5(a)(1)(ii)(C). Absent the availability of

an express regulatory remedy for laborers seeking payment of established wages, we are loathe to

imply preemption of other remedies.

¶47 We conclude, as did the U.S. Supreme Court in Geier, 529 U.S. 861 at 908-09, that

regulatory preemption will not be implied absent some declaration of an intent to preempt. Such a

declaration being absent here, we find no implied preemption in the Davis-Bacon regulations.

¶48 Finally, we analyze whether state law remedies would actually conflict with the

Federal Act. There are two types of conflict preemption: (1) "where it is impossible to

comply with both state and federal requirements"; and (2) "where state law stands as

an obstacle to the accomplishment and execution of the full purposes and objectives of

Congress." Williamson v. General Dynamics Corp. (9th Cir. 2000), 208 F.3d 1144, 1152

(citing Industrial Truck Ass'n, Inc. v. Henry (9th Cir. 1997), 125 F.3d 1305, 1309). "In

determining whether a state law conflicts with federal statutes or regulations, the

federal-state conflict must be actual and unavoidable, not merely possible." Seigel v.

American Sav. & Loan Assn. (1989), 210 Cal.App.3d 953, 965, 258 Cal.Rptr. 746, 752

(citation omitted). Additionally, courts must "determine whether, under the

circumstances of [a] particular case, [that State's] law stands as an obstacle to the

accomplishment and execution of the full purposes and objectives of Congress." Jones

v. Rath Packing Co. (1977), 430 U.S. 519, 526, 97 S.Ct. 1305, 1310, 51 L.Ed.2d 604, 614

23
(citations omitted). ARC argues that allowing a state cause of action to enforce wage

provisions in an employment contract based upon the Davis-Bacon Act results in an

irreconcilable conflict between the federal law and the state action. In this case, we

disagree for three reasons.

¶49 First, DOL's dispute regulations prescribe how factual and legal disputes concerning payment

of wages are to be resolved through administrative proceedings. 29 C.F.R. § 5.11. Here, the amount

of wages and the job classifications have already been established and agreed upon by the

contractors and subcontractors. However, even if ARC's and Baer's failure to pay contractually-

agreed upon wages qualifies as a dispute described by § 5.11, the fact remains that the regulation

does not give the Workers the express right to initiate the administrative proceedings. Therefore,

granting a remedy to an aggrieved laborer who has no express administrative remedy does not

frustrate the regulations.

¶50 Second, the purpose of the Act is to guarantee that workers on federal construction projects

are paid a specified minimum wage. Allowing the Workers here the right to enforce the wage

provisions in the Contract in state court will not impose a hardship on the contractors. Because

contract enforcement occurs long after contract bidding and acceptance, the contractors are still able

to submit bids which include "known" labor costs in accordance with the Davis-Bacon Act.

Additionally, in a state contract enforcement action, laborers are simply seeking to recover the

amount of wages contemplated in the contract. Therefore, granting laborers an alternative remedy in

certain limited circumstances does not frustrate or undermine the purpose of the Davis-Bacon Act,

nor does it impose greater or unexpected labor costs on the contractors.

¶51 Lastly, the contractor discipline provisions in the regulations are not frustrated by our

24
conclusion. There are three primary means of disciplining violating contractors: contract

termination, 29 C.F.R. § 5.5(a)(7); withholding or suspension of funds, 29 C.F.R. § 5.9; and

debarment, 29 C.F.R. § 5.12. The USAF Contracting Officer unilaterally had the authority to

terminate the Contract with ARC upon her determination that ARC had breached its Contract with

the Air Force. She also had the unilateral authority to withhold funds from ARC or suspend

payments to ARC upon a finding of breach. While she did not have the authority to pursue

debarment of ARC and Baer, there was nothing to preclude her from notifying the DOL that the

USAF had rendered a determination of violation and a calculation of wages due that has not been

appealed by the adversely affected parties. Such notice to DOL by the federal contracting agency

would allow the DOL to take any of the regulatorily-authorized steps it considered appropriate

toward the violating contractor. Quite simply, contractors who violate the law remain

subject to regulatory discipline, whether or not the instant action goes forward in state

court.

¶52 Under the circumstances presented here, we hold that a state remedy does not stand as

an obstacle to the accomplishment and execution of the Davis-Bacon Act. The Workers have

complied with the federal requirements to the extent they were allowed and this additional

remedy, in no way, will render it impossible for the other contracting parties to comply with

federal requirements. We therefore conclude that the Davis-Bacon Act does not preempt

Workers' right to a state enforcement action under these facts.

Private Right of Action

¶53 ARC urges us to resolve this case under a "private right of action" analysis. There are cases

25
in several jurisdictions holding that laborers do not have the right to bring a private action against a

contractor under the Davis-Bacon Act, but may only bring a Davis-Bacon wage action vis-à-vis a

Miller Act claim. See, United States, etc. v. Capeletti Bros., Inc. (5th Cir. 1980), 621 F.2d 1309;

Oper. Eng. Health & Welfare v. JWJ Contracting Co. (9th Cir. 1998), 135 F.3d 671; Weber v. Heat

Control Co. (3d Cir. 1984), 728 F.2d 599. However, the Seventh Circuit held that an implied

private right of action exists under the Davis-Bacon Act when, as in this case, the express

remedies provided by the Act are not available. McDaniel v. University of Chicago (7th Cir.

1977), 548 F.2d 689, cert. denied (1978), 434 U.S. 1033, 98 S.Ct. 765, 54 L.Ed.2d 780

(McDaniel II). The Seventh Circuit's first decision, reached in McDaniel v. University of

Chicago (1975), 512 F.2d 583, was vacated by the U.S. Supreme Court, and the matter was

remanded back to the Seventh Circuit to be reviewed in light of the Supreme Court's decision

in Cort v. Ash (1975), 422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26. University Of Chicago v.

McDaniel (1975), 423 U.S. 810, 96 S.Ct. 20, 46 L.Ed.2d 30. The Seventh Circuit analyzed

the McDaniel case under the Cort test in McDaniel II and reached its original decision for a

second time. The U.S. Supreme Court subsequently denied cert. See also, Norling v. Valley

Contracting and Pre-Mix (D.N.D. 1991), 773 F.Supp. 186 and Stampco Constr. Co., Inc. v.

Guffey ( Ind. 1991), 572 N.E.2d 510.

¶54 It is significant that the U.S. Supreme Court has considered many Davis-Bacon cases but has

specifically declined to resolve the "private right of action" issue. Universities Research Assn. v.

Coutu (1981), 450 U.S. 754, 769, 101 S.Ct. 1451, 1460, 67 L.Ed.2d 662, 674 ("Similarly, we do not

decide whether the Act creates an implied private right of action to enforce a contract that contains

26
specific Davis-Bacon Act stipulations."). We likewise decline to reach this issue. Rather, because

we find preemption inapplicable here, and, in keeping with Montana's longstanding policy and

constitutional guarantee in Article II, Section 16 granting citizens access to our courts when they are

aggrieved, we hold that under the specific facts of this case, Workers, as third party beneficiaries to

the Contracts between the USAF, ARC and Baer, may bring and pursue a state claim to enforce the

terms of the Contract.

¶55 This decision is limited to the named Petitioners/Appellants. There is no proof of

class certification and we render no ruling as to other potential claimants. Moreover,

inasmuch as Workers' claims for either negligence or for penalties under § 39-3-206,

MCA, were not decided by the state court nor raised on appeal, we will not consider

those claims here.

Summary of Analysis

¶56 We agree that the Davis-Bacon Act and the accompanying DOL regulations theoretically

provide an administrative remedy under which aggrieved parties to a contract incorporating the Act

may seek relief. We further agree that the administrative procedure, when available and not

otherwise exhausted, must be routinely pursued to its intended conclusion. However, when an

administrative remedy is not available or has been exhausted, and the underlying statute and

regulations do not preempt state law, the Montana Constitution gives citizens the right to bring

grievances to our courts. The Workers have that right in this case.

¶57 We hold that the Workers satisfactorily exhausted their available administrative remedies by

obtaining unchallenged, unappealed USAF/DOL rulings, and that the Davis-Bacon Act does not

expressly or impliedly preempt this state common law cause of action under these circumstances.

27
We further conclude that the Workers, as third party beneficiaries of the Contract, have the right to

sue to enforce that Contract.

¶58 Lastly, we do not disagree with the conclusions reached in Justice Rice's Concurrence.

However, having concluded that the Workers had a right to seek a contractual remedy in state court

and recognizing that the Workers did not reinstitute their federal action before the Miller Act statute

of limitations had expired, we saw no reason to address the rights which might otherwise be

available under the Miller Act.

CONCLUSION

¶59 We hold that the State District Court incorrectly concluded that it lacked subject matter

jurisdiction. Therefore, we reverse and remand to allow the Workers to proceed with their breach of

contract action against the defendants.

/S/ PATRICIA COTTER

We Concur:

/S/ KARLA M. GRAY
/S/ JAMES C. NELSON
/S/ W. WILLIAM LEAPHART
/S/ JIM REGNIER

28
Justice Jim Rice specially concurring.

¶60 I concur with the holding of the Court, but do so under a somewhat different rationale. I

agree that the District Court has subject matter jurisdiction to adjudicate Workers’ state law claims

for breach of contract. However, in reaching that conclusion, I believe it necessary to analyze the

Miller Act. The Davis-Bacon Act specifically prescribes an available judicial right of action under

the Miller Act for the wages at issue here and, therefore, as a Davis-Bacon prescribed remedy, the

Miller Act must be considered in properly assessing the rights of Workers herein.

¶61 In addition to the conclusion reached by the majority, I would also conclude that the Miller

Act, allowing Workers to sue the contractor and its surety on the bond, as provided for in 40 U.S.C.

§ 276a-2(b) of the Davis-Bacon Act, is not an exclusive federal remedy and, as such, does not

preempt or exclude Workers’ breach of contract action under Montana state law.

¶62 Initially, I note that ARC was correct when it argued that Workers cannot sue in state or

federal court under the Davis-Bacon Act for violations of the Davis-Bacon Act. Neither the statutes

nor regulations prescribe any such remedy. The regulations implementing the Davis-Bacon Act

require proactive conduct on the part of the Federal agency (USAF) and the Department of Labor to

protect laborers and mechanics working under federal contracts with Davis-Bacon clauses. See 29

C.F.R. § 5.6(a)(3) and (b) (requiring the Federal agency and Department of Labor to initiate

investigations to assure compliance with Davis-Bacon contract clauses, inspect payroll data, and to

determine the correctness of classifications, giving priority to complaints of alleged violations). In

the event of failure or refusal to pay, 29 C.F.R. § 5.9 authorizes the Federal agency to cause the

suspension and withholding of funds sufficient to compensate employees for the wages to which

29
they are entitled. If insufficient funds are subsequently withheld to compensate employees their

unpaid wages, there is no remedy to sue under the Davis-Bacon Act.

¶63 Rather, 40 U.S.C. § 276a-2(b) of the Davis-Bacon Act provides that “[i]f the accrued

payments withheld under the terms of the contract . . . are insufficient to reimburse all the laborers

and mechanics with respect to whom there has been a failure to pay the wages required pursuant to

this Act, such laborers and mechanics shall have a right of action and/or of intervention against the

contractor and his sureties conferred by law upon persons furnishing labor or materials . . . .” This

does not refer to a “private action” under the Davis-Bacon Act, but a right of action by the laborer or

mechanic on the contractor’s payment bond pursuant to the Miller Act. See Ybanez v. Anchor

Constructors, Inc. (Tex. Civ. App. 1972), 489 S.W.2d 730, 739. See also University Research Ass’n

Inc., v. Coutu (1981), 450 U.S. 754, 776-77 & n.28, 101 S.Ct. 1451, 1465 & n.28, 67 L.Ed.2d 662,

679 & n.28.

¶64 Workers were thus correct in arguing that this is not a “private right of action” case, but

rather a “preemption” case. As the only “right of action” provided to Workers is a right of action

under the Miller Act, the relevant inquiry is whether the federal Miller Act remedy is the exclusive

remedy available to Workers when the actions of the Federal agency and Department of Labor under

the Davis-Bacon Act fail to provide Workers with sufficient funds to compensate their unpaid

wages.

¶65 Creating confusion in this scenario is the question surrounding the exhaustion of

administrative dispute resolution procedures and exhaustion of administrative remedies under the

Davis-Bacon Act. The “administrative remedy” provided for laborers and mechanics under the

Davis-Bacon Act is the withholding of sufficient funds by the Federal agency/Contracting Officer to

30
reimburse laborers and mechanics their unpaid wages. The laborers and mechanics can initiate such

“withholding action” by giving notice of any alleged violations via complaints to the Federal

agency. 29 C.F.R. § 5.6(a)(3).

¶66 Upon a Federal agency finding of an actual violation of the Davis-Bacon clauses by the

contractor or subcontractor, the Federal agency has authority to cause the suspension of sufficient

funds to compensate the laborers and mechanics their unpaid wages. 29 C.F.R. § 5.9. If the Federal

agency fails to withhold sufficient funds, the only remaining remedy under the Davis-Bacon Act is a

Miller Act action pursuant to 40 U.S.C. § 276a-2(b).

¶67 The administrative procedural prerequisite for an actionable Miller Act claim is that Workers

must give notice of the alleged contract clause violations to the Federal agency– the USAF. 29

C.F.R. § 5.6(a)(3). The Davis-Bacon regulations provide no further administrative procedures to be

completed on behalf of Workers beyond notification to the Federal agency of the alleged violations.

¶68 For an actionable Miller Act claim, the Davis-Bacon regulations also require no further

administrative determination beyond the Federal agency’s determination that the contractor or

subcontractor is in violation of the Davis-Bacon clauses. In fact, regarding any post-contract

violations by the contractor or subcontractor, the regulations provide no option for the laborers and

mechanics other than to complain of the alleged violations to the Federal agency, as the regulations

contain no provision for the laborers and mechanics to appeal to the Department of Labor. Neither

do the regulations require the Department of Labor to make a post-contract determination of

prevailing wages and employment classifications subsequent to the Federal agency’s proper exercise

of post-contract authority in making such determinations. 4

4
The “contract provisions” in 29 C.F.R. § 5.5, dealing with pre-contract determinations

31
have been interpreted to require further post-contract administrative determinations by the
Department of Labor if workers file a complaint alleging underpayment of wages due. See, e.g.,
Davis v. Hardaway Contracting Co. (Ark. 1965), 386 S.W.2d 707. However, such interpretation
is incorrect and contrary to a plain reading of the regulations. The contract provisions in 29
C.F.R. § 5.5, requiring classification disputes to be referred to the Department of Labor, refer
only to disputes regarding predetermination of prevailing wages and classification of workers,
occurring prior to letting of the contract. See University Research Ass’n Inc., v. Coutu (1981),
450 U.S. 754, n.9, 101 S.Ct. 1451, n.9, 67 L.Ed.2d 662, n.9 (“[t]here is currently no
administrative procedure [under the Davis-Bacon Act] that expressly provides review of a
coverage determination after the contract has been let”).

32
¶69 Following Workers’ complaint of the alleged violations, the only subsequent administrative

determinations essential to an actionable Miller Act claim are a determination of prevailing wages

and a determination of the correct classifications for Workers. See 40 U.S.C. §§ 276a through 276a-

2(b). These determinations cannot be made judicially, as the judiciary has no authority or

jurisdiction to determine the correctness of prevailing wages or the correctness of employee wage

classifications under the Davis-Bacon Act. See United States v. Binghamton Constr. Co. (1954),

347 U.S. 171, 177, 74 S.Ct. 438, 441, 98 L.Ed. 594, 599 (“[t]he correctness of the [Department of

Labor’s] determination is not open to attack on judicial review”).

¶70 Applied to the present situation, the Department of Labor initially exercised its authority,

pursuant to 40 U.S.C. § 276a, and determined the prevailing wages and job classifications prior to

execution of the contract. The Department of Labor was thus correct when it denied the request by

ARC for “new” job classifications, as the Department of Labor had already exercised its “final”

authority by its pre-contract determination of prevailing wages, correct job classifications and

correct job descriptions. No party to this action disputes these findings and there were thus no

disputes of fact or of law to be resolved by the Department of Labor pursuant to 29 C.F.R. § 5.11.

¶71 Secondly, the Federal agency/Contracting Officer, pursuant to 29 C.F.R. § 5.6 (a)(3),

determined that Workers were correctly classified, and were, therefore, underpaid. As noted, this

determination is within the explicit authority of the Federal agency. In other words, although the

Department of Labor is ultimately the final authority regarding determinations of prevailing wages

and worker classifications, the Davis-Bacon regulations afford the Federal agency authority to

determine proper classification of workers prior to entering into the contract, see 29 C.F.R. §

5.5(a)(1)(ii)(A) and (B), and authority to determine the correctness of worker classifications

33
subsequent to contract formation, see 29 C.F.R. § 5.6(a)(3). 5 The latter authority can be exercised
F

by the Federal agency upon its own initiative or after complaints of alleged violations filed by

laborers and mechanics.

¶72 The above two administrative determinations by the Department of Labor and the Federal

agency, as correctly noted by the majority, fully exhausted all administrative procedures and the

administrative dispute resolution process. The result–that Workers were not fully reimbursed for

unpaid wages–was not a failure of the administrative dispute resolution process as the Court here

5
Some case law from other jurisdictions hold otherwise, that generally all disputes must
be resolved by the Department of Labor. Such case law is based upon misapplication of
precedent. See, e.g., United States ex. rel Windsor v. DynCorp, Inc. (E.D. Va. 1995), 895
F.Supp. 844. Relying on Coutu and failing to distinguish between pre- and post-contract
determination by the Department of Labor, the DynCorp court concluded that classification
disputes must be referred to the Department of Labor. As noted above in footnote 1, however,
the Coutu court explicitly distinguished between pre- and post-contract determinations and
specifically noted that the regulations contain no administrative procedure that expressly
provides review of a coverage determination after the contract has been let.

34
finds. To the contrary, there were no disputes to be administratively resolved and the process

worked as intended. 6

¶73 With the successful completion of the administrative process, it having been properly

determined that the accrued payments withheld were insufficient to reimburse Workers for unpaid

wages according to their correct classifications, Workers were free to exercise the final federal

remedy provided by 40 U.S.C. § 276a-2(b) of the Davis-Bacon Act: a judicial right of action by

Workers against the contractor and its surety on the bond pursuant to the Miller Act.

¶74 A necessary question before this Court, therefore, is whether the federal Miller Act remedy is

intended to be the exclusive remedy available to Workers or whether Workers may, in the

alternative, avail themselves to available Montana state law remedies.

¶75 The United States Courts of Appeals for the Second, Fifth, Ninth and Tenth Circuits have

considered the issue of whether the federal Miller Act provides an exclusive remedy to laborers and

mechanics, and these Courts of Appeals have concluded that it does not. See United States v. Reid &

Gary Strickland Co. (5th Cir. 1999), 161 F.3d 915, 919; Wright v. United States Postal Service (9th

Cir. 1994) 29 F.3d 1426, 1431; K-W Industries v. National Surety Corp. (9th Cir. 1988), 855 F.2d

6
Pursuant to 29 C.F.R. § 5.7(a)(2), it is the sole responsibility of the Federal agency to
report any violations by the contractor or subcontractor to the Department of Labor. However, a
failure of the Federal agency to do so has no repercussions on the rights of the complaining
laborers and mechanics to receive unpaid wages or to pursue their right of action under the
Miller Act, nor does the failure of the Federal agency to submit its mandatory report, as
apparently occurred in the present situation, imply that the laborers or mechanics must somehow
supplement such inaction by notifying the Department of Labor of the Federal agency’s findings.

35
640, 643; Active Fire Sprinkler Corp. v. United States Postal Service (2nd Cir. 1987), 811 F.2d 747,

754; United States v. Ins. Co. of North America (10th Cir. 1982), 695 F.2d 455, 458.

¶76 The Supreme Courts of Nevada and Wisconsin have likewise held. See Hoffmeister Cabinets

of Nevada, Inc. v. Bivins (Nev. 1971), 486 P.2d 57, 58; Voelz v. Milgram Contracting Co. (Wis.

1956), 75 N.W.2d 305, 306 (holding that the Miller Act is the exclusive remedy only to an action

brought “on the bond” and not to some other suit not based on the bond directly).

¶77 Similarly, the United States District Courts in California, Texas and Massachusetts are in

agreement. See United States v. Wausau Insurance Cos. (E.D. Cal. 1991), 755 F.Supp. 906, 909;

Alvarez v. Insurance Co. of North America (N.D. Cal. 1987), 667 F.Supp. 689, 693-95; United

States v. Robert E. McKee, Inc. (N.D. Tex. 1988), 702 F.Supp. 1298, 1302; United States v.

Sovereign Constr. Co. (D. Mass.), 311 F.Supp. 371, 372.

¶78 Finally, in another important ruling, the Eighth Circuit Court of Appeals has held that the

Davis-Bacon and Miller Acts have different and independent aims, and do not, either explicitly or

implicitly, limit one another. See United States v. W.H. Cates Constr. Co. Inc. (8th Cir. 1992), 972

F.2d 987, 992.

¶79 I would likewise conclude that the Miller Act is not the exclusive remedy to Workers in the

present situation, subject to any actual frustration by state law remedies of the purposes or goals of

either the Miller Act or the Davis-Bacon Act. A breach of contract remedy under Montana state law,

however, does not frustrate or impede the goal of the Miller Act to create a substitute lien via right

of bond action against a surety. In both a Miller Act action or breach of contract action, Workers are

provided with a remedy to receive unpaid wages which are due. Based on the foregoing, I conclude

that workers are free to pursue their state law claims for breach of contract.

36
¶80 For the above reasons, I concur with the result reached by the majority and also conclude that

the Miller Act remedy, provided in 40 U.S.C. § 276a-2(b) of the Davis-Bacon Act, is not the

exclusive remedy to Workers in this case, but that Workers are free to pursue their breach of contract

action under Montana state law.

/S/ JIM RICE

37
Justice Terry N. Trieweiler concurring and dissenting.

¶81 I concur with the result of the majority Opinion and with much of what is said in that

Opinion. However, I also conclude that the majority has unnecessarily and, contrary to our prior

decisional law, limited the effect of its Opinion, thereby depriving other aggrieved workers of its

benefit. From those limitations placed on this Opinion, I dissent.

¶82 I agree with what is said in Justice Rice's concurring Opinion except for his conclusion that

an employee cannot sue directly to enforce his rights provided by the Davis-Bacon Act. However, I

would resolve the issue in this case more directly and without the inference that there was an

effective administrative remedy available to the Plaintiffs pursuant to the Davis-Bacon Act.

¶83 As noted by the majority, the contract between American Renovation and Construction

Company and the United States Air Force required not only that ARC pay its laborers' prevailing

wages pursuant to the Davis-Bacon Act, but also required that ARC require its subcontractors to pay

those wages. Assuming the Plaintiffs' allegations to be correct, it did not do so.

¶84 The question in this case was not, as decided by the District Court, whether the Davis-Bacon

Act provides a direct cause of action pursuant to the Supreme Court's analysis in Cort v. Ash (1975),

422 U.S. 66, 95 S.Ct. 2080, 45 L.Ed.2d 26. (Although I would hold as in McDaniel v. University of

Chicago (7th Cir. 1977), 548 F.2d 689, cert. den'd., 434 U.S. 1033, 98 S.Ct. 765, 54 L.Ed.2d 780,

(1978), that it does.) The question is whether the Davis-Bacon Act preempts the Plaintiffs' state

remedies such as their claims for breach of contract and negligence. I agree with the majority's

analysis of the preemption issue with the exception that I would not under any circumstance infer

preemption by federal administrative regulations. The question is whether Congress intended

preemption of state law. I do not believe comprehensive administrative regulation could ever shed

any light on that issue.

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¶85 I agree with the result of the majority's preemption analysis. However, I would not limit the

conclusion that a common law breach of contract action presents no conflict with the statutory and

regulatory scheme of the Davis-Bacon Act to the facts of this case as the majority has done in ¶ 48

of its Opinion. I would conclude that a breach of contract action to enforce those protections

provided to workers through the Davis-Bacon Act can never conflict with the Act which the majority

concedes was enacted to protect workers on federal construction projects. How could allowing

workers to enforce their right to prevailing wages conflict with federal law requiring that they be

paid prevailing wages? It seems to me the majority's analysis in that regard is unnecessarily

complicated and the majority's conclusion is unnecessarily limited.

¶86 Nor do I join in the majority's conclusion at ¶ 33 that Baer and ARC are estopped from

arguing that the Plaintiffs failed to exhaust their administrative remedies. I would simply conclude

that there were no effective administrative remedies available to the Plaintiffs nor, other than the

practical limitations pointed out by Justice Rice (regarding DOL determination of the proper job

classification and prevailing wage), is there any requirement in our prior case law that people

protected by a federal statutory scheme exhaust that statutory remedy before pursuing an

independent state remedy. For the same reason, I disagree with the majority's conclusion in ¶ 35 that

the Plaintiffs in this case had an obligation to make their complaints to the contractor, subcontractor,

contracting agency or Department of Labor before bringing a state law action for breach of contract

or negligence. While common sense and practicality suggest that those efforts first be made, there is

nothing in the law that requires it.

¶87 Finally, I strongly disagree with the majority's conclusions in ¶ 56 of the majority Opinion

that the Davis-Bacon Act and DOL regulations provide workers an effective remedy for contract

violations or that the administrative remedy must be pursued to its intended conclusion. The first

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conclusion is completely inconsistent with the majority's observations in ¶ 26 and ¶ 29 of its Opinion

that only the DOL, contracting agency or private contractor can initiate dispute resolution

proceedings regarding the payment of prevailing wages. A regulatory scheme which leaves the

rights of workers totally up to federal agencies and their private contractors is no remedy whatsoever

to a worker who has been denied his or her prevailing wage.

¶88 Finally, once the Court has considered whether the Davis-Bacon Act preempts state law

claims, I would conclude it is only necessary to look to our prior case law to determine whether

Plaintiffs' claims in this case were properly dismissed. We have already decided this identical issue

in State ex rel. Farm Credit Bank of Spokane v. Dist. Court of Third Jud. Dist. (1994), 267 Mont. 1,

881 P.2d 594. However, the Farm Credit decision is not even mentioned in either the majority

Opinion or Justice Rice's concurring Opinion.

¶89 In Farm Credit, the Plaintiffs filed a state law claim for damages from Farm Credit Bank of

Spokane. Among their claims, Plaintiffs alleged that the Bank breached its contract with them by

not complying with the Agricultural Credit Act of 1987, the terms of which were incorporated into

the contract between the parties. The District Court dismissed the Plaintiffs' breach of contract claim

based on preemption by the Agricultural Credit Act. On appeal, the Bank contended, as does the

Defendant in this case, that the District Court should be affirmed because, based on federal

authority, there is no direct cause of action available to a borrower for enforcement of the terms of

the Agricultural Credit Act. Plaintiffs, on the other hand, pointed out that they were not relying on

the creation of a private cause of action to enforce the Agricultural Credit Act. They simply sought

to enforce those provisions of the Act which had been incorporated in the terms of their contract

with the Bank.

¶90 In Farm Credit, we first held, as the majority does in this case, that it is not necessary to

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analyze whether Congress intended to permit a private right of action to enforce the Act. We held

that:

By including reference to the Act as a controlling contract term, the FCB is bound by
the terms of the Act under the contract, and the Graveleys have the same right to
enforce the provisions of the Act as the parties have to enforce any other provision in
the contract.

Farm Credit, 267 Mont. at 17, 881 P.2d at 603.

¶91 We pointed out that "while the existence of a private cause of action is correctly analyzed

under Cort v. Ash, federal preemption is analyzed differently." Farm Credit, 267 Mont. at 17, 881

P.2d at 603. Based on the same analytical process employed by the majority in this case, we

concluded that not only was there no conflict between the private cause of action and the Act, but

that the private cause of action furthered the purpose of the federal legislation. In relevant language,

we stated:

There is no basis for concluding that simply because Congress provided for a
minimum procedure for reviewing a loan officer's decision that it meant to foreclose
any other method of enforcing the right to restructure provided for by statute.

Farm Credit, 267 Mont. at 20, 881 P.2d at 605.

¶92 We concluded that because the terms of the Act were incorporated by the parties as a term of

their contract, those terms were as enforceable in a court of law as any other contract term. Farm

Credit, 267 Mont. at 20-21, 881 P.2d at 606.

¶93 If a minimum procedure for reviewing a loan officer's decision does not foreclose other

methods of enforcing rights provided for by contract, certainly the administrative process alluded to

by the majority would not foreclose the Plaintiffs' claim in this case. In this case, Plaintiffs did not

even have a right to initiate a fact finding process by which to resolve their claim that they were

denied the prevailing wage for their job classification.

¶94 For these reasons, and based on our prior decision in Farm Credit, I would reverse the

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judgment of the District Court and I concur in the majority's decision to do so. However, I dissent

from the majority's unnecessary and legally incorrect limitations on the application of its Opinion. I

believe that the majority's limiting language will lead to confusion by future litigants and leave the

door open for future avoidance of what should have been a simple and unequivocal conclusion in

this case.

/S/ TERRY N. TRIEWEILER

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