United States District Court, D. Massachusetts
MEMORANDUM OF DECISION AND ORDER ON DEFENDANT'S
MOTION FOR SUMMARY JUDGMENT
Gail Dein United States Magistrate Judge
December 2010, the defendant, ABM Janitorial Services -
Northeast, Inc. (“ABM”), entered into an
agreement with the Massachusetts Convention Center Authority
(“MCCA”) to provide janitorial and cleaning
services for the Boston Convention & Exhibition Center
and the Hynes Convention Center. ABM, in turn, entered into a
Subcontract Agreement (the “Agreement”) with the
plaintiff, Star Service Corporation (“Star”), to
provide the janitorial services at these sites. As part of
the parties' arrangement, Star also agreed to be bound by
ABM's contract with SEIU, Local 615, the Union that
represented employees performing janitorial and cleaning
services at MCCA sites.
Star was performing the services called for under the
Agreement, the Massachusetts Department of Labor determined
that Star was paying its employees at the Convention Centers
less than the prevailing wage for state cleaning contracts.
While Star did not dispute that it was not paying the
prevailing wage, it argued that it was paying its employees
in accordance with the contract with the Union. A dispute
arose between Star and ABM as to whether Star's failure
to pay the prevailing rate constituted a breach of the
Agreement. In addition, ABM claimed that Star had wrongfully
failed to carry workers' compensation insurance, as a
result of which it had to pay an injured employee's
claim, and that an audit conducted by ABM revealed that Star
had billed for work that had not been performed. ABM then
terminated the Agreement “for cause, ” and
withheld in excess of $318, 000.00 due to Star under the
Agreement. Star brought suit against ABM for the amounts
withheld and other damages, and ABM responded by asserting
various counterclaims against Star.
matter is before the court on “Defendant ABM Janitorial
Service-Northeast, Inc.'s Motion for Summary
Judgment.” (Docket No. 38). By this motion, ABM is
seeking judgment in its favor on all of Star's claims, as
well as on its own counterclaims. Star has opposed the motion
on the grounds that material facts are in dispute.
the reasons detailed herein, ABM's Motion for Summary
Judgment (Docket No. 38) is ALLOWED IN PART and DENIED IN
PART as follows:
to the Complaint:
I - Breach of Contract: Allowed as to the claims based
on Star's failure to maintain workers' compensation
insurance, and ABM's claim that Star overbilled ABM;
denied as to the claim that Star breached the Agreement by
failing to comply with the prevailing wage law.
to ABM's Counterclaim:
I - Breach of Contract; Count IV - Indemnity: Allowed as
to the claims based on Star's failure to maintain
workers' compensation insurance, and ABM's claim that
Star overbilled ABM; denied as to the claim that Star
breached the Agreement by failing to comply with the
prevailing wage law.
II, III & V: Denied.
STATEMENT OF FACTS
a California corporation with a principal place of business
in Texas. DF ¶ 2. It provides a variety of services,
including janitorial and cleaning services, at various
facilities. Id. ¶ 3. In December 2010, ABM
entered into an agreement with MCCA to provide janitorial and
cleaning services for the Boston and Hynes Convention
Centers. Id. ¶ 4. That agreement provides for
the payment of specified hourly rates for certain employees,
including operations supervisors, utility workers and
cleaners. ABM Ex. A ¶ 3.2. ABM was obligated to pay
“not less than the wage rates” specified in the
agreement, but could pay higher wages if it saw fit to do so.
Id. ¶ 3.5.
turn, entered into the Subcontract Agreement with Star in
December 2010. DF ¶ 5. Star is a Massachusetts
corporation, with a principal place of business in East
Boston, Massachusetts, and had been working at the Boston and
Hynes Convention Centers before ABM was retained.
Id. ¶¶ 1, 5. The parties agree that ABM
retained Star's services in order to satisfy the
MCCA's minority-owned business contracting requirements.
Id. ¶ 5. Pursuant to the Agreement, Star
consented to be bound by the terms of the Agreement as well
as the specifics of the contract between ABM and MCCA.
Id. ¶ 15; ABM Ex. B (Agreement) ¶ 1(a). In
addition, Star agreed to be bound by ABM's contract with
the Union (the “Union Contract”), “which
provided additional terms governing Star's relationship
with its workers” at the Convention Centers. DF ¶
16. Star provided services beginning at the Hynes on January
1, 2011, and at the Boston Convention Center on January 8,
2011, and ending at both places on November 29, 2013.
Id. ¶ 26. ABM terminated Star's services
“for cause” by letter dated December 2, 2013. DF
¶ 74; ABM Ex. W. ABM withheld $318, 791.91 from amounts
allegedly due to Star under the Agreement. DF ¶ 71.
Obligation To Pay Wages
Article VI of the Union Contract, entitled “Wages,
” provides that “Wages, during the term of this
Agreement, shall be paid as set forth in ‘Appendix
A', attached hereto and made part of this
Agreement.” ABM Ex. C (Union Contract) Article VI.
Appendix A lists what appears to be an hourly rate for
employees in “Category A, ” “Category B
& C, ” and “Category D.” Id.
Appendix A. These categories are defined in the Union
Contract as follows:
Category A - Regularly scheduled employees of over 29 hours
Category B - Regularly scheduled employees of between 16 and
29 hours, inclusive
Category C - Regularly scheduled employees of under 16 hours
Category D - Daily cash employees
Id. Article IV.
addition, for employees who fell within Categories A-C under
the Union Contract, Star was obligated to make certain
payments to the Boston Building Service Employees Trust Fund
and the Massachusetts Service Employees Pension Fund (the
“Funds”), and was then able to take a credit for
such payments. See id. Articles XIV & XV; DF
¶ 21; PR ¶ 21. These payments are included in the
determination whether the prevailing wage is being paid. DF
contends that in order to fulfill its contractual obligations
with ABM, it was obligated to pay workers at the Convention
Centers “in accordance with the wage sched- ules set
forth in Article [VI] (Wages) of the Agreement between ABM
and SEIU, ” including Appendix A thereto. PR ¶ 17.
Star also argues that it complied with its obligations under
the Union Contract. Therefore, according to Star, it does not
matter if it paid the prevailing wage rate since it satisfied
its contractual obligations with ABM by satisfying its
obligations under the Union Contract. ABM, on the other hand,
argues that for purposes of this motion for summary judgment,
it does not matter whether Star met its obligations under the
Union Contract because it had an independent obligation under
its Agreement with ABM to pay its workers “the state
prevailing wage rate, which is required under M.G.L. c. 149,
§ 27F, the Massachusetts Prevailing Wage Law for state
cleaning contracts (the ‘PWL').” DF ¶
17. In support of its position, ABM relies on paragraph 4 of
the Agreement. That paragraph provides as follows:
4. COMPLIANCE WITH APPLICABLE LAWS.
Contractor [ABM] is an equal employment opportunity and
affirmative action employer. Contractor does not discriminate
in employment of persons or awarding of subcontracts based on
an individual's race, sex, age, religion, national
origin, sexual orientation, gender identity, veteran or
disabled status. Subcontractor [Star] affirms that it is an
equal employment opportunity employer and affirms that it
does not discriminate against any person based on age, race,
sex, color, religion, national origin, sexual orientation,
gender identity, veteran or disabled status. Subcontractor
hereby acknowledges and affirms its obligation to comply with
all federal, state and local laws, regulations and ordinances
governing labor and employment of its employees and all other
matters related to the performance of the Services under this
Agreement including but not limited to Executive Order 11246,
Title VII of the Civil Rights Act of 1964, as amended, the
Age Discrimination in Employment Act of 1967, as amended, the
Rehabilitation Act of 1973, 41 CFR 60-741, the Americans with
Disabilities Act, the Vietnam Era Veterans Readjustment
Assistance Act of 1974, 41 CFR 60-25, and Executive Order
11625 (Minority Business Enterprise) together with all
amendments thereto, the Immigration Reform and Control Act of
1986 (IRCA), the Williams-Steiger Occupational Safety and
Health Act of 1970, the federal Fair Labor Standards Act,
state and local wage and hour laws, and all
laws, rules and regulations regarding the filing of reports
and payment of social security, withholding and income taxes.
Subcontractor shall, upon request, provide express
certification and evidence of compliance with such laws and
that all required filings and governmental payments have been
ABM Ex. B ¶ 4 (emphasis added). Star admits that it paid
its employees less than the prevailing wage under the
prevailing wage law. PR ¶ 40.
Commonwealth of Massachusetts, Department of Labor and
Workforce Development, Department of Labor Standards
(“DLS”) is responsible for making determinations
about whether contracts for cleaning of state buildings are
covered by the prevailing wage law. DF ¶ 18. If so, DLS
issues prevailing wage rates for cleaners, janitors, and
porters. Id. It appears that in September 2010, DLS
issued prevailing wage rates for cleaners, janitors and
porters at the Boston and Hynes Convention Centers.
See ABM Ex. C-1. Star denies that it knew about
“the rates and method by which PWL applied to the work
covered by the agreement between SEIU and ABM for work
performed at the” Convention Centers. PR ¶ 20. ABM
has offered no support for its assertion that Star knew about
these rates. See Gallo Decl. ¶¶ 8, 11; DF
Attorney General's Investigation
contradiction to Star's contention that it complied with
its obligations under the Union Contract, by no later than
March 2013, the Funds were asserting that Star was not
meeting its obligations under the Union Contract to pay
benefit contributions. DF ¶ 45. The Massachusetts
Attorney General notified ABM that it had investigated a
complaint concerning work at the Convention Centers, and was
considering an enforcement action against Star, under which
it would seek to hold ABM jointly liable for Star's
failure to pay the minimum prevailing wage under the
prevailing wage law. Id. ¶ 46. The Attorney
General also informed ABM that the Massachusetts Division of
Unemployment Assistance had placed a lien on Star's
payroll in the amount of $400, 000.00. Id. ¶
9, 2014, the Attorney General informed ABM that it had
determined that from March 2012 through September 2013, Star
had reported in excess of $959, 000 in deductions from 160
workers for health, welfare and pension fund contributions
that were never made. Id. ¶ 49. Since these
contributions are relevant to whether the prevailing wage was
paid, the Attorney General also informed ABM that as a result
of Star's actions, Star had failed to pay its employees
the required minimum prevailing wage. Id. ¶ 50.
In addition, ABM was informed that the Attorney General's
Office intended to take enforce-ment action pursuant to Mass.
Gen. Laws ch. 149, § 27C, under which it would seek to
hold both Star and ABM jointly liable for approximately $959,
000 due to Star's employees. Id. ¶ 51.
September 5, 2014, ABM entered into a settlement with the
Attorney General. Id. ¶ 52. As detailed
E. In or around August of 2011, the Attorney General received
complaints from the SEIU Local 615 (the “Union”),
the exclusive bargaining agent for employees performing
janitorial and related services at the MCCA sites, that Star
had failed to pay its employees the minimum state prevailing
wage, by improperly taking credit for deductions from the
employees' pay for contributions to the employees'
pension fund and for health and welfare plans.
F. The Attorney General, in response to this complaint,
undertook an investigation through which the Attorney General
concluded that, at relevant times between January 2011 and
December 2013 (the relevant time period), Star failed to pay
some or all of its employees the required minimum prevailing
wage rate for cleaning services at the MCCA pursuant to Mass.
Gen. L. c. 149, §§ 27H and 150 and it submitted
claims to ABM for payment for services provided at the
[Boston Convention & Exhibition Center]. Star made no
payments to the relevant pension fund, and insufficient
payment to the health and welfare funds, and it did not
provide the minimum prevailing wage payments directly to its
ABM Ex. G. As part of the settlement, ABM agreed to pay $300,
000.00, to be distributed only to Star employees and the
Massachusetts Service Employees Pension Fund. Id. at
¶ 1; DF ¶ 52. ABM made the payment in a timely
manner on October 1, 2014. DF ¶ 53.
Attorney General then pursued an action against Star for
failing to pay the appropriate prevailing wage at the
Convention Centers. Id. ¶ 54; ABM Ex. I. As a
result of the $300, 000 settlement payment made by ABM, the
Attorney General reduced the total amount Star was ordered to
pay as restitution from approximately $959, 000.00 to $659,
899.64. DF ¶ 55. Star was also ordered to pay a penalty,
for a total of $758, 884.64.
¶ 54. There is nothing in the record to indicate how the
amounts due were calculated, or whether Star had submitted
invoices to, and been reimbursed by, ABM for these amounts
during the normal course of their business relationship.
See ABM Ex. I.
appealed the Attorney General's citation to the
Commonwealth of Massachu-setts Division of Administrative Law
Appeals (“DALA”) on the grounds that it was
“excused from paying the prevailing wage because [Star
was] required to pay the wage set in the collective
bargaining agreement, which was a lower rate than the
prevailing wage.” DF ¶ 56; ABM Ex. J at 6. The
Administrative Magistrate affirmed the Attorney General's
citation, and rejected Star's argument.
Id. Thus, DALA affirmed the Attorney
General's finding that Star had failed to pay its 160
workers the prevailing wage after taking deductions for
health, welfare and pension fund contributions that it never
made. DF ¶ 57. Star did not appeal the DALA decision to
the Massachusetts Superior Court, and the time to do so has
expired. Id. ¶ 59.
contends that Star must indemnify it for the $300, 000.00 it
paid to the Attorney General's Office, plus the
attorneys' fees it incurred in resolving the Attorney
General's dispute. In so arguing, ABM relies on paragraph
18 of the Agreement, which provides in relevant part as
18. INDEMNIFICATION. To the fullest
extent permitted by law, Subcontractor [Star] shall, at its
sole cost and expense, indemnify, defend and hold harmless
Contractor [ABM], ... from and against any and all claims,
demands, losses, liability, lawsuits, liens and judgments,
including all attorneys' fees, costs and expenses
(collectively “Claims”) which arise out of, are
alleged to arise out of or result, in whole or in part,
directly or indirectly, from or in connection with ... (iv)
Subcontractor's relationship with its employees or agents
(including but not limited to a failure to comply with
paragraph 4 hereof); (v) any act or omission by
Subcontractor, its employees, agents or sub-subcontractors;
(vi) any Claims for which any of the Indemnitees and
Subcontractor may be jointly or severally liable ....
ABM Ex. B ¶ 18. Star disputes that it is obligated to
indemnify ABM for wages that ABM independently owed to the
employees, especially since Star had allegedly complied with
the terms of the Union Contract. As detailed below, this
court finds that there are disputed ...