International Brotherhood Elec v. Farfield Co ( 2021 )

PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
_______________________
No. 20-1922
_______________________
UNITED STATES OF AMERICA EX REL.
INTERNATIONAL BROTHERHOOD OF ELECTRICAL
WORKERS LOCAL UNION NO. 98
v.
THE FARFIELD COMPANY,
Appellant
_______________________
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 5-09-cv-04230)
District Judge: The Honorable Mark A. Kearney
__________________________
Argued March 10, 2021
Before: SMITH, Chief Judge, McKEE and AMBRO, Circuit
Judges
(Filed July 13, 2021)
Susan R. Friedman [ARGUED]
STEVENS & LEE
51 South Duke Street
P.O. Box 1594
Lancaster, PA 17602
Thomas I. Vanaskie
STEVENS & LEE
1500 Market Street
Centre Square
East Tower, Suite 1800
Philadelphia, PA 19102
Counsel for Appellant
Marc L. Gelman [ARGUED]
Richard B. Sigmond
JENNINGS SIGMOND
1835 Market Street, Suite 2800
Philadelphia, PA 19103
James E. Goodley, I
1650 Market Street, Suite 3600
Philadelphia, PA 19103
Ryan P. McCarthy
GOODLEY MCCARTHY
1650 Market Street
One Liberty Place, Suite 3600
Philadelphia, PA 19103
Counsel for Appellee
-ii-
Catherine Ruckelshaus
NATIONAL EMPLOYMENT LAW PROJECT
90 Broad Street, Suite 1100
New York, NY 10004
Counsel for Amicus Appellees Community
Justice Project, Community Legal Services, and
National Employment Law Project
Shauna B. Itri
SEEGER WEISS
1515 Market Street, Suite 1380
Philadelphia, PA 19102
Counsel for Amicus Appellee Taxpayers against
Fraud Education Fund
Esmeralda Aguilar
SHERMAN DUNN
900 7th Street, N.W., Suite 1000
Washington, DC 20001
Counsel for Amicus Appellee North America
Building Trades Unions
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Table of Contents
I. Legal Background .......................................................... 2
A. The Davis-Bacon Act .................................................... 2
B. The False Claims Act .................................................... 4
II. Factual Background ....................................................... 6
III. Procedural Background ............................................... 11
IV. Jurisdiction & Standard of Review ............................ 15
V. Discussion ...................................................................... 16
A. Section 3729(a)(1)(B) Applies Retroactively to the
Project and Does Not Violate the Ex Post Facto
Clause.. ........................................................................ 16
1. In context, “claims” can only mean cases……...….. 19
2. Congress repudiated Allison Engine with clear intent
for full retroactivity. ................................................... 24
3. Applying § 3729(a)(1)(B) does not violate the Ex Post
Facto Clause. .............................................................. 28
B. Farfield Misclassified Its Employees. ......................... 34
1. No clear error in finding that groundmen were not
“assisting” linemen. ................................................... 34
2. Local industry practice controls the propriety of
worker classification. ................................................. 35
C. Farfield’s False Certified Payrolls Were Material. ..... 42
1. Proper classification and accurate certified payrolls
were payment conditions. ........................................... 44
2. No evidence of past relevant Government (in)action. 50
3. Davis-Bacon compliance was essential to the
bargain…………………………………………………….52
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D. The Facts Support the District Court’s Finding of
Recklessness. ............................................................... 55
1. The testimony supported the District Court’s
recklessness finding. ................................................... 56
2. No clear error based on DOL audit. .......................... 57
3. Farfield’s other arguments fail. ................................. 58
E. The District Court Properly Shifted the Burden of Proof
on Damages to Farfield. .............................................. 60
1. Mt. Clemens applies in an appropriate FCA case, like
this one. ...................................................................... 61
2. Local 98’s evidence was sufficiently
representative……. ..................................................... 65
F. The Award of Attorneys’ Fees Was Reasonable. ....... 67
VI. Conclusion .................................................................. 69
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__________________________
OPINION OF THE COURT
__________________________
SMITH, Chief Judge.
Contractors on most federally funded construction pro-
jects must pay their workers a minimum wage based on the
type of work they perform. The Department of Labor (DOL)
usually sets those prevailing wage rates for each classification
of worker needed on such a project. A contractor who bids on
a project knows well that compliance with these regulations is
required. And once it commences work, the contractor knows
that it must also certify its compliance on payrolls supporting
invoices for payment.
If a contractor misclassifies workers—thereby paying
them less than required—the federal government may withhold
funds in an amount proportionate to the affected work. The
DOL is usually the forum for adjudicating claims of misclassi-
fication, for misclassified employees to recover underpaid
wages, and for aggrieved contractors to assert entitlement to
withheld funds.
But a contractor found to have misclassified employees
can also face collateral consequences. For example, its certifi-
cations of compliance with wage-and-hour regulations may
have been false. And those same false certifications may, in
turn, have been material to the Government’s decision to pay
invoices associated with the misclassified work.
So what happens when a contractor is sued under the
False Claims Act for falsely certifying compliance, but the
DOL declines to adjudicate the underlying issue of whether
workers were misclassified? In this case, the results have been
over a decade of litigation and a panoply of first-impression
issues. We conclude that a 2009 amendment to the FCA’s lia-
bility standard applies retroactively to cases, like this one,
pending on or after June 7, 2008; that the record establishes the
contractor’s misclassification of its workers; that its false cer-
tified payrolls were material to the Government’s decision to
pay for the associated work; and that the burden-shifting
framework for damages in Fair Labor Standards Act cases
applies. We also reject the appellant-contractor’s other argu-
ments en route to affirming the challenged orders of the District
Court.
I. LEGAL BACKGROUND
A. The Davis-Bacon Act
The Davis-Bacon Act, “[o]n its face,” is “a minimum
wage law designed for the benefit of construction workers.”
United States v. Binghamton Constr. Co., 347 U.S. 171, 178
(1954). The Act was intended “to protect local wage standards
by preventing contractors from basing their bids on wages
lower than those prevailing in the area” where the work is to
be done. Univs. Res. Ass’n v. Coutu, 450 U.S. 754, 773–74
(1981) (quotation omitted); see 40 U.S.C. § 3142(a). Its pur-
pose was “to give local labor and the local contractor a fair
opportunity to participate in [] building program[s].” Coutu,
450 U.S. at 774 (quoting 74 Cong. Rec. 6510 (1931)). To that
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end, the Act requires contractors on most1 federally funded
infrastructure projects to pay employees minimum wages
based on the DOL’s determination of prevailing wages “for the
corresponding classes of laborers and mechanics employed on
projects of a character similar to the contract work in the civil
subdivision of the State in which the work is to be performed.”
40 U.S.C. § 3142(b).
Per DOL regulations, see 29 C.F.R. pts. 1, 5, 7, prevail-
ing wage determinations are typically promulgated at the
county level, 29 C.F.R. § 1.7(a), often based on survey data of
wages paid or local collective bargaining agreements. See 40
U.S.C. § 3142(b); 29 C.F.R. § 1.3(b). Though the determina-
tions sometimes don’t include detailed information about the
duties covered by each job classification, the DOL’s regula-
tions provide that “[a]ll questions relating to the application
and interpretation of wage determinations (including the clas-
sifications therein) . . . shall be referred to the Administrator
for appropriate ruling or interpretation.” 29 C.F.R. § 5.13; see
also Coutu, 450 U.S. at 760–61 (“Disputes over the proper
classification of workers under a contract containing Davis-
Bacon provision must be referred to the Secretary for determi-
nation.” (citations omitted)).
Shirking Davis-Bacon obligations can have dire conse-
quences. For example, covered contracts must provide for the
Government’s withholding from the contractor as much of the
accrued payments as is necessary to pay the workers the differ-
ence between the required wages and those paid. See 40 U.S.C.
§ 3142(c)(3). And if the contractor is found to have failed to
1
The Act does not apply to federally funded construction con-
tracts of $2,000 or less. See, e.g., 40 U.S.C. § 3142(a).
-3-
pay the specified prevailing wages, the Government “by writ-
ten notice . . . may terminate the contractor’s right to proceed
with the work or the part of the work as to which there has been
a failure to pay the required wages.” § 3143 (providing also
that contractor and its sureties “shall be liable to the Govern-
ment for any excess costs the Government incurs”). When a
contractor is determined to have “disregarded” its Davis-Bacon
obligations to employees or subcontractors, it is barred from
federal contracts for three years. See § 3144(b).
B. The False Claims Act
The False Claims Act (FCA) imposes civil liability for
making a false or fraudulent “claim,” or a false record or state-
ment material to such a claim, to obtain payment from the fed-
eral government. 31 U.S.C. § 3729(a)(1)(A)–(G), (b)(2). Both
the Justice Department and private parties (called “relators”)
may bring an FCA action. The FCA imposes civil penalties on
a per-violation basis plus three times actual damages,
§ 3729(a)(1), and authorizes recovery of a relator’s attorneys’
fees, § 3730(d)(1)–(2).
In 2008, the Supreme Court held in Allison Engine Co.
v. U.S. ex rel. Sanders, 553 U.S. 662 (2008), that liability under
(former) § 3729(a)(1) required a defendant’s direct present-
ment of the false claim to an officer or employee of the Gov-
ernment and that liability under (former) § 3729(a)(2) required
proof of the defendant’s specific intent to defraud the Govern-
ment. Id. at 668–72. To “clarify and correct [those] erroneous
interpretations of the [FCA],” S. Rep. No. 111-10, at 10 (2009);
see also id. at 4, Congress amended the FCA in the Fraud
Enforcement and Recovery Act of 2009 (FERA). Pub. L. No.
111-21, § 4, 123 Stat. 1625. FERA eliminated (a)(1)’s
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requirement that the false claim be presented “to an officer or
employee of the United States” and amended (a)(2) to remove
the language that the Supreme Court had read to require spe-
cific intent to defraud the Government. See, e.g., Pub. L. No.
111-21, § 4; S. Rep. No. 111-10 at 11.
FERA also amended the FCA to make clear that liability
under the renumbered § 3729(a)(1)(B) (formerly (a)(2)), as
well as another subsection not relevant here, requires that the
false statement be material. So (a)(1)(B) liability now attaches
when the defendant “knowingly makes, uses, or causes to be
made or used, a false record or statement material to a false or
fraudulent claim.” 31 U.S.C. § 3729(a)(1)(B). After FERA,2
materiality means “having the tendency to influence, or be
capable of influencing, the payment or receipt of money or
property.” § 3729(b)(4). And “knowingly” embraces actual
knowledge of the false information, deliberate ignorance of its
truth or falsity, and reckless disregard of its truth or falsity. See
§ 3729(b)(1)(A).
Given FERA’s substantive changes to the sweep of
FCA liability, Congress anticipated that disputes would arise
over how to apply the amendments to conduct pre-dating
FERA’s date of enactment. So Congress promulgated the fol-
lowing “Effective Date and Application” provision in section
4(f) of FERA:
2
We have recognized that FERA’s materiality “changes
merely made explicit and consistent that which had previously
been a judicially-imposed, and oftentimes conflicting, stand-
ard.” U.S. ex rel. Spay v. CVS Caremark Corp., 875 F.3d 746,
761 (3d Cir. 2017).
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The amendments made by this section shall take
effect on the date of enactment of this Act [May
20, 2009] and shall apply to conduct on or after
the date of enactment, except that—
(1) subparagraph (B) of subsection
3729(a)(1) of title 31, United States Code,
as added by subsection (a)(1), shall take
effect as if enacted on June 7, 2008, and
apply to all claims under the False Claims
Act (31 U.S.C. 3729 et seq.) that are
pending on or after that date; and
(2) section 3731(b) of title 31, as amended
by subsection (b); section 3733, of title
31, as amended by subsection (c); and
section 3732 of title 31, as amended by
subsection (e); shall apply to cases
pending on the date of enactment.
Pub. L. No. 111-21, § 4(f), 123 Stat. 1617, 1625 (codified at 31
U.S.C. § 3729 note) [hereinafter “FERA § 4(f)”]. So the new
liability standard in § 3729(a)(1)(B) for “knowingly . . .
caus[ing] to be made or used, a false record or statement mate-
rial to a false or fraudulent claim,” took effect “as if enacted on
June 7, 2008, and appl[ies] to all claims under the [FCA] . . .
pending on or after that date.” The June 7, 2008 effective date
is two days before the Supreme Court issued its decision in
Allison Engine.
II. FACTUAL BACKGROUND
The Farfield Company is an open-shop construction
company based in Lititz, Pennsylvania. It contracted with the
Southeastern Pennsylvania Transportation Authority (SEPTA)
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for a track and signal improvement project on a 7.5-mile stretch
of railroad track running from the Wayne Junction station to
the Glenside station in the Philadelphia area (“the Project”).
The federal government partially funded the Project. Work
began in 2002 and concluded in 2007.
The contract between Farfield and SEPTA was exe-
cuted in 2002 and valued at $54.7 million. It included several
provisions required by federal regulation, addressing how Far-
field was to classify and pay its workers. For example, the
contract provided that “[a]ll laborers and mechanics employed
or working upon the site of the work . . . will be paid . . . at
rates not less than those contained in the [incorporated] wage
determination.” A8213; see 29 C.F.R. § 5.5(a)(1)(i). It also
required that workers “be paid the appropriate wage rate and
fringe benefits on the wage determination for the classification
of work actually performed, without regard to skill.” Id. And
“[l]aborers or mechanics performing work in more than one
classification may be compensated at the rate specified for each
classification for the time actually worked therein: provided,
that the employer’s payroll records accurately set forth the time
spent in each classification in which work is performed.” Id.The DOL’s prevailing wage determinations incorpo-
rated into the contract derived from the rates specified in local
collective bargaining agreements (“CBAs”). The prevailing
wage determinations referenced a CBA executed on December
3, 2000, between a contractors’ association and Local 126 of
3
Citations preceded by “A” refer to Appellant Farfield’s
Appendix submitted on appeal.
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the International Brotherhood of Electrical Workers (IBEW),4
and listed certain relevant worker classifications and their
associated minimum rates of pay: “groundman” ($19.34 hourly
plus fringes), “lineman” or “journeyman lineman” (total cash
equivalent of $41.34 hourly), and “electrician” (total cash
equivalent of $46.83 hourly). A832. From a May 1, 2001 CBA
involving a separate laborers union, the prevailing wage deter-
minations derived the classification of “laborer,” paid at a
$32.70 cash equivalent for those able to lay “conduit and duct”
and a $32.50 cash equivalent for laborers classified as “[y]ard
workers.” A838.
The contract also required that Farfield submit to
SEPTA for transmission to the Federal Transit Administration
(FTA) a copy of Farfield’s certified payroll, setting out all the
information required to be maintained under various provisions
of the Davis-Bacon Act.5 In each week’s certified payroll, Far-
field had to include a “Statement of Compliance” averring,
among other things, that the information in the payroll was cor-
rect and complete and that each worker “has been paid not less
4
Local 126 represents electrical workers in the Philadelphia
area who perform electrical work outside a property line.
Local 126 organizes this “outside” work in the railroad track
area, such as the work on the Project.
5
For example, under 29 C.F.R. § 5.5(a)(3)(i), “payrolls and
basic records related thereto shall be maintained by the con-
tractor during the course of the work and preserved for a period
of three years thereafter for all laborers and mechanics working
at the site of the work,” which records “shall contain” each
worker’s “correct classification,” “hourly rates of wages paid,”
and “actual wages paid.”
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than the applicable wage rates and fringe benefits or cash
equivalents for the classification of work performed, as speci-
fied in the applicable wage determination incorporated into the
Contract.” A824; 29 C.F.R. § 5.5(a)(3)(ii)(B). Critically, “fal-
sification” of a payroll certification could subject Farfield to
criminal penalties or civil liability under the FCA. A824;
§ 5.5(a)(3)(ii)(D).
A few years before the Project, Farfield formed a transit
division with the objective of obtaining contracts for rail work.
To that end, it hired Joseph McGee, Sr. to be vice president of
the new division because of his expertise in “captur[ing]” rail
work. A1823–24. McGee’s background included work with
groundmen and linemen—experiences no one else at Farfield
possessed when he was hired. Farfield relied on McGee to
ensure that employees were properly classified based on the
work they performed on the Project. Yet under McGee’s man-
agement, Farfield’s forepersons exercised unfettered discretion
over which individual employee would perform which tasks on
Project job sites. Neither Farfield nor McGee instructed them
on how to classify workers on rail projects.
Farfield used daily “phase codes” internally to track
labor, material, insurance, tax, overhead, subcontracting, and
other costs of the Project. Farfield’s forepersons tracked labor
on the Project by recording on handwritten or typed timesheets
the daily hours an employee had worked and associating those
hours with a particular phase code.6 These codes were applied
irrespective of whether an employee was physically working
6
Other than preparing these timesheets, Farfield did not docu-
ment the work that a particular employee performed on the Pro-
ject on any given day.
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or, instead, attending briefings, traveling to and from the
worksite, or waiting for trains to pass. Each week, forepersons
were given prepared sheets—reflecting information generated
by Farfield’s corporate offices—that set forth phase codes
associated with work needed on the Project, with a blank space
for the foreperson to insert a phase code not already printed on
the sheet. Forepersons prepared daily reports noting the work
done by their crews as well as the number of workers in each
classification who were part of a crew. But these reports did
not identify which workers (or classifications of workers) per-
formed which of the tasks embraced by the phase codes marked
on the sheets.
In September 2004, about midway through the Project,
a DOL auditor reviewed some of Farfield’s certified payrolls
and spoke with one of the company’s vice presidents as well as
certain employees not identified in the record. After reviewing
one particular payroll, the auditor asked the vice president, who
in turn consulted McGee, why certain employees had been paid
at the “yard worker” laborer category rather than the slightly
higher-paying laborer category. A1028 (mentioning “laying
conduit”). But besides finding that four carpenters who
worked on Labor Day had been paid at the Farfield shop rate—
instead of the higher rate for holidays demanded by the SEPTA
contract—the DOL auditor unearthed no wage-and-hour viola-
tions. Farfield paid $811.52 in holiday-pay arrears to the four
carpenters.7
7
On a few occasions, an unidentified SEPTA employee met
with Farfield workers on the Project about their work and pay
rates.
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SEPTA made full payment of all monies that Farfield
was due under the contract, with some funds ultimately reim-
bursed to SEPTA by the FTA. On September 18, 2007, Far-
field submitted its final bill to SEPTA for the Project. The bill
was paid in early December of the same year.
III. PROCEDURAL BACKGROUND
A business manager at IBEW Local 988 suspected that
Farfield had won several government contracts with low bids
by intending to pay less-skilled workers, such as groundmen,
to perform certain work that would otherwise have been the
bailiwick of higher-skilled (and higher-paid) workers, such as
linemen.9 So the business manager requested copies of Far-
field’s certified payrolls. His concerns unmollified, the busi-
ness manager then contacted someone at Local 126 to discuss
the Project. Local 98’s business manager and its attorneys
eventually met to discuss worker classification issues with
eight Farfield employees who had worked on the Project.
On September 17, 2009, Local 98 filed a sealed qui tam
FCA complaint in the Eastern District of Pennsylvania. Local
98 alleged that, on the Project and four others, Farfield had
schemed to intentionally pay wages lower than required by the
8
Local 98 represents electrical workers in the Philadelphia area
who perform electrical work inside a property line. Little, if
any, such “inside” work was performed on the Project.
9
Groundmen lack an apprenticeship program and had only to
fill out an application to be hired by Farfield. Linemen receive
7,000 hours of field training as an apprentice, including train-
ing in aspects of conduit installation and electrical wire pulls.
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Davis-Bacon Act and then to submit claims to the federal gov-
ernment for payment based on sworn certifications of compli-
ance with the Act. About two years later, the United States
Department of Justice elected not to intervene in the action.
After the District Court unsealed the complaint and Local 98
served it, Local 98 amended its complaint to allege that Far-
field submitted fraudulent certified payrolls to SEPTA, intend-
ing that SEPTA then use those documents to secure the federal
government’s payment on the projects.
Farfield moved to dismiss the amended complaint,
arguing that the FCA did not apply to its contract with SEPTA
and that the Court lacked subject-matter jurisdiction because
the DOL had sole authority to adjudicate Davis-Bacon worker
misclassifications. The District Court denied Farfield’s motion
and appointed a Special Master to manage the discovery that
ensued. Despite arguing that the case did not require the DOL
to resolve complex worker classifications, Local 98 eventually
requested expert witnesses to prove industry classification
practices. So in a September 26, 2017 order, the District Court
referred the case to the DOL as a complex Davis-Bacon worker
classification case. Then the case stagnated. Local 98 took no
action until November 2018 when the District Court ordered it
to effectuate the DOL referral. But the DOL declined the
referral, refusing to investigate chiefly due to “the passage of
time and the significant resources that would be necessary to
investigate a closed contract.” A183–84.
With the case once again before the District Court, Far-
field filed a renewed motion to dismiss. The District Court
denied it. Local 98 then withdrew its claims arising out of Far-
field’s work on four of the five projects, leaving only worker
classifications on the Project to anchor its FCA suit. After
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deposing Local 98’s three experts, Farfield moved for sum-
mary judgment. The District Court denied that motion and
directed the parties to select a Special Master to conduct the
trial. The parties designated the same Special Master who had
presided over discovery.
Local 98 sought to introduce before the Special Master
six workers’ testimony about their own work and that of others
on the Project as representative proof for the entire set of 42
Farfield employees who, as groundmen or laborers, had their
daily time logged under phase codes that purportedly signified
lineman work. To the extent that Farfield’s phase codes fail to
capture the work its employees performed, Local 98 argued,
the burden should shift to Farfield—as it does in collective
actions under the Fair Labor Standards Act—to show the
amount of non-lineman work performed under those codes.
The District Court granted Local 98’s motion to authorize this
burden-shifting and, in an October 2019 order, held that the
damages burden would shift to Farfield were the Special Mas-
ter presented with such “representative” damages evidence.
See A139–57.
In his Report & Recommendation (“R&R”), the Special
Master made extensive findings of fact and conclusions of law
based on the evidence at trial. He found that employees whom
Farfield classified (and thus paid) as laborers and groundmen
had performed lineman work under six Farfield phase codes by
pulling wire and laying conduit. He determined that local prac-
tice does not permit laborers and groundmen to perform such
tasks, as they are reserved for higher-paid linemen with elec-
trical experience. Thus, the Special Master concluded, Farfield
had falsely certified on payrolls submitted to the FTA that “the
classifications set forth therein for each laborer or mechanic
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conform with the work performed.” A824 (Contract
¶ 7(c)(2)(b)).
Concluding that wage underpayments were the measure
of FCA damages, and after shifting the burden of proof to Far-
field to rebut Local 98’s prima facie damages showing, the
Special Master calculated $159,273.54 in total wage underpay-
ments. Trebling under 31 U.S.C. § 3729(a)(1) brought the sum
to $477,820.62. Because the misclassifications occurred dur-
ing 105 workweeks, thus tainting 105 certified payrolls sub-
mitted to SEPTA and then the FTA, the Special Master found
105 FCA violations. He imposed the minimum civil penalty
of $5,500 per violation “because Farfield did not intend to
make a false statement, but did so recklessly,” and because
$577,500 (105 times $5,500) was still a weighty penalty in
relation to the wage underpayments.10 A322 (Conclusions of
Law ¶ 36). The Special Master recommended a total judgment
of $1,055,320.62. Local 98, the relator, could recover between
25 and 30 percent of the total judgment, 31 U.S.C.
§ 3730(d)(2), so the Special Master suggested that Local 98 be
awarded 30 percent of the recommended judgment, or
$316,596.19.
The District Court overruled Farfield’s challenges to the
R&R, adopting it in its entirety. The Court entered judgment
against Farfield in the amount of $1,055,320.62: $738,724.43
10
In 1999, the Justice Department adjusted FCA penalties for
violations occurring after September 29, 1999 to account for
inflation. For those violations, it increased the civil penalty
range to between $5,500 and $11,000. 64 Fed. Reg. 47099,
47103–04 at § 85.3(9). The range and method for computing
penalties were later revised, but not as relevant here.
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to the United States and $316,596.19 to Local 98. In a subse-
quent order and supporting opinion, it partially granted Local
98’s motion for attorneys’ fees and costs, taxing $1,229,927.55
in fees and $203,226.45 in costs. Farfield’s appeal followed.
IV. JURISDICTION & STANDARD OF REVIEW
The District Court had jurisdiction over this action
under 28 U.S.C. § 1331. We have jurisdiction to review the
District Court’s final orders under 28 U.S.C. § 1291.
A district court’s findings of fact “must not be set aside
unless clearly erroneous, and the reviewing court must give
due regard to the trial court’s opportunity to judge the wit-
nesses’ credibility.” Fed. R. Civ. P. 52(a)(6). A finding of fact
is clearly erroneous when, “although there is evidence to sup-
port it, the reviewing court on the entire evidence is left with
the definite and firm conviction that a mistake has been com-
mitted.” United States v. U.S. Gypsum Co., 333 U.S. 364, 395
(1948). When the disputed factual finding is based on a cred-
ibility determination, “‘even greater deference’ is owed.”
Alimbaev v. Att’y Gen. of U.S., 872 F.3d 188, 195 (3d Cir.
2017) (quoting Anderson v. City of Bessemer, 470 U.S. 564,
575 (1985)).
We review statutory constructions de novo. United
States v. Hodge, 948 F.3d 160, 162 (3d Cir. 2020). We review
any mixed questions of fact and law de novo insofar as “the
primary facts are undisputed and only ultimate inferences and
legal consequences are in contention.” U.S. Gypsum Co. v.
Schiavo Bros., 668 F.2d 172, 176 (3d Cir. 1981). But when the
mixed questions immersed the district court in case-specific
factual issues, our review is a deferential one for clear error.
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See U.S. Bank Nat’l Ass’n ex rel. CW Cap. Asset Mgmt. LLC
v. Village at Lakeridge, LLC, 138 S. Ct. 960, 967–69 (2018).
V. DISCUSSION
Farfield appeals the District Court’s orders denying its
initial and renewed motions to dismiss, referring the case to the
DOL, denying its motion for summary judgment, shifting the
damages burden of proof to Farfield, overruling its objections
to and adopting the Special Master’s R&R, and awarding
attorneys’ fees. We treat Farfield’s most substantial arguments
at length and dispose of the remaining ones in short order. We
will affirm all the District Court’s challenged orders.
A. Section 3729(a)(1)(B) Applies Retroactively to
the Project and Does Not Violate the Ex Post
Facto Clause.
This appeal presents a threshold issue of first impres-
sion in our Circuit: whether 31 U.S.C. § 3729(a)(1)(B) applies
retroactively to conduct antedating that provision’s June 7,
2008 effective date. Recall that FERA amended the provision
to remove language that the Supreme Court had understood to
require specific intent to defraud the Government.11 The Dis-
trict Court found that Farfield’s reckless misconduct on the
Project concluded by 2007, when its work terminated and the
last invoice was paid. And Local 98 did not sue until Septem-
ber 2009. So judgment must be entered for Farfield if
§ 3729(a)(1)(B) does not apply retroactively to pre-June 7,
2008 conduct.
11
It is undisputed that Farfield did not intentionally misclassify
workers or intentionally falsify payroll certifications.
-16-
Our retroactivity analysis is sequential. We first look
for an “unambiguous directive” from Congress to apply the
statute retroactively. Landgraf v. USI Film Prods., 511 U.S.
244, 263 (1994). If there is one, we follow it—and our inquiry
ends. See id.; Mathews v. Kidder, Peabody & Co., Inc., 161
F.3d 156, 161 (3d Cir. 1998). But if the statute contains no
express retroactivity command and normal rules of construc-
tion do not require that it have only prospective reach, we next
ask whether applying the statute would “impair rights a party
possessed when he acted, increase a party’s liability for past
conduct, or impose new duties with respect to transactions
already completed?” Id. at 280; see Mathews, 161 F.3d at 160–
61 (also citing Lindh v. Murphy, 521 U.S. 320, 324–29 (1997)).
If so, the statute has “retroactive effect”—and our final task is
to employ the strong presumption against applying such stat-
utes to pending cases unless Congress manifested clear intent
that the statute apply retroactively. Landgraf, 511 U.S. at 280;
Mathews, 161 F.3d at 161, 166.
The critical language in FERA’s retroactivity provision
applies § 3729(a)(1)(B) to “all claims under the False Claims
Act (31 U.S.C. 3729 et seq.) that are pending on or after [June
7, 2008].” FERA § 4(f)(1) (emphasis added). By designating
a pre-enactment effective date for § 3729(a)(1)(B)’s new lia-
bility standard, Congress sought to apply the provision to some
conduct predating its enactment. Accordingly, we are applying
a statute that includes an “express command” to apply it retro-
actively. Landgraf, 511 U.S. at 280. The question is whether
that command is limited in scope to conduct that occurred on
or after June 7, 2008, or whether it embraces conduct—when-
ever occurring—challenged in a lawsuit initiated on or after
June 7, 2008. If it does not extend to the latter, then only Con-
gress’s clear intent that § 3729(a)(1)(B) apply in such a manner
-17-
can rebut the presumption against retroactivity. See Landgraf,
511 U.S. at 263, 280; Mathews, 161 F.3d at 161.12
Whether Congress used “claims” in the FCA-specific
sense as “requests for payment” (i.e., underlying conduct) or
generically to mean “cases” has engendered a Circuit split.
The Eleventh Circuit has interpreted FERA to apply
§ 3729(a)(1)(B) retroactively only to demands for payment
that were pending on or after June 7, 2008. See Hopper v.
Solvay Pharms., Inc., 588 F.3d 1318, 1327 n.3 (11th Cir. 2009)
(“[T]he word ‘claim’ in [FERA] section 4(f) . . . mean[s] ‘any
request or demand . . . for money or property,’ as defined by
31 U.S.C. § 3729(b)(2)(A) . . . . While this case was pending
on and after June 7, 2008, the relators do not allege that
any claims, as defined by § 3729(b)(2)(A), were pending on or
after June 7, 2008.’”). Fifth and Ninth Circuit decisions have
endorsed Hopper, though with little analysis. See Gonzalez v.
Fresenius Med. Care N. Am., 689 F.3d 470, 475 n.4 (5th Cir.
2012) (adopting district court’s conclusion that FERA “did not
apply to conduct occurring before [its] enactment” and that its
retroactivity provision did not apply “because Relator’s
‘claims’ were not pending on June 7, 2008”); U.S. ex rel.
Cafasso v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1051
n.1 (9th Cir. 2011) (“[FERA’s] amendments do not apply ret-
roactively to this case.” (citing Hopper, 588 F.3d at 1327 n.3));
but see U.S. ex rel. Rigsby v. State Farm Fire & Cas. Co., 794
F.3d 457, 464 n.4 (5th Cir. 2015) (“[T]he 2009 version of
12
The intermediate Landgraf step is met here: Section
3729(a)(1)(B)’s liability standard has “retroactive effect”
because, by applying to substantive conduct completed pre-
enactment, it “increase[s] a party’s liability” for past conduct.
Landgraf, 511 U.S. at 280.
-18-
§ 3729(a)(1)(B), which was formerly § 3729(a)(2), is retroac-
tively applicable to the Rigsbys’ false record count.”).
By contrast, the Sixth and Seventh Circuits have
rejected Hopper’s reading in thorough opinions, holding that
Congress used the term “claims” in § 4(f) of FERA simply to
mean cases or lawsuits. See U.S. ex rel. Garbe v. Kmart Corp.,
824 F.3d 632, 637–41 (7th Cir. 2016); Sanders v. Allison
Engine Co., Inc., 703 F.3d 930, 936–42 (6th Cir. 2012). The
Second Circuit has seemingly reached the same conclusion,
though without detailed analysis. See U.S. ex rel. Kirk v.
Schindler Elev. Corp., 601 F.3d 94, 113 (2d Cir. 2010) (con-
cluding that § 3729(a)(1)(B) applied “[b]ecause Kirk’s claim
was filed in March 2005, and was pending as of June 7, 2008”),
rev’d on other grounds, 563 U.S. 401 (2011).
We agree with the more comprehensive decisions and
conclude, following the Sixth and Seventh Circuits, that Con-
gress used “claims” generically in FERA’s retroactivity provi-
sion to mean cases or lawsuits. At any rate, Congress’s intent
to apply § 3729(a)(1)(B) to all cases pending on or after June
7, 2008 is sufficiently clear. Whether as an express command
under the first step of Landgraf, or consistent with Congress’s
clear intent under the last Landgraf prong, FERA subjects
Farfield’s pre-2008 conduct to § 3729(a)(1)(B).
1. In context, “claims” can only mean cases. Pro-
ponents of limiting FERA’s retroactivity, including Farfield,
urge that the FCA’s definition of “claim” controls Congress’s
use of “claims” in § 4(f)(1). But the mere fact that “claim” is
a defined term does not mean that it is used in that technical
sense every time it appears in the statute. “A given term in the
same statute may take on distinct characters from association
-19-
with distinct statutory objects calling for different
implementation strategies.” Envtl. Def. v. Duke Energy Corp.,
549 U.S. 561, 574 (2007). With “several commonly under-
stood meanings among which a speaker can alternate in the
course of an ordinary conversation, without being confused or
getting confusing,” the word “claim” eschews the presumption
of uniform usage. Gen. Dynamics Land Sys., Inc. v. Cline, 540
U.S. 581, 595 (2004). Indeed, § 4(f)(1) speaks of “claims
under the False Claims Act,” and FERA elsewhere uses
“claims” as synonymous with cases. So Congress did not use
“claims” in its technical sense in FERA’s retroactivity clause.
First, in the specific context of the retroactivity provi-
sion, replacing “claims” with the word’s technical definition
“makes no sense.” Kmart, 824 F.3d at 640. Doing so yields
this: “all request[s] or demand[s], whether under a contract or
otherwise, for money or property . . . under the [FCA] that are
pending on or after June 7, 2008.” It would be anomalous for
Congress to say that a request for payment is submitted
“under” a statute that only comes into play if the request vio-
lates (or is alleged to violate) it. See, e.g., Matthew Titolo,
Retroactivity and the Fraud Enforcement and Recovery Act of
2009, 86 IND. L.J. 257, 289 (2011). The FCA and its liability
standards are more naturally understood to apply only once an
allegedly fraudulent request for payment is made, and a civil
action filed. Sanders, 703 F.3d at 938 & n.3; see Kmart, 824
F.3d at 640 (“Rather, a claim ‘under the [FCA]’ is a legal action
by the government or a relator to recover fraudulently obtained
funds.” (alteration in original) (citations omitted)). To harmo-
nize the technical definition of “claims” with the retroactivity
clause, one must exclude the later phrase “under the False
Claims Act.” That we are loath to do. See, e.g., Colautti v.
Franklin, 439 U.S. 379, 392 (1979) (“[A] statute should be
-20-
interpreted so as not to render one part inoperative.” (citation
omitted)); United States v. Bass, 404 U.S. 336, 344 (1971)
(“[C]ourts should interpret a statute with an eye to the sur-
rounding statutory landscape and an ear for harmonizing
potentially discordant provisions . . . .”). The generic reading
of “claims,” on the other hand, avoids rendering superfluous
the phrase “under the False Claims Act.”13
Second, interpreting “claims” to mean legal actions
reflects the broader statutory landscape. The FCA uses
“claims” synonymously with “cases.” See, e.g., 31 U.S.C.
§ 3730(c)(5) (“the Government may elect to pursue its claim”);
§ 3730(d)(1) (discussing relator’s right to receive “proceeds of
the action or settlement of the claim”); § 3730(d)(2) (“the per-
son bringing the action or settling the claim”); § 3730(d)(4) (“if
. . . the court finds that the claim of the person bringing the
action was clearly frivolous”); § 3731(c) (“to clarify or add
detail to the claims in which the Government is intervening and
to add any additional claims”); § 3732(b) (“Claims Under State
Law”). Indeed, when the FCA uses the term in its technical
sense, “claim” usually comes after “false” or “fraudulent.” See
Titolo, Retroactivity, at 291.
Granted, the second retroactivity clause of § 4(f) of
FERA uses the word “cases.” See FERA § 4(f)(2). But the
negative contextual implication that Farfield would have us
13
A common generic definition of “claim” is “[a]n interest or
remedy recognized at law; the means by which a person can
obtain a privilege, possession, or enjoyment of a right or thing;
cause of action.” Claim, BLACK’S LAW DICTIONARY (11th ed.
2019).
-21-
draw—that Congress’s disparate use of “claims” in the preced-
ing subsection reflects a different intent—is unreasonable.
To begin with, “the presumption that ‘disparate inclu-
sion or exclusion’ is purposeful is weakened when, as here, the
provisions were not joined together or considered simultane-
ously.” Kmart, 824 F.3d at 641 (quoting Sanders, 703 F.3d at
937) (citation omitted). On the contrary, §§ 4(f)(1) and 4(f)(2)
of FERA were drafted by different chambers of Congress, at
different times. S. 386, 11th Cong. § 4(b) (as reported in Sen-
ate, March 5, 2009); S. 386, 11th Cong. § 4(f) (House
engrossed amendment, May 6, 2009); see also Titolo, Retro-
activity, at 300. This drafting history undermines any negative
inference that Congress’s differing word choice in the two
subsections signals a different intention.
What’s more, §§ 4(f)(1) and 4(f)(2) of FERA “address
wholly distinct subject matters.” Martin v. Hadix, 527 U.S.
343, 356 (1999). So we should not infer that Congress’s use
of different terms in the two sections is meaningful. Start, as
did the Hadix Court, with Lindh. There, the Court concluded
that Congress’s use of disparate language regarding pending-
case applicability in two adjacent chapters was intentional
because the two chapters addressed overlapping subject matter:
“new standards for review of habeas corpus applications by
state prisoners” and “new standards for review of habeas cor-
pus applications by state prisoners under capital sentences.”
Hadix, 527 U.S. at 356 (citing Lindh, 521 U.S. at 329). In
Hadix, by contrast, the Court concluded that no such inference
followed from disparate pending-case applicability language in
two adjacent provisions because the two provisions covered
different subject matters: “the propriety of various forms of
relief and . . . the immediate termination of ongoing relief
-22-
orders,” in the first, and “the award of attorneys’ fees,” in the
second. Id. at 356–57. What was true in Hadix is true here:
The relevant provisions of FERA concern different subject
matters. Section 4(f)(1) discusses retroactive application of the
new liability standard in § 3729(a)(1)(B). By contrast,
§ 4(f)(2) of FERA deals with entirely different subject matter:
the retroactivity of changes to FCA provisions relating to
procedure and jurisdiction. See 31 U.S.C. §§ 3731 (“False
claims procedure”), 3733 (“Civil investigative demands”), and
3732 (“False claims jurisdiction”). Concern for the first’s ret-
roactivity would thus not necessarily have mirrored that for the
second’s, so we cannot say that Congress’s disparate use of
words was intentional.
Tools of statutory interpretation leave us, then, with a
provision that admits of only “one interpretation.” INS v. St.
Cyr, 533 U.S. 289, 316–17 (2001) (quoting Lindh, 521 U.S. at328 n.4). By using concrete temporal language (“pending on
or after”) linked to a pre-enactment date and a word (“claims”)
whose only logical meaning in context is as a synonym for
“cases,” § 4(f)(1) of FERA expressly commands that the new
liability standard in § 3729(a)(1)(B) apply to conduct
challenged in a case pending on or after June 7, 2008.14 See,
e.g., St. Cyr, 533 U.S. at 318–19 (identifying amendment’s
express application to “conviction[s] . . . entered before, on, or
after” enactment date as clear retroactivity statement (internal
quotation marks omitted)); Hadix, 527 U.S. at 355 (language
14
Landgraf’s presumption against retroactivity does not trump
other interpretive principles. Lindh, 521 U.S. at 324–26. So in
deciding the scope of Congress’s express command, we do not
impose a higher bar for legislative clarity than in other contexts
demanding a clear statement.
-23-
applying section “to all prospective relief whether such relief
was originally granted or approved before, on, or after the date
of the enactment of this title,” was clear statement (quotation
omitted)); Graham v. Goodcell, 282 U.S. 409, 418–419 (1931)
(clear statement rule satisfied where new tax refund statute
“expressly applied to internal revenue taxes” assessed before
pre-enactment date certain).
2. Congress repudiated Allison Engine with clear
intent for full retroactivity. Even if § 4(f)(1) lacks an express
command to apply § 3729(a)(1)(B) retroactively to cases pend-
ing on or after June 7, 2008, FERA otherwise shows Con-
gress’s clear intent to subject to the new provision relevant con-
duct, whenever occurring, that was subject to a lawsuit pending
on or after that date. That clear intent suffices to rebut the pre-
sumption against retroactively applying § 3729(a)(1)(B) in
such a manner. See, e.g., Landgraf, 511 U.S. at 272–73, 280;
Mathews, 161 F.3d at 166–70.
The Supreme Court’s decision in Rivers v. Roadway
Express, Inc., 511 U.S. 298 (1994), is instructive. At issue was
the retroactivity vel non of § 101 of the Civil Rights Act of
1991, which defines “make and enforce contracts” in 42 U.S.C.
§ 1981 to include “the making, performance, modification, and
termination of contracts, and the enjoyment of all benefits,
privileges, terms, and conditions of the contractual relation-
ship.” § 1981(b) (emphasis added). Section 101 was passed
in the wake of Patterson v. McLean Credit Union, 491 U.S.
164 (1989), which held that § 1981 “does not apply to conduct
which occurs after the formation of a contract.” Id. at 171.
Section 101 thus enlarged the category of conduct that is sub-
ject to § 1981 liability to include all aspects of the contractual
relationship, including termination. Rivers, 511 U.S. at 303.
-24-
The Rivers petitioners, garage mechanics covered by a collec-
tive-bargaining agreement who were allegedly fired in 1986
for racially discriminatory reasons, argued that § 101 of the
1991 Act applied retroactively because their appeal was pend-
ing at the time of its passage. Id. at 301–03.
In rejecting the petitioners’ arguments, the Rivers Court
contrasted the 1991 Act with a prior version of the bill that the
President had vetoed. The Court stated that Congress clearly
intended for the vetoed bill to apply retroactively: Its express
purpose was to “respond to the Supreme Court’s recent
[Patterson] decision[] by restoring the civil rights protections
that were dramatically limited [there]by.” Id. at 307–08 (quot-
ing S. 2104, § 2(b)(1) (alterations omitted)). The section of the
bill responding to Patterson was titled “Restoring Prohibition
Against All Racial Discrimination in the Making and Enforce-
ment of Contracts.” 511 U.S. at 307 (quoting S. 2104, § 12).
The bill also included a provision establishing “that the amend-
ment to § 1981 ‘shall apply to all proceedings pending on or
commenced after’ the date of the Patterson decision.” 511
U.S. at 307–08 (quoting S. 2104, § 15(a)(6)).15
By contrast, the statute enacted in 1991 lacks compara-
ble language about its application to pending proceedings,
describes its function as “expanding the scope of relevant civil
rights statutes” rather than restoring pre-existing rights, and
“lacks any direct reference to cases arising before its enact-
ment, or to the date of the Patterson decision.” 511 U.S. at 308
(quoting Act of 1991 § 3(4), 105 Stat. 1071). So the Court
15
The Rivers Court also discussed legislative history. See, e.g.,
511 U.S. at 306 n.6, 308. We rest our decision solely on the
text of FERA and the implications following directly from it.
-25-
could glean from the 1991 Act only that it was passed in
response to Patterson. See id. at 308–09; see also id. at 304–
05 (noting that legislatively overruling Supreme Court deci-
sion, without more, does not “reveal whether Congress intends
the ‘overruling’ statute to apply retroactively to events that
would otherwise be governed by the judicial decision”).
Like the vetoed bill in Rivers that sought to “restore”
pre-existing rights supposedly trammeled by a Supreme Court
decision, FERA’s amendments to the FCA after Allison Engine
are expressly meant “to reflect the original intent of the law.”
FERA § 4(f) (heading). And in setting § 3729(a)(1)(B)’s
effective date as June 7, 2008—a Saturday, and two days
before the decision—Congress abrogated Allison Engine’s
construction of what was then § 3729(a)(2) to the fullest pos-
sible extent “without reopening judgments that were already
final when Allison Engine was decided.” Kmart, 824 F.3d at
640; see also Plaut v. Spendthrift Farm, Inc., 514 U.S. 211,
217–19 (1995) (explaining that Congress cannot reopen final
judgments without triggering separation-of-powers concerns).
Conversely, Farfield’s interpretation of “claims” would
subvert Congress’s intent to undo the effect of Allison Engine
to the maximum extent possible. Indeed, on that reading, what
significance would attach to Congress’ May 2009 choice of a
June 2008 date? Just as FCA defendants in prior cases could
not explain Congress’s choice of retroactivity date, see, e.g.,
Kmart, 824 F.3d at 640 (concluding that Kmart’s reading
rendered June 7, 2008 date meaningless), Farfield fails to do so
as well.
Reasons rooted in federal procedure also counsel
against Farfield’s reading. “When a new law makes clear that
-26-
it is retroactive, an appellate court must apply that law in
reviewing judgments still on appeal that were rendered before
the law was enacted, and must alter the outcome accordingly.”
Plaut, 514 U.S. at 226 (citations omitted). And even Farfield
concedes that FERA’s choice of a pre-enactment effective date
for § 3729(a)(1)(B) means that Congress expressly com-
manded retroactivity, if only for underlying conduct occurring
on or after June 7, 2008. But reading “claims” as the defined
term would require post-FERA appellate courts to deviate from
the Plaut rule when reviewing judgments related to pre-June 7,
2008 conduct, without a separate directive from Congress (or
anyone else) to do so.
FERA’s express purpose of “clarify[ing]” the FCA “to
reflect the original intent of the law” and the pre-enactment
effective date chosen for § 3729(a)(1)(B) reveal Congress’s
clear intent that the provision be applied retroactively to all
conduct, whenever occurring, that was the subject of a non-
final lawsuit at the time of (or after) Allison Engine.
* * *
There is no reasonable contextual reading of § 4(f) of
FERA other than that it mandates applying § 3729(a)(1)(B) to
cases pending on or after June 7, 2008. That makes it an
express retroactivity command. At all events, Congress’s sta-
ted purpose in passing FERA was to reinstitute the FCA’s
“original intent” rather than expand its coverage, something
highlighted by its pre-enactment date preceding Allison Engine
by two non-business days. Reading “claims” as “cases”
reflects that intent and recognizes Congress’s overruling of
Allison Engine to the fullest extent allowed by the Constitution.
-27-
3. Applying § 3729(a)(1)(B) does not violate the Ex
Post Facto Clause. To be sure, even a law that Congress
intended to apply retroactively may offend the Constitution’s
Ex Post Facto Clause or otherwise fail to satisfy due process.16
Farfield argues that retroactively applying § 3729(a)(1)(B)’s
liability standard amounts to an unlawful ex post facto criminal
penalty. We disagree, as have most federal courts to pass on
such claims. See, e.g., Sanders, 703 F.3d at 948; see also U.S.
ex rel. Miller v. Bill Harbert Int’l Const., Inc., 608 F.3d 871,
878–79 (D.C. Cir. 2010); Genty v. Resolution Tr. Corp., 937
F.2d 899, 912 & n.7 (3d Cir. 1991) (recognizing that FCA’s
multiple damages provision is not punitive but provides for
“liquidated damages to assure the plaintiff’s full compensa-
tion” (citing United States v. Bornstein, 423 U.S. 303, 315
(1976)).
16
Though Farfield stresses that its conduct here—reckless
violations of worker-classification regulations—is inoffensive,
it makes no argument that § 4(f) of FERA violates the Due Pro-
cess Clause by failing to advance a rational legislative purpose.
See, e.g., Pension Benefit Guar. Corp. v. R.A. Gray & Co., 467
U.S. 717, 730 (1984). Any due process argument is thus for-
feited. See, e.g., N.J. Dep’t of Env’t Prot. v. Am. Thermoplas-
tics Corp., 974 F.3d 486, 492 n.2 (3d Cir. 2020) (“argument
. . . vaguely presented without legal or factual support . . . is
forfeited”). And we would reject such a claim even if
preserved because, as noted in Sanders, 703 F.3d at 948–49,
Congress rationally sought to correct to the fullest extent what
it deemed an erroneous interpretation of the FCA by passing
FERA “to reflect the original intent” of its previously enacted
legislation. FERA § 4 (heading).
-28-
Our Constitution provides that “[n]o Bill of Attainder or
ex post facto Law shall be passed.” U.S. CONST., art. I, § 9.
This clause prohibits the enactment of any law that “retroac-
tively alter[s] the definition of crimes or increase[s] the pun-
ishment for criminal acts.” Collins v. Youngblood, 497 U.S.
37, 43 (1990). Applying the Clause requires us first to ask
whether Congress “in establishing the penalizing mechanism,
indicated either expressly or impliedly a preference for” a civil
or criminal label. Hudson v. United States, 522 U.S. 93, 99–
100 (1997) (quoting United States v. Ward, 448 U.S. 242, 248
(1980)).
Congress intended the FCA to impose a “civil penalty”
plus three times the amount of damages sustained by the Gov-
ernment, and for a relator to bring a “civil action” on the Gov-
ernment’s behalf for a violation. 31 U.S.C. § 3729(a). The Act
also authorizes lawsuits brought in accordance with the Federal
Rules of Civil Procedure, and imposes a preponderance-of-the-
evidence standard of proof. §§ 3732(a), 3731(d). It could
hardly be clearer that Congress “meant the statute to establish
‘civil’ proceedings.” Kansas v. Hendricks, 521 U.S. 346, 361
(1997).
That said, it is possible for a civil statute to be criminally
punitive in effect. But a finding of punitive effect requires the
“clearest proof” to override legislative intent based on factors
such as
1) Whether the sanction involves an affirmative disa-
bility or restraint;
2) Whether it has historically been seen as punishment;
3) Whether it comes into play only upon a finding of
scienter;
-29-
4) Whether its operation will promote the traditional
aims of punishment—retribution and deterrence;
5) Whether the behavior to which it applies is already
a crime;
6) Whether an alternative purpose to which it may
rationally be connected is assignable for it; and
7) Whether it appears excessive in relation to the alter-
native purpose assigned.
See Hudson, 522 U.S. at 99–100 (citing Ward, 448 U.S. at 249;
Kennedy v. Mendoza-Martinez, 372 U.S. 144, 168–69 (1963)).
Taking these factors in turn, we conclude that Farfield has not
shown by the “clearest proof” that retroactively applying
§ 3729(a)(1)(B) amounts to criminal punishment in violation
of the Ex Post Facto Clause.
First, the FCA’s treble damages and civil fines do not
involve an affirmative disability or restraint because they do
not restrict one’s physical liberty similar to imprisonment. See,
e.g., Myrie v. Comm’r, N.J. Dept. of Corr., 267 F.3d 251, 260–
61 (3d Cir. 2011) (requiring comparison to “infamous punish-
ment of imprisonment” (quoting Flemming v. Nestor, 363 U.S.
603, 617 (1960))). This factor does not favor characterizing
the FCA as criminally punitive in effect.
Second, the sanction here—monetary penalties—has
not historically been viewed as punishment. See, e.g., Cook
Cnty., Ill. v. U.S. ex rel. Chandler, 538 U.S. 119, 132 (2003)
(“Treble damages certainly do not equate with classic punitive
damages, which leave the jury with open-ended discretion
. . . .”); Hudson, 522 U.S. at 104 (“payment of fixed or variable
sums of money . . . ha[s] been recognized as enforc[ea]ble by
-30-
civil proceedings” (quotation omitted)). The second factor too
disfavors viewing the FCA as criminally punitive.
Third, the post-FERA FCA requires proof only of
“reckless disregard” and thus penalizes acts committed without
guilty knowledge. 31 U.S.C. § 3729(b)(1); see United States
v. Stadtmauer, 620 F.3d 238, 255–56 (3d Cir. 2010) (defining
“scienter” to include knowledge and willful blindness, but not
recklessness). Because the FCA does not come into play only
upon a finding of (criminal) scienter, the third factor also sug-
gests that the FCA’s effect is civil.
Fourth, the FCA’s operation does promote deterrence—
one of the traditional aims of punishment. Indeed, the original
goal of the FCA was to stop massive frauds perpetrated by gov-
ernment contractors during the Civil War. See, e.g., Bornstein,
423 U.S. at 309. But “all civil penalties have some deterrent
effect.” Hudson, 522 U.S. at 102 (citations omitted). If the
fourth factor favors a determination that the FCA is criminally
punitive in effect, then it does so only slightly.
Fifth, the conduct for which the FCA imposes sanctions
may also bear criminal liability under 18 U.S.C. § 287. But it’s
unclear which way this cuts. On one hand, it might stand to
reason that the FCA has a criminally punitive effect by target-
ing behavior that is already a crime. See, e.g., United States v.
One Assortment of 89 Firearms, 465 U.S. 354, 365 (1984) (cit-
ing Mendoza-Martinez, 372 U.S. at 168–69). On the other
hand, the post-FERA FCA covers more conduct than does the
criminal fraudulent-claims statute.17 Sanders, 703 F.3d at 946;
17
Section 287 criminalizes “mak[ing] or present[ing] to any
[federal official or agency] any claim upon or against the
-31-
cf. 89 Firearms, 465 U.S. at 366 (“Congress in fact drafted
§ 924(d) to cover a broader range of conduct than is proscribed
by the criminal provisions of § 922(a)(1).”). And the separate
existence of a criminal statute suggests that the civil statute
serves a different purpose. See, e.g., Hudson, 522 U.S. at 105.
This factor thus carries neutral weight or, at best for Farfield,
only slightly favors a determination of criminally punitive
effect.
Sixth, the FCA’s treble damages provision may be
assigned a remedial (i.e., compensatory) purpose. See, e.g.,
Chandler, 538 U.S. at 130–31 (stating that “some liability
beyond the amount of the fraud is usually ‘necessary to com-
pensate the Government completely’” and that “[i]n qui tam
cases the rough difference between double and triple damages
may well serve not to punish” (quoting Bornstein, 423 U.S. at
315)). After all, the FCA does not authorize the award of pre-
judgment interest or consequential damages, which typically
accompany recovery for fraud. See id. at 131. Another unique
purpose of the FCA’s treble damages function is to incentivize
private enforcement, “to quicken the self-interest of some pri-
vate plaintiff who can spot violations and start litigating to
compensate the Government, while benefitting himself as
well.” Id. (citation omitted) (“The most obvious indication that
the treble damages ceiling has a remedial place under this
statute is its qui tam feature with its possibility of diverting as
much as 30 percent of the Government’s recovery to a private
relator who began the action.”). This alternative remedial
purpose supports a conclusion that the FCA operates civilly.
United States, or any department or agency thereof, knowing
such claim to be false, fictitious, or fraudulent.” 18 U.S.C.
§ 287.
-32-
Seventh, although recovery can significantly exceed the
pecuniary loss sustained directly as a result of the false
claims—as it arguably did here—this does not mean that the
FCA permits sanctions that are constitutionally excessive in
relation to their civil compensatory purpose. Farfield makes
much of statements by the Supreme Court that Congress has
increased the FCA’s civil penalties so that liability is “essen-
tially punitive in nature.” Vt. Agency of Nat. Res. v. U.S. ex rel.
Stevens, 529 U.S. 765, 784–85 (2000). And it is true that the
Supreme Court cited this language from Stevens in Universal
Health Services, Inc. v. United States ex rel. Escobar, 136 S.
Ct. 1989, 1996 (2016). But other post-Stevens cases such as
Chandler, supra, suggest that the Court does not view the
Stevens characterization as exclusive and also endorses a
“softe[r] . . . view of the role of the treble damages available
under the FCA.” Sanders, 703 F.3d at 948 (citing PacifiCare
Health Sys., Inc. v. Book, 538 U.S. 401, 405–06 (2003)). The
most we can say is that the seventh factor “weakly favor[s] a
finding of punitive effect,” Sanders, 703 F.3d at 948, making
it only—at best for Farfield—the third factor (out of seven) to
cut in that direction. And none of those three are strong indi-
cators. So we lack the “clearest proof” necessary to override
Congress’s intent that the FCA be civil in nature.
* * *
We therefore conclude that the FCA’s treble damages
and civil penalties do not violate the Ex Post Facto Clause so
as to vitiate Congress’s express command or, alternatively,
clear intent that § 3729(a)(1)(B) apply retroactively to cases
pending on or after June 7, 2008.
-33-
B. Farfield Misclassified Its Employees.
Farfield next contends that the District Court erred in
adopting the Special Master’s conclusion that it misclassified
certain of its employees as groundmen and laborers when what
they actually performed was lineman work. First, Farfield
urges, the record shows that a lineman was present on nearly
every job site on the Project and, because a groundman was
permitted to assist a lineman in performing all the relevant
tasks, there was no misclassification. Second, Farfield presses
that whatever the local industry practice, its worker classifica-
tions were proper because they did not violate Local 126’s
CBAs. Neither argument carries the day.
1. No clear error in finding that groundmen were not
“assisting” linemen. The Special Master’s factfinding dis-
poses of Farfield’s first contention because he found the rele-
vant testimony of Farfield’s witnesses “not . . . credible.” A292
(Findings of Fact ¶ 144). Neither the Special Master’s findings
of fact, nor the District Court’s adoption of his R&R, were
clearly erroneous. Fed. R. Civ. P. 52(a)(6); U.S. Gypsum Co.,
333 U.S. at 395. The evidence did not support a finding that
groundmen and laborers were simply helping linemen install
conduit or pull wire. Testimony highlighted that many ground-
men and laborers performed all tasks associated with conduit
installation and wire pulling. Other proof told a similar tale.
For example, most crews were not limited in the work they
performed; forepersons did not receive any training or instruc-
tion from Farfield on how to assign workers of different clas-
sifications to different tasks; classifications played only a
minor role in the assignment of work to members of a crew;
and tasks associated with “installing conduit and pulling were
-34-
not performed by any particular classification” but by “all
workers on a crew.” A290–91 (Findings of Fact ¶¶ 133–41).
2. Local industry practice controls the propriety of
worker classification. Farfield points out that nothing in
contemporaneous CBAs negotiated by Local 126 restricted the
work that a groundman could do, other than certain tasks not
relevant here. These CBAs provided that the employer “ha[s]
no restrictions, except those specifically provided for [herein],
in planning, directing and controlling the operation of all his
work [and] in deciding the number and kind of Employees to
properly perform the work.” A853. So Farfield protests that it
could classify workers based on what it views as the CBAs’
permissive approach to the duties of groundmen. But neither
the case law nor DOL authority supports that proposition.
Under the Davis-Bacon Act, Farfield’s obligations flowed
from local industry practices that sharply limited the range of
electrical work that groundmen may perform.
Davis-Bacon decisions establish that “[w]age determi-
nations implicitly include the locally prevailing practice of
classifying jobs [and] [w]here collective bargaining agree-
ments form the basis of wage determinations, the practice of
local signatory unions is conclusive.” Abhe & Svoboda, Inc.
v. Chao, 508 F.3d 1052, 1058–59 (D.C. Cir. 2007) (emphasis
added) (citations omitted) (citing In the Matter of Fry Bros.
Corp., WAB Case No. 76-06, 1977 WL 24823, at *6 (June 14,
1977)).18 And the DOL instructs that, when classifications are
18
Circuits other than the D.C. Circuit follow Fry Brothers.
See, e.g., U.S. ex rel. Plumbers & Steamfitters Loc. Union No.
38 v. C.W. Roen Const. Co., 183 F.3d 1088, 1093–94 (9th Cir.
1999).
-35-
unknown or disputed, “[i]f . . . the rates listed for all the classi-
fications that may perform the work in question are union rates,
the dispute will be resolved by examining the practice(s) of
union contractors in classifying workers performing the duties
in question on similar construction in the area (usually the
same county).” U.S. DOL Field Ops. Handbook, Ch. 15,
§ 15f05(c)(5)(b) (emphasis added). The legal question as Far-
field frames it, then, is whether local “practices” control even
in the face of silent or potentially inconsistent CBAs.
Before reaching the merits of Farfield’s argument, we
first address a threshold issue. The DOL’s wage determination
incorporated into the contract prescribes wage rates for
groundmen under “ELEC0126D 12/03/2000,” which seem-
ingly refers to a Local 126 CBA executed on December 3,
2000. A832. See, e.g., Abhe & Svoboda, 508 F.3d at 1056(“[T]he wages for painters, laborers, and carpenters were each
based on union collective bargaining agreements; the relevant
unions were noted in the wage determinations by their ini-
tials.”); id. at 1056 n.1 (“[T]he general wage determination
includes the initials PAIN0011C to indicate that wages for
‘Painters (Bridge Construction)’ were based on the wages
established in a collective bargaining agreement signed by Dis-
trict Council 11 of the International Brotherhood of Painters
and Allied Trades.” (citation omitted)). But the earliest CBA
in the record was executed December 3, 2001.19 And though
19
In response to a question at oral argument, counsel for Far-
field stated that “[a]ll of the collective bargaining agreements
are in the record,” including “three that covered the time period
of the project because it lasted four and a half years.” OA
Trans. 12:13–23; see also id. at 13:15–21. That is inaccurate,
of course, inasmuch as no CBA relevant to the “laborer” clas-
-36-
they contain a classification for “groundhands,” the Local 126
CBAs in the record include no classification of “laborer”; the
“laborer” classifications in the wage determination appear to
derive from a Laborers’ Union CBA omitted from the record.20
In other words, it is unclear whether the CBA on which the
DOL’s prevailing wage determinations and classifications
were based contains the same “permissive” approach to
sification is before us. And though Farfield’s employees
worked on the Project from 2002–2007, the prevailing wage
determination incorporated into the SEPTA contract associated
the electrician worker classifications with the earlier December
3, 2000 CBA not in the record. Counsel represented at oral
argument that “the relevant provisions didn’t change,” id. at
13:21–22, so we will consider Farfield’s argument on the
assumption that the subsequent CBAs in the record are indeed
identical in relevant respects to the critical one cited in the pre-
vailing wage determination.
20
Confusingly, Farfield recognizes that “[t]he Laborers have
their own collective bargaining agreement” and that “there
isn’t a collective bargaining agreement that governs both the
Laborers and the IBEW,” OA Tr. 14:24–25, 15:3–8, while also
arguing that the relevant “classifications [are] all under one
collective bargaining agreement.” OA Tr. 16:3–7. While
groundmen and linemen may have been classifications con-
templated by the same Local 126 CBA, that cannot be said for
laborers, whom the District Court also found were misclassi-
fied. So Farfield’s CBA-based argument, at best, constitutes
only a partial defense to the Special Master’s findings that Far-
field misclassified groundmen and laborers by having them
perform lineman work (such as laying conduit and pulling
wire).
-37-
groundman duties—to say nothing of “laborer” duties—as the
later Local 126 CBAs included in the record.
In any case, Farfield’s argument fails because it is not
the language of a CBA but rather signatory parties’ local prac-
tice that controls worker classifications under the Davis-Bacon
Act. To that end, the DOL’s Field Operations Handbook pro-
vides that when the applicable wage determination reflects
union wage rates for the classifications involved, “the unions
whose members may have performed the work in question”
should be contacted “to determine whether the union workers
performed the work on similar projects in the county in the year
prior” to the relevant start date of the project. U.S. DOL Field
Ops. Handbook, Ch. 15, § 15f05(d)(1)(a). “If union contrac-
tors performed the work, each union should be asked how the
individuals who performed the work in question were classi-
fied.” § 15f05(d)(1)(c). That information “provided by the
unions should be confirmed with collective bargaining repre-
sentatives of management,” and “the area practice is estab-
lished” only “[i]f all parties agree as to the proper classification
of the work in question.” § 15f05(d)(1)(d)–(e). The Handbook
thus requires that a contractor, rather than simply reading a
CBA to determine for itself whether a classification is prohib-
ited, achieve consensus with both labor and management on
how individuals who perform comparable work are actually
classified.
Following the Handbook’s dictates, the most compre-
hensive court decision on point similarly holds that local prac-
tices of the referenced CBA’s signatories control Davis-Bacon
-38-
worker classifications.21 In Abhe & Svoboda, the D.C. Circuit
held that wage determinations derived from CBAs require
worker classifications to be “determined exclusively by the
practices of signatory unions.” 508 F.3d at 1059 (emphasis
added) (citations omitted). Farfield tries to minimize the
import of this ruling, arguing that it doesn’t elevate local prac-
tices over inconsistent terms of a CBA. While we acknowl-
edge that such a proposition was unnecessary to the D.C.
Circuit’s decision, large swaths of the opinion do, in fact,
support such a holding in the case before us.
Abhe & Svoboda arose out of a contractor’s classifica-
tion of workers based on its own national “tools of the trade”
analysis, which it claimed to have relied on for over 500 gov-
ernment contract jobs across the country. 508 F.3d at 1056.
21
To be sure, two members of a Ninth Circuit panel held in
Roen that “where the Department [of Labor] determines that
prevailing wages are established by a collectively bargained
agreement, the job classifications for the project or area at issue
are also established by that agreement.” 183 F.3d at 1093. But
the facts of Roen differed significantly from those we confront.
The relevant job tasks were enumerated in an inter-union
agreement on how to classify piping workers on Northern Cal-
ifornia water treatment plant projects. See id. at 1090–91. By
formal letter, the DOL adopted that agreement because it
reflected “the appropriate classifications and wages for work
done on water treatment projects in Northern California.” Id.Not so here. The CBAs in the record did not affirmatively
establish the duties of groundmen other than merely prohibit-
ing them from performing certain tasks. Nor did the DOL so
clearly and formally adopt the sparse work descriptions therein
as the proper classifications on the Project.
-39-
The court held that this practice strayed from DOL regulations
and practices establishing “that contractors do not have the
authority to determine the scope of job classifications based on
their own methodologies.” Id. at 1061–62 (emphasis added).
Noting the DOL’s Fry Brothers decision, the court held that
the contractor was on notice of the need to “follow the practice
of the local unions.” Id. at 1060–61 (citing Fry Bros., 1977
WL 24823, at *5–6). “From start to finish,” the court noted,
“the focus of the [Davis-Bacon] Act is on local practice” such
that a contractor’s application of its own classifications, even
if based on a national standard, “is inconsistent with the funda-
mental principle of the Davis-Bacon Act that local practice
should control government contracts.” Id. at 1061. The court
rejected a narrow construction of Fry Brothers that would have
“require[d] only that contractors abide by known union prac-
tices,” instead faulting the contractor “for not contacting the
relevant unions or inquiring of the Department [of Labor] if it
was unclear about the local practices for classifying jobs.” Id.
at 1062 (emphasis added) (“the Company made no effort to
ascertain the practices of the unions noted in the wage determi-
nation”).22 And the court was unpersuaded by the arguments
of amici that contractors should not be saddled with
“break[ing] through the union wall to adequately and clearly
determine their invariably unwritten practices and rules.” Id.(emphasis added).
The takeaway from Abhe & Svoboda is straightforward.
If the DOL’s prevailing wage determinations rest on a particu-
22
Contacting the union would have been especially fruitful for
Farfield: The Local 126 business manager listed on every CBA
is Thomas Leach, who served as Local 98’s expert on local
industry practices in this case.
-40-
lar CBA, then a contractor may not base classification practices
on its own reading of that CBA. Rather, it must engage with
the signatory union(s) and management on local classification
practices, even if “unwritten.” Failing that, the contractor may
contact the DOL for clarification.
The evidence before the Special Master offers no quar-
ter to Farfield. Local 98’s expert testified that under local prac-
tice “groundmen are not permitted to connect conduit; thread
conduit; lay conduit; connect or splice conduit at a manhole;
pull wire; monitor[] or address[] tension of a cable through a
conduit; terminate a cable run; and perform splicing and/or
stripping functions.” A83–84. It is linemen who perform this
work. Farfield offered no compelling evidence on the issue.23
Farfield’s assigning groundmen and laborers to perform such
tasks—its logging their hours under phase codes that reflected
23
Farfield states that Local 98’s expert “admitted that under
local union practice laborers also install and lay conduit and
pull wire.” Appellant’s Br. 28. Though he acknowledged that
members of other trades, such as laborers, do install conduit
and pull wire, the expert testified that Local 126 is “adamantly
against that” because such work “should be done by electrical
workers and signatory electrical contractors.” A1653–54. And
he later clarified that on Local 126 jobs, laborers do not pull
wires. Farfield’s own witnesses established that “under local
area practices, only journeymen [linemen], and not laborers,
could install conduit on transit projects.” A298 (Findings of
Fact ¶ 169). The Special Master thus found that “under local
area practices in the Philadelphia area, only journeymen [line-
men] may perform the tasks associated with installing electri-
cal conduit” and “pulling electrical wires or cable.” A299
(Findings of Fact ¶¶ 170–71).
-41-
“journeyman [lineman] work, including installing electrical
conduit [and] pulling electrical wires or cable,” A303
(Findings of Fact ¶ 184)—conflicted with prevailing local
practices and so amounted to misclassification of its workers.
* * *
The District Court, via the Special Master, did not
clearly err in finding any of the relevant facts. We reject Far-
field’s legal contention that it did not misclassify workers
because one could read the relevant CBAs to permit its prac-
tices. Instead, whether workers were properly classified turns
on the local practices of the CBA signatories. And the direct
evidence showed that, under such practices, only linemen
could lay conduit and pull wire. So the District Court correctly
held that Farfield misclassified workers on the Project.
C. Farfield’s False Certified Payrolls Were
Material.
A materiality inquiry under the FCA is a holistic, total-
ity-of-the-circumstances examination of whether the false
statement has “a natural tendency to influence, or be capable
of influencing, the payment or receipt of money or property.”
31 U.S.C. § 3729(b)(4); see Escobar, 136 S. Ct. at 2003–04.
The Government’s “decision to expressly identify a provision
as a condition of payment is relevant, but not automatically dis-
positive” of materiality. Escobar, 136 S. Ct. at 2003. While
materiality “cannot be found where noncompliance is minor or
insubstantial,” it may be found where the Government “con-
sistently refuses to pay claims in the mine run of cases based
on noncompliance with the particular statutory, regulatory, or
contractual requirement.” Id. In this context, as in all others,
-42-
materiality “look[s] to the effect on the likely or actual behav-
ior of the recipient of the alleged misrepresentation.” Id. at
2002 (alteration in original) (quoting 26 R. Lord, WILLISON ON
CONTRACTS § 69:12, p. 549 (4th ed. 2003)).
Farfield argues that even if it misclassified workers, it
cannot be liable under the FCA because the false certified pay-
rolls that it submitted to SEPTA, which SEPTA in turn submit-
ted to the FTA, were not material to the Government’s decision
to pay.24 This is so, Farfield claims, because (1) the contract
language permitted, but did not require, the Government to
withhold payment from SEPTA if work was misclassified or
certified payrolls were false; (2) the Government took no
action at various stages of the Project and this litigation; and
(3) the total amount of underpaid wages due to misclassifica-
tions was small in relation to the overall value of the contract.
But none of the relevant circumstances convince us that the
false certified payrolls were immaterial to the Government’s
decision to pay invoices for Farfield’s work. 25
24
Farfield does not dispute its obligations to classify workers
properly and submit accurate payrolls containing a sworn cer-
tification of compliance. See 29 C.F.R. § 5.5(a)(3)(ii)(B).
25
Farfield also contends that the false certified payrolls (sub-
mitted weekly) cannot anchor Local 98’s FCA claim because
they are not a “request or demand” for payment within the
FCA’s definition of “claims.” Appellant’s Br. 30, 50–53. Far-
field argues that any FCA violations it committed must instead
trace to (monthly) invoices affected by the worker misclassifi-
cations. Not so. Post-FERA, the FCA imposes a civil penalty
on any person who “knowingly makes, uses, or causes to be
made or used, a false record or statement material to a false or
-43-
1. Proper classification and accurate certified payrolls
were payment conditions. After Escobar, the Government’s
designation of compliance with a particular regulatory require-
ment as a condition of payment is relevant to, but not disposi-
tive of, materiality. 136 S. Ct. at 2003. The SEPTA contract
incorporates several of the federal regulations pertinent to this
fraudulent claim.” 31 U.S.C. § 3729(a)(1)(B) (emphasis
added). Farfield’s “false record or statement” was each certi-
fied payroll report (more specifically, each certification of
compliance) submitted to the FTA to backstop the associated
invoices. See, e.g., U.S. ex rel. Sheet Metal Workers Int’l
Ass’n, Loc. No. 20 v. Horning Inv., LLC, 828 F.3d 587, 591–
92 (7th Cir. 2016) (highlighting evidence that defendant’s
employee “submitted the Certified Payroll Reports and the
eight applications that initially went to [the prime contractor]
with the knowledge that they were to be presented to the
Department of Veterans Affairs for payment” (citation
omitted)); United States v. Saavedra, 661 F. App’x 37, 45–46
(2d Cir. 2016) (“[N]othing in the [FCA] requires the court to
impose penalties based on the number of false claims under
§ 3729(a)(1)(A), instead of the number of false statements
under § 3729(a)(1)(B).”); see also U.S. ex rel. Schwedt v.
Planning Res. Corp., 59 F.3d 196, 199 (D.C. Cir. 1995) (claim
need not be an invoice but may be a progress report submitted
to induce payment); United States v. Bd. of Educ. of City of
Union City, 697 F. Supp. 167, 176 (D.N.J. 1988) (“Although
each individual report did not trigger separate payments, the
release of funds was predicated upon the grant agreement
which required the periodic submission of accurate reports.”).
-44-
materiality factor. These provisions give the Government the
unilateral right to exercise withholding and debarment reme-
dies in response to Farfield’s non-compliance with Davis-
Bacon requirements.
First, the federal agency (here, the FTA) “shall upon its
own action or upon [application] of the Department of Labor
withhold or cause to be withheld from the contractor . . . so
much of the accrued payments or advances as may be consid-
ered necessary to pay . . . the full amount of wages required by
the contract.” 29 C.F.R. § 5.5(a)(2) (emphasis added).
Second, “[i]n the event of failure to pay . . . all or part
of the wages required by the contract, the (Agency) may, after
written notice . . ., take such action as may be necessary to
cause the suspension of any further payment, advance, or guar-
antee of funds until such violations have ceased.” Id. (empha-
sis added).
Third, if the contractor fails to maintain or submit
required documents, the Government “may, after written notice
. . ., take such action as may be necessary to cause the suspen-
sion of any further payment,” with “failure to submit the
required records” a permissible “grounds for debarment” for a
three-year period. 29 C.F.R. § 5.5(a)(3)(iii) (emphasis added)
(citing § 5.12); see also § 5.5(a)(3)(ii)(A)–(D) (describing
required payrolls and certifications of compliance).
Still another regulation says that the Government
“shall” suspend sufficient payments when a contractor fails “to
comply with the labor standards clauses contained in § 5.5,” 29
C.F.R. § 5.9 (emphasis added), but the relevant statute calls
only for contractual stipulations that there “may be withheld
-45-
from the contractor so much of the accrued payments as the
contracting officer considers necessary” to pay the required
wages. 40 U.S.C. § 3142(c)(3) (emphasis added); accord
Coutu, 450 U.S. at 757.
The parties spill more ink than necessary arguing
whether the Government has a mandatory obligation to sus-
pend payment when it learns of Davis-Bacon noncompliance
or merely the right to do so. Farfield claims that the Govern-
ment has discretion and thus that Davis-Bacon compliance is
not a condition of payment, whereas Local 98 presses that the
Government must withhold payment for noncompliance.
There is scant case law interpreting whether the Government
must withhold funds sufficient to make misclassified employ-
ees whole. See, e.g., Favel v. Am. Renovation and Const. Co.,
59 P.3d 412, 420 (Mont. 2002) (“Whether [withholding was]
discretionary or mandatory, the USAF Contracting Officer had
the unilateral authority to make such a decision . . . .” (citing
29 C.F.R. §§ 5.5(a)(2), 5.5(a)(3)(iii), 5.9; 40 U.S.C.
§ 276a(a))).
We need not decide whether the Government lacks or
indeed has discretion to withhold payment unilaterally. Its
undisputed right to do so and to debar Farfield—combined
with Farfield’s relevant actual knowledge and the lack of evi-
dence that the Government would overlook misclassifica-
tion—support the conclusion that proper worker classification
and, by extension, submission of payrolls accurately certifying
the same were conditions of payment. Post-Escobar, courts
decide whether regulatory compliance is an express condition
of payment based on what the regulation requires the
defendant to do under the federal contract or program, not
-46-
whether the Government must act in response.26 See, e.g., U.S.
ex rel. Prather v. Brookdale Sr. Living Communities, Inc., 892
F.3d 822, 831–33 (6th Cir. 2018). Here, that analysis supports
the District Court’s materiality finding.
Compliance with the relevant Davis-Bacon regulations
was mandatory for Farfield to bid on the contract and for the
Government to perform under it. Under those regulations, Far-
field’s workers “will be paid unconditionally . . . the full
amount of wages . . . computed at rates not less than those con-
tained in the wage determination.” 29 C.F.R. § 5.5(a)(1)(i).
Such workers “shall be paid the appropriate wage rate and
fringe benefits on the wage determination for the classification
of work actually performed.” Id. They may be compensated
for work performed in more than one classification only if
“payroll records accurately set forth the time spent in each clas-
sification in which work is performed.” Id. “Payrolls and basic
records relating thereto shall be maintained by the contractor,”
and they “shall contain . . . [each worker’s] correct classifica-
tion” and “hourly rates of wages paid.” § 5.5(a)(3)(i). And
Farfield “shall submit weekly . . . a copy of all payrolls . . . to
[SEPTA] for transmission to the [federal agency],” which
“shall set out accurately and completely all of the information
26
To the extent that Government action is relevant, it goes to
the next Escobar factor we discuss below. If, for example, the
Government exercised its discretion not to withhold pay-
ment—and instead paid in full—despite knowledge of misclas-
sifications or false certifications, then that would cut against
materiality, per Escobar. But the mere existence of remedial
discretion alone does not mean that the regulatory compliance
otherwise required of the defendant was not an express condi-
tion of payment.
-47-
required to be maintained under [(a)(3)(i), except Social Secu-
rity numbers].” § 5.5(a)(3)(ii)(A). Each payroll “submitted
shall be accompanied by a ‘Statement of Compliance,’ signed
by the contractor . . ., and shall certify,” among other things,
that “each laborer or mechanic has been paid not less than the
applicable wage rates . . . for the classification of work per-
formed, as specified in the applicable wage determination
incorporated into the contract.” § 5.5(a)(3)(ii)(B).27 If the con-
tractor fails “to comply with the labor standards clauses in
§ 5.5” or “fails to submit the required records,” the
Government unilaterally may withhold funds and, for records
non-compliance, debar the contractor for three years.
§ 5.5(a)(3)(iii); § 5.9. And all of the above provisions “shall”
be “insert[ed] in full in any [covered] contract,” § 5.5(a),
making clear their centrality as contractual conditions.
Farfield’s Davis-Bacon compliance and weekly submis-
sion of complete and accurate certified payrolls were thus des-
ignated conditions of the Government’s obligation to perform
(i.e., pay) under the SEPTA contract. See Prather, 892 F.3d at
832–33; U.S. ex rel. Absher v. Momence Meadows Nursing
Ctr., Inc., 764 F.3d 699, 713 (7th Cir. 2014) (“[A] reasonable
jury could certainly find that these MDS [Minimum Data
Sheet] forms were conditions of payment because they specif-
27
The contract, the regulations, and Farfield’s payroll certifi-
cations all provide that “falsification of any of the above certi-
fications” may subject the contractor to criminal prosecution
under 18 U.S.C. § 1001 or civil liability under the FCA. A824;
29 C.F.R. § 5.5(a)(3)(ii)(D); A1265. Given the contemplated
FCA liability, the submission of payrolls falsely certifying
Davis-Bacon compliance must, at least in some cases, be
material to the Government’s decision to pay.
-48-
ically affirm that reimbursement is ‘conditioned on the accu-
racy and truthfulness of [the] information’ contained in the
forms. And such a certification of accuracy is required by the
Medicare and Medicaid regulations.” (last alteration in origi-
nal) (citing 42 C.F.R. § 483.20)). That conclusion finds further
support in the Government’s recourse to debarment of a con-
tractor that falsifies certified payrolls or otherwise disregards
its Davis-Bacon obligations to employees. 29 C.F.R.
§ 5.12(a)(2); see, e.g., Metro. Home Improvement Roofing Co.,
B-215945 (Comptr. Gen. Dec. Jan. 25, 1985). The express-
condition-of-payment factor thus favors the District Court’s
conclusion that Farfield’s submission of false certified payrolls
was material to the Government’s decision to pay. Escobar,
136 S. Ct. at 2003.
Even were we disinclined to call Davis-Bacon compli-
ance an express or designated condition of payment here, tes-
timony of Farfield’s witnesses reveals actual knowledge that
compliance was a de facto condition of both payment and Far-
field’s continued eligibility for federally funded projects. “The
existence of express contractual language specifically linking
compliance to eligibility for payment . . . is not, as [defendant]
argues, a necessary condition” for materiality. United States v.
Sci. Apps. Int’l Corp., 626 F.3d 1257, 1269 (D.C. Cir. 2010).
And the Supreme Court, endorsing a similar conception of
materiality, recognizes that “[a] defendant can have ‘actual
knowledge’ that a condition is material without the Govern-
ment expressly calling it a condition of payment.” Escobar,
136 S. Ct. at 2001–02; Sci. Apps., 626 F.3d at 1269 (“The plain-
tiff may establish materiality in other ways, such as through
testimony demonstrating that both parties to the contract
understood that payment was conditional on compliance with
the requirement at issue.”).
-49-
As the District Court summarized, one of Farfield’s vice
presidents testified that he “understood if the DOL ever found
Farfield to have . . . violated a prevailing wage act the conse-
quence ‘would have put us out of business.’” A103. McGee
testified that, based on “a problem years prior,” Farfield was
“concern[ed]” at the Project’s inception “that we used the
proper people in the proper positions and certified payrolls
were accurate.” A1294. It was clear to McGee that “if there
was a problem” with classification, it “would be a real prob-
lem.” A1306. There was also evidence that Farfield had gen-
erally “been very sensitive to [prevailing wage laws]” and per-
ceived itself as “‘under a magnifying glass’ by the union.”
A105. While a defendant’s actual knowledge “that the Gov-
ernment would be entitled to refuse payment were it aware of
the violation” is not dispositive of materiality, Escobar, 136 S.
Ct. at 2004 (emphasis added), Farfield’s clear appreciation that
Davis-Bacon violations would “likely” so affect the “behavior
of the recipient of the alleged misrepresentation” is enough to
tilt the condition-of-payment factor in favor of materiality. Id.
at 2002 (emphasis added) (quoting WILLISTON ON
CONTRACTS, at 549).
2. No evidence of past relevant Government (in)action.
The parties have pointed us to no record evidence showing that
the Government “consistently refuses to pay claims in the mine
run of cases based on noncompliance with” Davis-Bacon
requirements or pays claims like those at issue here “despite its
actual knowledge that certain requirements were violated.”
Escobar, 136 S. Ct. at 2003–04. So nothing suggests that this
is a case where the Government would have knowingly paid
invoices associated with false certified payrolls or, by exten-
sion, misclassified workers. Cf. U.S. ex rel. Spay v. CVS
-50-
Caremark Corp., 875 F.3d 746, 764 (3d Cir. 2017) (summariz-
ing evidence of Government’s knowledge that pharmacy ben-
efit managers were submitting claims that flouted regulatory
requirements and its payment of such claims anyway). Left
intact is Local 98’s prima facie materiality showing based on
the contract and regulations as well as the knowledge of Far-
field decisionmakers. See, e.g., U.S. ex rel. Doe v. Heart Sol’n,
PC, 923 F.3d 308, 318 (3d Cir. 2019) (faulting defendants for
failing to show “that Medicare generally pays this type of claim
‘in full despite its actual knowledge that certain requirements
were violated’” (quoting Escobar, 126 S. Ct. at 2003)).
In a trompe l’œil, Farfield paints the Justice Depart-
ment’s choice not to intervene in the litigation as a Government
act that fatally undermines materiality. But intervention deci-
sions are, at best, of minimal relevance. In Escobar, the Gov-
ernment chose not to intervene, see 136 S. Ct. at 1998, yet the
Supreme Court did not mention this as a pertinent materiality
factor. And “[if] relators’ ability to [meet] the element of
materiality were stymied by the government’s choice not to
intervene, this would undermine the purposes of the Act.”
Prather, 892 F.3d at 836 (citation omitted) (rejecting similar
intervention argument); cf. U.S. ex rel. Petratos v. Genentech
Inc., 855 F.3d 481, 490 (3d Cir. 2017) (listing non-intervention
as one among many Government actions and inactions that
undermined relator’s materiality allegation). Nor do the
“administrative mechanism[s]” for enforcing compliance with
wage-and-hour laws weigh against materiality—at least not on
the record we confront here. Appellant’s Br. 32–33. The DOL
declined to act on the District Court’s referral of the case, mak-
-51-
ing that forum well and truly unavailable to Local 98.28 And it
did so based on the vintage of the facts and related concerns
for investigatory resources, not on any grounds suggesting
immateriality.
3. Davis-Bacon compliance was essential to the bar-
gain. A third materiality factor is whether the noncompliance
is “minor or insubstantial” or, instead, goes “to the very
essence of the bargain.” Escobar, 136 S. Ct. at 2003 & n.5
(quotation omitted). Farfield argues that its misclassification
violations were small, calculated at just over $150,000 in wage
underpayments, in comparison to the $54.7 million value of the
SEPTA contract. We refuse to measure materiality based only
on the monetary value of Farfield’s wrongdoing in relation to
some larger, undefined whole. After all, Davis-Bacon compli-
ance is concerned not with minimizing costs but, on the con-
trary, aims to impose additional costs on contractors and the
Government in pursuit of goals that Congress has prioritized
for federally funded projects.
Holding otherwise would require us to engage in diffi-
cult, if not impossible, line-drawing. Even if valuing the
affected work were easy to accomplish—something belied by
the history of this case—at what level of generality should we
28
Farfield points to one tangential circumstance that it claims
weighs against a materiality determination: SEPTA spoke with
Farfield’s workers during the Project but raised no concerns
about worker classification. The District Court found that
these alleged conversations lacked the necessary specificity to
sway its materiality finding. We see no fault in that finding.
And, in any case, such discussions would fail to show the Gov-
ernment’s (i.e., the FTA’s) knowledge of the noncompliance.
-52-
evaluate the materiality denominator? Should we look at the
ratio between the affected work and the overall amount of elec-
trical work performed on the Project? The overall dollar value
of the Project? The overall budget of the FTA while the work
was performed? And then, even if we could formulate the cor-
rect denominator, what percentage of misclassified work in
relation to that whole suffices to meet the materiality thresh-
old? 0.1 percent? One percent? Ten percent? A search for
answers proves a Sisyphean task. Neither Davis-Bacon nor
case law provides a guide.
And opposite the dollar magnitude of the violation are
other factors one might reasonably consider in evaluating
whether a contractor’s regulatory violations were minor or
insubstantial. We might ask, for example, about temporal
duration: For how long did the Davis-Bacon noncompliance
affect the contractor’s work? Farfield falsely certified compli-
ance 105 times—once a week for more than two years on the
five-year Project. Arguably, undercutting the local labor mar-
ket for over two years is neither minor nor insubstantial.
Though we have no reason to think that any work on the Pro-
ject was sub-standard, we might also consider in our objective
materiality analysis the possible consequences to the public of
unskilled workers building public infrastructure that local prac-
tices reserve for an electrician’s skill and experience. Cf. Spay,
875 F.3d at 764 (“The misstatements that gave rise to this qui
tam action allowed patients to get their medication, and they
are precisely the type of ‘minor or insubstantial’ misstatements
where ‘materiality . . . cannot be found.’” (alteration omitted)
(quoting Escobar, 136 S. Ct. at 2003)). Should the potential
for widely felt negative consequences from public transit fail-
ure lower the dollar threshold for materiality in cases like this
one? One might even say that the Davis-Bacon Act’s debar-
-53-
ment remedy implicitly recognizes that certain regulatory vio-
lations on public works projects should have ramifications for
the contractor beyond wage restoration. And, of course, Davis-
Bacon compliance is a keystone of federally funded construc-
tion projects. See, e.g., Coutu, 450 U.S. at 771, 773–76; Fry
Bros. at *6. Whether a contractor “complied with the regula-
tions” that are central to decisions about how to spend public
funds “is a fact that a reasonable person would want to know.”
Prather, 892 F.3d at 835; see also United States v. Luce, 873
F.3d 999, 1007–08 (7th Cir. 2017) (misrepresentation that no
officers of loan-originating company were currently subject to
criminal proceedings was material because certification
“addressed a foundational part of the Government’s mortgage
insurance regime, which was designed to avoid the systemic
risk posed by unscrupulous loan originators”).
In view of the totality of the circumstances, we conclude
that Farfield’s Davis-Bacon violations were not minor or
insubstantial. Farfield misclassified more than $150,000 in
electrical work on a public infrastructure project. The conse-
quence was that, on 105 occasions across more than two years’
worth of payrolls, Farfield falsely certified its compliance to
the Government. And it did so under a regulatory regime and
a contract that authorized debarment as a remedy for misclas-
sification and false certifications. This Escobar consideration
also favors a conclusion that Farfield’s false statements were
material to the Government’s decision to pay SEPTA invoices.
* * *
Proper worker classification and submission of accurate
payroll certifications were express conditions of the Govern-
ment’s payment—or, at minimum, de facto conditions of pay-
-54-
ment based on Farfield’s knowledge of the Government’s
likely response to non-compliance. And Farfield’s regulatory
violations were not minor or insubstantial. Seeing no evidence
of relevant Government (in)action, we conclude that Farfield’s
false certified payrolls were material to the Government’s
decision to pay.
D. The Facts Support the District Court’s Finding
of Recklessness.
The District Court adopted the Special Master’s finding
that Farfield recklessly ignored its worker classification obli-
gations under the Davis-Bacon Act, and thus acted with reck-
less disregard for the truth or falsity of its certified payrolls.
Under the FCA, an individual or entity responsible for submit-
ting an objective falsehood must have acted “knowingly”—
that is, with actual knowledge of the falsehood, in deliberate
ignorance of its truth or falsity, or in reckless disregard of its
truth or falsity. See 31 U.S.C. § 3729(b)(1)(A). Congress
added the “reckless disregard” prong to the FCA’s definition
of “knowingly” to target the defendant who has “buried his
head in the sand” and failed to make an “inquiry into the
claim’s validity” that is “reasonable and prudent under the cir-
cumstances.” U.S. ex rel. Williams v. Renal Care Grp., Inc.,
696 F.3d 518, 530 (6th Cir. 2012) (quoting S. Rep. 99-345, at
21 (1986), reprinted in 1986 U.S.C.C.A.N. 5266, 5286).
The Special Master’s essential conclusion from the facts
was that Farfield, via McGee, delegated full discretion to fore-
persons to use workers on their crews as they saw fit while, at
the same time, fully aware of Farfield’s contractual and regu-
latory obligations to ensure that employees were paid prevail-
ing wages for the classification of work performed. Farfield
-55-
raises a hodgepodge of factual objections that it claims render
the recklessness finding erroneous, but none have merit.
1. The testimony supported the District Court’s reck-
lessness finding. Farfield contends that its forepersons and
managers reasonably believed that groundmen could do what-
ever work linemen could do. They testified that McGee told
them so. Transit work was not something that Farfield special-
ized in prior to undertaking the Project, and its supervisors may
have understandably relied on McGee for direction. But Far-
field’s argument fails to grapple with the District Court’s reck-
lessness finding. For his part, McGee testified that a ground-
man could not do all the work that a lineman could, including
specifically “pulling wire through conduit,” A1338–39,
because groundmen were “completely unskilled” “grunt[s].”
A1313–14; A1341. So McGee’s statements to subordinates
that “any worker could do any task” such that they needn’t
worry about properly classifying groundmen, A291 (Findings
of Fact ¶ 141), conflicted with his own knowledge of the
proper role of groundmen and the centrality of proper classifi-
cation to the health of Farfield’s business.29
The District Court reasonably concluded from this con-
flicting testimony that McGee, and thus Farfield, recklessly
delegated to unknowledgeable individuals the responsibility
29
A groundman could assist a lineman in most tasks, Farfield
points out, and a lineman was usually included on a crew. But
the Special Master found “not credible” the testimony of Far-
field’s witnesses that only linemen performed the skilled tasks
involved, with groundmen “simply ‘helping’ [them] with the
installation of conduit and pulling of wire.” A292 (Findings of
Fact ¶¶ 143–44); see supra Section V.B.1.
-56-
for ensuring that employees were properly classified. See, e.g.,
United States v. Krizek, 111 F.3d 934, 941–42 (D.C. Cir. 1997)
(observing that, although FCA is “not intended to apply to
mere negligence, it is intended to apply in situations that could
be considered gross negligence where the submitted claims to
the Government are prepared in such a sloppy or unsupervised
fashion that resulted in overcharges to the Government”
(emphasis added) (quotation omitted)); United States v.
Stevens, 605 F. Supp. 2d 863, 867, 869 (W.D. Ky. 2008) (find-
ing “reckless disregard” of physician’s duty as Medicare and
Medicaid provider to “take reasonable steps to ensure that his
clinic’s claims for reimbursement [were] accurate” where phy-
sician “completely delegated” all billing responsibilities to
someone with “absolutely no prior experience with medical
billing” (emphases added)). That Farfield hired McGee for his
knowledge of and experience with classifications on rail pro-
jects, or that other individuals may have been ignorant for their
part, does not mean that Farfield is unaccountable for McGee’s
reckless actions. An entity’s knowledge for FCA purposes
may be imputed based on that of a particular employee or
officer. See, e.g., Sci. Apps., 626 F.3d at 1272–73; U.S. ex rel.
Harrison v. Westinghouse Savannah River Co., 352 F.3d 908,
919–20 & n.11–12 (4th Cir. 2003).
2. No clear error based on DOL audit. Farfield next
claims that the District Court’s recklessness finding was
clearly erroneous for glossing over the DOL’s 2004 audit of
the Project, which found only minor holiday-pay violations.
But the District Court did indeed recognize that the DOL audit
was “evidence going to whether a defendant acted in reckless
disregard of wage and classification requirements.” A81 (cit-
ing U.S. ex rel. Rueter v. Sparks, 939 F. Supp. 636 (C.D. Ill.
1996), aff’d, 111 F.3d 133 (7th Cir. 1997)). The audit evidence
-57-
simply wasn’t compelling or specific enough to rebut the oth-
erwise strong proof that Farfield acted recklessly. For instance,
though the DOL auditor appears to have reviewed some payroll
information, the record does not show that he examined infor-
mation about the work that groundmen and linemen were
actually performing. In fact, the limited evidence related to the
audit suggested that the auditor’s remit may have been much
narrower than examining worker classification and prevailing
wage compliance across the entire project.
3. Farfield’s other arguments fail. Farfield throws
additional facts at the wall, but none of them stick. Farfield
contends that it could not have recklessly misclassified work-
ers on the Project because Local 98 voluntarily dismissed its
claims against Farfield related to four other projects. But that
tells us nothing about recklessness as to the Project at issue.
Nor does the Special Master’s description of the case as entail-
ing “close questions of fact and law” mean that Farfield could
not have acted recklessly. Appellant’s Br. 40–41. This case
implicates fact-bound wage-and-hour issues and complex
questions of law, including issues of statutory retroactivity, but
nothing that would diminish Farfield’s culpability.30
30
Farfield’s possible compliance with the CBAs’ restrictions
on groundman work does not vitiate the recklessness finding.
Even if Farfield or McGee relied on the CBAs when making
decisions relevant to how employees would be classified
(which was not proven), “parties dealing with the government
are expected to know the law, and there is no grave injustice in
holding parties to a reasonable knowledge of the law.” Abhe
& Svoboda, 508 F.3d at 1060 (cleaned up). As suggested by
our earlier treatment of Farfield’s industry-practice argument,
supra Section V.B.2, relying solely on the CBAs’ lack of
-58-
Farfield also claims that it could not have recklessly dis-
regarded its legal obligations so as to “cheat” or save money
because it paid some employees wages higher than those
required by Davis-Bacon and the SEPTA contract. Appellant’s
Br. 41–43. But even if that were true, it is irrelevant. To
“establish[] liability under the FCA, a plaintiff need not prove
the defendant had a financial motive to make a false statement
relating to a claim seeking government funds.” Harrison, 352
F.3d at 921 (citation omitted). There may well have been rea-
sons for Farfield’s recklessness besides aggregate profit. At all
events, Farfield offers no legal support for offsetting amounts
underpaid to certain employees with funds overpaid to others.
Cf. Smiley v. E.I. Dupont De Nemours & Co., 839 F.3d 325,
332–35 (3d Cir. 2016) (declining to offset employer’s FLSA
liability for unpaid pre- and post-shift work with amounts paid
for unproductive lunch breaks).
* * *
The record supports the Special Master’s factual find-
ings underpinning his conclusion that Farfield recklessly dis-
regarded whether its workers were properly classified and paid,
and thus recklessly disregarded the truth or falsity of the pay-
rolls’ certifications of compliance with the Davis-Bacon Act.
detailed classification strictures—without contacting the sig-
natories or the DOL—would not have been reasonable enough
to preclude “deliberate ignorance” or “reckless disregard”
under the FCA.
-59-
E. The District Court Properly Shifted the Burden
of Proof on Damages to Farfield.
Next, Farfield argues that the District Court improperly
shifted the burden of proof on damages after Local 98 intro-
duced “representative” evidence about the 42 employees found
to have been misclassified and underpaid. Appellant’s Br. 44–
50. Recall that Farfield did not segregate its employees’ hours
spent performing groundman or laborer work from those per-
forming lineman work. The Special Master found that substan-
tial lineman work, such as laying conduit and pulling wire, was
performed when an employee’s daily time was coded to six of
the 12 Farfield phase codes that Local 98 challenged. He then
required Farfield to show that the 42 groundmen and laborers
whose time was recorded under those six codes actually per-
formed non-lineman work for which they were paid appropri-
ately. After crediting Farfield’s rebuttal evidence that an aver-
age of 1.5 hours of unproductive time per day was billed to
these codes, and after reducing the misclassified hours accord-
ingly, the Special Master calculated damages based on the
resulting hours recorded to those codes for the 42 employees.
The Special Master awarded this recovery while acknowledg-
ing that “it [wa]s possible . . . that some of the remaining time
. . . was not [lineman] work.” A307.
The District Court authorized this burden-shifting as an
extension of the Supreme Court’s decision in Anderson v. Mt.
Clemens Pottery Co., 328 U.S. 680 (1946). Under Mt.
Clemens, an FLSA plaintiff bears the initial burden of proving
that employees have “in fact performed work for which [they
were] improperly compensated” and “produc[ing] sufficient
evidence to show the amount and extent of that work as a mat-
ter of just and reasonable inference.” Id. at 687. The burden
-60-
“then shifts to the employer to come forward with evidence of
the precise amount of work performed or with evidence to neg-
ative the reasonableness of the inference to be drawn from the
employee’s evidence.” Id. at 687–88. If the employer fails to
do so, “the court may then award damages to the employee,
even though the result be only approximate.” Id. (citation
omitted). Mt. Clemens also permits an award of back wages to
non-testifying employees based on the representative testi-
mony of only some employees. See id. at 687; see also
Donovan v. New Floridian Hotel, Inc., 676 F.2d 468, 471–72
(11th Cir. 1982) (“[E]ach employee need not testify in order to
make out a prima facie case of the number of hours worked as
a matter of ‘just and reasonable inference.’” (citing Brennan v.
Gen. Motors Acceptance Corp., 482 F.2d 825, 829 (5th Cir.
1973)).
According to Farfield, the burden should have remained
with Local 98 throughout to prove all damages with specificity.
While granting that Mt. Clemens burden shifting is appropriate
in FLSA cases, Farfield nonetheless argues that it cannot apply
in this FCA case. It points out that no cases have applied Mt.
Clemens to shift the damages burden to the defendant in an
FCA case and that, unlike an FLSA case, the underpaid
employees will not receive the damages award here. Farfield
also challenges the “representativeness” of Local 98’s evi-
dence. Appellant’s Br. 45–49. We reject both arguments.
1. Mt. Clemens applies in an appropriate FCA case,
like this one. Farfield correctly notes that Mt. Clemens burden-
shifting has not been applied in an FCA case prior to this one.
But Mt. Clemens has been either cited approvingly or applied
outright in Davis-Bacon cases. See, e.g., Janik Paving &
Const., Inc. v. Brock, 828 F.2d 84, 93 (2d Cir. 1987) (charac-
-61-
terizing Mt. Clemens as “the burden of proof to which the
Department [of Labor] and employees [a]re generally subject
in wage-standard violations”); Pythagoras Gen. Contracting
Corp. v. U.S. Dept. of Labor, 926 F. Supp. 2d 490, 495–96,
498–99 (S.D.N.Y. 2013) (affirming DOL Administrative
Review Board’s invocation of Mt. Clemens in Davis-Bacon
dispute). And a contractor’s false certifications that its workers
were paid at the rate legally required by the Davis-Bacon Act
are fodder for an FCA claim.31 See, e.g., U.S. ex rel. Plumbers
31
A line of cases can be read to preclude FCA claims where
the falsity of the claim or statement depends on the determina-
tion of complex Davis-Bacon classification issues. See U.S. ex
rel. Windsor v. DynCorp, Inc., 895 F. Supp. 844, 851–53 (E.D.
Va. 1995) (“[A] Davis-Bacon Act worker classification dis-
pute, by itself, is not an FCA claim because such disputes must
be resolved by the Department of Labor.”). Farfield has not
argued that the District Court lacked jurisdiction on this basis,
and it cites DynCorp. only in its Reply brief to counter an
unrelated point made by one of amici. See Barna v. Bd. of Sch.
Dirs., 877 F.3d 136, 146 (3d Cir. 2017) (noting that we will not
“reach arguments raised for the first time in a reply brief or at
oral argument”). Of course, the District Court did refer this
case to the DOL for resolution of worker classification ques-
tions. It is unclear whether DynCorp’s rationale still applies in
the wake of a referral that the agency declines. Cf. U.S. ex rel.
Wall v. Circle C Const., LLC, 697 F.3d 345, 353–54 (6th Cir.
2012); U.S. ex rel. Plumbers & Steamfitters Loc. Union No.
342 v. Dan Caputo Co., 152 F.3d 1060, 1062 (9th Cir. 1998)
(per curiam). And the Supreme Court has said only that “[d]is-
putes over the proper classification of workers under a contract
containing Davis-Bacon provision must be referred to the Sec-
retary [of Labor] for determination,” not that they must always
-62-
& Steamfitters Local Union No. 38 v. C.W. Roen Const. Co.,
183 F.3d 1088, 1091–92 (9th Cir. 1999) (“[A] false certifica-
tion that workers have been paid at the legally required wage
rate may give rise to liability under the FCA. If, as the Plumb-
ers allege, [defendant and its agents] submitted such false cer-
tifications, it may be liable under the False Claims Act.” (cita-
tion omitted)).
In this FCA false-certification case, the Davis-Bacon
Act supplies the substantive law by which the falsity of Far-
field’s statements is judged as well as the measure by which
employees were misclassified and underpaid. Just because the
employees themselves will not receive the underpayments
originally owed them does not mean that an employer can, by
keeping shoddy records, defeat the recovery of a person or
entity statutorily entitled to those damages.32 Indeed, account-
be adjudicated by the DOL for dependent federal-question
claims to proceed. Coutu, 450 U.S. at 760 (emphasis added).
We are also guided by court decisions “narrowly draw[ing]”
other jurisdictional bars to judicial review of Davis-Bacon
issues. Abhe & Svoboda, 508 F.3d at 1058 (“shield[ing] only
the substance of wage determinations from judicial review”
(citing Binghamton, 347 U.S. at 177; 40 U.S.C. § 3142(b))).
So to the extent that we must independently assure the exist-
ence of subject-matter jurisdiction, we conclude that the Dis-
trict Court had jurisdiction to adjudicate the applicable worker
classifications after it referred the case to the DOL and the
DOL declined the referral.
32
Though Farfield seeks to distinguish FLSA cases on the
grounds that the underpaid employees enjoy the recovery, it
does not challenge the District Court’s conclusion that the
-63-
ability would seem at least equally important when a contractor
recklessly fails to track its employees’ work on a project
funded by the public fisc.
While the FCA specifically places the burden of prov-
ing damages by a preponderance of the evidence on the Gov-
ernment or, as here, the relator, 31 U.S.C. § 3731(d), that bur-
den is met where the Government establishes “the prima facie
value” or “face amount” of the damages. United States v.
Thomas, 709 F.2d 968, 972–73 (5th Cir. 1983). The burden
then shifts to the defendant “to establish the actual value” of
the damages. Id. Mt. Clemens enables a similar process in
cases such as this one, where a relator draws prima facie evi-
dence from the defendant’s own documents to ascribe a face
value to the Government’s damages. Nor is the FLSA so
unique as to monopolize the principles of Mt. Clemens; indeed,
they have been applied in other contexts, including, for exam-
ple, antitrust cases. See, e.g., Bigelow v. RKO Radio Pictures,
327 U.S. 251, 264–266 (1946) (“[T]he wrongdoer may not
object to the plaintiff's reasonable estimate of the cause of
injury and of its amount, supported by the evidence, because
not based on more accurate data which the wrongdoer's mis-
conduct has rendered unavailable.”).
Finally, though it argued as much to the District Court,
Farfield does not sufficiently raise whether Mt. Clemens is
inapplicable because Farfield complied with recordkeeping
obligations, such as “the three-year record retention” regula-
measure of the Government’s damages is the amount of under-
paid wages. We assume without deciding that such damages
were “sustain[ed]” by the Government “because of the act of
[the defendant],” within the meaning of 31 U.S.C. § 3729(a).
-64-
tion under 29 C.F.R. § 5.5(a)(3)(i).33 A153. We cannot say
whether Farfield violated any such requirements. Though
Farfield may only have learned of a dispute about pay and
hours four years after cessation of work on the Project, we do
not know what records, if any, did not survive beyond the
three-year period.34 And Farfield may have ignored its
obligations by, for example, failing in the first instance to
create records reflecting each worker’s “correct classification.”
§ 5.5(a)(3)(i). In any event, the issue is unpreserved—and we
doubt that the employer’s actual violation of a recordkeeping
regulation is the sine qua non of Mt. Clemens burden-shifting.
See, e.g., Reich v. Gateway Press, Inc., 13 F.3d 685, 701–02
(3d Cir. 1994) (applying Mt. Clemens burden-shifting due to
employer’s inadequate records, with no mention of record-
keeping violation).
2. Local 98’s evidence was sufficiently representative.
Farfield’s challenge to the “representativeness” of Local 98’s
evidence also fails. Local 98 adduced direct testimony from
six workers who were classified as groundmen or laborers on
the Project yet whose work was logged using the phase codes
associated with lineman tasks. Those witnesses testified about
the work of 22 of the 42 affected groundmen and laborers (i.e.,
a 52-percent sample). Contrary to Farfield’s argument, this
evidence is quantitatively representative. See, e.g., Mt.
Clemens, 328 U.S. at 680 (8 out of 300 employees testified);
33
Farfield argues in its opening brief only that it saw “no need
to keep records of each task that every employee performed,
nor is such required.” Appellant’s Br. 50.
34
We express no view on whether Farfield violated record-
keeping obligations.
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Reich v. S. New Eng. Tel. Corp., 121 F.3d 58, 66–68 (2d Cir.
1997) (39 of 1,500 employees representative); Gateway Press,
13 F.3d at 701 (testimony of 22 out of 70 employees for whom
back wages were sought); McLaughlin v. Ho Fat Seto, 850
F.2d 586, 589 (9th Cir. 1988) (5 out of 28), cert. denied, 488
U.S. 1040 (1989); Donovan v. Simmons Petroleum Corp., 725
F.2d 83, 86 (10th Cir. 1983) (testimony of 12 employees suffi-
cient for all former employees); New Floridian Hotel, 676 F.2d
at 472 (23 testified out of 207 receiving an award).
The testimony of the six workers was also qualitatively
representative. Farfield cites nothing suggesting that the fre-
quency with which testifying workers performed lineman work
under the relevant phase codes was so unique that it was
unreasonable to conclude that they devoted “approximate[ly]”
the same amount of time as the other affected workers to line-
man work. Mt. Clemens. 328 U.S. at 688: see also Tyson
Foods, Inc. v. Bouaphakeo, 577 U.S. 442, 459 (2016) (“Rea-
sonable minds may differ as to whether the average time [] cal-
culated is probative as to the time actually worked by each
employee. Resolving that question, however, is the near-
exclusive province of the [factfinder]. The District Court could
have denied class certification on this ground only if it con-
cluded that no reasonable juror could have believed that the
employees spent roughly equal time donning and doffing.”
(citation omitted)). In fact, there was evidence that “most
crews were not limited in the work they performed” and that
“all workers on a crew performed all of these tasks [installing
conduit and pulling wire] at various times.” A290–91 (Find-
ings of Fact ¶¶ 135, 140). And to the extent that differences
existed, the factfinding seems to have accounted for them.
* * *
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Shifting the burden of proof on damages to Farfield
after Local 98 made out a prima facie case valuing those dam-
ages was justified here, just as it would have been in an FLSA
case or a Davis-Bacon proceeding before the DOL. And the
testifying workers’ incidence of lineman work under the rele-
vant phase codes was representative of that experienced by the
non-testifying affected workers.
F. The Award of Attorneys’ Fees Was Reasonable.
Finally, we reach Farfield’s challenge to the District
Court’s award of $1,229,927.55 in attorneys’ fees to Local 98.
Farfield does not claim that the District Court erred in award-
ing $203,226.45 in costs, nor does it assert that any of the
Court’s factual findings were erroneous. The core of Farfield’s
argument is that Local 98’s attorneys’ fees incurred on the four
voluntarily dismissed claims relating to other projects were not
fully excluded from the lodestar, and that many of a paralegal’s
time entries were too vague. Along with Farfield’s other argu-
ments, these fail as well.
Under our precedent, district courts have “substantial
discretion to determine what constitutes reasonable attorneys’
fees because they are better informed than an appellate court
about the underlying litigation and an award of attorney fees is
fact specific.” United States ex rel. Palmer v. C&D Techs.,
Inc., 897 F.3d 128, 137 (3d Cir. 2018) (cleaned up). So long
as the District Court employed correct standards and proce-
dures (as judged under de novo review) and made findings of
fact that are not clearly erroneous, we should let its fee award
stand. See, e.g., Pub. Interest Res. Grp. of N.J., Inc. v. Windall,
51 F.3d 1179, 1184 (3d Cir. 1995).
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In a 54-page memorandum opinion and order, the Dis-
trict Court granted in part Local 98’s motion for attorneys’ fees
and costs. The Court made extensive findings of fact and
rejected the same arguments Farfield makes here. On the point
about limited success, the Court noted that Local 98’s attorneys
cut over 1,000 hours to account for time spent pursuing work
on the four voluntarily dismissed claims. The Court then
applied the test announced in Hensley v. Eckerhart, 461 U.S.
424 (1983), to conclude that no further reductions were war-
ranted because “the legal theories and claim were the same
across all five projects.” A19–24.35 And the Court rejected
Farfield’s challenge to the paralegal’s time entries.
The District Court applied the correct legal standards
and procedures, and it made extensive findings of fact that are
supported by the record and the posture of the litigation. We
will affirm its award of attorneys’ fees to Local 98.
35
Farfield cursorily states that the “multiplier” of fees over and
above damages shows that the fees awarded were excessive in
relation to the recovery—i.e., the degree of Local 98’s success
on its claim relating to the Project. Appellant’s Br. 53. But
here, there was no appreciable “multiplier”: Local 98 proved
up a judgment of over $1 million (70 percent of which flows to
the Government), and the attorneys’ fees awarded were more
or less equivalent to that judgment. At all events, this recovery
is substantial—if not “large” relative to the typical FCA case
or the aggregate value of the Project. And “a plaintiff who has
won substantial relief should not have his attorney’s fee
reduced simply because the district court did not adopt each
contention raised.” Hensley, 461 U.S. at 440.
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VI. CONCLUSION
In the preceding pages, we resolve several issues not
previously decided by our Court. Congress’s 2009 amend-
ments to 31 U.S.C. § 3729(a)(1)(B) apply retroactively to cases
pending on or after June 7, 2008, no matter when the underly-
ing conduct occurred. When deciding how to classify workers
on a federally funded project, a contractor must contact either
the DOL or the signatories, including the union(s), to the CBA
underpinning the prevailing wage determination incorporated
into the contract. A contractor’s false certifications of Davis-
Bacon compliance on payrolls submitted to the Government
are material, absent evidence of the Government’s past action
relevant to associated claims or proof that the contractor’s
noncompliance was minor or insubstantial. And the damages
burden-shifting framework applicable in FLSA and Davis-
Bacon cases may apply in the appropriate FCA case. These
holdings, along with the foregoing analysis, compel us to
affirm the challenged orders of the District Court.
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