DAVID WALTON, individually and on behalf of all other persons similarly situated, Plaintiff-Appellant, KEVIN T. MADDISON, individually and on behalf of all other persons similarly situated, Plaintiff-Counter-Defendant-Appellant, v. COMFORT SYSTEMS USA (SYRACUSE), INC., doing business as ABJ Fire Protection Co., Inc., Defendant-Counter-Claimant-Appellee.
Docket No. 23-7944
United States Court of Appeals For the Second Circuit
August Term, 2024 (Argued: December 11, 2024 Decided: September 9, 2025)
Before: CHIN, ROBINSON, and NATHAN, Circuit Judges.
* The Clerk of Court is respectfully directed to amend the caption as reflected above.
Here, Plaintiffs-Appellants Kevin Maddison and David Walton sued their former employer, Defendant-Appellee Comfort Systems, seeking to recover, along with other relief, prevailing wages under § 220 for their fire alarm testing and inspection services performed on public works.
The United States District Court for the Northern District of New York (Kahn, J.) granted Comfort Systems’ motion for partial summary judgment on all prevailing wage related causes of action for three reasons: (1) the contracts did not affirmatively state that Comfort Systems would pay prevailing wages; (2) the contracts shortened the applicable statute of limitations to one year; and (3) even if the above were not true, fire alarm testing and inspection work is not the type of work subject to prevailing wages under § 220. See generally Maddison v. Comfort Systems USA (Syracuse), Inc., No. 5:17-cv-0359, 2020 WL 950288 (N.D.N.Y. Feb. 27, 2020). Plaintiffs appeal.
This appeal raises three questions. First, were Plaintiffs, as fire alarm testers and inspectors, entitled to prevailing wages under § 220? Second, is the promise to pay prevailing wages implicit in every public works contract so that individuals employed on public works projects may sue their employers to enforce the prevailing wage requirement under § 220 even if the employer‘s written contract does not include the statutorily required promise to pay prevailing wages? And third, are agreements to shorten the statute of limitations in public works contracts to one year enforceable against workers bringing third-party beneficiary breach of contract claims to enforce the prevailing wage law?
Based on precedent from the New York Court of Appeals, we answer the first question in the affirmative. As to the latter two potentially dispositive questions, because we cannot confidently predict how the New York Court of Appeals would answer them, and they are of importance to the state and may require value judgments and public policy choices, we CERTIFY two questions to that Court.
JASON J. ROZGER, Menken Simpson & Rozger LLP, New York, NY, for Plaintiff-Appellant and Plaintiff-Counter-Defendant-Appellant.
JESSICA F. PIZZUTELLI, Littler Mendelson, P.C., Fairport, NY, for Defendant-Counter-Claimant-Appellee.
ROBINSON, Circuit Judge:
This appeal raises important but unsettled questions of state law concerning
Here, Plaintiffs-Appellants Kevin Maddison and David Walton sued their former employer, Defendant-Appellee Comfort Systems, seeking to recover, along with other relief, prevailing wages under § 220 for the fire alarm testing and inspection work they performed on public works.
The United States District Court for the Northern District of New York (Kahn, J.) granted Comfort Systems’ motion for partial summary judgment on all prevailing wage-related causes of action for three reasons: (1) the contracts did not affirmatively state that Comfort Systems would pay prevailing wages; (2) the contracts shortened the applicable statute of limitations to one year; and (3) even if the above were not true, fire alarm testing and inspection work is not the type of work subject to prevailing wages under § 220. See generally Maddison v. Comfort Systems USA (Syracuse), Inc., 5:17-cv-0359, 2020 WL 950288 (N.D.N.Y. Feb. 27, 2020). Plaintiffs appeal.
This appeal raises three questions: (1) Were Plaintiffs, as fire alarm inspectors and testers, entitled to prevailing wages under § 220? (2) Is the promise to pay prevailing wages implicit in every public works contract so that individuals employed on public works projects may sue their employers to enforce the prevailing wage requirement under § 220 even if the employer‘s written contract does not include the statutorily required promise to pay prevailing wages? And (3) Are agreements to shorten the statute of limitations in public works contracts to one year enforceable against workers bringing third-party beneficiary breach of contract claims to enforce the prevailing wage law?
We decide the first question in the affirmative. Because we cannot confidently predict how the New York Court of Appeals
BACKGROUND
I. Factual Background2
Comfort Systems is a full-service fire alarm and sprinkler company that offers fire alarm testing and inspection services and repair services.3 Plaintiffs Maddison and Walton were employed as Alarm Systems Technicians for Comfort Systems: Maddison from May 2011 to May 2015 and Walton from 2013 to 2014. Their job responsibilities included “doing various types of electrical and sprinkler work including, but not limited to, installing, maintaining, inspecting, testing, repairing and/or replacing fire alarm, fire sprinkler, and security system equipment.” App‘x 283 ¶ 2 (emphasis omitted).
Comfort Systems entered into contracts for fire alarm testing and inspection services with New York public works customers, including Mount Markham Central School District, New York State Veterans Home, Tompkins Cortland Community College, Tri-Valley Central Schools, and Watertown Fire Department.
Relevant to this appeal, all the contracts between Comfort Systems and the public works customers included a clause shortening the statute of limitations for a cause of action against Comfort Systems to one year, stating, “No action shall be brought against Company more than one year after accrual of the cause of action.” App‘x 131, see also id. at 142, 156, 163, 171, 177, 183, 186, 190, 194, 198.
Additionally, some contracts contained a provision stating: “This agree[ment] is entered into with understanding that the services to be provided by abj Fire Protection Co. are not required to be paid under any local, state, or federal prevailing wage statutes.” App‘x 132, see also id. at 137, 143, 150, 157, 164, 172, 178, 184. Some explained that the “contract amount is based on our regular labor rates, if prevailing wage applies contact our office immediately for a revised Agreement.” App‘x 190, see also id. at 194. Two of the contracts stated, “Subscriber shall pay the Company the sum of $500.00 per year for said inspection contract. . . . This proposal amount is based on prevailing wage rates.” App‘x 220; see also id. at 224 (“Subscriber shall pay the Company the sum of: $16,000.00 . . .. This inspection agreement is based on prevailing wage rates.“). And several of the contracts were silent as to whether Comfort Systems would pay a prevailing wage. See App‘x 185-86; see also id. at 197-98.
With respect to the scope of work, many of Comfort Systems’ public works contracts included language limiting the contracted-for services to testing and inspection and disclaiming any intent to contract
“The test & inspection provided under this Agreement does not include any maintenance, repairs, alterations, replacement of parts or any field adjustments whatsoever nor does it include the correction of any deficiencies identified by Company to Subscriber. Nothing herein shall prevent Subscriber from entering into a separate Agreement with Company for the performance of such work.” App‘x 127; see also id. at 134, 139, 145, 152, 159, 166, 174, 180, 185, 189, 194, 197, 219, 223.
Some of the contracts discussed fire codes, saying the services provided “meet NFPA requirements,” App‘x 188, 192, 196, 200, or the “Subscriber should check with their local Fire Marshall (Authority Having Jurisdiction) to make sure the level of testing requested in the Agreement meets your local code requirements.” App‘x 188, 192, 196, 200, 226.
II. Procedural History
On behalf of themselves and a putative class of similarly situated workers, Plaintiffs brought five federal and state law claims against Comfort Systems all arising out of Comfort Systems’ alleged failure to pay prevailing wages or adequate overtime pay to its employees: (1) a claim under the Fair Labor Standards Act (“FLSA“) for failing to pay Plaintiffs and other class members overtime; (2) a third-party beneficiary breach of contract claim for failure to pay Plaintiffs and other class members prevailing wages for work performed on public projects in New York; (3) a claim under the NYLL for failure to properly include travel time in calculations of overtime pay for Plaintiffs and other class members; (4) a quantum meruit claim for failure to pay prevailing wages; and (5) an unjust enrichment claim for failure to pay prevailing wages.
Maddison sued Comfort Systems in March 2017 and amended his complaint in June 2017. In February 2018, Comfort Systems answered Maddison‘s amended complaint, responding that it had already paid Maddison prevailing wages to resolve this dispute and bringing an unjust enrichment counterclaim against Maddison to the extent Maddison earned a double recovery from this lawsuit. In April 2018, Maddison moved to add Walton. Following another amendment to the complaint and motions practice concerning Plaintiffs’ class claims, the district court granted Comfort Systems’ motion to dismiss Plaintiffs’ Second Amended Complaint (“SAC“) in September 2019. After the magistrate judge granted Plaintiffs’ motion to amend the SAC, Plaintiffs filed their Third Amended Complaint (“TAC“).
In the meantime, while the district court was deciding the motion to dismiss the SAC, the parties proceeded with discovery and litigation. In May 2019, Comfort Systems moved for partial summary judgment on all of Plaintiffs’ prevailing wage-related causes of action. It argued that: (1) Plaintiffs’ third-party beneficiary claims failed because the inspection contracts did not expressly state plaintiffs were entitled to prevailing wages, (2) the claims were time-barred due to the contracts’ shortening of the applicable statute of limitations, and (3) Plaintiffs’ work-testing and inspection-is not subject to the prevailing wage requirement under
Plaintiffs opposed, arguing that under
In February 2020, the district court granted Comfort Systems’ motion for partial summary judgment on Plaintiffs’ prevailing wage-related causes of action for three reasons.4 Maddison, 2020 WL 950288, at *1. First, it concluded the contracts shortened the statute of limitations to one year and Plaintiffs, as third-party beneficiaries, were bound to that contract term. Id. at *4-5. The district court rejected Plaintiffs’ assertion that the term should be considered void as against public policy, and noted that they cited no caselaw holding a one-year limitations period in a contract void as against public policy. Id. at *5.5
As to Comfort Systems’ alternative arguments, the court concluded that Plaintiffs could not enforce the prevailing wage requirement as third-party beneficiaries of Comfort Systems’ public works contracts because those contracts did not contain any clauses expressly promising to pay prevailing wages. Id. at *5-6. In so concluding, it quoted our certification opinion in Ramos, where we said, “New York courts have held that, in order for workers to bring a third-party breach of contract claim under
Finally, the district court concluded that the testing and inspection services covered by the contract were not subject to prevailing wages under the NYLL. Id. at *7. It factually distinguished the public works contracts here from the one addressed by the New York Court of Appeals in Ramos III. Id. Because the district court concluded Plaintiffs were not entitled to prevailing wages, it dismissed Plaintiffs’ quantum meruit and unjust enrichment claims. Id. at *7-8.6
The district court separately dismissed Plaintiffs’ FLSA claim as time-barred, so
Plaintiffs timely appealed, challenging the district court‘s grant of partial summary judgment on the prevailing wage claims.
DISCUSSION
Section 220 of the NYLL provides that certain classes of workers employed in connection with public works-meaning work performed for public entities-shall be paid “not less than the prevailing rate.”
As noted above, this appeal raises three legal questions: (1) Were Plaintiffs, as fire alarm inspectors and testers, subject to prevailing wages under § 220? (2) Is a promise to pay prevailing wages implicit in every public works contract such that individuals employed on public works projects may assert third-party beneficiary breach of contract claims against their employers to enforce the prevailing wage requirement under § 220 even if the employer‘s written contract with the public entity does not include the statutorily required promise to pay prevailing wages? And (3) Are agreements to shorten the statute of limitations in public works contracts to one year enforceable against workers bringing third-party beneficiary breach of contract claims to enforce the prevailing wage law?
Based on a 2009 NYS DOL Opinion Letter, we conclude that testing and inspection work falls within the scope of the prevailing wage statute. As to the latter two questions, because New York law “is so uncertain that we can make no reasonable prediction” about the answer to these questions, we conclude the prudent path is to certify to the New York Court of Appeals. RSD Leasing, Inc. v. Navistar International Corp., 81 F.4th 153, 169 (2d Cir. 2023).
I. Fire Alarm Testing and Inspection Work and the Scope of NYLL § 220
We conclude that it is. In 2009, the NYS DOL concluded as much, and the
[T]hat assertion fails to recognize “the nature, or the direct or primary objective, purpose and function of the work product of the contract,” i.e. the purpose of the contracts for inspection and testing, which you characterize as being merely to satisfy a customer‘s compliance with state or local code provisions, in fact, generally require inspections to be undertaken so as to ensure that systems are properly operating up to code standard, and if not, that necessary repairs are made.
Id.
The letter noted the New York State Fire Code‘s “basic requirement for periodic inspection and testing of fire systems in order to ensure its operational integrity,” and concluded that “a contract to satisfy the [applicable] inspection and testing requirements . . . is, in the opinion of this Department, an integral part of an overall contract for the maintenance of a system and is, therefore, included within the coverage of Article 8 of the Labor Law.” Id. It concluded, “Accordingly, any public contracts which are aimed, either explicitly or impliedly, at satisfying the testing and inspection requirements of...any code adopted for the purpose of maintaining fire systems in proper operating order are within the coverage of Article 8 of the Labor Law.” Id.
The NYS DOL further noted that state contracts related to fire system maintenance treat “maintenance services” as including “testing, inspection and monitoring,” and that SimplexGrinnell‘s own representative described “maintenance activities” as including testing. Id. at 2-3. And it noted that SimplexGrinnell‘s Standard Fire Alarm Testing and Inspection Procedure contemplates replacement of broken pull station rods or glass and otherwise combined testing with “corrective actions that are needed to maintain the system in proper working condition.” Id. at 3.
The letter ultimately concluded, “For these reasons, the Department of Labor is now of the opinion that the testing of fire systems is included within the category of system maintenance and is, therefore, subject to the payment of prevailing wages.” Id.8
And we reject Comfort Systems’ contention that this case is distinguishable insofar as some of its contracts specifically disclaim any intent to contract for “maintenance” services,9 and the 2009 NYS DOL Opinion Letter specifically noted that the employer‘s own description of “maintenance services” incorporated testing. NYS DOL Opinion Letter at 3. We don‘t read the NYS DOL Opinion Letter as resting on this employer-specific factor. The NYS DOL‘s reasoning rested primarily on general observations about the “nature and purpose of the inspection and testing of fire systems” as maintenance services. Id. at 3. The NYS DOL‘s reference to SimplexGrinnell‘s own statements regarding its maintenance practices bolstered its conclusion that, as a general matter, testing and inspecting are parts of maintenance. Id. (noting that “testing and inspection appear to be included, independent of the above discussed factors, as integral parts of the maintenance of fire systems by employees working within your own company“) (emphasis added).
Comfort Systems cannot contract around the prevailing wage requirement for testing and inspection services. As the Court of Appeals concluded in connection with the same controversy that led to the 2009 NYS DOL Opinion Letter, in requiring employers to include a provision agreeing to comply with § 220, “The legislature surely meant that the parties must agree to comply with the law as correctly understood, not as the parties may have misunderstood it.” Ramos III, 24 N.Y.3d at 148. Under New York law, the NYS DOL Opinion Letter is entitled to deference from this Court. See Samiento v. World Yacht Inc., 10 N.Y.3d 70, 79 (2008) (“The Labor Department‘s interpretation of a statute it is charged with enforcing is entitled to deference. The construction given statutes and regulations by the agency responsible for their administration, if not irrational or unreasonable, should be upheld.“); Chesterfield Assocs. v. New York State Dep‘t of Labor, 4 N.Y.3d 597, 604 (2005) (holding that the Commissioner of Labor‘s determination was entitled to deference unless it was “irrational or unreasonable“); Ramos II, 740 F.3d at 856 (the NYS DOL‘s conclusion in its 2009 Opinion Letter that testing and inspection services are covered work is entitled to deference). For that reason, we
II. Enforcing § 220 Through Third-Party Beneficiary Claims Absent Express Contractual Promises
The next question is whether Plaintiffs can vindicate that right through a civil claim against Comfort Systems for breach of contract based on a third-party beneficiary theory. To answer this question, we consider: (1) the history and structure of § 220, (2) the New York Court of Appeals’ decisions allowing third-party beneficiary breach of contract claims to enforce the prevailing wage requirement of § 220, (3) New York‘s general law concerning third-party beneficiary breach of contract claims, and (4) New York Appellate Division third-party beneficiary cases potentially pointing in conflicting directions with respect to the critical question here. We conclude that, although general principles of New York common law governing third-party beneficiary claims may suggest that Plaintiffs cannot pursue a direct breach of contract claim under these circumstances, some New York Appellate Division cases regarding third-party beneficiary breach of contract claims seeking to enforce the right to prevailing wages under § 220 suggest otherwise, causing substantial uncertainty as to how the Court of Appeals would answer the question presented here.
A. New York Labor Law § 220
New York first passed a prevailing wage labor law in 1894 that stated that “every contract ... made by the state or any municipal corporation, for the performance of public works must” ensure that “all . . . mechanics, workingmen and laborers . . . receive not less than the prevailing rate of wages.” Act of May 10, 1894, Chap. 622, § 2, 1894 N.Y. Laws 1569, 1569, repealed and superseded by Act in Relation to Labor, Chap. 415, Art. I, § 3, 1897 N.Y. Laws 461, 463, later amended by Act to Amend Chapter 415 of the Laws of 1897, Chap. 567, § 3, 1899 N.Y. Laws 1172, 1172-73. In 1901, the New York Court of Appeals concluded that the New York Constitution did not authorize such a law, see People ex rel. Rodgers v. Coler, 166 N.Y. 1 (1901), and the New York Constitution was amended to give the
legislature such power. See Concurrent Resolution, 1903 N.Y. Laws 1453, 1453 (legislative proposal of constitutional amendment to be submitted for approval at the 1905 general election); see also People ex rel. Williams Engineering & Contracting Co. v. Metz, 193 N.Y. 148, 154-55 (1908) (noting that constitutional amendment took effect January 1, 1906); Cayuga-Onondaga Counties Board of Cooperative Educational Services v. Sweeney, 89 N.Y.2d 395, 401 (1996). In 1906, the legislature again passed a law requiring payment of prevailing wages in connection with public works contracts. See Act to Reenact Section Three of the Labor Law, Chap. 506, § 3, 1906 N.Y. Laws 1394, 1395; Williams Engineering, 193 N.Y. at 155-56. The statute specifically stated, “Each such contract hereafter made shall contain a stipulation that each such laborer, workman or mechanic, employed by such contractor, subcontractor or other person on, about or upon such public work, shall receive such wages herein provided for.” Chap. 506, § 3, 1906 N.Y. Laws at 1395; see also Williams Engineering, 193 N.Y. at 156.
Highlighting the significance of the prevailing wage protection to New York‘s labor policy, the prevailing wage protection was enshrined in the New York Constitution in 1939: “No laborer, worker or mechanic, in the employ of a contractor or sub-contractor engaged in the performance of any public work, shall be . . . paid less than the rate of wages prevailing in the
The wages to be paid for a legal day‘s work, as hereinbefore defined, to laborers, workmen or mechanics upon such public works, shall be not less than the prevailing rate of wages as hereinafter defined. . . . Such contracts shall contain a provision that each laborer, workman or mechanic, employed by such contractor, subcontractor or other person about or upon such public work, shall be paid the wages herein provided.
The administrative enforcement mechanism under
The New York Court of Appeals has said “proceedings under section 220 are the antithesis of proceedings for the enforcement of private rights, statutory or otherwise,” explaining that the proceedings “have the earmark of a powerful administrative mechanism for the enforcement of a strong public policy, over which a private complainant has no control.” Cayuga-Onondaga Counties Board, 89 N.Y.2d at 402-03. That said, the New York Court of Appeals has concluded that, at least in some cases, workers can enforce the prevailing wage requirement through a private breach of contract claim, relying on their status as third-party beneficiaries.
B. New York Court of Appeals: Fata, Wright and Ramos
The two most on-point New York Court of Appeals cases addressing this issue are Fata v. S.A. Healy Co., 289 N.Y. 401 (1943), and Wright v. Wright Stucco, 50 N.Y.2d 837 (1980). The Court of Appeals’ more recent decision in Ramos III, 24 N.Y.3d at 143, also offers some potential clues.
In Fata, the plaintiff was employed by the defendant as a “pump operator” on public works projects performed for New York City. 289 N.Y. at 403. The contract between the defendant employer and the City entity said laborers, mechanics, and workers would receive prevailing wages, and it set forth the specific wage amounts for those workers in a schedule of wages annexed to the contract. Id. at 404-05. The plaintiff argued he was not paid accordingly and he brought a third-party beneficiary contract claim instead of using the administrative enforcement mechanism in
The New York Court of Appeals reversed, holding a plaintiff could bring a third-party beneficiary claim to enforce the contractual promise. The Court of Appeals concluded the contract at issue was “not an agreement merely to pay wages at an unfixed rate not less than the ‘prevailing rate’ as defined by the statute, but an agreement to pay wages at rates fixed in accordance with the statute and set forth in a schedule of wages annexed to the contract.” Id. at 406. Because the wage obligation incorporated into the contract was more specific than the statute, the Court of Appeals concluded that the plaintiff was not limited to the statutory remedy under
In blessing the third-party beneficiary claim, the Fata court seemed to rely on evidence that the public works contract at issue evinced a particular intent to pay set wages beyond the general requirements of
In Wright v. Wright Stucco, 72 A.D.2d 959, 959 (N.Y. App. Div. 4th Dep‘t 1979), a general contractor on a public works project signed a contract requiring it to pay prevailing wages to its workers and to impose the same obligation on its subcontractors. Id. Plaintiffs, who worked for a subcontractor on the project, alleged they were paid less than the prevailing wages and sought to enforce their rights as third-party beneficiaries of the general contractor‘s agreement. Id.
Defendants moved to dismiss the complaint, contending the sole remedy for plaintiffs was the statutorily provided administrative remedy. Id. The trial court denied the motion, but a divided Appellate Division reversed. Id. It rejected the notion that simply including a promise to pay prevailing wages in the contract could lead to a third-party beneficiary breach of contract claim. Id. It distinguished Fata on the basis that in Fata the contract contained a schedule of wages that went beyond simply stating the statutory prevailing wage requirement. Id. at 960. In contrast, in Wright, the court held that “there are persuasive policy reasons why the prevailing wages for any given locality should be determined uniformly by administrative action rather than judicially and why employers should not be subject to numerous actions by their employees when the Legislature has established an efficient and expeditious method for employees to obtain relief.” Id.
The dissent took a contrary view. It observed it has long been public policy in New York that workers on public works projects be paid prevailing wages. Id. (Cardamone, J.P., and Hancock, Jr., J., dissenting). And it noted that until 1927, when the New York legislature created the administrative enforcement process, the only way to enforce the prevailing wage statute was through a common-law contract claim. Id. The dissent explained that plaintiffs relying on the contractual remedy faced challenging problems of proof, and public employees had no means to pursue a third-party beneficiary breach of contract claim. Id. Citing Fata, the dissent rejected the claim that the statutory administrative remedy superseded the pre-existing contractual remedy. Id. The dissent emphasized that the statute was focused on the “protection of workingmen against being induced, or obliged, to accept wages below the prevailing rate” and that it “must be construed with the liberality
On appeal, the Court of Appeals endorsed the dissent‘s view. Wright v. Herb Wright Stucco, 50 N.Y.2d 837, 839 (1980) (“Order reversed, . . . and the order of Supreme Court, Monroe County, reinstated for reasons stated in the dissenting memorandum at the Appellate Division.“). Together Fata and Wright suggest that, at least where a public works contract promises to pay prevailing wages as required by
One recent Court of Appeals decision may offer some additional clues, though it doesn‘t move the needle far. In Ramos III, the Court of Appeals considered certified questions in a third-party beneficiary contract claim seeking to enforce prevailing wage rights under
An agreement to comply with a statute is an agreement to comply with it as correctly interpreted, whether or not the correct interpretation was known to the parties at the time of contracting. That is particularly clear where, as here, a contractual clause agreeing to comply is required by the statute itself. The legislature surely meant that the parties must agree to comply with the law as correctly understood, not as the parties may have misunderstood it.
Id. As suggested more fully below, the Court of Appeals’ focus on the requirements of
None of these cases resolves the question here—whether the employer can avoid a third-party beneficiary claim by failing to include the statutorily required prevailing wage commitment in the public works contract. But New York‘s general common law regarding third-party beneficiary claims suggests that may be possible.
C. Third-Party Beneficiary Contract Claims under New York Common Law
Under New York law, third parties may sue as beneficiaries on contracts made for their benefit. Therefore, a party asserting rights as a third-party beneficiary must be able to show that the contracting parties had the specific “intent to benefit the third party.” Dormitory Authority of the State of N.Y. v. Samson Construction Co., 30 N.Y.3d 704, 710 (2018). Otherwise, the third party is merely an “incidental beneficiary” with no independent right to enforce the contract. Id.
D. New York Appellate Division Cases
Several decisions of the Appellate Division of the New York Supreme Court shed light on this issue—although we don‘t read them to all point in the same direction. On one hand, Singh v. Zoria Housing, LLC, 163 A.D.3d 1025, 1025-26 (N.Y. App. Div. 2d Dep‘t 2018), and Wroble v. Shaw Environmental & Infrastructure Engineering of New York, P.C., 166 A.D.3d 520, 521 (N.Y. App. Div. 1st Dep‘t 2018), suggest that, in derogation of New York‘s general common law rules regarding third-party beneficiary claims, the contracting parties’ stated intentions as to the availability of a third-party breach of contract claim are not dispositive. On the other hand, the court in Maldonado v. Olympia Mechanical Piping & Heating Corp., 8 A.D.3d 348, 350 (N.Y. App. Div. 2d Dep‘t 2004), suggested that the existence and terms of the specific contract at issue are essential elements of a third-party beneficiary contract claim to enforce prevailing wage rights under
i. Singh and Wroble
Wroble is most squarely on point. There, a defendant—SLSCO—was a general contractor who entered into a public works contract with New York City. 166 A.D.3d at 520. In the contract, SLSCO agreed to pay prevailing wages in compliance with
Plaintiffs, employed by a subcontractor, brought a third-party beneficiary breach of contract claim against both the subcontractor and SLSCO. Id. SLSCO moved to dismiss, arguing that the contract provision expressly prohibiting third-party beneficiary actions relieved it of any liability. Id.
The First Department rejected SLSCO‘s argument. Even though the contracting parties’ language expressly precluded third-party beneficiary contract claims, the court concluded that because
At a minimum, Wroble suggests that, in contrast to other kinds of third-party beneficiary claims, the right to pursue a third-party beneficiary claim for prevailing wages does not depend entirely on the intent of the contracting parties. In fact, it appears it does not depend at all on the intent of the contracting parties.
The Second Department considered a similar issue in Singh. In Singh, the plaintiff was employed by the defendant, Zoria Housing, which performed work at properties owned by the New York City Housing Authority (“NYCHA“). 163 A.D.3d at 1025. He brought a prevailing wage lawsuit as a third-party beneficiary to the contracts between Zoria and NYCHA, which contained a provision requiring the payment of prevailing wages. Id. In support of its motion to dismiss, Zoria submitted a bid document purportedly reflecting the agreement between Zoria and NYCHA; it contained a provision that would have required the plaintiff to exhaust available administrative remedies before bringing a claim. Id. at 1026.
The Second Department concluded that the plaintiff had stated a viable third-party beneficiary contract claim, saying:
In situations where the Labor Law requires the inclusion of a provision for payment of the prevailing wage in a labor contract between a public agency and a contractor, a contractual obligation is created in favor of the contractor‘s employees, and an employee covered by or subject to the contract, in his or her status as third-party beneficiary to the contract, possesses a common-law cause of action against the contractor to recover damages for breach of such a contractual obligation.
Id. at 1025-26.
As to the purported agreement requiring exhaustion of administrative remedies, the court said, “Contrary to the defendants’ contention, the plaintiff was not required to exhaust any available administrative remedies prior to asserting the breach of contract causes of action, notwithstanding any provisions of that bid document pertaining to administrative processes.” Id. at 1026.
The court did not further explain its reasoning, and the two cases it cited in support of its conclusion offer few additional clues. See Cox v. NAP Constr. Co., Inc., 10 N.Y.3d 592, 606-07 (2008) (considering federal and state prevailing wage requirement and concluding “plaintiffs do not have any administrative remedies they can exhaust“); Stennett v. Moveway Transfer & Storage, Inc., 97 A.D.3d 655, 656-57 (N.Y. App. Div. 2d Dep‘t 2012) (allowing plaintiff to bring a third-party beneficiary claim based on an alleged violation of an analogous statute,
ii. Maldonado
Not all cases decided by the Appellate Division point in the same direction. In Maldonado, the trial court dismissed plaintiffs’ contract suit against their former employer for failing to pay prevailing wages in a public works contract. 8 A.D.3d at 349. On appeal, the Second Department said, “The workers protected by Labor Law § 220 are third-party beneficiaries of the contract between their employer and the municipality, and they possess a cause of action against their employer to recover damages for breach of contract when the contract between the employer and the municipality expressly provides for the wages to be paid to such workers.” Id. at 350 (emphasis added). However, citing general principles of contract law, the court said, “In order to plead a breach of contract cause of action, a complaint must allege the provisions of the contract upon which the claim is based. The pleadings must be sufficiently particular to give the court and the parties notice of the transactions, occurrences, or series of transactions or occurrences, intended to be proved as well as the material elements of each cause of action or defense.” Id. Because the plaintiffs failed to identify the breached contracts, the Appellate Division affirmed the dismissal of the plaintiffs’ third-party beneficiary prevailing wage claim. Id.
It is not clear whether the problem in Maldonado was the absence of express contractual language supporting the prevailing wage claim or the absence of an identified contract at all. However, either way, Maldonado suggests that a plaintiff‘s third-party beneficiary breach of contract claim to enforce
E. Conclusion
The New York Court of Appeals has not addressed the question before us here, and the state of the law “is so uncertain that we can make no reasonable prediction” as to how it would resolve the issue. RSD Leasing, Inc. v. Navistar International Corp., 81 F.4th 153, 169 (2d Cir. 2023).
Not only are Appellate Division cases divided, but sound policy and other considerations point in cross-cutting directions. On the one hand, the New York Legislature‘s requirement that public works contracts specifically include a prevailing wage commitment suggests it intended to give workers a private contract claim to enforce the prevailing wage right—especially given the lack of any other enforcement mechanism at the time. See Wright, 72 A.D.2d at 960. And it would be incongruous to allow a public contractor to avoid that potential liability by simply ignoring its statutory obligation and omitting the required language from the public works contract. A strong argument can be made that by virtue of
On the other hand, under ordinary common law principles in New York, that‘s not how third-party beneficiary claims usually work. And Comfort Systems makes a fair point that Plaintiffs chose to pursue a third-party beneficiary breach of contract claim rather than to pursue administrative claims.
III. Effect of Contractually Shortened Statute of Limitations on Third Party Beneficiary Claims
The statute of limitations question raises similar issues. The statute of limitations for an ordinary third-party beneficiary breach of contract claim is six years because it is “an action upon a contractual obligation or liability, expressed or implied.”
We don‘t doubt that the shortened statute of limitations is reasonable. “Parties to a contract may agree to a shorter period of limitations within which an action may be brought so long as the period agreed to is not unreasonably short.” Hurlbut v. Christiano, 63 A.D.2d 1116, 1117 (N.Y. App. Div. 4th Dep‘t 1978) (citing
And it‘s clear that under New York law third-party beneficiaries are generally bound by the terms of the contracts pursuant to which they sue—including any provisions shortening the applicable limitations period. See, e.g., Timberline Elec. Supply Corp., 72 A.D.2d at 906 (“[A]ny right [the third party] has under the . . . agreement arises because of [the third party‘s] status as a third-party beneficiary. As such [it] is bound by the conditions and limitations created by the contract.“); BAII Banking Corp. v. UPG, Inc., 985 F.2d 685, 697 (2d Cir. 1993) (“It would be contrary to justice or good sense to hold that a third-party beneficiary should acquire a better right against the promisor than the promisee [itself] had.“).
Finally, because Walton and Maddison‘s claims accrued at the latest in 2014 and 2015—when they terminated their respective employments—and they did not commence this action until 2017, there is no question that their claims would be time-barred under a one-year limitation period.
What makes this issue complicated is the recognition that New York courts do not appear to apply standard third-party beneficiary common law principles when assessing claims by workers to enforce their rights under
Considering the above, there is also a reasonable probability the New York Court of Appeals would conclude a plaintiff‘s statutorily created contractual right to bring a third-party beneficiary claim belongs to the plaintiff and, in contrast to an ordinary third-party beneficiary claim, cannot be compromised or limited by an agreement between the contractor and government agency without the plaintiff‘s consent.
IV. Certification
The New York Court of Appeals authorizes us to certify claim-determinative questions of New York law where there is no controlling Court of Appeals precedent. 22 N.Y.C.R.R. § 500.27(a). Likewise, under our Local Rule 27.2, we may certify questions of New York law to the New York Court of Appeals. Among the factors that guide our exercise of discretion to certify, or not, are: (1) “whether the New York Court of Appeals has addressed the issue;” (2) “whether the question is of importance to the state and may require value judgments and public policy choices;” and (3) “whether the certified question is determinative of a claim before us.” Barenboim v. Starbucks Corp., 698 F.3d 104, 109 (2d Cir. 2012).
As detailed above, the New York Court of Appeals has not addressed the potentially dispositive questions here. And the Appellate Division precedent does not clarify the New York courts’ position. For these reasons, we believe New York law “is so uncertain that we can make no reasonable prediction,” and the prudent path is to certify the question to the New York Court of Appeals. RSD Leasing, 81 F.4th at 169. Moreover, this question is “of importance to the state and may require value judgments and public policy choices.” Barenboim, 698 F.3d at 109. Therefore, we certify the question to the New York Court of Appeals.
CONCLUSION
Given the stakes at issue, we conclude the New York Court of Appeals should have the opportunity to decide the important and challenging question we have been called upon to answer. See Barenboim, 698 F.3d at 117-18. Pursuant to our Local Rule 27.2 and 22 N.Y.C.R.R. § 500.27(a), we hereby CERTIFY the following questions to the New York Court of Appeals:
- Is the promise to pay prevailing wages implicit in every public works contract so that individuals employed on public works projects may sue their employers for breach of contract to enforce the prevailing wage requirement under NYLL § 220 even if the employer‘s written contract does not include the statutorily required promise to pay prevailing wages?
- Are agreements to shorten the statute of limitations in public works contracts to one year enforceable against workers bringing third-party beneficiary breach of contract claims to enforce the prevailing wage law?
Consistent with our usual practice, we do not intend to limit the scope of the New York Court of Appeals’ analysis through the formulation of our questions, and we invite the Court of Appeals to expand upon or alter these questions as it deems appropriate. This panel will retain its jurisdiction.
It is therefore ORDERED that the Clerk of this Court transmit to the Clerk of the Court of Appeals of the State of New York a Certificate, as set forth below, together with a complete set of briefs and appendices, and the record filed in this Court by the parties.
CERTIFICATE
The foregoing is hereby certified to the Court of Appeals of the State of New York pursuant to Second Circuit Local Rule 27.2 and New York Codes, Rules, and Regulations Title 22, section 500.27(a), as ordered by the United States Court of Appeals for the Second Circuit.