Delaware Building & Construction Trades Council, AFL-CIO v. The University of Delaware

Opinion

COURT OF CHANCERY

OF THE

SAM GLASSCOCK III STATE OF DELAWARE COURT OF CHANCERY COURTHOUSE VICE CHANCELLOR 34 THE CIRCLE GEORGETOWN, DELAWARE 19947

Date Submitted: May 21, 2014 Date Decided: May 29, 2014

Richard L. Abbott William E. Manning Abbott Law Firm James D. Taylor, Jr. 724 Yorklyn Road, Suite 240 Whitney W. Deeney Hockessin, Delaware 19707 Saul Ewing LLP 222 Delaware Avenue, Suite 1200 Wilmington, Delaware 19899

Re: Delaware Building & Construction Trades Council, AFL-CIO v. The University of Delaware et al., Civil Action No. 7881-VCG

Dear Counsel:

The Plaintiff in this action contends that the Defendants are “subdivisions of

the State” of Delaware, and thus subject to the prevailing wage provisions of

29 Del. C. § 6960. It seeks a declaratory judgment to that effect, and an injunction

prohibiting the Defendants from violating that statute in the future. This Letter

Opinion addresses whether the Complaint provides a sufficient basis for this Court

to exercise equitable jurisdiction over this matter. For the following reasons, it

does not.

A. Background

On September 20, 2012, Plaintiff Delaware Building & Construction Trades

Council, AFL-CIO filed its Verified Complaint, alleging that the Defendants—the

University of Delaware (the “University”) and 1743 Holdings, LLC (“1743”)—are

“subdivisions of the State” under 29 Del. C. § 6960 (the “Prevailing Wage Law”),

and thus subject to the requirements governing certain public works projects

promulgated therein.1 In its Complaint, the Plaintiff requests a declaration that the

Defendants “constitute a ‘subdivision’ of the State of Delaware and must comply

with the Prevailing Wage Law,” as well as the “entry of a Permanent Injunction

prohibiting the University and 1743 from undertaking public works projects

subject to the Prevailing Wage Law without complying with its provisions.”2

On March 21, 2013, the Defendants moved for summary judgment; the

Plaintiff cross-moved on March 13, 2014. In April, I requested a teleconference

with the parties regarding whether the Court has equitable jurisdiction over this

matter. During that teleconference, counsel for the Plaintiff argued that this Court

had jurisdiction, and requested the opportunity to brief the issue.3 On May 21,

2014, the Plaintiff submitted its Memorandum of Law Regarding Equitable

Jurisdiction. After reviewing the Plaintiff’s Complaint, as well as its

Memorandum, I conclude that this Court lacks subject matter jurisdiction.

1 The Plaintiff avers that 1743, a limited liability company that is wholly owned by the University, is bound by Section 6960 as the purported “alter ego of the University.” Compl. ¶ 3. 2 Id. at 10 (Prayer for Relief). 3 The Defendants have decided not to brief this issue.

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B. Subject Matter Jurisdiction

The Court of Chancery is a court of limited jurisdiction, and “can acquire

subject matter jurisdiction over a case in three ways: (1) the invocation of an

equitable right; (2) the request for an equitable remedy when there is no adequate

remedy at law; or (3) a statutory delegation of subject matter jurisdiction.”4

“[U]nlike many jurisdictions, judges in the Delaware Court of Chancery are

obligated to decide whether a matter comes within the equitable jurisdiction of this

Court regardless of whether the issue has been raised by the parties.”5 When the

issue of equitable jurisdiction is raised, by either the Court or one of the parties, the

Plaintiff has the burden of demonstrating that such jurisdiction exists.6 In deciding

whether this Court has equitable jurisdiction over a pending matter, I “must look

beyond the remedies nominally being sought, and focus upon the allegations of the

4 Testa v. Nixon Unif. Serv., Inc., 2008 WL 4958861, at *2 (Del. Ch. Nov. 21, 2008). 5 Christiana Town Ctr., LLC v. New Castle Ctr., 2003 WL 21314499, at *3 (Del. Ch. June 6, 2003), aff’d sub nom., Christiana Town Ctr., LLC v. New Castle Cnty., 841 A.2d 307 (Del. 2004). 6 Pitts v. City of Wilmington, 2009 WL 1204492, at *5 (Del. Ch. Apr. 27, 2009); see also Christiana Town Ctr., LLC, 2003 WL 21314499, at *3 (“[T]he Court of Chancery will not exercise subject matter jurisdiction where a complete remedy otherwise exists but where plaintiff has prayed for some type of traditional equitable relief as a kind of formulaic ‘open sesame’ to the Court of Chancery.”) (internal quotation marks omitted); McMahon v. New Castle Assocs., 532 A.2d 601, 603 (Del. Ch. 1987) (“Chancery jurisdiction is not conferred by the incantation of magic words. Neither the artful use nor the wholesale invocation of familiar chancery terms in a complaint will itself excuse the court, upon a proper motion, from a realistic assessment of the nature of the wrong alleged and the remedy available in order to determine whether a legal remedy is available and fully adequate. If a realistic evaluation leads to the conclusion that an adequate remedy is available, this court, in conformity with the command of Section 342 of Title 10 of the Delaware Code, will not accept jurisdiction over the matter.”).

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complaint in light of what the plaintiff really seeks to gain by bringing his or her

claim.”7

C. Analysis

The Plaintiff seeks both a declaratory judgment and injunctive relief, relying

on the latter as the basis for this Court’s equitable jurisdiction.8 According to the

Plaintiff, “[p]ast failures by Defendants to abide by all Prevailing Wage Law

requirements create a reasonable belief that future violations will occur” such that

“[t]he mere entry of a Declaratory Judgment would be inadequate, as it would only

declare that the Defendants are subject to the Prevailing Wage Law, not require

future compliance.”9 Accordingly, the Plaintiff requests that this Court employ its

“coercive powers” to ensure the Defendants’ compliance with 29 Del. C. § 6960, if

this Court finds that they are in fact bound by this statute.

7 Candlewood Timber Grp., LLC v. Pan Am. Energy, LLC, 859 A.2d 989, 997 (Del. 2004); see also id. (“To say it differently, the appropriate analysis requires a realistic assessment of the nature of the wrong alleged and the remedy available in order to determine whether a legal remedy is available and fully adequate.”) (internal quotation marks omitted); Diebold Computer Leasing, Inc. v. Commercial Credit Corp., 267 A.2d 586, 588 (Del. 1970) (“The subject-matter jurisdiction of the Chancery Court depends solely, at this stage, upon the allegations of the complaint and a determination of what the plaintiff really seeks by the complaint; for it is settled that the existence of jurisdiction is to be ascertained as of the time of the filing of the complaint. We view the material factual allegations of the complaint as true, as though on a motion to dismiss the complaint for want of jurisdiction.”) (citation omitted). 8 See Reader v. Wagner, 2007 WL 3301026, at *1 (Del. Ch. Nov. 1, 2007) (“It is well settled that the Declaratory Judgment Act does not independently confer jurisdiction on this court. . . . [T]his court will not exercise jurisdiction in a declaratory judgment action unless the complaint reflects ‘some special, traditional basis for equity jurisdiction.’”). 9 Pl.’s Mem. of Law Regarding Equitable Jurisdiction at 13.

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In McMahon v. New Castle Associates, then-Chancellor Allen observed that

“[a]t a minimum, for a complaint to properly state a claim cognizable in equity

solely because of a request for an injunction, the facts alleged must, if assumed to

be true, create a reasonable apprehension of a future wrong.”10 Even accepting all

facts alleged in the Complaint as true, the Plaintiff here has not sufficiently alleged

facts that indicate the Defendants will shirk their duties under the Prevailing Wage

Law if a declaratory judgment is issued in the Plaintiff’s favor.11 The Plaintiff

merely contends that, because the Defendants have purportedly not complied with

this statute in the past, they will continue this alleged pattern of non-compliance

even if a court were to declare that they are “subdivisions of the State” and thus

bound by its requirements. However, that contention is insufficient to invoke the

equitable jurisdiction of the Court, as “[t]his [C]ourt cannot permit its jurisdiction

10 McMahon v. New Castle Associates, 532 A.2d 601, 606 (Del. Ch. 1987) (addressing the plaintiff’s request for “an injunction prohibiting defendants from charging in excess of the actual cost to defendant of electrical utility service,” and finding that, “accepting the well-pleaded factual allegations as true, there is no such threat shown and thus no basis for the entry of an injunction, even should plaintiff prove correct in its contention that defendant has been breaching its lease and the subsequently enacted landlord-tenant act”); see also Town of Smyrna v. Kent Cnty. Levy Court, 2004 WL 2671745, at *4 (Del. Ch. Nov. 9, 2004) (“[A] complaint for declaratory judgment does not fall within this court’s subject matter jurisdiction unless it concerns ‘equitable subjects, claims or rights’ or properly contains a claim for equitable relief. In this regard, merely adding a claim for an injunction to enforce a declaration of legal rights will not, ordinarily, invoke this court’s jurisdiction.”) (footnote omitted). 11 See, e.g., State ex rel. Brady v. Pettinaro Enters., 870 A.2d 513, 519 (Del. Ch. 2005) (“Here, the Attorney General . . . claims she is entitled to an injunction prohibiting [the defendant] from violating the various consumer statutes by conduct of this kind in the future. Yet, she has failed to plead any facts indicating any threat of such a recurrence or indicating why her power to enforce consumer affairs statutes as to future acts of non-compliance is not fully adequate. A request for a loose and unfocused injunction of this kind—i.e., not to violate the law in the future—does not invoke this court’s equitable jurisdiction.”).

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to be invoked simply on the basis of unsubstantiated fear that a legal duty may be

breached in an uncertain future.”12

Here, assuming that the Plaintiff is correct that the Defendants are bound by

Section 6960, the Plaintiff is simply wrong in its assertion that injunctive relief is

required to compel “future compliance;” compliance is compelled by the statute

itself. Although the Plaintiff argues that “[t]he mere entry of a Declaratory

Judgment would be inadequate, as it would only declare that the Defendants are

subject to the Prevailing Wage Law,”13

it is not at all clear what purpose would be served by enjoining [the Defendants] from violating duly enacted statutes that it is already duty-bound to honor. The [Plaintiff’s] request for injunctive relief of that nature both trivializes equity’s role and implicitly suggests that the most powerful expression of a societal prohibition—an express statute forbidding conduct—is somehow insufficient without an “us, too” from the judicial branch.14

In fact, as the Plaintiff itself points out in its Memorandum, penalties for breach of

Section 6960 are already provided for, in the statute itself. Any injunctive order

12 Id. at 536. 13 Pl.’s Mem. of Law Regarding Equitable Jurisdiction at 13. 14 State ex rel. Brady, 870 A.2d at 536-37. Although Vice Chancellor Noble found, in dicta, that this Court had subject matter jurisdiction in Gittman-Crowther v. Kent County Society for the Prevention of Cruelty to Animals, where the plaintiffs sought to compel the defendant’s compliance with the State’s Shelter Standards Law, I find that case distinguishable. 2013 WL 3866676, *2 n.9 (Del. Ch. July 25, 2013). Whereas the Plaintiff here requests that this Court order the Defendants to comply with the Prevailing Wage Law—if it is determined that they are bound by this legislation—the plaintiffs’ injunctive request in Gittman-Crowther was not limited to an order demanding compliance. Rather, the plaintiffs requested “a permanent injunction addressing a wide range of actions subject to the Shelter Standards Law,” including an order that the defendant “abandon[] ‘temperament’ tests used to determine whether the animal is ‘aggressive’ or ‘unadoptable’ and thus eligible for euthanasia,” as well as hire a monitor “to assure compliance with the Shelter Standards Law.” Id. at *1.

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from this Court would be redundant of the directive of the legislature made by

statute. Accordingly, I find that, although the Plaintiff’s Complaint seeks

injunctive relief, it does not “properly state a claim cognizable in equity.”15 As

such, I do not need to address the other arguments raised by the Plaintiff in its

Memorandum of Law Regarding Equitable Jurisdiction.

Because the only other relief that the Plaintiff seeks is a declaratory

judgment based in law and not equity, I find that this relief is available from the

Superior Court.16 As “there is a full, complete, practical and efficient remedy at

law, this Court is without jurisdiction to hear the matter.”17

D. Conclusion

Having found that the Court lacks subject matter jurisdiction over the

Plaintiff’s claims, this action is dismissed, unless the Plaintiff seeks to transfer this

15 See McMahon v. New Castle Associates, 532 A.2d 601, 606 (Del. Ch. 1987). 16 See, e.g., Reader v. Wagner, 2007 WL 3301026, at *1 (Del. Ch. Nov. 1, 2007) (“The complaint exclusively involves issues of statutory interpretation that are not, by such statutes, assigned to the exclusive jurisdiction of this court. As Chancellor Chandler recently held, such issues ‘are, beyond question, legal issues capable of resolution by the Superior Court, and declaratory relief is available there to the same extent as it is [in the Court of Chancery].’ Because the complaint does not seek to vindicate an equitable right and does not demand an exclusively equitable remedy, this court lacks the power to adjudicate the dispute.”) (citation omitted). 17 See Int’l Bus. Machines Corp. v. Comdisco, Inc., 602 A.2d 74, 85 (Del. Ch. 1991); see also Gladney v. City of Wilmington, 2011 WL 6016048, at *5 (Del. Ch. Nov. 30, 2011) (finding that “an injunction is unwarranted” and, accordingly, that the plaintiff’s “request for declaratory relief provides no basis for Chancery jurisdiction, because a declaratory judgment is as available from the Superior Court as it is from this Court”).

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matter to Superior Court pursuant to 10 Del. C. § 1902.

Sincerely,

/s/ Sam Glasscock III

Sam Glasscock III