Latest 2 Cases This Week: California Ridge Wind Energy, LLC v. United States (Fed. Cir.), Electric Boat Corp. v. Secretary of the Navy (Fed. Cir.)

Joint Employer Liability: Notes from Australia

SAMUEL ESTREICHER, NICHOLAS SAADY

NYU law professor Samuel Estreicher and Nicholas Saady, LLM, conduct a comparative analysis of the doctrine of joint employer liability, looking at the rules adopted by the U.S. Department of Labor and National Labor Relations Board as compared to the approach Australia has taken in an analogous context, “accessorial liability” doctrine.

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California Ridge Wind Energy, LLC v. United States

Court: US Court of Appeals for the Federal Circuit

Docket: 19-1463

Opinion Date: May 21, 2020

Judge: Richard Gary Taranto

Areas of Law: Energy, Oil & Gas Law, Government & Administrative Law, Government Contracts, Tax Law

The plaintiffs each own a wind farm that was put into service in 2012. Each applied for a federal cash grant based on specified energy project costs, under section 1603 of the American Recovery and Reinvestment Tax Act of 2009. The Treasury Department awarded each company less than requested, rejecting as unjustified the full amounts of certain development fees included in the submitted cost bases. Each company sued. The government counterclaimed, alleging that it had actually overpaid the companies. The Claims Court and Federal Circuit ruled in favor of the government. Section 1603 provides for government reimbursement to qualified applicants of a portion of the “expense” of putting certain energy-generating property into service as measured by the “basis” of such property; “basis” is defined as “the cost of such property,” 26 U.S.C. 1012(a). To support its claim, each company was required to prove that the dollar amounts of the development fees claimed reliably measured the actual development costs for the windfarms. Findings that the amounts stated in the development agreements did not reliably indicate the development costs were sufficiently supported by the absence in the agreements of any meaningful description of the development services to be provided and the fact that all, or nearly all, of the development services had been completed by the time the agreements were executed.

Electric Boat Corp. v. Secretary of the Navy

Court: US Court of Appeals for the Federal Circuit

Docket: 19-1621

Opinion Date: May 19, 2020

Judge: Kimberly Ann Moore

Areas of Law: Government Contracts

In 2003, Electric Boat (EB) and the Navy entered into a contract for the construction of up to six nuclear-powered submarines. The Contract includes a “Change-of-Law Clause,” which provides for a price adjustment in the event that compliance with a new federal law, or a change to existing federal laws or regulations, directly increases or decreases EB’s costs of performance. In September 2004, OSHA issued a new regulation, "Fire Protection in Shipyard Employment." In February 2005, EB submitted a Notification of Change, stating that it anticipated that compliance would result in a cost increase exceeding $125,000 per ship. In June 2007, EB sought price adjustments across all six submarines. The Navy challenged the calculations. In April 2009, EB submitted a revised cost proposal. In May 2011, the Contracting Officer formally denied an adjustment of the contract price, citing discrepancies between the proposal and documents related to the OSHA change.. The memorandum stated that if EB decided to further pursue the adjustment, it should file “Requests for Equitable Adjustment’” by June 3, 2011. In December 2012, EB filed a certified claim, seeking a price adjustment. The Contracting Officer, the Armed Services Board of Contract Appeals, and the Federal Circuit concluded that the claim was barred by the six-year limitations period, 41 U.S.C. 7103(a)(4)(A). EB knew of its claim by February 2005 and suffered some injury by August 2005.