Bridging the Prevailing-Wage Gap: First Circuit Mandates State-Court Clarification of “Construction and Design of Improvements” in Special-Act Contracts

Introduction

In Nicholls v. Veolia Water Contract Operations USA, Inc., No. 24-1931 (1st Cir. Jul. 22, 2025), the United States Court of Appeals for the First Circuit confronted a novel statutory-interpretation problem at the intersection of Massachusetts public-works legislation and a 1997 Springfield-specific Special Act. Four wastewater-plant employees sued their employer, Veolia, alleging entitlement to Massachusetts Prevailing Wage Act (“PWA”) rates for work performed under Veolia’s contract with the Springfield Water and Sewer Commission (“SWSC”). After the district court granted summary judgment for Veolia, the employees appealed. Finding “no controlling precedent” and identifying profound policy implications, the First Circuit certified two dispositive questions to the Massachusetts Supreme Judicial Court (“SJC”) instead of deciding the merits itself. The decision creates an important procedural precedent on when federal courts should defer to state courts for authoritative interpretations of Special Acts affecting prevailing-wage obligations.

Summary of the Judgment

1. Statutory Landscape. The PWA (Mass. Gen. Laws ch. 149, §§ 26–27H) requires contractors on public-works projects to pay locally determined prevailing wages. A 1997 Special Act (1997 Mass. Acts ch. 155) authorizes SWSC to outsource operation, maintenance, and capital improvements of its wastewater facilities and exempts such contracts from many, but not all, state procurement laws. Section 6 of the Special Act states that most procurement-law provisions “except the provisions of sections 26-27H of chapter 149” (i.e., the PWA) shall be inapplicable to the selected contractor “for the construction and design of improvements.”

2. District-Court Ruling. The district court held that Veolia owed no prevailing wages because the employees were not engaged in “construction and design of improvements” within Section 6’s meaning and, alternatively, because the Special Act implicitly supplanted the PWA.

3. First Circuit Holding. • The meaning of “construction and design of improvements” under the Special Act is unclear.
• Whether the Special Act and the PWA are incompatible under the Massachusetts doctrine clarified in Metcalf v. BSC Group, Inc., 214 N.E.3d 1043 (Mass. 2023), is uncertain.
• Because Massachusetts courts have not addressed either issue, the First Circuit certified two questions to the SJC and retained jurisdiction pending the SJC’s answers.

Analysis

Precedents Cited and Their Influence

Donis v. American Waste Services, LLC, 149 N.E.3d 361 (Mass. 2020): Re-affirmed the PWA’s purpose of wage parity on public projects. Used to illuminate legislative intent behind prevailing-wage protections.
Mullally v. Waste Management of Massachusetts, Inc., 895 N.E.2d 1277 (Mass. 2008): Emphasized broad construction of “public works” to advance the PWA’s remedial goals; supports employees’ reading that Section 6 incorporates the PWA’s broad definition of construction.
Metcalf v. BSC Group, Inc., 214 N.E.3d 1043 (Mass. 2023): Articulated a modern test for “repeal by implication” or statutory incompatibility between a specific and a general statute. Veolia invokes Metcalf to argue that the Special Act supplants PWA obligations beyond “construction and design of improvements.”
Massachusetts Canon of in pari materia: Though not a case, the court references this canon, requiring that related statutes be read harmoniously, signaling skepticism toward sweeping incompatibility claims.
Williams v. American Honda Finance Corp., 858 F.3d 700 (1st Cir. 2017): Cited to demonstrate the First Circuit’s authority to certify questions sua sponte.

Legal Reasoning

The First Circuit applied the SJC’s two-step statutory-interpretation framework:

Examine plain text. The court observed that Section 6 expressly references the PWA yet limits its applicability to “construction and design of improvements,” a phrase undefined anywhere in Massachusetts law.
Consult context, structure, and purpose. The PWA employs an expansive definition of “construction,” capturing demolition, renovations, preliminary testing, and more. Meanwhile, Veolia urges a dictionary (ordinary-meaning) reading narrowed further by the word “improvements.” The First Circuit found both interpretations plausible.

Because the interpretive outcome would dictate millions of dollars in wages and influence future legislative drafting, the court deemed the issue a “close and difficult” question suitable for certification—especially given Massachusetts’ strong interest in regulating public-works labor standards and the Special Act’s geographically limited application.

Impact of the Judgment

Procedural Impact: Signals heightened willingness of federal courts to certify questions when state-specific special legislation intersects with generally applicable wage statutes. Future litigants will likely cite this case to justify certification in similar contexts.
Substantive Impact (Pending SJC Answers): Depending on the SJC’s response:
- If “construction and design of improvements” is interpreted broadly, contractors like Veolia must pay PWA rates for a wider array of tasks, possibly retroactively.
- If the Special Act is held incompatible with the PWA, municipalities could draft project-specific legislation to sidestep prevailing-wage mandates, reshaping Massachusetts labor economics.
Legislative Drafting Caution: The controversy underscores the importance of clear prevailing-wage clauses in future special acts; lawmakers may begin expressly stating whether PWA rates apply.

Complex Concepts Simplified

Prevailing Wage Act (PWA): A state law requiring that workers on public construction projects be paid wages comparable to local union rates, protecting them from undercutting.
Special Act: A statute enacted by the Massachusetts Legislature that applies to a specific municipality, agency, or project, as opposed to general laws that apply statewide.
Certification of Questions: When a federal court asks a state’s highest court to resolve ambiguous state-law issues critical to a federal case. The state court’s answer becomes binding precedent on that issue.
Incompatibility / Repeal by Implication: The doctrine that a later, more specific statute can override an earlier, more general statute if they cannot be reconciled.

Conclusion

Nicholls v. Veolia halts immediate adjudication to obtain authoritative guidance on whether a Springfield-specific outsourcing statute narrows or preserves prevailing-wage protections. The First Circuit’s certification reinforces cooperative federalism—allowing the Massachusetts SJC to define critical statutory terms and balance local procurement flexibility against state-wide wage-parity goals. Whatever interpretation the SJC adopts will ripple through public-works contracting, labor-law compliance, and legislative drafting across the Commonwealth. For practitioners, the case is a potent reminder: when special legislation intersects with general wage statutes, textual precision and early jurisdictional strategy (including potential certification) are paramount.