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No Private Cause of Action for Businesses Complaining that Competitor Unfairly Used Prison Labor

No Private Cause of Action for Businesses Complaining that Competitor Unfairly Used Prison Labor

by John E. Dannenberg

The Washington Water Jet Workers Association (“Water Jet”) sued the Washington Department of Corrections (WDOC), claiming the WDOC had illegally contracted with a water jet firm, MicroJet, thereby violating the Washington state constitution’s prohibition on contracting for prison labor.

MicroJet had set up shop at the Monroe Corrections Center, where prisoners were employed at below-market wages. Although the Washington Supreme Court eventually held that WDOC’s below-market contracting of prison labor violated state law, it remanded to the trial court to determine whether Water Jet could maintain a private cause of action against WDOC for its transgressions.

Water Jet had sued for damages, arguing that Washington state law RCW 72.09.100(1) created a duty to protect businesses from unfair competition, such as prison laborers who were not paid the local prevailing wage. Water Jet also claimed violation of rights under 42 U.S.C. § 1983, denial of due process of law, and a tort claim for violation of the state constitution. However, the trial court ruled that absent establishing that the WDOC had intentionally interfered with a contractual business relationship, used improper means or acted with improper purpose, Water Jet could not recover damages.

In 1981, Washington’s legislature granted WDOC the authority to create work programs that included bringing outside contractors onto prison grounds to use prison labor. To qualify, the contractors had to pay wages comparable to those paid to local non-prisoner employees. In 1995, MicroJet arranged to use space at Monroe (with free rent and discounted utilities), with the WDOC acting as trustee for the prisoner workers.

In 1999, Water Jet sued WDOC and MicroJet for damages resulting from alleged unfair competition in the free market of water jet-related industries. [See: PLN, Feb. 2000, p.13].

The State Supreme Court eventually found that RCW 72.09.100(1) violated Washington’s constitution, Article II, § 29, which prohibited the use of prison labor in private industry. See: Washington Water Jet Workers Ass’n v. Yarbrough, 151 Wash.2d 470, 90 P.3d 42 (Wash. 2004) [PLN, Dec. 2004, p.22].

As a result, in 2004 the WDOC began shutting down its joint ventures with prison industry contractors. However, in 2007, Article II, § 29 was amended by referendum to allow prisoners to work in Class I industry programs.

Nonetheless, the seven firms suing under Water Jet (with Talon Industries as the lead plaintiff) claimed they were entitled under the former law to damages from the WDOC-MicroJet contract, based largely on the below-market wages that MicroJet had paid for prison labor.

However, Water Jet had the burden of showing that the legislature had enacted RCW 72.09.100(1) for the “especial benefit of private businesses,” or in other words, to favor certain contractors.

In affirming the trial court, the Washington Court of Appeals held that precedent favored the WDOC in this case. Under a parallel federal law, the Ashurst-Summers Act (18 U.S.C. § 1761), no private cause of action exists. Comparing the line of cases interpreting Ashurst-Summers, the appellate court found that RCW 72.09.100(1) was created only with the affirmative intent to provide a comprehensive prisoner work program.
Accordingly, it did not meet the test of having an illegal purpose of protecting only private businesses, nor did it provide for a private cause of action for damages.

For those reasons, the Court of Appeals ruled that none of Water Jet’s statutory or constitutional challenges survived scrutiny, and thus upheld the denial of all damage claims. See: Talon Industries v. Washington State Dept. of Corrections, Washington App.Div.1, (unpublished); 2008 WL 2640146.

The Prison Industries Enhancement act purports to protect private businesses by requiring that prisoners manufacturing goods transported in interstate commerce be paid at least the comparable prevailing wage, yet after 30 years, PIE employed prisoners are not paid the prevailing wage in any industry that PLN is aware of. And with rulings such as this one, it is unlikely that they will.

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Related legal case

Talon Industries v. Washington State Dept. of Corrections