Appeals court affirms Hartford unit’s win over defense of wage suits

The 3rd U.S. Circuit Court of Appeals ruled Thursday that a federal judge in Williamsport, Pennsylvania, correctly found that a Hartford Financial Services Group Inc. unit is not obligated to defend a highway construction contractor against two class actions over alleged violations of the Pennsylvania Prevailing Wage Act.

The three-judge appellate panel, in Twin City Fire Insurance Co. v. Glenn O. Hawbaker Inc. et al., said the policy clearly stated that it did not cover claims involving allegations, in whole or in part, of a wage and hour violation.

Much of State College, Pennsylvania-based Glenn O. Hawbaker Inc.’s business involves public works projects subject to the state’s Prevailing Wage Act, which requires companies awarded a public works contract to pay a prevailing minimum wage and offer certain fringe benefits.

In 2021, the state attorney general filed a criminal complaint accusing GOH of violating the wage law by misappropriating roughly $20.7 million in fringe benefits owed to prevailing wage employees from 2015 to 2018. The company entered into a plea agreement in which it agreed to pay $20.7 million in restitution and plead no contest to the charges, court records show.

Victims of the misappropriation later filed two class actions against GOH, its board of directors, and the administrator of its retirement plan. Twin City sued the company seeking a determination that it was not obligated to defend against the class actions.

A federal judge dismissed GOH’s counterclaim for breach of contract in August 2023 and granted Twin City’s motion for judgment on the pleadings in December 2023 after finding the allegations fell outside the terms of the policy.  GOH appealed that ruling.

Representatives for the parties did not respond to requests for comment.