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BALL, BALL & BROSAMER, INC. v. MARTIN

August 17, 1992

BALL, BALL AND BROSAMER, INC., Plaintiff,
v.
LYNN MARTIN, SECRETARY OF LABOR, et al., Defendants.



The opinion of the court was delivered by: CHARLES R. RICHEY

 Before the Court are the parties' cross-motions for summary judgment in the above-captioned case. In addition, the Court has received supplemental briefs from two groups serving as amicus curiae, namely the Associated General Contractors of America, Inc., in support of the plaintiff, and the Building and Construction Trades Department, AFL-CIO in support of the defendants.

 The plaintiff Ball, Ball and Brosamer, Inc. ("Ball"), a prime contractor on a federally-funded construction project, seeks judicial review of a decision by the Department of Labor Wage Appeals Board ("the Board"), pursuant to the Administrative Procedures Act, ("APA"), 5 U.S.C. § 552 et seq.. The plaintiff contests the Board's decision requiring it to pay a subcontractor prevailing wages in accordance with the Davis-Bacon Act, 40 U.S.C. § 276a, et seq.. Upon careful consideration of the submissions of the parties and amicus curiae, the applicable law, and the entire record herein, the Court concludes that the decision of the Board must be affirmed.

 I. Background

 On September 20, 1985, the United States Department of the Interior awarded a contract to the plaintiff to construct thirteen miles of an aqueduct in central Arizona. Administrative Record ("AR") at 155. The contract explicitly incorporated by reference "all rulings and interpretations of the Davis-Bacon and Related Acts contained in 29 CFR parts 1, 3 and 5". Pl. Opp. to Def. Mot. for Summary Judgment ("Pl. Opp."), App. A, Contract P I.7.9.

 The plaintiff obtained concrete and other materials required for the contract from Red Rock Products, Inc. ("Red Rock"). Amended Compl. P 5; Answer to Amended Compl. ("Ans.") P 5. Red Rock obtained raw materials from a sand and gravel pit, and processed the materials at a portable batch plant. Both the gravel pit and the batch plant were from two to fifteen miles *fn1" from the thirteen mile stretch of aqueduct under construction. *fn2" AR 175, 208, 263. Red Rock began removing materials from the gravel pit in January 1986. AR 195. Red Rock went out of business in March 1986. Of Red Rock's total production, 96% went either to the plaintiff, for construction of its portion of the aqueduct, or to another government contractor, Bechtel Constructors Corporation, for construction of its portion of the aqueduct. AR 162.

 In March 1986, the Wage and Hour Division of the Department of Labor's Employment Standards Administration began an investigation into whether Red Rock was subject to the Davis-Bacon Act and the Contract Work Hours and Safety Standards Act ("CWHSSA"), 40 U.S.C. § 327 et seq.. *fn3" The Wage and Hour Division demanded payroll records from Red Rock, which were not obtained until July 1988. AR 161.

 The Wage and Hour Division determined that Red Rock's contract with the plaintiff was subject to the Davis-Bacon Act and the CWHSSA, and that Red Rock should have paid its employees the wage rates determined by the Department of Labor to apply to those employees. AR 262-64. Specifically, the Wage and Hour Division determined that Red Rock owed a total of $ 60,976.71 in back wages. *fn4" AR 163. Therefore, in accordance with 40 U.S.C. § 276a, the Department of the Interior withheld $ 60,976.71 from the money due the plaintiff under the contract. AR 215. These funds are still being withheld.

 By its September 16, 1988 letter to the Wage and Hour Division, Ball denied liability for back wages to former Red Rock employees, and asked for a review of the matter pursuant to 29 C.F.R. § 5.11. AR 81-82. The Acting Administrator of the Wage and Hour Division, by letters to Ball and Red Rock dated February 6, 1990, found that Ball was liable for the back wages. AR 87-88; 262-64. By letter dated March 8, 1990, the plaintiff filed a petition for review of the ruling by the Wage Appeals Board. By doing so, plaintiff effectively accepted the Acting Administrator's determination of the facts, because the plaintiff was informed that if it disputed facts, its remedy was to seek a hearing pursuant to 29 C.F.R. § 5.11(c)(2)(i) rather than seeking review with the Wage Appeals Board. AR 87-88, 264; see also supra, n. 1. The plaintiff did not attempt to dispute any facts during the administrative process.

 On November 29, 1990, the Board issued its decision denying plaintiff's petition for review. AR 342-365. Plaintiff then filed this action.

 II. Analysis

 A. The Standard of Review

 Summary judgment is awarded when there is no genuine issue as to any material fact and the moving party is entitled to a judgment as a matter of law. Fed. R. Civ. P. 56(c). Where there is a properly supported motion for summary judgment, the adverse party may not rest upon the "mere allegations or denials" of its pleadings, but must set forth specific facts showing that there is a genuine issue for trial. Fed. R. Civ. P. 56(e); see Lujan v. National Wildlife Federation, 497 U.S. 871, 111 L. Ed. 2d 695, 110 S. Ct. 3177, 3188-89 (1990). However, it is well established that the Court must believe the non-movant's evidence and draw all justifiable inferences in its favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986).

 Judicial review of the Wage Appeals Board decision is limited; this Court may only reverse the decision if it finds that the agency action was "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706 (2)(A).

 The standards for judicial review under this statute are set forth in Chevron U.S.A. Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 81 L. Ed. 2d 694, 104 S. Ct. 2778 (1984). The Supreme Court held that when a court reviews an agency's construction of a statute it administers, it is confronted with two questions. First is whether Congress has directly spoken to the precise question at issue. In determining the plain meaning of the statute, the court must look to the particular statutory language, and the language and design of the statute as a whole. K Mart Corp. v. Cartier, Inc., 486 U.S. 281, 291, 100 L. Ed. 2d 313, 108 S. Ct. 1811 (1988). If Congressional intent is clear, "the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress". Chevron at 842-3.

 On the other hand, if "the court finds that the statute is silent or ambiguous with respect to the specific issue, the court does not simply impose its own construction on the statute . . . Rather . . . the question for the court is whether the agency's answer is based on a permissible construction of the statute." Id. at 843 (footnotes omitted).

 B. The Plaintiff Was Obligated Under the Terms of Its Contract to Comply With the Davis-Bacon Act and Its Implementing Regulations

 The plaintiff's contract explicitly incorporated by reference "all rulings and interpretations of the Davis-Bacon and Related Acts contained in 29 CFR Parts 1, 3, and 5". Pl. Opp., App. A, Contract P I.7.9. The Davis-Bacon Act provides in relevant part that:

 
The advertised specifications for every contract in excess of $ 2,000 to which the United States or the District of Columbia is a party, for construction, alteration, and/or repair, including painting and decorating, of public buildings or public works of the United States or the District of Columbia . . . which requires or involves the employment of mechanics and/or laborers shall contain a provision stating the minimum wages to be paid various classes of laborers and mechanics which shall be based upon the wages that will be determined by the Secretary of Labor to be prevailing for the corresponding classes of laborers and mechanics employed on projects of a character similar to the contract work in the city, town, village, or other civil subdivision of the State in which the work is to be performed . . .; and every ...

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