SOL Page

TABLE OF CONTENTS

A. Course of Proceedings

B. Statement of Facts

C. The ALJ’s Decision

I. THE ALJ CORRECTLY RULED THAT THE CASE SHOULD NOT BE DISMISSED ON THE GROUNDS OF DENIAL OF DUE PROCESS OR LACHES DUE TO ANY ADMINISTRATIVE DELAY IN THE GRANTING OF A HEARING AFTER THE WITHHOLDING OF FUNDS

A. Due Process

B. Laches

II. THE ALJ CORRECTLY DETERMINED THAT AZTEC VIOLATED THE PREVAILING WAGE PROVISIONS OF THE DAVIS-BACON ACT AND THE OVERTIME PROVISIONS OF THE CONTRACT WORK HOURS AND SAFETY STANDARDS ACT AND CORRECTLY DETERMINED THE BACK WAGES OWED TO R&F’S SPRINKLE FITTERS

A. R&F Sprinkler Fitters Were Entitled To Prevailing Wage Rates Regardless of the Existence Of Any Partnership Agreement Between Them

B. Wage-Hour correctly Calculated the Back Wages

III. AZTEC AND ITS OFFICIALS WERE PROPERLY DEBARRED UNDER THE DAVIS-BACON ACT FOR DISREGARD OF THEIR OBLIGATIONS TO EMPLOYEES

CONCLUSION

CERTIFICATE OF SERVICE

TABLE OF AUTHORITIES

Cases:

Abernathy & Wood, WAB Case No. 87-41 (Jan. 9, 1990)

Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680 (1946)

Arbor Hill Rehabilitation Project, WAB Case No. 87-04 (Nov. 3, 1987)

Arliss D. Merrell, 94-DBA-41 (October 26, 1995)

Brock v. Pierce County, 476 U.S. 253 (1986)

California Housing Corp. v. California Housing Fin. Agency, 93 Lab. Cas. (CCH) ¶34,146 (E.D. Cal. 1981)

Cotham v. Tuite, 94 Lab. Cas. (CCH) ¶34,215 (E.D. Cal. 1982)

Edwards Funance Company Inc., WAB Case No. 77-28 (Sept. 18, 1978)

G & H Machinery Co. v. Donovan, 96 Lab. Cas. (CCH) ¶34,354 (S.D. Ill. 1982)

G & O General Contractors, Inc., WAB Case No. 90-35 (Feb. 19, 1991)

Gemini Construction Corp., WAB No. 91-23 (Sept. 20, 1991)

Howell Construction, Inc., WAB Case No. 93-12 (May 12, 1994)

In the Matter of Sundex, Ltd., ARB Case No. 98-130 (December 30, 1999)

Irwin Company Inc. v. 3535 Sage Street Associates, Ltd., 37 F.3d 212 (5th Cir. 1994)

J.A.M. Builders, Inc. v. Herman, 233 F.3d 1350 (11th Cir. 2000)

KP & L Electrical Contractors, Inc., et al., ARB Case No. 99-039 (May 31, 2000)

L.T.G. Construction Co., WAB Case No. 93-15 (Dec. 30, 1994)

Lance Love, Inc., WAB Case No. 88-32 (March 28, 1991)

Labor Services, Inc., WAB Case No. 90-14 (May 24, 1991)

Lujan v. G & G Fire Sprinklers, Inc., 532 U.S. 189 (2001)

M.C. Lazzinnaro Construction Corp., WAB Case No. 88-08 (March 11, 1991)

Martin v. Gingerbread House, Inc., 977 F.2d 1405 (10th Cir. 1992)

Morello Brothers, Inc., WAB Case No. 87-24 (Feb. 21, 1991)

OPM v. Richmond, 496 U.S. 414 (1990)

Permis Construction Corp., WAB Case No. 88-11 (July 31, 1991)

Phoenix Paint Co., WAB Case No. 87-8 (May 5, 1989)

Public Developers Corporation, et al., WAB Case No. 94-02 (July 29, 1994)

R&B Trucking Co. v. U.S. Dep't of Labor, (C.D. Cal. Aug. 28, 2000)

Star Brite Construction Co., Inc., Case No. 98-113 (June 30, 2000)

Structural Concepts, Inc., WAB Case No. 95-02 (Nov. 30, 1995)

Thomas and Sons Building Contractors Inc., ARB No. 00-050 (Aug. 27, 2001)

Tom Rob, Inc., et al., WAB Case No. 94-03 (June 21, 1994)

Trataros Construction Corp., WAB Case No. 92-03 (Apr. 28, 1993)

U.S. Floors, Inc., WAB Case No. 91-33 (March 20, 1992)

United California Discount Corporation v. United States, 19 Cl. Ct. 504 (U.S. Claims Court 1990)

Utah Power and Light Co. v. United States, 243 U.S. 389 (1917)

Winzeler Excavating Co. v. Brock, 694 F. Supp. 362 (N.D. Ohio 1988)

Statutes and Regulations:

Contract Work Hours and Safety Standards Act,

40 U.S.C. 327 et seq.

Davis-Bacon Act,

40 U.S.C. 276a et seq.

40 U.S.C. 276a(a)

Code of Federal Regulations,

29 C.F.R. Part 5, 6, 7

29 C.F.R. 5.2(o)

29 C.F.R. 5.5.

29 C.F.R. 5.5(a)(1)

29 C.F.R. 5.5(a)(6)

29 C.F.R. 5.5(a)(a)

29 C.F.R. 5.5(a)(1)-(10)

29 C.F.R. 5.9

29 C.F.R. 5.11

29 C.F.R. 5.11(b)(2)

29 C.F.R. 5.12(a)(2)

29 C.F.R. 5.12(b)(1)

29 C.F.R. 18.29

29 C.F.R. 18.803(a)(6)

Miscellaneous:

S. Rep. No. 1155, 74th Cong., 1st Sess. (1935)

H. Rep. No. 1756, 74th Cong., 1st Sess. (1935)

ADMINISTRATIVE REVIEW BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D.C.

In the Matter of:

Disputes concerning the payment of
prevailing wage rates, overtime pay,
and proposed debarment by:

RAY WILSON CO., a Corporation,
Prime Contractor,

ARB Case No. 02-086

With respect to laborers and mechanics
employed by its subcontractors:
AZTEC FIRE PROTECTION, INC.,
DAVID NAIM, President,
ABRAHAM YAZDI, Vice President,

on Contract Number GS-09P-95-KTC-0012
let by the General Services Administration,
Region 9, to Respondent, Ray Wilson Co.,
For the construction at the Ronald Reagan
Building in Santa Ana, California.

STATEMENT FOR THE ADMINISTRATOR
IN RESPONSE TO PETITION FOR REVIEW

ISSUES PRESENTED

1. Whether the administrative law judge (“ALJ”) correctly held that the case should not be dismissed due to the elapsed time between the withholding of funds and the granting of a hearing to Aztec Fire Protection, Inc. (“Aztec”) because there was no denial of due process and the doctrine of laches was not applicable.

Aztec has not offered any evidence to refute the certified payroll evidence, nor has it demonstrated that there is any missing evidence that might refute Leung’s calculations. Aztec’s claim that it “would have” collected more evidence, or investigated R&F’s practices back in 1997, if it had known it was the subject of an investigation is unavailing. First, by the admission of Aztec’s own witness, R&F did not keep records of wages; thus, evidence probative of prevailing wage payments was never in existence. Second, in the very early stages of these proceedings, Aztec met with ADD Taverner to discuss the issues. Following this meeting, by letter dated June 20, 1997, (Exhs. C-18, R-26), ADD Taverner sent copies of the forms on which the Wage and Hour investigator had calculated the back wages owed to the sprinkler fitters. (See Exh. C-11 for the forms). At that time, ADD Taverner also indicated his willingness to accept any additional documents that Aztec wished to submit. (Exhs. C-18, R-26). It is undisputed that Aztec failed to submit any additional documents to Wage and Hour after this meeting. (Tr. 831).

If actual prejudice is not established in the absence of a presumption of prejudice, the Board has in the past ended the inquiry. See KP&L Electrical Contractors, Inc., supra, slip op. at 6 ("We do not address the first three of the . . . factors because we conclude that KP&L has not established actual prejudice as a result of the passage of time."). It is nevertheless instructive that with regard to the second and third factors, the reason for the delay and the assertion of one's right to a hearing, Aztec bears partial responsibility because it did not contest the violations, or request a hearing, until after its attempts to obtain the withheld funds had failed. On three separate occasions, Aztec acknowledged that R&F violated the Act and that Wage and Hour's calculations of underpayments to the sprinkler fitters were correct. First, in a letter sent to Thomas Hawkins, General Counsel for the GSA, Aztec asserted that the withheld back wages should be immediately released because, as Aztec did not request a hearing under DOL rules, the “findings referenced in Mr. Taverner’s June 20, 1997 letter are, in fact, final.” Aztec stated:

I must emphasize that nobody, including Aztec Fire Protection, Inc., is now contesting or has ever contested the Department of Labor’s findings that R&F Fire Protection failed to comply with the Davis-Bacon Act and that the monies being withheld are due and payable to R&F’s employees.

(Ex. R-10)(emphasis in original). Second, in a letter sent to contracting officer De La Torre, Tom Cairns, attorney for Aztec, identified the sprinkler fitters as "Judgment Debtors" (following Aztec's lawsuit against R&F):

There can be little question that your agency is now holding funds which are due and payable to the Judgment Debtors . . . The amounts being held by your agency pursuant to the direction of the U.S. Department of Labor [29 CFR § 5.9] have been “found to be due” to Aztec’s Judgment Debtors (see, e.g. enclosed copies of U.S.D.O.L. Forms WH-55).

(Exh. R-20, page 2). Third, as a follow-up to a phone conversation held with ADD Taverner, Aztec stated in a letter:

You further acknowledged that nobody, including Aztec Fire Protection, R&F Fire Protection and Ray Wilson Company has ever disputed the findings referenced in your June 20, 1997 letter.

(Exh. C-21, page 2).

These letters were sent after Aztec had sued R&F and the sprinkler fitters in state court and R&F had stipulated to judgment in Aztec's favor. In fact, Aztec’s position changed only after it unsuccessfully attempted to collect the funds directly from GSA, and after it learned that the withheld funds had been prematurely disbursed to the sprinkler fitters directly. (Tr. 443). Only subsequent to that point did Aztec demand a hearing. (Tr. 444).

^{^[1]} The facts relevant to the allegation of improper delay are set forth in the Statement of Facts below.

^{^[2]} Under the Secretary's Wage Determination supplied with the Wilson contract, the classification of the laborers who installed the fire protection system was "sprinkler fitters". (Tr. 249-250; Exh. C-8). The required wage rate for sprinkler fitters was $37.96 per hour ($28.12 per hour plus $9.84 per hour in fringe benefits), plus time and a half for overtime hours worked. (Tr. 26; Exh. C-8).

^{^[3]} The ALJ, without citation, noted that the request for a hearing was in 1999, but, as indicated below, the ALJ analyzed the case as if there were a five-year delay involved (between the withholding of funds and the hearing). (D&O at 4).

^{^[4]} Despite the fact that Wilson is jointly and severally liable, see infra, and that Wilson joined in the Petition for Review before this Board, only Aztec and its officials were debarred; therefore, we often refer only to Aztec, even though Wilson, too, is liable.

^{^[5]} The actual time from the date of the withholding (April 1997) to the hearing (November 2001) was four years and seven months.

^{^[6]} Aztec did not raise this issue in its Petition for Review.

^{^[7]} The ALJ did find a slight mathematical error (as opposed to an error in methodology) in Wage-Hour's computations, and consequently ordered DOL to reimburse Ray Wilson Co. for payment withheld in the amount of $6,381.48. This is not at issue in this case.

^{^[8]} As did the ALJ, we discuss the case in terms of a five-year lapse of time between the withholding of funds in 1997 and the holding of the hearing in 2001. As the ALJ recognized, however, "[a] review of the record shows that the Respondent did not initially contest the findings of the Wage and Hour Division."

^{^[9]} See Winzeler Excavating Co. v. Brock, 694 F. Supp. 362 (N.D. Ohio 1988); G & H Machinery Co. v. Donovan, 96 Lab. Cas. (CCH) ¶34,354 (S.D. Ill. 1982); Cotham v. Tuite, 94 Lab. Cas. (CCH) ¶34,215 (E.D. Cal. 1982); California Housing Corp. v. California Housing Fin. Agency, 93 Lab. Cas. (CCH) ¶34,146 (E.D. Cal. 1981).

^{^[10]} It should be noted that "just as the Board is entitled to refrain from deciding constitutional claims," "the Board is entitled to hear and decide constitutional claims germane to the proceedings before it, as long as this does not include declaring the Board's governing statute unconstitutional." Tom Rob, supra, slip op. at 10.

^{^[11]} As discussed below in the section on laches, Aztec, by its own admission, did not request a hearing in a timely manner. See 29 C.F.R. 5.11(b)(2). Aztec made this admission despite the fact that a charging letter was not issued by Wage and Hour until February 2000, and a hearing was requested in March 2000. It is significant, however, that Wage-Hour did meet with Aztec in June 1997, following the withholding of funds in April 1997, and ADD Taverner sent a letter to Aztec on June 20, 1997, indicating that back wages were owed to the sprinkler fitters. Despite this acknowledged failure on the part of Aztec to timely request a hearing, we nevertheless follow the ALJ in addressing the issues of due process and laches in turn.

^{^[12]} The regulation at 29 C.F.R. 5.11 sets forth the procedures, including the right to a hearing, for the resolution of disputes concerning the payment of wages under the Davis-Bacon and Related Acts. Subsequent to the withholding of funds in the present case, Wage and Hour, in 1999, put in place new procedures to supplement the procedural safeguards for contractors where contract funds are withheld for back wage violations under both the Davis-Bacon Act and the Service Contract Act. They include an opportunity, before withholding is instituted, to meet with the investigator to discuss the alleged violations and present rebuttal evidence, to receive written notice of the possibility of the withholding of contract funds, and to present written information or evidence to higher-level official of DOL concerning whether the violations occurred. See R&B Trucking Co. v. U.S. Dep't of Labor, Civil Action No. 00-04314-SVW (RNBx) (C.D. Cal. Aug. 28, 2000) (holding that such safeguards satisfy due process requirements in a Davis-Bacon Act enforcement action).

^{^[13]} Although the Board has addressed the applicability of laches against the government on its merits, it is worth noting that some 80 years ago, the Supreme Court stated that "[a]s a general rule laches or neglect of duty on the part of officers of the Government is no defense to a suit by it to enforce a public right or protect a public interest." Utah Power and Light Co. v. United States, 243 U.S. 389, 407 (1917). See also OPM v. Richmond, 496 U.S. 414, 422 (1990) (the Supreme Court has "reversed every finding of estoppel [against the government] that [it has] reviewed"). As the Supreme Court stated, "This Court has frequently articulated the great principle of public policy, applicable to all governments alike, which forbids that the public interests should be prejudiced by the negligence of the officers or agents to whose care they are confided." Brock v. Pierce County, 476 U.S. 253, 260 (1986) (internal quotation marks omitted). Indeed, addressing the analogous principle of estoppel, the Wage Appeals Board acknowledged that "[t]o invoke estoppel against DOL to defeat a legitimate claim for back wages on behalf of aggrieved workers may be a legal impossibility . . . ." L.T.G. Construction Co., WAB Case No. 93-15, at 6 (Dec. 30, 1994).

^{^[14]} The certified payrolls indicate hours worked, but do not show the amount of wages paid.

^{^[15]} As indicated above, R&F's certified payrolls specify hours for "owner operators," but do not indicate the rate of pay.

^{^[16]} The payrolls provide a starting date of June 28, 1996, and ending date of March 29, 1997 (approximately nine months) for the work performed by the sprinkler fitters on the project. (Exh. C-9) The nine-month duration of the work on the project was undisputed. (Tr. 180, 181, 482).

^{^[17]} To the extent that Aztec argues that the certified payrolls should have been excluded as hearsay, it is incorrect. They are, at minimum, admissible under the "[r]ecords of regularly conducted activity" exception. See 29 C.F.R. 18.803(a)(6). Moreover, the Board has consistently stated that hearsay evidence is admissible in ALJ proceedings. See Howell Construction, Inc., WAB Case No. 93-12 (May 12, 1994); U.S. Floors, Inc., WAB Case No. 91-33 (March 20, 1992); Permis, supra; and M.C. Lazzinnaro Construction Corp., WAB Case No. 88-08 (March 11, 1991). Finally, as this Board has stated, "When examining questions of possible error committed by a trier of fact in the handling of evidence, the Board must emphasize that, in general, an ALJ has broad discretion in the types and quality of evidence which is admitted at hearing. Sweeping authority accorded an ALJ in the conduct of hearings is specified in the regulations governing proceedings conducted before the Department of Labor's Office of Administrative Law Judges. See 29 C.F.R. § 18.29." Star Brite, supra.

^{^[18]} This information is also corroborated by Aztec's check records, which correspond to the paychecks as to date, payee, and amount. (Exh. C-15).

Footnotes