Assoc. Gen. Contractors of Wash. v. State

• Court: Washington Supreme Court
• Writing for the Court: Gordon McCloud, J.
• Citation: Assoc. Gen. Contractors of Wash. v. State, 2 Wn.3d 846 (Wash. 2024)
• Decision Date: 14 March 2024
• Docket Number: No. 101997-1
• Parties: Associated General Contractors of Washington et al., Respondents, v. The State of Washington et al., Petitioners.
• topic: Construction Law,Contracts,Administrative Law,Public Sector Law

2 Wn.3d 846

[No. 101997-1. En Banc.]

Argued January 25, 2024.

Decided March 14, 2024.

Associated General Contractors of Washington et al., Respondents, v. The State of Washington et al., Petitioners.

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Gordon McCloud, J., delivered the opinion for a unanimous court. Owens, J., did not participate in the disposition of this case.

Nature of Action: Building contractor associations filed suit against the State and state officials to challenge Sub-

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stitute Senate Bill (SSB) 5493, Laws of 2018, ch. 248 (codified at RCW 39.12.015(3)), which directs the Department of Labor and Industries industrial statistician to establish prevailing wage rates for public works projects by adopting the prevailing wage from whichever collective bargaining agreement covering work in a particular county has the highest wages. The plaintiffs sought a declaratory judgment that SSB 5493 violated Const. art. II, § 37 as well as preliminary and permanent injunctions barring implementation of SSB 5493.

Superior Court: After denying the plaintiffs’ motion for a preliminary injunction, the Superior Court for Thurston County, No. 19-2-00377-1, Christopher Lanese, J., on December 27, 2019, entered a summary judgment in favor of the defendants.

Court of Appeals: In an unpublished opinion noted at 26 Wn. App. 2d 1021 (2023), the court reversed the judgment, holding that RCW 39.12.015(3) violated Const. art. II, § 37 because RCW 39.12.015(3) conflicted with the single-county geographic limitation in RCW 39.12.026(1).

Supreme Court: Holding that RCW 39.12.015(3) did not conflict with the single-county geographic limitation in RCW 39.12.026(1) and, thus, did not violate Const. art. II, § 37 because the single-county geographic limitation in RCW 39.12.026(1) did not apply to RCW 39.12.015(3), the court reverses the decision of the Court of Appeals and remands the case for further proceedings.

Robert W. Ferguson, Attorney General, and Anastasia R. Sandstrom, Senior Counsel, and Paul M. Weideman and James P Mills, Assistants, for petitioners.

Darren A Feider and Jennifer A. Parda-Aldrich (of Sebris Busto James PS), for respondents.

Bradley L. Medlin and Karanjot Gill on behalf of AFLCIO Washington State Building and Construction Trades Council, amicus curiae.

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¶1 Gordon McCloud, J. — When the State of Washington builds a bridge, a road, or any other public project, it must pay the workers a fair wage—what the legislature has called the "prevailing rate of wage." RCW 39.12.020. Before 2018, the legislature directed the State to determine the prevailing rate of wage by using wage and hour surveys dependent on voluntary compliance by employers and unions. WAC 296-127-019; Clerk’s Papers (CP) at 2559. The "data collected" from those surveys could be used "only in the county for which the work was performed." RCW 39.12.026(1).

¶2 In 2018, the legislature changed the method for determining the prevailing rate of wage on most projects. It directed the State to determine that rate "by adopting the hourly wage, usual benefits, and overtime paid for the geographic jurisdiction established in collective bargaining agreements [CBAs] for those trades and occupations that have [CBAs]." RCW 39.12.015(3)(a).

¶3 In Associated General Contractors, the Court of Appeals declared this 2018 statute unconstitutional on the ground that it conflicted with the single-county geographic limitation in the older statutory subsection, RCW 39.12- .026(1).¹ Specifically, the Court of Appeals held that RCW 39.12.026(1) provides that "data collected" by the State to determine prevailing wage rates may be used "only in the county for which the work was performed," the new CBA-

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adoption statute lacks that geographic limitation, and the RCW 39.12.026(1) single-county limit conflicts with RCW 39.12.015(3)(a)’s seeming permission to adopt wage rates from CBAs that cover more than one county. The Court of Appeals concluded that this was a fatal conflict—that it violated article II, section 37 of the Washington Constitution.

¶4 We disagree. The older statutory subsection, RCW 39.12.026(1), was enacted at the time that the older wage-survey method was in force and, when RCW 39.12.026(1) is read in context of the full statute and chapter in which it appears, that statutory subsection’s single-county use limitation applies only to the wage-survey "data collection" method. It does not apply to the newer CBA-adoption method at all. Thus, the older statute does not conflict with the newer statute; they just apply to different situations.

¶5 We therefore reverse the decision of the Court of Appeals.

Facts and Procedural History

I. The legislature amends the prevailing wages on public works act

¶6 The prevailing wages on public works act (Act) requires employers to pay no less than the "prevailing rate of wage" to laborers, workers, or mechanics working on public projects. RCW 39.12.020. The legislature originally defined the "prevailing rate of wage" as "the rate of hourly wage, usual benefits, and overtime paid in the locality … to the majority of workers, laborers, or mechanics, in the same trade or occupation." RCW 39.12.010(1). The " locality’ is the largest city in the county wherein the physical work is being performed." RCW 39.12.010(2). The legislature placed the job of determining the prevailing wage for each trade and occupation in the hands of the industrial statistician of the Department of Labor and Industries (L&I). RCW 39.12.015(1).

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¶7 Pursuant to that legislative grant of authority, the industrial statistician promulgated WAC 296-127-019, which lays out a multistep procedure for setting the prevailing wage by using wage surveys. Before 2018, the industrial statistician followed this method and set prevailing wage rates in Washington’s 39 counties by sending wage surveys to employers and unions, asking them to voluntarily report wage rates in various trades and occupations. WAC 296- -127-019; CP at 2559. Then, the industrial statistician would "systemize" the survey data and "determine the majority or average rate by statistical estimation." Associated Gen. Contractors of Wash. v. State, 200 Wn.2d 396, 401, 518 P.3d 639 (2022) (AGO II) (citing WAC 296-127-019); CP at 2555-59 (Christensen deposition).

¶8 In 2003, the legislature codified the wage survey process in RCW 39.12.026 and directed the statistician that "all data collected by [L&I] may be used only in the county for which the work was performed." Former RCW 39.12- .026(1) (2003).

¶9 In 2018, the legislature modified the prevailing wage process by enacting Substitute Senate Bill (SSB) 5493.² That law requires the industrial statistician to "adopt[ ]" the wages memorialized in CBAs to set most prevailing wage rates, rather than to collect, analyze, and apply data concerning wages, jobs, and hours through the wage-survey method. This newer law, codified at RCW 39.12.015, currently provides:

(3)(a) Except as provided in RCW 39.12.017,³ and notwithstanding RCW 39.12.010(1), the industrial statistician shall establish the prevailing rate of wage by adopting the hourly wage, usual benefits, and overtime paid for the geographic

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jurisdiction established in [CBAs] for those trades and occupations that have [CBAs]. For trades and occupations with more than one [CBA] in the county, the higher rate will prevail.

(b) For trades and occupations in which there are no [CBAs] in the county, the industrial statistician shall establish the prevailing rate of wage as defined in RCW 39.12.010 by conducting wage and hour surveys. In instances when there are no applicable [CBAs] and conducting wage and hour surveys is not feasible, the industrial statistician may employ other appropriate methods to establish the prevailing rate of wage.

II. AGC challenges SSB 5493

¶10 In 2019, Associated General Contractors of Washington, Associated Builders of Western Washington Inc., Inland Pacific Chapter of Associated Builders and Contractors Inc., and Inland Northwest AGC Inc. (collectively AGC) filed this lawsuit challenging SSB 5493. AGC argued that SSB 5493 (1) unconstitutionally delegates legislative authority, (2) violates due process, (3) violates equal protection, and (4) violates article II, section 37 of the Washington Constitution. CP at 11-17. It sought declaratory judgment that the law is invalid as well as preliminary and permanent injunctions barring implementation of the law. Id. at 17.

¶11 The trial court denied AGC’s motion for a preliminary injunction. Id. at 182. The parties filed cross motions for summary judgment, which the trial court resolved in favor of the State. Id. at 2536.

¶12 AGC appealed. The Court of Appeals reversed, accepting AGC’s argument that SSB 5493 violates the non-delegation doctrine. Associated Gen. Contractors of Wash. v. State, 19 Wn. App. 2d 99, 112, 494 P.3d 443 (2021) (AGC I). The court did not reach the article II, section 37 issue. Id. at 101 n.4. The court declined to consider the due process and equal protection issues because they were insufficiently briefed. Id. at 101 n.3.

¶13 This court granted review and reversed, holding that the new law did not violate the nondelegation doctrine.

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AGC II, 200 Wn.2d at 400. We remanded for the Court of Appeals to consider the remaining article II, section 37 issue. Id. at 415-16.

¶14 On remand, the Court of Appeals held that the new law violates article II, section 37. AGC III, slip op. at 2. It reversed the trial court’s grant of summary judgment in favor of the State and remanded to the trial court for further proceedings. Id.

¶15 The State filed a petition for review, which we granted. 1 Wn.3d 1024 (2023).

Standard of Review

¶16 We review an order on summary judgment de novo, performing the same inquiry as the trial court. Jones v. Allstate Ins. Co., 146 Wn.2d 291, 300, 45 P.3d 1068 (2002) (citing Lybbert v. Grant County, 141 Wn.2d 29, 34, 1 P.3d 1124 (2000)). "Summary judgment is...