California State Employees' Assn. v. State Personnel Bd.

• Decision Date: 04 March 1986
• Docket Number: P,AFL-CI
• Citation: 223 Cal.Rptr. 826,178 Cal.App.3d 372
• Court: California Court of Appeals
• Parties: CALIFORNIA STATE EMPLOYEES' ASSOCIATION (CSEA), Local 1000 Service Employees' International Union,laintiffs and Respondents, v. CALIFORNIA STATE PERSONNEL BOARD, et al., Defendants and Appellants, Universal Service Contractors, Defendant and Respondent. Civ. 25503.

Page 826

223 Cal.Rptr. 826

178 Cal.App.3d 372

CALIFORNIA STATE EMPLOYEES' ASSOCIATION (CSEA), Local 1000 Service Employees' International Union, AFL-CIO, Plaintiffs and Respondents, v. CALIFORNIA STATE PERSONNEL BOARD, et al., Defendants and Appellants Universal Service Contractors, Defendant and Respondent.

Civ. 25503.

Court of Appeal, Third District, California.

March 4, 1986.

John K. Van de Kamp, Atty. Gen., N. Eugene Hill, Asst. Atty. Gen., Faith J. Geoghegan, Deputy Atty. Gen., for defendants and appellants.

Gary P. Reynolds and M. Jeffrey Fine, Sacramento, for plaintiffs and respondents.

Donald D. Harmata, Sacramento, for defendant and respondent Universal Service Contractors.

SIMS, Associate Justice.

In this case, we construe subdivision (a)(2) of Government Code section 19130, ¹ which specifies certain conditions pursuant to which the State of California can contract with private firms for the performance of personal services.

Defendants and appellants, California State Personnel Board (Board), Department of General Services (General Services), and Teale Data Center (Teale) appeal from a judgment granting a writ of mandate compelling appellants (a) to refrain from entering into a contract between Teale and respondent Universal Service Contractors (Universal) providing for security guard services for Teale, or (b) to regard the contract as void if the contract has been executed. We agree with the trial court that the proposed contract violated subdivision (a)(2) of section 19130. Consequently, we affirm the judgment.

FACTS

General Services has historically supplied state civil service security guards to protect the state's Teale data processing center.

In April 1985, pursuant to a statutory mandate, ² the Board informed respondent California State Employees' Association (CSEA) that Teale intended to enter into a contract with Universal pursuant to which Universal's private sector employees would replace the state's security guards at the data center. ³

CSEA submitted written objections to the Board. As relevant here, CSEA contended the proposed contract violated subdivision (a)(2) of section 19130, which provides: "Proposals to contract out work shall not be approved solely on the basis that savings will result from lower contractor pay rates or benefits. Proposals to contract out work shall be eligible for approval if the contractor's wages are at the industry's level and do not significantly undercut state pay rates." (All further nondescript references to "subdivision (a)(2)" are to this statute.) CSEA argued the contractor's wages "significantly undercut state pay rates."

The state's security guards were paid $6.94 per hour, exclusive of benefits. Universal's guards were paid $5.00 per hour, exclusive of benefits. It is undisputed that Universal's wages were at the industry's level. It is further undisputed in this action that the public and private security guards had the same training and qualifications and would perform the same duties at the data center.

The Board rejected CSEA's objections and approved the contract. However, the trial court concluded Universal's wages significantly undercut the state pay rate and issued the previously described writ.

DISCUSSION

The dispute between appellants and respondent CSEA concerns the proper interpretation of subdivision (a)(2). ⁴

The parties first focus on the word "undercut." Appellants contend "undercut" requires an intentional pricing down to pay below the state pay rate. Although not entirely clear, appellants apparently contend a contractor would "undercut" state pay rates only if the contractor intentionally dropped his wage rate below the prevailing rate in the industry to try to get a state contract. Thus, appellants argue that as long as the contractor pays the prevailing wage for the industry, the contractor does not "undercut" state pay rates. CSEA argues the trial court correctly concluded "undercut" means simply "lower than." By this view, a contractor's wages "significantly undercut" state pay rates when they are "significantly lower than" state pay rates. For reasons that follow, we believe the trial court correctly resolved this issue by adopting the construction urged by CSEA.

We first note that courts are bound to give effect to statutes according to the usual, ordinary import of their language. (California Teachers Assn. v. San Diego Community College Dist. (1981) 28 Cal.3d 692, 698, 170 Cal.Rptr. 817, 621 P.2d 856.) As pertinent here, Webster defines "undercut" as follows: "to offer to sell at lower prices than or to work for lower wages or serve for lower fees than (a competitor)." (Webster's Third New International Dictionary (1981) p. 2488.) The ordinary use of "undercut" does not include "intentional pricing down." The trial court's interpretation thus gives the language its usual ordinary meaning.

Moreover, in the absence of an absurd result, we are not free to disregard ordinary rules of grammar and syntax in the interpretation of a statute. (See Watson v. Superior Court (1972) 24 Cal.App.3d 53, 60, 100 Cal.Rptr. 684.) In subdivision (a)(2), the operative noun is "wages" which "do not significantly undercut state pay rates." Unlike contractors, "wages" have no "intention." They are simply higher or lower than some other number. Appellants' construction of the statute is thus at odds with its syntax.

We are also mindful that an interpretation which would render terms of a statute surplusage should be avoided, and every word should be given some significance, leaving no part useless or devoid of meaning. (City and County of San Francisco v. Farrell (1982) 32 Cal.3d 47, 54, 184 Cal.Rptr. 713, 648 P.2d 935.) Appellants expressly argue that, by their interpretation, a contractor paying the prevailing wage cannot "undercut" state pay rates. However, the statute imposes conjunctive conditions of eligibility for approval of a proposal: (1) the contractor's wages must be at the industry's level, and (2) the wages do not significantly undercut state pay rates. ⁵ By appellants' argument, condition (2) could not occur if condition (1) was satisfied. Since appellants' interpretation makes the second condition surplusage, the interpretation is erroneous.

In support of their position, appellants cite Curtiss-Wright Corporation v. McLucas (D.N.J.1973) 364 F.Supp. 750 and Altemose Const. v. Bldg & Const. Trades Council (E.D.Pa.1977) 443 F.Supp. 492. However, we fail to discern how these cases help appellants. In Curtiss-Wright, the court, in a footnote, simply cited remarks by a single senator respecting amendments to the federal Service Contract Act (41 U.S.C. § 351 et seq.): "During the hearings on the 1972 Amendments, Senator Gurney, for example, attacked service contractors who 'ruthlessly and unconscionably' undercut wages and fringe benefits by bidding low on contracts against a better paying incumbent." (Curtiss-Wright, supra, 364 F.Supp. at p. 768, fn. 16.) We do not believe a snippet of legislative history respecting an amendment to an unrelated federal statute, which does not even contain language similar to that at issue here, sheds light on the problem at hand.

Similarly, in Altemose Const. v. Bldg. & Const. Trades Council, supra, the court held that defendants' counterclaims should survive summary judgment under the Sherman Act where defendants claimed plaintiffs had conspired to depress wages. (443 F.Supp. at p. 499.) We cannot see how this case aids appellants. Indeed, both Curtiss-Wright and Altemose suggest the trial court properly construed the California statute at issue. In both cases, the intentional depression of wages was treated as unlawful and opprobrious. The statute at hand proscribes proposals where wages "significantly undercut" state pay rates. It would be odd for the Legislature to proscribe opprobious and possibly unlawful conduct only in the event its effects were "significant."

Appellants also assert the trial court failed to give proper deference to a contemporaneous administrative construction of subdivision (a)(2). When an administrative agency is charged with enforcing a particular statute, its interpretation of the statute will be accorded great respect by the courts and will ordinarily be followed if not clearly erroneous. (San Lorenzo Education Assn. v. Wilson (1982) 32 Cal.3d 841, 850, 187 Cal.Rptr. 432, 654 P.2d 202.)

The rule is applied with most vigor to administrative regulations promulgated by an administrative body authorized to promote a statute's purposes. (See, e.g., Norman v. Unemployment Ins. Appeals Bd. (1983) 34 Cal.3d 1, 8, 192 Cal.Rptr. 134, 663 P.2d 904; In re Kelly (1983) 33 Cal.3d 267, 277, 188 Cal.Rptr. 447, 655 P.2d 1282.) Conversely, where an "administrative interpretation" of a statute is found in an informal memorandum prepared for use in litigation, rather than in a regulation, the usual deference to administrative interpretation is inappropriate. (Jones v. Tracy School Dist. (1980) 27 Cal.3d 99, 107, 165 Cal.Rptr. 100, 611 P.2d 441.) In the instant case, the "administrative interpretation" cited by appellants is found in a declaration submitted in the trial court by the section manager in the Employment Services Division of the State Personnel Board who had responsibility for providing staff analysis for the review of the contract at issue here. The declarant asserts, "The contractor is not intentionally pricing down to undercut state pay rates." However, the declarant does not purport to speak for the Board itself. So far as the declaration indicates, the interpretation of the statute is that of the declarant, submitted in the instant litigation. As such, the usual deference given to a formal agency interpretation of a statute is inappropriate. (Ibid.)

"In any event, administrative construction of a statute, while entitled to weight, cannot prevail when a contrary legislative purpose is apparent. [Citations.]" (Pacific Legal Foundation v....