Department of Employment, Labor Standards Div. v. Roberts Const. Co.

• Decision Date: 20 November 1992
• Docket Number: No. 92-26,92-26
• Citation: 841 P.2d 854
• Parties: DEPARTMENT OF EMPLOYMENT, LABOR STANDARDS DIVISION, State of Wyoming, Appellant, v. ROBERTS CONSTRUCTION COMPANY, Appellee.
• Court: Wyoming Supreme Court

Page 854

841 P.2d 854

DEPARTMENT OF EMPLOYMENT, LABOR STANDARDS DIVISION, State of Wyoming, Appellant, v. ROBERTS CONSTRUCTION COMPANY, Appellee.

No. 92-26.

Supreme Court of Wyoming.

Nov. 20, 1992.

Joseph B. Meyer, Atty. Gen., Michael L. Hubbard, Sr. Asst. Atty. Gen., and Robert L. Lanter, Asst. Atty. Gen., for appellant.

George E. Powers, Jr. of Godfrey & Sundahl, Cheyenne, for appellee.

Before THOMAS, CARDINE, URBIGKIT ^* and GOLDEN, JJ., and BROWN, J. (Retired).

BROWN, Justice (Retired).

The trial court set aside and reversed a decision by appellant, the Department of Employment, Labor Standards Division, State of Wyoming (Department), which had revoked the certificate of residency possessed by appellee Roberts Construction Company, Inc. (Roberts).

Appellant argues a single issue:

Was there sufficient evidence to support the Division of Labor Standards' decision that a certified resident contractor was using its certificate of residency primarily as a device to obtain benefits of residency for a nonresident contractor, in violation of W.S. § 16-6-102(d).

We affirm.

In 1984, all of the stock in Roberts Construction Company was purchased by McCormick, Inc. In 1987, Roberts received from the Department a certificate of residency status. The certificate of residency allowed Roberts to bid public contract projects as a resident contractor and thus enjoy a five percent preference on its bids over those of nonresident contractors.

This dispute arose when the owner of Nucor Drilling, Inc., filed an oral complaint with the Department complaining about the residency status of Roberts. The complaint was formally made in writing and received by the Department on March 14, 1991.

At the time of the complaint by Nucor Drilling, Inc., Roberts was the low bidder on two construction projects planned by the Department of Environmental Quality. Nucor Drilling, Inc., was the second lowest bidder on these projects, its bid being $115,460 higher than Roberts' bid.

As a result of the complaint by Nucor Drilling, Inc., David Crowlie, a compliance officer with the Department, did an on-site investigation of Roberts' business office in Sundance, Wyoming. The on-site inspection disclosed material which caused Crowlie to believe that Roberts was using the certificate of residency primarily as a device to obtain benefits of residency for its nonresident corporate parent, McCormick, Inc. (McCormick), a North Dakota corporation. David Simonton, Compliance Supervisor for the Department of Labor Standards, wrote a letter to Roberts on March 25, 1991, informing Roberts of the residency certification audit and his preliminary findings. In his letter, David Simonton requested that Roberts respond to the preliminary findings and produce documentation to demonstrate that it was not in fact using its residency certificate primarily as a device to obtain the residency five percent bid preference for McCormick, a nonresident.

Roberts responded to David Simonton's March 25, 1991 letter with a letter from its attorney dated April 9, 1991. After reviewing Roberts' response, Mr. Simonton concluded that Roberts was in violation of Wyo.Stat. § 16-6-102(d) (1990) and was using its certificate of residency primarily as a device to obtain benefits of residency for McCormick, a nonresident. Mr. Simonton revoked Roberts' resident contractor certificate in his April 16, 1991 letter.

Roberts requested a hearing to review the decertification decision as provided by Chapter XI, Section 10(a) of the Departments' Rules of Practice and Procedure. The hearing was held on May 17, 1991, with the Commissioner of Labor, Michael J. Sullivan, sitting as hearing officer. On May 30, 1991, the Commissioner issued his determination and order upholding the Department's decision to revoke Roberts' residency certification.

Roberts filed a petition for review on June 3, 1991. Roberts' motion for stay of enforcement of the administrative decision was denied on June 26, 1991, by the district court. The contracts were then awarded to Nucor Drilling, Inc., at a cost of an additional $115,460 to the state. On December 13, 1991, the district court reversed the Commissioner of Labor's order revoking Roberts' residency certification. The district court held that the Department's decision to revoke Roberts' certificate of residency was unsupported by substantial evidence, and, therefore, must be set aside in accordance with Wyo.Stat. § 16-3-114(c)(ii)(E) (1990) of the Administrative Procedures Act. The Department filed its notice of appeal to the supreme court on December 24, 1989.

The Wyoming Administrative Procedures Act sets the legislative standard for reviewing an administrative decision. Wyo.Stat. § 16-3-114(c) (1990) provides in pertinent part:

To the extent necessary to make a decision and when presented, the reviewing court shall decide all relevant questions of law, interpret constitutional and statutory provisions, and determine the meaning or applicability of the terms of an agency action. In making the following determination, the court shall review the whole record or those parts of it cited by a party and due account shall be taken of the rule of prejudicial error. The reviewing court shall:

(i) Compel agency action unlawfully withheld or unreasonably delayed; and (ii) Hold unlawful and set aside agency action, findings and conclusions found to be:

(A) Arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law;

(B) Contrary to constitutional right, power, privilege or immunity;

(C) In excess of statutory jurisdiction, authority or limitations or lacking statutory right;

(D) Without observance of procedure required by law; or

(E) Unsupported by substantial evidence in a case reviewed on the record of an agency hearing provided by statute.

This court has developed further standards of review with respect to agency decisions that tilt in favor of the agency determination. When reviewing an agency decision, we must examine the entire record as if it came directly to the court from the agency. The district court's determination should not be afforded any deference. Mekss v. Wyoming Girls' School, State of Wyoming, 813 P.2d 185, 200-01 (Wyo.1991). After a careful review of the record, the court must determine whether the agency's findings were supported by substantial evidence. Id. at 200.

Substantial evidence is defined by this court as "relevant evidence which a reasonable mind might accept in support of the conclusions of the agency." Dougherty v. J.W. Williams, Inc., 820 P.2d 553, 555 (Wyo.1991) (quoting Trout v. Wyoming Oil and Gas Conservation Commission, 721 P.2d 1047, 1050 (Wyo.1986)). The substantial evidence standard also requires that there be more than a scintilla of evidence. Knight v. Environmental Quality Council of State of Wyoming, 805 P.2d 268, 274 (Wyo.1991). It is not required that the proof attain such a degree of certainty as to support only one conclusion to the exclusion of all others. Marathon Battery Company v. Kilpatrick, 418 P.2d 900, 917 (Okla.1965). Once the measure of evidence has surpassed the scintilla threshold, the possibility of drawing two inconsistent conclusions from the entire record does not mean that the conclusion drawn by the administrative agency is not supported by substantial evidence. Knight, 805 P.2d at 274. Even where this court, after reviewing the record, arrives at a different conclusion, the court cannot substitute its judgment for that of the agency's as long as the agency's conclusion is supported by substantial evidence. Kloefkorn-Ballard Construction and Development, Inc. v. North Big Horn Hospital District, 683 P.2d 656, 660 (Wyo.1984).

Wyoming Rules of Evidence 401 defines relevant evidence as "evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence." Relevant evidence can be either direct or circumstantial in nature. Circumstantial evidence, like direct evidence, is relevant if it tends to prove or disprove some matter in issue or to make a fact in issue more or less probable. Jozen v. State, 746 P.2d 1279, 1283 (Wyo.1987); Petricevich v. Salmon River Canal Company, 92 Idaho 865, 452 P.2d 362 (1969).

In developing our standards of review we have used some imprecise terms such as "scintilla of evidence," "weight of the evidence," "great weight of evidence," "overwhelming weight of evidence," and "substantial evidence." How these terms are applied often depends on the context in which they are used, but more likely, as a practical matter, it depends on "the eye of the beholder." ¹ To paraphrase the late United States Supreme Court Justice Potter Stewart [pornography case], substantial evidence is difficult to define, but one knows it is not present when one does not see it.

The administrative hearing officer, Michael J. Sullivan, wrote voluminously in support of his "Determination and Order." He purported to make seventy-one findings of fact; however, sixty-three of these entries are really a summary of the evidence. The so-called conclusions of law mostly state the parties' contentions and set out some findings of fact. Although the hearing officer did not actually make conclusions of law as required by the statute, we can glean from his "Determination and Order" that he concluded that Roberts was using the certificate of residency primarily as a device to obtain benefits of residency for a nonresident. Most likely, the hearing examiner's findings of fact and conclusions of law do not satisfy the requirements of Wyo.Stat. § 16-3-110 (Wyo.1990). ² However, we will decide this case on the merits.

In the first paragraph of his "Determination and Order," the hearing officer, Michael J. Sullivan, said, "The decertification was based on a violation of Wyoming Statute 16-6-102(d)." This statute provides in pertinent part:

(d) The...