L.P. Cavett Co. v. U.S. Dept. of Labor

Decision Date03 December 1996
Docket NumberNo. 95-3902,95-3902
Citation101 F.3d 1111
Parties, 133 Lab.Cas. P 33,480, 3 Wage & Hour Cas.2d (BNA) 993 L.P. CAVETT COMPANY, Plaintiff-Appellant, v. UNITED STATES DEPARTMENT OF LABOR, et al., Defendants-Appellees.
CourtU.S. Court of Appeals — Sixth Circuit

Paul D. Rice (argued and briefed), Cincinnati, OH, for L.P. Cavett Co.

William J. Stone, Ford F. Newman (argued and briefed), U.S. Department of Labor, Office of the Solicitor, Washington, DC, and James M. Coombe, Office of the U.S. Attorney, Cincinnati, OH, for United States Department of Labor, Robert Reich, and Wage Appeals Board.

William A. Isokait (briefed), Associated General Contractors of America, Inc., Washington, DC, for Associated General Contractors of America, Inc., Amicus Curiae.

Terry R. Yellig (briefed), Sherman, Dunn, Cohen, Leifer & Yellig, Washington, DC, for the Building and Construction Trades Department, AFL-CIO, Amicus Curiae.

Before: KEITH, SILER, and BATCHELDER, Circuit Judges.

KEITH, Circuit Judge.

Plaintiff-Appellant, L.P. Cavett Company ("Cavett") appeals from an order of the magistrate judge granting summary judgment in favor of the Department of Labor in an action to review the Department's determination that Cavett and its subcontractor violated the Davis-Bacon Act while performing work on a federally-funded highway construction project. Cavett contends that the district court erred in finding that the prevailing wage requirements of the Davis-Bacon Act were intended to apply to truck drivers hauling asphalt from a temporary batch plant to a highway construction project. See 892 F.Supp. 973, 981-82 (S.D.Ohio 1995). We agree with Cavett that the wage provisions of the Davis-Bacon Act were not intended to apply to the truck drivers. In addition, we find that the Federal-Aid Highways Act does not impose an obligation on Cavett to pay the truck drivers prevailing wages. As a result, we REVERSE the decision of the magistrate judge and REMAND this case to the district court with instructions to enter judgment in favor of Cavett.

I. Background

On June 10, 1985, the Indiana Department of Highways awarded a contract to Cavett to resurface roughly 10.8 miles of Indiana state road. The contract specified that Cavett would perform surface and shoulder removal, widening of the highway and then resurfacing with a bituminous mix. On June 12, 1985, representatives of Cavett and the Indiana Department of Highways decided that a bituminous plant would be established approximately three miles from the midpoint of the highway to be reconstructed. Cavett subcontracted with George St. John's Trucking ("St. John's") to haul materials, supplies and equipment from the batch plant to the highway. Cavett's contract with St. John's did not contain a Davis-Bacon Act prevailing wage standard provision even though the highway project was financially assisted by federal funds.

In 1988, the Department of Labor initiated an investigation of the highway project. On May 16, 1989, the Wage and Hour Administrator issued a ruling that the truck drivers hauling asphalt from the batch plant to the highway site should have been paid at the prevailing Davis-Bacon wage rate because the batch plant could be considered as part of the "site of work" pursuant to 29 C.F.R. § 5.2(1)(2). The Administrator found that the batch plant was part of the "site of work" because (1) the batch plant was established after the contract was awarded, (2) the batch plant was three to five miles from the construction site, and (3) the material produced at the batch plant was furnished exclusively, or nearly so, to the highway project. Thereafter, Cavett was assessed $11,202.10 in back wages--$9,403.87 of which was due for prevailing wages and $1,798.23 for overtime wages.

On June 14, 1989, Cavett filed a petition for review before the Wage Appeals Board. The Board found that the bituminous batch plant was part of the "site of the work," as defined in the applicable regulations at 29 C.F.R. § 5.2(l), and that therefore, the Davis-Bacon Act prevailing wage rates applied to St. John's truck drivers.

Cavett petitioned the district court for review on September 22, 1993. The parties stipulated to having a magistrate judge decide the case. On July 20, 1995, the magistrate judge upheld the Department's regulatory interpretation of the "site of the work," and thus, affirmed the Wage Appeals Board's decision that the truck drivers were working on the "site of the work" for purposes of prevailing wage coverage. The magistrate judge found that the statutory phrase "directly upon the site of the work" was ambiguous, and that section 5.2(l) represented a permissible construction of that phrase. Cavett filed a timely notice of appeal to this Court.

II. Discussion
A. Standard of Review

We review de novo the magistrate judge's decision to grant summary judgment in favor of the Department of Labor. Brooks v. American Broadcasting Co., 932 F.2d 495, 500 (6th Cir.1991), cert. denied, 510 U.S. 1015, 114 S.Ct. 609, 126 L.Ed.2d 574 (1993). Summary judgment is appropriate when the "pleadings, depositions, answers to interrogatories and admissions on file, together with affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.Proc. 56(c). Under the Administrative Procedure Act, judicial review of a Wage Appeals Board's decision is limited to the question of whether the agency action was "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A); Communities, Inc. v. Busey, 956 F.2d 619, 623 (6th Cir.), cert. denied, 506 U.S. 953, 113 S.Ct. 408, 121 L.Ed.2d 332 (1992).

B. Davis-Bacon Act

The Davis-Bacon Act, 40 U.S.C. § 276a, was passed in 1931. It provides that for all contracts involving federal construction projects, "mechanics and laborers employed directly on the site of the work" shall be paid local prevailing wage rates as determined by the Secretary of Labor. The dual purposes of the Act are to give local laborers and contractors fair opportunity to participate in building programs when federal money is involved and to protect local wage standards by preventing contractors from basing their bids on wages lower than those prevailing in the area. See S.Rep. No. 963, 88th Cong., 2d Sess. (1964), reprinted in 1964 U.S.C.C.A.N. 2339, 2340.

In finding that the truck drivers employed by St. John's Trucking Company were entitled to prevailing wages under the Davis-Bacon Act, the Department of Labor included in the site of the work both a batch plant located at a quarry more than three miles away from the highway construction project and the Indiana highway system that was used to transport materials from the batch plant to the construction project. In support of this determination, the Department of Labor relied on its own definition of "site of the work" contained in 29 C.F.R. § 5.2(l). That regulation states:

(1) The site of the work is limited to the physical place or places where the construction called for in the contract will remain when work on it has been completed and, as discussed in paragraph (l )(2) of this section, other adjacent or nearby property used by the contractor or subcontractor in such construction which can reasonably be said to be included in the site.

(2) Except as provided in paragraph (l )(3) of this section, fabrication plants, mobile factories, batch plants, borrow pits, job headquarters, tool yards, etc. are part of the site of the work provided they are dedicated exclusively, or nearly so, to performance of the contract or project, and are so located in proximity to the actual construction location that it would be reasonable to include them.

(3) Not included in the site of the work are permanent home offices, branch plant establishments, fabrication plants, and tool yards of a contractor or subcontractor whose locations and continuance in operation are determined wholly without regard to a particular Federal or federally assisted contract or project. In addition, fabrication plants, batch plants, borrow pits, job headquarters, tool yards, etc., of a commercial supplier or materialman which are established by a supplier of materials for the project before opening of bids and not on the project site, are not included in the site of the work. Such permanent, previously established facilities are not a part of the site of the work, even where the operations for a period of time may be dedicated exclusively, or nearly so to the performance of a contract.

29 C.F.R. 5.2(l) (emphasis added).

Our review of Cavett's statutory challenge is governed by the framework established in Chevron, U.S.A., Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 2781-82, 81 L.Ed.2d 694 (1984). First, we must determine whether "Congress has directly spoken to the precise question at issue." Id. at 842, 104 S.Ct. at 2781. If we find that Congress has spoken to the precise question at issue "that is the end of the matter; for the court, as well as the agency, must give effect to the unambiguously expressed intent of Congress." Id. at 842-43, 104 S.Ct. at 2781. However, if the relevant statute is ambiguous or silent with respect to the matter in question, we must then assess whether the agency's interpretation is based on a permissible construction of the statute. Id. at 843, 104 S.Ct. at 2781-82.

In the present case, the magistrate judge found that the phrase "directly upon the site of the work" was ambiguous because in constructing a highway it was necessary that work would "spill over onto nearby areas" not occupied by the final construction work. The magistrate judge then determined that the definition of "site of the work" contained in 29 C.F.R. § 5.2(l)(2) was a permissible construction of the Davis-Bacon Act--thereby satisfying the two pronged...

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