Mendoza v. Fonseca McElroy Grinding Co.

• Citation: 11 Cal.5th 1118,282 Cal.Rptr.3d 369,492 P.3d 993
• Decision Date: 16 August 2021
• Docket Number: S253574
• Court: United States State Supreme Court (California)
• Parties: Leopoldo Pena MENDOZA et al., Plaintiffs and Appellants, v. FONSECA MCELROY GRINDING CO., INC., et al., Defendants and Respondents.

11 Cal.5th 1118

492 P.3d 993

282 Cal.Rptr.3d 369

Leopoldo Pena MENDOZA et al., Plaintiffs and Appellants,

v.FONSECA MCELROY GRINDING CO., INC., et al., Defendants and Respondents.

S253574

Supreme Court of California.

August 16, 2021

Justice At Work Law Group, Tomas E. Margain, San Jose; Esner, Chang & Boyer, Stuart B. Esner, Los Angeles, and Holly N. Boyer, Pasadena, for Plaintiffs and Appellants.

Altshuler Berzon, Eileen Goldsmith and Zoe Palitz, San Francisco, for International Association of Sheet Metal, Air, Rail & Transportation Workers, Sheet Metal Workers’ Local Union No. 104 as Amicus Curiae on behalf of Plaintiffs and Appellants.

David Balter, Kristin García, San Francisco, Luong Chau and Lance Grucela for Department of Industrial Relations, Division of Labor Standards Enforcement as Amicus Curiae on behalf of Plaintiffs and Appellants.

Simpson, Garrity, Innes & Jacuzzi, Paul V. Simpson and Sarah E. Lucas, South San Francisco, for Defendants and Respondents.

Rutan & Tucker, Paul Aherne and Alyssa Roy for Construction Employers’ Association as Amicus Curiae on behalf of Defendants and Respondents.

Cook Brown, Dennis B. Cook and Stephen McCutcheon, Sacramento, for Modular Building Institute, Northern Alliance of Engineering Contractors and Western Electrical Contractors Association, Inc., as Amici Curiae on behalf of Defendants and Respondents.

Sweeny, Mason, Wilson & Bosomworth and Roger M. Mason, Los Gatos, for United Contractors as Amicus Curiae on behalf of Defendants and Respondents.

Jeffer Mangels Butler & Mitchell, Kerry Shapiro, San Francisco, Matthew D. Hinks, Los Angeles, and Martin P. Stratte, San Francisco, for California Construction and Industrial Materials Association as Amicus Curiae on behalf of Defendants and Respondents.

Ogletree, Deakins, Nash, Smoak & Stewart, Robert R. Roginson and Ryan H. Crosner, Los Angeles, for Associated General Contractors of California as Amicus Curiae on behalf of Defendants and Respondents.

Atkinson, Andelson, Loya, Ruud & Romo, Robert Fried, Pleasanton, Thomas A. Lenz, Pasadena, and Elizabeth P. Lind for Associated Builders and Contractors of California as Amicus Curiae on behalf of Defendants and Respondents.

Opinion of the Court by Corrigan, J.

California's Labor Code requires that certain kinds of jobs performed on a public works project be compensated at a per diem rate no less than the prevailing wage paid in the area where the work is done. ( Lab. Code,¹ § 1771.) The Labor Code delineates with specificity the kinds of "public work" covered by the prevailing wage statutes. (See §§ 1720–1720.9.)

The question here is whether the prevailing wage must be paid for plaintiffs’ mobilization work, which involved transporting heavy machinery to and from a public works site. It is undisputed that operation of the machinery at the site qualifies as "public work." However, plaintiffs do not contend that mobilization is "public work" as that term is defined in the applicable statutes. Instead, they argue that, under Labor Code section 1772, they are "deemed to be employed upon public work" because their mobilization work was performed "in the execution" of a public works contract. Plaintiffs urge an interpretation of section 1772 that would enlarge the scope of the prevailing wage law to encompass activities that the Legislature has not otherwise defined as public work.

This expansive interpretation is unsupported by either the statutory language or legislative history. Section 1772 was not intended to define or expand the categories of work covered by the prevailing wage law. As a result, plaintiffs’ reliance on that statute is misplaced.²

I. BACKGROUND

Defendants are a roadwork construction company and its successor, which work on both public and private projects. Part of the road construction process involves using milling equipment to break up existing roadbeds so that new roads can be built. Plaintiffs are unionized engineers who operate the equipment. Sometimes the heavy milling machines are not kept at the job site but are stored instead at a permanent yard or other offsite location. In such cases, plaintiffs report to the offsite location, load the equipment onto trailers, and bring it to the job site. This preparatory activity and equipment transportation is known as mobilization.³

A master agreement between defendants and plaintiffs’ union established wage rates for onsite construction. A separate memorandum of agreement (memorandum) set a lower wage rate for mobilization. When assigned to public works projects, plaintiffs here were paid according to the master agreement and memorandum, receiving the prevailing wage for onsite work and the lesser memorandum rate for mobilization.

Plaintiffs sued in federal court alleging, inter alia, failure to pay the prevailing wage for mobilization done in connection with public works projects. The parties filed cross-motions for partial summary judgment limited to whether mobilization fell under the prevailing wage law. The district court ruled for defendants, concluding that mobilization was not covered by prevailing wage protection.

After all remaining issues were settled, plaintiffs appealed the mobilization decision to the United States Court of Appeals for the Ninth Circuit. The sole issue raised was "whether transporting heavy equipment to be used on public works construction is [done] ‘in the execution of the contract’ under California Labor Code section 1772." We accepted the Ninth Circuit's request⁴ to decide whether the mobilization activity was covered by section 1772.⁵

II. DISCUSSION

A. Prevailing Wage Law Overview

California's prevailing wage law was enacted in 1931 as an uncodified measure. (1931 Act; Stats. 1931, ch. 397, §§ 1–6, pp. 910–912.) Its federal counterpart, the Davis-Bacon Act ( 40 U.S.C. § 3141 et seq. ), was enacted the same year but is not completely coextensive with California's version of the law. ( Kaanaana v. Barrett Business Services, Inc. (2021) 11 Cal.5th 158, 165, 276 Cal.Rptr.3d 417, 483 P.3d 144 ( Kaanaana ).) State and federal prevailing wage laws "responded to the dire economic conditions of the Great Depression, when private construction diminished severely and ‘the oversupply of labor was exploited by unscrupulous contractors to win government contracts ....’ " ( Kaanaana , at pp. 165–166, 276 Cal.Rptr.3d 417, 483 P.3d 144 ; see Universities Research Assn. v. Coutu (1981) 450 U.S. 754, 773–774, 101 S.Ct. 1451, 67 L.Ed.2d 662.)

The prevailing wage law is a minimum wage provision whose overall purpose is "to protect and benefit employees on public works projects." ( Lusardi Construction Co. v. Aubry (1992) 1 Cal.4th 976, 985, 4 Cal.Rptr.2d 837, 824 P.2d 643 ( Lusardi ).) "This general objective subsumes within it a number of specific goals: to protect employees from substandard wages that might be paid if contractors could recruit labor from distant cheap-labor areas; to permit union contractors to compete with nonunion contractors; to benefit the public through the superior efficiency of well-paid employees; and to compensate nonpublic employees with higher wages for the absence of job security and employment benefits enjoyed by public employees." ( Id . at p. 987, 4 Cal.Rptr.2d 837, 824 P.2d 643.) Courts liberally construe the law to fulfill its purpose. ( City of Long Beach v. Department of Industrial Relations (2004) 34 Cal.4th 942, 949–950, 22 Cal.Rptr.3d 518, 102 P.3d 904.)

Those employed on "public works" must generally be paid at least the "prevailing rate of per diem wages for work of a similar character" in the area. ( § 1771.) Under the current statutory scheme, the prevailing wage law does not apply to work done by a public agency with its own labor force. (Ibid .) As we will discuss at some length, this statutory exclusion for government workers was not always in place. (See post , 282 Cal.Rptr.3d at pp. 376–381, 492 P.3d at pp. 1000–1004.)

A contractor or subcontractor that does not pay the prevailing wage rate on a public works project is liable for the deficiency and subject to a penalty. ( § 1775, subd. (a).) The statutory payment obligation is independent of any contractual requirement. ( Lusardi , supra , 1 Cal.4th at pp. 981–982, 4 Cal.Rptr.2d 837, 824 P.2d 643.) For that reason, the fact that the parties’ memorandum provides lesser pay for mobilization does not settle the question here. If the statutory scheme requires payment of the prevailing wage for a particular type of labor, it is irrelevant that the parties may have agreed to a lesser amount.

The prevailing wage law describes with particularity the kind of "public works" that fall within its scope.⁶ Since the law's adoption in 1931, it has encompassed certain "construction or repair work." (Stats. 1931, ch. 397, § 4, p. 912.) Over the years, the statutory definition of "public works" has been amended to clarify and expand the scope of the activities it embraces. As applicable here, section 1720, subdivision (a)(1) (hereafter section 1720(a)(1)) currently defines "public works" as "[c]onstruction, alteration, demolition, installation, or repair work done under contract and paid for in whole or in part out of public funds ...."⁷ Other provisions of section 1720, subdivision (a) not involved here provide additional definitions of "public works" in different contexts like street and sewer work (subd. (a)(3)), carpet laying (subd. (a)(4) & (5)), and tree removal (subd. (a)(8)). Still other definitions of "public works" are contained in additional statutes. (§§ 1720.2–1720.9.)

Plaintiffs’ operation of milling machines at the job site clearly constitutes "public work" under section 1720(a)(1) because it involved "[c]onstruction, alteration, demolition, installation, or repair work," and all the labor engaged in here was "done under contract and paid for in whole or in part out of public funds ...." But here we are concerned with mobilization, not onsite machine operation. Plaintiffs do not argue that mobilization...