Associated Builders & Contractors of California Cooperation Committee, Inc. v. Becerra

231 F. Supp. 3d 810, 2017 U.S. Dist. LEXIS 12799
CourtDistrict Court, S.D. California
DecidedJanuary 27, 2017
DocketCase No.: 3:16-cv-02247-BEN-NLS
StatusPublished
Cited by1 cases

This text of 231 F. Supp. 3d 810 (Associated Builders & Contractors of California Cooperation Committee, Inc. v. Becerra) is published on Counsel Stack Legal Research, covering District Court, S.D. California primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Associated Builders & Contractors of California Cooperation Committee, Inc. v. Becerra, 231 F. Supp. 3d 810, 2017 U.S. Dist. LEXIS 12799 (S.D. Cal. 2017).

Opinion

ORDER:

(1)GRANTING DEFENDANT BECERRA’S MOTION TO DISMISS [ECF No. 6];

(2) DENYING PLAINTIFFS’ MOTION FOR PRELIMINARY INJUNCTION [ECF No. 11]; and

(3) GRANTING DEFENDANT SU’S MOTION TO DISMISS AND DEFENDANT BAKER’S MOTION FOR JUDGMENT ON THE PLEADINGS [ECF No. 17]

Hon. Roger T. Benitez, United States District Judge.

This case concerns the constitutionality of California Senate Bill (“SB”) 954, a law that amends part of California’s prevailing wage law. Before passage of the law, both unionized and non-union employers were entitled to the same benefit. However, with the enactment of SB 954, the Legislature of the State of California made a political decision to take away that benefit from non-union employers. Unionized employers retain the benefit. The fight over the constitutionality of SB 954 continues the ongoing fight between unions and open shops in this state.

Unlike the California Legislature, this Court is not a political institution. It does not act politically or personally. It is a court of law bound by prior precedent. As such, upon consideration of the issues and controlling authority, the Court is compelled to grant Defendants’ motions and disrhiss Plaintiffs’ complaint.

BACKGROUND

This case involves California’s prevailing wage law. See Cal. Labor Code §§ 1770 et seq. That law requires contractors on public works construction projects to pay the general prevailing rate of per diem wages for work of a similar character in the locality in which the work is performed. Id. § 1771. The Director of the California Department of Industrial Relations (“California DIR”) determines the general prevailing rate of per diem wages. Under the law, the “general prevailing rate of per diem wages includes ... [t]he basic hourly wage rate ... [and] employer payments,” ie., benefits. Id. § 1773.9. In other words, employers can satisfy the prevailing wage by either paying all cash wages or a mix of cash wages and benefits that add up to the prevailing wage rate. California Labor Code section 1773.1 defines what “employer payments” are included in per diem wages. “Employer payments are a credit [815]*815against the obligation to pay the general prevailing rate of per diem wages.” § 1773.1(c). SB 954 amends the definition of employer payments under section 1773.1.

Under section 1173.1, per diem wages include employer payments for traditional benefits like “health and welfare,” “pension,” and “vacation.” Previously, section 1773.1 also provided that employer payments include:

(8) Industry advancement and collective bargaining agreements administrative fees, provided that these payments are required under a collective bargaining agreement pertaining to the particular craft, classification, or type of work within the locality or the nearest labor market area at issue.
(9) Other purposes similar to those specified in paragraphs (1) to (8), inclusive.

Id. § 1773.1 (citing law before SB 954 became effective).

Thus, an employer making payments to an industry advancement fund could receive prevailing wage credit under § 1773.1(a)(8) if the payment was required under a collective bargaining agreement (“CBA”). An employer making a similar payment to an industry advancement fund, but which was not required by a collective bargaining agreement, could receive prevailing wage credit under § 1773.1(a)(9). This arrangement changed on January 1, 2017.

Plaintiff Associated Builders & Contractors of California Cooperation Committee, Inc. (“ABC-CCC”) is a § 501(c)(6) tax exempt trade association representing the interests of open shop employers in the building and construction industry. (Compl. ¶ 4.) It is recognized by the California DIR as an industry advancement fund. (Id.) It received employer payments that qualified for credit under section 1773.1(a)(9). (Id. ¶ 14.) Plaintiff Interpipe Contracting, Inc. (“Interpipe”) is a California contractor that “has made prevailing wage payments to ABC-CCC on a regular basis in the past, and has received prevailing wage credit under California Labor Code section § 1773.1(a)(9) for those payments.” (Id. ¶ 5.)

Effective January 1, 2017, SB 9541 amends what qualifies as “employer payments” under subsections (8) and (9) as follows:

(8) Industry advancement and collective bargaining agreements administrative fees, provided that these payments are made pursuant to a collective bargaining agreement to which the employer is obligated.
(9) Other purposes similar to those specified in paragraphs (1) to (5), inclusive; or other purposes similar to those specified in paragraphs (6) to (8), inclusive, if the payments are made pursuant to a .collective bargaining agreement to which the employer is obligated.

(SB 954, Compl. Ex. A.) Therefore, according to Plaintiffs, under the new law, employers making payments to industry advancement funds will not receive prevailing wage credit unless the payment is required by a collective bargaining agreement.

Plaintiffs allege that the “loss of employer payment credits under SB 954 will cause Interpipe and other open shop employers to reduce or eliminate their payments to industry advancement funds like ABC-CCC.” (Compl. ¶ 15.) ABC-CCC alleges that it will “suffer severe financial' [816]*816harm in the form of lost revenues as a result of reduced employer payments resulting from the loss of’ the credit, and those lost revenues will force ABC-CCC to “curtail or discontinue its advocacy on behalf of open shop employers.” (Id. ¶ 18.) And Interpipe will be harmed because it “will lose some or all of the industry advocacy and financial assistance previously provided by ABC-CCC.” (Id. ¶ 19.)

Plaintiffs’ complaint seeks declaratory and injunctive relief on three claims for relief: (1) a claim that SB 954 is preempted by the National Labor Relations Act (“NLRA”) under the Supremacy Clause; (2) a claim that SB 954 violates ABC-CCC’s First Amendment speech rights; and (3) a claim that SB 954 violates ABC-CCC’s equal protection rights. (Compl. ¶¶ 22-34.) They have sued Xavier Becerra, in his official capacity as Attorney General of the State of California;2 Christine Baker, in her official capacity as Director of the California DIR; and Julie Su, in her official capacity as California Labor Commissioner. Becerra is represented separately from Baker and Su.

Becerra and Su have moved to dismiss the complaint and Baker has moved for judgment on the pleadings. (Becerra Mot., ECF No. 6; Su & Baker Mot., ECF No. 17.) Plaintiffs have moved for a preliminary injunction to prevent SB 954 from going into effect on January 1, 2017. (Pis. Mot., ECF No. 11.) The Court held a hearing on Becerra’s and Plaintiffs’ motions on December 14, 2016. The Court takes Su and Baker’s motion under submission without oral argument, pursuant to Civil Local Rule 7.1.d.l.

LEGAL STANDARDS

I. Motions to Dismiss and for Judgment on the Pleadings

“[A] complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.” Ashcroft v. Iqbal, 556 U.S. 662, 677-78, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

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Related

Interpipe Contracting, Inc. v. Xavier Becerra
898 F.3d 879 (Ninth Circuit, 2018)

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Bluebook (online)
231 F. Supp. 3d 810, 2017 U.S. Dist. LEXIS 12799, Counsel Stack Legal Research, https://law.counselstack.com/opinion/associated-builders-contractors-of-california-cooperation-committee-inc-casd-2017.