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Two prevailing wage cases decided

Two rulings, one by a local Superior Court judge and another by an appellate panel, stand to have a significant effect on prevailing wage law in the county and throughout California.

San Diego Superior Court Judge Joel Wohlfeil issued a tentative ruling supporting Senate Bill 7, which would require cities to pay prevailing wages on public works projects. The bill is expected to become law Jan. 1.

After the California Legislature passed SB 7 last year, a group of cities including Carlsbad, El Cajon, Oceanside, Vista, Fresno and El Centro filed a lawsuit in Superior Court challenging the prevailing wage requirement. The case is known as the City of El Centro v. (California Labor Secretary) David Lanier.

Christine Baker, state director of industrial relations, and Julie Su, state labor commissioner, are also defendants.

Wohlfeil wrote that while he sympathized with the cities' position, there were insufficient legal grounds to overturn the law.

"Courts do not look to the Constitution to determine whether the Legislature is authorized to do an act, but only to see if it is prohibited," the judge wrote. "If there is any doubt as to the Legislature's power to act in any given case, the doubt should be resolved in favor of the Legislature's action."

The cities were represented by James Lough, Alena Shamos and Kenneth Lounsbery of Lounsbery Ferguson Altona & Peak LLP.

The defendants were represented by Ross Moody of the San Francisco attorney general's office and Scott Kronland of the San Francisco law firm Altshuler Berzon LLP.

Although the city of Vista was a party to the lawsuit, it has been exempted from the prevailing wage law as a result of a complex legal battle. In the case of AFL-CIO v. Vista, when Vista decided that prevailing wage wasn't required on city construction contracts earlier in the decade, the unions filed a lawsuit in Superior Court to require those wages.

Ultimately, Vista won that battle at the state Supreme Court.

"The court found that so far as 'municipal affairs' are concerned, charter cities are supreme and beyond the reach of legislative enactment,” the ruling stated. "Thus, Vista need not comply with the prevailing wage law because the law invades Vista's constitutionally guaranteed autonomy as a charter city."

Officials from Carlsbad's city attorney's office and Lough declined comment pending a final ruling on the matter. Calls to the Carlsbad and Oceanside city attorneys were not returned.

In the case of Oceanside, which has voted to ban project labor agreements, the state has successfully argued that while PLAs are not required, they must be considered.

Jim Ryan, CEO of the San Diego Chapter of the Associated General Contractors, said forcing prevailing wages on these cities is tantamount to opening Pandora's box.

"In general, we don't agree that the state ought to be able to hold public agencies hostage for any reason...," Ryan said. "What if it is determined a city doesn't have enough hybrids? Don't they get their state funding? Where does it stop?"

Ryan said he expects the cities will be appealing the ruling on SB 7.

Dale Howard, a spokesman for Smart Cities Prevail — an organization that works to ensure municipalities across the state pay prevailing wage — isn't a direct party to the lawsuit, said the news was encouraging.

"Today a small group of California cities appear to have lost their bid to undermine our recovery and export more of California's hard-earned tax dollars to fly-by-night contractors from out of state. Judge Wohlfeil's tentative ruling is a victory for bipartisanship, our economy and California taxpayers," Howard said in a statement.

"With this tentative ruling, it appears that this law — already passed by wide margins and signed by Gov. (Jerry) Brown — is on its way to being affirmed by the courts. We are encouraged by what this ruling and full implementation of the law would mean for the future of California's middle class."

In the other case, the San Francisco-based chapter of the Sheet Metal Workers International Association Local 104 v. Russ Mill Mechanical Inc., the business successfully appealed a decision requiring prevailing wage to be paid in cases where materials were fabricated offsite.

Ryan said he is much happier about the Russ Mill Mechanical case.

The question presented by that appeal was whether the prevailing wage law applies to an employee of a subcontractor who fabricates materials for a public works project at a permanent, offsite manufacturing facility not exclusively dedicated to the project.

"We conclude that California law does not require the prevailing wage to be paid to the employee in this circumstance," the appellate court wrote.

Ryan said that while his industry will be licking its wounds over the SB 7 case for a while, he is celebrating a hard-fought victory in the sheet-metal case.

"This has bounced back and forth through the courts," Ryan said, emphasizing that in this case, even components that were made out of state and theoretically out of the country could have been subject to prevailing wage requirements.

"It would have been a mess," Ryan said.

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