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Eastwind Inc., et al., v. State, Department of Labor (12/26/97), 951 P 2d 844
<![CDATA[
NOTICE: This opinion is subject to correction before
publication in the Pacific Reporter. Readers are
requested to bring errors to the attention of the Clerk
of the Appellate Courts, 303 K Street, Anchorage,
Alaska 99501, phone (907) 264-0608, fax (907) 264-
0878.
THE SUPREME COURT OF THE STATE OF ALASKA
EASTWIND, INC., an Alaskan )
corporation; M-B CONTRACTING, ) Supreme Court No. S-6914
CO., INC., a foreign corpora- )
tion; WILDER CONSTRUCTION CO.,) Superior Court No.
INC., a foreign corporation; ) 3AN-94-2909 CI
H & H CONTRACTORS, INC., an )
Alaskan corporation; and )
QUALITY ASPHALT PAVING, INC., ) O P I N I O N
an Alaskan corporation, )
)
Appellants, ) [No. 4927 - December 26, 1997]
)
v. )
)
STATE OF ALASKA, DEPARTMENT )
OF LABOR, WAGE AND HOUR )
ADMINISTRATION, )
)
Appellee. )
______________________________)
Appeal from the Superior Court of the State
of Alaska, Third Judicial District,
Anchorage,
Peter A. Michalski, Judge.
Appearances: Mary L. Pate, Eide & Miller,
Anchorage, for Appellants. Toby N.
Steinberger, Assistant Attorney General,
Anchorage, and Bruce M. Botelho, Attorney
General, Juneau, for Appellee.
Before: Compton, Chief Justice, Rabinowitz,
Matthews, Eastaugh, and Fabe, Justices.
RABINOWITZ, Justice.
I. INTRODUCTION
At issue in this appeal is whether the new wage rate
determination provisions of the 1993 amendments to AS 36.05.010
apply to public construction contracts bid on prior to the
effective date of the amendments. We hold that they do not.
II. FACTS AND PROCEEDINGS
Effective September 22, 1993, the legislature amended
AS 36.05.010, the Little Davis-Bacon Act (Act).1 Prior to
amendment the Act required that all contractors with public works
contracts pay their employees no less than the prevailing wage
rate for work of a similar nature in the relevant locale. Alaska
Statute 36.05.010 specifically directed contractors to adjust
their wage rates every time that the Department of Labor (DOL)
issued new prevailing wages.2 Thus, by contract, a public works
contractor agreed to immediately adjust employee wages for the
subsequent pay period after each DOL issuance of new prevailing
wage rates.3
In 1993, the legislature amended AS 36.05.010 and AS
36.05.070. Under the system established by the 1993 amendments,
which became effective September 22, 1993, minimum wages are
fixed at the prevailing wage rates in effect ten days prior to
the final date for submission of bids on the public contract.
These wage rates remain constant for twenty-four months or the
life of the contract, whichever is shorter.4 Thus, wages are
frozen for the first twenty-four months of the contract and the
contractor will only have to adjust pay rates when performance of
the contract will take longer than twenty-four months. On
September 1, 1993, DOL issued an Interpretive Bulletin which
concluded that the 1993 amendments applied only to public
contracts with a final bid date after September 22, 1993.
Eastwind, Inc., and the other party corporations are
public works contractors who have contracts with bid dates prior
to September 22, 1993. Work on their contracts continued after
the effective date of the 1993 amendments. The contractors filed
a declaratory judgment action, asserting that the amendments in
question should apply to their pre-existing contracts and seeking
an invalidation of the DOL's Interpretive Bulletin. Both sides
subsequently moved for summary judgment.
The superior court granted the State's motion for
summary judgment. The court held that applying the 1993
amendments to pre-existing contracts would "amount to making the
statute retroactive,"which the legislature did not expressly
intend. The State subsequently moved for attorney's fees and was
awarded $1,485.04 pursuant to Civil Rule 82. The contractors now
bring this appeal.
III. DISCUSSION
A. Are the Amendments to AS 36.05.010 Applicable to
Contracts with a Bid Date Prior to Enactment?
We start from the undisputed proposition that all
statutes are presumptively non-retroactive. Alaska Statute
01.10.090 provides: "Retrospective statutes. No statute is
retrospective unless expressly declared therein." Though the
amendments to the Act were made effective September 22, 1993, the
contractors contend that the legislature intended to include all
pay periods following enactment, regardless of the bid date of
the contract. Moreover, the contractors assert that this inter
pretation of the amendments does not constitute a retroactive
application.
1. Legislative history5
The contractors argue that legislative intent to
include pre-enactment contracts in the scope of the amendments is
evidenced by several sources. They observe that Representative
Gail Phillips, the amendments' sponsor, stated that under the
amended version of the Act, the DOL wage rate would "no longer
apply immediately to contracts in progress."
Representative Phillips' full statement on this subject
is as follows:
Current law provides that a construction
contractor or subcontractor who performs work
on public construction in the state shall pay
not less than the current prevailing wage for
work of a similar nature. However, an
increase in the prevailing wage in the middle
of a contract creates a financial hardship on
the contractor; and anticipation of interim
increases may also serve to inflate the cost
of construction projects, because the
contractor or subcontractor must absorb the
costs . . . .
The bill before you proposes to address these
concerns.
Sponsor Substitute for House Bill 126 was
introduced to amend AS 36.05.010 so that the
prevailing wage as determined by the
Department of Labor will no longer apply
immediately to contracts in progress. The
wage in effect at least 10 days before final
bid submission will remain in effect for 24
months from the date the contract is awarded
. . . .
Representatives from Unions, Alaska General
Contractors and the Department of Labor
worked together to find appropriate language
to be introduced, and it is my understanding
that the bill now meets with the approval of
each.
The contractors conclude that the term "in progress"must refer
to all contracts already in place at the time of enactment. We
disagree. The more plausible interpretation of this phrase is
that it is used merely to refer to contracts which are being
performed when DOL issues a new determination of prevailing wage
rates. Thus in the quoted statement the phrase "contracts in
progress" is another way of referring to, as Representative
Phillips put it, "an increase in the prevailing wage in the
middle of a contract." The phrase is nowhere keyed to the date a
particular contract might have been let.
The contractors' reliance on similar statements by
legislators and DOL is also misplaced. These pronouncements
indicate only that the amendments were intended to relieve
contractors of the burden of continually adjusting wages during
the term of the contract. While the statements may be generally
indicative of legislative motivation for amending the Act, they
fail to establish that the amendments were meant to apply to
contracts with a bid date prior to September 1993.
We conclude that the contractors have not shown that
the legislature specifically intended for the 1993 amendments to
apply to pre-enactment contracts. We note that in the past this
court has strictly applied the requirements of AS 01.10.090 when
determining whether a statute is meant to be applied
retroactively. For instance, in State, Alcoholic Beverage
Control Bd. v. Odom Corp., 671 P.2d 375, 377 (Alaska 1983), we
stated:
AS 01.10.090 provides that no Alaskan
statute can be applied retrospectively
"unless expressly declared therein." This
statute has been applied strictly. . . .
. . . .
It would have been simple for the
legislature to have included in the amendment
a statement that the new rates would apply to
revenues collected in the 1980 calendar year.
No such statement was made. Therefore, the
new fees schedule cannot be applied to
revenues collected prior to the effective
date of AS 04.10.340.
(Citations omitted.) See also Hansen v. Stroecker, 699 P.2d 871
(Alaska 1985) (holding that a statute adopting "wait and see"
approach to measurement of period in rule against perpetuities
could not be retrospectively applied, since statute did not
clearly provide for its application); State, Dep't of Revenue v.
Alaska Pulp America, Inc., 674 P.2d 268, 272 (Alaska 1983)
("Absent clear language indicating legislative intent to the
contrary, a law is presumed to operate prospectively only.").
Finally, we note that not only did the legislature fail
to include a provision specifically regarding retroactivity, it
also declined to provide for an immediate effective date.6 This
provides further support for the proposition that the 1993
amendments were intended to have prospective application only.7
See, e.g., Schultz Constr., Inc. v. Ross, 76 A.D.2d 151, 154
(N.Y. App. Div. 1980), aff'd, 422 N.E.2d 579 (N.Y. 1981)
(concluding that an effective date 60 days after an amendment was
enacted suggests an intention to apply it prospectively); Deutsch
v. Catherwood, 294 N.E.2d 193, 194 (N.Y. 1973) ("The postponement
of the effective date of each amendment furnishes critical and
clear indicia of intent. If the amendments were to have
retroactive effect, there would have been no need for any
postponement."). See also 2 Norman J. Singer, Sutherland
Statutory Construction 41.04 (5th ed. 1991) ("Postponement of
the effective date for an act indicates that it should have only
prospective application.").
Because clear legislative intent indicating that the
amendments are to be applied to pre-existing public contracts is
lacking, we conclude that the amended version of the Act must be
interpreted to apply non-retroactively.
2. Retroactive application8
This court has previously held that a statute will be
considered retroactive insofar as it "gives to pre-enactment
conduct a different legal effect from that which it would have
had without the passage of the statute." Norton v. Alcoholic
Beverage Control Bd., 695 P.2d 1090, 1093 (Alaska 1985) (citing
Hochman, The Supreme Court and the Constitutionality of
Retroactive Legislation, 73 Harv. L. Rev. 692 (1960)). In the
instant case, we must determine whether the contractors'
interpretation of the 1993 amendments would give different legal
effect to pre-enactment conduct.
The superior court answered this in the affirmative,
concluding that applying the amendments to contracts bid on prior
to September 22, 1993, would indeed constitute a retroactive
interpretation of the statute. It stated:
The contracts at issue were executed before
the amendments were passed. The Contractors
bid on those contracts under the old law.
Thus, their bids took into account the
possibility of wage changes. Applying the
amendments to these pre-existing contracts
would give pre-enactment conduct a different
legal effect from that which it would have
had without passage of the statute.
The contractors dispute the superior court's
determination of the conduct relevant for purposes of assessing
retroactivity. They argue that interpreting the amended Act to
govern all active contracts and wages paid after September 1993
would constitute a prospective application of the statute, since
this interpretation would affect only payrolls issued after the
effective date of the amendments.9
The State asserts that since this interpretation would
alter the contractors' rights and duties under an existing
contract executed prior to the effective date of the amendments,
it constitutes a retroactive application. The essence of the
State's argument is as follows:
If the 1993 amendments were to be
applied as the Contractors contend, the
Contractors' pre-enactment conduct would be
given a different legal effect from that
which it would have had without the passage
of the statute. . . . There is no dispute
that the Contractors relied on the law in
effect at the time when they bid on public
construction contracts that pre-date the
September 1993 amendments. But for the
amendments, the Contractors would have to pay
workers according to the terms of the public
construction contracts, which included the
requirement to change the pay rates if the
Department issued a new Pamphlet.*
__________
* A retroactive application would give the
Contractors a "non-bargained for" unexpected
windfall because the state and political
subdivisions would still be liable for the
full price of the public construction
contract which included an assumption that
higher wages may have to be paid throughout
the life of the contract. . . .
(Citation omitted, emphasis in original.)
The question of which conduct is relevant for
retroactivity purposes is complicated by the fact that almost any
statute or regulation that affects the business environment in
some respect -- for instance minimum wage laws, building codes,
and zoning ordinances -- will alter the legal significance of the
terms of certain contracts executed prior to enactment. Thus,
the fact that interpreting amended AS 36.05.010 to apply to pre-
enactment contracts alters the legal significance of certain
contract terms does not alone establish that such an
interpretation would constitute a retroactive application.10
Nonetheless, we conclude that in this case the relevant
conduct for purposes of assessing retroactivity is the act of
contracting. Other courts have reached a similar conclusion
regarding the relevant conduct for purposes of retroactivity
analysis. In Schultz Construction, 76 A.D.2d at 151, the court
held that an amendment to the prevailing wage determination
statute did not apply retroactively to pre-existing public works
contracts. Addressing the issue of whether new procedural
requirements applied to contracts executed prior to the
amendments, the court's reasoning is instructive insofar as it
regards the date of contracting as relevant for purposes of
assessing retroactivity. The court stated:
In the absence of a clear expression of
intent, the amendment and its background are
such as to imply prospective application only
to contracts entered into on or after its
effective date.
Id. at 154.
In Deutsch v. Catherwood, 294 N.E.2d at 195, the court
concluded that amendments to the Labor Law could not apply
retroactively to public works contracts executed prior to the
effective date of the amendments. After determining that the
legislature did not intend the statute to have retroactive
application, the court held that the new wage requirements could
therefore not be imposed on pre-existing contracts. It
concluded:
To reach a contrary result in this case would
serve to impose new conditions upon and
impair the obligations of a contract already
existing, under which the parties had fully
entered into the performance of their
work. . . .
Id. See also Roto-Rooter Services Co. v. Department of Labor,
593 A.2d 1386, 1389 n.5 (Conn. 1991) ("Because the amendment
. . . affects the substantive obligation of employers to pay
overtime compensation, and in view of the absence of a clearly
expressed legislative intent that the amendment shall apply
retrospectively, we agree with the trial court that the amendment
is not subject to retrospective application."); F.G. Compagni
Constr. Co. v. Ross, 79 A.D.2d 831 (N.Y. App. Div. 1980) (holding
that amendments to a labor law governing wages paid in
performance of public works contracts did not apply to contracts
executed prior to the effective date of the amendments).
In reaching the conclusion that the relevant conduct
for purposes of assessing retroactivity is the act of
contracting, we note that the former version of AS 36.05.070(a)
required that all public construction contracts "contain a
provision stating the minimum wages to be paid . . . and that the
rate of wages shall be adjusted to the wage rate for each period
applicable under AS 36.05.010." As a consequence, the pre-1993
scheme was incorporated into every public contract that was
executed.11 Therefore, applying the amendments to AS 36.05.010 to
these pre-existing contracts would effectively modify the meaning
of the contracts as executed and, as such, give pre-enactment
conduct a different legal significance. We decline to interpret
the statute in this manner.
We have previously observed that "[t]he reason for the
statutory presumption against retrospective legislation is that
people in conducting their business should be able to rely on
existing laws with reasonable certainty." Norton, 695 P.2d at
1093. Since application of this statute to pre-enactment
contracts would impair this interest insofar as it would alter
the practical significance of existing contractual terms, the
policy behind this statutory presumption would be subverted.
If, on the other hand, these contract provisions were
read merely as agreements to abide by the relevant wage
determination laws, whatever they may be, we might reach a
different result. Under this framework, each pay period would be
evaluated under whatever system was in force at the time the pay
period commenced. This is the argument advanced by the
contractors when they assert that "[s]ince the amendments would
not apply to payrolls issued prior to September 22, 1993, but
only to those arising after the effective date, the application
would not be retroactive, but prospective only."12
Had the pre-1993 wage determination scheme not been
explicitly incorporated into the contracts in question, the
contractors' argument that the amendments apply to all payrolls
issued after September 1993 would be stronger. However, since
the relevant contracts at issue specifically provide for the
immediate application of new prevailing wages, we conclude that
the act of contracting is itself sufficient to constitute the
relevant pre-enactment conduct for purposes of retroactivity
analysis.13
In short, since application of the 1993 amendments to
pre-existing contracts would give a different legal effect to
significant pre-enactment conduct -- namely, the agreement to
specific contractual terms governing wage determinations -- we
reject the contractors' interpretation of the 1993 amendments as
inconsistent with the statutory presumption against
retroactivity. We thus conclude that the superior court correctly
held that the amendments apply only to public construction
contracts with bid dates after September 22, 1993.14
B. Are the Contractors Public Interest Litigants?15
The contractors claim that the superior court's award
of attorney's fees award was improper because the contractors
qualify as public interest litigants.16 We have previously
formulated a four-part test for identifying public interest
litigation for purposes of attorney's fee awards:
(1) whether the case is designed to
effectuate strong public policies; (2)
whether, if the plaintiff succeeds, numerous
people will benefit from the lawsuit; (3)
whether only a private party could be
expected to bring the suit; and (4) whether
the litigant claiming public interest status
would lack sufficient economic incentive to
bring the lawsuit if it did not involve
issues of general importance.
Oceanview Homeowners Ass'n v. Quadrant Constr. and Engineering,
680 P.2d 793, 799 (Alaska 1984) (citing Kenai Lumber Co. v.
LeResche, 646 P.2d 215 (Alaska 1982)).
Based on these criteria, we conclude that the superior
court did not err in awarding attorney's fees to the State. We
note that although all of the contractors, except Eastwind, Inc.,
have now paid wages according to the pre-amendment Act, each had
a financial interest in the case at the time they filed the
declaratory action. See DeNardo v. State, 887 P.2d 947 (Alaska
1994). Thus, the contractors had a substantial economic
incentive to bring this suit; had their litigation been
successful, the minimum authorized wage presumably would have
been frozen at the September 1993 rate and the contractors
potentially allowed to reduce the wages of employees governed by
pre-enactment contracts.
The contractors' argument that "enforcing proper
statutory interpretation"is a strong public policy does not
alter this conclusion. See Kenai Lumber Co., 646 P.2d at 223.
Were we to hold otherwise, every party advancing a statutory
interpretation argument would automatically qualify as a public
interest litigant. The purpose of the exception would be ill
served by adoption of the contractor's rationale.17
We thus conclude that the superior court did not
abuse its discretion in determining that the contractors fail to
qualify as public interest litigants and awarding the State
attorney's fees pursuant to Civil Rule 82.
IV. CONCLUSION
We AFFIRM the superior court's order granting summary
judgment to the State and awarding attorney's fees against the
contractors.
_______________________________
1 In City and Borough of Sitka v. Construction and
General Laborers Local 942, 644 P.2d 227, 232-33 n.11 (Alaska
1982), we noted that
[c]ourts construing federal Davis-Bacon
recognize the paternalistic design of the
Act: "The language of the Act and its
legislative history plainly show that it was
not enacted to benefit contractors, but
rather to protect their employees from
substandard earnings by fixing a floor under
wages on Government projects." U.S. v.
Binghamton Cons. Co., 347 U.S. 171, 177, 74
S.Ct. 438, 441, 98 L.Ed. 594, 599 (1953).
See Walsh v. Schlecht, 429 U.S. 401, 411, 97
S.Ct. 679, 686, 50 L.Ed. 2d 641, 650 (1977).
2 Prior to the 1993 amendments, AS 36.05.010 read:
Wage rates on public construction. A
contractor or subcontractor who performs work
on public construction in the state, as
defined by AS 36.95.010, shall pay not less
than the current prevailing rate of wages for
work of a similar nature in the region in
which the work is done. The current
prevailing rate of wages for each pay period
is that contained in the latest determination
of prevailing rate of wages issued by the
Department of Labor before the end of the pay
period.
(Emphasis added.)
3 There is no dispute in this case regarding pre-
amendment interpretation of the Act or that public construction
contracts executed prior to September 1993 were governed by its
terms. See former AS 36.05.070(a) (requiring that all public
construction contracts "contain a provision stating the minimum
wages to be paid . . . and that rate of wages shall be adjusted
to the wage rate for each pay period applicable under AS
36.05.010.").
4 AS 36.05.010 now provides:
Wage rates on public construction. A
contractor or subcontractor who performs work
on public construction in the state, as
defined by AS 36.95.010, shall pay not less
than the current prevailing rate of wages for
work of a similar nature in the region in
which the work is done. The current
prevailing rate of wages is that contained in
the latest determination of prevailing rate
of wages issued by the Department of Labor at
least 10 days before the final date for
submission of bids for the contract. The
rate shall remain in effect for the life of
the contract or for 24 calendar months,
whichever is shorter. At the end of the
initial 24-month period, if new wage
determinations have been issued by the
department, the latest wage determination
shall become effective for the next 24-month
period or until the contract is completed,
whichever occurs first. This process shall
be repeated until the contract is completed.
(Emphasis added.)
5 In reviewing questions of statutory interpretation, we
apply our independent judgment. Foss Alaska Line, Inc. v.
Northland Services, Inc., 724 P.2d 523, 526 (Alaska 1986).
6 The amendments were signed into law on June 24, 1993,
and made effective on September 22, 1993, pursuant to Alaska
Const., art. II, 18 (laws passed by the legislature become
effective 90 days after enactment unless otherwise provided).
7 The Manual of Legislative Drafting, on which Alaska
legislators are to rely, states: "Be sure to include a bill
section that provides expressly for the retroactive application
of the bill or part of the bill. This section should be set out
immediately preceding the effective date section. It is good
drafting practice to provide an immediate effective date" for
sections which are meant to apply retroactively.
8 Whether application of the post-1993 wage determination
scheme to pre-enactment public contracts would amount to a
retroactive application of legislation is a pure question of law
which we review de novo. Langdon v. Champion, 752 P.2d 999, 1001
(Alaska 1988).
9 Under the contractors' interpretation, the conduct
relevant to retroactivity analysis is payroll issuance, as
opposed to contract execution. In other words, the contractors
contend that the 1993 amendments authorize contractors holding
pre-existing contracts to pay wages for the next twenty-four
months according to the pamphlet in effect on September 22, 1993,
the effective date of the amendments.
10 In this vein, the contractors note that "[n]ot every
modification to a contractual promise violates the Contract
Clause." We see no reason to reach this issue, however, since
the State does not assert that an inclusive application of the
1993 amendments would violate the Contract Clause.
11 We have held that whenever a contract is entered into,
it implicitly incorporates all applicable laws in existence at
that time. In Skagway City School Board v. Davis, 543 P.2d 218,
222 (Alaska 1975) we said:
These provisions became a part of the
contract for appellee's employment under the
general rule that applicable laws in
existence at the time of the formulation of
the contract and which the parties are
presumed to know are incorporated into the
contract and become a part of it as though
they had been expressly set out in the
contract.
(Footnote omitted.) See also Dillingham v. CH2M Hill Northwest,
Inc., 873 P.2d 1271, 1276 n.7 (Alaska 1994); Stephan & Sons, Inc.
v. Municipality of Anchorage, 629 P.2d 71, 78 n.19 (Alaska 1981).
See note 2, supra, for the text of former AS 36.05.010.
12 The contractors contend that the prevailing wage in
effect at the time of enactment, as opposed to the prevailing
wage at time of bidding, ought to apply to all contracts which
pre-date enactment. The fact that this approach finds no support
in the language of the statute further indicates the weakness of
the contractors' position.
13 Under Article 6.1 (laws to be observed) of the "1984
Municipality of Anchorage Standard Specifications Streets -
Drainage - Utilities - Parks"it is provided, in relevant part:
The Contract shall be governed by the laws of
the State of Alaska. The Contractor at all
times shall observe and comply with all
Federal, State, and local laws . . . in any
manner affecting the conduct or the work
. . . .
It is further provided:
The Contractor shall comply with the
Provisions of Title 36, Chapter 05 of the
Alaska Statutes requiring the Contractor to
pay not less than the current prevailing rate
for wages.
In regard to the June 1993 Municipality of Anchorage,
Department of Public Works' contract with Eastwind, Inc., for
construction of the Baxter Road Street Improvements Project, it
is stated in Section 90.02 of the Special Provisions section:
This Contract is subject to and hereby
incorporates by reference the "Municipality
of Anchorage Standard Specifications Streets
- Drainage - Utilities - Parks"dated 1984
. . . .
14 Admittedly this holding could lead to the situation
where employees of public works contractors are paid non-uniform
minimum wages. Nevertheless, for the reasons discussed above, we
think it inappropriate to apply the text of the questioned
amendments literally.
15 We review a trial court's determination that a party is
not a public interest litigant for abuse of discretion.
Anchorage Daily News v. Anchorage School Dist., 803 P.2d 402, 404
(Alaska 1990).
16 The "public interest litigant" exception was
established in response to concern that citizens would be
deterred from litigating questions of public importance out of
"fear of incurring the expense of the other party's attorney's
fees." Kenai Lumber Co. v. LeResche, 646 P.2d 215, 222 (Alaska
1982).
17 We think the claim that the general public would save
money on public construction under the interpretation advanced by
the contractors unpersuasive, since there is no evidence to
suggest that cost to the public of pre-enactment contracts is not
already fixed by the former terms of the Act. As the State
persuasively argues, "[I]t is the Contractors, not the State,
[who] would benefit financially if the 1993 amendments apply
retroactively."
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