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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Alborn Construction, Inc. v. State of Alaska, Department of Labor & Workforce Development, Labor Standards & Safety Division, and Deborah Kelly, in an official capacity (4/8/2022) sp-7589

Alborn Construction, Inc. v. State of Alaska, Department of Labor & Workforce Development, Labor Standards & Safety Division, and Deborah Kelly, in an official capacity (4/8/2022) sp-7589

           Notice:   This opinion is subject to correction before publication in the P                    ACIFIC  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, email  

                                                                                                                           

           corrections@akcourts.gov.  



                       THE SUPREME COURT OF THE STATE OF ALASKA                                       



ALBORN  CONSTRUCTION,  INC.,                                     )  

                                                                 )    Supreme Court No. S-17905  

                                                                                       

                                                                                                        

                                Appellant,                       )  

                                                                 )    Superior Court No. 3AN-18-09876 CI  

                                                                                                                                 

           v.                                                    )  

                                                                                           

                                                                 )    O P I N I O N  

                     

STATE OF ALASKA,                                                 )  

                                                                                                        

                                                  

DEPARTMENT OF LABOR &                                            )    No. 7589 - April 8, 2022  

                           

WORKFORCE DEVELOPMENT,                                           )  

                                             

LABOR STANDARDS & SAFETY                                         )  

                                                 

DIVISION, and DEBORAH KELLY,                                     )  

                       

in an official capacity,                                         )  

                                                                 )  

                                Appellees.                       )  

                                                                 )  



                                                                                                               

                                            

                      Appeal from the Superior Court of the State of Alaska, Third  

                                                                                                     

                      Judicial District, Anchorage, Peter R. Ramgren, Judge.  



                                                                                                          

                      Appearances:   Herbert A. Viergutz and Kevin D. Fowler,  

                                                                                                         

                      Barokas  &  Martin,  Anchorage,  for  Appellant.                                   Siobhan  

                                                                                                                

                      McIntyre,  Assistant  Attorney  General,  Anchorage,  and  

                                                                                                  

                      Treg R. Taylor, Attorney General, Juneau, for Appellees.  



                                                                                                                

                      Before:         Winfree,  Chief  Justice,  Maassen,  Carney,  and  

                                                                                                 

                      Henderson, Justices.  [Borghesan, Justice, not participating.]  



                                                     

                      WINFREE, Chief Justice.  



I.         INTRODUCTION  



                                                                                                                                 

                      A construction company filed an administrative appeal of a final agency  



                                                                                                                                    

decision that a renovation project on a State-leased office building fell under a wage  


----------------------- Page 2-----------------------

statute    for    public    construction    projects.       During    enforcement    proceedings    an  



administrative law judge (ALJ) found that the project parties had entered into a sham                                                                                                                



contract in an attempt to evade the statute's coverage. The State agency charged with                                                                                                                   



enforcing the wage statute adopted the ALJ's findings verbatim as its final agency                                                                                                               



decision.     The   construction  company   appealed;   acting   as   an   intermediate   court   of  



appeals,   the   superior   court   affirmed  the   final   agency   decision.     The   construction  



company now appeals to us.                                                For the reasons set forth below, we affirm the superior                                                              



court's decision affirming the agency decision.                                              



II.             FACTS AND PROCEEDINGS                



                A.               Facts  



                                 Juneau   I,   LLC   has  leased   a   Juneau   building   to   the   State   since   1984,  



primarily for Department of Transportation and Public Facilities (DOT&PF) offices. In                                                                                                                         



early 2013 Juneau I and the Department of Administration began discussing building                                                                                                             

                                                                                                                                                     1         The   Department   of  

renovations    in    advance    of    renewing    the    State's    lease.                                                                                                                                  



Administration  drafted  a  lease  amendment  detailing  the  State's  requested  building  

                                                                                                                                                                                              



improvements.  In July the Department of Administration and Juneau I executed a lease  

                                                                                                                                                                                                      



amendment,  known  as  Amendment  54,  specifying  building  upgrades,  significantly  

                                                                                                                                                                                    



raising the State's monthly rent upon completing the renovation, and extending the lease  

                                                                                                                                                                                                        



for ten years.  

                                  



                                 Amendment54'supgradesincluded: bringing thecommercialbuildinginto  

                                                                                                                                                                                                           



compliance  with  more  stringent  federal  Americans  with  Disabilities  Act  (ADA)  

                                                                                                                                                                                                



requirementsfor publicbuildings, specified windowcoverings, specifiedfloorcoverings,  

                                                                                                                                                                                           



acoustical partitions calibrated to State-approved sound ratings, State-approved signage,  

                                                                                                                                                                                                



                1  

                                                                                                                                                                        

                                 See  AS  36.30.080-.085  (delineating  Department  of  Administration's  

                                                                                                                        

authority to negotiate, manage, and extend State leases).  



                                                                                                      -2-                                                                                                       7589  


----------------------- Page 3-----------------------

and    mechanical    and    electrical    system    upgrades.       DOT&PF's    tenant    requests,  



incorporated in Amendment 54, included:                                                                  30 new windows meeting specific lighting                                               



requirements,  a   thorough   mold   inspection,   roof   repair,   and   new   restrooms   with  



 State-approved design. The Amendment required that Juneau I certify compliance with                                                                                                                    



the   State's   specifications   and   all   State   laws,   including  the   set   of   statutes   known  

colloquially as the Little Davis-Bacon Act.                                                              2  



                                 The  Act  defines  public  construction3                                                        and  requires  public  construction  

                                                                                                                                                                                    



project contractors to pay prevailing wages set by Department of Labor and Workforce  

                                                                                                                                                                                        

Development,4                           whose   Labor   Standards   and   Safety   Division,   Wage   and   Hour  

                                                                                                                                                                                                   



Administration (WageandHour),determines theAct's application toprojects and invites  

                                                                                                                                                                                                   

contractors to request coverage determinations about applicable wages.5  

                                                                                                                                                             



                                 Juneau I sought a coverage determination, inaccurately representing the  

                                                                                                                                                                                                           



project as merely a routine building upgrade with no specific State requests and asserting  

                                                                                                                                                                                              



                2                AS 36.05.005                       et seq         .;  see  AS 36.05.010 ("A contractor or subcontractor                                         



who performs work on a public construction contract in the state shall pay not less than                                                                                                                

the   current   prevailing   rate   of   wages   .   .   .   .   [determined]   by   the   Department  of  

Labor . . . .").                   



                3                AS 36.95.010(3).  

                                          



                4                AS 36.05.010; City & Borough of Sitka v. Constr. & Gen. Laborers Loc.  

                                                                                                                                         

942 (City of Sitka), 644 P.2d 227, 231-32 (Alaska 1982) (explaining Act's history and  

                                                                                                                                                                                                          

establishing interpretive guidelines).  

                                                             



                5                See AS 23.10.080 (setting out Division's authority).   "Wage and Hour  

                                                                                                                                                                                                      

enforces and administers Alaska labor laws . . . . includ[ing] enforcement of . . . public  

                                                                                                                                                                                                 

contract laws . . . ." DEP 'T OF                                     LAB.&W                 ORKFORCE  DEV. https://labor.alaska.gov/lss/ (last                                                           

                                               

visited Feb. 25, 2022).                                     "For questions regarding prevailing wage . . . requirements,                                                    

please contact the nearest Wage and Hour office."                                                                        Laborers' and Mechanics' Minimum                                   

                                                                                           EP 'T OF            LAB. & W                  ORKFORCE   DEV. at i (Sept. 1,                                       

Rates of Pay:                       Pamphlet No. 600                               , D 

2021), https://labor.alaska.gov/lss/forms/Pamphlet_600_Issue_43.pdf.   



                                                                                                      -3-                                                                                             7589
  


----------------------- Page 4-----------------------

                                                                                                                           

that  it  did  not  believe  the renovations  were  covered  by  the  Act.                               Wage  and  Hour  



                                                                                                                         

determined the project was not covered by the Act based on this information but warned  



                                                                                                              

that its determination was subject to change based on new information.  



                                                                                                            

                    New  information  soon  appeared;  the  Department  of  Administration  



                                                                                                                               

provided Wage and Hour a copy of Amendment 54.  Wage and Hour then notified the  



                                                                                                                        

parties that it considered the entire renovation project to be covered by the Act because  



                                                                                                                                     

the lease extension and rent increase were contingent on the building improvements.  



                                                                                                                                

Wage and Hour again included the caveat that its determination could change based on  



                            

new information.  



                                                                                                                               

                    Wage  and  Hour's  coverage  determination  caused  Juneau  I  to  halt  the  



                                                                                                                               

project. Discussions ensued among counsel for the Department of Labor, DOT&PF, the  



                                                                                                                

Department of Administration, and Juneau I; in April 2014 Wage and Hour subsequently  



                                                                                                                             

issued  a  new  coverage  determination  we  refer  to  as  the  Bifurcation  Letter.                                        The  



                                                                                                                      

Bifurcation Letter proposed an "unorthodox" solution to "compromise" on coverage  



                                                                                                                    

questions under the Act and get the project moving.  Construction would be bifurcated  



                                                                                                                                

into the State-required projects covered by the Act and general upgrades not covered by  



                                                                                                                           

the Act.   Wage and Hour determined that seven items fell under the Act:   (1) ADA  



                                                                                                                      

compliancefor publicentities;(2)remodelingafter Stateoccupancy; (3) adding windows  



                                                                                                                            

tocomply withState-specified lighting requirements;(4) renovatingofficewallstoState- 



                                                                                                                           

specified requests; (5) replacing flooring with State-specified colors and with State- 



                                                                                                                           

approvedmaterials;(6) painting interior spaceswithState-specifiedcolors;and (7) State- 



                                                                                                                         

specified lighting fixture upgrades.  Wage and Hour expressly stated that "the overall  



                                                                                                                        

construction project as contemplated could be covered" by the Act, and again warned  



                                                                                                                           

that this determination, like its previous ones, was based on "the information at hand"  



                                                                                                                             

and "may not be supportable if the circumstances . . . change."  Wage and Hour also  



                                                                                                

urged project participants and their contractors to seek private counsel.  



                                                               -4-                                                         7589
  


----------------------- Page 5-----------------------

                                               The Department of Administration and Juneau I then signed a new lease                                                                                                                                                                          



amendment, Amendment 55, omitting the items the Bifurcation Letter listed as "public                                                                                                                                                                                                   



construction" covered by the Act.                                                                                         But Juneau I confirmed in a letter (the Companion                                                                                            



Letter) to the Department of Administration that the omitted items would be completed,                                                                                                                                                                                    



for   free,   on   Juneau   I's   own  initiative.     Despite   Amendment   55   excluding   seven  



construction items, the rent increase remained the same as in Amendment 54.                                                                                                                                                                                           



                                               Near the end of 2014 Juneau I and Alborn Construction, Inc. executed a                                                                                                                                                                                       



roughly $5.5 million construction contract; a clause gave Alborn the right to increased                                                                                                                                                                                        



payment if the Act applied to the project.                                                                                                            By early 2016 renovations were complete.                                                                                                                      



The Department of Administration                                                                                                 completed its inspection, and                                                                                 Juneau   I certified   



compliance with State requirements.                                             



                                               Wage and Hour began investigating Alborn's failure to pay Act wages                                                                                                                                                                        

                                                                                                           6   Wage and Hour requested Alborn's payroll records and  

while the project was ongoing.                                                                                                                                                                                                                                                                      



subcontractor  contracts.                                                                     Although  untimely,  Alborn  eventually  complied  with  the  

                                                                                                                                                                                                                                                                                                    

requests.  Wage and Hour completed its investigation and issued a Notice of Findings,7  

                                                                                                                                                                                                                                                                             



explaining that because Alborn had refused to cooperate and had refused to pay Act  

                                                                                                                                                                                                                                                                                                   



wages on any part of the construction project, including the parts the Bifurcation Letter  

                                                                                                                                                                                                                                                                                           



listed as covered under the Act, Wage and Hour was prepared to treat the entire project  

                                                                                                                                                                                                                                                                                        



                        6                      See   AS   36.05.030(a)(1)   (granting   Department   of   Labor   authority   to  



investigate   public   construction   contract   violations);   8   Alaska   Administrative   Code  

(AAC) 30.090(a) (providing Division "will investigate potential violations of AS 36                                                                                                                                                                                                                    

(Public Contracts), on its own motion or on the complaint of any person").                                                                                                                                                            



                        7                      See  8  AAC  30.090(b)  (directing  investigator  to  explain  alleged  Act  

                                                                                                                                                                                                                                                                                                  

violation).  



                                                                                                                                                    -5-                                                                                                                                         7589
  


----------------------- Page 6-----------------------

 as covered by the Act.  Wage and Hour requested a meeting to negotiate a resolution,                                                                          8  



                                                                                                                                                     

but Alborn did not meet with Wage and Hour.  Wage and Hour then referred the matter  



                                                                                                                                                   9  

                                                                                                                                                        

                                                                                                                                           

to the Office of Administrative Hearings for resolution by an independent ALJ. 



             B.          Administrative Proceedings  

                                                         



                         In the administrative proceeding the facts were generally undisputed; the  

                                                                                                                                                           



Act's prevailing wage coverage was the only issue and both parties requested summary  

                                                                                                                                                

 adjudication, the equivalent of summary judgment in a civil proceeding.10                                                                    Summary  

                                                                                                                                              



judgment is appropriate when "there is no genuine issue as to any material fact and . . .  

                                                                                                                                                               

 [the moving] party is entitled to a judgment as a matter of law."11                                                           The ALJ issued a  

                                                                                                                                                               



 summary adjudication decision, applying a five-factor test explained in Western Alaska  

                                                                                                                                                     



Building &Construction Trades Council v. Inn-Vestment Associates of Alaska (Western  

                                                                                                                                                 

Alaska) and determining that the Act covered the entire construction project.12  

                                                                                                                                 



             8           See   8 AAC 30.090(c) (requiring attempt to resolve enforcement issues                                                      



through informal conference).     



             9           See generally  8 AAC 30.090-100 (governing formal hearing procedure  

                                                                                                                                              

 following failure to resolve at informal conference); AS 44.64.060(e)(1) (authorizing  

                                                                                                           

 adoption of proposed decision as final agency decision).  

                                                                                       



             10          See Schikora v. State, Dep't of Revenue, 7 P.3d 938, 941-42, 946 (Alaska  

                                                                                                                                                   

2000) (treating summary adjudication and summary judgment interchangeably).  

                                                                                                                     



             11          Alaska R. Civ. P. 56(c) (setting out summary judgment standard); see, e.g.,  

                                                                                                                                                          

In re N. Star 1300, LLC, OAH No. 19-1092-CON at *3 (Dec. 18, 2020) ("Summary  

                                                                                                                                           

 adjudication in an administrative proceeding is the equivalent of summary judgment in  

                                                                                                                                                             

 a court proceeding.   It is a means of resolving disputes without a hearing when the  

                                                                                                                                                           

 central underlying facts are not in contention, but only the legal implications of those  

                                                                                                                                                       

 facts.").  



             12          909  P.2d  330,  333-34  (Alaska  1996)  (outlining  five-factor  test  for  

                                                                                                                                                          

 determining whether project is "public construction" under Act).  

                                                                                                                



                                                                              -6-                                                                      7589
  


----------------------- Page 7-----------------------

                                          The   ALJ   concluded   that   Amendment   55   was   an   invalid   attempt   to  



circumvent the Act's purpose and goals.                                                                                          The Companion Letter and Amendment 55's                                                                                          



facially fewer renovations with the same higher lease rate were important considerations                                                                                                                                          



leading   the   ALJ   to   characterize   Amendment   55   as   a   "sham"   contract.     The   ALJ  



concluded that Amendment 54 controlled for purposes of the Act's coverage analysis.                                                                                                                                                                                               



The ALJ rejected Alborn's argument that the Bifurcation Letter's listing of covered and                                                                                                                                                                             



non-covered items should estop Wage and Hour from arguing that the Act covered the                                                                                                                                                                                    



entire project.                                



                                          The ALJ partially granted a subsequent motion for reconsideration after                                                                                            



allowing Alborn to submit additional briefing.                                                                                                            The ALJ then clarified parts of the                                                                        



decision without changing the conclusions. The parties stipulated that if the Act applied,                                                                                                                                                            



Alborn owed $586,316.41 in unpaid wages.                                                                                                         The Department of Labor adopted the                                                                                 



                                                                                                                                                                                                                13  

ALJ's reconsidered decision verbatim as its final agency decision.                                                                                                                                                      



                     C.                   Superior Court Proceedings  

                                                                                               



                                          AlbornappealedtheDepartment ofLabor's agency decisionto thesuperior  

                                                                                                                                                                                                                                                      

court,14 arguing that the ALJ: had no jurisdiction to assess Amendment 55's validity and  

                                                                                                                                                                                                                                                                    



erroneously concluded therenovations werea"publicconstruction"project; erroneously  

                                                                                                                                                                                                                                           



rejected Alborn's estoppel defense; denied due process by not giving Alborn adequate  

                                                                                                                                                                                                                                                   



notice that Amendment 55's validity  was in question; and inappropriately issued a  

                                                                                                                                                                                                                                                                          



summary adjudication.  

                                                                          



                     13                   See  AS44.64.060(e)(1) (authorizingadoptionofproposed                                                                                                                               decision as final   



agency decision).   



                     14                   See AS 22.10.020(d) (granting superior court appellate jurisdiction over  

                                                                                                                                                                                                                                                                 

final administrative decisions); Alaska R. App. P. 602(a)(2)  (allowing appeal from  

                                                                                                                                                                                                                                                               

administrative decision to superior court within 30 days).  

                                                                                                                                                                 



                                                                                                                                   -7-                                                                                                                          7589
  


----------------------- Page 8-----------------------

                                                                                                                                 

                    The superior court reviewed the ALJ's Act coverage analysis, including its  



                                                                                                                                

grant of summary adjudication, under a reasonable basis standard.  The court found no  



                                                                                                                               

genuine dispute of material fact precluding summary adjudication and considered the  



                                                                                                                             

ALJ's  Western Alaska and other analysis thorough and reasonable.   The court also  



                                                                                                              

applied reasonable basis review in affirming the ALJ's sham contract determination,  



                                                                                                               

reasoning that the analysis fell within the Department of Labor's area of expertise.  



                                                                                                                             

                    The  superior  court  reviewed  Alborn's  estoppel,   due   process,   and  



                                                                                                                       

jurisdiction  claims  under  a  substitution  of  judgment  standard.                                The  court  rejected  



                                                                                                                                 

Alborn's estoppel defense, concluding that the Department of Labor was permitted to  



                                                                                                                      

bring an enforcement action despite the Bifurcation Letter.  The court rejected Alborn's  



                                                                                                                             

due  process  claim,  noting  that  Alborn  had  "repeatedly  litigated"  Amendment  55's  



                                                                                                                       

validity before the ALJ.  The court concluded that the ALJ had authority to consider  



                                                                                                                              

Amendment 55's validity because determining whether the construction project fell  



                                                                                                                                

under the Act's coverage was within the Department of Labor's statutory mandate.  



                                                                                                                                

                    The superior court affirmed the Department of Labor's agency decision on  



                 

all points.  



                                     

          D.        Alborn's Appeal  



                                                                                                                      

                    Alborn  appeals  the  superior  court's  decision  to  us,  and  we  construe  



                                                                                                                              

Alborn's appeal points as follows:  (1) the ALJ's summary adjudication decision was  



                                                                                                                 

inappropriate because material facts were in dispute; (2) the ALJ erred by determining  



                                                                                                                             

that Amendment 55 was a sham and that the entire project was covered by the Act;  



                                                                                                                          

(3) the ALJ erred by rejecting Alborn's argument that the Department of Labor should  



                                                                                                                  

have been estopped from enforcing the Act; and (4) Alborn had no adequate opportunity  



                                                                                                                          

to argue that Amendment 55 was valid, violating Alborn's right to due process.  



                                                                -8-                                                        7589
  


----------------------- Page 9-----------------------

III.        STANDARD OF REVIEW                



                        "When   a   superior   court   acts   as   an  intermediate   court   of   appeals,   we  



                                                                                          15  

independently review the administrative decision."                                                                                            

                                                                                              The level of deference we afford  



                                                                                                                 16  

                                                                                                                      If a question of law          

to administrative decisions depends on the type of determination. 



                                                                                                                                               

involves "agencyexpertiseor thedetermination of fundamental policies within the scope  



                                                                                                                                              

of the agency's statutory functions," reasonable basis review applies, and we will affirm  



if the administrative decision "is supported by the facts and has a reasonable basis in                                                              



          17  

law."                                                                                                                                          

               "For questions of law involving no agency expertise, we substitute our 'own  



                                                                                                                                                     

judgment for that of the agency even if the agency's decision had a reasonable basis in  

             18   We review constitutional questions, including due process claims, using our  

law.' "                                                                                                                                           

independent judgment.19  

                        



IV.         DISCUSSION  



                                                                                                         

            A.          Summary Adjudication Was Appropriate.  



                                                                                                                  

                        Alborn  contends  that  material  factual  disputes  precluded  summary  



                                                                                                                                          

 adjudication and that the ALJ erroneously analyzed the facts when applying the Western  



            15          Titus v. State,  Dep't  of  Admin.,  Div. of  Motor  Vehicles, 305  P.3d 1271, 1276  



 (Alaska  2013)  (quoting  Alaska  Exch.  Carriers  Ass'n,  Inc.  v.  Regul.  Comm'n  of  Alaska ,  

202  P.3d  458,  460  (Alaska  2009)).  



            16         North Slope Borough v. State, Dep't of Educ. & Early Dev., 484 P.3d 106,  

                                                                                                                                                 

 113 (Alaska 2021).  

                        



            17         Id. (quoting Nicolos v. North Slope Borough, 424 P.3d 318, 325 (Alaska  

                                                                                                                          

2018)).  



            18         Id. (quoting Tesoro Alaska Petrol.  Co. v. Kenai Pipe Line  Co., 746 P.2d  

                                                                                                                                                

  896, 903 (Alaska 1987)).  

                                  



            19         Anderson  v. Alaska  Hous.  Fin.  Corp., 462  P.3d 19,  25  (Alaska 2020);  

                                                                                                                                            

 Griswold v. Homer Bd. of Adjustment , 426 P.3d 1044, 1045 (Alaska 2018).  

                                                                                                                          



                                                                          -9-                                                                  7589
  


----------------------- Page 10-----------------------

Alaska  multifactor legal test to determine the project was "public construction" covered                                                  



                    20  

by the Act.                                                                                                                                           

                        But Alborn alleges no specific factual disputes, and the applicability of a  

                                                                     21   Alborn also asserts that because the ALJ did  

                                                                                                                                                   

                                                               

statutory definition is a question of law. 



not order an evidentiary hearing about the State's role in the project and the parties'  

                                                                                                                                           



intent underlying Amendment 55, the ALJ drew "sua sponte" conclusions not based on  

                                                                                                                                                    



evidence.  But "[t]here is no right to an evidentiary hearing in the absence of a factual  

                                                                                                                                            

dispute."22  

                      



                        As the Department of Labor notes responds, the ALJ explained that at the  

                                                                                                                                                   



summary adjudication phase: "All inferences that could be drawn regarding the truth of  

                                                                                                                                                     

the  fact  will  be  drawn  in  Alborn's  favor."23                                   The  ALJ  accepted  as  true  Alborn's  

                                                                                                                                        



contentions that Juneau I "initiated many of the projects that later became Amendment  

                                                                                                                                   



54" and that "the relative role of the [S]tate in the financing of the project was small  

                                                                                                                                               



compared to the role of Juneau I."  Alborn disagrees with the ALJ's ultimate analysis of  

                                                                                                                                                     



the facts in applying the Western Alaska test, but Alborn identifies no other material facts  

                                                                                                                                                



that the ALJ did not already assume to be true.  

                                                                                    



                        The ALJ concluded that no evidentiary hearing was needed to decide that  

                                                                                                                                                  



Amendment 55 was a sham contract because the material facts were in the record,  

                                                                                                                                           



            20          See  909 P.2d 330, 333-34 (Alaska 1996) (explaining five-factor "public                                            



construction" test); AS 36.95.010(3) (defining "public construction" under Act).                                                     



            21          Western Alaska, 909 P.2d at 332.  

                                                                                    



            22          Church v. State, Dep't of Revenue, 973 P.2d 1125, 1129 (Alaska 1999)  

                                                                                                                                              

(quoting Hum. Res. Co. v. Alaska Comm'n on Post-Secondary Educ., 946 P.2d 441, 445  

                                                                                                                                                  

n.7 (Alaska 1997)).  

                                     



            23          See Progressive Cas. Ins. Co. v. Skin, 211 P.3d 1093, 1098 (Alaska 2009)  

                                                                                                                                              

(explaining at summary judgment stage all factual inferences must be drawn in favor of  

                                                                                                                                                     

non-moving party).  

                                     



                                                                        -10-                                                                   7589
  


----------------------- Page 11-----------------------

                                                                                                                            

offered by Alborn itself, undisputed, addressed at the hearing, and addressed again after  



                                                                                                                    

Alborn's motion for reconsideration.  For example, the ALJ noted Alborn's statement  



                                                                                                                              

that Amendment  55's  purpose was avoiding  the Act's coverage while keeping  the  



                                                                                                                         

construction project substantially the same, and Alborn states the same to us.  Given  



                                                                                                                               

Alborn's  direct  admission,  an  evidentiary  hearing  about  the  nature  and  purpose  of  



                                

Amendment 55 was unnecessary.  



                                                                                                             

                    Based on the undisputed facts, summary adjudication was appropriate.  



                                                                    

          B.        The Act Covered The Entire Project.  



                                                                                                                 

                    1.        Reasonable basis is the proper standard of review.  



                                                                                                                      

                    Alborn contends that the ALJ cannot "claim any particularized [agency]  



                                                                                                                  

experience and knowledge . . . . to which a reviewing tribunal should pay deference"  



                                                                                                                      

because the ALJ is not a Department of Labor employee. Alborn asserts that by adopting  



                                                                                                                             

the ALJ's decision verbatim, the Department of Labor demonstrated a lack  of  due  



                                                                                                                            

diligence and failure to insert agency expertise.   Alborn further asserts that the only  



                                                                                                 

examples of agency expertise in this case are Wage and Hour's Bifurcation Letter and  



                                                                                                                           

subsequent Notice of Findings. Alborn contends that we thus should defer to only those  



                                                                                                                              

documents and that we should not consider the ALJ's order an "agency decision."  



                                                                                                                                 

                    The Department of Labor responds that adopting the ALJ's order makes it  



                                                                                                                          

a final agency decision deserving reasonable basis review.  The Department of Labor  



                                                                                                                               

contends  that  labeling  Amendment  55  a  sham  contract  also  should  be  subject  to  



                                                                                                                             

reasonable basis review because the ALJ was determining the Act's coverage rather than  



                                                                                                             

resolving a contract claim.  The Department of Labor is correct on both points.  



                                                                                                                               

                    Alborn's mistaken contention that the Bifurcation Letter and Notice of  



                                                                                                                              

Findings  are  owed  some  judicial  deference  as  final  agency  decisions  borders  on  



                                                                                                                

frivolous.  The Bifurcation Letter was an offer of "compromise" based on then-current  



                                                                                                                

information.  The Department of Administration and Juneau I rejected the compromise  



                                                              -11-                                                        7589
  


----------------------- Page 12-----------------------

and executed Amendment 55 with the intent that Alborn not pay Act wages for                                                                                  any  part  



of the project.                  Wage and Hour then investigated and issued its Notice of Findings,                                                       



essentially an invitation to negotiate. After it became clear that the dispute would not be                                                                              



resolved informally, the Notice of Findings became the Department of Labor's position                                                                         

                                                                             24    The Department of Labor adopted the ALJ's  

before an independent hearing officer.                                                                                                                           



decision verbatim, agreeing with the legal conclusions.   Because the Department of  

                                                                                                                                                                         

Labor's area of expertise is determining Act coverage and violations25  and adopting the  

                                                                                                                                                                        

ALJ's decision makes it a "final agency decision,"26  we apply reasonable basis review  

                                                                                                                                                                

to legal questions involving the decision.27  

                                                                                       



                           A violation of the Act occurs when a "contractor . . . who performs work  

                                                                                                                                                                   

on a public construction contract in the state" fails to pay workers the prevailing wage.28  

                                                                                                                                                                               



                                                                                                                                                                          29  

The Act's coverage depends in part on whether a contract involves public construction.                                                                                         

                                                                                                                                                 



We have warned that "attempts to disguise State involvement in [a] building contract"  

                                                                                                                                                           



and "arrangements that could be designed to circumvent the Act's application" may  

                                                                                                                                                                     



             24            See  8  AAC  30.090-.100  (explaining  investigation  and  hearing  process).   



             25            AS 36.05.030 (authorizing  Department of Labor  to determine Act  coverage  



and  violations).  



             26            AS  44.64.060(e)(1)  (authorizing  adopting  proposed  decision  as  final  agency  



decision).   



             27            See North Slope Borough v. State, Dep't of Educ. & Early Dev., 484 P.3d  

                                                                                                                                                                     

 106, 113 (Alaska 2021) (explaining when reasonable basis review applies).  

                                                                                                                                                         



             28            AS 36.05.010; Western Alaska , 909 P.2d 330, 332 (Alaska 1996).  

                                                                                                                                                  



             29            See generally  City & Borough of Sitka v. Constr. & Gen. Laborers Loc.  

                                                                                                                                                                     

942, 644 P.2d 227, 229-30, 232 (Alaska 1982) (deciding in prevailing wage appeal from  

                                                                                                                                                                    

direct superior court action involving construction project divided under two contracts,  

                                                                                                                                                          

with work under one contract not covered by Act, that Act covered whole project).  

                                                                                                                                                                        



                                                                                   -12-                                                                            7589
  


----------------------- Page 13-----------------------

                        30  

violate the Act.             Evaluating an attempt to evade the Act necessarily involves contract                             



              31  

analysis,                                                                                                                            

                  and the ALJ's limited contractual analysis thus falls "squarely within the  



                                                                   32  

                                                                        

                                                     

scope" of determining the Act's coverage. 



                     2.	        The  Department  of  Labor  reasonably  concluded  that  the  

                                                                                                                                    

                                renovation project was public construction under the Act.  

                                                                                                                                    



                     We have interpreted and applied the Act's public construction requirement  

                                                                                                                        



only three times. In City &Borough of Sitka v. Construction &General Laborers Local  

                                                                                                                                  



942 we held that a contract to clear timber in advance of a public dam project was  

                                                                                                                                    



covered by the Act because the work was integrated with and "instrumental to" the  

                                                                                                                                     

overall construction project.33   In Alaska State Federation of Labor v. State, Department  

                                                                                                                        



of Labor we held that a community hall for private use by Alaska Native groups was not  

                                                                                                                                      



covered by the Act because a public construction project requires "significant [S]tate  

                                                                                                                                

involvement," and the State's only involvement was a one-time monetary grant.34                                                    And  

                                                                                                                                    



in  Western Alaska we relied on our two previous decisions about "significant [S]tate  

                                                                                                                                



involvement" to set out a five-factor "public construction" test analyzing:  

                                                                                                                       



                     (1) [T]he nature of the contract (whether the contract was for  

                            

                                                                                                                 

                     the  provision   of  funds  or  for  the  construction  itself);  

                                                                                                          

                     (2) whether the structure will be used for a public purpose;  

                                                                                                        

                     (3)  whether   the   State  will   control  the   structure  after  

                                                                                                            



           30         Western  Alaska ,  909  P.2d  at  334.   



           31        See  id.   



           32        See  North  Slope  Borough,  484  P.3d  at  113  (noting  reasonable  basis  review  



is  appropriate  for question  of  law  involving  "agency expertise  or  the  determination  of  

fundamental   policies   within   the   scope   of   the   agency's   statutory   functions"   (quoting  

Nicolos  v.  North  Slope  Borough,  424  P.3d  318,  325  (Alaska  2018))).  



           33        644 P.2d at 232-34.  

                                                       



           34        713 P.2d 1208, 1211 (Alaska 1986).  

                                                                      



                                                                  -13-	                                                           7589
  


----------------------- Page 14-----------------------

                      construction; (4) whether the State will continue to fund the                                 

                      project   after   construction;   and   (5)  the   relative   portion   of  

                      project financing that the State supplied.                        [35]  



We emphasized that no single factor is dispositive; the factors are viewed together to  

                                                                                                                                           

determine "significant [S]tate involvement."36  The ALJ in this case analyzed each factor  

                                                                                                                                     



thoroughly,repeatedly referencing therecord, and drewall factual inferences inAlborn's  

                                                                                                                                

favor.37  

              



                                 a.         Factor 1 (nature of the contract)  

                                                                                     



                      The  ALJ  observed  that  no  government  agency  was  a  party  to  the  

                                                                                                                                        



construction contract between Juneau I and Alborn but that a government agency, the  

                                                                                                                                         



Department of Administration, was a party to the lease.   Because the Act requires a  

                                                                                                                                            

contract "for  the [S]tate," not with the State,38  the ALJ concluded that the State did not  

                                                                                                                                         

need to be a party but simply needed to benefit from the construction contract.39                                                      The  

                                                                                                                                        



ALJ noted that the Act's coverage requires a "contracting agency" that "has entered into  

                                                                                                                                        



           35         909  P.2d  at  333-34.   



           36         Id.  at  334.  



           37         See  In  re  N.  Star  1300,  LLC,  OAH  No.  19-1092-CON  at  *3  (Dec.  18,  2020)  



(explaining  summary  adjudication  in  administrative  hearing  and  summary  judgment  in  

court   are   analogous);   Schikora   v.   State,  Dep't   of  Revenue,   7   P.3d   938,   941-42,   946  

(Alaska 2000)  (treating summary adjudication and summary judgment interchangeably);  

cf.  Progressive  Cas.  Ins.  Co.  v.  Skin,  211  P.3d  1093,  1098  (Alaska  2009)  (explaining  that  

at  summary  judgment  phase  all  factual  inferences  must  be  drawn  in  favor  of  non-moving  

party).  



           38         AS 36.95.010(3) (emphasis added).  

                                                                                  



           39         See  Western Alaska ,  909  P.2d  at  334  (determining  State  agency  was  

                                                                                                                                       

"contracting agency" for Act's purposes even though "not a party to the [construction]  

                                                                                                                        

contract"because agency was part of larger business arrangement that included contract).  

                                                                                                                               



                                                                    -14-                                                              7589
  


----------------------- Page 15-----------------------

                                                                                                           40  

a public construction contract with a contractor."                                                              The ALJ concluded that, as Alborn                             



conceded, there would be no construction contract without the lease; the Department of                                                                                                   

Administration thus was a contracting agency because it was a party to the lease.                                                                                                41  



                                                                                                                                                                              

                             The  ALJ  then  concluded  the  two  agreements  established  a  tenant  



                                                                                                                                                                         

improvement project undertaken with the State's specific needs in mind, even accepting  



                                                                                                                                                                               

Alborn's contention that the project's momentum came from Juneau I.   The ALJ's  



                                                                                                                                                                                      

conclusion is well-supported by the State's lease extension being contingent on the  



                                                                                                                                                                                          

improvements.  The ALJ reasonably concluded on the undisputed facts that Factor 1  



                                                                                                 

weighed in favor of a "public construction" finding.  



                                                                                                                                                                            

                                            b.	           Factor 2  (public purpose)  and  Factor 3 (State control  

                                                          post-construction)  



                                                                                                                                                                                      

                             The ALJ concluded that renovating a building leased exclusively by the  



                                                                                                                                                                                       

State "serves a public purpose."                                              The  ALJ pointed  out that the building  would  be  



                                                                                                                              42  

                                                                                                                                                                                   

identified as a State building, unlike in  Western Alaska,                                                                          and that it had been used  



                                                                                                                                                                                    

exclusively  by  the  State  for  30  years.                                                  Alborn  does  not  sufficiently  contest  this  



                                                                                                                                                                                       

conclusion. Although acknowledging that a tenant improvement project could serve the  



                                                                                                                                                                                   

private purpose of helping a landlord retain a commercially viable building, the ALJ  



                                                                                                                                                                            

reasonably  concluded  on  the  undisputed  facts  that  there  was  enough  of  a  "public  



                                                                                                                                                                      

purpose" that Factor 2 weighed in favor of a "public construction" finding.  



               40	           AS 36.05.900.                     



               41            See City of Sitka                  , 644 P.2d 227, 232-34 (Alaska 1982) (determining timber                                                        



clearing contract was "instrumental to" public dam construction contract and analyzing                                                                                  

two contracts together).  

                               



               42            See 909 P.2dat 331-32 (explaining Stateagencyin question had investment  

                                                                                                                                                                      

in commercial hotel).  

                                 



                                                                                          -15-	                                                                                   7589
  


----------------------- Page 16-----------------------

                               The ALJ acknowledged that Juneau I, as landlord, maintained a high level                                                                                     



of project control but concluded that State control was significant enough for finding                                                                                                



material State involvement. Alborn contests this conclusion, focusing on project control                                                                                               



during  construction, in contradiction to                                                     Western Alaska                      's focus on State control                                after  

                              43    Alborn argues first that the Department of Administration, not the ALJ,  

construction.                                                                                                                                                                               



has the "authority" and "agency expertise" to define the State's level of control over a  

                                                                                                           



contract,  including  application  of  wage  and  hour  laws.                                                                              Alborn  contends  that  the  

                                                                                                                                                                                               



Department of Administration "furnishes whatever degree of oversight that a State  

                                                                                                                                                                                           



agency may provide both during construction and throughout the lease term" and that the  

                                                                                                                                                                                                 



Department of Administration "acknowledged that no State control was involved . . . on  

                                                                                                                                                                                                



this project."  

                                



                               The Department of Labor responds that the State required upgrades as a  

                                                                                                                                                                                                    



condition for extending its lease and that Juneau I asked Alborn to meet the State's  

                                                                                                                                                                                       



specifications.                       The  Department  of  Labor  notes  that  the  renovation  included  ADA  

                                                                                                                                                                                          



compliance necessary only for public entities and that "[t]he State had the right to  

                                                                                                                                                                                                  



approve" upgraded flooring, "final color selections for flooring and carpeting," window  

                                                                                                                                                                                     



placement, and more.  Finally, the Department of Labor correctly points out that only it  

                                                                                                                                                                                                    

has statutory authority to assess the Act's coverage.44  

                                                                                                                             



                               We agree that the Department of Administration's opinion is irrelevant to  

                                                                                                                                                                                                   



                                                   45  

 Western Alaska's test.                                   And we agree that, on the undisputed facts, the State's post- 

                                                                                                                                                                                           



               43             Id.  at 336.              



               44              See    AS    36.05.030    (delineating    Department   of    Labor's    authority);  



AS 36.30.080 (delineating Department of Administration's authority).                                                                                                 



               45              Alborn attempts to recast this argument elsewhere as a claim that the ALJ  

                                                                                                                                                                                             

did not have "jurisdiction" to determine the scope of the Act's coverage because as the  

                                                                                                                                                                                                

                                                                                                                                                                        (continued...)  



                                                                                               -16-                                                                                        7589
  


----------------------- Page 17-----------------------

amendment   lease   control   is   substantial   and   material.     The   ALJ's   conclusions   that  



Factors 2 and 3 weigh in favor of a "public construction" finding were reasonable.                                                                                         



                                                c.	             Factor 4 (State funding after construction) and Factor 5                                                                                     

                                                                (financing provided by State)                               



                                The ALJ concluded - and the Department of Labor concedes - that                                                                                                       



Factor 5 weighed against a "public construction" finding.                                                                                    Accepting as true Alborn's        



contentions about project financing, the ALJ found that Juneau I and its majority owner                                                                                                          



provided the vast majority of the funding. The ALJ also accepted that the State provided                                                                                                   



no initial financing                              because   the rent increase started only                                                        after   project completion.                                     



Weighing Factor 5 in Alborn's favor therefore was reasonable.                                                               



                                                                                                                                                                                      46  

                                But the ALJ concluded that Factor 4, which is forward-looking,                                                                                             weighed  



                                                                                                                                                                                                 

in favor of the Act's coverage because over a ten-year period the rent increase would  



                                                                                                                                                                                                

materially defray construction costs.  The ALJ distinguished Western Alaska and Alaska  



                                                                                                                                                                                                    

Federation because in those cases there was "no regular income stream" from the State  



                45              (...continued)  



                                                                                                                                                                                                          

 State's  contracting  agency  the  Department  of  Administration  has  the  authority  to  

                                                                                                                                                                                                             

determine the State's contracting obligations and because an ALJ cannot "invalidate" a  

                                                                                                                                                                                                         

contract. We stress that although the Department of Administration may contract on the  

                                                                                                                                                                                                         

 State's behalf, the Department of Labor determines whether a contract is covered by the  

                                                                                                                                                                                       

Act.            AS  36.05.030  (delineating  Department  of  Labor's  authority);  AS  36.30.080  

                                                                                                                                                                                            

(delineating Department of Administration's authority).  There is no conflict between  

                                                                                                                                                                                                        

these two mandates.   As we already have explained, limited contractual analysis for  

                                                                                                                                                                                                          

purposes of determining the Act's coverage is well within the Department of Labor's -  

                                                                                          

and therefore the ALJ's - purview.  



                46              See Western Alaska, 909 P.2d at 336; Alaska State Fed'n of Lab. v. State,  

                                                                                                                                                                                                   

Dep't of Lab., 713 P.2d 1208, 1211 (Alaska1986) (discussing funding issues fromwhich  

                                                                                                                                                                                                  

 Western Alaska five-factor test was derived).  

                                                                                                              



                                                                                                   -17-	                                                                                            7589
  


----------------------- Page 18-----------------------

to the building owner;47 in contrast, the State will be Juneau I's exclusive tenant for at                                                                         



least ten years. Alborn contends that the rental income stream is not guaranteed because                                                                                                                                                                                                 



it is subject to annual legislative appropriation.                                                                                                                              But if Juneau I took this possibility                                                          



seriously, it likely would not have contracted for the renovations. It thus was reasonable                                                                                                                                                                                     



for the ALJ to conclude, on the undisputed facts, that Factor 4 weighed in favor of the                                                                                                                                                                                                                  



Act's coverage.   



                                                3.	                     The Department of Labor reasonably concluded that a State                                                                                                                                                               

                                                                        contract covered the entire "public construction" project and                                                                                                                                                                

                                                                       that the Act therefore applied.                                                      



                                                                        a.	                    The conclusion that Amendment 55 was a sham                                                                                                                   



                                                After concludingthattheAct covered theentirerenovation project, theALJ                                                                                                                                                                                



then asked which lease version controlled:                                                                                                                 Amendment 54 or Amendment 55?                                                                                                            The  



ALJ correctly considered the broad policies set out in                                                                                                                                        City of Sitka                                and  Western Alaska                                                      .   



In  City of Sitka                                     we cautioned against "unduly exalt[ing] form over substance" when we                                                                                                                                                                                



held that a timber clearing contract severed from a larger, State-sponsored dam building                                                                                                                                                                                               

                                                                                                                                 48        In  Western Alaska we similarly disapproved of  

contract was still subject to the Act.                                                                                                                                                                                                                                                                      



"attempts to disguise State involvement in the building contract" and cautioned that  

                                                                                                                                                                                                                                                                                                      



contracting "arrangements that could be designed to circumvent the Act's application"  

                                                                                                                                                                                                                                                                         

could violate the Act.49  

                                                              



                                                With these cases in mind, the ALJ analyzed whether Amendment 55 was  

                                                                                                                                                                                                                                                                                                      



a "bargained-for agreement" or a "sham . . . intended only to affect the rights of the  

                                                                                                                                                                                                                                                                                                         



workers  on the project."   Quoting the Restatement (Second) of Contracts, the ALJ  

                                                                                                                                                                                                                                                                                                    



                        47                      See Western Alaska                                                     , 909 P.2d at 331-32;  Alaska State Fed'n of Lab. 713  



P.2d at 1209.                                    



                        48                      644 P.2d 227, 232-33 (Alaska 1982).  

                                                                                                                                                             



                        49                      909 P.2d at 334.  

                                                                                          



                                                                                                                                                   -18-	                                                                                                                                           7589
  


----------------------- Page 19-----------------------

observed that a sham contract exists when the "purported consideration was not in fact                                               



                                                                                           50  

bargained   for   but   was   a   mere   formality   or   pretense."                                                                 

                                                                                                 Applying  the  law  to  the  



                                                                                                                                       

undisputed facts, the ALJ concluded that, for purposes of Act coverage, Amendment 55  



                                                                                                                               

was a sham.   The ALJ noted Alborn's concession that "the parties removed certain  



                                                                                                                                      

projects from Amendment 54, and Juneau I then promised to do the removed projects for  



                                                       

free, in order to avoid the [Act]."  



                                                                                                                                   

                     Alborn  points  out  minor  differences  between  Amendment  54  and  



                                                                                                                            

Amendment  55  combined  with  the  Companion  Letter  -  for  example,  a  different  



                                                                                                                                         

deadline and a few additional projects - as evidence that Amendment 55 was not a  



                                                                                                                                    

sham. But Alborn also suggests that not seeking a new Act coverage determination after  



                                                                                                                

executing Amendment 55 was justified partly because other than the omission of Act- 



                                                                                                                               

covered items listed in the Bifurcation Letter, there were no major differences.  



                                                                                                                            

                     The ALJ explained why minor differences did not affect the Act coverage  



                

analysis:  



                                                                                                          

                     If two parties agree to a sale, and then later purport to change  

                                                                                                        

                     their  agreement  to  a  mutual  exchange  of  'gifts'  without  

                                                                                                               

                     actually changing the bargain, it does not matter if they also  

                                                                                                             

                     add additional items to their exchange at the time of the sham  

                                                                                                               

                     gift giving.   Here, the important undisputed facts are that  

                                                                                             

                     (1) the seven [S]tate-specific items listed in Amendment 54  

                                                                                                              

                     and purportedly removed by Amendment 55 were, in fact,  

                                                                                                       

                     never removed from the bargain because they were promised  

                                                                                                                

                     by Juneau I in the [Companion Letter]; and (2) the rent did  

                                                                                                              

                     not change between Amendment 54 and Amendment 55 even  

                                                                                                           

                     though  Amendment  55  purportedly  offered  a  less  useful  

                                     

                     building.  



                                                                                                                              

                     This analysis is further supported by City of Sitka and broader Act policies.  



                                                                                                                                      

Even though the parties in City of Sitka had severed the timber clearing contract from the  



           50        RESTATEMENT  (SECOND) OF  CONTRACTS.    79  (AM.  L.  INST .   1981).  



                                                                  -19-                                                            7589  


----------------------- Page 20-----------------------

original construction contract, we examined the                                original  contract - and therefore the                   



                                                                                            51  

project as a whole - when evaluating the Act's coverage.                                                                                

                                                                                                We have explained that the  

                                                                                                             52 and was intended  

                                                                                                                               

                                                                                             

Act "is to the benefit of the employees, not the contracting principals" 

to be "liberally construed to effectuate its beneficent purpose."53  

                                                                                       



                      The Department of Administration clearly never intended to accept the  

                                                                                                                                       



building  lease  without  the  State-specified  renovations.                                  Amendment  55  may  be  an  

                                                                                                                                        



enforceable contract between Juneau I and the State, but under any standard of review  

                                                                             



we agree with the ALJ that Amendment 55 was an attempt to circumvent the Act.  

                                                                                                                              



           C.	        The  Department  Of  Labor  Correctly  Denied  Alborn's  Estoppel  

                                                                                                                            

                      Defense.  



                      Equitable estoppel has three general elements:  "(1) assertion of a position  

                                                                                                                                

by conduct or word, (2) reasonable reliance thereon, and (3) resulting prejudice."54  

                                                                                                                        



                                                                                                                                         

Courts also may consider "[a] fourth element, . . . [which] is that the estoppel will be  



                                                                                    55  

                                                                                                                                       

enforced only to the extent that justice so requires."                                   Thus, "even where reliance has  



                                                                                                               

been foreseeable, reasonable, and substantial, the interest of justice may not be served  



                                                                                                                                   

by the application of estoppel [against the government] because the public interest would  



                                              56  

                           

be significantly prejudiced." 



           51         644  P.2d  at  232-33.  



           52        Id.  at  232.  



           53         Western         Alaska ,        909      P.2d       at    333       (quoting        Drivers,         Salesmen,  



 Warehousemen,  Milk  Processors,  Cannery,  Dairy  Emps.  & Helpers,  Loc.  Union  No.  695  

v.  NLRB,  361  F.2d  547,  553  n.23  (D.C.  Cir.   1966)).  



           54        Municipality of  Anchorage  v.  Schneider,  685  P.2d  94,  97  (Alaska   1984).   



           55        Id. ; see Beecher v. City of Cordova, 408 P.3d 1208, 1214 (Alaska 2018).  

                                                                                                                                  



           56         See  Schneider,  685  P.2d  at  97  (explaining  that  fourth  element  is  especially  



                                                                                                                      (continued...)  



                                                                   -20-	                                                            7589
  


----------------------- Page 21-----------------------

                     Alborn   seeks   to   estop   the   Department  of   Labor's   enforcement   action.   



                                                                                                                                 57  

Because the estoppel defense does not fall under the agency's area of expertise,                                                     we  

                                                                                       58   This standard "permits a . . .  

                                                                                                                                         

                                                                            

apply the substitution of judgment standard of review. 



court to substitute its own judgment for that of the agency even if the agency's decision  

                                                                                                                             

had a reasonable basis in law."59                    Alborn appears to raise two estoppel arguments.  We  

                                                                                                                                     



address them in turn and conclude both were correctly rejected.  

                                                                                         



                     1.         The "single entity" argument  

                                                                  



                     Alborn first points out that it "relied upon assurances" fromthe Department  

                                                                                                                        



of Administration that Act-covered items listed in the Bifurcation Letter "had been  

                                                                                                                                  



omitted from Amendment 55, . . . eliminat[ing] the [Act's] coverage issues."  Quoting  

                                                                                                



Thorsheim  v.  State,  Alborn  argues  that  the  Department  of  Administration  and  the  

                                                                                                                                     

                                                                                                      60    Alborn  notes  that  

Department  of  Labor  should  be  considered  "a  single  entity."                                                                 

                                                                                           



           56        (...continued)  



                                                                                                                                   

relevant "when considering estoppel against a municipality"); Beecher, 408 P.3d at 1214  

(same).  



           57        Cf.   AS        23.05.010           (explaining          Department            of     Labor's        purpose);  

                                                                                                                         

AS 36.05.030 (authorizing Department of Labor to set prevailing wage, determine Act  

                                                                                                                                     

coverage and violations, and refer infractions to attorney general for enforcement).  

                                                                                                                                      



           58        See North Slope Borough v. State, Dep't of Educ. & Early Dev., 484 P.3d  

                                                                                                                                   

106, 113 (Alaska 2021) (explaining when substitution of judgment standard applies).  

                                                                                                                           



           59        Tesoro Alaska Petrol. Co. v. Kenai Pipe Line Co., 746 P.2d 896, 903  

                                                                                                                                    

(Alaska 1987).  

                          



           60        469 P.2d 383, 389 (Alaska 1970)  ("[T]he Department of Administration  

                                                                                                                  

and the Department of Fish and Game were both integral parts of a single entity, the  

                                                                                                                          

State of Alaska.").  

              



                                                                  -21-                                                            7589
  


----------------------- Page 22-----------------------

                                                                                               61  

statutory law lists both as part of the "[S]tate government"                                       and that the Act defines         



                                                           62  

"contracting agency" as "the [S]tate."                                                                                                      

                                                                Alborn then sets out a seemingly absurd result:  



                                                                                                               

                     It was the  State of Alaska  that assured Juneau I that [the  

                                                                                                                    

                     Act's] wage coverage was inapplicable to the project . . . .  

                                                                                                           

                     Conversely,  it  thereafter  was  the  State  of  Alaska  which  

                                                                                                          

                     sought   to   label   the   project   as   "[Act-covered]   public  

                                                                                                                   

                     construction," even though the State of Alaska, wearing a  

                                                                                                               

                     different hat, had indicated it was not.  And presently, it also  

                                                                                                       

                     is the State of Alaska which is seeking to recoup the increased  

                                                                                                    

                     wages.  (Emphasis in original; citation omitted.)  



                                                                                                                                      

Alborn  contends  this  supports  an  estoppel  defense  based  on  the  Department  of  



                                                

Administration's assurances.  



                                                                                                                                        

                     But  Thorsheim,  a case  about whether  the State could  be considered  a  



                                                                                                           63 

                                                                                       

"contractor" in a workers' compensation proceeding, is inapposite.                                             The Department  



of Administration had negotiated a contract on a state agency's behalf; we held that  

                                                                                                                                    



under the workers' compensation statute the State could not be considered a contractor  

                                                                                                                           

with respect to its public duties no matter which agency was involved.64                                              That narrow  

                                                                                                                               



decision does not stand for the proposition that separate State agencies cannot have  

                                                                                                                                   



different stances on a particular issue or that State agencies should be considered a single  

                                                                                                                                 

entity in all contexts.65  

                                      



           61        See  AS  44.17.005  (listing  government  offices  and  departments).  



           62        See  AS  36.05.900  (defining  "contracting  agency").   



           63        469  P.2d  at  385.  



           64        Id.  at  389-90.  



           65        Such  a  conclusion would logically contradict  state and  federal  precedent  



allowing         different        government    branches                 and      agencies    to    bring           lawsuits        and  

administrative  enforcement  actions  against  one  another;  a  single  party  cannot  sue  itself.  

                                                                                                                    (continued...)  



                                                                  -22-                                                            7589
  


----------------------- Page 23-----------------------

                        Alborn also misstates the definition of "contracting agency" under the Act                                                     



as "the [S]tate."               The Act defines "contracting agency" as "the [S]tate                                                or a political     



subdivision of the                 [S]tate   that has entered into a public construction contract with a                                                   

                      66  and "political subdivision" includes "any [S]tate department [or] [S]tate  

contractor,"                                                                                                                                     

agency."67   The Act thus clearly envisions the possibility that one arm of the State could  

                                                                                                                                                   



enter into an Act-covered construction contract, taking the position that the Act does not  

                                                                                                                                                        



apply, and that the Department of Labor, vested with the exclusive authority to determine  

                                                                                                                                           

Act coverage,68 could bring an enforcement action.  In that context, the Department of  

                                                                                                                            



Labor and the offending "political subdivision" necessarily would have taken opposite  

                                                                                                                                              



positions regarding the Act's coverage, just as happened in this case.  

                                                                                                                     



            65          (...continued)  



See,   e.g.,  Beegan v.  State,  Dep't   of   Transp.   &  Pub.  Facilities,   195  P.3d   134   (Alaska  

2008)  (involving investigation and  potential Alaska State Commission  for  Human  Rights  

(ASCHR)  administrative  action  against  DOT&PF);  State,  Dep't  of  Fish  &  Game,  Sport  

Fish  Div.  v.  Meyer,  906  P.2d  1365  (Alaska  1995)  (involving  investigation  and  potential  

ASCHR  administrative  action  against  Department  of  Fish  and  Game),  superseded on  

other  grounds   by  statute,   ch.   63,    4,   SLA   2006,   as   recognized   in  Huit   v.  Ashwater  

Burns,  Inc.,  372  P.3d  904,  914  n.52  (Alaska  2016);  see  generally  Michael  Herz,  United  

                                                                                                                                        M. & MARY  

States  v.  United  States:   When  Can  the  Federal  Government  Sue  Itself?,  32W 

L. REV.  893  (1991),  https://scholarship.law.wm.edu/wmlr/vol32/iss4/4;  SEC v.  Fed.  Lab.  

      

Rels.   Auth. ,   568  F.3d   990,   997-98   (D.C.   Cir.   2009)   (Kavanaugh,   J.,   concurring)  

(collecting  cases  and  explaining  why  government  should  not  always  be  treated  as  single  

entity  for  litigation  purposes).   



            66          AS 36.05.900 (emphasis added).  

                                                                       



            67          AS 36.95.010(6).  

                                



            68          AS 36.05.030 ("The Department of Labor . . . has the authority to determine  

                                                                                                                                            

. . . [if] this chapter is being violated.").  

                                                                         



                                                                           -23-                                                                    7589
  


----------------------- Page 24-----------------------

                        Alborn's   "single   entity"   estoppel  theory   additionally   can  be  rejected   on  



                                              69  

public   interest   grounds.                        Even   assuming   Alborn   met   the   required   elements   of  



reasonable   and   detrimental  reliance   on   a  prior  position   taken  by   the  unitary   "State,"  



application  of  estoppel  would  frustrate  enforcement  of  the  Act, which  was  enacted  to  

help  construction  workers  earn  better  wages.70  

                                                                                     Precluding  enforcement  cuts  against  the  



public  interest  and  the  Act's  broad  policy  mandate.  



                        2.          The  final  determination  argument  



                        Alborn  alternatively  appears  to  argue  that  the  Department  of  Labor  took  



inconsistent  positions  with  respect  to  the  Act's  coverage  and  that  enforcement  therefore  



should   be   estopped.     Specifically,   Alborn   complains   that   the   Department   of   Labor  



characterized  Wage  and  Hour's  Bifurcation  Letter   as  its  "final"  determination;  that  the  



Bifurcation  Letter  clearly  indicated  only  some  work  items  would  be  covered  by  the  Act;  



and that the Department of  Labor  changed  its  position by  deciding that all of the work  



items  were  covered.  



                                     a.          Assertion  of  a  position  by  conduct  or  word  



                        The   ALJ   concluded   that   Wage   and   Hour   "asserted   a   position"   in   its  

Bifurcation  Letter.71  

                                                                                                                                                  

                                      Wage and Hour "maintain[ed that] the overall construction project  



                                                                                                                                                   

as contemplated could be covered" by the Act, but it parsed individual items that would  



                                                                                                                                                       

not be covered under a compromise proposal.  Less than two weeks later, Wage and  



                                                                                                                                                   

Hour  characterized the Bifurcation Letter  as its "final answer."   With respect  to the  



            69          SeeMunicipalityofAnchoragev.Schneider                                         ,685 P.2d 94, 97 (Alaska1984)                 



(explaining courts should consider public interest when evaluating estoppel arguments                                                      

made against government).     



            70          See Western Alaska, 909 P.2d 330, 332-33 (Alaska1996) (explaining Act's  

                                                                                                                                                     

public interest purpose).  

                            



            71          See Schneider, 685 P.2d at 97 (asserting position is element of estoppel).  

                                                                                                                                                                



                                                                           -24-                                                                     7589
  


----------------------- Page 25-----------------------

                                                                                                                             

construction project as governed by Amendment 54, the Department of Labor thus took  



    

a stance.  



                                                             

                              b.        Reasonable reliance  



                                                                                                                           

                    We  will  assume  that  Alborn  -  although  not  a  party  to  the  lease  



                                                                                                                              

negotiations - did rely on the Bifurcation Letter to some degree, as it contends.  We  



                                                        

conclude that any such reliance was unreasonable.  



                                                                                                                          

                    First, Wageand Hour expressly stated that "the overall construction project  



                                                                                                               

as contemplated could be covered" by the Act.  It nonetheless made an "unorthodox"  



                                                                                                         

offer of "compromise" to allow the project to move forward.  Wage and Hour warned  



                                                                                                                              

that the determination, like previous ones, was "based on the information at hand and  



                                                                                                                         

may not be supportable if the circumstances of [the] project change"; it urged project  



                                                                                                                           

participants  and  their  contractors  to  seek  private  counsel.                            Alborn  dismisses  these  



                                                                                                                             

warnings as boilerplate language.  But given that the original determination in this case  



                                                                                                                               

changed, assuming new information would not arise and Wage and Hour would not  



                                                                             

again change its determination was unreasonable.  



                                                                                                                                

                    Second,  circumstances  changed:                      (1)  Juneau  I  and  the  Department  of  



                                                                                                                           

Administration executed Amendment 55, putatively eliminating the "covered" items  



                                  

from the project, and (2) Alborn failed to pay Act wages even for the "covered" items  



                                                                                                                               

the Bifurcation Letter identified.   As the ALJ pointed out and Alborn concedes, the  



                                                                                                                         

Bifurcation Letter was based on Amendment 54, not Amendment 55.  Alborn clearly  



                                                                                                                                

understood the risk that the project would be covered by the Act, as evidenced by its  



                                                                                                                     

asserting a right to adjust its contract price with Juneau I if the Act applied.  



                                                                                                                             

                    We reject Alborn's estoppel argument because Alborn's reliance, if any,  



        

was unreasonable.  



                                                              -25-                                                         7589
  


----------------------- Page 26-----------------------

                                                       c.                 Resulting prejudice   



                                     The   Department   of   Labor   argues   that  Alborn   cannot   show   prejudice  



because it anticipated the Act could apply to the project and included contract language                                                                                                                              



asserting its right to increase the contract price accordingly.                                                                                                      Alborn wrote in its project                            



proposal to Juneau I:                                      "Should any circumstances change which result in a requirement                                                                                   



to pay prevailing wages, our project total will be amended to reflect the additional                                                                                                                               



expense."  Whether Alborn has been or will be made whole by Juneau I following the                                                                                                                                                     



Department of Labor's enforcement decision and whether being made whole precludes                                                                                                                                    



Alborn's ability to show prejudice is unclear.  But given Alborn's contract protection,   



it has not demonstrated any prejudice.                                                                     



                                                       d.                 Public interest                             



                                     Finally, even if Alborn met all the estoppel requirements, its position is                                                                                                                           



                                                                                   72  

contrary to the public interest.                                                                                                                                  

                                                                                           The ALJ made this point succinctly:  



                                                                                                                                                                        

                                     Even assuming that in advance of a project the [Department  

                                                                                                                                                                                                       

                                     of Labor] has the discretion to bifurcate those aspects of a  

                                                                                                                                                                                             

                                     project for which coverage under the [Act] is uncertain from  

                                                                                                                                                                                          

                                     those that are definite, once an enforcement action is taken,  

                                                                                                                                                                                     

                                     and  it  becomes  clear  that  the  "iffy"  aspects  are,  indeed,  

                                                                                                                                                                                               

                                     covered,  the  [Department  of  Labor]  cannot  ignore  the  

                                                                                                                                                                                           

                                     interests of the workers.  Although an agency may in some  

                                                                                         

                                     cases compromise uncertain issues to avoid an enforcement  

                                                                                                                                                                                           

                                     action, an adjudicated decision cannot ignore the law.  



                                                                                                                                                                                                                                         

On the facts of this case, Alborn cannot estop the Department of Labor from bringing an  

                                                                                                                                               73      Contractors should benefit from  

                                                                                                                                                                                                                                  

enforcement action on behalf of underpaid workers. 



                   72                See id.            (explaining courts should consider public interest when evaluating                                                                                        



estoppel arguments made against government);                                                                                         Beecher v. City of Cordova                                                    , 408 P.3d     

 1208, 1214 (Alaska 2018) (same).                                          



                   73                Cf. North Slope Borough v. State, Dep't of Educ. & Early Dev., 484 P.3d  

                                                                                                                                                                                                                                   

                                                                                                                                                                                                          (continued...)  



                                                                                                                  -26-                                                                                                           7589
  


----------------------- Page 27-----------------------

 agency opinions to help better budget for upcoming projects, but there is no basis to                                                                                                                                 



permit relying on a distortion of an agency opinion to circumvent wage and hour laws.                                                                                                                                          



                 D.	              Alborn Was Not Denied Due Process When Litigating Amendment                                                                                             

                                  55's Validity.   



                                  Alborn suggests, although it does not explicitly state, that it was denied due                                                                                                    



process. Alborn cites a due process case and complains about not having adequate notice                                                                                                                       



that Amendment 55's validity was at issue. "[P]rocedural due process under the Alaska                                                                                                                      



 Constitution requires notice and opportunity for hearing appropriate to the nature of the                                                                                                                           

 case."74                                                                                                                                                                   

                     Fundamentally, "[p]arties must have notice of the subject of proceedings that  



                                       75  

                                                                                                                                                                                                                       

 concern them."                               Because due process claims are questions of law, we review them de  



               76  

novo. 



                                                                                                                                                                                                        

                                  Alborn argues that its only opportunity to litigate the ALJ's sham contract  



                                                                                                                                                                                                            

ruling was in a motion for reconsideration, leaving no "opportunity to develop the factual  



                                                                                                                                                                                                                       

basis in support of its defense."   Alborn relies on our  Griswold v. Homer Board of  



                                                                                                                                                                                                     

Adjustment  decision  that  due process  was  denied  when  the  first  time  the  litigant's  



                                                                                                                                                                                                           77 

                                                                                                                                                                                                                 The  

 standing was at issue was on a motion for reconsideration that was later denied. 



                                                                                                                                                                                                                   

Department  of  Labor  points  out  that,  unlike  in  Griswold,  Alborn's  motion  for  



                 73               (...continued)  



 106, 120 (Alaska 2021) (explaining we will not enforce estoppel doctrine when  doing  

 so  would  require  State  to  contravene  law  and  legislative  intent).  



                 74                Griswold  v.  Homer  Bd.  of  Adjustment ,  426  P.3d  1044,  1045  (Alaska  2018)  



 (alteration  in  original)  (quoting  Price  v.  Eastham,  75  P.3d   1051,   1056  (Alaska  2003)).  



                 75               Id. (alteration in original) (quoting Price, 75 P.3d at 1056).  

                                                                                                                                                                        



                 76               Id.  



                 77               Id. at 1045-46.  

                                                                          



                                                                                                         -27-	                                                                                                  7589
  


----------------------- Page 28-----------------------

reconsideration was partially granted; that Alborn was permitted to submit additional                                                                                                                                                                                                                                                                                                                                                      



evidence; and that Alborn submitted over 40 pages of additional briefing.                                                                                                                                                                                                                                                                                                  



                                                                           Alborn had notice and opportunity to litigate the issue, even beyond what                                                                                                                                                                                                                                                                                                                     



the Department of Labor notes.                                                                                                                                                   As the ALJ pointed out, Alborn and the Department of                                                                                                                                                                                                                                                    



Labor litigated                                                                    theshamcontract questionduringtheoriginaladministrativeproceedings.                                                                                                                                                                                                                                                                                                                                                  



The Department of Labor had argued that "Amendment 55 did not substantively change                                                                                                                                                                                                                                                                                                                                                                           



 . . . coverage under the [Act]," thereby putting Alborn on notice of a sham contract                                                                                                                                                                                                                                                                                                                                                                 



argument.   Alborn responded by characterizing the Department of Labor's argument as                                                                                                                                                                                                                                                                                                                                                                                                     



calling Amendment 55 "superficial" and an example of "evasive drafting." Although the                                                                                                                                                                                                                                                                                                                                                                                               



words "sham contract" were not used, both parties' arguments clearly indicate that the                                                                                                                                                                                                                                                                                                                                                                                             



Act's coverage - including whether Amendment 55 was designed to evade the Act -                                                                                                                                                                                                                                                                                                                                                                                                       



was at issue during the initial hearing before the ALJ.                                                                                                                                                                                                                         



                                                                           Because there was ample notice and opportunity to be heard regarding the                                                                                                                                                                                                                                                                                                                                                    



"sham contract" issue, Alborn was not denied due process.                                                                                                                                                                                                                                  



V.                                    CONCLUSION  



                                                                           Thesuperior court's decision affirming theDepartment ofLabor's decision  

                                                                                                                                                                                                                                                                                                                                                                                                                                                      



is AFFIRMED.  

           



                                                                                                                                                                                                                                        -28-                                                                                                                                                                                                                              7589
  

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