State ex rel. Associated Builders & Contractors of Central Ohio, et al. . Case No. 08-1478
Appellants, . Appeal From the Tenth District Court of Appeals V.
Franklin County Board of Commissioners, et al.
Appellees.
APPELLANTS' MERIT BRIEF, VOLUME 1 OF 2
Michael F. Copley (0033796) (Counsel of Record) Douglas M. Beard (0073759) Kenley S. Maddux (0082786) The Copley Law Firm, LLC 1015 Cole Road Galloway, Ohio 43119 Telephone: (614) 853-3790 Facsimile: (614) 467-2000 E-mail: [email protected] COUNSEL FOR APPELLANTS
Ronald L. Mason (0030110) Aaron T. Tuleneik (0073049) Mason Law Firm Co., LPA 425 Metro Place North, Suite 620 Dublin, Ohio 43017 Telephone: (614)734-9454, Facsimile: (614)734-9451 E-mail: [email protected] CO-COUNSEL FOR APPELLANTS
(Counsel continued on next page) Ron O'Brien (0017245) Nick A. Soulas, Jr. (0062166) Franklin County Prosecutor's Office, Civil Division 373 South High Street, 13' Floor Columbus, Ohio 43215 . Telephone: (614) 462-3520 Facsimile: (614) 462-6012 E-mail: [email protected] COUNSEL FOR APPELLEES, FRANKLIN COUNTY BOARD OF COMMISSIONERS
N. Victor Goodman (0004912) Mark D. Tucker (0036855) Benesch, Friedlander, Coplan, & Aronoff LLP 41 South High Street, 26th Floor Columbus, Ohio 43215 Telephone: 614-223-9300 Facsimile: 614-223-9330 E-mail: [email protected] COUNSEL FOR AMICI CURIAE OHIO STATE BLDG. & CONSTR. TRADES COUNCIL AND COLUMBUS/CENTRAL OH BLDG. & CONSTR. TRADES COUNCIL TABLE OF CONTENTS
Paae
TABLE OF AUTHORITIES iii
STATEMENT OF THE FACTS 1
A. Debarment under R.C. Chapter 4115 1
B. Franklin County's Debarment of The Painting Company 5
C. Procedural History 6
STANDARD OF REVIEW 7
LEGALSTANDARDS 7
ARGUMENT 10
Proposition of Law: 10 The state's comprehensive statutory scheme, which balances competing public interests in prevailing wage compliance and competition for public contracts, displaces Franldin County's conflicting debarment provision.
A. The Board's Prevailing Wage Enforcement Conflicts with R.C. 4115. 0
1. The Resolution is a Debarment Provision. 11
2. The Resolution Imposes Debarment More Broadly than R.C. 4115, 13 and on Harsher Terms.
3. The Resolution Deprives Contractors of the Process Due Under 15 R.C. 4115.
4. The Resolution Usurps the State's Role and Hinders its Prevailing 16 Wage Enforcement.
5. Local Enforcement Actions are as Disruptive to the State 21 Prevailing Wage Scheme as a Conflict in Policy
6. Navratil did not Evaluate a Debarment Provision 22
B. Prevailing Wa¢e Enforcement Is Not a Matter of County Government. 24
1. Franklin County Lacks Home Rule Power. 25
i 2. The Resolution is an Exercise of the Police Power. 27
3. Prevailiniz Wage Law is a Matter of Statewide Concern. 28
C. The Comprehensive State Scheme for Enforcing R.C. 4115 Forecloses 30 Contract Local Action
CONCLUSION 31
CERTIFICATE OF SERVICE 33
APPENDIX Pape
Notice of Appeal to the Ohio Supreme Court 0001-0003 (July 28, 2008)
Judgment Entry of the Franklin County Court of Appeals 0004 (June 12, 2008)
Nunc Pro Tunc Opinion of the Franklin County Court of Appeals 0005-0014 (June 13, 2008)
Decision and Final Judgment of the Franklin County Court of Common Pleas 0015-0037 (March 31, 2008)
Franklin County Resolution No. 421-02 0038-0041
Franklin County Resolution No. 476-06 0042-0043
Franklin County Resolution No. 180-08 0044-0118
Ohio Constitution, Articles X and XVIII 0119-0123
R.C. Sections 4115.03-4115.21, 4115.99 0124-0141
Prevailing Wage Law, 1965 Version 0142-0045
Prevailing Wage Law, 1994 Version 0146-0151
ii TABLE OF AUTHORITIES
CASES: Paee
Akron v. Callaway (2005), 162 Ohio App.3d 781 ...... 7
Akron v. Meyer, 2004-Ohio-4457 ...... 25
Am. Fedn. ofState, Cty. and Mun. Emp. Local No. 47 v. Warren (2008), 177 Ohio App. 3d 530 ...... 7
Am. Fin. Servs. Assn. v. Cleveland (2006) 112 Ohio St.3d 170 ...... 7-8, 8, 9, 28,29
Auxter v. Toledo (1962), 173 Ohio St. 444 ...... 8
Bd of Edn. of Chillicothe City Sch. Dist. v. Sever-Williams Co. (1970), 22 Ohio St.2d 107 ...... 29
Beachwoodv. Bd. ofElections (1958), 167 Ohio St. 369 ...... 9
Bergman v. Monarch Constr. Co., 2009-Ohio-551 ...... 13, 19
Berlanti v. Bodman (3d Cir. 1985), 780 F.2d 296 ...... 15
Blacker v. Wiethe (1968), 16 Ohio St.2d 65 ...... 26
Bundy v. Five Rivers Metroparks (2003), 152 Ohio App.3d ...... 26
Canton v. State (2002), 95 Ohio St.3d 149 ...... 7, 10, 30
Cementech, Inc. v. City ofFairlawn (2006), 109 Ohio St.3d 475 ...... 29
Chamber of Commerce of US. v. Brown (2008), 128 S.Ct. 2408 ...... 22
Champion Gym & Fitness, Inc. v. Crotty, 2008-Ohio-5642 ...... 7
Cincinnati v. Baskin (2006), 112 Ohio St.3d 279 ...... 7, 9, 10, 31
Cincinnati W. & Z. Rd Co. v. Com'rs of Clinton County (1852), 1 Ohio St. 77.... 8, 26
CRC Marine Serv., Inc. v. U.S. (1998), 41 Fed.C1. 66 ...... 12
Danis Clarkco Landfill Co. v. Clark Cty. Solid Waste Mgt. Dist. (1995), 73 Ohio St.3d 590 ...... 29
m Eastlake v. Ohio Bd. ofBldg. Stds. (1981), 66 Ohio St.2d 363 ...... 13,14,25
Garner v. Teamsters (1953), 346 U.S. 485 ...... 21
Geauga Cry. Bd. of Commrs. v. Munn Rd. Sand & Gravel (1993), 67 Ohio St.3d 579 ...... 8, 9, 26, 29
Lorain v. Tomasic (1979), 59 Ohio St.2d 1 ...... 8
Marich v. Bob Bennett Constr. Co. (2008), 116 Ohio St.3d 553 ...... 8
Mastercraft Flooring, Inc. v. Donovan (D.D.C. 1984), 589 F.Supp. 258...... 15
Motor Coach Employees v. Lockridge (1971), 403 U.S. 274 ...... 22
Nationwide Mut. Fire Ins. Co. v. Guman Bros. Farm (1995), 7 73 Ohio St. 3d 107 ......
Northern Ohio Patrolmen's Benevolent Assn. v. Parma (1980), 61 Ohio St.2d 375 ...... 26
O'Toole v. Denihan, 118 Ohio St.3d 374 ...... 27
Salvation Army v. Blue Cross & Blue Shield of N. Ohio (1993), 92 Ohio App.3d 571 .:...... 21
Stapp Towing, Inc. v. US. (1995), 34 Fed.Cl. 300 ...... 13
State ex rel. Evans v. Moore (1982), 69 Ohio St.2d 88 ...... 10, 24, 28, 30,31
State ex rel. Hackley v. Edmonds (1948), 150 Ohio St. 203 ...... 9
State ex rel. Harris v. Williams (1985), 18 Ohio St.3d 19 ...... 15, 16, 19
State ex rel. Navratil v. Medina Cty. Bd. of Commrs. (Oct. 11, 1995), 9th Dist. App. No. 2424-M ...... 22, 23
State v. Buckeye Elec. Co. (1984), 12 Ohio St.3d 252 ...... 18, 27, 30
Struthers v. Sokol (1923), 108 Ohio St. 263 ...... 8
Swallow v. Industrial Com'n of Ohio (1988), 36 Ohio St.3d 55 ...... 21
TLT Constr. Corp. v. U.S. (2001), 50 Fed.C1. 212 ...... 11,13
iv Transco Security, Inc. v. Freeman (6th Cir. 1981), 639 F.2d 318 ...... 15
Trucco Constr. Co., Inc. v. Columbus, 2006-Ohio-6984 ...... 7
Wainwright v. Sykes (1977), 433 U.S. 72 ...... 14
Wisconsin Dept. of Indus., Dev., Labor and Human Relations v. Gould Inc. (1986), 475 U.S. 282 ...... 21,22
Zents v. Bd. of Commrs. (1984), 9 Ohio St.3d 204 ...... 25
CONSTITUTIONAL PROVISIONS; REGULATIONS; RESOLUTIONS; STATUTES: Paee
Am. Sub.H.B. 350, 145 Ohio Laws 5572 ...... 16, 17
Arn.S.B. 201, 131 Ohio Laws 996 (1965) ...... 16
Chapter 15, Title 29, U.S. Code ...... 27
Franklin County Resolution 180-08 ...... 6, 12, 17, 18, 19
Franklin County Resolution 421-02 ...... 5, 15, 19, 22, 23. 28
Ohio Constitution, Article X ...... 8, 25, 26
Ohio Constitution, Article X, Section 1 ...... 26
Ohio Constitution, Article XVIII ...... 8, 26
Ohio Constitution, Article XVIII, Section 3 ...... 25
R.C. 119(D) ...... 16
R.C. 125.05 ...... 29
R.C. 125.47-125.59 ...... 29
R.C. 1501.012 ...... 29
R.C. 152.18 ...... 29
v R.C. 1523.03 ...... 29
R.C. 153.01-153.12 ...... 29
R.C. 153.65-153.70 ...... 29
R.C. 307.86 ...... 26
R.C. 307.86-307.92 ...... 29
R.C. 309.08 ...... 1, 18
R.C. 317.20(C) ...... 29
R. C. 3313.46 ...... 29
R.C. 3318.10 ...... 29
R.C. 3375.41 ...... 29
R.C. 4115.03 ...... 3
R.C. 4115.03(B) ...... 30
R.C. 4115.03-4115.16 ...... 18,24
R.C. 4115.03-4115.21 ...... 1, 13, 27
R.C. 4115.10 ...... 18
R.C. 4115.10(A) ...... 3,4
R.C. 4115.10(B) ...... 1
R.C. 4115.10(C) ...... 3,4
R.C. 4115.13 ...... 2,16
R.C. 4115.13(A) ...... 1,30
R.C. 4115.13(B) ...... 2, 3, 16, 17,30
R.C. 4115.13(C) ...... 3, 14
R.C. 4115.13(D) ...... 3, 14, 16,
vi 17, 29, 30
R.C. 4115.13(G) ...... 2
R.C. 4115.13(G)(2) ...... 17
R.C. 4115.13 (H) ...... 1
R.C. 4115.132 ...... 1
R.C. 4115.133 ...... 1, 16, 18, 24
R.C. 4115.133(A) ...... 3, 4, 16, 18
R.C. 4115.133(B) ...... 3, 14, 15
R.C. 4115.133(C) ...... 18,27
R.C. 4115.99 ...... 1,18
R.C. 4582.31(A)(18)(b) ...... 1,29
R.C. 505.37 ...... 29
R.C. 515.01 ...... 29
R.C. 5525.01-5525.99 ...... 29
R.C. 6131.37-31.41 ...... 29
R.C. 749.09-749.14 ...... 29
R.C. 749.28-749.31 ...... 29
R.C. 9.312 ...... 29
R.C. Chapter 119 ...... 16, 17
R.C. Chapter 4114 ...... 27
R.C. Chapter 4115 ...... 1, 4, 6, 7, 10, 11, 13- 18, 22, 23, 27-31
vii Section 151 et seq., Title 21, U.S. Code ...... 21
Section 9.103, Title 48, C.F.R ...... 11
Section 9.40 1, Title 48, C.F.R ...... 11
Section 9.405, Title 48, C.F.R ...... 11
Section 9.406-3, Title 48, C.F.R ...... 11
Title 26, U.S. Code ...... 27
U.S. Constitution, Amendment IV ...... 16
U.S. Constitution, Amendment V ...... 15, 16
U.S. Constitution, Amendment VI ...... 16
U.S. Constitution, Amendment XIV ...... 15, 16
OTHER AUTHORITIES Page
Black's Law Dictionary (8th ed. 2004) ...... 11
Barbara Carmen, All Eyes on County Bidding Rules, Apr. 13, 2008, Columbus Dispatch ...... 20
viii I. STATEMENT OF FACTS
This case began when the Franklin County Board of Commissioners (the Board) declared
The Painting Company ineligible to compete for its Huntington Park constraction project, citing its prevailing wage policy. This Court has granted The Painting Company and the Associated
Builders & Contractors of Central Ohio (ABC) the opportunity to explain why the state prevailing wage law supersedes the county's policy.
A. Debarment under R.C. Chapter 4115
The prevailing wage law, R.C. Chapter 4115, Sections 4115.03 through 4115.21 and
4115.99, bestows primary responsibility for administration and enforcement upon the
Department of Commerce. The Department investigates every prevailing wage complaint it receives to evaluate whether an underpayment occurred, and if so, whether it was intentional.
R.C. 4115.13(A), 4115.132. It has the power to collect underpayments and to debar contractors who intentionally violate prevailing wage obligations. R.C. 4115.10(B), 4115.133. Counties have only a limited enforcement role - prosecution of criminal violations of the statute. R.C.
309.08, 4115.99.
R.C. 4115.13(H) defines an intentional violation:
As used in this section, "intentional violation" means a willful, knowing, or deliberate failure to comply with any provision of sections 4115.03 to 4115.16 of the Revised Code, and includes, ***:
(1) An intentional failure to submit [payroll] reports *** or knowingly submitting false or erroneous reports;
(2) An intentional misclassification of employees for the purpose of reducing wages;
(3) An intentional misclassification of employees as independent contractors or as apprentices;
(4) An intentional failure to pay the prevailing wage;
1 (5) An intentional failure to comply with the allowable ratio of apprentices to skilled workers * * * ;
(6) Intentionally allowing an officer of a [debarred] contractor or subcontractor *** of the Revised Code to perform work on a public improvement.
The statute provides guidelines for "determining whether a contractor intentionally violated the prevailing wage law," R.C. 4115.13(G), instructing that:
[T]he director may consider as evidence either of the following:
(1) The fact that the director, prior to the commission of the violation under consideration, issued notification to the contractor, subcontractor, or officer of a contractor or subcontractor of the same or a similar violation, provided that the commission of the same or a similar violation of sections 4115.03 to 4115.16 of the Revised Code at a subsequent time does not create a presumption that the subsequent violation was intentional;
(2) The fact that, prior to the connnission of the violation, the contractor, subcontractor, or officer of a contractor or subcontractor used reasonable efforts to ascertain the correct interpretation of sections 4115.03 to 4115.16 of the Revised Code from the director or of the Revised Code, provided that a violation is presumed not to be intentional where a contractor, subcontractor, or officer of a contractor or subcontractor complies with a decision the director or designated representative issues pursuant to a request made under section 4115.131 of the Revised Code.
Id. The latter provision is a safe haven from debarment for contractors who use certain
reasonable efforts to comply with the prevailing wage law. Id.
When a Department of Commerce investigation results in a recommended finding of an
intentional violation, the accused contractor receives a number of procedural protections. R.C.
4115.13. The Departrnent
shall give written notice by certified mail of that recommendation to the [accused contractor] which also shall state that the [accused contractor] may file with the director an appeal of the recommendation within thirty days after the date the notice was received.
R.C. 4115.13(B). The appeal takes the form of an evidentiary hearing. Id.
2 For the purpose of the hearing, the director may designate a hearing examiner who shall, after notice to all interested parties, conduct a hearing and make findings of fact and recommendations to the director. The director shall make a decision, which shall be sent to the affected parties.
Id. The contractor has sixty days to appeal an adverse decision to the Court of Common Pleas.
R.C. 4115.13(D).
R.C. Chapter 4115 requires the Director to report convictions and adjudicated intentional violations to the Secretary of State, who must then publish the contractor's name on a debarment list. R.C. 4115.133(A). Debarment is a significant sanction:
No public authority shall award a contract for a public improvement to any contractor, subcontractor, or officer of a contractor or subcontractor during the time that the contractor's, subcontractor's, or officer's name appears on [the secretary of state's debarment] list. The filing of the notice of conviction or of the finding with the secretary of state constitutes notice to all public authorities.
R.C. 4115.13(C). "Public authority" includes any political subdivision of the state, such as
Franklin County. R.C. 4115.03. Debarment for a first intentional violation lasts one year; a
second intentional violation within five years triggers an additional three-year debarment. R.C.
4115.133(B).
If the Department of Commerce investigation reveals an underpayment that was not
intentional, the statutory notice and hearing procedures do not apply. See R.C. 4115.13(B) ("If
the director or designated representative recommends that the alleged violation was an
intentional violation ***." (emphasis added)). Instead, either an underpaid employee or the
Department seeks to collect any alleged underpayment that the employer disputes, via a lawsuit
if necessary. R.C. 4115.10(A), (C). If a contractor unsuccessfully opposes prevailing wage
collection in court, it may be ordered to pay the amount of underpayment, an additional penalty
up to 100% of that amount, and the opposing party's attorneys' fees. Id. However, the
3 contractor cannot be debarred under R.C. Chapter 4115 without either a conviction or an adjudication of an intentional violation. See R.C. 4115.133(A).
The Painting Company has never intentionally violated R.C. 4115 and has never been debarred by the State. (Tr. Trans. 158:11-19, Supp. at 60.) In 2007, The Painting Company and the Department of Commerce settled roughly $190,000 in alleged underpayments for less than
25% of that amount. (Tr. Trans. 173:12-174:18, Supp. at 71-72; Tr. Trans. 259:20-260:13, Supp. at 94-95; Pls' Ex. 21, Supp. at 163-171.) If The Painting Company had taken these determinations to trial, it would have risked incurring the Department's legal fees. R.C.
4115.10(A), (C). Settlement was a business decision that considered the amount at stake and the costs of defending a number of complex legal issues. (Tr. Trans. 174:4-18, Supp. at 72.) The settlement expressly stated:
WHEREAS, The Painting Company disputes any liability for the underpayment of prevailing wages * * *; and
***
WHEREAS, [the Department of] Commerce and The Painting Company have successfiully negotiated a settlement of the dispute without any acknowledgement of liability by The Painting Company;
NOW THEREFORE, * * * the Department of Commerce, on behalf of the State of Ohio, hereby releases and forever discharges The Painting Company * * * from any and all * * * penalties * * * arising out of or in any way concerning, directly or indirectly, claims against The Painting Company for the alleged underpayment of prevailing wages by The Painting Company [on specified projects].
***
It is understood and agreed by [the Department of] Commerce that this release constitutes a compromise settlement of the disputed claim or claims, and that payment by The Painting Company of the above-stated settlement is not to be construed as and does not constitute an admission of liability or wrongdoing on the part of The Painting Company.
(Pls' Ex. 31, Supp. at 167-69 (attaching settlement agreement.))
4 B. Franklin County's Debarment of The Painting Company
The Board adopted its Quality Contracting Standards Resolution (the Resolution) in
2002. (Tr. Stip. 27., Supp. at 2, 9.) The Resolution added a prevailing wage compliance certification requirement to the Franklin County invitation to bid. Franklin Count Res. 421-02.
It requires contractors bidding on Franklin County prevailing wage projects to certify that they
"have not been debarred from public contracts or found by the state (after all appeals) to have violated prevailing wage laws more than three times in a two-year period in the last ten years."
Id., Apx. at 40 item 5 (emphasis added). The Resolution does not differentiate intentional violations from unintentional underpayments. (Tr. Trans. 57:14-19, supp. at 39; Tr. Trans.
61:15-21, supp. at 41.) It treats prevailing wage settlements like the one the Painting Company entered in 2007 as violations found by the state after all appeals. (Tr. Trans. 68:12-16, Supp. at
45.) If a contractor cannot make the required certification, the Board automatically rejects its bid. (See Tr. Stip. 75, Supp. at 2, 18; Tr. Trans. 76:15-77:1, Supp. at 48-49.) The Board does not consider the contractor's bid amount, experience, or qualifications. (Pls' Ex. 16, Supp. at
117 (Painting Co. "not eligible.")) According to the Board, its interpretation and application of the Resolution has been consistent from 2002 to the present. (Brief of Board, Franklin App.
(May 5, 2008) at 12, Supp. at 177; Tr. Trans. 270:12-19, Supp. at 99.)
In April 2005, the Board announced its Huntington Park construction project. (Tr. Stip.
37-38, Supp. at 2, 12.) The Painting Company submitted the lowest sealed bid on the painting scope of work for Huntington Park, beating the next lowest bid by over $45,000. (Tr. Stip. 58,
60, 62, Supp. at 2, 15.) The Painting Company has an excellent record of performance on a number of sports venues comparable to Huntington Park in size and design, (Tr. Trans. 153:11-
22, Supp. at 58), and it received the full support and recommendation of both the project
5 manager, (Tr. Stip. 47, 65-67, Supp. at 2, 13, 16), and the owner's representative, (Tr. Stip. 41,
67, Supp. at 2, 13, 16). Despite all of the above, the Board threw out The Painting Company's bid, (Tr. Stip. 75, 91, Supp. at 2, 18, 20), stating:
The Painting Company has been found by the State of Ohio to have violated the State's prevailing wage laws more than three times in a two-year period within the past ten years; therefore, the Painting Company is not eligible for award of this contract.
(Tr. Stip. 75, Supp. at 2, 18; Pls' Ex. 16, Supp. at 117.) The Board did not consider The Painting
Company's bid amount, its performance history, or the recommendations of the project manager and the owner's representative. (Id.) It paid no heed to the Secretary of State's debarment list.
(Tr. Trans. 76:15-77:1, Supp. at 48-49.) It relied solely on its own interpretation of records it obtained from the Department of Commerce, (Tr. Trans. 62:10-63:1, Supp. at 62-63); Franklin
County Res. No. 180-08, Apx. at 44, which interpretation the Department neither approved nor endorsed, (see Pls' Ex. 6, Supp. at 105-07 ("[The Board's] quest for a defmition of `violation' cannot be secured through a review of [R.C. Chapter 4115] in and of itself. ***[T]he mere fact that back wages are owed" is "not necessarily" a violation.)).
C. Procedural History
The Painting Company and ABC filed the instant case to challenge the rejection of The
Painting Company's bid and the constitutionality of the Resolution. (Compl., Franklin Com. P1.
(March 5, 2008), Supp. at 3.) ABC is a trade association that promotes open competition and free enterprise in the construction industry, (Tr. Trans. 131:22-23, 132:5-14, Supp. at 53-54);
The Painting Company is an ABC member. (Tr. Trans. 152:14-21, Supp. at 57.) Following an expedited trial, the common pleas court ruled that the Board did not abuse its discretion in rejecting The Painting Company's bid, and that R.C. Chapter 4115 does not preempt the
Resolution. (Decision, Franklin Com. P1. (March 31, 2008), Apx. at 15.) The Tenth District
6 Court of Appeals affirmed, holding that "the pertinent specifications do not impermissibly conflict with Ohio's prevailing wage statutes." (Nunc Pro Tune Op., Franklin App. (June 13,
2008) at ¶ 18, Apx. at 15.) ABC and The Painting Company appealed. (Notice of Appeal (July
28, 2008), Apx. at 1.) This Court accepted the appeal, (Entry (December 3, 2008)), deciding to review one issue: whether the comprehensive scheme in R.C. Chapter 4115 preempts the Board from conducting its own prevailing wage debarment policy. (Id. (accepting appeal as to
Proposition of Law No. III); Memorandum in Support of Jurisdiction (July 28, 2008).)
II. STANDARD OF REVIEW
Conflict between a local enactment and a state statute is an issue of law reviewed de novo. Am. Fedn. of State, Cty. and Mun. Emp. Local No. 47 v. Warren, 177 Ohio App. 3d 530,
535, 2008-Ohio-3805, 895 N.E.2d 238 at ¶ 30; Trucco Constr. Co., Inc. v. Columbus, 10th Dist.
No. 05AP-1134, 2006-Ohio-6984 at ¶ 9 (citing Nationwide Mut. Fire Ins. Co. v. Guman Bros.
Farm (1995), 73 Ohio St. 3d 107, 108, 652 N.E.2d 684); Akron v. Callaway (2005), 162 Ohio
App.3d 781, 2005-Ohio-4095, 835 N.E.2d 736 at ¶ 23. Accordingly, the decision below should receive no deference. E.g., Champion Gym & Fitness, Inc. v. Crotty, _ N.E.2d. _, 2008-Ohio-
5642 at 19.
III. LEGAL STANDARDS
This Court's decisions enumerate a clear "test for determining whether a municipal ordinance is displaced by a state measure." Cincinnati v. Baskin, 112 Ohio St.3d 279, 2006-
Ohio-6422 at ¶ 9.
`A state statute takes precedence over a local ordinance when ( 1) the ordinance is in conflict with the statute, (2) the ordinance is an exercise of the police power, rather than of local self-government, and (3) the statute is a general law.'
Id. at ¶ 10, quoting Canton v. State, 95 Ohio St.3d 149, 2002-Ohio-2005 at ¶ 9; see also, Am.
Fin. Servs. Assn. v. Cleveland, 112 Ohio St.3d 170, 2006-Ohio-6043 at ¶ 30 (referencing "the 7 Canton test"); Auxter v. Toledo (1962), 173 Ohio St. 444, 446, 20 0.O.2d 71, 183 N.E.2a 920
(describing same three elements). Because counties are not municipalities, the second element must be modified as described below. The first and third elements apply to counties exactly as
Cincinnati applied them to municipalities.
This Court has described the application of the first Cincinnati element, conflict with state law, as follows:
`[I]n determining whether an ordinance is in conflict with general laws, the test is whether the ordinance permits or licenses that which the statute forbids and prohibits,and vice versa.'
Cincinnati, 112 Ohio St.3d 170 at ¶ 19, quoting Struthers v. Sokol (1923), 108 Ohio St. 263 at paragraph two of the syllabus (internal quotation marks omitted); see also Marich v. Bob Bennett
Constr. Co., 116 Ohio St.3d 553, 880 N.E.2d 906, 2008-Ohio-92, at ¶ 30-35. When state law
does not explicitly foreclose the local enactment, a conflict-by-implication test is used. Am. Fin.
Servs. Assn., 112 Ohio St.3d 170 at ¶ 41; see also, Cincinnati at ¶ 56 (O'Connor, J., concurring
in judgment only) (describing test for field preemption). For example, in Lorain v. Tomasic
(1979), 59 Ohio St.2d 1, 13 0.O.3d 1, 391 N.E.2d 726, this Court ruled that a state statute
prohibiting per-session charity bingo payouts exceeding $3500 implicitly sanctioned payouts up
to and including that amount. See Am. Fin. Servs. Assn. 112 Ohio St.3d 170 at ¶ 43. Lorain
struck down a local $15001imit because of the implicit conflict with state law. See id.
The second element of the Cincinnati test, the zone of local power protected by the Home
Rule Amendment, must be modified to fit this case. Non-chartered counties lack home rule
authority under the Constitution, compare Article X, Ohio Constitution, with Article XVIII, Ohio
Constitution, and so they can only derive legislative authority from a specific statutory grant.
Geauga Cty. Bd of Commrs. v. Munn Rd. Sand & Gravel (1993), 67 Ohio St.3d 579, 582-83,
621 N.E.2d 696; Cincinnati W. & Z. Rd. Co. v. Com'rs of Clinton County (1852), 1 Ohio St. 77, 8 89. It follows that the enactments of non-chartered counties must never conflict with state laws.
See Geauga, 67 Ohio St.3d at 583.
If the Home Rule. Amendment were at issue, the second Cincinnati element would be evaluated under the statewide concern doctrine. "[T]he term `statewide concern' describes * * * those matters which are neither local self-government nor local police and sanitary regulations."
Am. Fin. Servs. Assn. 112 Ohio St.3d 170 at ¶ 29 (internal quotations omitted). This is because
"the framers of the [Home Rule Amendment] did not want to `impinge upon matters which are of a state-wide nature or interest."' Id. at ¶ 30, quoting State ex red. Hackley v. Edmonds (1948),
150 Ohio St. 203, 212, 37 O.O. 474, 8- N.E.2d 769. Thus, issues of statewide concern fall beyond the power of local self-government. One justice has suggested that two key factors determine whether an issue is one of statewide concern: "(1) A need for uniform regulation exists and (2) any local regulation of the matter would have extraterritorial effects." Id. at ¶ 56
(O'Connor, J., concurring in judgment only). See also id. at ¶ 119 (Pfeiffer, J., dissenting)
(focusing on extraterritorial effects or lack thereof); Beachwood v. Bd of Elections (1958), 167
Ohio St. 369, 371.
The third element of the Cincinnati test is whether the state statute is a general law.
`To constitute a general law for purposes of home-rule analysis, a statate must (1) be part of a statewide and comprehensive legislative enactment, (2) apply to all parts of the state alike and operate uniformly throughout the state, (3) set forth police, sanitary, or similar regulations, rather than purport only to grant or limit legislative power of a municipal corporation to set forth police, sanitary, or similar regulations, and (4) prescribe a rule of conduct upon citizens generally.'
Cincinnati, 112 Ohio St.3d 279 at ¶ 13, quoting Canton, 95 Ohio St.3d 149 at ¶ 21. This Court has already affirmed that R.C. Chapter 4115 is a general law barring contrary local action. State ex rel. Evans v. Moore (1982), 69 Ohio St.2d 88, 92.
9 In summary, if three elements are present, ( 1) conflict with a state statute, (2) lack of protected local power, and (3) the general nature of the state statute, then the local action is unconstitutional. Cincinnati, 112 Ohio St.3d at ¶ 9-10.
IV. ARGUMENT
Proposition of Law: The state's comprehensive statutory scheme, which balances competing public interests in prevailing wage compliance and competition for public contracts, displaces Franklin County's conflicting debarment provision.
The Resolution is unconstitutional because it meets each of the three Cincinnati elements.
First, it conflicts with R.C. Chapter 4115, taking for Franklin County a role that the General
Assembly reserved for the state by imposing debarment more broadly, more severely, and without the procedural protections that state law requires. Second, prevailing wage enforcement is not a valid exercise of any power that the Board has under the Constitution or any statute.
Finally, R.C. Chapter 4115 is a comprehensive statewide enforcement scheme, and it preempts contrary local policies. This Court should overturn the decision below and remand for further consistent proceedings.
A. The Board's Prevailing Wage Enforcement Conflicts with R.C. Chapter 4115.
The Resolution satisfies the first element of the Cincinnati test, conflict with state law.
112 Ohio St.3d 279 at ¶ 10. It conflicts with R.C. Chapter 4115 in at least four important ways:
(1) it imposes debarment more broadly than R.C. Chapter 4115;
(2) it imposes debarment on harsher terms than R.C. Chapter 4115;
(3) it imposes debarment without the procedural protections that R.C. Chapter 4115
requires; and
10 (4) it usurps the Department of Commerce's enforcement authority under R.C. Chapter
4115, obstructing the efficient resolution of prevailing wage issues.
These direct and glaring conflicts must be resolved in favor of R.C. Chapter 4115, and the decision below should be reversed.
1. The Resolution is a Debarment Provision.
Debarment is "[t]he act of precluding someone from having or doing something."
Black's Law Dictionary (8th ed. 2004). The federal acquisition system presents a useful distinction between debarments and responsibility determinations. Federal regulations define debarment as a categorical disqualification from all federal contracts for a period of time,
Section 9.405, Title 48, C.F.R., but a responsibility determination evaluates whether a contractor is qualified to perform a particular contract, Section 9.103, id. A contracting officer must perform a responsibility determination before entering any contract, however small. Id. On the other hand, only a few high-level federal officials can impose debarment. Section 9.401, id.
(defining `debarring official'). Debarment follows formal procedures that provide notice and an opportunity to oppose the debarment, including a formal evidentiary hearing on all genuine disputes of material fact. Section 9.406-3, id. However, courts recognize that agencies sometimes impose debarment outside the regulations:
De facto debarment occurs when an agency bars a contractor from competing for government contracts for a certain period of time without following the applicable debarment procedures * * * .
TLT Constr. Corp. v. US. (2001), 50 Fed.Cl. 212, 215 (internal citations omitted). De facto
debarment is shown when an agency indicates by statement or action that a contractor will not be
considered for future contracts. Id. at 215-16 (citing CRC Marine Serv., Inc. v. U.S. (1998), 41
Fed.Cl. 66, 84).
11 The Resolution's prevailing wage certification requirement is a debarment provision. As the Board interprets the requirement,
To be entitled to a contract, bidders must certify that they have not been debarred from public contracts or have not been found by the state (after all appeals) to have violated prevailing wage laws more than three times in a two-year period in the last ten years.
(Brief of Board, Franklin App. (May 5, 2008) at p. 6(internal quotation marks omitted), Supp. at
174.) In effect, contractors cannot bid on Franldin County projects until eight years have elapsed from the end of most recent two-year period in which they have more than three `violations,' as
defined by the Resolution. Up to that point, they are not eligible for contracts and the Board will
reject their bids. In this case, the Board decided that The Painting Company's prevailing wage
determinations from 2005 and 2006 were `violations' triggering the Resolution. (Ex. 16, Supp.
at 117 (attaching records); Franklin County Res. 180-08, Apx. at 55-99 (same).) This means that
The Painting Company cannot certify that it has no two-year period of more than three
`violations' in the past ten years until 2015. The Resolution renders The Painting Company
ineligible for any and all Franklin County prevailing wage contracts for a period of years. By
definition, it is a debarment provision.
The Board maintains that the form of the Resolution is more important than its substance,
that the Resolution is somehow harmless because it is not a statute or ordinance. (Brief of
Board, Franklin App. pp. 16-17, Supp. at 178-79; Tr. Trans. 221:5-21, Supp. at 80.) However,
the Board has defended the Resolution as within its discretion, properly enacted, and
unambiguous. In this case, the Board has interpreted the Resolution to preclude The Painting
Company from winning any Franklin County contracts from Huntington Park until 2015.
Whatever the Resolution's technical status, its effect on the untold number of contractors who fit
its terms is clear: it debars them all, automatically. The Resolution is plainly a debarment rule,
12 de facto or otherwise. TLT Constr. Corp., 50 Fed. Cl. at 215-16; Stapp Towing, Inc. v.US.
(1995), 34 Fed.Cl. 300, 312.
2. The Resolution Imposes Debarment More Broadly than R.C. Chapter 4115, and on Harsher Terms.
The Resolution conflicts with R.C. Chapter 4115 because it debars many more contractors than R.C. Chapter 4115, and for a much longer period of time. "When the state by comprehensive statutory plan has imposed regulations statewide where there is a genuine statewide concern for uniformity * * * any ordinance which differs from the statutes by imposing more restrictive requirements is in `conflict' therewith and is ipso facto invalid." Eastlake v.
Ohio Bd of Bldg. Stds. (1981), 66 Ohio St.2d 363, 369, 20 0.O.3d 327, 422 N.E.2d 598.
The Resolution imposes debarment far more broadly than R.C. Chapter 4115, punishing contractors who unintentionally underpay the prevailing wage. Unintentional underpayment determinations often come about through no fault of the contractor. A contractor can inadvertently underpay the prevailing wage by having the wrong ratio of apprentices on a particular site, by misclassifying employees or job functions, by relying on mistaken advice that a particular fringe benefit program is covered by the statute, or by failing to catch an error in calculating paychecks. See R.C. 4115.03-4115.21. In a recent case, a general contractor was held liable for its subcontractor's failure to pay the prevailing wage, even though the contractor had no knowledge of the underpayments. Bergman v. Monarch Constr. Co., 12th Dis. No.
CA2008-02-044, 2009-Ohio-551, ¶ 5-6. A determination can be assessed against a contractor when a public authority fails in its responsibility under R.C. Chapter 4115 to notify the contractor of an increase in applicable rates. Id. at ¶ 61-62, 68. In this case, The Painting
Company had to pay a determination due to a public authority's error. (Tr. Trans. 171:16-
172:28, Supp. at 69-70.) The Department of Commerce advised The Painting Company at that
13 time that it was responsible to pay the determination, and could then seek restitution from the public authority. (Id.) These are all examples of inadvertent underpayments of the prevailing wage.
The Resolution does not distinguish between a contractor who intentionally circumvents prevailing wage law and one who runs afoul of it due to a misunderstanding, a clerical error, or even the error of a public authority. (Tr. Trans. p. 57:14-19, Supp. at 39.) Both can be automatically rendered ineligible to bid on and win Franklin County contracts. As the Board stated below, to read the Resolution any other way would be "absurd." (Brief of Board, Franklin
App. at 6, Supp. at 174.) In stark contrast to the Resolution, R.C. Chapter 4115 requires the unwitting violator to make restitution but does not restrict the contractor's ability to compete for and win future contracts. R.C. 4115.13(C). The General Assembly reserved debarment for intentional violators. R.C. 4115.13(D). This is a sensible policy decision, for no penalty could be expected to deter accidental violations. E.g., Wainwright v. Sykes (1977), 433 U.S. 72, 97
(Brennan, J., dissenting) ("[U]nplanned and unintentional action of any kind generally is not subject to deterrence * * * ."). The Resolution punishes conduct that R.C. Chapter 4115 pointedly refrains from punishing. In fact, the Board's counsel admitted that to interpret the
Resolution as narrower than R.C. Chapter 4115, or even equal in scope, would be "silly." (Tr.
Trans. pp. 222:16-223:17, Supp. at 81-82.) This is a serious conflict between the Resolution and
R.C. Chapter 4115. Eastlake, 66 Ohio St.2d at 369.
Compounding the Resolution's effect on innocent contractors, its penalty is far more severe than R.C. 4115.133(B). The state's maximum period of debarment is three years for a repeated intentional violation, R.C. 4115.133(B), and only one year for a first intentional violation. Id. In contrast, the Resolution excludes any contractor who has paid or settled
14 underpayment determinations (regardless of intent, and regardless of whether those determinations were settled without admission of liability) "more than three times in a two-year period in the last ten years." Franklin County Res. 421-02. This effectively debars a contractor for a minimum of eight years, a penalty grossly out of proportion with the problem addressed.
Moreover, if a contractor incurs additional `violations' on contracts with other Ohio public
authorities, the debannent period can automatically extend. It is not difficult to see how the
Resolution could convert recurring inadvertent underpayments into an indefinite and effectively
permanent debarment. Because the Resolution dramatically expands the duration of debarment,
doubling and redoubling what the General Assembly enacted, it is repugnant to R.C. Chapter
4115.
3. The Resolution Deprives Contractors of the Process Due under R.C. Chapter 4115.
The Resolution also impermissibly conflicts with R.C. Chapter 4115 in that it deprives
contractors of important procedural protections guaranteed by the General Assembly. The
interests at stake in a debarment are vitally important and demand a fair procedure. "Debarment
is a severe penalty which may have a serious economic impact upon a business and may well
cause it to fail." Mastercrafi Flooring, Inc. v. Donovan (D.D.C. 1984), 589 F.Supp. 258, 263.
Debarment implicates a liberty interest protected by the U.S. Constitution, triggering the
requirements of due process. Transco Security, Inc. v. Freeman (6th Cir. 1981), 639 F.2d 318,
321; see also Berlanti v. Bodman (3d Cir. 1985), 780 F.2d 296, 300-02 (state prevailing wage
debarment statute created protected property interest in not being debarred, implicating
Amendments V and XIV, U.S. Constitution); State ex rel. Harris v. Williams (1985), 18 Ohio
St.3d 198, 202, 480 N.E.2d 471 (under Ohio law, R.C. Chapter 4115 actions with legally
significant impact require certain procedures).
15 Guarantees of procedural fairness appear throughout the current prevailing wage
debarment provision. Under R.C. Chapter 4115, the Department of Commerce first investigates
allegations and makes a recommendation as to whether a punishable violation was committed.
R.C. 4115.13(B). The contractor receives notice by certified mail of its right to appeal a
recommendation of intentional violation. Id. The appeal consists of a prompt hearing, which is
subject to the formal requirements of R.C. Chapter 119. See R.C. 119(D), 4115.13(B); Harris,
18 Ohio St.3d at 202. The contractor has the opportunity to present evidence to a designated
hearing examiner, and to confront the evidence against it. The hearing examiner prepares written findings of fact and a recommendation to the Director of the Department of Commerce, who
makes a written final decision. R.C. 4115.13(B). The contractor has the right to pre-debarment
judicial review of the decision. R.C. 4115.133(A), 4115.13(D). This litany of procedural
safeguards in R.C. Chapter 4115 indicates that the General Assembly wanted to prevent arbitrary
debarment decisions from harming innocent contractors.
Prior versions of R.C. Chapter 4115 also reflect careful attention to procedural fairness.
The first prevailing wage debarment provision, enacted in 1965, made criminal conviction a
prerequisite to debarment. Section 4115.13, Am.S.B. 201, 131 Ohio Laws 996 (1965), Apx. at
145. Criminal trials must provide a high level of procedural fairness. E.g., Amendments IV, V,
VI, and XIV, U.S. Constitution, In 1994, the General Assembly first allowed the Department of
Commerce to debar without a criminal conviction. Sections 4115.13(D), 4115.133, Am.
Sub.H.B. 350, 145 Ohio Laws 5572, 5577-5581, Apx. at 146, 148-50. In the same bill, it granted
contractors the important procedural rights they enjoy today. Section 4115.13(B) enacted the
right to a formal fact-finding hearing. Id., 145 Ohio Laws 5577, Apx. at 148. Section
4115.13(D) guaranteed a pre-debarment appeal to the court of common pleas. Id., 145 Ohio
16 Laws 5578, Apx. at 149. Section 4115.13(G)(2) provided a statutory safe haven for contractors who had used certain "reasonable efforts" to comply. Id., 145 Ohio Laws 5579, Apx. at 149.
For as long as the General Assembly has permitted debarment for prevailing wage issues, it has required procedures and safeguards that ensure a just outcome.
The Resolution, unlike any version of R.C. Chapter 4115, provides neither opportunity to present evidence about the factual basis of the debarment to an impartial fact-finder nor judicial review. The Board's treatment of The Painting Company shows practically no concern for the important interests at stake. First, county employees requested Department of Commerce records of all determinations or complaints against The Painting Company. (Tr. Stip. 69-70,
Supp. at 2, 17.) They then decided which determinations or complaints constituted violations that had been found by the state within the meaning of the Resolution. (Tr. Trans. 57:10-19,
Supp. at 39.) These employees counted these `violations,' applied the Resolution, and issued a formal rejection. (Tr. Trans. 62:10-22, Supp. at 42; PIs' Ex. 16, Supp. at 117.) The only appeal available to The Painting Company was a protest meeting with county officials. (Pls' Ex. 16,
Supp. at 118.) No fact-finder presided, no witnesses could be examined or confronted, and no written findings were produced. Compare Franklin County Res. 180-08, Apx. at 100-118
(attaching transcript of protest meeting), with R.C. Chapter 119 (state adjudication procedure).
Because the allegations contained in the files of the Department of Commerce were the only evidence that the county considered relevant, The Painting Company had no real opportunity to demonstrate its compliance with the law, through reasonable efforts or otherwise. Compare
Franklin County Res. 180-08, Apx. at 44, with R.C. 4115.13(G)(2). The protest meeting was a formality. The Board affirmed the rejection, which became effective immediately. Franklin
County Res. 180-08, Apx. at 44.
17 The General Assembly did not want debarment to be imposed without specific procedures and safeguards to ensure a just outcome. Because the Resolution circumvents the requirements of R.C. Chapter 4115, it is unconstitutional.
4. The Resolution Usurps the State's Role and Hinders its Prevailina Wage Enforcement.
In enacting and applying the Resolution,. the Board overstepped its role in the state
prevailing wage scheme. R.C. Chapter 4115 gives the Director of the Department of Commerce
sole authority to direct investigations, oversee adjudications, and impose debarment where
appropriate. R.C. 4115.10. R.C. 4115.133 and 4115.99 set out the intended interaction between
local contracting authorities and state prevailing wage law. R.C. 4115.133(A) requires the
Secretary of State to keep a list of all contractors "who have been prosecuted and convicted for
violations of or have been found to have intentionally violated sections 4115.03 to 4115.16 of the
Revised Code." R.C. 4115.133(C) provides that "[t]he filing of the notice of conviction or of the
finding with the secretary of state constitutes notice to all public authorities" that they may not
contract with the violator. R.C. 4115.99 assigns counties a limited but legitimate enforcement
role - the ability to prosecute prevailing wage violations. R.C. 309.08(A), 4115.99; State v.
Buckeye Elec. Co. (1984), 12 Ohio St.3d 252, 254, 466 N.E.2d 894. Conviction automatically
earns a contractor a place on the Secretary of State's prevailing wage debarment list. R.C.
4115.133(A).
Here, the Board did not perform its designated function under the law. It did nbt
prosecute The Painting Company, and it all but ignored the Secretary of State's debarment list.
Instead, the Board set up its own blacklist with its own criteria and its own process. The
Department's investigation of The Painting Company found no intentional violation and no
cause for debarment. (See Tr. Trans. pp. 244-48, Supp. at 88-92 (describing Department
18 resolution of determinations.)) In spite of the Department's advice that nothing in either the statute or the Department's files defines a "violation," (Pls' Ex. 6, Supp. at 105-07,) the Board disregarded the Department's process and settlements, summarily made its own findings of violations, disqualified The Painting Company from the Huntington Park project, and effectively debarred it from future bidding on Franklin County contracts. Franklin County Res. 180-08,
Apx. at 44; Franklin County Res. 421-02, Apx. at 38. The Board's reinterpretation of the
Director's determinations (which this Court has compared to right-to-sue letters that "can fix no obligation nor impose any liability," Harris, 18 Ohio St.3d at 200-201) is an unconstitutional assumption of the state's enforcement authority.
The Board's actions will significantly impact the Department of Commerce's ability to enforce the prevailing wage law. The Department routinely mediates and settles prevailing wage issues with contractors. (Pls' Ex. 6, Supp. at 107 ("We make decisions based on the facts of the case at hand exercising our best judgment to ultimately seek the best resolution for all."); Tr.
Trans. 259:1-19, Supp. at 94); see also Bergman, 2009-Ohio-551 at ¶ 50-52 (describing
Department of Commerce practices of continuing negotiation and `redeterminaton' before and during trial). Now that this case has clarified and publicized the meaning and effect of the
Resolution, contractors who would otherwise routinely settle violations with the Department as a cost of doing business must now consider that Franklin County and other authorities may debar them as a result. The Resolution disqualifies contractors for all paid or settled determinations, intentional and inadvertent, large and small. (Tr. Trans. pp. 56:24-57:19, Supp. at 38-39.) This result is the same whether the `violations' are found by jury verdict and upheld on appeal or merely settled before trial for pennies on the dollar. (Tr. Trans. 68:12-16, Supp. at 45.) The only way for a contractor accused of underpayment to escape the Resolution is by obtaining a
19 favorable judicial outcome or by prolonging the judicial process. (Brief of Board, Franklin App., at p. 15 ("[U]p to the point of litigation, so long as the State ... determines that the contractor has not paid ..., then the contractor has been found by the State to have violated prevailing wage laws." (emphasis added)); see also Tr. Trans. 70:19-24, Supp. at 46 ('open' determinations not `violations.')). As enactments similar to the Resolution spring up throughout Ohio,l settling
determinations with the Department of Commerce becomes significantly less attractive to
contractors. Because of Franklin County's actions, the Department will find itself facing lengthy
and expensive trials and appeals on minor, inadvertent underpayments that it prefers to settle.
This will strain the Department's resources, raise the cost of resolving each prevailing wage
issue, and limit the number of complaints the Department can pursue annually. The Constitution
prohibits such local interference with state functions.
A county cannot be permitted to second-guess the state's prevailing wage policy
judgments. The settlement in this case was between The Painting Company and the Department
of Commerce, "on behalf of the State of Ohio," represented by the Attorney General. (Pls' Ex.
31, Supp. at 167-69 (attaching settlement agreement.)) None of the investigations of The
Painting Company resulted in notices or adjudications of intentional violations. The inadvertent
underpayment issues went to common pleas court, and The Painting Company presented strong
arguments that the determinations were incorrect and unfair. If The Painting Company had
prevailed at trial, it would have clearly established that it fully complied with the prevailing wage
requirements. On the other hand, it risked an unfavorable decision in some amount on a civil
judgment, which may have led to additional appeals or a different settlement. Even if that case
had produced a final decision, the only issue was whether money was owed. The Court would
' See Barbara Carmen, All Eyes on County Bidding Rules, Apr. 13, 2008, Columbus Dispatch at 02G. 20 not have adjudicated a violation that could lead to debarment under state law. The settlement agreement, duly drafted and approved by the Attorney General as the state's legal counsel, reflects the judgment that it was in the state's interest to resolve the case without a verdict. (Pls'
Ex. 31, Supp. at 167-69 (attaching settlement agreement.)) This judgment should be fmal. C.f.
Swallow v. Industrial Com'n of Ohio ( 1988), 36 Ohio St.3d 55, 57, 521 N.E.2d 778 (deference to agency expertise); Salvation Army v. Blue Cross & Blue Shield of N. Ohio (1993), 92 Ohio
App.3d 571, 576, 636 N.E.2d 399 (agencies' determinations of technical matters promote uniform policy and utilize accumulated expertise).
5. Local Enforcement Actions are as Disruptive to the State Prevailing Wage Scheme as a Conflict in Policy.
The Supreme Court of the United States confronted a strikingly similar issue in
Wisconsin Dept of Indus., Dev., Labor and Human Relations v. Gould Inc. (1986), 475 U.S. 282, a challenge to a Wisconsin law debarring contractors who violated the National Labor Relations
Act (NLRA), Section 151 et seq., Title 29, U.S. Code, three times within a five-year period. The state defended its statute as a legitimate exercise of its inherent power to select appropriate contracting partners. Id. at 287. Because the law was an enforcement provision and not a spending provision, the Court disagreed. Id. It held:
No other purpose could credibly be ascribed, given the rigid and undiscriminating manner in which the statute operated: firms adjudged to have violated the NLRA three times are automatically deprived of the opportunity to compete for the state's business.
Id. at 287-88 (footnote omitted; emphasis added). It cited the rule that "`conflict is imminent' whenever `two separate remedies are brought to bear on the same activity,"' id. at 286, quoting
Garner v. Teamsters (1953), 346 U.S. 485, 498-99, and observed that `[c]onflict in technique can be fully as disruptive to the system Congress erected [for enforcing the NLRA] as conflict in overt policy."' Wisconsin., 475 U.S. at 286, quoting Motor Coach Employees v. Lockridge 21 (1971), 403 U.S. 274, 287. The Court struck down the debarment provision because it
"assume[d] for the State of Wisconsin a role Congress reserved exclusively for the [federal government]." Id. at 291. See also, Chamber of Commerce of U.S. v. Brown (2008), 128 S.Ct.
2408, 2412 (citing Wisconsin).
Exactly as the State of Wisconsin tried to do, the Board in this case is imposing an additional penalty for violating a superior legislative enactment. The Resolution is more than a mere guideline for selecting responsible contracting partners; its "rigid and undiscriminating manner" belies that classification. Wisconsin., 475 U.S. at 287-88. The Resolution is plainly an enforcement provision because it automatically deprives contractors of the ability to compete for
Franklin County business. The Board admits that the Resolution's purpose is enforcement.
Franklin County Res. 421-02, Apx. at 38 ("[T]he Commissioners desire to further ensure that the
County's contractors are compliant with the law * * * ."). The Resolution thus assumes a role that the General Assembly reserved for the State. Even though it purports to promote the policy behind R.C. Chapter 4115, the Resolution is much broader and harsher, removes important procedural protections, and interferes with the State's enforcement efforts. It is as disruptive to the state enforcement scheme as the conflict in policy this Court struck down in Evans. 69 Ohio
St.2d 88, 92. This Court should apply Wisconsin's reasoning to this case, and should declare the
Resolution unconstitutional.
6. Navratil did not Evaluate a Debarment Provision.
The Board will no doubt renew its argument that this case is controlled by State ex rel.
Navratil v. Medina Cty. Bd. of Cornmrs. (Oct. 11, 1995), 9th Dist. App. No. 2424-M, 1995 WL
598549. (See Memorandum Opposing Jurisdiction of Appellees Franklin County Board of
Commissioners (Aug. 27, 2008) at pp. 9-10.) However, Navratil is inapplicable to the
22 Resolution. Both Navratil and the instant case involve a county board rejecting a low bid, but only the instant case challenges an express debarment provision. The contractor in Navratil was unable to show the existence of a policy either to reject bids or to exclude bidders based on prevailing wage issues. Navratil, 1995 WL 598549 at *4. The Statement of Bidder's
Qualifications in that case merely stated that "[i]f the Board determined that the lowest bidder was unqualified to do the work, it could award the contract to the next lowest bidder." Id. at * 1.
In fact, the board members testified that their decision to reject the low bid considered several factors unrelated to prevailing wage issues, including the bidder's reputation in the community,
"knowledge of problems regarding [the bidder's] work on a different * * * project [for the same county]," and the project manager's "reluctan[t]" and "weak" recommendation of the bidder. Id. at *3. On these facts, the Navratil court concluded that "[t]he Board was not prohibiting [the bidder] from contracting with the county." Id. at *4.
The instant case must be distinguished from Navratil. Unlike the plaintiff in Navratil,
ABC and The Painting Company challenge bright-line eligibility criteria contained in an enactment that has been in place for more than six years. Franklin County Res. 421-02, Apx. at
38. The Board's public statements, legal briefs, and resolutions clearly show how these criteria apply to The Painting Company and similarly-situated contractors. (E.g., Tr. Stip. 75, 91, Supp. at 2, 18, 20; Brief of Board, Franklin App., Supp. at 172.) The Resolution's certification requirement defines a class of contractors forbidden from bidding, much less contracting, on
Franklin County projects now and in the future. The Navratil plaintiff was unable to make such a showing, Navratil, 1995 WL 598549 at *4, because that case did not involve a debarment provision. Moreover, unlike the public authority in Navratil, the Board rejected The Painting
Company's low bid solely due to the prevailing wage certlftcation provision of the Resolution.
23 (Tr. Stip. 75, Supp. at 2, 18; Pls' Ex. 16, Supp. at 117-18.) Unlike the project manager in
Navratil, the project manager and the owner's representative on the Huntington Park project both recommended The Painting Company without reservation. (Tr. Stip. 65-67, Supp. at 2, 16.) The record contains no suggestion of poor workmanship or delays on any prior The Painting
Company contract. In fact, The Painting Company has an excellent record of performance on projects similar to Huntington Park. (Tr. Trans. 153:7-25, Supp. at 58.) Due to these crucial factual disparities, Navratil simply does not apply.
Even if Navratil were relevant to the facts of this case, it was wrongly decided and holds
no precedential value. Competitive bidding and prevailing wage enforcement are important
matters of statewide concern. See Evans, 69 Ohio St.2d at 91-92. The detailed scheme set out in
R.C. Chapter 4115 carefully balances these interests and shows a need for uniformity. R.C.
4115.03 to 4115.16. The State already maintains a list of all contractors excluded from public
contracts due to prevailing wage violations. R.C. 4115.133. Boards of education, municipalities,
and sewer districts cannot be allowed to compile their own blacklists based on their own
prevailing wage criteria. To do so would invite political manipulation of the bidding process.
The decision below puts Ohio on a path toward patronage, cronyism, and the end of meaningful
competitive bidding for public contracts. (Tr. Stip. 76, Supp. at 18; Tr. Trans. at 134:7-21,
Supp. at 55.) The General Assembly did not intend such a result.
B. Prevailing Wage Enforcement Is Not a Matter of County Government.
The Resolution satisfies the second element of the Cincinnati test, 112 Ohio St.3d 279 at
¶ 10, which addresses whether the enactment is within a protected zone of local power. Franklin
County has no authority to enact resolutions that contradict state law. The Home Rule
Amendment does not apply to Franklin County. Even if the Board could claim home rule
24 authority, prevailing wage policy is not a matter of local self-government that home rule proteots.
Instead, prevailing wage policy is a matter of demonstrated statewide concern. The Board's prevailing wage enforcement is an unauthorized and unconstitutional exercise of the police power.
1. Franklin County Lacks Home Rule Power.
The Home Rule Amendment reserves for municipalities "authority to exercise all powers of local self-government and to adopt and enforce within their limits such local police, sanitary and other similar regulations, as are not in conflict with general laws." Section 3, Article XVIII,
Ohio Constitution. The trial court cited the Home Rule Amendment in its analysis of
preemption, (Decision, Franklin Com. P1. (March 31, 2008) at p. 6, Apx. at 20), and the court of
appeals took its standard of preemption from a home rule case, (Nunc Pro Tunc Opinion,
Franklin App., at ¶ 14, Apx. at 12 (citing Eastlake, 60 Ohio St.2d 383)). However, counties are
not municipalities within the meaning of the Home Rule Amendment. Geauga Cty. Bd of
Commrs. v. Munn Rd. Sand & Gravel (1993), 67 Ohio St.3d 579, 582-83, 621 N.E.2d 696.
Although counties may acquire home rule power by charter, id. n.2 (describing Article X, Ohio
Constitution); Akron v. Meyer, 9th Dist. No. 03 CRB 05664, 2004-Ohio-4457 at ¶ 11, Franklin
County is a non-chartered county. See Zents v. Bd of Commrs. (1984), 9 Ohio St.3d 204, 208
n.8, 459 N.E.2d 881. Therefore, the Board has no home rule authority.
Paradoxically, the Board interprets its lack of home rule authority as a legislative blank
check, concluding that decisions like Cincinnati provide no guidance and so the Constitution
does not limit the Board in any way. (See Br. of Board, Franklin App., at pp. 16-17, Supp. at
178-79; Tr. Trans. 221:5-21, Supp. at 80.) That is far from true. In fact, non-chartered counties
have only as much legislative authority as the General Assembly grants them. Section 1, Article
25 X, Ohio Constitution; Blacker v. Wiethe (1968), 16 Ohio St.2d 65, 68, 242 N.E.2d 655. As this
Court eloquently stated:
[W]hat is a county? ***[I]t is a mere instrurnentality, a means in the hands of the legislative power to accomplish its lawful purposes; and to this extent, a creature in the hands of its creator, subject to be moulded and fashioned as the ever varying exigencies of the State may require. It would seem to follow, that it may, from time to time, be clothed with such powers, and charged with such duties, of a local administrative character, not vested elsewhere by the constitution, as the General Assembly may see fit to direct.
Cincinnati W. & Z. Rd. Co. v. Com'rs of Clinton County (1852), 1 Ohio St. 77, 89; see also,
Bundy v. Five Rivers Metroparks, 152 Ohio App.3d 426, 787 N.E.2d 1279, 2003-Ohio-1766 at ¶
42. More recently, Northern Ohio Patrolmen's Benevolent Assn. v. Parma (1980), 61 Ohio St.2d
375, 402 N.E.2d 519, established a presumption against the ability of political subdivisions to make enactments contrary to state laws. Id. at 378-79. A non-chartered municipality may sometimes override general statutes, but only because of its home rule authority. Id.; Geauga, 67
Ohio St.3d 582-83. A county is not a municipality. See Geauga, 67 Ohio St.3d at 582-83; compare Article X, Ohio Constitution, with Article XVIII, Ohio Constitution. A non-chartered county like Franklin County lacks home rule authority. Geauga, 67 Ohio St.3d at 582-83.
Therefore, Franklin County may never enact provisions that, like the Resolution, contradict state law.
The Board argues that its debarment provision is within its discretion to select the best contractors for its projects. (Tr. Trans. 221:5-21, Supp. at 80.) Of course, counties can consider legitimate quality factors in this regard. See R.C. 307.86. However, this grant of authority must be strictly construed. Geauga, 67 Ohio St.3d at 583. The Board can legitimately vet contractors for scope of proposed work, financial ability to perform, past performance on similar projects, and experience of its work force and management. It may also be allowed to consider final decisions of state and federal administrative agencies and courts of competent jurisdiction. 26 However, no statute authorizes counties to evaluate in the first instance whether a contractor has complied with state and federal laws such as R.C. Chapter 4115; OSHA, Chapter 15, Title 29,
U.S. Code; civil rights laws such as R.C. Chapter 4114; or tax laws such as Title 26, U.S. Code.
C.£ Geauga, 67 Ohio St. 3d at 53 ("[A] county does not have authority to regulate unless the
General Assembly affirmatively grants it. The grant must be in clear and certain terms."). Such
issues are wisely reserved for designated officials with relevant expertise to investigate and
adjudicate final decisions. E.g., R.C. 4115.03-4115.21 (Department of Commerce authority over
prevailing wage investigation, determination, and adjudication); O'Toole v. Denihan, 118 Ohio
St.3d 374, 889 N.E.2d 505, 2008-Ohio-2574 at ¶ 57 (expressio unius est exclusio alterius); see
also, Buckeye Electric Co., 12 Ohio St.3d at 253-54 (describing roles of Department of
Commerce, employee, and county in R.C. Chapter 4115). Although prevailing wage compliance
is the ornly issue here, the other laws cited are additional examples of authority designated to
superior agencies or courts. The Board may (and, in fact, must) consider a firm's prevailing
wage compliance history by consulting the Secretary of State's debarment list before awarding a
contract. R.C. 4115.133(C). However, R.C. Chapter 4115 provides it with no authority to write
that history in the first instance by interpreting non-final decisions, settlement agreements with
the State or cases dismissed with prejudice. Any assumption of that authority exceeds the
Board's lawful power.
2. The Resolution is an Exercise of the Police Power.
Even if the home rule power was at issue, it does not protect exercises of the police
power that conflict with state law. The Resolution is an exercise of the police power. The stated
purpose of the Resolution is "to further ensure that the County's contractors are compliant with
the law." Franklin County Res. 421-02, Apx. at 38. The Board confirmed this in arguments
27 below. (Brief of Board, Franklin App. p. 6, Supp. at 174; Tr. Trans. 221:5-21, Supp. at 80
(emphasis added).) Enforcement of a general state statute such as R.C. Chapter 4115 can in no way be construed as a matter of local self-government. It is an exercise of the police power. Am.
Fin. Servs. Assn., 112 Ohio St.3d 170 at ¶ 29-30. Therefore, if local enforcement of R.C.
Chapter 4115 conflicts with state law, it is unconstitutional. Id.
3. Prevailing Wage Law is a Matter of Statewide Concern.
Even when regulating local matters, subdivisions may not infringe on matters of statewide concern. Evans, 69 Ohio St.2d at 89-90. "[C]ourts should consider the [statewide concem] doctrine when deciding whether the ordinance is an exercise of local self-governrnent *
**." Am. Fin. Servs. Assn., 112 Ohio St.3d 170 at ¶ 30 (internal quotation and alteration omitted). "[W]here matters of statewide concern are at issue, the state retains the power- despite the Home Rule Amendment-to address those matters." Id. at ¶ 27.
R.C. Chapter 4115 balances two competing interests of statewide concern: prevailing wage policy and the promotion of competitive bidding. With respect to the former, this Court has held that:
The prevailing wage law evidences a legislative intent to provide a comprehensive, uniform framework * * * . The prevailing wage law delineates civil and criminal sanctions for its violation. * * *
* * * [T]hese considerations clearly transcend local boundaries, thus demonstrating the genuine statewide concern for compliance with and enforcement of the prevailing wage law.
Evans, 69 Ohio St.2d at 91-92 (footnote omitted; emphasis added). This Court has also recognized the public policy favoring competitive bidding:
The legislative intent which prompted the passage of R.C. 3313.46 [requiring competitive bidding on school improvement projects] was obviously to provide for open and honest competition in bidding for public contracts and to save the public harmless, as well as bidders themselves, from any kind of favoritism or fraud in its varied forms. 28 Bd. of Edn. of Chillicothe City Sch. Dist v. Sever-Williams Co. (1970), 22 Ohio St.2d 107, 115,
51 0.O.2d 173, 258 N.E.2d 605. "The intent of competitive bidding is to protect the taxpayer, prevent excessive costs and corrupt practices, and provide open and honest competition in bidding for public contracts." Cementech, Inc. v. City of Fairlawn, 109 Ohio St.3d 475, 849
N.E.2d 24, 2006-Ohio-2991 at ¶ 9(citing Danis Clarkco Landfill Co. v. Clark Cty. Solid Waste
Mgt. Dist. (1995), 73 Ohio St.3d 590, 602). The General Assembly's promotion of robust competition for public contracts is found throughout the Revised Code.2 R.C. Chapter 4115's debarment provision is unusual in that it reduces competition, limiting the pool of contractors eligible for competitive bidding. R.C. 4115.13(D). In crafting it, the General Assembly artfully balanced the two competing statewide concerns, sacrificing a degree of competition to protect its prevailing wage policy. (The Resolution addresses the same areas of statewide interest, clumsily tipping R.C. Chapter 4115's balance by inviting firms to seek advantage over competitors by
lodging prevailing wage complaints that can debar them without a fair adjudication.) The
statewide concern doctrine applies to prevailing wage enforcement, which is therefore not a
matter of local government. See Am. Fin. Servs. Assn., 112 Ohio St3d 170 at ¶ 30.
2 Examples of provisions promoting full, fair and open participation by the widest possible array of potential contractors, especially for construction, include R.C. 9.312 (defining `lowest responsive and responsible' standard), 125.05 (competitive bidding for state supplies), 125.47- 125.59 (same for printing), 152.18 (same for Ohio Bldg. Auth. construction), 153.01-152.12 (same for state public improvement construction), 153.65-153.70 (same for state public improvement design svcs.), 307.86-307.92 (same for most county contracts), 317.20(C) (same for certain recorder's indexes), 505.37 (same for twp. fire protection svcs.), 515.01 (same for provision of twp. lighting), 749.09-749.14 (same for mun. hospital construction), 749.28-749.31 (same for mun. hospital work/supplies), 1501.012 (same for state park facilities), 1523.03 same for Div. of Water construction), 3313.46 (same for school district library construction), 3318.10 (same for state-funded school library construction), 3375.41 (same for board of trustees library construction), 4582.31(A)(18)(b) (same for port authority construction), 5525.01-5525.99 (same for ODOT construction), and 6131.37-31.41 (same for single county ditches). 29 C. The Comprehensive State Scheme for Enforcing R.C. Chapter 4115 Forecloses Contrary Local Action.
The Resolution satisfies the third element of the Cincinnati test, that the state statute is a general law. 112 Ohio St.3d 279 at ¶ 10. As this Court stated: "[T]he prevailing wage law preempts and supersedes any local ordinance to the contrary." Evans, 69 Ohio St.2d at 91. An ordinance "which directly conflicts with the prevailing wage law, must yield to an overriding law of statewide scope and concem." Id. at 92. R.C. Chapter 4115 is a general law that forecloses contrary local regulations. This principle applies with at least equal force to the county policy embodied in The Resolution. See Geauga, 67 Ohio St.3d at 582-83.
Moreover, R.C. Chapter 4115 is a general law occupying the field of prevailing wage enforcement because it meets each of the four elements described in Canton. 95 Ohio St.3d 149 at ¶ 21. First, the statute is "a statewide and comprehensive legislative enactment" because it establishes that the state is responsible for prevailing wage enforcement. Id. Its detailed, comprehensive scheme includes investigation, R.C. 4115.13(A), adjudication, R.C. 4115.13(B), specific penalties and appeal rights, R.C. 4115.13(D). Buckeye Electric Co., 12 Ohio St.3d at
253. Second, the statute "appl[ies] to all parts of the state alike and operate[s] uniformly throughout the state," Canton at ¶ 21, because all public improvement projects above a threshold dollar amount are covered. R.C. 4115.03(B). Third, the statute "set[s] forth police, sanitary, or similar regulations, rather than purport[ing] only to grant or limit legislative power of a municipal corporation. Canton at ¶ 21. "[T]he primary purpose of the prevailing wage law is to support the integrity of the collective bargaining process by preventing the undercutting of employee wages in the private construction sector." Evans, 69 Ohio St.2d at 91. Finally, R.C.
Chapter 4115 "prescribe[s] a rule of conduct upon citizens generally," Canton at ¶ 21, fixing rules that all persons who contract to construct public improvements must follow. Because R.C.
30 Chapter 4115 meets each element of the Canton test, it is a general law foreclosing contrary local action.
Finally prevailing wage law demands uniformity throughout the state. As this Court has recognized, "the prevailing wage law has a significant extraterritorial effect." Evans, 69 Ohio
St.2d at 91. A patchwork of prevailing wage debarment criteria varying from public authority to public authority would make it impossible for ABC's members, including The Painting
Company, to know whether preparing a bid is a waste of their time and money. (See Tr. Trans.
157:11-22, Supp, at 59.) Even public authorities with identical quality standards could interpret
"violations" more narrowly or more broadly than does Franklin County. The Painting Company now knows it is ineligible to bid on Franldin County contracts, but it might still be eligible for
contracts with a local school district. Piecemeal prevailing wage enforcement will raise the
expense and risk of bidding on public contracts throughout the state, limit competition, and
ultimately harm the taxpayer. Due to this need for uniformity and the inevitable extraterritorial
effects of local ordinances, R.C. Chapter 4115 is a general law that forecloses the Resolution.
IV. CONCLUSION
The Resolution meets all three elements of the test this Court set forth in Cincinnati v.
Baskin,, 112 Ohio St.3d 279 at ¶ 9-10. First, the Resolution seriously conflicts with R.C.
Chapter 4115. Second, the Board has no authority to contradict the state's prevailing wage
policy. Third, R.C. Chapter 4115 is a general statute that forecloses contrary local action.
Therefore, both the Board's Resolution and its application of the Resolution to The Painting
Company are unconstitutional. This Court should overturn the decision below and remand this
case for further consistent proceedings.
31 Respectfully su itted,
Michae F. opl (0033796) Dougla M. Be d (0073759) Kenley S. Ma ux (0082786) The Copley Law Firm, LLC 1015 Cole Road, Galloway, Ohio 43119 Telephone: (614) 853-3790 Facsimile: (614) 467-2000 E-mail: [email protected] COUNSEL FOR APPELLANTS
Ronald L. Mason (0030110) Aaron T. Tulencik (0073049) Mason Law Firm Co., LPA 425 Metro Place North, Suite 620 Dublin, Ohio 43017 Telephone: (614)734-9454 Facsimile: (614)734-9451 E-mail: [email protected] CO-COUNSEL FOR APPELLANTS
32 CERTIFICATE OF SERVICE
One copy each of Appellants' Merit Brief, Volumes I and II, and the Supplement to Appellants' Merit Brief was hand-delivered to:
N. Victor Goodman Mark D. Tucker Benesch, Friedlander, Coplan & Aronoff, LLP 41 South High Street, Suite 2600 Columbus, Ohio 43215;
Ron O'Brien Nick A. Soulas, Jr. Franklin County Prosecutor's Office, Civil Division 373 South High Street, 13th floor Columbus, Ohio 43215; and
Ronald L. Mason Aaron T. Tulencik Mason Law Firm Co., LPA 425 Metro Place North, Suite 620 Dublin, Ohio 43017 this 23rd day of February, 2009.
33