Judge: Mitchell L. Beckloff, Case: 22STCP03463, Date: 2024-02-07 Tentative Ruling

Case Number: 22STCP03463    Hearing Date: February 7, 2024    Dept: 86

ZUSSER COMPANY, INC. v. CALIFORNIA DEPARTMENT OF INDUSTRIAL RELATIONS

Case Number: 22STCP03463

Hearing Date: February 7, 2024 

[Tentative]       ORDER DENYING PETITION FOR WRIT OF MANDATE 

Petitioner, Zusser Company, Inc., seeks a writ of administrative mandate directing Respondent, Katrina S. Hagen, in her official capacity as the Director of the Department of Industrial Relations (Director) to set aside an administrative decision affirming a Civil Wage and Penalty Assessment (Assessment) issued by Real Party in Interest, the Division of Labor Standards Enforcement (DLSE; collectively with the Director, Respondents). The Assessment arose from a public works contract between Petitioner and the Metropolitan Water District of Southern California (MWD) referred to as the Los Angeles Department of Water and Power (LADWP) Lagoon Refurbishment Project (the Project). Petitioner challenges the Director’s finding Petitioner misclassified certain workers on the Project as Sewer and Storm Drain Pipelayers and Drain Pipe Tradesman instead of Industrial Pipefitters.

DLSE’s request for judicial notice is denied.  Petitioner’s objections to the request for judicial notice are sustained. 

The Board Action Report (Report) is part of the administrative record; therefore, the Report will be considered by the court. (AR 2836-2842.) However, DLSE impliedly requests to augment the administrative record with additional material related to the Report, including “video of the Board’s consideration of agenda item 8-3 and all accompanying material.” (RJN 2:15-16.) 

In general, “a hearing on a writ of administrative mandamus is conducted solely on the record of the proceedings before the administrative agency.” (Toyota of Visalia, Inc. v. New Motor Vehicle Bd. (1987) 188 Cal.App.3d 872, 881.) Extra-record evidence may be admitted if, in the exercise of reasonable diligence, the relevant evidence could not have been produced or was improperly excluded at the hearing. (Code Civ. Proc., § 1094.5, subd. (e).) A request for judicial notice cannot be used to circumvent the rules concerning augmentation of the administrative record. (Ballona Wetlands Land Trust v. City of Los Angeles (2011) 201 Cal.App.4th 455, 475, fn. 10.)

DLSE has not addressed the requirements of Code of Civil Procedure, section 1094.5, subdivision (e). DLSE could have, with the exercise of reasonable diligence, submitted video of the Board meeting (from January 2015) or other materials related to the Report in the administrative proceedings. Because the reasonable diligence requirement of Code of Civil Procedure section 1094.5, subdivision (e) is not satisfied, DLSE’s requests for judicial notice and to augment the record are denied.

BACKGROUND

Statutory Framework

“Under California's prevailing wage law (Lab. Code, § 1720 et seq.), all public works contracts involving projects of more than $1,000 require workers be paid no less than the general prevailing wage rates consisting of cash wages and fringe benefits.” (Department of Industrial Relations v. Nielsen Construction Co. (1996) 51 Cal.App.4th 1016, 1020.) “The prevailing wage is determined by the Director of the Department of Industrial Relations [] according to the craft, classification or type of worker needed for the project in the particular locality in which the work is to be performed. (§§ 1770, 1773.)” (Ibid.) 

Based on the contract terms, contractors and subcontractors may be deemed to have constructive notice of the applicable prevailing wage rates. (See Division of Labor Standards Enforcement v. Ericsson Information Systems (1990) 221 Cal.App.3d 114, 125.) The contractor also has “the opportunity to request clarification as to which existing classification applied or to request the director to specially designate one.” (Ibid.; accord Sheet Metal Workers Internat. Assn., Local Union No. 104 v. Rea (2007) 153 Cal.App.4th 1071, 1079-1085.)[1]

When DLSE determines a violation of the prevailing wage laws has occurred following an investigation, it may issue an Assessment for the wages and penalties due. (Lab. Code,[2] § 1741, subd. (a).) “An affected contractor or subcontractor may obtain review of a civil wage and penalty assessment . . . .” (§ 1742, subd. (a).) “The contractor or subcontractor shall have the burden of proving that the basis for the civil wage and penalty assessment is incorrect.”

(§ 1742, subd. (b).) DLSE “has the burden of coming forward with evidence that . . . provides prima facie support for the Assessment or Withholding of Contract Payments.” (Cal. Code Regs., tit. 8, § 17250, subd. (a).) “If the Enforcing Agency meets its initial burden . . . , the Affected Contractor or Subcontractor has the burden of proving that the basis for the Civil Wage and Penalty Assessment or for the Withholding of Contract Payments is incorrect.” (Id. at § 17250, subd. (b).) “An affected contractor or subcontractor may obtain review of the decision of the director by filing a petition for a writ of mandate to the appropriate superior court pursuant to Section 1094.5 of the Code of Civil Procedure.” (§ 1742, subd. (c).) 

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The Project

On October 6, 2014, MWD invited bids for the Project located in Granada Hills. (AR 2835.) The notice inviting bids provided a description of the Project:

The work consists of construction of approximately 7,000 feet of 6-inch to 8-inch PVC pipe, 500 feet of 2-inch PVC pipe, 1,700 feet of utility ductbanks, and three maintenance holes; modification of two existing maintenance holes; installation of two standpipes, five submersible pumps and two turbidity meters; on-site screening of approximately 6,100 cubic yards of underdrain rock; disposal of approximately 2,000 cubic yards of hazardous material; installation of approximately 12,500 cubic yards of crushed rock; refurbishment of existing decant valve structures for four lagoons including asbestos and PCB abatement; installation of local electrical panels and a utility cabinet; and other appurtenant work as specified and shown on the drawings. (AR 2782.)

The notice reported MWD “expects the total cost of construction to range between $2,700,000 and $3,200,000.” (AR 2782) The notice stated “[a] pre-bid conference will be held with responsible representatives of prospective bidders at the Joseph Jensen Water Treatment Plant, 13100 Balboa Blvd., Granada Hills, CA 91344.” (AR  2782.) 

The Project consists of the refurbishment of four lagoons located on property owned by LADWP. (AR 861, 2836; Opening Brief 6:16.) MWD leased the lagoons from LADWP for long-term use as part of a “new solids handling system” for MWD’s Joseph Jensen Water Treatment Plant (the Jensen Plant). (AR 2836-2837 [Report awarding contract to Petitioner (submitted as DLSE Exhibit No. 12)].) 

Petitioner described the intended use of the lagoons in its closing brief filed in the administrative proceedings:

The nearby Jenson Water Treatment Plant . . . exclusively treats water and delivers to MWD for distribution. Residual solids collected from the [Jensen Plant’s] sedimentation basins were previously thickened onsite, transported via a temporary solids transfer system, and then air-dried at two nearby lagoons on LADWP property. (See Exhs. 10 and 12.)

Solids produced at the [Jensen Plant] also were discharged in the City of Los Angeles Sanitary Sewer System. However, sewer disposal is expensive and is limited by the “discharge permit.” (See Ex. 12.)

To solve this problem MWD sought to refurbish lagoons owned by LADWP. (AR 861.)

MWD awarded the contract for the Project to Petitioner with a successful bid of $3,067,900.  The four competing bids ranged from approximately $3.2 million to $4.3 million. (AR 8 and fn. 8.) 

Petitioner performed work as the general contractor on the Project between July 27, 2015 and August 22, 2017. (AR 8, 3404, 3493.) The Project bid and contract documents advised Petitioner of and required compliance with the provisions of the Public Works Law (PWL) related to prevailing wages. (AR 2787, 2833-2835.)[3]

The Assessment, Administrative Hearing, and Administrative Decision

After an investigation conducted by Industrial Relations Representative Reisee Salamero, DLSE determined Petitioner failed to pay workers on the Project the required prevailing wage rates in several ways, including misclassifying workers as “Pipelayer” and “Pipe Tradesman” for work which properly falls under the “Industrial Pipefitter” scope of work. (AR 8-10; 2606-2612.)  The relevant scope of work adopted by the Director for the Industrial Pipefitter classification specifies that it covers: “All piping in connection with central distributing filtration treatment stations, boosting stations, waste sewage disposal plants, central chlorination and chemical treatment work and all underground supply lines to cooling wells, suction basins, filter basins, settling basins and aeration basins.” (AR 2857, 2606.) Salamero found the Project’s four lagoons were part of the Jensen Plant, a filtration treatment plant, and therefore the Industrial Pipefitter classification applied to certain workers—not Pipelayer and Pipe Tradesman. (AR 133-138.)

On March 11, 2019, Salamero issued her Assessment for $547,189.87. The Assessment included unpaid wages for the misclassifications, unpaid training funds, various penalties, and apprenticeship violations. (AR 2614-2624.)[4]

Petitioner timely filed a request for review of the Assessment. The Department of Industrial Relations conducted a review hearing on November 20, 2019, October 23, 2020, October 28, 2020, and June 16, 2021. (AR 4.) DLSE presented documentary evidence and testimony by Salamero to establish prima facie support for the Assessment. (AR 10-12.) Petitioner presented documentary evidence and testimony by its Chief Financial Officer and Secretary, Mikhail Fyodorov in opposition to the Assessment. (AR 17-20.)

The parties submitted their briefs on August 3, 2021 and August 17, 2021. The matter was thereafter submitted for decision on August 17, 2021. (AR 5.) 

A year later, in a detailed written decision dated August 18, 2022, the Director affirmed the Assessment. The Director found “DLSE carried its initial burden of presenting evidence at the Hearing that provided prima facie support for the Assessment, and that [Petitioner] failed to carry its burden of proving the basis for the Assessment was incorrect.” (AR 6.)

This proceeding ensued.

STANDARD OF REVIEW 

Petitioners seek relief from the court pursuant to Code of Civil Procedure section 1094.5.

Under Code of Civil Procedure section 1094.5, subdivision (b), the relevant issues are whether the respondent has proceeded without jurisdiction, whether there was a fair trial, and whether there was a prejudicial abuse of discretion. An abuse of discretion is established if the agency has not proceeded in the manner required by law, the decision is not supported by the findings, or the findings are not supported by the evidence. (Code Civ. Proc., § 1094.5, subd. (b).)

Administrative decisions affirming civil wage and penalty assessments issued by DLSE under the PWL do not affect a fundamental vested right. (See Northern Inyo Hosp. v. Fair Emp. Practice Com. (1974) 38 Cal.App.3d 14, 23. [“[T]here is no vested right to conduct a business free of reasonable governmental rules and regulations.”]) Accordingly, review of the Director’s findings here is governed by substantial evidence.    

Substantial evidence is relevant evidence that a reasonable mind might accept as adequate to support a conclusion (California Youth Authority v. State Personnel Board (2002) 104 Cal. App. 4th 575, 584-585), or evidence of ponderable legal significance which is reasonable in nature, credible and of solid value. (Mohilef v. Janovici (1996) 51 Cal. App. 4th 267, 305 n. 28.)  Under the substantial evidence test, “[c]ourts may reverse an [administrative] decision only if, based on the evidence . . ., a reasonable person could not reach the conclusion reached by the agency.” (Sierra Club v. California Coastal Com. (1993) 12 Cal.App.4th 602, 610.)   

In addition, an agency is presumed to have regularly performed its official duties. (Evid. Code,

§ 664.) “[A] trial court must afford a strong presumption of correctness concerning the administrative findings.” (Fukuda v. City of Angels (1999) 20 Cal. 4th 805, 817.) A petitioner seeking administrative mandamus has the burden of proof and must cite to the administrative record to support its contentions. (See Alford v. Pierno (1972) 27 Cal.App.3d 682, 691.) A court reviewing the administrative decision “will not act as counsel for either party [] and will not assume the task of initiating and prosecuting a search of the record for any purpose of discovering errors not pointed out in the briefs.” (Fox v. Erickson (1950) 99 Cal.App.2d 740, 742 [in context of review by appeal].) When there is a challenge to “the sufficiency of the evidence, all material evidence on the point must be set forth and not merely [its] own evidence.” (Toigo v. Town of Ross (1998) 70 Cal.App.4th 309, 317.) 

“On questions of law arising in mandate proceedings, [the court] exercise[s] independent judgment.” (Christensen v. Lightbourne (2017) 15 Cal.App.5th 1239, 1251.) The interpretation of statute or regulation is a question of law.  (See State Farm Mut. Auto. Ins. Co. v. Quackenbush (1999) 77 Cal.App.4th 65, 77.) 

ANALYSIS 

The Director Did Not Prejudicially Abuse Her Discretion By Admitting and Relying Upon the Report

In a lengthy footnote, Petitioner contends the Director prejudicially abused her discretion in admitting and relying upon the Report. (Opening Brief 17, fn. 11.)  Specifically, Petitioner contends the Report is “hearsay and cannot support a finding by itself, without corroborating admissible evidence.” (Opening Brief 17, fn. 11.) Petitioner also objects that the Report “was not produced to [it] until the parties exchanged exhibits 3 weeks before the hearing.” (Opening Brief 17, fn. 11.) 

Petitioner relies on applicable regulations to support its claim. California Code of Regulations, title 8, section 17224, subdivision (d) provides:

The Enforcing Agency shall make evidence available for review as specified in subparts (a) through (c) within 20 days of its receipt of the Request for Review; provided that, this deadline may be extended by written request or agreement of the Affected Contractor or Subcontractor. The Enforcing Agency's failure to make evidence available for review as required by Labor Code section 1742(b) and this Rule, shall preclude the Enforcing Agency from introducing such evidence in proceedings before the Hearing Officer or the Director. 

The provision is qualified by subdivision (e) of the same regulation. It states:

This Rule shall not preclude the Enforcing Agency from relying upon or presenting any evidence first obtained after the initial disclosure of evidence under subparts (a) through (d), provided that, such evidence is promptly disclosed to the Affected Contractor or Subcontractor. (Cal. Code Regs, tit. 8, § 17224 subd. (e).) 

Relatedly, Labor Code section 1742, subdivision (b) provides in pertinent part:

The contractor or subcontractor shall be provided an opportunity to review evidence to be utilized by the Labor Commissioner at the hearing within 20 days of the receipt of the written request for a hearing. Any evidence obtained by the Labor Commissioner subsequent to the 20-day cutoff shall be promptly disclosed to the contractor or subcontractor.

During the administrative hearing, the parties stipulated “the Request for Review was timely” and “[t]he] enforcement file was timely made available.” (AR 65.)  Accordingly, there is no disputed DLSE complied with the initial disclosure requirement of sections 1742, subdivision (b) and California Code of Regulations, title 8, section 17224, subdivision (b)-(d). 

Petitioner suggests DLSE failed to timely disclose the Report and should have been barred from submitting the Report into evidence, because “[i]t was not produced to [Petitioner] until the parties exchanged exhibits 3 weeks before the hearing.” (Opening Brief 17, fn. 11.) The court is not persuaded. 

California Code of Regulations, title 8, section 17224, subdivision (d) expressly authorizes DLSE to “rely[] upon” and “present” evidence “first obtained after the initial disclosure of evidence,” provided that such evidence “is promptly disclosed to the Affected Contractor or Subcontractor.” Here, it is undisputed Salamero obtained the Report after an internet search about six weeks prior to the administrative hearing. Salamero conducted the search only after Petitioner asserted the Jensen Plant is not connected to the lagoons. (AR 11, fn. 16; AR 151-154. See also Opening Brief 17, fn. 11 [Salamero obtained Report “a week or two before the exhibits were produced”].) It is also undisputed DLSE produced the Report to Petitioner about three weeks prior to the hearing. (AR 79-83.) 

In its Opening Brief, Petitioner does not develop any argument DLSE did not “promptly disclose[]” the Report after Salamero obtained it. In its Reply Brief, Petitioner argues DLSE did not promptly disclose the Report because it was produced “three weeks prior to the hearing on the last possible day.” (Reply 12:14-1.) Petitioner fails to explain, however, why given the circumstances DLSE’s disclosure should not be considered “prompt.” The evidence shows DLSE disclosed the Report shortly after Salamero obtained it and when the parties timely exchanged exhibits for the administrative hearing.

On this record and argument, the court concludes DLSE satisfied its obligation to promptly disclose the Report. The court also notes Petitioner has not identified any prejudice from the disclosure of the Report three weeks prior to the hearing.[5] 

In its Opening Brief, Petitioner cites no authority for his assertion DLSE could not rely on the Report because it was discovered after the Assessment was issued, and “it was not part of [Salamero’s] investigation . . . . (See Opening Brief 17, fn. 11.) For the first time in reply, Petitioner asserts “[t]he admissible evidence that must be utilized [to support DLSE’s prima facie case] is that which the Deputy relied upon at the time of the issuance of the [Assessment] on March 11, 2019.” (Reply 9:13-14 [citing Cal. Code Regs., tit. 8, § 17250, subd. (a).) 

First, Petitioner does not show good cause to raise this argument for the first time in its Reply Brief. (Balboa Ins. Co. v. Aguirre (1983) 149 Cal.App.3d 1002, 1010.) The argument is not new—Petitioner made the claim during the hearing, and there is no reason Petitioner could not have raised the claim to provide Respondents with a full opportunity to address the claim. (AR 143.) The court rejects the late reply argument on that procedural basis. 

Second, even assuming the court did not reject the late argument on procedural grounds, Petitioner’s late reply argument is unpersuasive on the merits. California Code of Regulations, title 8, section 17250, subdivision (a)—upon which Petitioner relies—does not state or suggest DLSE is strictly limited to evidence it relied upon when it issued an assessment to prove its prima facie case at the hearing.[6] Petitioner cites no other authority for its position.

The court also notes Petitioner’s position directly conflicts with section California Code of Regulations, title 8, section 17224, subdivision (e) and section 1742, subdivision (b). Both provisions expressly indicate DLSE may rely on evidence “first obtained after the initial disclosure of evidence” (Cal. Code Regs., tit. 8, § 17224, subd. (e)) as long as such evidence is promptly disclosed to the affected contractor.

Petitioner’s hearsay argument related to the Report (see Opening Brief 17, fn., 11) concludes without any real analysis the Report is “hearsay and lacked foundation.”[7] California Code of Regulations, title 8, section 17244 provides in part:

(a) The hearing need not be conducted according to technical rules relating to evidence and witnesses. Any relevant evidence shall be admitted if it is the sort of evidence on which responsible persons are accustomed to rely in the conduct of serious affairs, regardless of the existence of any common law or statutory rule which might make improper the admission of such evidence over objection in civil actions. . . .

. . . .

(d) Hearsay evidence is admissible but shall not be sufficient in itself to support a finding unless it either would be admissible over objection in a civil action or no Party raises an objection to such use. 

Salamero testified she found the Report published on MWD’s website. (AR 154.) Given its location on MWD’s website, MWD has provided the information to inform the public about MWD’s affairs. According to the Report, it was prepared by MWD staff for a meeting of the MWD’s Board of Directors held on January 13, 2015. The Report purports to have been signed by a Chief Engineer and General Manager of MWD in December 2014. (AR 2836-2839.) 

The court agrees with Petitioner—the Report is hearsay.[8] Nonetheless, the Report is admissible in evidence because the Report “is the sort of evidence on which responsible persons are accustomed to rely in the conduct of serious affairs, . . . .” (Cal. Code Regs, tit. 8, § 17244, subd. (a).) The Report’s location and subject matter provide sufficient indicia of reliability to support use of it for decision making in matters of serious affairs. Petitioner has not argued otherwise.[9] (See Opening Brief 17, fn. 11.)

Given the Report’s admissibility under California Code of Regulations, title 8, section 17244, subdivision (a) on these facts, Petitioner does not demonstrate the Director erred by receiving the Report into evidence or relying upon it.[10]

Substantial Evidence Supports the Director’s Findings that DLSE Met its Burden to Present Evidence Showing Prima Facie Support for the Assessment

The Director made the following findings, among others, when she found DLSE met its initial burden of proof for the Assessment:

[T]he scopes of work for the Plumber subclassifications, as well as Salamero's understanding that the scope of work for the Project was to refurbish the lagoons connected to the Joseph Jensen Water Treatment Plant. Salamero's understanding was based on information provided to her by both the Awarding Body and by the workers she interviewed. . . . MWD's Jensen Plant is a water treatment plant that delivers water into the water distribution system. (DLSE Exhibit No. 12 [the Report], p. 238). As part of its water treatment process, Jensen Plant transfers solids through a pipeline to the lagoons on the LADWP's Aqueduct Filtration Plant. (Id. at pp. 238-239.) For these reasons, the piping work underneath the drainage rock in the lagoons constituted piping in connection with a central distributing filtration treatment station as well as underground supply lines to filter basins. (AR 23.)

Petitioner contends DLSE did not meet its burden to present prima facie support for the Assessment because: (1) “There was no testimony by anyone but Salamero (Opening Brief 17:13); (2) Salamero “had no understanding of the Project scope of work, and failed to reach out to anyone within her own agency [or the awarding body, MWD] that could give her guidance as to the appropriate classification” (Opening Brief 17:14-15); (3) Salamero had not visited the jobsite; (4) “Salamero’s testimony is not credible” (Opening Brief 17:17);

(5) Salamero “misled” the Hearing Officer and her supervisor in her penalty review (Opening Brief 18:3); (6) “The bid and contract documents did not provide any notice that the lagoons are connected to the Jensen Plant or any filtration plant” (Opening Brief 19:13-14); (7) Petitioner’s contracted work was performed “exclusively” in the lagoons (Opening Brief 7:12); and (8) the Report “relates to future plans with respect to the lagoons but had nothing to do with the work performed by” Petitioner. (Opening Brief 19:4-5.)

As discussed, with substantial evidence review “[the court] do[es] not weigh the evidence, consider the credibility of witnesses, or resolve conflicts in the evidence or in the reasonable inferences that may be drawn from it. The administrative agency’s findings come before [the court] with a strong presumption as to their correctness and regularity. [The court] do[es] not substitute [its] judgment if the agency’s decision is one which could have been made by reasonable people. (Doe v. Regents of the University of California (2016) 5 Cal.App.5th 1055, 1073; accord Valenzuela v. State Personnel Board (2007) 153 Cal.App.4th 1179, 1184-1185 and California Youth Authority v. State Personnel Board (2002) 104 Cal. App. 4th 575, 584-585.) 

Salamero determined the Industrial Pipefitter classification applied to the plumbing-related work on the Project pursuant to subsection A.1.36 of the Plumber scope of work provision, which provides: “All piping in connection with central distributing filtration treatment stations, boosting stations, waste sewage disposal plant, central chlorination, and chemical treatment work, and all underground supply lines to the cooling wells, suction basins, filter basins, settling basins, and aeration basins.” (AR 125 [emphasis added].)

Salamero testified her “understanding of the scope of work of this project, the LADWP/Metropolitan lagoons was . . . a filtration plant.” (AR 124-125, 128, 133, 137.) Salamero opined the lagoons and the Jensen Plant were “attached” and “operate hand in hand.” (AR 133.) Salamero’s understanding of the scope of work was supported by her review of the Project contract provided to DLSE by the MWD, the scope of work provision for the Plumber prevailing wage determination, and her interviews with workers. (AR 112-114, 354-358.) Salamero further explained she found the Industrial Pipefitter classification applied because the pipework installed by Petitioner did not involve sewers or storm drains. (AR 128, 132-133, 2867.) 

Significantly, Salamero also explained she determined the work properly fell under the Industrial Pipefitter scope of work because MWD awarded the contract for the Project, and MWD owns and operates the water filtration plan, not LADWP. (AR 132: 10-24.) Salamero questioned: “if in fact the lagoons are owned by LADWP, why would [LADWP] not have been the awarding body . . . .” Relatedly, the notice inviting bids stated “[a] pre-bid conference will be held with responsible representatives of prospective bidders at the Joseph Jensen Water Treatment Plant, 13100 Balboa Blvd., Granada Hills, CA 91344.” (AR 2782.)[11]  

The Report also corroborates Salamero’s and DLSE’s determination the Industrial Pipefitter classification applied to the Project. The subject of the Report included the contract with Petitioner “to refurbish solids lagoons for the Joseph Jensen Water Treatment Plant.” (AR 2836.)  The Report summarized the Project:

This action awards a construction contract to refurbish four existing solids lagoons on property owned by the Los Angeles Department of Water and Power (LADWP) for long-term use by Metropolitan's Joseph Jensen Water Treatment Plant. Use of the refurbished lagoons will support reliable, long-term solids handling at the Jensen plant. (AR 2836 [emphasis added].)

The Report further provides:

Residual solids collected from the Jensen plant's sedimentation basins are currently thickened on-site, transported via a temporary solids transfer system, and then air-dried at two nearby lagoons on LADWP property at the Aqueduct Filtration Plant. This cooperative arrangement, which was initiated in 2005, provides sufficient solids handling capacity to process only 15 percent of the solids generated at the Jensen plant's maximum flowrate under design conditions. Solids produced at the Jensen plant may also be discharged to a city of Los Angeles sanitary sewer. However, sewer disposal is expensive and is limited by the discharge permit. [¶] In December 2012, Metropolitan's Board authorized an agreement with LADWP that enables Metropolitan to utilize four solids lagoons on LADWP property for a period of 50 years. In conjunction with a future mechanical dewatering facility at the Jensen plant, this agreement provides sufficient capacity to meet Metropolitan's anticipated solids handling needs. [¶] Construction of the first component of the new solids handling system, which includes a solids transfer pipeline from the Jensen plant, is currently underway. In November 2013, Metropolitan's Board authorized a reimbursable agreement with LADWP in an amount not to exceed $5 million to design and refurbish the four existing LADWP solids lagoons. These refurbished lagoons comprise the second component of the new solids handling system. (AR 2836-37 [emphasis added].)

While Petitioner has suggested the Director may not rely on the Report “in itself to support a finding” (Cal. Code Regs, tit. 8, § 17244, subd. (d)) necessary to upholding the Assessment, Petitioner is incorrect given the circumstances here. (See Opening Brief 17, fn. 11.) The Report alone—as admissible hearsay (Cal. Code Regs, tit. 8, § 17244, subd. (a))—may be relied upon by the Director to support her findings unless Petitioner objected to the Report’s admission into evidence during the administrative hearing.[12] Petitioner expressly stated during the hearing it had no objection to the Report (hearing Exhibit 12) being admitted into evidence. (AR 514. [“We have no objections to Exhibits One through 18.”]) Thus, the Director could rely on the Report to support any finding made.[13]

As DLSE argues, “[i]t is undisputed that the lagoons are on LADWP’s property, so there would be no plausible reason for the District to award a contract for their refurbishment unless they were to be used by the District.” (DLSE Opposition 12, fn. 13.) The court agrees. 

It is undisputed LADWP owns the lagoons, and MWD operates the Jensen Plant located near the lagoons. Petitioner has not identified any reason MWD would award the contract unless the lagoons were to be refurbished for use by MWD. The notice inviting bids, the contract, Salamero’s testimony, and the Report also support, collectively, a conclusion the lagoons were being refurbished for use by MWD “in connection with” the Jensen Plant. Specifically, a reasonable person could infer from the record evidence the lagoons would be used by MWD to support the “solids handling” operations of the Jensen Plant, which is a water filtration plant.  Because the pipework would be used “in connection” with the Jensen Plant operations, DLSE could reasonably conclude the Industrial Pipefitter classification applied.

Petitioner’s arguments do not persuade. The Director could properly rely on the testimony of a single witness, Salamero. (See Michael Distributing Co. v. Tobin (1964) 225 Cal.App.2d 655, 660-661 [“the testimony of only one witness found worthy of belief is sufficient for the proof of any fact”].) Petitioner also cites no statute, regulation, or other authority supporting its contentions Salamero was required to visit the jobsite or discuss the classification issue with MWD. As discussed, substantial evidence shows DLSE had prima facie support for the Assessment based on the investigation Salamero performed. Accordingly, it is irrelevant Salamero did not take the additional investigative steps proposed by Petitioner. 

Petitioner has not demonstrated the classification issue turns on whether the lagoons are to be used for solids handling, as reflected in the Report, as opposed to storing “dirty water” that “gets filtered . . . at the treatment plant,” as suggested by Salamero during her testimony. (See AR 136-137, 356.) In both circumstances, the lagoons would be used to support the water filtration operations of the Jensen Plant.[14]  Because substantial evidence supports DLSE’s determination the pipework for the Project would be used “in connection with [a] central distributing filtration treatment station” (see AR 125), it is irrelevant Salamero may not have fully understood the mechanics by which the lagoons would support the Jensen Plant.[15]

Under substantial evidence review, the court cannot conclude that it was unreasonable for the Director to credit the testimony of Salamero. (See Opening Brief 17:17-18.) As discussed, Salamero clearly explained the evidence upon which she relief to determine Petitioner had misclassified its employees. That Salamero did not discuss the classification issue with MWD—because there was no legal or factual reason to do so to issue the Assessment—does not detract from her credibility as a witness. The decision specifically explains how other evidence supported Salamero’s testimony, and the basis for labeling Fyorodov’s testimony as unreliable and “self-serving.” (AR 27-28.) On substantial evidence review, the court cannot reweigh the evidence or make its own credibility determination. Moreover, the Director’s credibility determinations are supported by substantial evidence.

Finally, as discussed, the notice inviting bids, the contract, and the Report all corroborate, in some fashion, Salamero’s testimony and DLSE’s determination Petitioner should have used the Industrial Pipefitter classification for the pipeworkers on the Project. Petitioner cites no authority the bid or contract documents needed to specifically state that the “lagoons are connected to the Jensen Plant or any filtration plant” to uphold the administrative decision. (Opening Brief 19:13-14.) 

Based on the foregoing, substantial evidence supports the Director’s findings “DLSE carried its initial burden of presenting evidence at the Hearing that provided prima facie support for the Assessment. . . .” (AR 6, 23.)

Substantial Evidence Supports the Director’s Finding Petitioner Did Not Meet its Burden to Demonstrate the Basis for the Assessment is Incorrect 

The Director found Petitioner had not met its burden to show the Assessment was incorrect. The Director explained:

This description [of the Project in Petitioner’s closing brief, quoted above, see AR 861] contradicts Fyodorov's testimony that he was unaware of the connection between Jensen Plant and the lagoons, the purpose of the lagoon refurbishment project, or the sources of water into the lagoons. [Petitioner] contends that it "performed no work outside of the lagoons nor was. there any pipeline connection with any outside facility including the [Jensen Plant]." . . . . However, Salamero testified that the workers she interviewed during the course of her investigation advised her that the lagoons were part of the Jensen Plant. This is further supported by MWD's description of the lagoon project as the second component of the construction of MWD's new solids handling system, with the first component of the solids handling system being the construction of a solids transfer pipeline from the Jensen Plant to the four LADWP lagoons to be refurbished for MWD use.  (DLSE Exhibit No. 12 [Report], pp. 238-239.) Fyodorov's self-serving testimony that he had no understanding of the connection between Jensen Plant and the lagoons or of the purpose of the lagoon refurbishment project must be discounted, particularly in light of his admission that he would not be surprised to learn that the purpose of the lagoons was to handle the solids discharge from the Jensen Plant.

The evidence shows that the four lagoons refurbished by [Petitioner] on the Project were connected to the Jensen Plant by a solids transfer pipeline, and that the purpose of connecting the lagoons was to allow Jensen Plant to increase its capacity to process the solids collected by its sedimentation basins as part of its treatment of water. Accordingly, the piping work on the Project constituted piping work in connection with a central distributing filtration treatment station that falls under the Industrial Pipefitter scope of work. The lagoons are connected to the Jensen Plant, and constitute an integral part of its water treatment function. There is no credible evidence that the piping work performed on the lagoons was related to sewer or storm drain piping work. (AR 27-28.)

Petitioner does not show the Director’s credibility determination as to Fyodorov is unsupported by substantial evidence. Although Petitioner summarizes parts of Fyodorov’s testimony at some length, Petitioner does not squarely address the reasons the Director found Fyodorov’s testimony to be self-serving and unreliable. In an email communication to Salamero during the investigation, Fyodorov asserted the lagoons “are not even connected to the plant.” (AR 4273.)  Fyodorov maintained that position at the hearing. He testified he was not aware when working on the Project of a connection between the lagoons and the Jensen Plant; of the purpose of the lagoons to handle solids for the Jensen Plant; or that a pipeline transferred solids from the Jensen Plan directly to the lagoons. (AR 771, 773, 778.) However, on cross-examination, Fyodorov admitted he would not be surprised to learn the purpose of the lagoons is to handle the solids discharged from the Jensen Plant. (AR 773.) He also acknowledged Petitioner did not discuss the classification of workers on the Project with MWD, and Petitioner did not request a determination as to the scope of work from the Director. (AR 768-769.) Fyodorov’s testimony was also undercut by Petitioner’s closing brief, which acknowledged the lagoons would serve as a solids transfer system for the Jensen Plant and, therefore, were necessarily connected to the Jensen Plant. (AR 27, 861.)[16] Given Fyodorov’s admissions on cross-examination, among other evidence, a reasonable person could find Fyodorov’s testimony that Petitioner was unaware of a connection between the Project and the Jensen Plant lacked credibility. 

The Director found “[t]here is no credible evidence that the piping work performed on the lagoons was related to sewer or storm drain piping work.” (AR 27-28.) Petitioner appears to challenge that finding by citing to Fyodorov’s testimony regarding the work performed on the Project, as well as Fyodorov’s opinions as to the differences between the pipelayer/pipe tradesman and pipefitter classifications. (See Opening Brief 19:12-20.) Petitioner summarizes Fyodorov’s testimony regarding the drainage system installed by Petitioner at the lagoons; how some of the pipes installed were “perforated” to allow for drainage; and why he believed an industrial pipefitter would not install underdrain pipe. (See e.g., AR 557-581, 746-751.) 

However, Petitioner cites no evidence that Petitioner actually installed pipes to be used for a sewer or storm drain. Indeed, as Petitioner admitted in its closing brief, the purpose of the Project was to establish a new solids transfer system because “sewer disposal is expensive and is limited by the ‘discharge permit.’ ” (AR 861.) Substantial evidence supports the Director’s findings the piping work on the lagoons was not related to sewer or storm drain work.  Substantial evidence also supports the Director’s findings “the four lagoons refurbished by [Petitioner] on the Project were connected to the Jensen Plant by a solids transfer pipeline, and . . . the piping work on the Project constituted piping work in connection with a central distributing filtration treatment station.” (AR 28.) 

Significantly, Petitioner has not offered any persuasive argument the Industrial Pipefitter classification does not apply to the Project, assuming the pipes installed in the lagoons do have a “connection” with the Jensen Plant.  The scope of work for Industrial Pipefitter is broadly worded to include: “All piping in connection with central distributing filtration treatment stations . . . .” (AR 125 [emphasis added].) Petitioner acknowledges the court should apply rules of statutory construction to the scope of work. This relevant language of the Industrial Pipefitter classification appears clear. Petitioner has not developed any persuasive argument the court not accept the plain meaning of the Industrial Pipefitter classification.

For the first time in its Reply Brief, Petitioner argues the Report “actually supports the use of sewer and storm drain classifications of Pipelayer/Pipe Tradesman.” (Reply 12:19.) According to Petitioner, “[i]t has no impact on the operation of the Jensen Plant whether the solids are disposed in city sewers, air dried at the lagoons or placed in the subdrainage system installed by [Petitioner]. . . . [T]he lagoons have nothing to do with the water treatment system at the Jensen Plant. The water treatment system at the Jensen Plant operated in the same fashion before and after [Petitioner’s] work.” (Reply 13:9-11, 13-15.)

Petitioner’s argument is late; it does not show good cause to raise these new arguments in Reply. (Balboa Ins. Co. v. Aguirre, supra, 149 Cal.App.3d at 1010.) The court disregards the late reply arguments on that basis and need not respond in detail.  However, the court notes that, in the reply, Petitioner does not assert that the solids from the lagoons would be discharged into the sewer.  Petitioner also acknowledges, in reply, that there is a pipeline connection between the lagoons and the Jensen Plant. 

Based on the foregoing, substantial evidence supports the Director’s findings that Petitioner “failed to carry its burden of proving the basis for the Assessment was incorrect.” (AR 6.)

The Time Limits in Section 1742, Subdivision (b) Are Directory, Not Mandatory

Again, for the first time in its Reply Brief, Petitioner asserts the Director’s “failure to issue a decision within 45 days of the conclusion of the hearing as required by Section 1742(b)” invalidates the decision. (Reply 14:20-21.) Petitioner also seems to argue the Director was required to commence the hearing within 90 days of receipt of Petitioner’s request for the hearing. (Reply 15:8-9.) Petitioner again waived the issues by not raising them in the Opening Brief. “The salutary rule is that points raised in a reply brief for the first time will not be considered unless good cause is shown for the failure to present them before.” (Balboa Ins. Co. v. Aguirre, supra, 149 Cal.App.3d at 1010.) Petitioner has not shown good cause to raise the timeliness argument for the first time in it Reply Brief.

Alternatively, to the extent Respondents waived the procedural objection through its opposition on the merits, the court finds persuasive Respondents’ contentions the time limits in section 1742, subdivision (b) are directory and not mandatory. 

Section 1742, subdivision (b) states:

[u]pon receipt of a timely request, a hearing shall be commenced within 90 days before the director. . . . Within 45 days of the conclusion of the hearing, the director shall issue a written decision affirming, modifying, or dismissing the assessment. (§ 1742, subd. (b).) 

The Director issued her decision well after the 45-day time period specified in section 1742, subdivision (b). Thus, the issue is whether the 45-day deadline is directory or mandatory. 

“The word ‘mandatory’ may be used in a statute to refer to a duty that a governmental entity is required to perform as opposed to a power that it may, but need not exercise. As a general rule, however, a ‘‘directory' or 'mandatory' designation does not refer to whether a particular statutory requirement is 'permissive' or 'obligatory,' but instead simply denotes whether the failure to comply with a particular procedural step will or will not have the effect of invalidating the governmental action to which the procedural requirement relates.’ [Citation.] If the action is invalidated, the requirement will be termed ‘mandatory.’ If not, it is ‘directory’ only.”  (California Correctional Peace Officers Assn. v. State Personnel Bd. (1995) 10 Cal.4th 1133, 1145 [CCPOA].) 

“Time limits are usually deemed to be directory unless the Legislature clearly expresses a contrary intent. [Citation.] ‘In ascertaining probable intent, California courts have expressed a variety of tests. In some cases focus has been directed at the likely consequences of holding a particular time limitation mandatory, in an attempt to ascertain whether those consequences would defeat or promote the purpose of the enactment. [Citations.] Other cases have suggested that a time limitation is deemed merely directory 'unless a consequence or

penalty is provided for failure to do the act within the time commanded.' (Ibid.) As Morris v. County of Marin, supra, 18 Cal.3d 901, 908, held, the consequence or penalty must have the effect of invalidating the government action in question if the limit is to be characterized as ‘mandatory.’ ” (CCPOA, supra, 10 Cal.4th at 1145.) 

Section 1742, subdivision (b) does not dictate any consequence should the Director issue her decision after the 45-day time limit. As argued by Respondents, section 1742, subdivisions (a) and (c) demonstrates how the Legislature clearly specifies the consequences for exceeding applicable time limits.[17] (See Director’s Opposition 6.) Moreover, “[t]he overall purpose of the prevailing wage law . . . is to benefit and protect employees on public works projects.” (Lusardi Construction Co. v. Aubry (1992) 1 Cal.4th 976, 987.) That legislative purpose would be frustrated with a construction of the time limits in section 1742, subdivision (b) as mandatory rather than directory.  

Based on the foregoing, the court concludes the time limits in section 1742, subdivision (b) are directory. Accordingly, the Director’s failure to issue a decision within 45 days after the hearing does not invalidate her decision.

Because the 45-day time limit is directory, any alleged prejudice suffered by Petitioner from the delay is not determinative. (Reply 14:23-24.) Petitioner’s “sole remedy for delay is traditional mandamus which lies ‘to compel the performance of an act which the law specially enjoins, as a duty resulting from an office, trust, or station. . . .’ ” (CCPOA, supra, 10 Cal.4th at 1146.) In any event, Petitioner has not made a persuasive showing of prejudice. Notably, Petitioner elected not to raise the Director’s delay in issuing her decision until its Reply Brief.

Petitioner also seems to argue the Director must have commenced the hearing within 90 days of receipt of Petitioner’s request for the hearing. (Reply 15:8-9.) For the same reasons stated above, the court concludes the 90-day time limit in section 1742, subdivision (b) is directory, not mandatory. Moreover, as argued by Respondents, the record demonstrates “Petitioner requested a hearing date in late November or early December 2019” and thereby invited any error and waived any objection to commencement of the hearing after 90 days. (See AR 65.)

Based on the foregoing, Petitioner does not demonstrate any prejudicial error based on the time requirements of section 1742, subdivision (b).

Petitioner Does Not Demonstrate Laches

In the petition, Petitioner asserted “the Decision must be vacated on the grounds of laches.”  (Pet. ¶ 24.) Petitioner did not pursue or support that legal theory in the opening brief or reply.  Accordingly, Petitioner forfeited the issue. (Nelson v. Avondale Homeowners Assn., supra, 172 Cal.App.4th at 862-863 [argument waived if not raised or adequately briefed]; Pfeifer v. Countrywide Home Loans, Inc. (2012) 211 Cal.App.4th 1250, 1282 [same].)

CONCLUSION 

The petition is DENIED.

IT IS SO ORDERED. 

February 7, 2024                                                                   ________________________________ 

Hon. Mitchell Beckloff  

Judge of the Superior Court