Filed 2/27/13 Ogundare v. Department of Indust. Relations etc. CA5 

NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS

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or ordered published for purposes of rule 8.1115. 

IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA 

FIFTH APPELLATE DISTRICT 

AYODEJI A. OGUNDARE et al., 

Respondents, 

 v. 

DEPARTMENT OF INDUSTRIAL 

RELATIONS, DIVISION OF LABOR 

STANDARDS ENFORCEMENT, 

Appellant. 

F061162 

(Super. Ct. No. CV268425) 

OPINION

 APPEAL from a judgment of the Superior Court of Kern County. Linda S. 

Etienne, Commissioner. 

 David D. Cross for Appellant. 

 Dowling, Aaron & Keeler, Daniel K. Klingenberger and Stephanie Hamilton 

Borchers for Respondents. 

-ooOoo- 
2. 

 Ayodeji A. Ogundare, individually and doing business as Pacific Engineering 

Company (together Pacific), filed a petition for writ of administrative mandate asking the 

trial court to set aside a “debarment”1 decision adopted by the State of California, 

Department of Industrial Relations, Division of Labor Standards Enforcement (DLSE) 

that would have precluded Pacific from bidding or working on public works construction 

projects for one year. The trial court reviewed the administrative record and concluded 

there was no credible evidence to support a finding that Pacific violated prevailing wage 

laws with intent to defraud, which finding was necessary in this case for debarment to be 

imposed under Labor Code section 1777.1.2 Accordingly, the trial court granted 

Pacific’s petition. DLSE appeals, arguing that (i) the trial court failed to apply the correct 

standard of review (i.e., the substantial evidence test) and (ii) there was substantial 

evidence in the record to support the administrative finding of intent to defraud. We 

agree on both points and will reverse. 

FACTS AND PROCEDURAL HISTORY

 Pacific was a general engineering construction company based in Bakersfield, 

California, that performed concrete (flat) and underground (water, soil and sewer) 

construction work. Ninety-nine percent of the projects undertaken by Pacific were public 

works projects. Pacific was owned and managed by Ayodeji A. Ogundare (Ogundare), 

who was a licensed contractor. 

 In 2007 and 2008, DLSE conducted investigations regarding public works projects 

on which Pacific was a subcontractor, including a project in Delano for sewer and 

 

1 Debarment occurs when an individual or entity is excluded from bidding, 

contracting or subcontracting on public works projects, usually for a defined period of 

time, due to violations of public contract law or other wrongful conduct. (See Labor 

Code, § 1777.1, subd. (b); Golden Day Schools, Inc. v. State Dept. of Education (2000) 

83 Cal.App.4th 695, 703.) 

2 Unless otherwise indicated, all further statutory references are to the Labor Code. 
3. 

sidewalk construction (the Delano project), a project in Madera to build a youth center 

(the Madera project), and a project in Exeter to construct a school building (the Exeter 

project). As a result of these investigations, DLSE notified Pacific of apparent violations 

of laws relating to public contracts and issued civil wage and penalty assessments against 

Pacific. Additionally, DLSE initiated the instant debarment proceedings against Pacific 

based on particular allegations that Pacific violated prevailing wage laws in a manner that 

was allegedly willful and with intent to defraud. The present appeal concerns the 

debarment proceedings only.3

 The debarment proceedings were commenced against Pacific in December 2008, 

when DLSE filed a statement of alleged violations, seeking Pacific’s debarment pursuant 

to the provisions of section 1777.1. 

 The hearing of the debarment proceedings was held on April 30, 2009, before a 

hearing officer. Pacific and DLSE were each represented by counsel and following the 

presentation of evidence and closing arguments, the hearing officer took the matter under 

submission. On August 6, 2009, the hearing officer issued a written statement of 

decision that was adopted the same day by DLSE as the decision of that agency. The 

statement of decision stated that Pacific committed willful violations with intent to 

defraud, and a one-year debarment of Pacific was ordered by DLSE therein.4

 The statement of decision stated the following principal conclusions: “[Pacific] 

‘willfully’ and with ‘intent to defraud’ violated the public works laws in not paying 

prevailing wages to one worker, Laborer Miguel Ibarra and [in not paying] prevailing 

 

3 A prior appeal was made concerning one of the monetary wage and penalty 

assessments against Pacific and another contractor. (See Department of Industrial 

Relations v. Davis Moreno Construction, Inc. (2011) 193 Cal.App.4th 560.) 

4 When we refer to the statement of decision herein, we mean the administrative 

decision made by the hearing officer and adopted by DLSE, not the trial court’s decision 

on the petition for administrative writ of mandate. 
4. 

overtime to two workers, Laborers Javier Perez (on the Madera project) and Juan 

Ramirez (on the Exeter project). Although the DLSE argued that [Pacific] had a pattern 

and practice of failing to pay prevailing wages and prevailing overtime on the three 

projects at issue as well as on previous projects ... the evidence simply was not presented 

at this hearing to establish this was the case.” Further, as to the alleged inadequacy of 

Pacific’s payroll records, the statement of decision stated that Pacific willfully violated 

provisions of section 1776 by submitting certified payroll records to DLSE, prime 

contractors, awarding bodies and others, that were “not accurate.” However, Pacific’s 

failures to provide adequate payroll records, although willful, were not sufficient in 

themselves to show intent to defraud. 

On the specific issue of intent to defraud, the statement of decision elaborated: 

“[Miguel] Ibarra’s testimony that he was always paid $15.00 per hour on the Delano 

project and worked 61 hours during the week ending August 4, 2007 is credible 

especially since he provided a copy of a paycheck corroborating his testimony. [Pacific] 

knew that payment to this individual was not in compliance with the public works laws as 

evidenced by the fact that the check shows payment at $15.00 per hour for 61 hours 

worked yet [Pacific] submitted to the DLSE certified payroll records listing the correct 

prevailing wage rate that should have been paid and listing only 25 hours worked for the 

week ending August 4, 2007. In this regard, [Pacific] ‘willfully’ violated the public 

works laws. [Pacific] also violated the public works laws with ‘intent to defraud’ 

evidenced by the fact that he put the required amount of payment on the certified payroll 

records he signed under penalty of perjury knowing that he paid a much lower rate.” 

Additionally, the statement of decision indicated that Pacific’s intent to defraud was 

further corroborated by the failure to pay overtime prevailing wages to Javier Perez and 

Juan Ramirez, since it appeared that Pacific “was attempting to split the total hours 

worked by Perez and Ramirez, so as not to have to pay or report prevailing overtime that 

was in fact worked by both workers.” 
5. 

As a consequence of the violations and of the finding of intent to defraud, the 

statement of decision ordered that Pacific “shall be ineligible to, and shall not, bid on or 

be awarded a contract for a public works project, and shall not perform work as a 

subcontractor on a public work ... for a period of one (1) year ....” 

On September 22, 2009, after DLSE adopted the statement of decision as the 

decision of DLSE in this matter, Pacific filed a petition for writ of administrative 

mandate pursuant to Code of Civil Procedure section 1094.5, seeking to have the order of 

debarment set aside on the ground that the order was not supported by the record. A first 

amended petition for writ of administrative mandate was filed by Pacific on December 4, 

2009. 

On August 16, 2010, the trial court issued its written order ruling on the petition 

for administrative writ of mandate. The trial court applied the “independent judgment” 

standard of review to the administrative decision on the assumption that Pacific’s interest 

in bidding on public contracts was a “fundamental vested right.” (Capitalization 

omitted.) In applying that standard to the record before it, the trial court found that “there 

was no credible evidence offered by [DLSE] to support a finding of an intent to 

defraud ....” (Capitalization omitted.) Moreover, the trial court explained that without a 

finding of intent to defraud pursuant to section 1777.1, subdivision (a), the mere willful 

violations in this case could not (by themselves) justify debarment since there were no 

prior willful violations as required by section 1777.1, subdivision (b). (Cf., § 1777.1, 

subd. (a) [debarment appropriate if violation of prevailing wage law was found to be with 

“intent to defraud”]; id., subd. (b) [debarment for “willful” violations appropriate only if 

a prior willful violation occurred in past three years].) Accordingly, no basis existed for 

debarment under section 1777.1, and the trial court granted Pacific’s petition. 

DLSE timely filed its notice of appeal. 
6. 

DISCUSSION

I. Standard of Review 

 Since our standard of review is affected by the standard of review that was 

applicable in the trial court, we will begin with a summary of the law regarding the trial 

court’s standard of review. 

A. In the Trial Court

“Section 1094.5 of the Code of Civil Procedure governs judicial review by 

administrative mandate of any final decision or order rendered by an administrative 

agency. A trial court’s review of an adjudicatory administrative decision is subject to 

two possible standards of review depending upon the nature of the right involved. 

[Citation.] If the administrative decision substantially affects a fundamental vested right, 

the trial court must exercise its independent judgment on the evidence. [Citations.] The 

trial court must not only examine the administrative record for errors of law, but must 

also conduct an independent review of the entire record to determine whether the weight 

of the evidence supports the administrative findings. [Citation.] If, on the other hand, the 

administrative decision neither involves nor substantially affects a fundamental vested 

right, the trial court’s review is limited to determining whether the administrative 

findings are supported by substantial evidence. [Citations.]” (Wences v. City of Los 

Angeles (2009) 177 Cal.App.4th 305, 313, relying on Strumsky v. San Diego County 

Employees Retirement Assn. (1974) 11 Cal.3d 28, 32 & Bixby v. Pierno (1971) 4 Cal.3d 

130, 143-144.) 

Whether an administrative decision substantially affects a fundamental vested 

right must be determined on a case-by-case basis. (Bixby v. Pierno, supra, 4 Cal.3d at 

p. 144.) “A right may be deemed fundamental ‘on either or both of two bases: (1) the 

character and quality of its economic aspect; [or] (2) the character and quality of its 

human aspect.’ [Citation.] ‘The ultimate question in each case is whether the affected 

right is deemed to be of sufficient significance to preclude its extinction or abridgement 
7. 

by a body lacking judicial power. [Citation.]’ [Citation.]” (Wences v. City of Los

Angeles, supra, 177 Cal.App.4th at pp. 313-314.) “In determining whether the right is 

fundamental the courts do not alone weigh the economic aspect of it, but the effect of it in 

human terms and the importance of it to the individual in the life situation.” (Bixby v. 

Pierno, supra, at p. 144.) For example, an agency’s decision to revoke a professional 

license or the right to practice one’s trade or profession has been found to affect the 

person’s fundamental vested rights. (Rand v. Board of Psychology (2012) 206 

Cal.App.4th 565, 574.) On the other hand, “as a general rule, when a case involves or 

affects purely economic interests, courts are far less likely to find a right to be of 

the fundamental vested character. [Citations.]” (JKH Enterprises, Inc. v. Department of 

Industrial Relations (2006) 142 Cal.App.4th 1046, 1060 [cases digested] (JKH 

Enterprises).) 

B. In the Court of Appeal

 “Regardless of the nature of the right involved or the standard of judicial review 

applied in the trial court, an appellate court reviewing the superior court’s administrative 

mandamus decision always applies a substantial evidence standard. [Citations.]” (JKH 

Enterprises, supra, 142 Cal.App.4th at p. 1058.) However, “the reviewing court’s focus

changes, depending on which standard of review governed at trial.” (MHC Operating 

Limited Partnership v. City of San Jose (2003) 106 Cal.App.4th 204, 218, italics added.) 

“[D]epending on whether the trial court exercised independent judgment or applied the 

substantial evidence test, the appellate court will review the record to determine whether 

either the trial court’s judgment or the agency’s findings, respectively, are supported by 

substantial evidence. [Citation.] If a fundamental vested right was involved and the trial 

court therefore exercised independent judgment, it is the trial court’s judgment that is the 

subject of appellate court review. [Citations.] On the other hand, if the superior court 

properly applied substantial evidence review because no fundamental vested right was 

involved, then the appellate court’s function is identical to that of the trial court. It 
8. 

reviews the administrative record to determine whether the agency’s findings were 

supported by substantial evidence, resolving all conflicts in the evidence and drawing all 

inferences in support of them. [Citations.]” (JKH Enterprises, supra, 142 Cal.App.4th at 

p. 1058, fn. omitted.) 

II. The Trial Court Should Have Applied Substantial Evidence Test 

 Looking to the character and quality of the right involved, we conclude that 

Pacific’s one-year debarment from being able to bid or work on public projects did not 

implicate a fundamental vested right. Pacific was not prevented from bidding or working 

on all construction projects, but only from certain kinds of work (i.e., public projects). 

Hence, it appears that the interest affected was purely economic in this case. (See, e.g., 

JKH Enterprises, supra, 142 Cal.App.4th at pp. 1061-1062 [stop work order and penalty 

issued by Department of Industrial Relations due to employer’s failure to provide 

workers’ compensation to employees did not implicate fundamental vested right—

interest involved “purely economic”]; Kawasaki Motors Corp. v. Superior Court (2000) 

85 Cal.App.4th 200, 204 [protest to New Motor Vehicle Board of manufacturer’s 

termination of automotive dealer franchise reviewed under substantial evidence test as 

purely economic contractual privileges were involved]; Standard Oil Co. v. Feldstein

(1980) 105 Cal.App.3d 590, 604-605 [no fundamental right to operate four rather than 

three refinery units even though return on investment may be lower].) 

 It follows that the trial court applied the wrong standard. It should have reviewed 

DLSE’s administrative decision under the substantial evidence test rather than under the 

independent judgment standard of review. However, we need not send the matter back to 

the trial court to apply the proper standard. Where the trial court erroneously uses the 

independent judgment standard, an appellate court may proceed to review the matter by 

applying the substantial evidence standard to the administrative findings. (Housing 

Development Co. v. Hoschler (1978) 85 Cal.App.3d 379, 387; Savelli v. Board of 
9. 

Medical Examiners (1964) 229 Cal.App.2d 124, 133; 2A Cal.Jur.3d (2007) 

Administrative Law, § 754, p. 230.) 

III. Administrative Decision Supported by Substantial Evidence 

The question remains whether a different result would have been required in the 

present case under the substantial evidence test. This test “requires a review of the entire 

record to determine whether findings of an administrative decision are supported by 

substantial evidence.” (Northern Inyo Hosp. v. Fair Emp. Practice Com. (1974) 38 

Cal.App.3d 14, 23-24.) If the administrative decision is supported by substantial 

evidence, we may not overturn it merely because a contrary finding would have been 

equally or more reasonable. (Id. at p. 24) “In general, substantial evidence has been 

defined in two ways: first, as evidence of ‘“‘ponderable legal significance ... reasonable 

in nature, credible, and of solid value’”’ [citation]; and second, as ‘“relevant evidence 

that a reasonable mind might accept as adequate to support a conclusion”’ [citation].” 

(County of San Diego v. Assessment Appeals Bd. No. 2 (1983) 148 Cal.App.3d 548, 555) 

“Unless the finding, viewed in the light of the entire record, is so lacking in evidentiary 

support as to render it unreasonable, it may not be set aside.” (Northern Inyo Hosp. v. 

Fair Emp. Practice Com., supra, at p. 24.) 

 In order to impose debarment in the present case, it was necessary for DLSE to 

establish intent to defraud under section 1777.1. That statute provides, in relevant part, as 

follows: “Whenever a contractor or subcontractor performing a public works project 

pursuant to this chapter is found by the Labor Commissioner to be in violation of this 

chapter with intent to defraud, ... the contractor or subcontractor ... is ineligible for a 

period of not less than one year or more than three years to do either of the following: [¶] 

(1) Bid on or be awarded a contract for a public works project. [¶] (2) Perform work as a 

subcontractor on a public works project.” (§ 1777.1, subd. (a)(1) & (2).) The term 

“intent to defraud” is defined in the applicable regulations as follows: “‘Intent to 

defraud’ means the intent to deceive another person or entity, as defined in this article, 
10. 

and to induce such other person or entity, in reliance upon such deception, to assume, 

create, transfer, alter or terminate a right, obligation or power with reference to property 

of any kind.” (Cal. Code Regs., tit. 8, § 16800.) 

Here, as noted above, the statement of decision adopted by DLSE explained that 

intent to defraud was found based on (among other things) the following: “[Miguel] 

Ibarra’s testimony that he was always paid $15.00 per hour on the Delano project and 

worked 61 hours during the week ending August 4, 2007 is credible especially since he 

provided a copy of a paycheck corroborating his testimony. [Pacific] knew that payment 

to this individual was not in compliance with the public works laws as evidenced by the 

fact that the check shows payment at $15.00 per hour for 61 hours worked yet [Pacific] 

submitted to the DLSE certified payroll records listing the correct prevailing wage rate 

that should have been paid and listing only 25 hours worked for the week ending 

August 4, 2007. In this regard, [Pacific] ‘willfully’ violated the public works laws. 

[Pacific] also violated the public works laws with ‘intent to defraud’ evidenced by the 

fact that he put the required amount of payment on the certified payroll records he signed 

under penalty of perjury knowing that he paid a much lower rate.” Additionally, the 

statement of decision indicated that Pacific’s intent to defraud was further corroborated 

by the failure to pay overtime prevailing wages to Javier Perez and Juan Ramirez, since it 

appeared that Pacific “was attempting to split the total hours worked by Perez and 

Ramirez, so as not to have to pay or report prevailing overtime that was in fact worked by 

both workers.” 

 The parties, like the trial court, have placed primary emphasis on the evidence 

relating to Miquel Ibarra’s wages. DLSE argues that such evidence was sufficient to 

reasonably allow the conclusion that Pacific acted with an intent to defraud. Pacific, on 

the other hand, argues that in light of the entire record, the evidence was inadequate to 

support that conclusion. 
11. 

 We’ll begin with Pacific’s position. Pacific argues that since Ibarra testified he 

did not keep a record of the number of hours he worked for any particular week and he 

was unsure of the total hours he worked on the particular week reflected on the paycheck 

introduced into evidence (i.e., the week ending August 4, 2007), it was not substantiated 

that he was paid only $15 per hour. Pacific also claims that the large discrepancy 

between Ibarra’s paycheck (showing Ibarra was paid $15 per hour) and the certified 

payroll records (showing he was paid a prevailing wage of $36.10 and worked only 25 

hours that week) did not show intent to defraud. In that regard, Pacific points out that 

although the statement of decision noted the certified payroll records were signed (by 

Ogundare) under penalty of perjury, the record on appeal does not include any signature. 

Ogundare’s name is printed on the signature line, but no signature is present. Also, 

Pacific refers to the fact that the statement of decision characterized Pacific’s inaccurate 

payroll records as a “‘willful’” violation of the recordkeeping statute (§ 1776), but not a 

fraudulent violation of that statute.5 Finally, Pacific points out that three other employees 

testified that they had been paid properly (i.e., prevailing wages) on the same job. 

 DLSE’s position is that intent to defraud was established by the evidence, in 

particular Ibarra’s testimony that he was paid $15 per hour as confirmed by the paycheck 

for the week of August 4, 2007, and the certified payroll records for that same week 

showing that Ibarra was paid prevailing wages of $36.10 per hour and only worked 

25 hours that week. We agree with DLSE. Although Ibarra did not keep a record of his 

hours, his testimony that he was paid $15 per hour was clearly supported by the 

 

5 Ogundare testified at the administrative hearing about there being some confusion 

due to (among other things) some turnover or inexperience of employees in payroll, 

followed by hiring an outside accountant, and it was argued that any errors were clerical 

mistakes. The statement of decision rejected that explanation as inherently implausible in 

light of Ogandare’s (Pacific’s) extensive experience in public contracts and knowledge of 

recordkeeping that is required. 
12. 

paycheck. The notation on that check indicated he was being paid for 61 hours worked 

on the Delano job, and the total amount paid was $915. Doing the math, this equates to 

$15 per hour. For the identical week, the certified payroll records reported by Pacific to 

DLSE pursuant to section 1776 (whether or not personally signed under oath by 

Ogundare) represented to DLSE that Ibarra was making $36.10 per hour and worked only 

25 hours. (See § 1776, subd. (a)(1) & (2) [records must include hours worked, wages 

paid, and declaration stating compliance with § 1771 (prevailing wage law)].) No 

satisfactory explanation was ever provided by Pacific for this glaring discrepancy 

between Ibarra’s actual paycheck reflecting $15 per hour and the contrary representations 

by Pacific to DSLE. A party’s intent, including intent to defraud, may be shown by 

circumstantial evidence. (1 Witkin, Cal. Evidence (5th ed., 2012) Circumstantial 

Evidence, § 122, p. 528; People v. Phillips (1960) 186 Cal.App.2d 231, 240.) A 

reasonable conclusion from this evidence is that Pacific violated the prevailing wage law 

with intent to defraud. 

DISPOSITION

 The trial court’s judgment granting Pacific’s writ of administrative mandate is 

reversed. The matter is remanded to the trial court with instructions that a new order be 

entered by the trial court denying the writ and affirming DLSE’s administrative decision 

to impose a one-year debarment. Costs on appeal are awarded to DLSE. 

 _____________________ 

Kane, J. 

WE CONCUR: 

 _____________________ 

Wiseman, Acting P.J. 

 _____________________ 

Detjen, J.