State of New York

Supreme Court, Appellate Division

Third Judicial Department

Decided and Entered: January 29, 2015 518507 

________________________________

In the Matter of CDE ELECTRIC,

INC.,

Appellant,

v MEMORANDUM AND ORDER

PETER M. RIVERA, as Commissioner

of Labor, et al.,

Respondents.

________________________________

Calendar Date: November 14, 2014

Before: Lahtinen, J.P., McCarthy, Egan Jr. and Devine, JJ.

__________

Couch White, LLP, Albany (Jennifer K. Harvey of counsel),

for appellant.

Eric T. Schneiderman, Attorney General, Albany (Allyson B.

Levine of counsel), for respondents.

__________

Devine, J.

Appeal from a judgment of the Supreme Court (Breslin, J.),

entered April 30, 2013 in Albany County, which dismissed

petitioner's application, in a proceeding pursuant to CPLR

article 78, to review a determination of respondent Commissioner

of Labor denying petitioner's application to sponsor an

electrician apprenticeship program.

Petitioner was initially incorporated in 2010 under the

name Capital District Electric, Inc. and later changed its name

to CDE Electric, Inc. Petitioner is owned by its president and

vice-president, Gregory Guerin and Timothy Jones, respectively,

who were long-time employees of Phoenix Electricians Company Inc. 
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Petitioner's initial incorporation took place the day after

Phoenix Electricians agreed in a stipulation that it would be

debarred, in accordance with Labor Law § 220-b (3) (b), due to

its willful underpayment of prevailing wages and supplements to

its workers on 20 different public work projects. The

stipulation was entered into with the Bureau of Public Work, a

division of respondent Department of Labor (hereinafter DOL) that

is separate from the Office of Apprenticeship Training – the DOL

division involved in the actions currently challenged in this

proceeding.

With respect to the latter division, Daniel Paris, a DOL

Apprentice Training Representative, initially met with the owner

and sole shareholder of Phoenix Electricians, Robert Phoenix, one

month prior to the settlement of the public work violation

proceeding. In the course of a routine audit of Phoenix

Electricians' apprenticeship training program, Phoenix indicated

that he had unspecified public work violations and that he would

soon be retiring, but that Guerin would be forming a new company. 

Guerin separately informed Paris that he was a long-time employee

of Phoenix Electricians, that he and a coworker were purchasing

the assets of that company, and that they wished to set up an

apprenticeship program. Thereafter, Paris met with Guerin, as

well as Phoenix and his wife, to assist them in preparing

petitioner's application for sponsorship of a new apprenticeship

program. Paris asserts that neither Phoenix and his wife nor

Guerin informed him that Phoenix Electricians' apprenticeship

program was being deregistered – and that petitioner was formed –

as a result of the debarment of Phoenix Electricians, or that the

public work violations were related to Phoenix's retirement.

In 2011, petitioner filed an application to register its

apprenticeship training program, in which Guerin attested that no

affiliate, predecessor company or entity, director or officer of

petitioner had been the subject of, within the last five years,

"[a]ny pending or open investigation of a possible violation of

New York or other state law or regulation including . . .

investigations by the Bureau of Public Work[, or] [a]ny

determination of a violation of any [s]tate law or regulation,

including [a] [p]ublic [w]ork violation[, or] [a]ny stipulations

involving any state . . . enforcement action." Inasmuch as the
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application avoided any mention of Phoenix or Phoenix

Electricians by name, Paris sought further information in

writing, seeking to confirm what Guerin had previously informed

him verbally – i.e., that Phoenix Electricians was "not part of

[petitioner] in any way" and that "the only connection between

Phoenix [Electricians] and [petitioner] is that [petitioner]

bought some of [its] assets." In response, Guerin informed Paris

that the only affiliation between the two companies was that

petitioner purchased some of Phoenix Electricians' assets and now

employed its employees.

Upon DOL's solicitation of public comments regarding

petitioner's application in accordance with 12 NYCRR 601.4 (g), a

commenter affiliated with an electrical workers' union stated

that Phoenix Electricians had been debarred, Phoenix was employed

by petitioner, and that Guerin had been both vice-president and

secretary of Phoenix Electricians, as well as overseeing and

signing payroll documents on several of the projects covered by

the stipulation resolving the public work violations. In

response, Guerin denied that he had managed the payroll, but

acknowledged to Paris for the first time that he had been an

officer of Phoenix Electricians and that he had signed certified

payroll documents when Phoenix was unavailable. Guerin also

admitted that Phoenix was now a part-time employee of petitioner.

DOL ultimately denied petitioner's application to sponsor

an electrician apprenticeship program on the ground that

petitioner had provided "inaccurate and/or incomplete

information" in its application with respect to both its

affiliation with Phoenix Electricians and Guerin's role in that

company. Respondent Commissioner of Labor affirmed, prompting

this proceeding, which Supreme Court dismissed. Petitioner

appeals, and we affirm.

Petitioner argues that Supreme Court erred in holding that

the denial of its application was rationally based upon its

failure to disclose the relationship between petitioner and

Phoenix Electricians – that is, the extent of the involvement of

petitioner's president, Guerin, in the activities of Phoenix

Electricians – and the debarment of the latter company. As

petitioner acknowledges, the standard of review for this
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proceeding, which challenges a determination that was not made

after a quasi-judicial hearing, is whether the Commissioner's

determination was arbitrary and capricious or an abuse of

discretion (see CPLR 7803 [3]; Matter of Beck-Nichols v Bianco,

20 NY3d 540, 559 [2013]; Matter of Pell v Board of Educ. of Union

Free School Dist. No. 1 of Towns of Scarsdale & Mamaroneck,

Westchester County, 34 NY2d 222, 231 [1974]). "An action is

arbitrary and capricious when it is taken without sound basis in

reason or regard to the facts" (Matter of Peckham v Calogero, 12

NY3d 424, 431 [2009]; see Matter of Pell v Board of Educ. of

Union Free School Dist. No. 1 of Towns of Scarsdale & Mamaroneck,

Westchester County, 34 NY2d at 231). When a determination is

supported by a rational basis, it must be sustained even if the

reviewing court would have reached a different result (see Matter

of Peckham v Calogero, 12 NY3d at 431).

In our view, the Commissioner's determination has both a

foundation in fact and a sound basis in reason. The governing

regulation states, as relevant here, that "[a]pplications shall

be rejected if information required on the Sponsor Information

Sheet, or required disclosures related thereto, is found to be

inaccurate or incomplete" (12 NYCRR 601.4 [c] [2]). In its

written submissions in connection with its application,

petitioner provided general information that – while technically

true – was misleading and incomplete insofar as the application

did not identify the extent of petitioner's affiliation with

Phoenix Electricians or provide any indication that petitioner's

formation arose due to the public work enforcement action. For

example, Guerin submitted a letter explaining that he had "worked

for an electrical contractor" for 29 years, and had formed

petitioner and "begun purchasing the assets and equipment of our

former employer as he will be retiring in the next few months." 

Guerin did not name Phoenix Electricians or Phoenix as his former

employer, specify that he was the former vice- president of

Phoenix Electricians or clarify that Phoenix, rather than

retiring, would be employed by petitioner after Phoenix

Electricians was debarred due to its willful underpayment of

prevailing wages. Even after Paris expressly requested

information regarding whether petitioner had any connection with

Phoenix Electricians beyond purchasing some of its assets, Guerin

responded only that petitioner hired Phoenix Electricians'
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employees and that "[w]e have no affiliation with Phoenix

Electricians." 

In addition, the sponsor information sheet submitted as

part of the application required petitioner to disclose whether

any "affiliate, any predecessor company or entity," director or

officer of petitioner had been the subject of, within the last

five years, any investigation of a possible violation of, or

determination of a violation of any state law or regulation,

including a public work violation, or stipulations involving any

enforcement action. These questions – which Guerin answered in

the negative – belie petitioner's argument that information about

the debarment of its affiliates or predecessors was not

requested. The sponsor information sheet specifically requested

information regarding whether an affiliate or predecessor company

had been investigated for any public work violation or had been

the subject of a stipulation involving any state enforcement

action.

Similarly, there is no merit to petitioner's assertion that

the determination that it provided incomplete information must be

deemed irrational because Guerin had informed Paris prior to

filing an application that he was a former employee of Phoenix

Electricians and a separate division of DOL entered into a

stipulation with that company resolving its prevailing wage

violations. Regardless of the information available to other

divisions of DOL or that had been provided prior to petitioner's

application, it was only after a member of the public revealed

the extent of petitioner's association with Phoenix Electricians

that Guerin acknowledged in connection with the application

process that petitioner was formed due to the debarment of

Phoenix Electricians and that Guerin was not merely an employee

but an officer of that company, who had signed payroll checks. 

Even at that point, Guerin minimized the association between the

two companies, failing to mention that he was a principal of both

companies, that petitioner was formed the day after Phoenix

Electricians was debarred and that petitioner would employ

Phoenix. In any event, petitioner was not relieved of its

obligation to provide accurate and complete information on its

application by virtue of the fact that a different division of

DOL had knowledge of the debarment and a single employee of the
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Office of Apprenticeship Training knew that Guerin was a prior

employee of Phoenix Electricians. 

Nor can it be said that the Commissioner's determination

was contrary to the stipulation entered into between DOL and

Phoenix Electricians, as petitioner contends. The stipulation

released all officers of Phoenix Electricians from financial

liability for underpayment of prevailing wages; it does not,

however, contain any language that would preclude DOL from

considering Guerin's involvement in the activities of Phoenix

Electricians for purposes of approving an application for a new

apprenticeship training program. While the stipulation further

indicated that DOL would not hold accountable any future newlyformed entity that employed Phoenix for prior violations or

assert that the future employer was a "successor" within the

meaning of Labor Law § 220 (5) (k) – provided that Phoenix did

not own any shares or serve as a principal in the newly-formed

entity – the denial of petitioner's application does not amount

to a conclusion that petitioner is a "successor" under the

prevailing wage statute. Rather, the Commissioner determined

that Phoenix Electricians was a predecessor company to petitioner

"for purposes of the questions on the Sponsor's Information

Sheet," which is governed by the separate regulations found in 12

NYCRR part 601. Inasmuch as "courts must defer to an

administrative agency's rational interpretation of its own

regulations in its area of expertise" (Matter of Peckham v

Calogero, 12 NY3d at 431), it cannot be said that the stipulation

conflicts with the Commissioner's determination that Phoenix

Electricians was a predecessor company for purposes of the

apprenticeship training program.

Under these circumstances, the Commissioner did not act

arbitrarily and capriciously in concluding that petitioner did

not provide all information sought by DOL. As the Commissioner

noted, even if the information in petitioner's application was

technically accurate, it was misleading and, therefore,

"incomplete" within the meaning of 12 NYCRR 601.4 (c) (2). 

Accordingly, Supreme Court properly dismissed the petition. 

Petitioner's remaining arguments have been considered and found

to be lacking in merit.
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Lahtinen, J.P., McCarthy and Egan Jr., JJ., concur.

ORDERED that the judgment is affirmed, without costs.

ENTER:

Robert D. Mayberger

Clerk of the Court