Court Opinion

ID: 9963564
Source: CourtListenerOpinion
Date Created: 2024-04-25 19:05:55.104435+00
Date Added: 2024-06-11T08:24:53.265605
License: Public Domain

NOT FOR PUBLICATION IN WEST'S HAWAI#I REPORTS AND PACIFIC REPORTER

                                             Electronically Filed
                                             Intermediate Court of Appeals
                                             CAAP-XX-XXXXXXX
                                             25-APR-2024
                                             08:21 AM
                                             Dkt. 150 SO

                       NO. CAAP-XX-XXXXXXX

               IN THE INTERMEDIATE COURT OF APPEALS
                      OF THE STATE OF HAWAI#I

            ECKARD BRANDES, INC., Appellant-Appellee,
                                v.
          DEPARTMENT OF LABOR AND INDUSTRIAL RELATIONS,
                        Appellee-Appellee,

                                 and

                 SCOTT FOYT, Intervenor-Appellant

        APPEAL FROM THE CIRCUIT COURT OF THE FIRST CIRCUIT
                      (CIVIL NO. 18-1-0011)

                     SUMMARY DISPOSITION ORDER
 (By:   Leonard, Acting Chief Judge, Nakasone and McCullen, JJ.)

          Intervenor-Appellant Scott Foyt (Foyt) appeals from the
December 19, 2018 Order Reversing Decision of Department of Labor
and Industrial Relations (Order Reversing DLIR Decision) and
Final Judgment entered in favor of Appellant-Appellee Eckard
Brandes, Inc. (EB) against Appellee-Appellee Department of Labor
and Industrial Relations (DLIR), by the Circuit Court of the
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First Circuit (Circuit Court).1        The Order Reversing DLIR
Decision reversed a DLIR hearing officer's (hearings officer)
December 6, 2017 "Decision and Order" (DLIR Decision) that upheld
a May 4, 2017 notice of violation (NOV) issued by the DLIR to EB
after Foyt complained that he was underpaid by EB on certain
projects due to misclassification of the work he performed.
          On appeal, Foyt contends in his sole point of error
that the Circuit Court "erred in [r]eversing the Hearing
Officer's Conclusion that [EB] violated Chapter 104 [Hawaii
Revised Statutes (HRS)] under the right-wrong standard of
review."
          Upon review of the record on appeal and relevant legal
authorities, giving due consideration to the issues raised and
arguments advanced by the parties, we resolve Foyt's appeal as
follows, and affirm.
          Foyt worked for EB from May 5, 2011 to July 26, 2013, a
time period that included the eight projects at issue in the NOV.
EB cleaned, conducted CCTV inspections, and repaired pipes.
Foyt's main duties while working for EB entailed driving a Vactor
truck to and from the company yard to the job sites daily, where
he operated equipment to clean out sewer lines. A Vactor truck
is a truck with a water tank and a high pressure hose that can
push pressurized water into a sewer pipe and evacuate the
material using a vacuum pump. EB used the Vactor truck solely
for the cleaning function and not for repairs.           Foyt occasionally
also drove a water truck and debris truck.

      1
            The Honorable Keith K. Hiraoka presided over the October 5, 2018
hearing and ruled to reverse the DLIR's decision. The Honorable James S.
Kawashima entered the December 19, 2018 Order Reversing DLIR Decision and
Final Judgment, and presided over the February 13, 2019 hearing on Foyt's
motions to intervene and to extend time to file a notice of appeal.

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          HRS § 104-2(b)(2012)2 requires that every laborer
performing work on a job site for the construction of any
public work project be paid no less than the prevailing wage
established by the DLIR director. Prior to July 2005, EB
paid its employees under the Sewer Line Tele-Repairer wage
classification. Nelson Befitel (Director Befitel), then the
Director of the DLIR, sent EB a letter dated July 26, 2005
(2005 Letter), stating that EB would not be receiving a wage
survey to complete to assist in determining prevailing wages
for the Sewer Line Tele-Repairer classification because that

      2
            HRS Chapter 104, entitled "Wages and Hours of Employees on Public
Works," regulates labor practices for any entity that contracts with the
government for construction of public works projects. HRS § 104-2(a) (2012)
applies the statute to the determination of wages for public works
construction project contracts over $2,000. HRS § 104-2(b) provides for the
establishment of the prevailing wage for each work classification by the DLIR
director, as follows:

            (b) Every laborer and mechanic performing work on the job
            site for the construction of any public work project shall
            be paid no less than prevailing wages; provided that:
                  (1) The prevailing wages shall be established by
                  the director as the sum of the basic hourly rate
                  and the cost to an employer of providing a
                  laborer or mechanic with fringe benefits.

                  . . . .
                          (B) The rates of wages which the
                          director shall regard as prevailing
                          in each corresponding classification
                          of laborers and mechanics shall be
                          the rate of wages paid to the
                          greatest number of those employed in
                          the State, the modal rate, in the
                          corresponding classes of laborers or
                          mechanics on projects that are
                          similar to the contract work;

                  (2) Except for the project prevailing wages
                  established by subsections (h) and (i), the
                  prevailing wages shall be not less than the
                  wages payable under federal law to corresponding
                  classes of laborers and mechanics employed on
                  public works projects in the State that are
                  prosecuted under contract or agreement with the
                  government of the United States . . . .

      (Emphases added.)

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classification was being discontinued.        Director Befitel's
2005 Letter stated in pertinent part:
                Input from the industry brought to our attention
          the distinction between inspection and cleaning versus
          repair. The inspection and cleaning function is not
          considered construction work as covered under Chapter
          l04, HRS, therefore, it will not be included in the
          prevailing wage rate schedule. The repair work is the
          same work that would be classified·as Laborer I, a
          classification that already exists.

                Additionally, under Section 104-2(b), HRS, the law
          states that "prevailing wages shall not be less than the
          wages payable under federal law to corresponding classes".
          The U.S. Department of Labor does not include a separate
          classification for sewer line tele-repairer work for
          construction projects covered by the federal Davis-Bacon
          Act. Work of that nature is classified as Laborer I. Thus,
          maintaining the rate classification of Sewer Line Tele-
          Repairer creates a prevailing wage that is less than the
          wages payable under federal law to corresponding classes,
          and is contrary to the law. ·

(Emphases added.)
          After receiving the 2005 Letter, EB paid its employees,
including Foyt as Laborer I or II, depending on the tools used,
if they performed repair work. If only preliminary cleaning and
inspection was being done, however, EB paid its employees the
company rate. When EB bid on the jobs at issue in the NOV "in
the period from 2005 up until September 2013," EB assumed that
cleaning and inspection were not construction work covered by HRS
Chapter 104.
          On September 6, 2013, the Administrator of the DLIR
Wage Standards Division, Pamela Martin (Administrator Martin),
responded to a letter from the City and County of Honolulu to the
DLIR requesting clarification on the proper wage classification
for employees that were performing cleaning and inspecting work
(2013 Letter). Administrator Martin's 2013 Letter stated that
cleaning and inspection work was now covered under Chapter 104
when cleaning and inspection is required for the repair and/or
rehabilitation of sewer pipes. The 2013 Letter stated in
relevant part:

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                The department's position is unchanged for
          strictly CCTV inspection and cleaning work only.
          However, under Section 12-22-1, Hawaii Administrative
          Rules, the definition of "construction of a public
          work" includes without limitation new construction,
          reconstruction, development, improvement, alteration,
          repair, renovation, painting, decorating, dredging,
          shoring, simultaneous sewer inspection and repair, and
          any other activity performed by a laborer or mechanic
          employed at the site of a public work.
                City and County repair and/or rehabilitation of
          sewer pipe projects which require cleaning and CCTV
          inspection are covered under Chapter 104, HRS. The
          cleaning and CCTV inspection activities are deemed an
          integral part of or in conjunction with a construction
          contract subject to Chapter 104, HRS. Workers must be
          classified and paid the closest existing
          classification as published in the Wage Rate Schedule.

(Emphasis added.)   Following Administrator Martin's 2013 Letter,
EB "began paying at the Laborer I rate if repair work was being
performed on the job site(s), but if no repair work was being
done workers were paid their regular company rate."
          The hearings officer concluded that HRS Chapter 104
applied because EB's work was performed on government contracts
that specified that sewer pipes were to be repaired or replaced.
The hearings officer found that Foyt was paid as a Laborer I or
Laborer II for the duration of the projects, but Laborer I or
Laborer II was not the correct classification for Foyt's work.
According to the hearings officer, because a specialized
Commercial Driver's License was required to drive the truck on
public roads, Foyt should have been paid as a Truck Driver Tandem
Dump Truck, over 8 cu. yds. (water level); Water Truck (over
2,000 gallons) under HRS § 104-2(b). The hearings officer
acknowledged the confusion caused by Director Befitel's 2005
Letter and Administrator Martin's 2013 Letter, but reasoned that
the union's classification was dispositive, as follows:
                The Hearings Officer acknowledges that the
          letters from Nelson B. Befitel, former Director, and
          Pamela B. Martin, WSD Administrator, appear to have
          confusing or conflicting information, and the letters
          reflect disagreements in the prevailing practice that
          were being resolved under different administrations.
          One letter states that a worker is Laborer I who only
          operates the equipment on the job site, but the letter
          does not address or clarify the workers'

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            classification who drives the truck and operates the
            equipment on the job site. However, the Fry Brothers
            case gives the International Operating Engineers the
            authority to set the prevailing area practices, and
            their classification is Truck Driver: Tandem Dump
            Truck, over 8 cu. yrds. (water level); Water Truck
            (over 2,000 gallons).

(Emphases added.) The hearings officer assessed EB a "penalty of
$5,466.47" with regard to the misclassification violation
pertinent to this appeal, and determined that Foyt was "due
$45,442.47 in prevailing wages, $9,222.18 in overtime, for a
total of $54,664.65."
          EB appealed the hearings officer's decision to the
Circuit Court on January 4, 2018, and on December 19, 2018 the
Circuit Court issued the Order Reversing DLIR Decision.3               The
Circuit Court concluded that "it was arbitrary and capricious for
the department to vary from the clear statements made in the
director's July 26, 2005 letter upon which [EB] reasonably
relied"; that Administrator Martin's 2013 Letter that differed
from Director Befitel's 2005 Letter "cannot be applied
retroactively"; and "since the classification used by [EB] was
consistent with the statements made in [Director Befitel]'s July
26, 2005 letter, it was error for the [DLIR] Wage Standards
Division to find otherwise."4

      3
            The parties to the Circuit Court appeal were EB and the DLIR.
Foyt did not intervene until 2019.
      4
            The Circuit Court ruled as follows:

                  So again, we get back to the –- I think in my mind,
            the dispositive issue in this case is whether or not [EB] is
            entitled to rely on compliance with a [sic] unambiguous
            letter from the Director of Labor being in compliance with
            the applicable law. So why is it fair for the department to
            come back after the fact and change the rules? And by
            changing the rules, I'm saying [Administrator] Martin's
            determination in 2013 was different than what [Director]
            Befitel said in 2005. And so why is [Administrator]
            Martin's change being given –- or why should it be given
            retroactive effect?
            . . . .

                                                                   (continued...)

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          On secondary review of an administrative decision, we
apply the same standard of review as the Circuit Court to
determine whether the Circuit Court was right or wrong in its
decision under HRS § 91-14(g) (2012 & Supp. 2019), which
provides:
                  (g) Upon review of the record, the court may
            affirm the decision of the agency or remand the case
            with instructions for further proceedings; or it may
            reverse or modify the decision and order if the
            substantial rights of the petitioners may have been
            prejudiced because the administrative findings,
            conclusions, decisions, or orders are:

                    . . . .
                    (4) Affected by other error of law; [or]
                    . . . .

                    (6) Arbitrary, or capricious, or characterized
                        by abuse of discretion or clearly
                        unwarranted exercise of discretion.

      4
       (...continued)
                  On the merits, first of all, I would like to make
            clear what the court is not ruling on because the court is
            going to reverse the Decision and Order. But the court is
            not ruling that, in the future, work performed by a Vactor
            truck driver who does not also do repair work is or is not
            compensable under the operating engineers contract or any
            other classification. The basis for the court's decision is
            that it was arbitrary and capricious for the department to
            vary from the clear statements made in [Director Befitel]'s
            July 26, 2005 letter upon which [EB] reasonably relied in
            calculating its expenses to submit its bids on these state
            contracts. So basically, the State cannot change the rules
            after a clear statement like this without notice being given
            to the employer, such as it arguably was in 2013 in the
            meeting with [Administrator] Martin. So the court is not
            ruling that that was a correct decision by [Administrator]
            Martin. The court is just ruling that it cannot be applied
            retroactively.
                  So it was a misapplication of the law for the Wage
            Standards Division not to apply the directives contained in
            [Director Befitel]'s July 26, 2005 letter. So because the
            parties did not controvert and the complainant agreed that
            he was paid for the correct number of hours, the only thing
            he was contesting was the classification. And since the
            classification used by [EB] was consistent with the
            statements made in [Director Befitel]'s July 26, 2005
            letter, it was error for the Wage Standards Division to find
            otherwise.

(Emphases added.)

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Paul's Elec. Serv., Inc. v. Befitel, 104 Hawai#i 412, 416, 91 P.3d
494, 498 (2004). Under HRS § 91-14(g), conclusions of law are
reviewable under subsection (4), and an agency's exercise of
discretion is reviewable under subsection (6). Id.
          On appeal, Foyt raises a number of arguments
challenging the Circuit Court's reversal of the DLIR Decision
that were not raised before the Circuit Court by Foyt, which we
do not address.5 We address Foyt's argument that the agency's
interpretation of HRS "Section 104" "is entitled to deference"
under Chevron U.S.A., Inc. v. Nat. Res. Def. Council, Inc.,
467 U.S. 837 (1984) (Chevron); "the current Administration's
interpretation of Section 104 HRS controlled in Foyt's matter and
not a prior Administration's letter"; and allowing EB "to rely
upon an outdated 2005 . . . letter from a prior administration is
not based on reasonable reliance . . . ."
          EB responds that "Director Befitel had the authority to
make statements in the 2005 letter because he was eliminating a

      5
            For Hawai#i Rules of Appellate Procedure (HRAP) Rule 28(b)(4)(iii)
compliance, Foyt cites to numerous transcript pages in the point of error and
appends these pages to the Opening Brief. Our review of the attached
transcript pages reflects that the only wage misclassification argument Foyt
raised below was as follows:

                  So this is kind of like one fluke administration
            gives the employer this letter in 2005 saying you don't
            have to pay this particular wage, but the administrations
            before and after all say you do. And that's why we're
            saying under Chevron versus USA [sic] we should be able to
            present that argument to the Intermediate Court of Appeals
            that [EB] had no right under Chevron versus USA to rely on
            that one administration telling them that they don't have
            to pay the prevailing wage under 104 to clients like mine
            . . . .

The above Chevron argument regarding the 2005 Letter was made by Foyt's
counsel at the February 13, 2019 hearing on Foyt's motion to intervene and
motion to extend time to file a notice of appeal. Foyt does not identify
where or whether he or another party, such as DLIR, raised the additional
legal arguments he raises on appeal to the Circuit Court below, and they are
waived. See HRAP Rule 28(b)(4); Cnty. of Hawai#i v. UNIDEV, LLC, 129 Hawai#i
378, 387, 301 P.3d 588, 597 (2013) ("It is axiomatic that where a party fails
to raise an argument before the courts below, that argument may be deemed
waived for purposes of appeal." (citation omitted)); Haw. Ventures, LLC v.
Otaka, Inc., 114 Hawai#i 438, 500, 164 P.3d 696, 758 (2007) ("It is unfair to
the circuit court to reverse on a ground that no one even suggested might be
error." (brackets omitted) (quoting Querubin v. Thronas, 107 Hawai#i 48, 61
n.5, 109 P.3d 689, 702 n.5 (2005))).

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wage rate classification from the wage rate schedule[,]" and he
"was authorized by the statute and administrative rule to do so."
EB claims that it "relied on that letter in bidding on all of the
projects worked on by Foyt," and in "pay[ing] its employees in
accordance with it." EB argues that the 2005 Letter was not
outdated, and that Administrator Martin's 2013 Letter was not
"entitled to greater weight" because she "ha[d] no authority
under the regulations to modify the wage rate schedules."
          Foyt's reliance on Chevron is misplaced. The principle
of deference to an agency's interpretation of its governing
statutes under Chevron applies where "the statute is silent or
ambiguous with respect to the specific issue . . . ." 467 U.S.
at 843; see Haole v. State, 111 Hawai#i 144, 155, 140 P.3d 377,
388 (2006) (citing Orca Bay Seafoods v. Northwest Truck Sales,
Inc., 32 F.3d 433, 436-37 (9th Cir. 1994)). Chevron does not
address a change in an agency's construction of a statute, which
is the situation here.
           "[I]n order to invoke estoppel against the government,
'one must show that he or she has detrimentally relied on the
representation or conduct of the person sought to be estopped and
that such reliance was reasonable.'" Turner v. Chandler,
87 Hawai#i 330, 334, 955 P.2d 1062, 1066 (App. 1998) (citing
Simpson v. Dep't Land & Nat. Res., 8 Haw. App. 16, 25, 791 P.2d
1267, 1273 (1990)). "[E]stoppel cannot be applied to actions for
which the agency or agent of the government has no authority."
Id. (quoting Filipo v. Chang, 62 Haw. 626, 634, 618 P.2d 295, 300
(1980)). In Turner, the Department of Human Services was
estopped from recouping the value of the food stamp overpayment
because "DHS had no authority to confer food stamp benefits on
[a]ppellant during this period," and thus, "the contrary
representation made to [a]ppellant by a DHS counselor was
unauthorized and ultra vires." Id.
          Here, the statements made in the 2005 Letter to EB were
within Director Befitel's statutory authority to determine
prevailing wages. See HRS § 104-2(b)(1) (providing that "[t]he
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prevailing wages shall be established by the director . . . .");
HRS § 104-1 (2012) (defining "director" as the "director of labor
and industrial relations of the State"). The classification that
EB applied to compensate Foyt was consistent with the Director's
statements in the 2005 Letter, which instructed EB to compensate
for work previously covered by the Sewer Line Tele-Repairer
classification under the Laborer classification. EB reasonably
relied on the 2005 Letter in making the calculations for its bid,
which occurred before the conflicting statements in Administrator
Martin's 2013 Letter. See Turner, 87 Hawai#i at 334, 955 P.2d at
1066. The subsequent 2017 NOV that EB received established EB's
detrimental reliance on the 2005 Letter. See id. The Circuit
Court did not err in its conclusions that EB's reliance on the
2005 Letter was reasonable under these circumstances; and that
DLIR "retroactively" changing its position without notifying EB
that it was not entitled to rely on Director Befitel's 2005
Letter was "arbitrary and capricious." See Paul's Elec. Serv.,
Inc., 104 Hawai#i at 416, 91 P.3d at 498; HRS § 91-14(g)(4) and
(6).
          For the foregoing reasons, we affirm the December 19,
2018 Order Reversing Decision of Department of Labor and
Industrial Relations and Final Judgment, filed and entered by the
Circuit Court of the First Circuit.
          DATED: Honolulu, Hawai#i, April 25, 2024.
On the briefs:
                                    /s/ Katherine G. Leonard
                                    Acting Chief Judge
Shawn A. Luiz,
for Intervenor-Appellant.           /s/ Karen T. Nakasone
                                    Associate Judge
Richard M. Rand,
for Appellant-Appellee.             /s/ Sonja M.P. McCullen
                                    Associate Judge

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