Court Opinion

ID: 9723782
Source: CourtListenerOpinion
Date Created: 2023-08-26 10:31:02.206071+00
Date Added: 2024-06-11T18:24:51.846437
License: Public Domain

Opinion
SIMS, J.
In this case, we construe subdivision (a)(2) of Government Code section 19130,1 which specifies certain conditions pursuant to which the State of California can contract with private firms for the performance of personal services.
Defendants and appellants, California State Personnel Board (Board), Department of General Services (General Services), and Teale Data Center (Teale) appeal from a judgment granting a writ of mandate compelling appellants (a) to refrain from entering into a contract between Teale and respondent Universal Service Contractors (Universal) providing for security guard services for Teale, or (b) to regard the contract as void if the contract has been executed. We agree with the trial court that the proposed contract violated subdivision (a)(2) of section 19130. Consequently, we affirm the judgment.
Facts
General Services has historically supplied state civil service security guards to protect the state’s Teale data processing center.
In April 1985, pursuant to a statutory mandate,2 the Board informed respondent California State Employees’ Association (CSEA) that Teale in*377tended to enter into a contract with Universal pursuant to which Universal’s private sector employees would replace the state’s security guards at the data center.3
CSEA submitted written objections to the Board. As relevant here, CSEA contended the proposed contract violated subdivision (a)(2) of section 19130, which provides: “Proposals to contract out work shall not be approved solely on the basis that savings will result from lower contractor pay rates or benefits. Proposals to contract out work shall be eligible for approval if the contractor’s wages are at the industry’s level and do not significantly undercut state pay rates.” (All further nondescript references to “subdivision (a)(2)” are to this statute.) CSEA argued the contractor’s wages “significantly undercut state pay rates.”
The state’s security guards were paid $6.94 per hour, exclusive of benefits. Universal’s guards were paid $5 per hour, exclusive of benefits. It is undisputed that Universal’s wages were at the industry’s level. It is further undisputed in this action that the public and private security guards had the same training and qualifications and would perform the same duties at the data center.
The Board rejected CSEA’s objections and approved the contract. However, the trial court concluded Universal’s wages significantly undercut the state pay rate and issued the previously described writ.
Discussion
The dispute between appellants and respondent CSEA concerns the proper interpretation of subdivision (a)(2).4
The parties first focus on the word “undercut.” Appellants contend “undercut” requires an intentional pricing down to pay below the state pay *378rate. Although not entirely clear, appellants apparently contend a contractor would “undercut” state pay rates only if the contractor intentionally dropped his wage rate below the prevailing rate in the industry to try to get a state contract. Thus, appellants argue that as long as the contractor pays the prevailing wage for the industry, the contractor does not “undercut” state pay rates. CSEA argues the trial court correctly concluded “undercut” means simply “lower than.” By this view, a contractor’s wages “significantly undercut” state pay rates when they are “significantly lower than” state pay rates. For reasons that follow, we believe the trial court correctly resolved this issue by adopting the construction urged by CSEA.
We first note that courts are bound to give effect to statutes according to the usual, ordinary import of their language. (California Teachers Assn. v. San Diego Community College Dist. (1981) 28 Cal.3d 692, 698 [170 Cal.Rptr. 817, 621 P.2d 856].)  As pertinent here, Webster defines “undercut” as follows: “to offer to sell at lower prices than or to work for lower wages or serve for lower fees than (a competitor).” (Webster’s Third New Internat. Dict. (1981) p. 2488.) The ordinary use of “undercut” does not include “intentional pricing down.” The trial court’s interpretation thus gives the language its usual ordinary meaning.
Moreover, in the absence of an absurd result, we are not free to disregard ordinary rules of grammar and syntax in the interpretation of a statute. (See Watson v. Superior Court (1972) 24 Cal.App.3d 53, 60 [100 Cal.Rptr. 684].)  In subdivision (a)(2), the operative noun is “wages” which “do not significantly undercut state pay rates.” Unlike contractors, “wages” have no “intention.” They are simply higher or lower than some other number. Appellants’ construction of the statute is thus at odds with its syntax.
We are also mindful that an interpretation which would render terms of a statute surplusage should be avoided, and every word should be given some significance, leaving no part useless or devoid of meaning. (City and County of San Francisco v. Farrell (1982) 32 Cal.3d 47, 54 [184 Cal.Rptr. 713, 648 P.2d 935].)  Appellants expressly argue that, by their interpretation, a contractor paying the prevailing wage cannot “undercut” state pay rates. However, the statute imposes conjunctive conditions of eligibility for approval of a proposal: (1) the contractor’s wages must be at the industry’s level, and (2) the wages do not significantly undercut state pay rates.5 *379By appellants’ argument, condition (2) could not occur if condition (1) was satisfied. Since appellants’ interpretation makes the second condition surplusage, the interpretation is erroneous.
In support of their position, appellants cite Curtiss-Wright Corporation v. McLucas (D.N.J. 1973) 364 F.Supp. 750 and Altemose Const. v. Bldg. & Const. Trades Council (E.D.Pa. 1977) 443 F.Supp 492. However, we fail to discern how these cases help appellants. In Curtiss-Wright, the court, in a footnote, simply cited remarks by a single senator respecting amendments to the federal Service Contract Act (41 U.S.C. § 351 et seq.): “During the hearings on the 1972 Amendments, Senator Gurney, for example, attacked service contractors who ‘ruthlessly and unconscionably’ undercut wages and fringe benefits by bidding low on contracts against a better paying incumbent.” (Curtiss-Wright, supra, 364 F.Supp. at p. 768, fn. 16.) We do not believe a snippet of legislative history respecting an amendment to an unrelated federal statute, which does not even contain language similar to that at issue here, sheds light on the problem at hand.
Similarly, in Altemose Const. v. Bldg. & Const. Trades Council, supra, the court held that defendants’ counterclaims should survive summary judgment under the Sherman Act where defendants claimed plaintiffs had conspired to depress wages. (443 F.Supp. at p. 499.) We cannot see how this case aids appellants. Indeed, both Curtiss-Wright and Alternóse suggest the trial court properly construed the California statute at issue. In both cases, the intentional depression of wages was treated as unlawful and opprobrious. The statute at hand proscribes proposals where wages “significantly undercut” state pay rates. It would be odd for the Legislature to proscribe opprobrious and possibly unlawful conduct only in the event its effects were “significant.”
Appellants also assert the trial court failed to give proper deference to a contemporaneous administrative construction of subdivision (a)(2). When an administrative agency is charged with enforcing a particular stat*380ute, its interpretation of the statute will be accorded great respect by the courts and will ordinarily be followed if not clearly erroneous. (San Lorenzo Education Assn. v. Wilson (1982) 32 Cal.3d 841, 850 [187 Cal.Rptr. 432, 654 P.2d 202].)
The rule is applied with most vigor to administrative regulations promulgated by an administrative body authorized to promote a statute’s purposes. (See, e.g., Norman v. Unemployment Ins. Appeals Bd. (1983) 34 Cal.3d 1, 8 [192 Cal.Rptr. 134, 663 P.2d 904]; In re Kelly (1983) 33 Cal.3d 267, 277 [188 Cal.Rptr. 447, 655 P.2d 1282].) Conversely, where an “administrative interpretation” of a statute is found in an informal memorandum prepared for use in litigation, rather than in a regulation, the usual deference to administrative interpretation is inappropriate. (Jones v. Tracy School Dist. (1980) 27 Cal.3d 99, 107 [165 Cal.Rptr. 100, 611 P.2d 441].) In the instant case, the “administrative interpretation” cited by appellants is found in a declaration submitted in the trial court by the section manager in the Employment Services Division of the State Personnel Board who had responsibility for providing staff analysis for the review of the contract at issue here. The declarant asserts, “The contractor is not intentionally pricing down to undercut state pay rates.” However, the declarant does not purport to speak for the Board itself. So far as the declaration indicates, the interpretation of the statute is that of the declarant, submitted in the instant litigation. As such, the usual deference given to a formal agency interpretation of a statute is inappropriate. (Ibid.)
“In any event, administrative construction of a statute, while entitled to weight, cannot prevail when a contrary legislative purpose is apparent. [Citations.]” (Pacific Legal Foundation v. Unemployment Ins. Appeals Bd. (1981) 29 Cal.3d 101, 117 [172 Cal.Rptr. 194, 624 P.2d 244].) Such is the case here.
Appellants also argue we must disregard the apparent meaning of the language of the statute because the trial court’s interpretation wrongfully “renders [section 19130] a nullity.” (See Herbert Hawkins Realtors, Inc. v. Milheiser (1983) 140 Cal.App.3d 334, 338 [189 Cal.Rptr. 450].) Appellants contend the purpose of section 19130 is to achieve cost savings and that contracting out on a cost saving basis will rarely, if ever, be justified if a contractor’s wages must be at or near state pay rates.
We must disagree with appellants’ argument at the threshold. When section 19130 is read in its entirety (see Appendix A, post) it is apparent the purpose of the statute is not simply to achieve cost savings but also to protect various employee policies including nondiscrimination (subd. (a)(8)), affir*381mative action (subds. (a)(4), (a)(8)), nondisplacement of civil service employees (subds. (a)(3), (b)), and maintenance of state pay rates (subd. (a)(2)). The statute is obviously a sausage produced by a legislative process that evidently stuffed interests of cost efficiency together with other interests, including those of state employees.
To be sure, cost efficiencies would be increased if private sector contractors could lower wages without limitation. However, no evidence suggests— and we are not prepared to assume—that the trial court’s interpretation of the statute will eliminate private sector cost savings and therefore render section 19130 “a nullity” as appellants claim. This is so for two reasons.
The first is set forth in section 900 of the Board’s Personnel Management Policy and Procedures Manual: “The cost advantages of contracting should typically result from efficiency-related factors, such as economies of scale, superior technology or lower overhead costs that cannot be offset by reasonable improvements in the State’s equipment and operating procedures.”6 The second is that contractors’ wages may be lower than state pay rates; a proposal is disqualified only in the event of a “significant” disparity. We therefore conclude the trial court’s interpretation results in no absurdity allowing us to disregard the plain and ordinary meaning of the language of the statute. The trial court correctly concluded a contractor’s wages “significantly undercut” state pay rates under subdivision (a)(2) when the wages were “significantly lower than” state pay rates.
The parties also dispute whether the comparison of wages and pay rates in subdivision (a)(2) should include or exclude fringe benefits. However, since the second sentence of subdivision (a)(2) requires a comparison of the contractor’s “wages” and state “pay rates,” “wages” and “pay rates” must mean the same thing, because we will not assume the Legislature intended a comparison of apples and oranges. The parties agree with this truism. The first sentence of subdivision (a)(2) refers disjunctively to “pay rates or benefits.” Upon the assumption “benefits” is not surplusage (City and County of San Francisco v. Farrell, supra, 32 Cal.3d at p. 54), then “benefits” means something other than “pay rates.” (See Gonzales & Co. v. Department of Alcoholic Bev. Control (1984) 151 Cal.App.3d 172, 178 [198 Cal.Rptr. 479].) Since “wages” and “pay rates” mean the same *382thing, and since “pay rates” means something other than “benefits,” the comparison of “wages” and “pay rates” in the second sentence of subdivision (a)(2) should be made by excluding fringe benefits from the computation. The trial court correctly performed the computation by excluding benefits.
The trial court determined that Universal’s wage (exclusive of benefits) of $5 per hour significantly undercut the state pay rate for state security guards of $6.94 per hour because the contractor’s wages were approximately 28 percent lower that the state hourly pay rate. We are not called upon in this case to draw a precise line for all cases with respect to whether disparities will or will not be considered significant. Appellants concede that if the trial court’s interpretation of subdivision (a)(2) is correct, 28 percent constitutes a “significant” disparity. We agree.
Therefore, the contract did not comply with subdivision (a)(2) and it was the duty of the Board to disapprove the contract. (See Pub. Contract Code § 10337, subd. (a).)  The trial court properly issued its writ.7
Disposition
The judgment is affirmed. Plaintiffs and respondents shall recover their costs on appeal from appellants. Defendant and respondent Universal Service Contractors shall bear its own costs on appeal.
*383Sparks, J., concurred.

Government Code section 19130 is set forth in full as Appendix A, post. All further statutory references are to the Government Code unless otherwise indicated.

Section 19131 requires any state agency proposing to execute a contract for personal services to achieve cost savings pursuant to section 19130, subdivision (a) to notify the Board of its intention. The Board is required to contact immediately all organizations that represent state employees who perform the type of work to be contracted so that they may be given a reasonable opportunity to comment on the proposed contract.

The dissent correctly points out that General Services wished to phase out the security guard class. However, at oral argument, the attorney general conceded that the instant record does not show the elimination of a civil service class by the Board but rather only the reassignment of persons within a class. The power of the Board to adopt and eliminate civil service classes (see Cal. Const., art. VII, § 3, subd. (a); § 18800) is therefore not implicated in this appeal.

Article VII, section 1 of the California Constitution provides: “(a) The civil service includes every officer and employee of the state except as otherwise provided in this Constitution. [¶] (b) In the civil service permanent appointment and promotion shall be made under a general system based on merit ascertained by competitive examination.” No party has contended the contract at issue violates this provision; we therefore refrain from expressing any view as to its possible application in the present dispute.

This conclusion is the basis of our disagreement with the dissent. The dissent argues the contract merits approval because most conditions imposed by section 19130 are satisfied by the contract proposal. With respect, we believe the dissent duplicates the error of the Board. *379The Board concluded subdivision (a)(2) was not violated because, “Although the proposed contractor’s wage is lower than the State’s wage, savings from this lower wage is not the sole basis for approval of the contract.” By this view, subdivision (a)(2) excuses wage undercutting if the lower wage is not the sole basis for approval of the contract. We think the Board and the dissent turn subdivision (a)(2) upside down. Subdivision (a)(2) clearly provides that a necessary condition of approval of a proposal is that wages do not undercut state pay rates. If that condition is unsatisfied, the proposal is ineligible for approval regardless of compliance with other provisions of section 19130. The statute contains no exemption from the eligibility requirement where savings from the lower wage are not the sole basis of contract approval. Rather, the statute simply provides an additional ground of disqualification: “Proposals to contract out work shall not be approved solely on the basis that savings will result from lower contractor pay rates or benefits.” (Subd. (a)(2).)

In 1975, the Board assumed the responsibility of reviewing contracts for personal services in order to determine whether the contracts were lawful. (See Assem. Office of Research, Government Operations Review Contracting for Services (Mar. 1982) pp. 6-7) In 1979, the Board adopted section 900 of its Personnel Management Policy and Procedure Manual describing the conditions under which the Board believed contracts for services could be let with private firms because of substantial cost savings.

Defendant and respondent Universal did not appeal from the judgment. Nonetheless, as a respondent, Universal has filed a brief in this court urging us to reverse the judgment on various grounds. However, “Although it is the appellant’s task to show error, there is a corresponding obligation on the part of the respondent to aid the appellate court in sustaining the judgment.” (9 Witkin, Cal. Procedure (3d ed. 1985) § 492, p. 481.) Thus, it is the general rule that a respondent who has not appealed from the judgment may not urge error on appeal. (See, e.g., Puritan Leasing Co. v. August (1976) 16 Cal.3d 451, 463 [128 Cal.Rptr. 175, 546 P.2d 679]; Henigson v. Bank of America (1948) 32 Cal.2d 240, 244 [195 P.2d 777]; Ray v. Parker (1940) 15 Cal.2d 275, 282 [101 P.2d 665]; California C.P. Growers v. Williams (1938) 11 Cal.2d 233, 238 [78 P.2d 1161].) A limited exception to this rule is provided by Code of Civil Procedure section 906, which provides in pertinent part: “The respondent. . . may, without appealing from the judgment, request the reviewing court to and it may review any of the foregoing [described orders or rulings] for the purpose of determining whether or not the appellant was prejudiced by the error or errors upon which he relies for reversal or modification of the judgment from which the appeal is taken. ” (Italics added.) The purpose of the statutory exception is to allow a respondent to assert a legal theory which may result in affirmance of the judgment. (See Central Manufacturing District, Inc. v. Board of Supervisors (1960) 176 Cal.App.2d 850, 857 [1 Cal.Rptr. 733]; 9 Witkin, op. cit. supra, § 249, pp. 255-256.) Here, without appealing, respondent seeks not to save the judgment but to overthrow it. This cannot be done; we will not review Universal’s contentions of error. (Code Civ. Proc., § 906; Henigson v. Bank of America, supra, 32 Cal.2d at p. 244.)

A new class would need to be established. The salary used here for comparison purposes is 10% above the rate for Security Guard.

Includes all costs listed in Chart A ($183,944.60) divided by 17,520 hours of service.