Court Opinion

ID: 6329622
Source: CourtListenerOpinion
Date Created: 2022-04-12 22:03:43.114566+00
Date Added: 2024-06-11T09:22:54.951431
License: Public Domain

Notice: This opinion is subject to correction before publication in the PACIFIC REPORTER.
      Readers are requested to bring errors to the attention of the Clerk of the Appellate Courts,
      303 K Street, Anchorage, Alaska 99501, phone (907) 264-0608, fax (907) 264-0878, email
      corrections@akcourts.gov.

               THE SUPREME COURT OF THE STATE OF ALASKA

ALBORN CONSTRUCTION, INC.,      )
                                )                   Supreme Court No. S-17905
                     Appellant, )
                                )                   Superior Court No. 3AN-18-09876 CI
       v.                       )
                                )                   OPINION
STATE OF ALASKA,                )
DEPARTMENT OF LABOR &           )                   No. 7589 – April 8, 2022
WORKFORCE DEVELOPMENT,          )
LABOR STANDARDS & SAFETY )
DIVISION, and DEBORAH KELLY, )
in an official capacity,        )
                                )
                     Appellees. )
                                )

              Appeal from the Superior Court of the State of Alaska, Third
              Judicial District, Anchorage, Peter R. Ramgren, Judge.

              Appearances: Herbert A. Viergutz and Kevin D. Fowler,
              Barokas & Martin, Anchorage, for Appellant. Siobhan
              McIntyre, Assistant Attorney General, Anchorage, and
              Treg R. Taylor, Attorney General, Juneau, for Appellees.

              Before: Winfree, Chief Justice, Maassen, Carney, and
              Henderson, Justices. [Borghesan, Justice, not participating.]

              WINFREE, Chief Justice.

I.    INTRODUCTION
              A construction company filed an administrative appeal of a final agency
decision that a renovation project on a State-leased office building fell under a wage
statute for public construction projects.         During enforcement proceedings an
administrative law judge (ALJ) found that the project parties had entered into a sham
contract in an attempt to evade the statute’s coverage. The State agency charged with
enforcing the wage statute adopted the ALJ’s findings verbatim as its final agency
decision. The construction company appealed; acting as an intermediate court of
appeals, the superior court affirmed the final agency decision. The construction
company now appeals to us. For the reasons set forth below, we affirm the superior
court’s decision affirming the agency decision.
II.    FACTS AND PROCEEDINGS
       A.        Facts
                 Juneau I, LLC has leased a Juneau building to the State since 1984,
primarily for Department of Transportation and Public Facilities (DOT&PF) offices. In
early 2013 Juneau I and the Department of Administration began discussing building
renovations in advance of renewing the State’s lease.1             The Department of
Administration drafted a lease amendment detailing the State’s requested building
improvements. In July the Department of Administration and Juneau I executed a lease
amendment, known as Amendment 54, specifying building upgrades, significantly
raising the State’s monthly rent upon completing the renovation, and extending the lease
for ten years.
                 Amendment 54’s upgrades included: bringing the commercial building into
compliance with more stringent federal Americans with Disabilities Act (ADA)
requirements for public buildings, specified window coverings, specified floor coverings,
acoustical partitions calibrated to State-approved sound ratings, State-approved signage,

       1
              See AS 36.30.080-.085 (delineating Department of Administration’s
authority to negotiate, manage, and extend State leases).

                                            -2-                                    7589
and mechanical and electrical system upgrades.            DOT&PF’s tenant requests,
incorporated in Amendment 54, included: 30 new windows meeting specific lighting
requirements, a thorough mold inspection, roof repair, and new restrooms with
State-approved design. The Amendment required that Juneau I certify compliance with
the State’s specifications and all State laws, including the set of statutes known
colloquially as the Little Davis-Bacon Act.2
             The Act defines public construction3 and requires public construction
project contractors to pay prevailing wages set by Department of Labor and Workforce
Development,4 whose Labor Standards and Safety Division, Wage and Hour
Administration (Wage and Hour), determines the Act’s application to projects and invites
contractors to request coverage determinations about applicable wages.5
             Juneau I sought a coverage determination, inaccurately representing the
project as merely a routine building upgrade with no specific State requests and asserting

      2
                AS 36.05.005 et seq.; see AS 36.05.010 (“A contractor or subcontractor
who performs work on a public construction contract in the state shall pay not less than
the current prevailing rate of wages . . . . [determined] by the Department of
Labor . . . .”).
      3
             AS 36.95.010(3).
      4
              AS 36.05.010; City & Borough of Sitka v. Constr. & Gen. Laborers Loc.
942 (City of Sitka), 644 P.2d 227, 231-32 (Alaska 1982) (explaining Act’s history and
establishing interpretive guidelines).
      5
              See AS 23.10.080 (setting out Division’s authority). “Wage and Hour
enforces and administers Alaska labor laws . . . . includ[ing] enforcement of . . . public
contract laws . . . .” DEP’T OF LAB. &WORKFORCE DEV. https://labor.alaska.gov/lss/ (last
visited Feb. 25, 2022). “For questions regarding prevailing wage . . . requirements,
please contact the nearest Wage and Hour office.” Laborers’ and Mechanics’ Minimum
Rates of Pay: Pamphlet No. 600, DEP’T OF LAB. & WORKFORCE DEV. at i (Sept. 1,
2021), https://labor.alaska.gov/lss/forms/Pamphlet_600_Issue_43.pdf.

                                           -3-                                      7589
that it did not believe the renovations were covered by the Act. Wage and Hour
determined the project was not covered by the Act based on this information but warned
that its determination was subject to change based on new information.
              New information soon appeared; the Department of Administration
provided Wage and Hour a copy of Amendment 54. Wage and Hour then notified the
parties that it considered the entire renovation project to be covered by the Act because
the lease extension and rent increase were contingent on the building improvements.
Wage and Hour again included the caveat that its determination could change based on
new information.
              Wage and Hour’s coverage determination caused Juneau I to halt the
project. Discussions ensued among counsel for the Department of Labor, DOT&PF, the
Department of Administration, and Juneau I; in April 2014 Wage and Hour subsequently
issued a new coverage determination we refer to as the Bifurcation Letter. The
Bifurcation Letter proposed an “unorthodox” solution to “compromise” on coverage
questions under the Act and get the project moving. Construction would be bifurcated
into the State-required projects covered by the Act and general upgrades not covered by
the Act. Wage and Hour determined that seven items fell under the Act: (1) ADA
compliance for public entities; (2) remodeling after State occupancy; (3) adding windows
to comply with State-specified lighting requirements; (4) renovating office walls to State­
specified requests; (5) replacing flooring with State-specified colors and with State­
approved materials; (6) painting interior spaces with State-specified colors; and (7) State-
specified lighting fixture upgrades. Wage and Hour expressly stated that “the overall
construction project as contemplated could be covered” by the Act, and again warned
that this determination, like its previous ones, was based on “the information at hand”
and “may not be supportable if the circumstances . . . change.” Wage and Hour also
urged project participants and their contractors to seek private counsel.

                                            -4-                                       7589
              The Department of Administration and Juneau I then signed a new lease
amendment, Amendment 55, omitting the items the Bifurcation Letter listed as “public
construction” covered by the Act. But Juneau I confirmed in a letter (the Companion
Letter) to the Department of Administration that the omitted items would be completed,
for free, on Juneau I’s own initiative. Despite Amendment 55 excluding seven
construction items, the rent increase remained the same as in Amendment 54.
              Near the end of 2014 Juneau I and Alborn Construction, Inc. executed a
roughly $5.5 million construction contract; a clause gave Alborn the right to increased
payment if the Act applied to the project. By early 2016 renovations were complete.
The Department of Administration completed its inspection, and Juneau I certified
compliance with State requirements.
              Wage and Hour began investigating Alborn’s failure to pay Act wages
while the project was ongoing.6 Wage and Hour requested Alborn’s payroll records and
subcontractor contracts. Although untimely, Alborn eventually complied with the
requests. Wage and Hour completed its investigation and issued a Notice of Findings,7
explaining that because Alborn had refused to cooperate and had refused to pay Act
wages on any part of the construction project, including the parts the Bifurcation Letter
listed as covered under the Act, Wage and Hour was prepared to treat the entire project

       6
             See AS 36.05.030(a)(1) (granting Department of Labor authority to
investigate public construction contract violations); 8 Alaska Administrative Code
(AAC) 30.090(a) (providing Division “will investigate potential violations of AS 36
(Public Contracts), on its own motion or on the complaint of any person”).
       7
              See 8 AAC 30.090(b) (directing investigator to explain alleged Act
violation).

                                           -5-                                     7589
as covered by the Act. Wage and Hour requested a meeting to negotiate a resolution,8
but Alborn did not meet with Wage and Hour. Wage and Hour then referred the matter
to the Office of Administrative Hearings for resolution by an independent ALJ.9
      B.     Administrative Proceedings
             In the administrative proceeding the facts were generally undisputed; the
Act’s prevailing wage coverage was the only issue and both parties requested summary
adjudication, the equivalent of summary judgment in a civil proceeding.10 Summary
judgment is appropriate when “there is no genuine issue as to any material fact and . . .
[the moving] party is entitled to a judgment as a matter of law.”11 The ALJ issued a
summary adjudication decision, applying a five-factor test explained in Western Alaska
Building & Construction Trades Council v. Inn-Vestment Associates of Alaska (Western
Alaska) and determining that the Act covered the entire construction project.12

      8
             See 8 AAC 30.090(c) (requiring attempt to resolve enforcement issues
through informal conference).
      9
             See generally 8 AAC 30.090-100 (governing formal hearing procedure
following failure to resolve at informal conference); AS 44.64.060(e)(1) (authorizing
adoption of proposed decision as final agency decision).
      10
              See Schikora v. State, Dep’t of Revenue, 7 P.3d 938, 941-42, 946 (Alaska
2000) (treating summary adjudication and summary judgment interchangeably).
      11
              Alaska R. Civ. P. 56(c) (setting out summary judgment standard); see, e.g.,
In re N. Star 1300, LLC, OAH No. 19-1092-CON at *3 (Dec. 18, 2020) (“Summary
adjudication in an administrative proceeding is the equivalent of summary judgment in
a court proceeding. It is a means of resolving disputes without a hearing when the
central underlying facts are not in contention, but only the legal implications of those
facts.”).
      12
            909 P.2d 330, 333-34 (Alaska 1996) (outlining five-factor test for
determining whether project is “public construction” under Act).

                                           -6-                                     7589
              The ALJ concluded that Amendment 55 was an invalid attempt to
circumvent the Act’s purpose and goals. The Companion Letter and Amendment 55’s
facially fewer renovations with the same higher lease rate were important considerations
leading the ALJ to characterize Amendment 55 as a “sham” contract. The ALJ
concluded that Amendment 54 controlled for purposes of the Act’s coverage analysis.
The ALJ rejected Alborn’s argument that the Bifurcation Letter’s listing of covered and
non-covered items should estop Wage and Hour from arguing that the Act covered the
entire project.
              The ALJ partially granted a subsequent motion for reconsideration after
allowing Alborn to submit additional briefing. The ALJ then clarified parts of the
decision without changing the conclusions. The parties stipulated that if the Act applied,
Alborn owed $586,316.41 in unpaid wages. The Department of Labor adopted the
ALJ’s reconsidered decision verbatim as its final agency decision.13
       C.     Superior Court Proceedings
              Alborn appealed the Department of Labor’s agency decision to the superior
court,14 arguing that the ALJ: had no jurisdiction to assess Amendment 55’s validity and
erroneously concluded the renovations were a “public construction” project; erroneously
rejected Alborn’s estoppel defense; denied due process by not giving Alborn adequate
notice that Amendment 55’s validity was in question; and inappropriately issued a
summary adjudication.

       13
             See AS 44.64.060(e)(1) (authorizing adoption of proposed decision as final
agency decision).
       14
             See AS 22.10.020(d) (granting superior court appellate jurisdiction over
final administrative decisions); Alaska R. App. P. 602(a)(2) (allowing appeal from
administrative decision to superior court within 30 days).

                                           -7-                                      7589
              The superior court reviewed the ALJ’s Act coverage analysis, including its
grant of summary adjudication, under a reasonable basis standard. The court found no
genuine dispute of material fact precluding summary adjudication and considered the
ALJ’s Western Alaska and other analysis thorough and reasonable. The court also
applied reasonable basis review in affirming the ALJ’s sham contract determination,
reasoning that the analysis fell within the Department of Labor’s area of expertise.
              The superior court reviewed Alborn’s estoppel, due process, and
jurisdiction claims under a substitution of judgment standard. The court rejected
Alborn’s estoppel defense, concluding that the Department of Labor was permitted to
bring an enforcement action despite the Bifurcation Letter. The court rejected Alborn’s
due process claim, noting that Alborn had “repeatedly litigated” Amendment 55’s
validity before the ALJ. The court concluded that the ALJ had authority to consider
Amendment 55’s validity because determining whether the construction project fell
under the Act’s coverage was within the Department of Labor’s statutory mandate.
              The superior court affirmed the Department of Labor’s agency decision on
all points.
       D.     Alborn’s Appeal
              Alborn appeals the superior court’s decision to us, and we construe
Alborn’s appeal points as follows: (1) the ALJ’s summary adjudication decision was
inappropriate because material facts were in dispute; (2) the ALJ erred by determining
that Amendment 55 was a sham and that the entire project was covered by the Act;
(3) the ALJ erred by rejecting Alborn’s argument that the Department of Labor should
have been estopped from enforcing the Act; and (4) Alborn had no adequate opportunity
to argue that Amendment 55 was valid, violating Alborn’s right to due process.

                                          -8-                                     7589
III.   STANDARD OF REVIEW
             “When a superior court acts as an intermediate court of appeals, we
independently review the administrative decision.”15 The level of deference we afford
to administrative decisions depends on the type of determination.16 If a question of law
involves “agency expertise or the determination of fundamental policies within the scope
of the agency’s statutory functions,” reasonable basis review applies, and we will affirm
if the administrative decision “is supported by the facts and has a reasonable basis in
law.”17 “For questions of law involving no agency expertise, we substitute our ‘own
judgment for that of the agency even if the agency’s decision had a reasonable basis in
law.’ ”18 We review constitutional questions, including due process claims, using our
independent judgment.19
IV.    DISCUSSION
       A.    Summary Adjudication Was Appropriate.
             Alborn contends that material factual disputes precluded summary
adjudication and that the ALJ erroneously analyzed the facts when applying the Western

       15
            Titus v. State, Dep’t of Admin., Div. of Motor Vehicles, 305 P.3d 1271, 1276
(Alaska 2013) (quoting Alaska Exch. Carriers Ass'n, Inc. v. Regul. Comm'n of Alaska,
202 P.3d 458, 460 (Alaska 2009)).
       16
            North Slope Borough v. State, Dep’t of Educ. & Early Dev., 484 P.3d 106,
113 (Alaska 2021).
       17
             Id. (quoting Nicolos v. North Slope Borough, 424 P.3d 318, 325 (Alaska
2018)).
       18
            Id. (quoting Tesoro Alaska Petrol. Co. v. Kenai Pipe Line Co., 746 P.2d
896, 903 (Alaska 1987)).
       19
             Anderson v. Alaska Hous. Fin. Corp., 462 P.3d 19, 25 (Alaska 2020);
Griswold v. Homer Bd. of Adjustment, 426 P.3d 1044, 1045 (Alaska 2018).

                                          -9-                                      7589
Alaska multifactor legal test to determine the project was “public construction” covered
by the Act.20 But Alborn alleges no specific factual disputes, and the applicability of a
statutory definition is a question of law.21 Alborn also asserts that because the ALJ did
not order an evidentiary hearing about the State’s role in the project and the parties’
intent underlying Amendment 55, the ALJ drew “sua sponte” conclusions not based on
evidence. But “[t]here is no right to an evidentiary hearing in the absence of a factual
dispute.”22
              As the Department of Labor notes responds, the ALJ explained that at the
summary adjudication phase: “All inferences that could be drawn regarding the truth of
the fact will be drawn in Alborn’s favor.”23 The ALJ accepted as true Alborn’s
contentions that Juneau I “initiated many of the projects that later became Amendment
54” and that “the relative role of the [S]tate in the financing of the project was small
compared to the role of Juneau I.” Alborn disagrees with the ALJ’s ultimate analysis of
the facts in applying the Western Alaska test, but Alborn identifies no other material facts
that the ALJ did not already assume to be true.
              The ALJ concluded that no evidentiary hearing was needed to decide that
Amendment 55 was a sham contract because the material facts were in the record,

       20
             See 909 P.2d 330, 333-34 (Alaska 1996) (explaining five-factor “public
construction” test); AS 36.95.010(3) (defining “public construction” under Act).
       21
              Western Alaska, 909 P.2d at 332.
       22
             Church v. State, Dep’t of Revenue, 973 P.2d 1125, 1129 (Alaska 1999)
(quoting Hum. Res. Co. v. Alaska Comm’n on Post-Secondary Educ., 946 P.2d 441, 445
n.7 (Alaska 1997)).
       23
             See Progressive Cas. Ins. Co. v. Skin, 211 P.3d 1093, 1098 (Alaska 2009)
(explaining at summary judgment stage all factual inferences must be drawn in favor of
non-moving party).

                                           -10-                                       7589
offered by Alborn itself, undisputed, addressed at the hearing, and addressed again after
Alborn’s motion for reconsideration. For example, the ALJ noted Alborn’s statement
that Amendment 55’s purpose was avoiding the Act’s coverage while keeping the
construction project substantially the same, and Alborn states the same to us. Given
Alborn’s direct admission, an evidentiary hearing about the nature and purpose of
Amendment 55 was unnecessary.
             Based on the undisputed facts, summary adjudication was appropriate.
      B.     The Act Covered The Entire Project.
             1.     Reasonable basis is the proper standard of review.
             Alborn contends that the ALJ cannot “claim any particularized [agency]
experience and knowledge . . . . to which a reviewing tribunal should pay deference”
because the ALJ is not a Department of Labor employee. Alborn asserts that by adopting
the ALJ’s decision verbatim, the Department of Labor demonstrated a lack of due
diligence and failure to insert agency expertise. Alborn further asserts that the only
examples of agency expertise in this case are Wage and Hour’s Bifurcation Letter and
subsequent Notice of Findings. Alborn contends that we thus should defer to only those
documents and that we should not consider the ALJ’s order an “agency decision.”
             The Department of Labor responds that adopting the ALJ’s order makes it
a final agency decision deserving reasonable basis review. The Department of Labor
contends that labeling Amendment 55 a sham contract also should be subject to
reasonable basis review because the ALJ was determining the Act’s coverage rather than
resolving a contract claim. The Department of Labor is correct on both points.
             Alborn’s mistaken contention that the Bifurcation Letter and Notice of
Findings are owed some judicial deference as final agency decisions borders on
frivolous. The Bifurcation Letter was an offer of “compromise” based on then-current
information. The Department of Administration and Juneau I rejected the compromise

                                          -11-                                     7589
and executed Amendment 55 with the intent that Alborn not pay Act wages for any part
of the project. Wage and Hour then investigated and issued its Notice of Findings,
essentially an invitation to negotiate. After it became clear that the dispute would not be
resolved informally, the Notice of Findings became the Department of Labor’s position
before an independent hearing officer.24 The Department of Labor adopted the ALJ’s
decision verbatim, agreeing with the legal conclusions. Because the Department of
Labor’s area of expertise is determining Act coverage and violations25 and adopting the
ALJ’s decision makes it a “final agency decision,”26 we apply reasonable basis review
to legal questions involving the decision.27
              A violation of the Act occurs when a “contractor . . . who performs work
on a public construction contract in the state” fails to pay workers the prevailing wage.28
The Act’s coverage depends in part on whether a contract involves public construction.29
We have warned that “attempts to disguise State involvement in [a] building contract”
and “arrangements that could be designed to circumvent the Act’s application” may

       24
              See 8 AAC 30.090-.100 (explaining investigation and hearing process).
       25
             AS 36.05.030 (authorizing Department of Labor to determine Act coverage
and violations).
       26
              AS 44.64.060(e)(1) (authorizing adopting proposed decision as final agency
decision).
       27
            See North Slope Borough v. State, Dep’t of Educ. & Early Dev., 484 P.3d
106, 113 (Alaska 2021) (explaining when reasonable basis review applies).
       28
              AS 36.05.010; Western Alaska, 909 P.2d 330, 332 (Alaska 1996).
       29
              See generally City & Borough of Sitka v. Constr. & Gen. Laborers Loc.
942, 644 P.2d 227, 229-30, 232 (Alaska 1982) (deciding in prevailing wage appeal from
direct superior court action involving construction project divided under two contracts,
with work under one contract not covered by Act, that Act covered whole project).

                                           -12-                                      7589
violate the Act.30 Evaluating an attempt to evade the Act necessarily involves contract
analysis,31 and the ALJ’s limited contractual analysis thus falls “squarely within the
scope” of determining the Act’s coverage.32
             2.     The Department of Labor reasonably concluded that the
                    renovation project was public construction under the Act.
             We have interpreted and applied the Act’s public construction requirement
only three times. In City & Borough of Sitka v. Construction & General Laborers Local
942 we held that a contract to clear timber in advance of a public dam project was
covered by the Act because the work was integrated with and “instrumental to” the
overall construction project.33 In Alaska State Federation of Labor v. State, Department
of Labor we held that a community hall for private use by Alaska Native groups was not
covered by the Act because a public construction project requires “significant [S]tate
involvement,” and the State’s only involvement was a one-time monetary grant.34 And
in Western Alaska we relied on our two previous decisions about “significant [S]tate
involvement” to set out a five-factor “public construction” test analyzing:
             (1) [T]he nature of the contract (whether the contract was for
             the provision of funds or for the construction itself);
             (2) whether the structure will be used for a public purpose;
             (3) whether the State will control the structure after

      30
             Western Alaska, 909 P.2d at 334.
      31
             See id.
      32
              See North Slope Borough, 484 P.3d at 113 (noting reasonable basis review
is appropriate for question of law involving “agency expertise or the determination of
fundamental policies within the scope of the agency’s statutory functions” (quoting
Nicolos v. North Slope Borough, 424 P.3d 318, 325 (Alaska 2018))).
      33
             644 P.2d at 232-34.
      34
             713 P.2d 1208, 1211 (Alaska 1986).

                                         -13-                                     7589
             construction; (4) whether the State will continue to fund the
             project after construction; and (5) the relative portion of
             project financing that the State supplied.[35]
We emphasized that no single factor is dispositive; the factors are viewed together to
determine “significant [S]tate involvement.”36 The ALJ in this case analyzed each factor
thoroughly, repeatedly referencing the record, and drew all factual inferences in Alborn’s
favor.37
                    a.     Factor 1 (nature of the contract)
             The ALJ observed that no government agency was a party to the
construction contract between Juneau I and Alborn but that a government agency, the
Department of Administration, was a party to the lease. Because the Act requires a
contract “for the [S]tate,” not with the State,38 the ALJ concluded that the State did not
need to be a party but simply needed to benefit from the construction contract.39 The
ALJ noted that the Act’s coverage requires a “contracting agency” that “has entered into

       35
             909 P.2d at 333-34.
       36
             Id. at 334.
       37
              See In re N. Star 1300, LLC, OAH No. 19-1092-CON at *3 (Dec. 18, 2020)
(explaining summary adjudication in administrative hearing and summary judgment in
court are analogous); Schikora v. State, Dep’t of Revenue, 7 P.3d 938, 941-42, 946
(Alaska 2000) (treating summary adjudication and summary judgment interchangeably);
cf. Progressive Cas. Ins. Co. v. Skin, 211 P.3d 1093, 1098 (Alaska 2009) (explaining that
at summary judgment phase all factual inferences must be drawn in favor of non-moving
party).
       38
             AS 36.95.010(3) (emphasis added).
       39
             See Western Alaska, 909 P.2d at 334 (determining State agency was
“contracting agency” for Act’s purposes even though “not a party to the [construction]
contract” because agency was part of larger business arrangement that included contract).

                                          -14-                                      7589
a public construction contract with a contractor.”40 The ALJ concluded that, as Alborn
conceded, there would be no construction contract without the lease; the Department of
Administration thus was a contracting agency because it was a party to the lease.41
             The ALJ then concluded the two agreements established a tenant
improvement project undertaken with the State’s specific needs in mind, even accepting
Alborn’s contention that the project’s momentum came from Juneau I. The ALJ’s
conclusion is well-supported by the State’s lease extension being contingent on the
improvements. The ALJ reasonably concluded on the undisputed facts that Factor 1
weighed in favor of a “public construction” finding.
                    b.    Factor 2 (public purpose) and Factor 3 (State control
                          post-construction)
             The ALJ concluded that renovating a building leased exclusively by the
State “serves a public purpose.” The ALJ pointed out that the building would be
identified as a State building, unlike in Western Alaska,42 and that it had been used
exclusively by the State for 30 years. Alborn does not sufficiently contest this
conclusion. Although acknowledging that a tenant improvement project could serve the
private purpose of helping a landlord retain a commercially viable building, the ALJ
reasonably concluded on the undisputed facts that there was enough of a “public
purpose” that Factor 2 weighed in favor of a “public construction” finding.

      40
             AS 36.05.900.
      41
             See City of Sitka, 644 P.2d 227, 232-34 (Alaska 1982) (determining timber
clearing contract was “instrumental to” public dam construction contract and analyzing
two contracts together).
      42
            See 909 P.2d at 331-32 (explaining State agency in question had investment
in commercial hotel).

                                         -15-                                     7589
                 The ALJ acknowledged that Juneau I, as landlord, maintained a high level
of project control but concluded that State control was significant enough for finding
material State involvement. Alborn contests this conclusion, focusing on project control
during construction, in contradiction to Western Alaska’s focus on State control after
construction.43 Alborn argues first that the Department of Administration, not the ALJ,
has the “authority” and “agency expertise” to define the State’s level of control over a
contract, including application of wage and hour laws. Alborn contends that the
Department of Administration “furnishes whatever degree of oversight that a State
agency may provide both during construction and throughout the lease term” and that the
Department of Administration “acknowledged that no State control was involved . . . on
this project.”
                 The Department of Labor responds that the State required upgrades as a
condition for extending its lease and that Juneau I asked Alborn to meet the State’s
specifications. The Department of Labor notes that the renovation included ADA
compliance necessary only for public entities and that “[t]he State had the right to
approve” upgraded flooring, “final color selections for flooring and carpeting,” window
placement, and more. Finally, the Department of Labor correctly points out that only it
has statutory authority to assess the Act’s coverage.44
                 We agree that the Department of Administration’s opinion is irrelevant to
Western Alaska’s test.45 And we agree that, on the undisputed facts, the State’s post­

       43
                 Id. at 336.
       44
            See AS 36.05.030 (delineating Department of Labor’s authority);
AS 36.30.080 (delineating Department of Administration’s authority).
       45
             Alborn attempts to recast this argument elsewhere as a claim that the ALJ
did not have “jurisdiction” to determine the scope of the Act’s coverage because as the
                                                                          (continued...)

                                            -16-                                     7589
amendment lease control is substantial and material. The ALJ’s conclusions that
Factors 2 and 3 weigh in favor of a “public construction” finding were reasonable.
                    c.     Factor 4 (State funding after construction) and Factor 5
                           (financing provided by State)
             The ALJ concluded — and the Department of Labor concedes — that
Factor 5 weighed against a “public construction” finding. Accepting as true Alborn’s
contentions about project financing, the ALJ found that Juneau I and its majority owner
provided the vast majority of the funding. The ALJ also accepted that the State provided
no initial financing because the rent increase started only after project completion.
Weighing Factor 5 in Alborn’s favor therefore was reasonable.
             But the ALJ concluded that Factor 4, which is forward-looking,46 weighed
in favor of the Act’s coverage because over a ten-year period the rent increase would
materially defray construction costs. The ALJ distinguished Western Alaska and Alaska
Federation because in those cases there was “no regular income stream” from the State

      45
              (...continued)
State’s contracting agency the Department of Administration has the authority to
determine the State’s contracting obligations and because an ALJ cannot “invalidate” a
contract. We stress that although the Department of Administration may contract on the
State’s behalf, the Department of Labor determines whether a contract is covered by the
Act. AS 36.05.030 (delineating Department of Labor’s authority); AS 36.30.080
(delineating Department of Administration’s authority). There is no conflict between
these two mandates. As we already have explained, limited contractual analysis for
purposes of determining the Act’s coverage is well within the Department of Labor’s —
and therefore the ALJ’s — purview.
      46
              See Western Alaska, 909 P.2d at 336; Alaska State Fed’n of Lab. v. State,
Dep’t of Lab., 713 P.2d 1208, 1211 (Alaska 1986) (discussing funding issues from which
Western Alaska five-factor test was derived).

                                         -17-                                     7589
to the building owner;47 in contrast, the State will be Juneau I’s exclusive tenant for at
least ten years. Alborn contends that the rental income stream is not guaranteed because
it is subject to annual legislative appropriation. But if Juneau I took this possibility
seriously, it likely would not have contracted for the renovations. It thus was reasonable
for the ALJ to conclude, on the undisputed facts, that Factor 4 weighed in favor of the
Act’s coverage.
                3.    The Department of Labor reasonably concluded that a State
                      contract covered the entire “public construction” project and
                      that the Act therefore applied.
                      a.     The conclusion that Amendment 55 was a sham
                After concluding that the Act covered the entire renovation project, the ALJ
then asked which lease version controlled: Amendment 54 or Amendment 55? The
ALJ correctly considered the broad policies set out in City of Sitka and Western Alaska.
In City of Sitka we cautioned against “unduly exalt[ing] form over substance” when we
held that a timber clearing contract severed from a larger, State-sponsored dam building
contract was still subject to the Act.48 In Western Alaska we similarly disapproved of
“attempts to disguise State involvement in the building contract” and cautioned that
contracting “arrangements that could be designed to circumvent the Act’s application”
could violate the Act.49
                With these cases in mind, the ALJ analyzed whether Amendment 55 was
a “bargained-for agreement” or a “sham . . . intended only to affect the rights of the
workers on the project.” Quoting the Restatement (Second) of Contracts, the ALJ

      47
                See Western Alaska, 909 P.2d at 331-32; Alaska State Fed’n of Lab. 713
P.2d at 1209.
      48
                644 P.2d 227, 232-33 (Alaska 1982).
      49
                909 P.2d at 334.

                                            -18-                                      7589
observed that a sham contract exists when the “purported consideration was not in fact
bargained for but was a mere formality or pretense.”50 Applying the law to the
undisputed facts, the ALJ concluded that, for purposes of Act coverage, Amendment 55
was a sham. The ALJ noted Alborn’s concession that “the parties removed certain
projects from Amendment 54, and Juneau I then promised to do the removed projects for
free, in order to avoid the [Act].”
              Alborn points out minor differences between Amendment 54 and
Amendment 55 combined with the Companion Letter — for example, a different
deadline and a few additional projects — as evidence that Amendment 55 was not a
sham. But Alborn also suggests that not seeking a new Act coverage determination after
executing Amendment 55 was justified partly because other than the omission of Act-
covered items listed in the Bifurcation Letter, there were no major differences.
              The ALJ explained why minor differences did not affect the Act coverage
analysis:
              If two parties agree to a sale, and then later purport to change
              their agreement to a mutual exchange of ‘gifts’ without
              actually changing the bargain, it does not matter if they also
              add additional items to their exchange at the time of the sham
              gift giving. Here, the important undisputed facts are that
              (1) the seven [S]tate-specific items listed in Amendment 54
              and purportedly removed by Amendment 55 were, in fact,
              never removed from the bargain because they were promised
              by Juneau I in the [Companion Letter]; and (2) the rent did
              not change between Amendment 54 and Amendment 55 even
              though Amendment 55 purportedly offered a less useful
              building.
              This analysis is further supported by City of Sitka and broader Act policies.
Even though the parties in City of Sitka had severed the timber clearing contract from the

       50
              RESTATEMENT (SECOND) OF CONTRACTS. § 79 (AM. L. INST. 1981).

                                           -19-                                      7589
original construction contract, we examined the original contract — and therefore the
project as a whole — when evaluating the Act’s coverage.51 We have explained that the
Act “is to the benefit of the employees, not the contracting principals”52 and was intended
to be “liberally construed to effectuate its beneficent purpose.”53
              The Department of Administration clearly never intended to accept the
building lease without the State-specified renovations. Amendment 55 may be an
enforceable contract between Juneau I and the State, but under any standard of review
we agree with the ALJ that Amendment 55 was an attempt to circumvent the Act.
       C.     The Department Of Labor Correctly Denied Alborn’s Estoppel
              Defense.
              Equitable estoppel has three general elements: “(1) assertion of a position
by conduct or word, (2) reasonable reliance thereon, and (3) resulting prejudice.”54
Courts also may consider “[a] fourth element, . . . [which] is that the estoppel will be
enforced only to the extent that justice so requires.”55 Thus, “even where reliance has
been foreseeable, reasonable, and substantial, the interest of justice may not be served
by the application of estoppel [against the government] because the public interest would
be significantly prejudiced.”56

       51
              644 P.2d at 232-33.
       52
              Id. at 232.
       53
            Western Alaska, 909 P.2d at 333 (quoting Drivers, Salesmen,
Warehousemen, Milk Processors, Cannery, Dairy Emps. & Helpers, Loc. Union No. 695
v. NLRB, 361 F.2d 547, 553 n.23 (D.C. Cir. 1966)).
       54
              Municipality of Anchorage v. Schneider, 685 P.2d 94, 97 (Alaska 1984).
       55
              Id.; see Beecher v. City of Cordova, 408 P.3d 1208, 1214 (Alaska 2018).
       56
              See Schneider, 685 P.2d at 97 (explaining that fourth element is especially
                                                                          (continued...)

                                           -20-                                      7589
             Alborn seeks to estop the Department of Labor’s enforcement action.
Because the estoppel defense does not fall under the agency’s area of expertise,57 we
apply the substitution of judgment standard of review.58 This standard “permits a . . .
court to substitute its own judgment for that of the agency even if the agency’s decision
had a reasonable basis in law.”59 Alborn appears to raise two estoppel arguments. We
address them in turn and conclude both were correctly rejected.
             1.     The “single entity” argument
             Alborn first points out that it “relied upon assurances” from the Department
of Administration that Act-covered items listed in the Bifurcation Letter “had been
omitted from Amendment 55, . . . eliminat[ing] the [Act’s] coverage issues.” Quoting
Thorsheim v. State, Alborn argues that the Department of Administration and the
Department of Labor should be considered “a single entity.”60 Alborn notes that

      56
             (...continued)
relevant “when considering estoppel against a municipality”); Beecher, 408 P.3d at 1214
(same).
      57
            Cf. AS 23.05.010 (explaining Department of Labor’s purpose);
AS 36.05.030 (authorizing Department of Labor to set prevailing wage, determine Act
coverage and violations, and refer infractions to attorney general for enforcement).
      58
            See North Slope Borough v. State, Dep’t of Educ. & Early Dev., 484 P.3d
106, 113 (Alaska 2021) (explaining when substitution of judgment standard applies).
      59
            Tesoro Alaska Petrol. Co. v. Kenai Pipe Line Co., 746 P.2d 896, 903
(Alaska 1987).
      60
             469 P.2d 383, 389 (Alaska 1970) (“[T]he Department of Administration
and the Department of Fish and Game were both integral parts of a single entity, the
State of Alaska.”).

                                          -21-                                     7589
statutory law lists both as part of the “[S]tate government”61 and that the Act defines
“contracting agency” as “the [S]tate.”62 Alborn then sets out a seemingly absurd result:
              It was the State of Alaska that assured Juneau I that [the
              Act’s] wage coverage was inapplicable to the project . . . .
              Conversely, it thereafter was the State of Alaska which
              sought to label the project as “[Act-covered] public
              construction,” even though the State of Alaska, wearing a
              different hat, had indicated it was not. And presently, it also
              is the State of Alaska which is seeking to recoup the increased
              wages. (Emphasis in original; citation omitted.)
Alborn contends this supports an estoppel defense based on the Department of
Administration’s assurances.
              But Thorsheim, a case about whether the State could be considered a
“contractor” in a workers’ compensation proceeding, is inapposite.63 The Department
of Administration had negotiated a contract on a state agency’s behalf; we held that
under the workers’ compensation statute the State could not be considered a contractor
with respect to its public duties no matter which agency was involved.64 That narrow
decision does not stand for the proposition that separate State agencies cannot have
different stances on a particular issue or that State agencies should be considered a single
entity in all contexts.65

       61
              See AS 44.17.005 (listing government offices and departments).
       62
              See AS 36.05.900 (defining “contracting agency”).
       63
              469 P.2d at 385.
       64
              Id. at 389-90.
       65
             Such a conclusion would logically contradict state and federal precedent
allowing different government branches and agencies to bring lawsuits and
administrative enforcement actions against one another; a single party cannot sue itself.
                                                                          (continued...)

                                           -22-                                       7589
              Alborn also misstates the definition of “contracting agency” under the Act
as “the [S]tate.” The Act defines “contracting agency” as “the [S]tate or a political
subdivision of the [S]tate that has entered into a public construction contract with a
contractor,”66 and “political subdivision” includes “any [S]tate department [or] [S]tate
agency.”67 The Act thus clearly envisions the possibility that one arm of the State could
enter into an Act-covered construction contract, taking the position that the Act does not
apply, and that the Department of Labor, vested with the exclusive authority to determine
Act coverage,68 could bring an enforcement action. In that context, the Department of
Labor and the offending “political subdivision” necessarily would have taken opposite
positions regarding the Act’s coverage, just as happened in this case.

       65
                (...continued)
See, e.g., Beegan v. State, Dep’t of Transp. & Pub. Facilities, 195 P.3d 134 (Alaska
2008) (involving investigation and potential Alaska State Commission for Human Rights
(ASCHR) administrative action against DOT&PF); State, Dep’t of Fish & Game, Sport
Fish Div. v. Meyer, 906 P.2d 1365 (Alaska 1995) (involving investigation and potential
ASCHR administrative action against Department of Fish and Game), superseded on
other grounds by statute, ch. 63, § 4, SLA 2006, as recognized in Huit v. Ashwater
Burns, Inc., 372 P.3d 904, 914 n.52 (Alaska 2016); see generally Michael Herz, United
States v. United States: When Can the Federal Government Sue Itself?, 32 WM. & MARY
L. REV. 893 (1991), https://scholarship.law.wm.edu/wmlr/vol32/iss4/4; SEC v. Fed. Lab.
Rels. Auth., 568 F.3d 990, 997-98 (D.C. Cir. 2009) (Kavanaugh, J., concurring)
(collecting cases and explaining why government should not always be treated as single
entity for litigation purposes).
       66
              AS 36.05.900 (emphasis added).
       67
              AS 36.95.010(6).
       68
                 AS 36.05.030 (“The Department of Labor . . . has the authority to determine
. . . [if] this chapter is being violated.”).

                                           -23-                                       7589
             Alborn’s “single entity” estoppel theory additionally can be rejected on
public interest grounds.69     Even assuming Alborn met the required elements of
reasonable and detrimental reliance on a prior position taken by the unitary “State,”
application of estoppel would frustrate enforcement of the Act, which was enacted to
help construction workers earn better wages.70 Precluding enforcement cuts against the
public interest and the Act’s broad policy mandate.
             2.     The final determination argument
             Alborn alternatively appears to argue that the Department of Labor took
inconsistent positions with respect to the Act’s coverage and that enforcement therefore
should be estopped. Specifically, Alborn complains that the Department of Labor
characterized Wage and Hour’s Bifurcation Letter as its “final” determination; that the
Bifurcation Letter clearly indicated only some work items would be covered by the Act;
and that the Department of Labor changed its position by deciding that all of the work
items were covered.
                    a.       Assertion of a position by conduct or word
             The ALJ concluded that Wage and Hour “asserted a position” in its
Bifurcation Letter.71 Wage and Hour “maintain[ed that] the overall construction project
as contemplated could be covered” by the Act, but it parsed individual items that would
not be covered under a compromise proposal. Less than two weeks later, Wage and
Hour characterized the Bifurcation Letter as its “final answer.” With respect to the

      69
             See Municipality of Anchorage v. Schneider, 685 P.2d 94, 97 (Alaska 1984)
(explaining courts should consider public interest when evaluating estoppel arguments
made against government).
      70
              See Western Alaska, 909 P.2d 330, 332-33 (Alaska 1996) (explaining Act’s
public interest purpose).
      71
             See Schneider, 685 P.2d at 97 (asserting position is element of estoppel).

                                          -24-                                    7589
construction project as governed by Amendment 54, the Department of Labor thus took
a stance.
                     b.     Reasonable reliance
              We will assume that Alborn — although not a party to the lease
negotiations — did rely on the Bifurcation Letter to some degree, as it contends. We
conclude that any such reliance was unreasonable.
              First, Wage and Hour expressly stated that “the overall construction project
as contemplated could be covered” by the Act. It nonetheless made an “unorthodox”
offer of “compromise” to allow the project to move forward. Wage and Hour warned
that the determination, like previous ones, was “based on the information at hand and
may not be supportable if the circumstances of [the] project change”; it urged project
participants and their contractors to seek private counsel. Alborn dismisses these
warnings as boilerplate language. But given that the original determination in this case
changed, assuming new information would not arise and Wage and Hour would not
again change its determination was unreasonable.
              Second, circumstances changed: (1) Juneau I and the Department of
Administration executed Amendment 55, putatively eliminating the “covered” items
from the project, and (2) Alborn failed to pay Act wages even for the “covered” items
the Bifurcation Letter identified. As the ALJ pointed out and Alborn concedes, the
Bifurcation Letter was based on Amendment 54, not Amendment 55. Alborn clearly
understood the risk that the project would be covered by the Act, as evidenced by its
asserting a right to adjust its contract price with Juneau I if the Act applied.
              We reject Alborn’s estoppel argument because Alborn’s reliance, if any,
was unreasonable.

                                           -25-                                     7589
                     c.     Resulting prejudice
              The Department of Labor argues that Alborn cannot show prejudice
because it anticipated the Act could apply to the project and included contract language
asserting its right to increase the contract price accordingly. Alborn wrote in its project
proposal to Juneau I: “Should any circumstances change which result in a requirement
to pay prevailing wages, our project total will be amended to reflect the additional
expense.” Whether Alborn has been or will be made whole by Juneau I following the
Department of Labor’s enforcement decision and whether being made whole precludes
Alborn’s ability to show prejudice is unclear. But given Alborn’s contract protection,
it has not demonstrated any prejudice.
                     d.     Public interest
              Finally, even if Alborn met all the estoppel requirements, its position is
contrary to the public interest.72 The ALJ made this point succinctly:
              Even assuming that in advance of a project the [Department
              of Labor] has the discretion to bifurcate those aspects of a
              project for which coverage under the [Act] is uncertain from
              those that are definite, once an enforcement action is taken,
              and it becomes clear that the “iffy” aspects are, indeed,
              covered, the [Department of Labor] cannot ignore the
              interests of the workers. Although an agency may in some
              cases compromise uncertain issues to avoid an enforcement
              action, an adjudicated decision cannot ignore the law.
On the facts of this case, Alborn cannot estop the Department of Labor from bringing an
enforcement action on behalf of underpaid workers.73 Contractors should benefit from

       72
             See id. (explaining courts should consider public interest when evaluating
estoppel arguments made against government); Beecher v. City of Cordova, 408 P.3d
1208, 1214 (Alaska 2018) (same).
       73
              Cf. North Slope Borough v. State, Dep’t of Educ. & Early Dev., 484 P.3d
                                                                        (continued...)

                                           -26-                                      7589
agency opinions to help better budget for upcoming projects, but there is no basis to
permit relying on a distortion of an agency opinion to circumvent wage and hour laws.
      D.     Alborn Was Not Denied Due Process When Litigating Amendment
             55’s Validity.
             Alborn suggests, although it does not explicitly state, that it was denied due
process. Alborn cites a due process case and complains about not having adequate notice
that Amendment 55’s validity was at issue. “[P]rocedural due process under the Alaska
Constitution requires notice and opportunity for hearing appropriate to the nature of the
case.”74 Fundamentally, “[p]arties must have notice of the subject of proceedings that
concern them.”75 Because due process claims are questions of law, we review them de
novo.76
             Alborn argues that its only opportunity to litigate the ALJ’s sham contract
ruling was in a motion for reconsideration, leaving no “opportunity to develop the factual
basis in support of its defense.” Alborn relies on our Griswold v. Homer Board of
Adjustment decision that due process was denied when the first time the litigant’s
standing was at issue was on a motion for reconsideration that was later denied.77 The
Department of Labor points out that, unlike in Griswold, Alborn’s motion for

      73
            (...continued)
106, 120 (Alaska 2021) (explaining we will not enforce estoppel doctrine when doing
so would require State to contravene law and legislative intent).
      74
               Griswold v. Homer Bd. of Adjustment, 426 P.3d 1044, 1045 (Alaska 2018)
(alteration in original) (quoting Price v. Eastham, 75 P.3d 1051, 1056 (Alaska 2003)).
      75
             Id. (alteration in original) (quoting Price, 75 P.3d at 1056).
      76
             Id.
      77
             Id. at 1045-46.

                                          -27-                                       7589
reconsideration was partially granted; that Alborn was permitted to submit additional
evidence; and that Alborn submitted over 40 pages of additional briefing.
             Alborn had notice and opportunity to litigate the issue, even beyond what
the Department of Labor notes. As the ALJ pointed out, Alborn and the Department of
Labor litigated the sham contract question during the original administrative proceedings.
The Department of Labor had argued that “Amendment 55 did not substantively change
. . . coverage under the [Act],” thereby putting Alborn on notice of a sham contract
argument. Alborn responded by characterizing the Department of Labor’s argument as
calling Amendment 55 “superficial” and an example of “evasive drafting.” Although the
words “sham contract” were not used, both parties’ arguments clearly indicate that the
Act’s coverage — including whether Amendment 55 was designed to evade the Act —
was at issue during the initial hearing before the ALJ.
             Because there was ample notice and opportunity to be heard regarding the
“sham contract” issue, Alborn was not denied due process.
V.    CONCLUSION
             The superior court’s decision affirming the Department of Labor’s decision
is AFFIRMED.

                                          -28-                                      7589