Opinion
No. 234037.
Submitted April 5, 2005, at Detroit.
Decided July 19, 2005, at 9:00 a.m.
Masud, Gilbert Patterson, P.C. (by David John Masud and Kraig M. Schutter), for Associated Builders and Contractors, Saginaw Valley Area Chapter.
Michael A. Cox, Attorney General, Thomas L. Casey, Solicitor General, and Richard P. Gartner, Assistant Attorney General, for the Consumer and Industry Services Director.
Jensen, Gilbert, Smith Borrello, P.C. (by Lawrence Wm. Smith), for the Midland County Prosecuting Attorney.
Smeltzer, Aptaker Shephard, P.C. (by Gary L. Lieber and Anessa Abrams), and Sachs Waldman (by Mary Ellen Gurewitz) for the Michigan Chapter of the National Electrical Contractors Association, the Michigan Mechanical Contractors Association, and the Michigan Chapter of the Sheet Metal Air Conditioning Contractors National Association.
Klimist, McKnight, Sale, McClow Canzano, P.C. (by John R. Canzano), and Jensen, Gilbert, Smith Borrello (by André R. Borrello) for the Michigan State Building Construction Trades Council.
David M. Gilbert for the Saginaw County Prosecuting Attorney.
ON REMAND
Before: WHITBECK, C.J., and WHITE and DONOFRIO, JJ.
This case is before us on remand from the Supreme Court. Plaintiff brought this action for declaratory and injunctive relief, challenging the constitutionality of the prevailing wage act (PWA), MCL 408.551 et seq., as vague and as an unconstitutional delegation of legislative authority to private parties, specifically, unions and union contractors. The circuit court dismissed plaintiff's vagueness claim on defendants' motions for summary disposition, and allowed the delegation of legislative authority claim to proceed to discovery. Defendants-intervenors were granted leave to file an interlocutory appeal of the latter ruling, and plaintiff cross-appealed as of right the dismissal of its vagueness claim.
Our initial opinion concluded that, because plaintiff had not alleged an "actual controversy," it could not seek declaratory relief. Thus, we did not reach the merits of the constitutional challenges; we reversed the circuit court's denial of summary disposition of the delegation of legislative authority claim and affirmed the dismissal of the vagueness claim. See Associated Builders Contractors v. Dep't of Consumer Industry Services Director (ABC I), unpublished opinion per curiam, issued August 5, 2003 (Docket No. 234037). Plaintiff applied for leave to appeal in the Supreme Court. After hearing oral arguments on plaintiff's application for leave, in lieu of granting leave to appeal, the Supreme Court reversed and remanded for reconsideration by this Court, stating:
We reverse the decision of the Court of Appeals and hold that plaintiff has presented an "actual controversy" so that plaintiff can seek declaratory relief under MCR 2.605. We do not address the substantive issue regarding the constitutionality of the PWA; instead, we remand to the Court of Appeals for reconsideration and resolution of the defendants' appeal and plaintiff's cross-appeal on the merits. [ Associated Builders Contractors v. Dep't of Consumer Industry Services Director, 472 Mich 117, 120; 693 NW2d 374 (2005) ( ABC II).]
Having considered the merits of the appeal and cross-appeal, we conclude that the PWA does not unconstitutionally delegate legislative authority to private parties, and so we reverse the circuit court's denial of summary disposition on that claim. In the cross-appeal, we conclude that the PWA is not unconstitutionally vague on its face or as applied, and affirm the circuit court's dismissal of those claims, though for somewhat different reasons.
I. APPEAL
Defendants assert that plaintiff's challenge to the PWA as an unconstitutional delegation of legislative authority to private parties must fail because that precise claim was rejected by this Court in West Ottawa Pub Schools v. Director, Dep't of Labor, 107 Mich App 237; 309 NW2d 220 (1981).
This Court reviews de novo the circuit court's denial of summary disposition. Maiden v. Rozwood, 461 Mich 109, 118; 597 NW2d 817 (1999). The constitutionality of a statute is a question of law this Court reviews de novo. Dep't of State v. MEA-NEA, 251 Mich App 110, 115-116; 650 NW2d 120 (2002). Legislation is presumed constitutional absent a clear showing to the contrary. Caterpillar Inc v. Dep't of Treasury, 440 Mich 400, 413; 488 NW2d 182 (1992). Statutes must be construed in a constitutional manner if possible. Id.
A. WEST OTTAWA
West Ottawa was an appeal of the circuit court's declaratory judgment and permanent injunction precluding enforcement of the PWA on the ground that the act constituted an unlawful delegation of legislative power to private parties, i.e., unions. This Court reversed, stating:
Plaintiffs argue that, because the Department of Labor [now the Department of Consumer and Industry Services (CIS) is statutorily required to set the prevailing wage rate at union rate, the Legislature has unconstitutionally delegated its power to a private party. We cannot agree.
The CIS is now named the Department of Labor and Economic Growth (DLEG).
Article 4, § 1, of the Michigan Constitution prohibits the delegation of "legislative power". The Michigan doctrine of nondelegation has been expressed in terms of a "standards" test:
"`There is no doubt that a legislative body may not delegate to another its lawmaking powers. It must promulgate, not abdicate. This is not to say, however, that a subordinate body or official may not be clothed with the authority to say when the law shall operate, or as to whom, or upon what occasion, provided, however that the standards prescribed for guidance are as reasonably precise as the subject matter requires or permits.' (Emphasis supplied.)" Detroit v. Detroit Police Officers Ass'n, 408 Mich 410, 458; 294 NW2d 68 (1980), quoting Osius v. St Clair Shores, 344 Mich 693, 698; 75 NW2d 25 (1956).
The preciseness of the standards will vary in proportion to the degree to which the subject regulated requires constantly changing regulation. Dep't of Natural Resources v. Seaman, 396 Mich 299, 309; 240 NW2d 206 (1976). As stated by the Court in G F Redmond Co v. Michigan Securities Comm, 222 Mich 1, 5; 192 NW 688 (1923):
"The power to carry out a legislative policy enacted into law under the police power may be delegated to an administrative board under quite general language, so long as the exact policy is clearly made apparent, and the administrative board may carry out in its action the policy declared and delegated * * *. This marks the line between arbitrary officiousness and the exercise of delegated power to carry out a designated policy under the police power."
In Male v. Ernest Renda Contracting Co, Inc, 122 NJ Super 526; 301 A2d 153 (1973), aff'd 64 NJ 199; 314 A2d 361 (1974), cert den 419 US 839; 95 S Ct 69; 42 L Ed 2d 66 (1974), the court reversed the trial court's finding that the New Jersey prevailing wage act was unconstitutional as an unlawful delegation of legislative power to a private party. Under the New Jersey act, the Commissioner of Labor established the prevailing wages for state projects from collective bargaining agreements. The Commissioner did not adopt any further rules or regulations but took the collective bargaining agreement that covered the majority of the workers in the locality and used the wages in that agreement as the prevailing rate. In holding that the statute was not unconstitutional, the appellate court reasoned:
"We do not find that the act, or the Commissioner's interpretation thereof, presents a problem of delegation of legislative power. As we view the act, the Commissioner has not been delegated power to perform a legislative function; rather, he has merely been granted the power, as a matter of legislative convenience, to determine a set of facts, i.e., the wage rates established under collective bargaining agreements in given circumstances. The Legislature has determined, for reasons set forth in section 1 of the act (NJSA 34:11-56.25), that the wages paid under collective bargaining agreements negotiated between labor unions representing a majority of the workmen engaged in the trade under collective bargaining agreements and their employers shall be the wages paid in the performance of public work. That public policy determination was for the Legislature. We find no constitutional bar thereto. To conclude, as the trial judge did, that under such a scheme `the public is not sufficiently protected against such arbitrary or self-motivated action on the part * * * of such private party to whom the legislative function has really been delegated,' misses the point and actually constitutes a substitution of judicial judgment for that of the Legislature." Male v. Ernest Renda Contracting Co, supra, 533-534.
Accord, Kugler v. Yocum, 69 Cal 2d 371; 71 Cal Rptr 687; 445 P2d 303 (1968), Union School Dist of Keene v. Comm'r of Labor, 103 NH 512; 176 A2d 332 (1961), Baughn v. Gorrell Riley, 311 Ky 537; 224 SW2d 436 (1949), Metropolitan Water Dist of Southern California v. Whitsett, 215 Cal 400; 10 P2d 751 (1932). [Contra,] Industrial Comm v. C D Pipeline, Inc, 125 Ariz 64 ; 607 P2d 383 (1980) [sic, 1979], Bradley v. Casey, 415 Ill 576; 114 NE2d 681 (1953), Wagner v. Milwaukee, 177 Wis 410; 188 NW 487 (1922).
While we recognize that there is a split of authority on this issue, we are persuaded that Male, supra, presents the better view. The Michigan Legislature has not delegated any legislative, policy-making authority to the Department of Labor. The Legislature has declared as the policy of this state that construction workers on public projects are to be paid the equivalent of the union wage in the locality. The Department of Labor's determination of that prevailing wage does not amount to the setting of any state policy. The Department is merely authorized to implement what the Legislature has already declared to be the law in Michigan.
In our judgment, the basic premise of plaintiffs' argument is invalid. Plaintiffs maintain that the prevailing wage statute is constitutionally defective because it delegates to the unions, or to the unions and contractor/employers together, the authority to determine the wage rate on state projects. The statute contains no such delegation. Rather, the statute expresses the policy that wages equal to union scale are to be paid to both union and nonunion workers on public construction projects. The Legislature did not confer on the unions and the contractor/employers the power to set the prevailing wage rate for public contracts. It merely adopted, as the critical standard to be used by the Department of Labor in determining prevailing wage [sic], the wage rate arrived at through a collective bargaining process which is completely unrelated to and independent of the prevailing wage statute. The purpose of collective bargaining is not to set the wage scale for public projects but rather to set the wage scale for all construction projects.
There is a vital distinction between conferring the power of making what is essentially a legislative determination on private parties and adopting what private parties do in an independent and unrelated enterprise. [ West Ottawa, 107 Mich App at 242-246 (emphasis added).]
We conclude that West Ottawa is on point and we reject plaintiff's unlawful delegation challenge.
Our adoption of West Ottawa notwithstanding, we acknowledge the validity of plaintiff's arguments that the CIS, now the DLEG, should refine its internal methods of gathering information from which it determines prevailing wage rates (e.g., so that if a two-tiered wage system has been negotiated, it is made known to the CIS and incorporated into its prevailing wage determination and the possibility of an arbitrary rate is thus foreclosed). However, plaintiff's complaints are properly addressed to the Legislature, not the courts, as the complaints center on the wisdom of tying prevailing wage rates under the PWA to collectively bargained agreements. "A valid statute is not rendered unconstitutional on the basis of improper administration." Council of Organizations and Others for Ed about Parochiaid, Inc v. Governor, 455 Mich 557, 570-571; 566 NW2d 208 (1997).
B. SUPPLEMENTAL BRIEFING AFTER REMAND
After the Supreme Court remanded this case to this Court, ABC II, 472 Mich at 129, this Court granted plaintiff's motion to file a supplemental brief. Defendants filed a response brief. Having reviewed the supplemental briefs after the remand, we conclude that plaintiff's arguments are largely addressed by our adoption of West Ottawa and that the remaining issues are without merit.
Plaintiff's supplemental brief asserts:
[T]he PWA constitutes an unlawful delegation of legislative authority because it requires the Michigan Department of Labor and Economic Growth ("DLEG") to adopt in wholesale fashion the agreements of interested private third parties for setting wage rates under the law. The PWA grants authority to unions and unionized contractors to establish one set of high rates applicable to public works projects through their collective bargaining agreements, to which all contractors are bound on public construction projects, but does not constrain them from negotiating another set of lower and more market reflective rates for use on privately-funded projects. This "two-tier" rate system is negotiated with one eye fixed firmly on the PWA, because it provides safe harbor for the artificially high public works wage rates in an otherwise competitive marketplace. The collusive practice of job targeting — which springs from the collective bargaining process and effectively establishes a two-tier rate system — is precisely the kind of practice that taints the collective bargaining process in relation to the PWA. Because the rates negotiated for use on PWA projects are artificially high, and because they result from collusive bargaining to the detriment of the Michigan tax-paying public, and because the DLEG is powerless under the statutory scheme to prevent it, the PWA constitutes an unlawful delegation of legislative authority to private parties.
Plaintiff's supplemental brief draws this Court's attention to J A Croson Co v. J A Guy, Inc, 2003 NLRB LEXIS 328, a hearing referee's decision issued on June 27, 2003, subsequent to J A Croson Co v. J A Guy, Inc, 81 Ohio St 3d 346; 691 NE2d 655 (1998). Plaintiff asserts that
In J A Croson, 81 Ohio St 3d 346, an unsuccessful bidder on two public projects brought suit against the successful bidder, alleging that by cooperating with the union to receive subsidies under a job targeting program, the successful bidder violated Ohio's prevailing wage law. The Ohio Supreme Court held that the National Labor Relations Act, at § 29 USC 157, preempts the Ohio state prevailing wage regulations "to the extent that those provisions could be construed to restrain or inhibit the federally protected use of job targeting programs." J A Croson, 81 Ohio St 3d at 358.
litigation of that Ohio state court case ( Croson) has continued through the NLRB, the recent result of which calls into question whether or not job targeting programs are as protected as the Intervenors contend.
* * *
Now the Board [NLRB] has determined that valid arguments exist to warrant a finding that job targeting programs may be inimical to state prevailing wage projects as well.
The referee's decision in J A Croson, 2003 NLRB LEXIS 328, is neither binding nor persuasive authority. The issue addressed therein has no bearing on a constitutional analysis of Michigan's PWA. Specifically, the referee's decision addressed a technical timing issue, i.e., in the event a state court suit is preempted by the NLRB's exclusive jurisdiction, at what time does the state suit become an unfair labor practice in violation of the National Labor Relations Act (NLRA).
To the extent that plaintiff's supplemental brief asserts that job targeting is "a collusive practice [that] springs from the collective bargaining process . . . [and] is precisely the kind of practice that taints the collective bargaining process in relation to the PWA," as noted in our initial opinion, we agree with the circuit court that plaintiff had acknowledged that job targeting or market recovery programs do not violate antitrust laws and may constitute protected concerted activity under the NLRA. Plaintiff's supplemental brief raises nothing to alter our original analysis.
See ABC I, slip op at 11.
We reverse the circuit court's determination allowing discovery to proceed and order that summary disposition enter in defendants' favor on the unconstitutional delegation of legislative authority challenge.
Defendants' final argument in the principal appeal, that plaintiff failed to exhaust administrative remedies, was alluded to, but not squarely raised below, nor was it addressed by the circuit court. Thus we do not address it. Fast Air, Inc v. Knight, 235 Mich App 541, 549; 599 NW2d 489 (1999).
II. CROSS-APPEAL
On cross-appeal, plaintiff argues that the PWA is unconstitutionally vague, both on its face and in application. The circuit court dismissed plaintiff's vagueness challenges, and we affirm.
A. FACIAL CHALLENGE ON VAGUENESS GROUNDS
Generally, "[t]he party challenging the facial constitutionality of an act `must establish that no set of circumstances exists under which the [a]ct would be valid. The fact that the . . . [a]ct might operate unconstitutionally under some conceivable set of circumstances is insufficient. . . .'" Straus v. Governor, 459 Mich 526, 543; 592 NW2d 53 (1999), quoting United States v. Salerno, 481 US 739, 745; 107 S Ct 2095; 95 L Ed 2d 697 (1987). "`[S]tatutes which do not involve First Amendment freedoms must be examined in light of the facts of the case at hand.'" BCBSM v. Governor, 422 Mich 1, 93; 367 NW2d 1 (1985), quoting People v. Howell, 396 Mich 16, 21; 238 NW2d 148 (1976).
Facial challenges are permitted in other limited contexts. For example, if the law challenged reaches a substantial amount of constitutionally protected conduct, i.e., where free speech or free association is affected, it may be facially challenged. See Kolender v. Lawson, 461 US 352, 358 n. 8; 103 S Ct 1855; 75 L Ed 2d 903 (1983).
A law that does not reach constitutionally protected conduct and therefore satisfies the overbreadth test may nevertheless be challenged on its face as unduly vague, in violation of due process; however, to succeed, the complainant must demonstrate that the law is impermissibly vague in all of its applications. [16B Am Jur 2d, Constitutional Law, § 920, p. 516, citing Village of Hoffman Estates v. Flipside, Hoffman Estates, Inc, 455 US 489; 102 S Ct 1186; 71 L Ed 2d 362 (1982).]
In this case, because the PWA does not implicate constitutionally protected conduct, plaintiff may succeed in a facial vagueness challenge only if it demonstrates that the law is impermissibly vague in all its applications. Because plaintiff neither argues nor supports that the PWA is impermissibly vague in all its applications, its facial challenge on vagueness grounds fails.
In a supplemental authority brief filed during the pendency of the initial appeal to this Court, plaintiff cites People v. Barton, 253 Mich App 601; 659 NW2d 654 (2002), and People v. Boomer, 250 Mich App 534; 655 NW2d 255 (2002), as supporting its position. Plaintiff is incorrect, as the statutes challenged in those cases affected First Amendment interests. The ordinance challenged in Barton prohibited "any indecent, insulting, immoral or obscene conduct in any public place." 253 Mich App at 602. The Barton Court stated, "We note that defendant may challenge the ordinance as unconstitutionally vague on its face because it threatens First Amendment interests." 253 Mich App at 605. The statute at issue in Boomer provided that "[a]ny person who shall use any indecent, immoral, obscene, vulgar or insulting language in the presence or hearing of any woman or child shall be guilty of a misdemeanor." 250 Mich App at 536. The Boomer Court noted that the statute "impinges on First Amendment freedoms" in that it unquestionably "reaches constitutionally protected speech." 250 Mich App at 541-542.
B. "VAGUENESS AS APPLIED" CHALLENGE
"To give fair notice, a statute must give a person of ordinary intelligence a reasonable opportunity to know what is prohibited or required. The statute cannot use terms that require persons of ordinary intelligence to guess its meaning and differ about its application. A statute is sufficiently definite if its meaning can be fairly ascertained by reference to judicial interpretations, the common law, dictionaries, treatises, or the commonly accepted meanings of words." [ People v. Beam, 244 Mich App 103, 105; 624 NW2d 764 (2000), quoting People v. Noble, 238 Mich App 647, 652; 608 NW2d 123 (1999).]
We reject plaintiff's "vagueness as applied" challenge because we agree with defendants that the misdemeanor provision of the act does not apply to a simple failure to pay according to the contract. Whether construed strictly as a criminal statute or broadly as a remedial statute, the words of the statute itself must control. Western Michigan Univ Bd of Control v. Michigan, 455 Mich 531, 538, 545-546; 565 NW2d 828 (1997). The PWA makes it a misdemeanor to violate a provision of the act. MCL 408.557. The act requires the contractor to include prevailing wage provisions in a covered contract, MCL 408.552, and to post prevailing wage information at the construction site and keep accurate records of the actual wages paid, MCL 408.555. The act also authorizes the contracting agent to terminate a contractor's right to proceed with any part of the contract for which prevailing wages are not, in fact, paid, and to complete the contract with another contractor at the original contractor's expense. MCL 408.556. While the act contemplates that the contractor will pay the prevailing wage, and provides for the right to terminate the contract for failure to do so, it cannot be said that the failure to pay the prevailing wage in and of itself constitutes a violation of the provisions of the act. Thus, we reject plaintiff's "vagueness as applied" challenge to the act because the challenge is based on an erroneous construction of the act.
Nothing in Western Michigan Univ, argues to the contrary. The language relied on by defendants clearly states that the act requires that the contract contain certain provisions, and the issue presented here was not discussed.
C. SPECULATION ABOUT STANDARDS
Plaintiff's final argument on cross-appeal is that the circuit court clearly erred in dismissing its claim that the PWA is unconstitutionally vague both on its face and in its application because discovery would show that nonunion construction contractors subject to the act must routinely speculate about whether their pay and work practices on prevailing wage projects comport with those derived from convoluted, constantly evolving, and generally unavailable collective bargaining agreements and unwritten understandings between trade unions and union contractors.
We conclude that this issue need not be addressed. "A valid statute is not rendered unconstitutional on the basis of improper administration." Council of Organizations v Governor, 455 Mich 557, 570-571; 566 NW2d 208 (1997). The criticisms plaintiff articulates here of the PWA, even if true, would not render the entire act unconstitutional. Plaintiff's promise that discovery would show these problems exist is not helpful. The alleged problems plaintiff's members have with the PWA relate to the CIS's administration of the act or should be addressed to the Legislature and do not affect the constitutionality of the act.
We affirm the dismissal of plaintiff's vagueness challenges and reverse the denial of summary disposition as to plaintiff's delegation challenge.
DONOFRIO, J., concurred.
I concur with the majority in this matter. I write separately to emphasize, briefly, several points that I consider to be of some importance.
I. OVERVIEW
At issue here is the constitutionality of the prevailing wage act, sometimes referred to as the "Little Davis-Bacon Act" because the Legislature patterned it after the federal Davis-Bacon Act of 1931.
MCL 408.551 et seq.
Former 40 USC 276a et seq. (now 40 USC 3141 et seq.).
The central provision of the prevailing wage act is § 2, which provides:
MCL 408.552.
Every contract executed between a contracting agent and a successful bidder as contractor and entered into pursuant to advertisement and invitation to bid for a state project which requires or involves the employment of construction mechanics, other than those subject to the jurisdiction of the state civil service commission, and which is sponsored or financed in whole or in part by the state shall contain an express term that the rates of wages and fringe benefits to be paid to each class of mechanics by the bidder and all of his subcontractors, shall not be paid less than the wage and fringe benefit rates prevailing in the locality in which the work is to be performed. . . .
Section 4 of the prevailing wage act implements § 2 by providing a method for establishing the "prevailing wages and fringe benefits" on the basis of collective bargaining agreements in the locality:
MCL 408.554.
The commissioner shall establish prevailing wages and fringe benefits at the same rate that prevails on projects of a similar character in the locality under collective agreements or understandings between bona fide organizations of construction mechanics and their employers. . . .
The prevailing wage act defines the "commissioner" as "the department of labor." MCL 408.551(d). Under Executive Reorganization Order No. 1996-2, the Department of Labor became the Department of Consumer and Industry Services, MCL 445.2001, of which defendant Kathleen Wilbur was the director. Under Executive Reorganization Order No. 2003-18, MCL 445.2011, the Department of Consumer and Industry Services became the Department of Labor and Economic Growth. I will use the abbreviation "CIS" in this concurrence to delineate the responsible department.
As the Attorney General points out, plaintiff Associated Builders and Contractors, Saginaw Valley Area Chapter (the Saginaw ABC) does not here contend that the Legislature lacks the authority to enact a prevailing wage act, nor does the Saginaw ABC contend that the Legislature lacks the authority to establish a method for the periodic adjustment of those rates without direct legislative action. Although the Saginaw ABC advances a number of contentions in this matter, there are two with which I am particularly concerned. The first is that, in practice, there is a "two-tier" rate system that allows unions and unionized contractors to establish one set of high rates applicable to public works projects but does not constrain them from negotiating another set of lower rates for use in privately funded projects. The second is that the rates negotiated for use on prevailing wage act projects — a phrase that the Saginaw ABC appears to use interchangeably with public works projects, presumably meaning those projects that are covered by the prevailing wage act — are "artificially high." I will deal with these two contentions in order below.
II. THE "TWO-TIER" SYSTEM
The Saginaw ABC contends that the prevailing wage act is an unconstitutional delegation of legislative authority. In support of this contention, the Saginaw ABC asserts that the CIS is "a mere paper shuffler in the process of determining prevailing wages" and that "the regulation of wages and benefits on state-funded construction projects in Michigan is passed to unions and unionized contractors." The Saginaw ABC further asserts that, "working together in collusion," such unions and unionized contractors can set inflated wage and fringe benefit rates in collective bargaining agreements and, at the same time, "make side agreements to adhere to lower rate scales which enable unionized contractors to compete in the everyday, `dog-eat-dog' private marketplace."
The Saginaw ABC identifies two types of such "side agreements": market recovery programs and job targeting programs. As I understand it, under a market recovery program a union may sacrifice wages in order to ensure that a unionized contractor can compete for the award of a contract for a given project. Such market recovery programs allow the modification of wages, fringe benefits, and work rules on a job-by-job basis. Thus, for example, the union may agree that operating engineers, who under the collective bargaining agreement with the unionized contractor are entitled to $25 an hour, will receive $23 an hour. As the defendants-intervenors frankly concede, unions institute such market recovery programs in the face of nonunion competition that pays a lower wage scale. Theoretically at least, the cumulative effect of the lower wages that the unionized contractor will pay allows that contractor to be competitive in bidding for projects and therefore "recover" the market that the contractor would otherwise have lost.
As I understand it, a job targeting program is a device for equalizing the pay of union members whose unionized contractor employer has successfully won a contract under a market recovery program. Using again the example of operating engineers who will make $23 an hour on a project pursuant to a market recovery program, the union will "target" that lower salary and will make up the difference between what the operating engineers would otherwise earn under the collective bargaining agreement, $25 an hour, with a subsidy from a job targeting fund that the union collects from the entire bargaining unit through additional dues.
The Saginaw ABC labels these programs a "recent form of obnoxious collusion" and asserts that, by effectively establishing a two-tier rate system, they "taint" the collective bargaining process in relation to the prevailing wage act. I would first note that this argument would have considerably more traction had the Saginaw ABC actually challenged the market recovery and job targeting programs at the trial court level. However, counsel for the Saginaw ABC made it clear that it was making no such challenge:
Mr. Masud: Judge, ABC, and I will make very clear on this, because there's some other counter-claims that ABC needs to be concerned about.
We are not challenging the lawfulness of market recovery. . . .
We don't need to show that that process is illegal. In fact, we state in our brief that it is not — job targeting is not illegal. . . .
* * *
I will make it very clear for this record that ABC is not in any way, shape, or form challenging employers and Union's right to do these things.
Secondly, I note that the record is barren of any suggestion that the Saginaw ABC engaged in any effort through administrative proceedings to have the CIS consider these "side agreements" in establishing prevailing wages. As the defendants-intervenors point out, the doctrine of exhaustion of administrative remedies is well-settled in Michigan and requires a party to exhaust whatever administrative remedies are available before challenging an agency action in court. There are a number of very good reasons for the doctrine.
Judges of the 74th Dist v. Bay Co, 385 Mich 710, 728; 190 NW2d 219 (1971).
(1) [A]n untimely resort to the courts may result in delay and disruption of an otherwise cohesive administrative scheme; (2) judicial review is best made upon a full factual record developed before the agency; (3) resolution of the issues may require the accumulated technical competence of the agency or may have been entrusted by the Legislature to the agency's discretion; and (4) a successful agency settlement of the dispute may render a judicial resolution unnecessary.
Int'l Business Machines Corp v. Dep't of Treasury, 75 Mich App 604, 610; 255 NW2d 702 (1977).
It is certainly possible, as the Saginaw ABC asserts, that unions and unionized contractors are colluding to conceal the existence of their market recovery and job targeting programs from the CIS. It is certainly possible that this collusion taints the collective bargaining process. It is certainly possible that this taint results in higher wage rates for projects covered by the prevailing wage act. But there is not a scintilla of evidence in this record that this is so. And the reason that no such evidence exists in the record is that the Saginaw ABC made no attempt, by complaint, petition, or otherwise, to engage the accumulated technical competence of the CIS to determine whether any of these possibilities might be confirmed.
In summary, it is one thing to label an administrative agency, which might be able to settle such issues conclusively, as a mere paper shuffler; rhetoric is often its own reward. It is quite another to seek untimely judicial intervention that has the effect, intended or not, of disrupting an otherwise cohesive administrative scheme. And it is extraordinarily inefficient to then seek judicial review without the benefit of a full factual record developed before the agency. As a matter of law, therefore, the Saginaw ABC has failed here to exhaust its administrative remedies. The trial court thus erred when it denied summary disposition regarding the Saginaw ABC's unlawful delegation claim on the basis that there were material issues of fact about which discovery could proceed.
III. "ARTIFICIALLY HIGH" WAGE RATES
In support of its contention that the prevailing wage act is unconstitutionally vague, the Saginaw ABC asserts:
[T]o say that the [prevailing wage act] requires the payment of "prevailing" wages in the locality is a misnomer. Union construction workers perform far less construction work in Michigan than do non-union construction workers. The wages paid to this minority of workers under collective bargaining agreements are well above [the] industry average. Since those high rates found in collective bargaining agreements are used exclusively to set the rates established by the CIS on prevailing wage projects, the "prevailing" wages under the Act are always far above the average for the industry. Thus, it cannot be said that they are truly "prevailing."
Since trade unions are effectively able to force their exorbitant wage and fringe benefits rates on all publicly-funded construction projects in Michigan through the application of the [prevailing wage act], the overall impact of the [prevailing wage act] is to increase the cost to the government for public works construction projects over what they would cost in the open market.
Footnotes omitted.
In a footnote, the Saginaw ABC goes further:
The resultant unnecessary increased cost is not the only affront to Michigan taxpayers. The [prevailing wage act's] original purpose has a checkered past as well. According to the Michigan Supreme Court, the Act is patterned after the federal Davis-Bacon Act, 40 U.S.C. 276a, and has its same goals and purposes. Western Michigan University v. State of Michigan, 455 Mich 531, 535-536 (1977). The federal statute was enacted in 1931 in large part as a means by which to protect the higher wages of white construction workers in northern cities such as New York, Philadelphia and Detroit from being diluted through "cheap colored labor" from the southern states. Thiebolt, Prevailing Wage Legislation, Wharton School of the University of Pennsylvania, (1986), p. 30. There is very strong evidence that the Michigan [prevailing wage act] has reduced employment opportunities in particular for blacks. Richard Vetter, supra, referencing Robert P. Hunter, Union Racial Discrimination is Alive and Well, Mackinac Center for Public Policy, September 1977.
Now, it may well be that the Congress passed the Davis-Bacon Act in order to insulate white construction workers from competition by "cheaper" African-American workers from the south. It may well be that the Michigan prevailing wage act has reduced employment opportunities for African-Americans in this state. It may well be that the prevailing wage act's reliance on collective bargaining agreements as determinative of prevailing wages in a locality is misplaced. It may well be that the overall effect of the prevailing wage act is to increase the cost to the government for public works construction projects over what they would cost in the open market. It may well be that each of these factors is an "affront" to Michigan citizens and taxpayers.
Unquestionably, however, these are public policy questions. Equally unquestionably, there is nothing in our judicial commission that empowers us, as compared to the Michigan Legislature, to address them. Our legal training makes us no more qualified to resolve these public policy issues than teachers or truck drivers, no more able to sense and act upon the public will than funeral directors or fire fighters, no wiser in charting a course for sound labor policy in the state than plumbers or physicians. If the prevailing wage act should be reconstituted or even repealed, then it is the Michigan Legislature — popularly elected by teachers and truck drivers, funeral directors and fire fighters, plumbers and physicians, and the rest of our diverse society to address precisely these types of public policy questions — that must undertake this task.
Of course, if the Legislature intended such public policy decisions to have a racially discriminatory effect, they would be subject to strict scrutiny by the courts. See, for example, Washington v. Davis, 426 US 229, 241-242; 96 S Ct 2040; 48 L Ed 2d 597 (1976). But the Saginaw ABC has not brought an equal protection or due process claim asserting that the prevailing wage act is racially discriminatory on its face or as applied.
Thus, my personal opinion on the fairness or the soundness of the prevailing wage act — and, quite frankly, the opinion of the Saginaw ABC on the same public policy issues — has absolutely nothing to do with whether the act is unconstitutional by reason of unlawful delegation or vagueness. The Legislature is free to adopt bad policy; it is free to act unfairly; it is free to pursue ostensibly counterproductive or even downright foolish objectives, all without the judicial branch acting as a super-legislature and substituting its own version of what constitutes sound public policy. While this freedom is not unlimited — it is for this reason, among others, that we the people enact constitutions — our scope of review is extremely limited and we must exercise it with the greatest restraint. As this Court has said:
That a statute may appear undesirable, unfair, unjust, or inhumane does not itself render the statute unconstitutional and empower a court to override the Legislature. Doe v. Dep't of Social Services, 439 Mich 650, 681; 487 NW2d 166 (1992). Arguments that a statute is unwise or results in bad policy should be addressed to the Legislature. People v. Kirby, 440 Mich 485, 493-494; 487 NW2d 404 (1992).
Proctor v. White Lake Twp Police Dep't, 248 Mich App 457, 462; 639 NW2d 332 (2001).
If arguments that a statute needs change, or even repeal, should be addressed to the Legislature, then it most certainly follows that the courts should not step in to do what the Legislature has not done. And, as the attached chart shows, since 1972 there have been thirteen proposed amendments to exempt certain projects from the prevailing wage act. During the same period there have been ten attempts to repeal the act. However, no proposed amendment, or repeal, of the act has passed. In essence, the Saginaw ABC invites us to do what the Legislature has refused to do: repeal the prevailing wage act. As is clear from the majority opinion, today we have declined that invitation.
Michigan Prevailing Wage Act History of Proposed Amendments
Year Title Primary Description Status Sponsor 408.551 408.551 408.551 408.551
2005 HB Rep. Eliminate requirement Referred to Committee 4351 Hildenbrand to pay prevailing on Employment wage on Relations, public school construction Training Safety. projects by amending MCL . 2005 HB Rep. Eliminate requirement Referred to Committee 4531 Hildenbrand to pay the on Employment prevailing wage on Relations, public school Training Safety. projects by amending MCL . 2003 HB Rep. Sheen Eliminate requirement Referred to Committee 4161 to pay prevailing on Employment wage on Relations, public school construction Training Safety. projects by amending MCL . 2001 SB Sen. Steil Eliminate requirement Referred to Committee 82 to pay prevailing on Education. wage on public school academy projects by amending MCL .408.551 408.551 408.551 408.551 408.551
2001 SB Sen. Steil Eliminate requirement Referred to Committee 84 to pay prevailing on Education. wage on public school projects by amending MCL . 2001 HB Rep. Eliminate requirement Second reading in 4383 Gosselin to pay prevailing Committee on Employment wage on Relations, public school, Training Safety. bridge, highway, and road projects by amending MCL . 2001 HB Rep. Kuipers Exempt projects Referred to Committee 4474 building bridges on Conservation used only for snowmobiling and Outdoor from the Recreation. Michigan prevailing wage act by amending MCL . 2000 SB Sen. Steil Eliminate requirement Referred to Committee 1353 to pay prevailing on Education. wage on public school academy projects by amending MCL . 1999 HB Rep. Kuipers Repeal the Michigan Referred to Committee 4193 prevailing wage on Employment act, MCL Relations, through 408.558. Training Safety.408.551 408.558
1999 HB Rep. Kukuk Repeal the Michigan Referred to Committee 4271 prevailing on Employment wage act, MCL Relations, 408.551 through Training Safety. 408.558. 1999 SB Sen. Steil Eliminate requirement Referred to Committee 122 to pay prevailing on Human wage on Resources, Labor, public school Senior Citizens projects by amending Veterans Affairs. MCL . 1999 SB Sen. Steil Repeal the Michigan Referred to Committee 207 prevailing on Human wage act, MCL Resources, Labor, 408.551 through Senior Citizens 408.558. Veterans Affairs. 1998 HB Rep. Exempt bond Referred to Committee 5506 Voorhees projects approved on Education. by the state treasurer Reported with from the recommendation to Michigan prevailing refer to Committee wage act by on Labor Occupational amending MCL Safety. 408.558. 1997 SB Sen. Steil Repeal the Michigan Referred to Committee 131 prevailing on Human wage act, MCL Resources, Labor, 408.551 through Senior Citizens 408.558. Veterans Affairs. 1997 SB Sen. Steil Exempt certain Referred to Committee 805 projects subject to on Labor the Michigan prevailing Occupational wage act by Safety. amending MCL .408.551 408.551
1995 HB Rep. Repeal the Michigan Referred to Committee 4327 DeLange prevailing on Human wage act, MCL Resources Labor. 408.551 through 408.558. 1995 SB Sen. Steil Repeal the Michigan Referred to Committee 95 prevailing on Human wage act, MCL Resources, Labor 408.551 through Veterans Affairs. 408.558. 1995 SB Sen. Shugars Exempt institutions Referred to Committee 106 and Sen. Steil of higher education on Human from the Michigan Resources, Labor prevailing wage act Veterans Affairs. by amending MCL . 1995 SB Sen. Repeal the Michigan Referred to Committee 149 Honigman prevailing wage on Human act, MCL Resources, Labor through 408.558. Veterans Affairs. 1993 HB Rep. Profit Require the Department Referred to Committee 4812 of Labor to on Labor file complaints when it knows of violations of the Michigan prevailing wage act. 1993 SB Sen. Repeal the Michigan Referred to Committee 92 Honigman prevailing wage on Labor. act. 1991-1992 HB Rep. Establish prevailing Referred to Committee 4157 DeLange wages and on Labor. fringe benefits on state projects pursuant to federal Davis-Bacon Act. 1991-1992 SB Sen. Repeal the Michigan Referred to Committee 318 Honigman prevailing on Labor. wage act. 1991-1992 SB Sen. Exempt construction Referred to Committee 403 Emmons of or work on on Labor. state mental health projects from the prevailing wage requirements. 1989-1990 HB Rep. Owen Assign penalties Referred to Committee 4706 for violations of on Labor. the prevailing wage act and prevent bidding on state contracts by violators. 1989-1990 SB Sen. Cherry Assign penalties Referred to Committee 588 for violations of on Human the Michigan prevailing Resources and wage act Senior Citizens. and provide for the payment of wage differentials. 1987-1988 None N/A N/A N/A 1985-1986 HB Rep. Enact a prevailing Referred to Committee 4131 DeLange wage act pursuant on Labor. to the federal act.408.551
1983-1984 HB Rep. Repeal requirement Referred to Committee 4364 O'Connor to pay prevailing on Labor. wage for state projects. 1981-1982 None N/A N/A N/A 1979-1980 HB Rep. Conroy Require EDC's to Passed. 5464 pay prevailing wage and fringe benefits 1977-1978 HB Rep. Elliott Include school district Passed and approved 4233 in the definition by of locality in Governor — 1978 MCL . PA 100. 1975-1976 None N/A N/A N/A 1973-1974 None N/A N/A N/A 1972 None N/A N/A N/A