Beary Landscaping, I v. Joe Costiga , 667 F.3d 947 ( 2012 )

In the
United States Court of Appeals
For the Seventh Circuit
No. 11-1920
B EARY L ANDSCAPING, INC., et al.,
Plaintiffs-Appellants,
v.
JOE C OSTIGAN, in his official capacity as
Director of the Illinois Department of Labor,
Defendant-Appellee.
Appeal from the United States District Court
for the Northern District of Illinois, Eastern Division.
No. 05 C 5697—James B. Zagel, Judge.
A RGUED N OVEMBER 29, 2011—D ECIDED JANUARY 31, 2012
Before P OSNER and K ANNE, Circuit Judges, and
P RATT, District Judge.Œ
P OSNER, Circuit Judge. Illinois law provides that
“workers . . . employed by or on behalf of any public
body engaged in the construction or demolition of
Œ
Hon. Tanya Walton Pratt of the Southern District of
Indiana, sitting by designation.
2 No. 11-1920
public works” (defined as “all fixed works constructed or
demolished by any public body, or paid for wholly or in
part out of public funds,” 820 ILCS 130/2) shall be paid
“not less than the general prevailing rate of hourly
wages for work of a similar character on [nonfederal]
public works in the locality in which the work is per-
formed.” 820 ILCS 130/3. The “public body awarding [the]
contract” is required to determine what the prevailing
wage is, 820 ILCS 130/4(a), but the Department of Labor
is required to conduct annual investigations to deter-
mine the prevailing wage for each type of construction
and demolition work in each locality (generally defined
as a county, 820 ILCS 130/2) in which such work
is being performed, and in practice the public bodies
simply adopt that determination.
The Department’s determination may, though only
within 30 days after it is published, be challenged ad-
ministratively by “any person affected” by it. 820 ILCS
130/9. If the Department rejects the challenge, the chal-
lenger can appeal to the Illinois courts. Id.; 735 ILCS 5/3-
102; see Hayen v. County of Ogle, 463 N.E.2d 124, 126
(Ill. 1984); Beary Landscaping, Inc. v. Ludwig, 479 F. Supp. 2d
857, 862 (N.D. Ill. 2007); People ex rel. Dep’t of Labor v. Skoog
Landscape & Design, 785 N.E.2d 992, 995 (Ill. App. 2003).
If an employer pays less than the prevailing wage to
employees working on a nonfederal public work, the
Department can sue for the underpayment on behalf of
the employees and also levy a separate penalty that it
retains. 820 ILCS 130/11; Brandt Construction Co. v.
Ludwig, 878 N.E.2d 116, 121 (Ill. App. 2007).
No. 11-1920 3
A number of landscape contractors in eight Illinois
counties who do nonfederal public-works projects in-
volving construction tasks, such as planting trees, install-
ing ornaments, sodding and seeding, stabilizing stream
banks, and applying fertilizer and other chemicals to the
soil, brought this suit against the Department. They
argue that it has violated the due process clause by dele-
gating the ascertainment of the prevailing wage for pub-
licly financed landscape construction work to private
entities, namely a labor union and the contractors
with which it has a collective bargaining agreement.
The district judge granted summary judgment in favor
of the Department.
Landscape laborers (as distinct from operators of equip-
ment, including trucks, used in landscape construction
projects, whom we can disregard) employed by these
contractors are called “plantsmen.” This is an unconven-
tional usage—“plantsman” as ordinarily understood
means either an enthusiastic and knowledgeable
gardener or someone who raises or sells plants commer-
cially. But no matter. Traditionally in Illinois plantsmen
in the sense of landscape laborers have been represented
by the Laborers Union, which represents many other
types of construction laborer as well. To determine the
prevailing wage for laborers, the Department in its
annual investigations simply asks the Laborers Union
to certify the current wage of laborers employed in
public works (by locality within Illinois) under the
Union’s collective bargaining agreement with construc-
tion contractors. A contractor who pays a lower wage to
a worker on a public work than the wage specified in
4 No. 11-1920
that agreement receives a demand letter from the De-
partment and if he doesn’t comply the Department can, as
we know, sue him; it may also bar him from bidding
on future public contracts if he is a repeat offender.
820 ILCS 130/11a.
In 2005 the Illinois Landscape Contractors Bargaining
Association signed a collective bargaining agreement
with the Teamsters Union and the International Union
of Operating Engineers that specified a wage for plants-
men that was substantially below the wage in the
Laborers Union collective bargaining contract. The
Illinois Landscape Contractors Association—a different
organization from the Illinois Landscape Contractors
Bargaining Association but with an overlapping mem-
bership—asked the Department to recognize plants-
men as a subclassification of laborers, having their
own prevailing wage, which the association argued
was the wage specified in the Teamsters/Operating Engi-
neers collective bargaining agreement. (We shall
refer to that collective bargaining agreement as the
“Landscapers Contract” and the one signed by the Labor-
ers Union as the “Laborers Contract.”) The Depart-
ment refused and its refusal was upheld in Illinois Land-
scape Contractors Ass’n v. Department of Labor, 866
N.E.2d 592 (Ill. App. 2007). As a result of that decision, the
Department, without investigating the prevailing wage
for landscape laborers employed on public works in
the localities in which the plaintiffs operate, continues
basing the prevailing wage for plantsmen on the wage
in the Laborers Contract.
No. 11-1920 5
The plaintiffs refuse to pay that wage, and have been
sued by the Department in state court. Those suits have
been stayed, however, pursuant to 735 ILCS 5/2-619(a)(3),
which authorizes such a stay if there is another action
pending between the same parties that involves the
same claim. The other action is this suit, in which
the plaintiffs argue that by rubber-stamping the wage
rate in the Laborers Contract the Department has dele-
gated a governmental function to private entities—the
union, and the employers who have signed a col-
lective bargaining contract with the union. (The stay
makes the otherwise attractive option of the federal
courts’ abstaining in favor of the state court’s enforce-
ment action unavailable.) The plaintiffs contend that
the money that the Department is seeking from them in
its state court suits is their property (which it is), and
that a state that delegates the taking of private property
to a private entity violates the nondelegation doctrine
of constitutional law (which is sometimes true).
The doctrine as usually understood and applied, how-
ever, just forbids Congress to delegate federal legislative
powers, which are vested in Congress by Article I, sec-
tion 1 of the Constitution, to agencies without giving
them guidance on how the delegated powers should be
exercised. Whitman v. American Trucking Associations, Inc.,
531 U.S. 457, 472-76 (2001); Mistretta v. United States,
488 U.S. 361, 371-73 (1989); National Broadcasting Co. v.
United States, 319 U.S. 190, 215-16, 225-26 (1943) (Frank-
furter, J.); Lac Courte Oreilles Band of Lake Superior
Chippewa Indians of Wisconsin v. United States, 367 F.3d
650, 658-59 (7th Cir. 2004). (Why guidance should make
6 No. 11-1920
the delegation okay is unclear, especially since the guid-
ance is often vague or open-ended.) But nothing in the
Constitution prescribes the allocation of powers within
state governments, Whalen v. United States, 445 U.S. 684, 689
n. 4 (1980); Mayor of City of Philadelphia v. Educational
Equality League, 415 U.S. 605, 615 and n. 13 (1974); Chicago
Observer, Inc. v. City of Chicago, 929 F.2d 325, 328 (7th Cir.
1991); Straley v. Utah Board of Pardons, 582 F.3d 1208, 1215
(10th Cir. 2009); Consolidated Edison Co. of New York, Inc. v.
Pataki, 292 F.3d 338, 346 n. 4 (2d Cir. 2002)—not even
the clause guaranteeing to each state a republican form
of government, Art. IV, § 4. For to be a “republic,” a
state or nation need not parcel out powers among
different branches in any particular fashion, such as that
in the federal Constitution.
But an offshoot of the constitutional nondelega-
tion doctrine that is applicable to the states forbids them
to authorize private persons to deprive other private
persons of life, liberty, or property without due process of
law. The standard example is a law that empowers land-
owners to determine, by whim, how a neighbor may use
his own property. Washington ex rel. Seattle Title Trust Co. v.
Roberge, 278 U.S. 116, 121-22 (1928); Eubank v. City of
Richmond, 226 U.S. 137, 143-44 (1912); cf. Philly’s v. Byrne,
732 F.2d 87, 92 (7th Cir. 1984); Young v. City of Simi Valley,
216 F.3d 807, 817-18 (9th Cir. 2000).
But the present case is remote from that example. It
doesn’t involve a comparable threat to property rights,
given settled law that, contrary to older understandings,
authorizes a good deal of “delegated” encroachment on
No. 11-1920 7
property rights. See Philly’s v. Byrne, supra. A state can
prescribe a minimum wage, which is bound to be based
on private wage determinations, and it can require em-
ployers that have contracts with the state to pay their
employees a prevailing wage, Atkin v. Kansas, 191 U.S.
207, 222-23 (1903); Frank Bros., Inc. v. Wisconsin Dep’t of
Transportation, 409 F.3d 880, 889-90 and n. 9 (7th Cir.
2005), which is a minimum wage determined by refer-
ence to what private employers are paying. Parker v.
Brown, 317 U.S. 341 (1943), upheld against a variety of
constitutional challenges a state program for estab-
lishing minimum prices for raisins that was ad-
ministered by raisin producers. Minimum product prices
are analogous to minimum wages, which are minimum
prices for labor services. But in this case a state agency
merely has determined that plantsmen are comparable
to other laborers and so should receive the same
minimum wage. That is a routine type of determination
made en route to fixing a prevailing wage, and the plain-
tiffs have not shown that the decision in Illinois
Landscape Contractors Ass’n v. Department of Labor
that upheld the determination was unreasonable. They
would not be permitted even to try to show it, in this
case at any rate, because as members of the contractors
association, sharing the interest of the other members
in defeating the determination and represented by the
same lawyer who represented the association in
the landscape contractors case, they are bound by
that determination. See Stichting Ter Behartiging Van de
Belangen Van Oudaandeelhouders In Het Kapitaal Van
Saybolt International B.V. v. Schreiber, 327 F.3d 173, 184-86
8 No. 11-1920
(2d Cir. 2003); Tahoe-Sierra Preservation Council, Inc. v. Tahoe
Regional Planning Agency, 322 F.3d 1064, 1082 (9th Cir.
2003); Expert Electric, Inc. v. Levine, 554 F.2d 1227, 1233-34
(2d Cir. 1977); 18A Charles Alan Wright et al., Federal
Practice and Procedure § 4456, pp. 502-05 (2d ed. 2002).
Their objection, rather, is to the Department’s rubber-
stamping the wage in the Laborers Contract as the pre-
vailing wage for plantsmen. Maybe plantsmen on public
projects are actually paid a different wage, and that
different wage is the prevailing wage for such workers.
But before the Department’s determination of the
prevailing wage for landscape workers became final, any
party or parties affected by it, such as these plaintiffs,
could object to the determination within thirty days of
its posting and by doing so obtain both administrative
and judicial review. The plaintiffs did not object to the
determination. They argue that they couldn’t because
they weren’t “person[s] affected” by it, not yet having
bid on public landscape construction projects to which
the latest annual determination of the prevailing wage
(based on the wage rate in the Laborers Contract)
would apply. But they were affected prospectively. The
price they bid on such projects will be higher if they
have to pay that rate, and they will probably have to
post a larger surety bond as well. See 820 ILCS 130/4(c). So
they will be less likely to be the low bidders than if, as
signatories of the Landscapers Contract, they can pay
a lower wage to their plantsmen than their competitors
who employ general construction laborers whose wages
are prescribed in the Laborers Contract.
No. 11-1920 9
The plaintiffs argue that a challenge to the Department’s
determination would have been futile because most
landscape contractors would be afraid to buck the De-
partment, and if enough bowed to the new determination
the wage in the Laborers Contract would be the prevailing
wage. But that is wrong too, because if the plaintiffs’
challenge succeeded, either as a direct challenge or as an
affirmative defense in an enforcement action, the De-
partment would be required to recalculate the prevailing
wage. 735 ILCS 5/3-111(a)(5)-(6); Hayen v. County of
Ogle, supra, 463 N.E.2d at 126; see also 820 ILCS 130/9.
Given these administrative and judicial remedies, we
conclude that the Illinois legislature and the Illinois
Department of Labor haven’t delegated regulatory
power to private parties (namely the signatories of the
Laborers Union collective bargaining contract). But
before engraving this conclusion in stone we need to
address the lone case that might be thought to support
the plaintiffs’ position: General Electric Co. v. New York
State Dep’t of Labor, 936 F.2d 1448, 1457-59 (2d Cir. 1991).
Having paid a lower wage to electrical workers than a
wage deemed by the state department of labor to be the
prevailing wage (for public projects) that had been fixed
in collective bargaining agreements between a union and
an association of electrical contractors, GE challenged as
an unconstitutional delegation of governmental power to
private entities the law under which the department
had determined the prevailing wage. The court held
that the challenge had prima facie merit:
The two “adversary” parties [the union and the
contractors association] set a relatively low rate for
10 No. 11-1920
electrical work done in the private sector in order
(from the union’s perspective) to make employment
of union workers more attractive to employers, and
(from the employers’ perspective) to achieve lower
labor costs for private sector employers. A higher
wage rate for public work projects was agreed to in
order (from the union’s perspective) to make up
some of the wages lost on the private sector work,
and (from the employers’ perspective) to give the
unions higher wages without the employers in-
curring greater labor costs since the higher wages
would be passed on to the taxpayers.
If this is in fact what occurred—and we express no
view as to whether it did or did not—then neither
side was forced to curb its self-interest, and the rates
set in the agreement are potentially arbitrary
because they reflect not the wage rates of an ad-
versarial marketplace, but the wage rates in a setting
skewed by the bargaining parties’ knowing use of
their agreement to achieve selfish ends. . . .
Thus, the Department’s procedures seem not to
involve the exercise of any discretion in setting pre-
vailing wage and supplement rates. The state’s insis-
tence that it does not merely take whatever rates
the unions submit, but sets the prevailing rate at
that actually paid in the locality may well be the
case, but we must take as true for purposes of this
appeal GE’s allegations regarding the actual pro-
cedure followed by the state.
This disputed fact is material because both collective
bargaining agreements from which the rates were
No. 11-1920 11
drawn explicitly provide for two wage rates, and bar
application of the lower wage rate to public work
projects. If this two wage rate system was collusively
negotiated, and simply adopted pro forma by the
state (without exercising any discretion) as the re-
sulting wage rates, this would clearly establish an
unconstitutional delegation of authority under the
statute as applied.
Id. at 1457-59.
The court thus assimilated the case to ones we cited
earlier in which a state or local government authorizes
landowners to impair at will their neighbors’ property
rights. That is not the character of the action by the
Illinois Department of Labor. It merely decided what the
relevant category of workers on public landscaping
projects was (namely laborers) and hence what collective
bargaining agreement it should look to for determining
the prevailing wage rate for workers in that category.
The decision to look to the Laborers Contract rather than
to the Landscapers Contract to determine the prevailing
wage for plantsmen was reasonable. Even if they outnum-
ber other laborers on most public landscaping projects,
many of those projects are not subject to the Prevailing
Wage Act, as we learn from a chart published on the
Department’s website: “Prevailing Wage Act: Coverage
of Landscaping Activities,” www.state.il.us/agency/idol/
forms/pdfs/PWLandscapeRates.pdf (visited Jan. 16, 2012).
For aught that appears, construction workers do most
of the landscaping work on public projects that are sub-
ject to the Act, thus making their wage—the wage in
12 No. 11-1920
the Laborers Contract—the prevailing wage of landscape
laborers (plantsmen).
Illinois’s procedure is further distinguishable from
New York’s because of the 30-day deadline for chal-
lenging the Illinois department’s determination of the
prevailing wage. That deadline is proximate enough to
the initial wage determination to make the challenge
proceeding part of the wage-setting process rather than
process belatedly bestowed after an unconstitutional
delegation is complete.
A FFIRMED.
1-31-12