Lujan v. G & G Fire Sprinklers, Inc.

532 U.S. 189 (2001)

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Nature of the Case

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Facts

The California Labor Code authorizes the State to order the withholding of payments due a contractor on a public works project if a subcontractor on the project fails to comply with certain Code requirements. The Code permits the contractor, in turn, to withhold similar sums from the subcontractor. Ds are the California Division of Labor Standards Enforcement (DLSE), the California Department of Industrial Relations, and several state officials in their official capacities. P is a fire-protection company that installs fire sprinkler systems. P served as a subcontractor on several California public works projects. The California Labor Code requires that contractors and subcontractors on such projects pay their workers a prevailing wage that is determined by the State. If workers were not paid the prevailing wage, the contractor was required to pay each worker the difference between the prevailing wage and the wages paid, in addition to forfeiting a penalty to the State. The Labor Code provides that 'before making payments to the contractor of money due under a contract for public work, the awarding body shall withhold and retain therefrom all wages and penalties which have been forfeited pursuant to any stipulation in a contract for public work, and the terms of this chapter.' The Labor Code permits the contractor, or his assignee, to bring suit against the awarding body 'on the contract for alleged breach thereof in not making . . . payment' to recover the wages or penalties withheld. The suit must be brought within 90 days of completion of the contract and acceptance of the job. Such a suit 'is the exclusive remedy of the contractor or his or her assignees.' D determined that P, as a subcontractor on three public works projects, had violated the Labor Code by failing to pay the prevailing wage and failing to keep and/or furnish payroll records upon request. The awarding bodies withheld payment from the contractors, who in turn withheld payment from P. The total withheld, according to P, exceeded $135,000. P sued Ds in the District Court claiming that the issuance of withholding notices without a hearing constituted a deprivation of property without due process of law in violation of the Fourteenth Amendment. The District Court granted P's motion for summary judgment. The Court of Appeals for the Ninth Circuit affirmed concluding that P 'has a property interest in being paid in full for the construction work it has completed,' and P was deprived of that interest 'as a result of the state's action.' Because subcontractors were 'afforded neither a pre- nor post-deprivation hearing when payments [were] withheld,' the statutory scheme violated the Due Process Clause of the Fourteenth Amendment. D appealed and the Supreme Court granted certiorari.