Independent Training and Apprenticeship Program, a California corporation; Brandin Moyer; Harold E. Nutter, Inc., a California corporation, Plaintiffs-Appellants,
California Department of Industrial Relations, an agency of the State of California; Christine Baker, in her official capacity as Acting Director of the California Department of Industrial Relations; Division of Apprenticeship Standards; Glen Forman, in his official capacity as Acting Chief, Division of Labor Standards Enforcement; Julie Su, in her official capacity as Labor Commissioner, Defendants-Appellees.
Argued and Submitted December 3, 2012—San Francisco, California
Appeal from the United States District Court for the Eastern District of California Garland E. Burrell, Senior District Judge, Presiding D.C. No. 2:11-cv-01047-GEB-DAD
Charles L. Post (argued), Zachary Smith, and Brendan J. Begley, Weintraub Genshlea Chediak Tobin & Tobin, Sacramento, California, for Plaintiffs-Appellants.
Fred Lonsdale (argued), Counsel; Katherine Zalewski, Chief Counsel; Steven McGinty, Assistant Chief Counsel; Gary O'Mara, Counsel, Department of Industrial Relations, State of California, Oakland, California, for Defendants-Appellees.
M. Patricia Smith, Solicitor of Labor; Steven J. Mandel, Deputy Solicitor for National Operations; Edward D. Sieger, Senior Attorney, United States Department of Labor, Washington, D.C.; Stuart F. Delery, Principal Deputy Assistant Attorney General; Michael Jay Singer and Abby C. Wright, Appellate Staff, United States Department of Justice, Civil Division, Washington, D.C., for the Acting Secretary of Labor, as amicus curiae.
Before: Michael Daly Hawkins, A. Wallace Tashima, and Mary H. Murguia, Circuit Judges.
The panel affirmed the district court's judgment in favor of the defendants in a suit seeking declaratory and injunctive relief on the ground that the California Department of Industrial Relations' actions were inconsistent with federal Fitzgerald Act regulations governing the employment of apprentices on public works projects qualifying as "Federal purposes."
The CDIR threatened to impose fines on two contractors that used apprentices enrolled in an apprenticeship program that was registered with the United States Department of Labor as an approved program for "Federal purposes" but that was not recognized by California as a state-approved apprenticeship program.
The panel held that, regardless of whether the Fitzgerald Act confers a private right of action, there was subject matter jurisdiction because the plaintiffs sought injunctive relief from state regulation on the ground that it was preempted by a federal statute.
The panel declined to afford controlling deference to the Secretary of Labor's new interpretation, in an amicus brief, of the meaning of "Federal purposes" under 29 C.F.R. § 29.2 because that interpretation was inconsistent with a prior interpretation, and there was a significant potential for unfair surprise. The panel nevertheless adopted the Secretary's new interpretation as the most persuasive construction of the regulation and held that a project qualifies as a "Federal purpose" under § 29.2 when conformity with federal apprenticeship standards is a condition of eligibility for federal assistance. The panel held that the CDIR's actions were not in contravention of the federal apprenticeship regulations because the construction projects at issue did not qualify as "Federal purposes." Accordingly, the plaintiffs' preemption claim failed.
The panel also affirmed the district court's judgment on claims under the dormant Commerce Clause and the Due Process and Equal Protection Clauses of the Fourteenth Amendment.
Judge Murguia concurred in the opinion. She wrote separately to highlight that allowing the Department of Labor to retroactively withdraw a conclusive interpretation of its own ambiguous regulation exposed the parties to the same risk of unfair surprise as would deferring to the agency's new interpretation.
TASHIMA, Circuit Judge
Pursuant to the National Apprenticeship Act of 1937 (also known as the "Fitzgerald Act"), federal regulations govern the employment of apprentices on public works projects qualifying as "Federal purposes, " a term that is defined under the regulations. Plaintiff Independent Training and
Apprenticeship Program ("I-TAP") is registered with the Department of Labor ("DOL") as an approved apprenticeship program for such Federal purposes. I-TAP is not, however, recognized by California as a state-approved apprenticeship program. Consequently, I-TAP enrollees may not be employed as bona fide apprentices on public works projects in California that do not fall within the scope of Federal purposes. In 2010, the California Department of Industrial Relations ("CDIR") sent letters to two contractors asserting that they were not in compliance with California law and threatening to impose fines because the contractors were using I-TAP enrollees on public works projects that the CDIR asserted were not for Federal purposes. Plaintiffs filed suit seeking declaratory and injunctive relief, principally on the ground that the CDIR's actions were inconsistent with the federal regulations and hence preempted. The district court denied Plaintiffs' motion for injunctive relief.
On appeal, we are called upon to determine the meaning of "Federal purposes" under 29 C.F.R. § 29.2. Because this is a question of first impression, following oral argument, we invited the Secretary of Labor (the "Secretary") to express her views as to the appropriate understanding of the term in the context of this case. In her amicus brief, the Secretary informed us that the DOL recently had withdrawn its two previous opinion letters that had interpreted the term, and she advanced a new interpretation that does not encompass the public works projects at issue here. For the reasons set forth below, we decline to afford controlling deference to the DOL's new interpretation under Auer v. Robbins, 519 U.S. 452 (1997), but we nevertheless adopt that interpretation as the most persuasive construction of the regulation at issue. Accordingly, we affirm.
The Fitzgerald Act does not delineate substantive standards for the regulation of apprenticeship programs. Rather, it authorizes and directs the Secretary:
to formulate and promote the furtherance of labor standards necessary to safeguard the welfare of apprentices, to extend the application of such standards by encouraging the inclusion thereof in contracts of apprenticeship, to bring together employers and labor for the formulation of programs of apprenticeship, to cooperate with State agencies engaged in the formulation and promotion of standards of apprenticeship, and to cooperate with the Secretary of Education in accordance with section 17 of Title 20.
29 U.S.C. § 50.
The DOL promulgated implementing regulations for the Fitzgerald Act in 1977. See 42 Fed. Reg. 10138 (Feb. 18, 1977) (to be codified at 29 C.F.R. pt. 29). These regulations prescribe the policies and procedures for the registration of apprenticeship programs for "certain Federal purposes." 29 C.F.R. § 29.1(b). In turn, "Federal purposes" is defined as:
any Federal contract, grant, agreement or arrangement dealing with apprenticeship; and any Federal financial or other assistance, benefit, privilege, contribution, allowance, exemption, ...