State of New York
Supreme Court, Appellate Division
Third Judicial Department
Decided and Entered: January 29, 2015 518507
________________________________
In the Matter of CDE ELECTRIC,
INC.,
Appellant,
v MEMORANDUM AND ORDER
PETER M. RIVERA, as Commissioner
of Labor, et al.,
Respondents.
________________________________
Calendar Date: November 14, 2014
Before: Lahtinen, J.P., McCarthy, Egan Jr. and Devine, JJ.
__________
Couch White, LLP, Albany (Jennifer K. Harvey of counsel),
for appellant.
Eric T. Schneiderman, Attorney General, Albany (Allyson B.
Levine of counsel), for respondents.
__________
Devine, J.
Appeal from a judgment of the Supreme Court (Breslin, J.),
entered April 30, 2013 in Albany County, which dismissed
petitioner's application, in a proceeding pursuant to CPLR
article 78, to review a determination of respondent Commissioner
of Labor denying petitioner's application to sponsor an
electrician apprenticeship program.
Petitioner was initially incorporated in 2010 under the
name Capital District Electric, Inc. and later changed its name
to CDE Electric, Inc. Petitioner is owned by its president and
vice-president, Gregory Guerin and Timothy Jones, respectively,
who were long-time employees of Phoenix Electricians Company Inc.
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Petitioner's initial incorporation took place the day after
Phoenix Electricians agreed in a stipulation that it would be
debarred, in accordance with Labor Law § 220-b (3) (b), due to
its willful underpayment of prevailing wages and supplements to
its workers on 20 different public work projects. The
stipulation was entered into with the Bureau of Public Work, a
division of respondent Department of Labor (hereinafter DOL) that
is separate from the Office of Apprenticeship Training – the DOL
division involved in the actions currently challenged in this
proceeding.
With respect to the latter division, Daniel Paris, a DOL
Apprentice Training Representative, initially met with the owner
and sole shareholder of Phoenix Electricians, Robert Phoenix, one
month prior to the settlement of the public work violation
proceeding. In the course of a routine audit of Phoenix
Electricians' apprenticeship training program, Phoenix indicated
that he had unspecified public work violations and that he would
soon be retiring, but that Guerin would be forming a new company.
Guerin separately informed Paris that he was a long-time employee
of Phoenix Electricians, that he and a coworker were purchasing
the assets of that company, and that they wished to set up an
apprenticeship program. Thereafter, Paris met with Guerin, as
well as Phoenix and his wife, to assist them in preparing
petitioner's application for sponsorship of a new apprenticeship
program. Paris asserts that neither Phoenix and his wife nor
Guerin informed him that Phoenix Electricians' apprenticeship
program was being deregistered – and that petitioner was formed –
as a result of the debarment of Phoenix Electricians, or that the
public work violations were related to Phoenix's retirement.
In 2011, petitioner filed an application to register its
apprenticeship training program, in which Guerin attested that no
affiliate, predecessor company or entity, director or officer of
petitioner had been the subject of, within the last five years,
"[a]ny pending or open investigation of a possible violation of
New York or other state law or regulation including . . .
investigations by the Bureau of Public Work[, or] [a]ny
determination of a violation of any [s]tate law or regulation,
including [a] [p]ublic [w]ork violation[, or] [a]ny stipulations
involving any state . . . enforcement action." Inasmuch as the
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application avoided any mention of Phoenix or Phoenix
Electricians by name, Paris sought further information in
writing, seeking to confirm what Guerin had previously informed
him verbally – i.e., that Phoenix Electricians was "not part of
[petitioner] in any way" and that "the only connection between
Phoenix [Electricians] and [petitioner] is that [petitioner]
bought some of [its] assets." In response, Guerin informed Paris
that the only affiliation between the two companies was that
petitioner purchased some of Phoenix Electricians' assets and now
employed its employees.
Upon DOL's solicitation of public comments regarding
petitioner's application in accordance with 12 NYCRR 601.4 (g), a
commenter affiliated with an electrical workers' union stated
that Phoenix Electricians had been debarred, Phoenix was employed
by petitioner, and that Guerin had been both vice-president and
secretary of Phoenix Electricians, as well as overseeing and
signing payroll documents on several of the projects covered by
the stipulation resolving the public work violations. In
response, Guerin denied that he had managed the payroll, but
acknowledged to Paris for the first time that he had been an
officer of Phoenix Electricians and that he had signed certified
payroll documents when Phoenix was unavailable. Guerin also
admitted that Phoenix was now a part-time employee of petitioner.
DOL ultimately denied petitioner's application to sponsor
an electrician apprenticeship program on the ground that
petitioner had provided "inaccurate and/or incomplete
information" in its application with respect to both its
affiliation with Phoenix Electricians and Guerin's role in that
company. Respondent Commissioner of Labor affirmed, prompting
this proceeding, which Supreme Court dismissed. Petitioner
appeals, and we affirm.
Petitioner argues that Supreme Court erred in holding that
the denial of its application was rationally based upon its
failure to disclose the relationship between petitioner and
Phoenix Electricians – that is, the extent of the involvement of
petitioner's president, Guerin, in the activities of Phoenix
Electricians – and the debarment of the latter company. As
petitioner acknowledges, the standard of review for this
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proceeding, which challenges a determination that was not made
after a quasi-judicial hearing, is whether the Commissioner's
determination was arbitrary and capricious or an abuse of
discretion (see CPLR 7803 [3]; Matter of Beck-Nichols v Bianco,
20 NY3d 540, 559 [2013]; Matter of Pell v Board of Educ. of Union
Free School Dist. No. 1 of Towns of Scarsdale & Mamaroneck,
Westchester County, 34 NY2d 222, 231 [1974]). "An action is
arbitrary and capricious when it is taken without sound basis in
reason or regard to the facts" (Matter of Peckham v Calogero, 12
NY3d 424, 431 [2009]; see Matter of Pell v Board of Educ. of
Union Free School Dist. No. 1 of Towns of Scarsdale & Mamaroneck,
Westchester County, 34 NY2d at 231). When a determination is
supported by a rational basis, it must be sustained even if the
reviewing court would have reached a different result (see Matter
of Peckham v Calogero, 12 NY3d at 431).
In our view, the Commissioner's determination has both a
foundation in fact and a sound basis in reason. The governing
regulation states, as relevant here, that "[a]pplications shall
be rejected if information required on the Sponsor Information
Sheet, or required disclosures related thereto, is found to be
inaccurate or incomplete" (12 NYCRR 601.4 [c] [2]). In its
written submissions in connection with its application,
petitioner provided general information that – while technically
true – was misleading and incomplete insofar as the application
did not identify the extent of petitioner's affiliation with
Phoenix Electricians or provide any indication that petitioner's
formation arose due to the public work enforcement action. For
example, Guerin submitted a letter explaining that he had "worked
for an electrical contractor" for 29 years, and had formed
petitioner and "begun purchasing the assets and equipment of our
former employer as he will be retiring in the next few months."
Guerin did not name Phoenix Electricians or Phoenix as his former
employer, specify that he was the former vice- president of
Phoenix Electricians or clarify that Phoenix, rather than
retiring, would be employed by petitioner after Phoenix
Electricians was debarred due to its willful underpayment of
prevailing wages. Even after Paris expressly requested
information regarding whether petitioner had any connection with
Phoenix Electricians beyond purchasing some of its assets, Guerin
responded only that petitioner hired Phoenix Electricians'
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employees and that "[w]e have no affiliation with Phoenix
Electricians."
In addition, the sponsor information sheet submitted as
part of the application required petitioner to disclose whether
any "affiliate, any predecessor company or entity," director or
officer of petitioner had been the subject of, within the last
five years, any investigation of a possible violation of, or
determination of a violation of any state law or regulation,
including a public work violation, or stipulations involving any
enforcement action. These questions – which Guerin answered in
the negative – belie petitioner's argument that information about
the debarment of its affiliates or predecessors was not
requested. The sponsor information sheet specifically requested
information regarding whether an affiliate or predecessor company
had been investigated for any public work violation or had been
the subject of a stipulation involving any state enforcement
action.
Similarly, there is no merit to petitioner's assertion that
the determination that it provided incomplete information must be
deemed irrational because Guerin had informed Paris prior to
filing an application that he was a former employee of Phoenix
Electricians and a separate division of DOL entered into a
stipulation with that company resolving its prevailing wage
violations. Regardless of the information available to other
divisions of DOL or that had been provided prior to petitioner's
application, it was only after a member of the public revealed
the extent of petitioner's association with Phoenix Electricians
that Guerin acknowledged in connection with the application
process that petitioner was formed due to the debarment of
Phoenix Electricians and that Guerin was not merely an employee
but an officer of that company, who had signed payroll checks.
Even at that point, Guerin minimized the association between the
two companies, failing to mention that he was a principal of both
companies, that petitioner was formed the day after Phoenix
Electricians was debarred and that petitioner would employ
Phoenix. In any event, petitioner was not relieved of its
obligation to provide accurate and complete information on its
application by virtue of the fact that a different division of
DOL had knowledge of the debarment and a single employee of the
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Office of Apprenticeship Training knew that Guerin was a prior
employee of Phoenix Electricians.
Nor can it be said that the Commissioner's determination
was contrary to the stipulation entered into between DOL and
Phoenix Electricians, as petitioner contends. The stipulation
released all officers of Phoenix Electricians from financial
liability for underpayment of prevailing wages; it does not,
however, contain any language that would preclude DOL from
considering Guerin's involvement in the activities of Phoenix
Electricians for purposes of approving an application for a new
apprenticeship training program. While the stipulation further
indicated that DOL would not hold accountable any future newly-
formed entity that employed Phoenix for prior violations or
assert that the future employer was a "successor" within the
meaning of Labor Law § 220 (5) (k) – provided that Phoenix did
not own any shares or serve as a principal in the newly-formed
entity – the denial of petitioner's application does not amount
to a conclusion that petitioner is a "successor" under the
prevailing wage statute. Rather, the Commissioner determined
that Phoenix Electricians was a predecessor company to petitioner
"for purposes of the questions on the Sponsor's Information
Sheet," which is governed by the separate regulations found in 12
NYCRR part 601. Inasmuch as "courts must defer to an
administrative agency's rational interpretation of its own
regulations in its area of expertise" (Matter of Peckham v
Calogero, 12 NY3d at 431), it cannot be said that the stipulation
conflicts with the Commissioner's determination that Phoenix
Electricians was a predecessor company for purposes of the
apprenticeship training program.
Under these circumstances, the Commissioner did not act
arbitrarily and capriciously in concluding that petitioner did
not provide all information sought by DOL. As the Commissioner
noted, even if the information in petitioner's application was
technically accurate, it was misleading and, therefore,
"incomplete" within the meaning of 12 NYCRR 601.4 (c) (2).
Accordingly, Supreme Court properly dismissed the petition.
Petitioner's remaining arguments have been considered and found
to be lacking in merit.
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Lahtinen, J.P., McCarthy and Egan Jr., JJ., concur.
ORDERED that the judgment is affirmed, without costs.
ENTER:
Robert D. Mayberger
Clerk of the Court