Ready-Mixed Concrete Suppliers

An O’Melveny team secured a preliminary injunction barring the State of California from enforcing the recent expansion of its prevailing wage law against a client group of ready-mixed concrete suppliers and other similarly situated companies. On October 18, 2016, US District Judge R. Gary Klausner ruled that O’Melveny’s clients had “at a minimum, raised serious questions” that California’s Assembly Bill 219 of 2015 (AB 219) was not rationally related to a legitimate governmental purpose and therefore violated the Equal Protection Clause of the Fourteenth Amendment.

California’s prevailing wage law generally requires contractors working on construction projects funded by the State to pay particular rates of wages to their workers and to comply with a variety of burdensome procedural requirements. AB 219 extended the prevailing wage law to drivers who haul and deliver ready-mixed concrete to those construction projects. O’Melveny’s clients—Allied Concrete and Supply Co., CalPortland Company, Gary Bale Redi-Mix Concrete, Inc., Holliday Rock Co., Inc., National Ready Mixed Concrete Co., Robertson’s Ready Mix, Ltd., Spragues’ Rock and Sand Company, and Superior Ready Mix Concrete L.P., all suppliers of ready-mixed concrete—challenged the constitutionality of AB 219, arguing that the law irrationally targeted ready-mixed concrete suppliers for application of the burdensome requirements of the prevailing wage law, while exempting similarly situated suppliers of other construction materials (in particular, asphalt). Prior to AB 219, the Department of Industrial Relations had specifically determined that suppliers of all construction materials, including ready-mixed concrete, were exempt from the prevailing wage law.

The State argued that singling out ready-mixed concrete suppliers was justified because of purported distinctions between ready-mixed concrete and other construction materials, and because the legislature was acting incrementally, intending to further expand the prevailing wage law to other material suppliers in the future. Despite the extremely deferential rational basis standard of review, the court rejected the State’s efforts to justify the law, in part because the legislative history revealed that the Legislature limited AB 219 to ready-mixed concrete suppliers to assure the bill’s opponents that the prevailing wage law would not later be expanded to other material suppliers. Moreover, the Legislature asserted that the purpose of the statute was to “close a loophole” in the material supplier exemption to the prevailing wage law, but the court recognized that the supposed “loophole” applied equally to all material suppliers.