Facts
- California required contractors and subcontractors on public works to pay a state-determined prevailing wage and authorized forfeiture and withholding of wages and penalties for underpayment.
- The statutory scheme allowed public entities to withhold amounts from prime contractors, who could withhold corresponding sums from subcontractors.
- The scheme also permitted a contractor (or assignee) to sue the public entity in state court for breach of contract to recover amounts wrongfully withheld.
- California labor officials determined that G & G Fire Sprinklers, Inc., a subcontractor on multiple public works projects, violated prevailing-wage requirements.
- Labor officials issued notices directing public entities to withhold funds from the prime contractors, and the primes withheld payment from G & G.
- G & G sued state officials under 42 U.S.C. § 1983, alleging that withholding contract payments without an administrative hearing deprived it of property without due process under the Fourteenth Amendment.
- The district court and Ninth Circuit ruled for G & G, concluding the scheme was unconstitutional because it provided no hearing within the statutory process.
Issues
- Whether directing the withholding of contract payments for alleged prevailing-wage violations without a specific administrative hearing violates the Fourteenth Amendment’s Due Process Clause when ordinary state-court contract remedies are available.
Decision
- The Supreme Court unanimously reversed the Ninth Circuit in an opinion by Chief Justice Rehnquist.
- Assuming arguendo that G & G had a protected property interest in the withheld sums, the Court held that due process was satisfied.
- The Court concluded that G & G’s interest was a disputed claim for payment under a contract, not a present entitlement to possess property or pursue an occupation.
- Because California provided access to ordinary judicial process—specifically, a breach-of-contract action to recover wrongfully withheld sums—no additional administrative hearing was constitutionally required.
- The injunction against enforcing the challenged provisions against G & G was vacated.
Legal Principles
- A disputed claim to payment under a contract with the State is an interest that can be fully protected through ordinary civil litigation.
- When a State makes ordinary judicial process available to resolve a contractual dispute over withheld funds, that judicial process satisfies due process.
- Due process does not require that the “hearing” be provided within an administrative scheme, nor that it occur before withholding, where conventional post-withholding judicial remedies adequately protect the asserted contractual entitlement.
Conclusion
The Court held that California’s prevailing-wage withholding mechanism did not violate due process because the subcontractor could contest the withholding and seek recovery through an ordinary state-court breach-of-contract action, which provided constitutionally sufficient process for this type of contractual payment dispute.