The case of Arthur S. Lujan, Labor Commissioner of California, et al. v. G & G Fire Sprinklers, Inc., 2000 revolved around the issue of whether a state agency could withhold payment from a contractor without providing an opportunity for a hearing before doing so. The dispute began when the State of California withheld payments to G & G Fire Sprinklers Inc., alleging that they had not properly installed fire sprinkler systems in public buildings as per their contract agreement and thus violated state labor laws by underpaying workers on these projects. In response, the company sued claiming that this action was unconstitutional because it deprived them of property without due process. However, the Supreme Court ruled in favor of Lujan and against G&G Fire Sprinklers Inc., stating that there was no violation since contractors have no entitlement to funds held by the state until all contractual obligations are met satisfactorily - including compliance with wage requirements stipulated by law; hence there is no deprivation or taking away property rights unconstitutionally.

In the dissenting opinion for Lujan v. G & G Fire Sprinklers, Inc., Justice Scalia argued that the majority's decision was a misinterpretation of California law and an overreach of federal authority. He contended that under state law, contractors were entitled to withhold payment only when work was incomplete or defective - not simply because they had been fined by a regulatory agency. Furthermore, he asserted that it should be up to California courts to interpret their own laws unless there is clear evidence of constitutional violation. In this case, he saw no such violation; rather than being deprived of property without due process as claimed by G & G Fire Sprinklers Inc., they were merely subject to standard contractual obligations and penalties for non-compliance with regulations.