Board of Governors of University of North Carolina v. U.S. Dept. of Labor, 89-3359

• Decision Date: 26 October 1990
• Docket Number: No. 89-3359,89-3359
• Citation: 917 F.2d 812
• Parties: 135 L.R.R.M. (BNA) 2760, 54 Fair Empl.Prac.Cas. 136, 55 Empl. Prac. Dec. P 40,370, 59 USLW 2312, 63 Ed. Law Rep. 738, 36 Cont.Cas.Fed. (CCH) 75,959, 1 A.D. Cases 1704 BOARD OF GOVERNORS OF the UNIVERSITY OF NORTH CAROLINA; University of North Carolina, at Asheville; The North Carolina School of the Arts, Plaintiffs-Appellees, v. UNITED STATES DEPARTMENT OF LABOR; Elizabeth H. Dole, Secretary of Labor; United States of America, Defendants-Appellants, Women's Legal Defense Fund; American Association of University Women; Equal Rights Advocates; Mexican-American Legal Defense and Education Fund; Mexican-American Women's National Association; National Association of Commissions for Women; National Council of La Raza; National Council of Negro Women, Incorporated; National Institute for Women of Color; National Organization for Women; Now Legal Defense and Education Fund; National Women's Law Center; National Women's Political Caucus; NC Equity; Northwest Women's Law Center; Organization of Pan Asian American Women, Incorporated; Wider Opportunities for Women; Women and Employment, Incorporated; Women Employed; Women's Law Project; YWCA of the USA; Equal Employment Advisory Council, Amici Curiae.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 812

917 F.2d 812

135 L.R.R.M. (BNA) 2760, 54 Fair Empl.Prac.Cas. 136,

55 Empl. Prac. Dec. P 40,370, 59 USLW 2312,

63 Ed. Law Rep. 738,

36 Cont.Cas.Fed. (CCH) 75,959, 1 A.D. Cases 1704

BOARD OF GOVERNORS OF the UNIVERSITY OF NORTH CAROLINA;

University of North Carolina, at Asheville; The

North Carolina School of the Arts, Plaintiffs-Appellees, v. UNITED STATES DEPARTMENT OF LABOR; Elizabeth H. Dole,

Secretary of Labor; United States of America,

Defendants-Appellants,

Women's Legal Defense Fund; American Association of

University Women; Equal Rights Advocates; Mexican-American

Legal Defense and Education Fund; Mexican-American Women's

National Association; National Association of Commissions

for Women; National Council of La Raza; National Council

of Negro Women, Incorporated; National Institute for Women

of Color; National Organization for Women; Now Legal

Defense and Education Fund; National Women's Law Center;

National Women's Political Caucus; NC Equity; Northwest

Women's Law Center; Organization of Pan Asian American

Women, Incorporated; Wider Opportunities for Women; Women

and Employment, Incorporated; Women Employed; Women's Law

Project; YWCA of the USA; Equal Employment Advisory

Council, Amici Curiae.

No. 89-3359.

United States Court of Appeals, Fourth Circuit.

Argued June 6, 1990.

Decided Oct. 26, 1990.

Irving Gornstein, U.S. Dept. of Justice, argued, James P. Turner, Acting Asst. Atty. Gen., David K. Flynn, U.S. Dept. of Justice, Robert P. Davis, Sol., James D. Henry, Associate Sol., Joseph M. Woodward, Deputy Associate Sol., Diane A. Heim, Counsel for Litigation, U.S. Dept. of Labor, on briefs, Washington, D.C., for defendants-appellants.

Thomas J. Ziko, Sp. Deputy Atty. Gen., N.C. Dept. of Justice, Raleigh, N.C., argued, Lacy H. Thornburg, Atty. Gen., Edwin M. Speas, Jr., Sr. Deputy Atty. Gen., N.C. Dept. of Justice, Raleigh, N.C., on briefs, for plaintiffs-appellees.

Gregg H. Levy, T. Jeremy Gunn, Covington & Burling, Washington, D.C.; Claudia Withers, Donna Lenhoff, Women's Legal Defense Fund, Washington, D.C., for amici curiae The Women's Legal Defense Fund, American Ass'n of University Women, Equal Rights Advocates, Mexican-American Legal Defense and Educ. Fund, Mexican-American Women's Nat. Ass'n, Nat. Ass'n of Commissions for Women, Nat. Council of La Raza, Nat. Council of Negro Women, Inc., Nat. Institute for Women of Color, Nat. Organization for Women, NOW Legal Defense and Educ. Fund, Nat. Women's Law Center, Nat. Women's Political Caucus, NC Equity, Northwest Women's Law Center, Organization of Pan Asian American Women, Inc., Wider Opportunities for Women, Women and Employment, Inc., Women Employed, Women's Law Project, and YWCA of the U.S.

Robert E. Williams, Douglas S. McDowell, Salvador T. Perkins, McGuiness & Williams, Washington, D.C., for amicus curiae Equal Employment Advisory Council.

Before WIDENER and CHAPMAN, Circuit Judges, and BUTZNER, Senior Circuit Judge.

CHAPMAN, Circuit Judge:

On this appeal, we must decide whether the Acting Secretary of Labor erred in ruling that, for the purposes of the federal contract compliance laws, the University of North Carolina system constitutes a single, unified state agency, of which the University's campuses are merely sub-agencies. This question is pertinent because it will determine whether, because of their affiliation with the University, the campuses that have not entered contracts with the federal government must, nonetheless, submit to the compliance reviews conducted by the Office of Federal Contract Compliance Programs. We hold that, because of the peculiarities of the statutory scheme creating the University of North Carolina, for the purposes of the federal contract compliance laws, the University is, indeed, a single state agency and, because of their connection with that agency, the non-contracting campuses must submit to compliance reviews, regardless of whether they are direct participants in any federal contract. We therefore reverse the judgment of the district court.

I.

The laws of North Carolina provide that the Board of Governors of the University of North Carolina (UNC) "shall be known and distinguished by the name of 'the University of North Carolina.' " N.C.Gen.Stat. Sec. 116-3. UNC is constituted as a "body politic and corporate," id., and is composed of 16 "constituent institutions" or campuses. Id. Sec. 116-4. UNC's Board of Governors is "responsible for the general determination, control, supervision, management and governance of all affairs of the constituent institutions." Id. Sec. 116-11. In executing these statutorily imposed duties, the Board maintains substantial control over many of the activities of the campuses: it determines each campus' academic mission and enrollment level; it sets the tuition for each campus; it prepares one budget for the entire university system; and it appoints each campus' senior administrative staff and tenured faculty. Id. The Board also selects the President of UNC, the University's "chief administrative officer." Id. Sec. 116-14.

A separate chancellor and board of trustees govern each of the individual UNC campuses. The board of trustees of each campus exercises those powers that the Board of Governors has delegated to it. Id. Sec. 116-33. Each chancellor enjoys executive authority over the affairs of his campus and may act "subject to the direction of the President." Id. Sec. 116-34. The statutes creating UNC contemplate very broad delegations of authority to the boards of trustees and the chancellors of the different campuses. The Board of Governors may delegate "any part of its authority over the affairs of any [constituent] institution to the board of trustees or, through the President, to the chancellor." Id. Sec. 16-11(13). However, the Board of Governors retains ultimate control over the affairs of the campuses since any delegation of authority "may be rescinded by the Board at any time in whole or in part." Id.

The President of UNC has established procedures that campuses must follow when applying for federal contracts. For contracts that fall into five specified categories, a bidding campus must secure the President's approval before submitting a proposal. ¹ For all other contracts, the procedures provide that a campus may bid without the President's prior approval, but the campus must send a copy of its contract proposal to the President who may, at any time, withdraw, revise, or amend it. Under these contract procedures, eleven of UNC's sixteen campuses have entered contracts with the federal government. The North Carolina School of the Arts (NCSA) and the University of North Carolina-Asheville (UNC-A) are two of the campuses that have not.

Section 503 of the Rehabilitation Act of 1973, 29 U.S.C. Sec. 793, ² section 402 of the Vietnam Era Veterans Readjustment Assistance Act, 38 U.S.C. Sec. 2012, ³ and section 202 of Executive Order 11246 ⁴ impose certain nondiscrimination and affirmative action obligations on parties to federal contracts. The two pieces of legislation impose these obligations on "part[ies] contracting with the United States," while the injunction in the executive order is directed at "the contractor." The Office of Federal Contract Compliance Programs (OFCCP) in the Department of Labor is charged with conducting periodic reviews of entities that have contracted with the government to ensure that the contractors have complied with their non-discrimination and affirmative action obligations. 41 C.F.R. Secs. 60-1.20, 60-250.25, 60-741.25. In 1981, UNC-A and NCSA refused to submit to one of these compliance reviews, taking the position that, since they had entered no federal contracts, the statutes and the executive order imposed no affirmative action obligations on them and the OFCCP was therefore without authority to require them to submit to a review. Seeking to compel the campuses to submit to a compliance review, the OFCCP filed an administrative complaint against them.

The administrative proceeding culminated when the Acting Secretary of Labor ruled that the "University of North Carolina is, by definition, one agency, not sixteen separate independent agencies." The Acting Secretary reasoned that, when a UNC campus is awarded a contract, UNC is properly viewed as the contractor: "[t]he constituent institutions are capable of entering into contracts only as agents of UNC because, under state law, only UNC, and not the constituent institutions, is a corporate body with the power to contract." Once UNC becomes the contractor, the Acting Secretary ruled, all of the constituent campuses are obligated to submit to compliance reviews. Although UNC has delegated contracting authority to its campuses, the Acting Secretary reasoned that such delegation does not transform the campuses into independent agencies: they continue to contract as agents of UNC. The Acting Secretary ordered the two non-contracting campuses to submit to review, stating that their refusal to do so would result in the cancellation of all of UNC's federal contracts.

UNC sought review of the Acting Secretary's ruling in the U.S. District Court for the Eastern District of North Carolina. The court held that only those UNC campuses that had entered federal contracts were subject to OFCCP's review authority. In reaching this decision, the court relied heavily on Department of Labor regulations implementing the statutes and the executive order. ⁵ Those regulations define the term "government contract" as an agreement "between any contracting agency and any person" for supplies, services, or property. See, e.g., 41 C.F.R. Sec. 60-1.3. For the purposes of this definition, the regulations define "person" to include "any natural person, corporation, partnership, unincorporated association, State or local government, and any agency, instrumentality, or subdivision of such a government." Id. The court held that the plaintiff UNC campuses were not contractors in their own...