Federal Food Service, Inc. v. Donovan
| Decision Date | 20 March 1981 |
| Docket Number | No. 80-1019,80-1019 |
| Citation | 658 F.2d 830 |
| Parties | 24 Wage & Hour Cas. (BN 1255, 212 U.S.App.D.C. 82, 91 Lab.Cas. P 33,999, 28 Cont.Cas.Fed. (CCH) 81,232 FEDERAL FOOD SERVICE, INC., Harold E. Gelber, Appellants, v. The Honorable Raymond J. DONOVAN, Secretary of Labor, et al. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
Thomas C. Hill, Asst. U. S. Atty., Washington, D. C., with whom Charles F. C. Ruff, U. S. Atty., John A. Terry, Michael W. Farrell and Kenneth M. Raisler, Asst. U. S. Attys., Washington, D. C., were on the brief, for appellees.
Before TAMM and MIKVA, Circuit Judges, and PHILIP NICHOLS, Jr., * Judge, United States Court of Claims.
Opinion for the court filed by Judge NICHOLS.
The issue presented in this appeal is whether the district court erred in upholding the Secretary of Labor's decision that appellants were in violation of federal law by underpaying certain employees and that there were no "unusual circumstances" present that justified removal of appellants' names from the list of those ineligible to bid on government contracts. Although we agree that the Secretary's finding of the existence of violations is supported by a preponderance of the evidence, we disagree on his application of the "unusual circumstances" standard and therefore reverse.
This is an appeal from two orders of Judge Penn. On August 1, 1979, Federal Food Service and its president, Harold E. Gelber (appellants) brought this action for preliminary injunction and declaratory judgment against the Secretary of Labor and the Comptroller General (appellees). On December 11, 1979, Judge Penn denied appellants' Motion for Preliminary Injunction. On December 18, 1979, he sua sponte granted summary judgment for appellees. Appellants seek review of these two decisions.
Appellants are in the business of furnishing mess attendant services and this case involves contracts awarded to appellants to provide such services at various and widely scattered military installations from July 1, 1973, through June 30, 1975. These contracts were subject to the Service Contract Act of 1965 (Act), as amended, 41 U.S.C. §§ 351 et seq. Early in 1974, appellee conducted an investigation into the performance of appellants' contract at a facility in Charleston, South Carolina. As a result, appellants paid back wages of $418 to seven employees for hours worked but not recompensed. Additional investigations thereupon were launched into other contracts of appellants and additional violations of the Act were discovered. An administrative complaint was filed in November 1976 charging appellants with violations of the minimum wage and fringe benefit requirements of the Act. Appellants denied the charges and also asserted the presence of "unusual circumstances" if violations were found.
After formal hearings, the Administrative Law Judge (ALJ) filed his decision on November 22, 1977, and found that appellants had failed to pay proper amounts of holiday pay at five locations, had failed to pay vacation pay at three locations, and owed back pay at one location. Out of a total alleged deficiency of $8,095.10, the ALJ found appellants responsible for $3,128.33. These underpayments of employes violated the Act, and under § 354 violators are ineligible for award of government contracts for a 3-year period unless the Secretary of Labor recommends otherwise because of the presence of unusual circumstances. There is no provision for any milder sanction. It is the executioner's ax or nothing. The ALJ recommended against unusual circumstances because he found that appellants' past history reflected violations of the Act during several years, and that there were culpable violations which proper management would have precluded.
Appellants appealed to the Administrator of the Wage and Hour Division who affirmed the ALJ and who recommended to the Secretary that appellants be debarred from receiving government contracts under § 354. Appellants filed an application for relief from debarment pursuant to 29 C.F.R. § 612, but the Secretary concurred with the ALJ's decision, and appellants were debarred. The debarment is now in effect and in view of the nature of appellants' business, must have a catastrophic impact upon it.
Appellants thereupon filed their suit for a preliminary injunction and declaratory judgment. After determining that the Secretary's decision was not precluded from judicial review, the district court denied appellants' motions, holding that the Secretary's determination that appellants' names should not be removed from the list of ineligible bidders was not arbitrary nor an abuse of discretion. Appellants bring this appeal requesting a reversal of the district court. The appellees argue that a debarment determination by the Secretary is precluded from judicial review, but if the decision is reviewable, then it was not arbitrary or capricious and was otherwise in accordance with law.
The two issues before this court are whether judicial review is foreclosed, and if there is review, whether the Secretary's decision was arbitrary, capricious, not based on a preponderance of the evidence or otherwise not in accordance with law.
Appellees argue that this court cannot review the decision of the Secretary because it "is committed to agency discretion by law" and thus not subject to judicial review. See 5 U.S.C. § 701(a)(1), (2). We, however, agree with the district court that the Secretary's decision is reviewable. Whether judicial review is foreclosed requires an analysis of two factors, i. e., whether there is clear and convincing evidence of a legislative intent to restrict access to review, Abbott Laboratories v. Gardner, 387 U.S. 136, 141, 87 S.Ct. 1507, 1511, 18 L.Ed.2d 681 (1967), or whether the statutory authority is drawn in such broad terms that in the given case there is no law to apply. Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 410, 91 S.Ct. 814, 820, 28 L.Ed.2d 136 (1971).
In this case there is no indication that Congress sought to prohibit judicial review. Section 5 of the 1965 act provided for distribution by the Comptroller General of a list of Act violators, and no contract could be awarded to a person or firm on the list unless the Secretary otherwise recommended. The provision now under analysis, § 354, amended that section, and, according to the legislative history, this new provision "limits the Secretary's discretion to relieve violators of the Service Contract Act from the debarment provisions of Section 5(a) to cases where unusual circumstances exist." S.Rep.No.92-1131, 92d Cong., 2d Sess. 3-4 (1972), U.S.Code Cong. & Admin.News 1972, p. 3534, 3536. Although the amendment limited the Secretary's discretion by restricting its exercise to unusual cases, appellees' citation to the above quote does not present clear and convincing evidence of a legislative intent to restrict access to judicial review. To the contrary, Congress provided that in case of judicial review, the evidentiary standard should be preponderance of the evidence. 41 U.S.C. §§ 39, 353(a). This of course would not extend judicial review to cases where it would otherwise be unavailable, but it does reflect an intent by Congress to leave availability to general law and judicial precedents.
Also, the statute is not drawn in such broad terms that there is no law to apply in this case. The "no law to apply" exception is a very narrow one which the legislative history of the Administrative Procedures Act, 5 U.S.C. § 701 and ff indicates is to be applied only in rare instances. S.Rep.No.752, 79th Cong., 1st Sess. 26 (1945); See Berger, Administrative Arbitrariness and Judicial Review, 65 Colum.L.Rev. 55 (1963). The Secretary does not undertake to show that in case of a proven or admitted violation, the question whether or not to debar is confided to his mere whim. He himself has concluded that there is law to apply, and has stated what it is, as we shall presently quote. Our holding that judicial...
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