Lynnville Transport, Inc. v. Chao

CourtUnited States District Courts. 8th Circuit. United States State District Court of Southern District of Iowa
Citation316 F.Supp.2d 790
Docket NumberNo. 4:02-CV-40646.,4:02-CV-40646.
PartiesLYNNVILLE TRANSPORT, INC., Plaintiff, v. Elaine L. CHAO, United States Secretary of Labor; and Tammy D. McCutchen, Administrator, Wage and Hours Division, United States Department of Labor, Defendants.
Decision Date15 April 2004

Michael J. Carroll, Babich, Goldman, Cashatt & Renzo PC, Des Moines, IA, for Plaintiff.

Gary L. Hayward, Asst U.S. Atty., Des Moines, IA, for Defendants.


GRITZNER, District Judge.

Plaintiff brought this action under the Administrative Procedure Act ("APA"), 5 U.S.C. §§ 701, et seq., for judicial review of agency action. The Court reviews the final decision of the United States Department of Labor pursuant to APA provisions. Attorney for Plaintiff is Michael J. Carroll; attorney for Defendant is Gary L. Hayward. The parties did not request oral argument, and the Court finds oral argument is not necessary on this matter; therefore, the Court considers the matter fully submitted and ready for ruling.


Plaintiff, Lynnville Transport, Inc. ("Lynnville" or "the Company"), was assessed civil penalties by the U.S. Department of Labor ("DOL", "the Government", or "the Agency") for violations of certain child labor statutes and regulations occurring between January 1996 and January 1998. These penalties included assessment of administrative fines. Lynnville requested that an administrative law judge review its objections to the civil money penalty assessment.

A hearing was held before Administrative Law Judge Donald W. Mosser ("ALJ") on September 10, 1999. On August 29, 2000, the ALJ issued a decision affirming the penalties assessed against Lynnville. Lynnville appealed the matter to the Administrative Review Board of the DOL ("ARB"), which affirmed the ALJ's decision and issued a Final Decision and Order dated November 27, 2002. Lynnville commenced the present action seeking review by this Court, on December 24, 2002. The Court established a briefing schedule on July 1, 2003, which has now been completed.

A. Facts

Lynnville, a closely held corporation located in Sully, Iowa, is a livestock hauling firm. It is owned and operated by Martin Vander Molen and his wife. In addition, two of their adult sons, Jeffrey and Michael Vander Molen, work on the premises. The company transports livestock throughout the United States. The livestock being hauled is largely owned by other individuals and companies. Lynnville's income from its hauling division was approximately $1,800,000 in 1996, and over $2,000,000 the subsequent two years (1997 and 1998). Its workforce consisted of 60 full- and part-time employees in 1996, and 68 employees in 1997.

The work that is the subject of this case involved the cleaning of the trailers used for hauling livestock. Between January 1996 and January 1998, this work was being performed in part by minor-aged children. The minor employees set their own work schedule and never worked at a time that interfered with their school or extracurricular activities. The parents of the children were aware of their children's schedules and the nature of the work they performed.

The minors occasionally used a New Holland LX 865 Skid Loader ("skid loader") to push manure into a pit and to pull a wagon to transport slats between the trucks and the washing shed. When used for this purpose, it was not necessary to, and the minors did not, raise the shovel of the skid loader from its lowest level.

In January 1998, Ronald Mease, an investigator for the Wage and Hour Division, conducted an investigation of Lynnville. During this investigation, the investigator found that Lynnville employed nine minors under the age of 18 to clean trailers. Of the nine minors, seven were under the age of 16, and three were 13 years old when they began working at Lynnville. At least five of the minors used the skid loader as part of their job duties, including two under age 14, and one additional child under age 16.

The investigator found that the seven employees under the age of 16 were illegally employed in an occupation involved in interstate transport. 29 C.F.R. § 570.33(f)(1).1 Upon reviewing Lynnville's records, the investigator further discovered the following illegal work hours: a minor under the age of 16 worked in excess of 40 hours in a week six times, including twice when he was a 13-year-old; a 13-year-old worked before 7:00 a.m. or after 7:00 p.m. on ten occasions, and worked in excess of eight hours daily while school was not in session, and in excess of 18 hours per week at least twice when school was in session; a 13-year-old worked in excess of eight hours a day twice while school was not in session, after 7:00 p.m. while school was in session on 20 occasions, and in excess of 18 hours per week twice during the school year; a 13-year-old worked after 7:00 p.m. on at least eight occasions while school was in session; a 14-year-old worked in excess of three hours per day and after 7:00 p.m. while school was in session on two occasions; and a 15-year-old worked in excess of 40 hours per week at least seven times when school was not in session, and more than 18 hours per week three times during the school year.

At the conclusion of his investigation, DOL Investigator Mease met with Company officials and discussed the violations he found. It was during this meeting that Plaintiff contends the investigator represented to them that if the Company would bring itself into compliance, no fines would be assessed, a claim contested by the investigator.2 The investigation ultimately resulted in the DOL finding several violations of the child labor laws, including the unlawful use of a skid loader by minor employees and other safety violations, failure to properly record some of the minors' birth dates, employment hours violations, and overtime pay violations. The investigator, using Form WH-266, determined an amount to be assessed as a civil penalty for the child labor violations and forwarded his findings to the Deputy Director of the Wage and Hour Division.

Donald Chleborad, the District Director of the U.S. DOL, Wage and Hour Division, reviewed the investigator's findings and sent the Company a Notice of Administrative Decision, dated April 7, 1998. This notice informed Lynnville that the investigation revealed the Company had employed nine minors in a manner violative of several child labor provisions of the Fair Labor Standards Act ("FLSA" or "the Act"), and further informed the Company that $21,125.00 in civil penalties was being assessed for the violations.3 The notice also indicated the administrative appeal procedures applicable in such cases.

B. The Administrative Proceedings

Following receipt of the April 7, 1998, notice letter, Plaintiff fully availed itself of the administrative appeal procedures. On April 9, 1998, Lynnville, through its president, Martin Vander Molen, sent a letter to District Director Chleborad taking exception to the imposition of penalties. This initiated formal adverse proceedings before the Agency.

After engaging in discovery, the parties participated in an evidentiary hearing in front of the assigned ALJ. Both parties presented testimony and evidence as part of the proceedings. In the hearing before the ALJ, Lynnville made the following arguments: (1) While the minor employees did operate the skid loader in the course of their employment, they did so infrequently, and the skid loader was not operated as a high-lift or hoist apparatus; (2) The minor employees set their own work schedule, they worked a times that did not interfere with school or extracurricular activities, and they worked with their parents' knowledge and consent; (3) There was no evidence the violations were intentional; (4) Lynnville was told and understood that no penalties would be imposed if the Company brought itself into compliance; (5) The statute does not require the imposition of penalties in such cases, but it was the Agency policy to do so, and penalties were inappropriate in this case because the violations were de minimus in nature and there was no evidence of willfulness in the violations; and (6) The assessment of penalties violates the purpose of the regulation, thereby depriving the Company of due process of law.

On August 29, 2000, the ALJ issued a Decision and Order generally affirming the Agency's interpretation of applicable regulations and the Agency's final penalty assessment of $17,125.00. The ALJ noted the facts concerning the child labor violations were essentially undisputed. The ALJ also recognized that while there was no evidence any of the minor employees used the skid loader in a hazardous manner, they were permitted to use the skid loader despite the potential hazard it presented, and this was sufficient to establish a violation under the regulations. The ALJ rejected the Company's contentions pertaining to the amount of the penalty imposed and concluded the penalty was reasonable when considering the totality of the circumstances. The ALJ also rejected Lynnville's claim that it had been told no penalty would be imposed, crediting the investigator's testimony on this point.

Lynnville sought review of the ALJ's decision from the ARB. The Company contended that the ALJ erroneously found a violation involving the use of the skid loader despite the fact it was never used for high-lifting or hoisting, that the ALJ improperly credited the investigator's testimony that Lynnville was not told there would be no penalties for the child labor violations, and that the imposition of the penalties was unlawful and unconstitutional because mitigating factors were not taken into consideration. The ARB issued a Final Decision and Order on November 27, 2002, affirming the ALJ's order. This decision and order constitutes the final agency action before the Court for judicial review in this case.


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