Pan American World Airways, Inc. v. Marshall

CourtUnited States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
Citation439 F. Supp. 487
Docket NumberNo. 77 Civ. 4416.,77 Civ. 4416.
PartiesPAN AMERICAN WORLD AIRWAYS, INC., Plaintiff, v. F. Ray MARSHALL, U.S. Secretary of Labor, and Weldon Rougeau, Director of Office of Contract Compliance Programs, an agency of the United States Department of Labor, and William Gladden, Director of Civil Rights, Federal Aviation Administration, an agency of the United States Department of Transportation, and Donald Williams, Director of Contract Compliance Programs, Eastern Region, Federal Aviation Administration, an Agency of the United States Department of Transportation, Defendants.
Decision Date06 October 1977

McCulloch & Denis, New York City, for plaintiff.

Robert B. Fiske, Jr., U.S. Atty., S.D.N.Y., New York City, for defendants; Dennison Young, Jr., Kent T. Stauffer, Asst. U.S. Attys., New York City, of counsel.

BRODERICK, District Judge.

Plaintiff, a contractor1 with the United States Government, seeks preliminarily to enjoin the Secretary of Labor and the other defendants, all administrative officials of the government, from taking any action, prior to hearings on plaintiff's alleged non-compliance with Presidential Executive Order No. 11246 and regulations thereunder, which will prevent the plaintiff from continuing to be eligible as a contractor with the federal government.2

For the reasons set forth below, I grant plaintiff's application for preliminary injunction to the extent set forth at the end of this decision.

Executive Order 11246 ("the Order") is a presidential directive first promulgated in 1965, and amended from time to time thereafter. The Order prohibits federal contractors from discriminating in employment on the basis of sex, race, color, religion, or national origin.3 It also requires that contractors take affirmative action on behalf of certain groups. Adherence to the requirements of the Order is, by the terms of the Order, required of government contractors. Regulations promulgated by the Secretary of Labor intended to implement the Order appear at 41 C.F.R. Chapter 60 (1976), as revised (1977).

Plaintiff Pan American World Airlines Inc. ("Pan American") is a New York corporation which maintains commercial air routes throughout the world. It performs under various commercial and defense contracts for the government and is, therefore, subject to the provisions of the Order.

Defendant F. Ray Marshall is the Secretary of Labor ("the Secretary") charged with responsibility for the administration of the Order. Defendant Weldon Rougeau is the director of the Office of Federal Contract Compliance Programs ("OFCCP"), which is an agency of the Department of Labor responsible for the implementation of the Order. The Federal Aviation Administration ("FAA") has been designated by OFCCP to implement the Order and the rules and regulations issued thereunder with respect to entities within its regulatory ken; it is the agency responsible for determining whether or not Pan American is in compliance with the Order. Defendant William Gladden is Director of Civil Rights in FAA, and defendant Donald Williams is Director of Contract Compliance Program for the Eastern Region in FAA.

For some years prior to the commencement of this action, Pan American has performed services pursuant to contracts with various agencies of the government. Included among these was a contract with the National Aeronautic and Space Administration ("NASA") for the operation and maintenance of missile tracking systems at Cape Canaveral in Florida ("the Cape Canaveral contract"), and one with the Military Air Command of the Department of Defense for the transport of military troops and equipment to and from overseas ("the MAC contract"). Both of these contracts by their terms were to expire on September 30, 1977.

Pan American was the low bidder on successor Cape Canaveral and MAC contracts, and was designated as the successful contractor by each of the agencies concerned, subject to the necessary internal government approvals. The new Cape Canaveral contract by its terms would run for three years from October 1, 1977, and would entail a gross revenue to the contractor of $229,000,000; the MAC contract by its terms would run for a period of one year from October 1, 1977 and would entail a gross revenue to the contractor of $29,000,000.

As of the time this action was brought, these contracts had not been signed by the government agencies involved because the requisite internal government approvals had not been forthcoming.

FAA initiated a compliance review of Pan American's facility at John F. Kennedy Airport in Jamaica, New York, in October, 1976, pursuant to 41 C.F.R. § 60-1.20. During the next several months, Pan American and FAA discussed asserted deficiencies in Pan American's Affirmative Action Programs ("AAP") for 1976 and 1977. Several problems which had been raised by FAA were satisfactorily resolved.

However, FAA determined that Pan American's mandatory maternity leave policy4 violates 41 C.F.R. Part 60-205 in that it imposes a penalty for childbearing. As a result, Pan American was found to be "non-responsible" under 41 C.F.R. § 60-2.2(b)6 and so subject to "passover" on two government contracts.

Meetings and correspondence on the issue of Pan American's maternity leave policy continued through the spring and summer of 1977. Pan American contended that there was a substantial issue of law or fact as to whether its maternity leave policy violates 41 C.F.R. Part 60-20 and FAA and OFCCP maintained that there was no substantial issue on this point.7

Pan American was named as the contractor on various government contracts after the finding of "nonresponsibility" was made, but was "passed over" with respect to the Cape Canaveral and MAC contracts.

On September 7, 1977, Pan American filed the complaint in this action and applied for a temporary restraining order and preliminary and permanent injunction seeking to prohibit the government from predicating a denial of future government contracts to Pan American upon its alleged discrimination in violation of the Order until there has been final agency action after notice and hearing.

On September 19, 1977, attorneys for the government advised me that the Department of Labor had permitted the Air Force to enter into the Cape Canaveral contract with Pan American, under the authority given to the Secretary in 42 U.S.C. § 2000e-17. Thus to the extent that the request for a preliminary injunction has been predicated upon "passover" with respect to the Cape Canaveral contract, it has been mooted. The government attorneys further advised me that the Air Force has unilaterally extended the expiring MAC contract with Pan American for 90 days. The government contends that this extension completely moots the plaintiff's application: the plaintiff presses its application.

A. Jurisdiction.

The initial determination is one of jurisdiction. Plaintiff brings this action pursuant to the Administrative Procedure Act, 5 U.S.C. § 701, et seq., the Declaratory Judgment Act, 28 U.S.C. §§ 2201 and 2202, and Executive Order 11246, and asserts the jurisdiction of this court under 28 U.S.C. §§ 2151, 1331, 1343(4), 1346(a)(2), 1355, and 1361. Since I find that there is jurisdiction under 28 U.S.C. § 1331(a), I shall not discuss the other bases for jurisdiction claimed by plaintiff.

Jurisdiction under § 1331(a) lies in an action against a federal agency or any officer thereof acting in his official capacity whenever the matter in controversy "arises under the Constitution, or laws . . . of the United States."

In Stevens v. Carey, 483 F.2d 188, 190 (7th Cir. 1973), the Court of Appeals reasoned that Executive Orders to which § 1331(a) jurisdiction properly pertains are those which "were issued pursuant to statutory authority providing for presidential implementation and thereby have the force and effect of law." The Order has been held to fit that mold:

This particular executive order 11246 and its direct antecedents have consistently been held to be based on statutory authority resting with the President to provide for procurement, utilization, and management of government property.
Contractors Ass'n of Eastern Pennsylvania v. Secretary of Labor, 442 F.2d 159, 166-171 (3d Cir.), cert. denied, 404 U.S. 854, 92 S.Ct. 98, 30 L.Ed.2d 95 (1971); Farkas v. Texas Instrument, Inc., 375 F.2d 629, 632 n.1 (5th Cir.), cert. denied, 389 U.S. 977, 88 S.Ct. 480, 19 L.Ed.2d 471 (1967)7. There is no question that Executive Order 11246 also has firm foundations in the fifth and fourteenth amendments to the Constitution and the several congressional enactments, including the comprehensive provisions of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et seq., intended to provide equal employment opportunities.
7 Thus, in issuing Executive Order 11246 on September 24, 1965, President Johnson declared in a preface to the order that the order was issued "under and by virtue of the authority vested in me as President of the United States by the Constitution and statutes of the United States." Exec. Order No. 11,246, 3 C.F.R. 169, 170 (1974).

Legal Aid Society of Alameda County v. Brennan, 381 F.Supp. 125, 130 (N.D.Cal. 1974).

This action is brought against federal agency officials with respect to acts done in their official capacity in purporting to enforce the Order. I find that the matter in controversy arises under the laws of the United States within the meaning of § 1331(a).

B. Standards for Issuance of Preliminary Injunction

Sonesta Int'l. Hotels Corp. v. Wellington Associates, 483 F.2d 247, 250 (2d Cir. 1973), spells out the standards for issuance of a preliminary injunction in the Second Circuit:

A preliminary injunction should issue only upon a clear showing of either (1) probable success on the merits and possible irreparable injury, or (2) sufficiently serious questions going to the merits to make them a fair ground for litigation and a balance of

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