PPG Industries, Inc. v. U.S., 94-5043

• Decision Date: 21 April 1995
• Docket Number: No. 94-5043,94-5043
• Citation: 52 F.3d 363
• Parties: PPG INDUSTRIES, INC., Appellee v. UNITED STATES of America, et al., Appellants.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 363

52 F.3d 363

311 U.S.App.D.C. 214

PPG INDUSTRIES, INC., Appellee v. UNITED STATES of America, et al., Appellants.

No. 94-5043.

United States Court of Appeals District of Columbia Circuit.

Argued March 20, 1995.

Decided April 21, 1995.

Appeal from the United States District Court for the District of Columbia (89cv0757).

Fred E. Haynes, Asst. U.S. Atty., Washington, DC, argued the cause for appellants. With him on the briefs were Eric H. Holder, Jr., U.S. Atty., John D. Bates and R. Craig Lawrence, Asst. U.S. Attys., and James D. Henry, Associate Sol., U.S. Dept. of Labor.

Susan S. Sauntry, Washington, DC, argued the cause and filed the brief for appellee.

Before: SILBERMAN, BUCKLEY, and GINSBURG, Circuit Judges.

SILBERMAN, Circuit Judge:

The Department of Labor appeals from the district court's summary judgment order which declined to remand this case to the Department. We reverse.

I.

In May 1986 the Department of Labor's Office of Federal Contract Compliance Programs (OFCCP) filed an administrative complaint charging PPG Industries with violating Sec. 503 of the Rehabilitation Act, 29 U.S.C. Sec. 793 (1988), by failing to hire James Thompson, an epileptic, as a production laborer at its automobile glass manufacturing plant in Tipton, Pennsylvania. At the time Thompson applied for work, Sec. 503 required that, "in employing persons to carry out" federal contracts in excess of $2,500 or more, contractors and subcontractors "take affirmative action to employ and advance in employment qualified handicapped individuals." 29 U.S.C. Sec. 793(a). ^* The Department enforced Sec. 503 through implementing regulations, 41 C.F.R. Part 60-741, including a regulatory presumption that subjected a federal contractor's entire operations to Sec. 503 requirements unless the contractor sought and received a waiver for any of its operations found to be "in all respects separate and distinct from activities ... related to the performance of the contract or subcontract." 41 C.F.R. Sec. 60-741.3(a)(5) (1994).

In proceedings before an Administrative Law Judge on Thompson's claim, OFCCP relied on the waiver regulation in asserting jurisdiction over PPG's Tipton plant. Although OFCCP had also sought limited discovery as to whether any federal contract work was performed at Tipton, none of this evidence, apart from a plant manager's testimony regarding Tipton's products, was introduced before the ALJ. PPG challenged the agency's jurisdiction by arguing, inter alia, that the regulation was overbroad and invalid under the statute. Under PPG's theory, OFCCP could not establish a Sec. 503 violation absent a showing that work on the federal contract was actually done at the Tipton plant and that Thompson would have been employed to "carry out" such work.

The ALJ rejected PPG's jurisdictional arguments, and determined that OFCCP properly relied on the waiver regulation in proceeding against PPG. Based on medical testimony that Thompson had been seizure-free for at least two years before applying for work, the ALJ then concluded that Thompson was a qualified handicapped individual who was unlawfully excluded from the production laborer position because of his disability, and awarded him retroactive seniority and back pay.

The Deputy Assistant Secretary for Employment Standards upheld the ALJ's finding that PPG violated Sec. 503 and its implementing regulations in a Final Decision of January 9, 1989. The Deputy Assistant Secretary also rebuffed PPG's argument concerning the waiver regulation, noting that it had been rejected in a prior agency adjudication, OFCCP v. Western Elec. Co., 80-OFCCP-29 (April 24, 1985). He remanded the proceeding to the ALJ so that the back pay calculations could be brought up to date, and ordered that Thompson be awarded retroactive seniority within sixty days upon penalty of contract cancellation and debarment.

PPG sought review of the Department's decision in district court under the APA, requesting, inter alia, a declaration that the waiver regulation upon which OFCCP relied in asserting jurisdiction was invalid. While the parties' cross-motions for summary judgment were pending, PPG advised the court of the decision of a district judge in another case, Washington Metro. Area Transit Auth. v. DeArment, 55 Empl. Prac. Dec. p 40,507, 1991 WL 185167 (D.D.C. Jan. 3, 1991) (WMATA), holding that the waiver regulation impermissibly extended the original statute's coverage beyond those employees hired to "carry out" the federal contract. Id. at 65,560. Some months later--apparently after determining that it would not appeal the WMATA decision--the Department of Labor filed a motion for remand in the PPG case, to allow OFCCP the opportunity to establish proof, following WMATA, that Thompson would have worked on a covered federal contract or subcontract at Tipton.

The district court denied the motion for remand and granted PPG's motion for summary judgment on the jurisdictional issue. Relying on the reasoning in WMATA, the court concluded that the Department lacked jurisdiction over PPG in the Thompson case and enjoined the agency from enforcing its Final Decision. The court declared that remand would be "inappropriate," "counterproductive," and "unfair to PPG," as "the evidence indicates that OFCCP did try to develop the issue of jurisdiction" in the agency proceeding. The Department of Labor appealed.

II.

The sole issue raised by the Department on appeal is whether the district court erred in denying the Department's motion for remand after concluding that the Department's decision rested on an incorrect legal standard. When a final agency action is challenged under the APA in district court, if the relevant substantive statute does not provide for direct review in the court of appeals, the district court does not perform its normal role. Instead, it "sits as an appellate tribunal, not as a court authorized to determine in a trial-type proceeding whether the [agency's decision] was factually flawed." Marshall County Health Care Auth. v. Shalala, 988 F.2d 1221, 1225 (D.C.Cir.1993). For the district court in this case, just as for us, "[t]he entire case on review is a question of law, and only a question of law." Id. at 1226.

Under settled principles of administrative law, when a court reviewing agency action determines that an agency made an error of law, the court's inquiry is at an end: the case must be remanded to the agency for further action consistent with the corrected legal standards. SEC v. Chenery Corp., 318 U.S. 80, 94-95, 63 S.Ct. 454, 462-63, 87 L.Ed. 626 (1943); see South Prairie Constr. Co. v. Int'l Union of Operating Eng'rs, 425 U.S. 800, 806, 96 S.Ct. 1842, 1845, 48 L.Ed.2d 382 (1976); Federal Power Comm'n v. Idaho Power Co., 344 U.S. 17, 20, 73 S.Ct. 85, 86-87, 97 L.Ed. 15 (195...