Publix Super Markets, Inc. v. Tenn. Dep't of Labor & Workforce Dev.

• Decision Date: 05 March 2013
• Docket Number: No. M2012–00089–COA–R3–CV.,M2012–00089–COA–R3–CV.
• Citation: 402 S.W.3d 218
• Parties: PUBLIX SUPER MARKETS, INC. v. TENNESSEE DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT, LABOR STANDARDS DIVISION.
• Court: Tennessee Court of Appeals

402 S.W.3d 218

PUBLIX SUPER MARKETS, INC.

v.TENNESSEE DEPARTMENT OF LABOR AND WORKFORCE DEVELOPMENT, LABOR STANDARDS DIVISION.

No. M2012–00089–COA–R3–CV.

Court of Appeals of Tennessee.

Aug. 24, 2012 Session.

Nov. 16, 2012.

Application for Permission to Appeal Denied by Supreme Court March 5, 2013.

William S. Rutchow and Wendy V. Miller, Nashville, Tennessee, for the appellant, Publix Super Markets, Inc.

Robert E. Cooper, Jr., Attorney General and Reporter; William E. Young, Solicitor General; Alex Rieger and Lindsey O. Appiah, Assistant Attorney Generals, for the appellee, Tennessee Department of Labor and Workforce Development, Labor Standards Division.

OPINION

FRANK G. CLEMENT, JR., J., delivered the opinion of the Court, in which RICHARD H. DINKINS, J., joined. ANDY D. BENNETT, J., filed a separate concurring opinion.

FRANK G. CLEMENT, JR., J.

This is an administrative appeal in which an employer challenges the decision of the Tennessee Department of Labor & Workforce Development finding the employer in violation of the Tennessee Child Labor Act for failing to furnish, within one hour of demand, personnel files of each of its minor employees. The trial court affirmed the decision of the Department and this appeal followed. Tennessee Code Annotated § 50–5–111(1) & (4) require employers to “make, keep and preserve a separate and independent file record for each minor employed, which shall be kept at the location of the minor's employment” and to “furnish” the records relative to the minor employees. On appeal, the employer contends it maintained the records on site as required, thus it did not violate subsection (1) of the statute. The employer also asserts that it has a Fourth Amendment right to object to a warrantless search by the Department and it may not be penalized for asserting its constitutional right. We have determined the Department's decision to assess penalties for violating subsection (1) of Tennessee Code Annotated § 50–5–111 is not supported by substantial and material evidence and the inference drawn by the Department that the records were not maintained on site based upon the fact that they were not produced within one hour of demand is insufficient. Therefore, the assessments for allegedly failing to maintain personnel records of minor employees on site is reversed. As for the requirement under subsection (4) of Tennessee Code Annotated § 50–5–111 that employers of minor employees furnish and allow inspection of the separate and independent file records for each minor employed upon request by the Department, the Act expressly provides that if the Department is denied permission to make an inspection, Tennessee Code Annotated § 50–4–101 provides that the Department employee or official may obtain an administrative inspection warrant in accordance with the procedures outlined in the statute; the Department did not seek to obtain a warrant in this case. As for refusing the Department's request to inspect the records without an administrative warrant, in order for a warrantless search or inspection to be constitutionally permissible under the Fourth Amendment, the Department must establish that the employer was part of a pervasively regulated industry or that the employer had weakened or reduced privacy expectations that are significantly overshadowed by the Department's interests in regulating the employer's industry. We have determined the Department failed to establish either; accordingly, the Department cannot assess a penalty against an employer for asserting its constitutional rights under the Fourth Amendment. Thus, the penalty assessed for allegedly violating subsection (4) of the statute is reversed. Pursuant to the foregoing, we remand with instructions for the trial court to order the Department to vacate the citations and penalties against the employer.

On April 28, 2008, an Inspector with the Tennessee Department of Labor & Workforce Development (the “Department”) performed a random, unannounced inspection of a Publix grocery located in Chattanooga, Tennessee. During the inspection, the Inspector requested access to the minor employees' employment files and time cards. The Publix assistant manager responded to the Inspector stating that the records were on site, however, it was Publix's policy for the Department to contact Publix's Human Resources Manager in advance to make an appointment to review the records. The Inspector demanded that the records be provided within one hour or a citation would issue. The assistant manager stated that the records would not be provided until Publix's Human Resources Manager was contacted. The Inspector then issued an inspection report citing Publix for one violation of the Child Labor Act for each minor who was employed at the store.

The following day, on April 29, Publix furnished to the Department all of the statutorily required minor employees' personnel records.

The Department sent a formal notice of violations to Publix on May 29, 2008, in which it cited Publix with fourteen violations, one for each minor employee, of the Tennessee Child Labor Act, Tennessee Code Annotated § 50–5–101, et seq. Specifically, the Department cited Publix for violating subsections 50–5–111(1)(A)–(B), –111(4). A total fine of $14,000 was assessed against Publix, $1,000 for each violation, which was the maximum penalty that could be assessed.

Publix requested an informal conference to review the citations and fine. The conference occurred on July 23, 2008. On July 29, 2008, the Commissioner's Designee affirmed the $14,000 assessment. Thereafter, Publix requested a contested case hearing, which occurred on October 19 and December 19, 2010. Following the hearing, the Commissioner's Designee issued an opinion affirming each of the fourteen violations, but reducing the penalty from $14,000 to $4,200. The Commissioner's Designee stated that at minimum Publix was in violation of the statute because the Inspector was never able to verify that Publix kept the minor employees' personnel records at the employment location, which is a requirement of the Child Labor Act. The Designee noted that the Child Labor Act itself was silent on the time period to produce such records for inspection, however, it was the practice of the Department to require the immediate production of such records when requested by an inspector. Nevertheless, the Designee reduced the fine from $14,000 to $4,200 because there was insufficient evidence to support the maximum penalty of $1,000 for each violation, but noted Publix was a sophisticated business with “several prior experiences” in child labor law inspections.¹

On February 15, 2011, Publix filed a Petition for Judicial Review in the Davidson County Chancery Court under the Uniform Administrative Procedures Act contending the Department's decision violated constitutional and statutory provisions, exceeded the agency's statutory authority, was made upon “unlawful procedure,” and was arbitrary, capricious, or an abuse of discretion. Following a hearing, the trial court affirmed the Department's decision in its entirety including the penalty assessment. The order incorporated by reference a transcript of the court's ruling from the bench.

Publix filed this appeal to challenge the trial court's decision to affirm the Department, arguing that the Department's decision is unsupported by evidence in the record, violates its Fourth Amendment rights under the United States Constitution, is based upon an invalid and unlawful “policy” that was adopted in contravention of the Uniform Administrative Procedures Act, and was arbitrary and capricious.

Standard of Review

Judicial review of decisions of administrative agencies, when those agencies are acting within their area of specialized knowledge, experience, and expertise, is governed by the narrow standard contained in Tennessee Code Annotated § 4–5–322(h) rather than the broad standard of review used in other civil appeals. Willamette Indus., Inc. v. Tenn. Assessment Appeals Comm'n, 11 S.W.3d 142, 147 (Tenn.Ct.App.1999) (citing Wayne Cnty. v. Tenn. Solid Waste Disposal Control Bd., 756 S.W.2d 274, 279–80 (Tenn.Ct.App.1988)).

The trial court may reverse or modify the decision of the agency if the petitioner's rights have been prejudiced because the administrative findings, inferences, conclusions or decisions are:

(1) In violation of constitutional or statutory provisions;

(2) In excess of the statutory authority of the agency;

(3) Made upon unlawful procedure;

(4) Arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted exercise of discretion; or

(5)(A) Unsupported by evidence which is both substantial and material in the light of the entire record.

Tenn.Code Ann. § 4–5–322(h)(1)–(5)(A). However, the trial court may not substitute its judgment concerning the weight of the evidence for that of the Board as to questions of fact. Tenn.Code Ann. § 4–5–322(h)(5)(B); see also Jones v. Bureau of TennCare, 94 S.W.3d 495, 501 (Tenn.Ct.App.2002). The same limitations apply to the appellate court. See Humana of Tenn. v. Tenn. Health Facilities Comm'n, 551 S.W.2d 664, 668 (Tenn.1977) (holding the trial court, and this court, must review these matters pursuant to the narrower statutory criteria). Thus, when reviewing a trial court's review of an administrative agency's decision, this court is to determine “whether or not the trial court properly applied the ... standard of review” found at Tennessee Code Annotated § 4–5–322(h). Jones, 94 S.W.3d at 501 (quoting Papachristou v. Univ. of Tenn., 29 S.W.3d 487, 490 (Tenn.Ct.App.2000)).

Analysis

Tennessee Child Labor Act, Tennessee Code Annotated § 50–5–101, et seq.

The Department is required by statute to administer and enforce the provisions of the Child Labor Act. SeeTenn.Code Ann. § 50–5–110 (“The department shall administer and enforce this part.”). In furtherance of this mandate, the Department is to, inter alia, provide...