Roman v. Korson, 1:91-CV-274.

• Decision Date: 21 March 2000
• Docket Number: No. 1:91-CV-274.,1:91-CV-274.
• Citation: 89 F.Supp.2d 899
• Parties: Rogelio ROMAN, et al., Plaintiffs, v. Gerald KORSON, et al., Defendants.
• Court: U.S. District Court — Western District of Michigan

89 F.Supp.2d 899

Rogelio ROMAN, et al., Plaintiffs, v. Gerald KORSON, et al., Defendants.

No. 1:91-CV-274.

United States District Court, W.D. Michigan, Southern Division.

March 21, 2000.

COPYRIGHT MATERIAL OMITTED

Gary N. Gershon, Michigan Migrant Legal Assistance Project, Inc., Grand rapids, MI, Joseph V. Walker, Plunkett & Cooney, PC, Bloomfield Hills, MI, Fred Wagner, David M. Friedland, Stephen M. Arner, Beveridge & Diamond, PC, Washington, DC, Roger C. Rosenthal, Migrant Legal Action Program, Washington, DC, Lee Philip reno, Reno, Cavanaugh & Hornig, Washington, DC, for Rogelio Roman, Maria Roman, Ruben Roman, Robert Roman, Ramiro Roman, Jorge Luis Roman, David Peralez, Rosalinda Peralez, Ester Paredes, Raquel Roman, Maria Cruz, Asuncion Aparicio, Guadencio Aparicio, Jesus Mojica, Maria I. Espinoza, Ceferino Borja.

Ruth Ann Ernst, Asst. U.S. Atty., U.S. Attorney's Office, Western District of Michigan, Grand Rapids, MI, Anne L. Weismann, Eric Johnson Mahr, Rupa Bhattacharyya, U.S. Dept. of Justice, Civ. Div., Washington, DC, Richard G. Phillips, Jr., U.S. Dept. of Justice, Washington, DC, for Edward Madigan, Laverne Ausman, Calvin Lutz, Harry Brumer, Dept. of Agriculture, Farmers Home Admin.

OPINION

ENSLEN, Chief Judge.

This matter is before the Court on Plaintiffs' Renewed Motion for Post-Judgment Relief (Dkt. No. 441). The Motion requests that the Court modify its Judgment and Permanent Injunction. The Motion implicates two legal questions: first, whether the modification of an Injunction intended to prevent a policy of non-enforcement of mandatory regulations requires a showing that the Federal Defendants have continued their policy of non-enforcement; and second, if the Injunction is modified, what kind of modifications are appropriate.

A. Factual Background

This class action lawsuit was filed in 1991 to challenge the systematic failure of the Department of Agriculture and Farmer's Home Administration to enforce mandatory regulatory duties of the Section 514 loan program, authorized under 42 U.S.C. § 1484. (Farmer's Home Administration's was succeeded by Rural Housing Service and Rural Development. For ease of reference, the Federal agencies and their officers who are named as defendants have referred to themselves as the "Federal Defendants" to distinguish themselves from private defendants.¹) The program at issue was designed to provide loans to borrowers to build housing for domestic farm labor. The mandatory regulations describing the program require that borrowers submit budgetary information demonstrating "the need and justification" of proposed rental and utility charges, obtain approval of rental and utility charges, bill tenants consistent with the approved rates, notify tenants of approved changes to rent and utility charges, and, in the event of unauthorized rental charges, rollback and rebate or credit the affected tenants. 7 C.F.R. § 1930, Subpart C, Exhibit C.

By Opinion and Order of November 30, 1993, the Court granted class action certification under Federal Rule of Civil Procedure 23. It then certified the class as:

All agricultural workers in the United States who reside, have resided or will reside in FmHA § 514 housing projects operating without loan agreements who have been or will be charged unauthorized rent and/or utilities.

Roman v. Korson, 152 F.R.D. 101 (W.D.Mich.1993).

By Order and Opinion of July 25, 1995, the Court considered the Plaintiffs and Federal Defendants' cross-motions for summary judgment as to Counts 1 and 2 and held that: (1) the Department of Agriculture abdicated its regulatory responsibilities by failing to enforce labor housing regulations requiring borrowers to follow notice and comment procedures prior to increasing rents and to roll back and refund illegally charged rent, and (2) the Department of Agriculture acted arbitrarily and capriciously in enforcing labor housing regulations that allowed borrowers to be exempt from the loan agreement requirement and from the reporting requirement relating to charging of rent if borrowers stated that they would not charge rent. Roman v. Korson, 918 F.Supp. 1108 (W.D.Mich.1995). The Court then required further briefing as to the injunctive relief to be entered. Id.

After receiving multiple briefings from the parties, the Court entered its Judgment and Permanent Injunction against the Federal Defendants. The Court determined consistent with the decisions in Bresgal v. Brock, 843 F.2d 1163, 1171 (9th Cir.1987) and Global Van Lines v. Interstate Commerce Commission, 804 F.2d 1293, 1305 n. 95 (D.C.Cir.1986) that it was preferable to first allow the agency to correct its policy of non-enforcement before ordering specific remedies. Thus, the Court merely enjoined "Federal Defendants and their successors in office ... to CEASE in their failure to enforce the rollback and rebate or credit duty" and "to CEASE in their failure to enforce the notice and comment duty." (Judgment and Permanent Injunction of February 9, 1996, Dkt. No. 340.) The Court's Opinion of that date warned the Federal Defendants that the "Court does expect that the Federal Defendants will be vigilant in performing their regulatory duties. A failure to take enforcement action in the future may warrant reconsideration of this decision and additional remedies." (Feb. 9, 1996 Opinion, Dkt. No. 339, at 4 & n. 2.)

In late 1998, after obtaining Freedom of Information Act documents, Plaintiffs moved to amend the Judgment because of suspected non-enforcement by the Federal Defendants. The Court denied the motion without prejudice by Order of March 18, 1999, while permitting Plaintiffs to obtain discovery on the issue of the Federal Defendants' post-judgment enforcement. (March 18, 1999 Order, Dkt. No. 411.) After said discovery, Plaintiffs renewed their motion for post-judgment relief by filing of December 17, 1999. The Renewed Motion has now been fully briefed and argument upon it is unnecessary.²

According to the Federal Defendants, they have taken at least four programmatic steps to enforce the Judgment and Permanent Injunction.³ (Plaintiffs' Exhibit 3, Report of James Vollmer dated July 13, 1998.) According to James Vollmer, the Federal Defendants' "point-man" on Section 514 enforcement, these actions were:

1. Issued AN (Administrative Notice) on servicing on-farm labor housing accounts which imposed follow-up report; 2. Conducted an on-sight training session in Alabama; 3. Prepared summary report on status of follow-up actions to key National Office managers; and, 4. Prepared advice to Michigan state office staff in response to service a threat from an attorney....

(Id.)

James Vollmer summarized the results of the enforcement steps as follows:

1. The identified number of borrowers who violated Exhibit C of Section 1930-C in the past have all been sent servicing letters demanding they come into compliance with Agency instructions; 2. The follow-up servicing actions report a high percentage coming into compliance with Agency regulations; and 3. A limited number of rebates or credits actually collected ....

(Id.) Vollmer supported these conclusions based upon an attached summary report purporting to be enforcement statistics. (Id.)

Plaintiffs are rightly skeptical of the attached summary report and statistical analysis. There are omissions in the statistics which are apparent on the face of the summary sheet. (Id.; i.e., incomplete data for Vermont.) It does not appear that the Federal Defendants in compiling these statistics have studiously checked the summary against the individual records of borrowers. (See Christine M. Wassmann Declaration.) Some field offices in key states also may not have followed AN policy in determining the extent of violations. (See Plaintiffs' Memorandum in Support of Plaintiffs' Renewed Motion for Post-Judgment Relief at 25-28.)⁴ However, it is difficult, if not impossible, to determine from the available records the extent to which the statistics are misleading. Plaintiffs' estimates of the violation statistics, not unlike Defendants' estimates, are self-serving and contain mistakes and miscalculations. (See Defendants' Opposition at 16 n. 4.) Overall, the Court does not believe that Plaintiffs' statistics are more reliable than the figures prepared by the Federal Defendants. In fact, the Federal Defendants have a distinct advantage in reporting the statistics since they have a better knowledge of the underlying data.

Of course, the most significant defect in the enforcement statistics is that they only relate to the period between the issuance of the AN on August 7, 1996 and its expiration on July 31, 1997. After the expiration of the AN, field office employees stopped compiling summary records and the National Office stopped assessing the extent of compliance. (Affidavit of O. Baker, Jr. — Dkt. No. 406; Defendants' Exhibit 7.) The AN was later re-issued on April 14, 1999 and is set to expire on March 31, 2000. (Plaintiffs' Exhibit 7.) According to the Federal Defendants, the expiration of the AN does not affect the Agency's policy, which remains the same regardless of whether the AN has expired. (Defendants' Exhibit 7.) However, the expiration of the AN did halt periodic reporting of enforcement (id.), which has the effect of eliminating oversight concerning Section 514 housing. Although it is impossible to speculate about the data after reporting stopped, there is no reason to suppose that enforcement improved in the absence of agency oversight.

While a lack of oversight is not laudable, the terms of the AN in question deserve praise. The Administrative Notice provides in pertinent part:

Field office employees are to ensure that owners on-farm LH financed under Section 514 are not charging for rent, utilities, refundable damage deposit charges, or cleaning fees to residents, unless the rent, charges and fees are approved by authorized officials in accordance with Exhibit C to RD Instruction 1930-C....