State of NY v. US Postal Service
| Decision Date | 01 August 1988 |
| Docket Number | No. 86 Civ. 2853 (JMC).,86 Civ. 2853 (JMC). |
| Citation | 690 F. Supp. 1346 |
| Parties | The STATE OF NEW YORK, Cesar A. Perales, as Commissioner of the New York State Department of Social Services, New York State Commission for the Blind and Visually Handicapped, Gary Serrapica, Chester Smalley and Murray Dimon, Plaintiffs, v. UNITED STATES POSTAL SERVICE and Albert Casey, Postmaster General of the United States, Defendants. |
| Court | U.S. District Court — Southern District of New York |
Robert Abrams, Atty. Gen., Judith Kaufman, Asst. Atty. Gen., New York City, for State plaintiffs.
Leslie Salzman, New York Lawyers for the Public Interest, New York City, for individual plaintiffs Serrapica, Smalley and Dimon.
Rudolph W. Giuliani, U.S. Atty., S.D. N.Y., Paula T. Dow, Asst. U.S. Atty., New York City, J. Fred Eggleston, Asst. Gen. Counsel, Chris Klepac, Atty., Legislative Div., U.S. Postal Service, Washington, D.C., for defendants.
Defendants' motion for judgment on the pleadings is denied. Fed.R.Civ.P. 12(c). The action is stayed pending exhaustion of applicable administrative remedies.
This action for declaratory and injunctive relief has been brought by The State of New York, Cesar Perales, in his capacity as Commissioner of the New York State Department of Social Services, the New York State Commission for the Blind and Visually Handicapped "CBVH", and Gary Serrapica, Chester Smalley and Murray Dimon, individual blind vendors, to challenge certain policies and practices of defendants United States Postal Service the "Postal Service" and the Postmaster General of the United States. The complaint alleges widespread and systemic violations of the Randolph-Sheppard Act, 20 U.S.C. §§ 107-107e the "Act" and violations of the Rehabilitation Act of 1973, 29 U.S.C. § 794.
The complaint states two claims for relief. In their first claim, plaintiffs allege that defendants are violating the Act by (1) failing to establish vending facilities for blind vendors wherever feasible on Postal Service properties; (2) failing to grant blind vendors priority in operating vending facilities on these properties; and (3) improperly denying vending machine income to blind vendors and the CBVH. In their second claim, plaintiffs allege that defendants are engaging in a pattern and practice of giving less desirable facilities to blind vendors than those given to private contractors, in violation of section 504 of the Rehabilitation Act of 1973. Plaintiff CBVH is the bureau of the New York State Department of Social Services designated as the State licensing agency under the Act. As such, CBVH operates New York State's vending program for blind individuals. It obtains the necessary permits to operate facilities on federal property and trains and licenses blind individuals to operate the facilities.
The Randolph-Sheppard Act was first enacted in 1936 and was designed to provide employment opportunities to blind vendors operating on federal property. The Act was amended in 1954 and 1974. Under the Act, the Secretary of Education has the responsibility to promulgate regulations designed to implement the Act. 20 U.S.C. § 107(b). For example, the Secretary is directed to prescribe regulations ensuring that:
Id. § 107(b)(1), (2). The Act also provides for the accrual to the State agency of income "obtained from the operation of vending machines on Federal property" where there is no blind licensee operating on the property. Id. § 107d-3(a).
Under the statutory scheme the Secretary designates state licensing agencies, such as the CBVH, which proceed to license blind vendors. Id. § 107a(a)(5); 34 C.F.R. § 395.7. The state licensing agencies then apply to various federal agencies for permits allowing them to establish sites for the blind vendors on federal property. Id. § 107a(c); 34 C.F.R. §§ 395.16, 395.35. When a dispute arises, the Act provides that:
Id. §§ 107d-1(a), (b). Section 107d-2(a) of the Act provides:
Upon receipt of a complaint filed under section 107d-1 of this title, the Secretary shall convene an ad hoc arbitration panel as provided in subsection (b) of this section. Such panel shall, in accordance with the provisions of subchapter II of chapter 5 of Title 5, give notice, conduct a hearing, and render its decision which shall be subject to appeal and review as a final agency action for purposes of chapter 7 of such Title 5.
Id. § 107d-2(a).
Defendants do not challenge the merits of plaintiffs' claims. Instead, they argue that the action must be dismissed because plaintiffs have failed to resort to the administrative remedies provided for in the Act.1 Plaintiffs oppose defendants' motion essentially on the grounds that resort to administrative remedies is not mandatory under the Act and, given the circumstances, arbitration is not an adequate remedy. Thus, the issue presented is squarely one of whether the Act requires plaintiffs to seek administrative relief prior to commencing an action in federal court.
Defendants point to several cases which support their position, although none emanate from this circuit. In Randolph-Sheppard Vendors of America v. Weinberger, 795 F.2d 90 (D.C.Cir.1986), organizations representing blind vendors challenged two contracts awarded by the Secretary of Defense on the ground that they were not made in accordance with the Act. Reaching the merits, the district court granted summary judgment in favor of the defendants. On appeal, the decision was vacated on the ground that plaintiffs had failed to exhaust their administrative remedies. Id. at 111.
In a thorough and exhaustive opinion, the court of appeals held that "the Act ... establishes a clear and explicit system for resolution of disputes arising under the Act." Id. at 102. In noting that the arbitration provisions were added as part of the 1974 amendments to the Act, the court quoted a Senate Report which declared that "it is the expectation of the Committee reviewing the amendments that the arbitration and review procedures adopted ... will provide the means by which aggrieved vendors and State agencies may obtain final and satisfactory resolution of disputes." Id. (quoting S.Rep. No. 937, 93d Cong., 2d Sess. 20 (1974)).
The Weinberger court was particularly impressed by the fact that the dispute resolution system embodied in the 1974 amendments "parallels the tiers of authority established by the Act." Id. Under the Act, a blind vendor must first apply to a state agency for a license and then the state agency applies to the federal agency for placement of the licensee. Likewise when a dispute arises, "a blind licensee must first apply to the state licensing authority before filing a complaint with the Secretary." Id. at 102-03.
Further support for the argument that Congress intended blind vendors and state licensing agencies to resort first to available administrative remedies can be gleaned from the scope of judicial review established by the 1974 amendments. Under 20 U.S.C. § 107d-2, the arbitration decision "shall be subject to appeal and review as a final agency action." Such judicial review is "severely circumscribed" and "requires a reviewing court to determine whether a decision is within the ambit of the agency's discretion and supported by the record." Weinberger, 795 F.2d at 103 (citing cases). The court's reasoning is persuasive:
It is unlikely, after establishing a specific dispute resolution system and conditioning judicial review on a final agency action, that Congress contemplated that an aggrieved party could, whenever it chose, circumvent the system and seek a de novo determination in federal court. ... Congress ... set up an arbitration scheme instead of authorizing resort to federal court. As Justice Brandeis stated the "well settled" rule: "where a statute creates a right and provides a special remedy, that remedy is exclusive." United States v. Babcock, 250 U.S. 328, 331 39 S.Ct. 464, 63 L.Ed. 1011 ... (1919) (citations omitted). Thus, where Congress has created an arbitration scheme as the administrative method for enforcing a statutory right, there is a strong presumption that it is exclusive.
Id. at 103. Under the above reasoning, plaintiffs' main argument, that the Act al...
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