Vigilantes, Inc. v. ADMINISTRATOR, WAGE & HOUR DIV., Civ. No. 88-1821 (JAF).

CourtUnited States District Courts. 1st Circuit. District of Puerto Rico
Writing for the CourtLinda Carol Arnold, U.S. Dept. of Labor, Washington, D.C., for respondents
Citation769 F. Supp. 57
PartiesVIGILANTES, INC. and Angel L. Pedrosa, Petitioners, v. ADMINISTRATOR, WAGE AND HOUR DIVISION, UNITED STATES DEPARTMENT OF LABOR; Secretary, United States Department of Labor, Respondents.
Docket NumberCiv. No. 88-1821 (JAF).
Decision Date16 July 1991

769 F. Supp. 57

VIGILANTES, INC. and Angel L. Pedrosa, Petitioners,
v.
ADMINISTRATOR, WAGE AND HOUR DIVISION, UNITED STATES DEPARTMENT OF LABOR; Secretary, United States Department of Labor, Respondents.

Civ. No. 88-1821 (JAF).

United States District Court, D. Puerto Rico.

July 16, 1991.


769 F. Supp. 58

Daniel R. Dominguez, Dominguez & Totti, San Juan, Puerto Rico, George E. Cranwell, Cranwell & O'Connell, Arlington, Va., for petitioners.

Linda Carol Arnold, U.S. Dept. of Labor, Washington, D.C., for respondents.

OPINION AND ORDER

FUSTE, District Judge.

Petitioners Vigilantes, Inc. ("Vigilantes") and Angel L. Pedrosa, founder and president of Vigilantes, filed this action against respondent officials of the United States Department of Labor ("DOL") seeking review and an order revoking a Final Decision and Order of the Deputy Secretary of Labor ("Deputy Secretary") issued on August 2, 1988, as amended on September 6, 1988. Specifically, petitioners seek to revoke both the Deputy Secretary's determination that petitioners were bound by their predecessor's Collective Bargaining Agreement ("CBA") and his order of debarment pursuant to section 5(a) of the McNamara-O'Hara Service Contract Act of 1965 ("SCA"), as amended, 41 U.S.C. § 354(a), on the grounds that these determinations were arbitrary, capricious and not supported by substantial evidence on the record as a whole. Jurisdiction is based on the Administrative Procedure Act ("APA"), 5 U.S.C. § 703, and 28 U.S.C. § 1331 (federal question). This action is before the court on cross-motions for summary judgment. After reviewing the administrative record, we conclude that the Deputy Secretary's fact determinations are supported by a preponderance of the evidence and his conclusions of law are not arbitrary or capricious and, therefore, grant respondents' motion for summary judgment. Accordingly, we deny petitioners' summary judgment motion and dismiss their petition.

I.

Prior Administrative Proceedings

The administrative record in this case includes twenty-five volumes of documents, transcripts and exhibits. Because petitioners have raised only two issues for federal court review, that is, liability based on a predecessor CBA and the appropriateness of debarment for the violations found by the Secretary, our review of the administrative record will be limited to the discussion of these two issues.1 Reference will be made both to the decision of the Administrative Law Judge ("ALJ") dated October 16, 1986 and the August 1988 Final Decision and Order. (Docket Document No. 2, Exhibits A and B).

A. Predecessor Collective Bargaining Agreement

After qualifying as a minority contractor under section 8(a) of the Small Business Act of 1958 ("SBA"), as amended, 15 U.S.C. § 637(a), petitioners were awarded security guard service contracts with the Federal Aviation Administration ("FAA") and the General Services Administration ("GSA") in Puerto Rico and the United States Virgin Islands. The SCA imposes certain requirements on prospective contractors. Section 4(c) provides:

No contractor or subcontractor under a contract, which succeeds a contract subject to this Chapter and under which substantially the same services are furnished, shall pay any service employee under such contract less than the wages and fringe benefits, including accrued wages and fringe benefits, and any prospective increases in wages and fringe
769 F. Supp. 59
benefits provided for in a collective-bargaining agreement as a result of arm'slength negotiations, to which such service employees would have been entitled if they were employed under the predecessor contract: Provided, That in any of the foregoing circumstances such obligations shall not apply if the Secretary finds after a hearing in accordance with regulations adopted by the Secretary that such wages and fringe benefits are substantially at variance with those which prevail for services of a character similar to the locality.

41 U.S.C. § 353(c).

The ALJ found that, prior to October 1, 1977, the commencement date for petitioners' contract at the FAA installation, Honor Guard Security Services ("Honor Guard"), a subsidiary of Chemical Technology, Inc., had been supplying security guard services at the installation. This predecessor contractor had been party to a CBA with the Industrial, Technical and Professional Employees Division of the National Maritime Union of America, AFL-CIO ("the Union"). The ALJ then found that Honor Guard, while having notice well in advance that their contract was going to be awarded to a section 8(a) minority contractor, had entered into a supplemental agreement with the Union which provided for the payment of wages at $3.20 per hour, as well as substantial fringe benefits. The ALJ noted that, while reference to a pre-existing CBA was made in the Award of Contract (Vol. 7, Tab 21, Special Provisions, Clause XXIII at 16),2 neither the CBA nor the supplemental agreement were attached to the Award of Contract. Instead, attached to the agreement was an incorrect wage determination, setting the minimum wage at $2.45 per hour. The ALJ concluded that the CBA and the supplemental agreement were not negotiated at arm's-length. He cited both the apparent lack of concern shown by FAA and SBA officials with respect to the CBA, as well as the DOL's failure to provide a hearing to consider the arm's-length issue. The ALJ ruled that the appropriate wage rate was $2.65, the amount found in the correct wage determination.

The Deputy Secretary reversed the ALJ's finding and ruled that petitioners' employees should have been paid at the CBA rate of $3.20 per hour for the one-year period commencing October 1, 1977 and were entitled to the fringe benefits provided for in that agreement effective October 1, 1977. The Deputy Secretary referred to the implementing regulation for section 4(c), 29 C.F.R. § 4.6(d)(2) (1977), which required the collectively-bargained rate to be paid by successive contractors unless the Secretary or his authorized representative determined that the CBA was not entered into after arm's-length negotiations. Since petitioners neither obtained nor sought such relief from the Secretary or his authorized representative, they were never relieved from the obligation to pay the wages and fringe benefits according to the terms of the prior CBA. The Deputy Secretary also noted that neither the statute nor the regulation imposed a duty upon the DOL to conduct a hearing as to the arm's-length issue.

B. Debarment Issue

Section 5(a) of the SCA, as amended, 41 U.S.C. § 354(a), directs the Comptroller General to distribute a list to all government agencies giving the names of persons or firms who have violated this chapter. The statute goes on to provide:

Unless the Secretary otherwise recommends because of unusual circumstances, no contract of the United States shall be awarded to the persons or firms appearing on this list ... until three years have elapsed from the date of publication of the list containing the name of such persons or firms. Where the Secretary does not otherwise recommend because of unusual circumstances, he shall, not later than ninety days after a hearing examiner has made a finding
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3 practice notes
  • In re Toyota Motor Corp.. Unintended Acceleration Mktg., Case No. 8:10ML 02151 JVS (FMOx).
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Central District of California
    • April 8, 2011
    ...likelihood here of “multiple litigation, and of factfinding hamstringed by the absence of centrally implicated actors in the drama.” 769 F.Supp. at 57.ii. Existing Parties The Court finds the named Toyota defendants' argument that they will be unable to obtain pretrial discovery in South Af......
  • Karawia v. U.S. Dept. of Labor, No. 08CV5471 (HB).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • May 7, 2009
    ...v. U.S. Dept. of Labor, 1995 WL 1612534, *2 (S.D.Ohio 1995); Vigilantes, Inc. v. Administrator, Wage and Hour Div., U.S. Dept. of Labor, 769 F.Supp. 57, 61 (D.Puerto Rico 1991); Fields v. Chao, 2009 WL 425016, 2 (D.Kan.2009). However, this reformulation of the language of Section 39 strikes......
  • Vigilantes, Inc. v. Administrator of Wage and Hour Div., U.S. Dept. of Labor, No. 91-1809
    • United States
    • U.S. Court of Appeals — First Circuit
    • January 8, 1992
    ...the SCA, the district court applied the "preponderance of the evidence" standard and affirmed the Secretary's decision in all respects. 769 F.Supp. 57. The Proper Wage Rate for the 1977 At the outset, we emphasize that our focus in this opinion is twofold. First, we examine only a 1977 cont......
3 cases
  • In re Toyota Motor Corp.. Unintended Acceleration Mktg., Case No. 8:10ML 02151 JVS (FMOx).
    • United States
    • United States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Central District of California
    • April 8, 2011
    ...likelihood here of “multiple litigation, and of factfinding hamstringed by the absence of centrally implicated actors in the drama.” 769 F.Supp. at 57.ii. Existing Parties The Court finds the named Toyota defendants' argument that they will be unable to obtain pretrial discovery in South Af......
  • Karawia v. U.S. Dept. of Labor, No. 08CV5471 (HB).
    • United States
    • United States District Courts. 2nd Circuit. United States District Courts. 2nd Circuit. Southern District of New York
    • May 7, 2009
    ...v. U.S. Dept. of Labor, 1995 WL 1612534, *2 (S.D.Ohio 1995); Vigilantes, Inc. v. Administrator, Wage and Hour Div., U.S. Dept. of Labor, 769 F.Supp. 57, 61 (D.Puerto Rico 1991); Fields v. Chao, 2009 WL 425016, 2 (D.Kan.2009). However, this reformulation of the language of Section 39 strikes......
  • Vigilantes, Inc. v. Administrator of Wage and Hour Div., U.S. Dept. of Labor, No. 91-1809
    • United States
    • U.S. Court of Appeals — First Circuit
    • January 8, 1992
    ...the SCA, the district court applied the "preponderance of the evidence" standard and affirmed the Secretary's decision in all respects. 769 F.Supp. 57. The Proper Wage Rate for the 1977 At the outset, we emphasize that our focus in this opinion is twofold. First, we examine only a 1977 cont......

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