Vigilantes, Inc. v. ADMINISTRATOR, WAGE & HOUR DIV.

Decision Date16 July 1991
Docket NumberCiv. No. 88-1821 (JAF).
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.
CourtU.S. District Court — District of Puerto Rico

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 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 of a violation of this chapter, forward to the Comptroller General the name of the individual or firm found to have violated the provisions of this chapter.

41 U.S.C. § 354.

Although the ALJ found that petitioners had violated the SCA, he ruled that the violations were not the result of intentional wrongdoing on the part of petitioners. The ALJ cited their good faith efforts to correct violations "when notified of them;" reasoned that "while it is generally the obligation of the contractor to keep abreast of the requirements, in this case Respondents received contradictory, incorrect, or no information in many instances;" and noted that "the contracting parties have all demonstrated confidence in the contractor by renewing contracts." (Docket Document No. 2, Exhibit A at 9). The ALJ decided that debarment was unwarranted.

Again, on review the Deputy Secretary reversed the ALJ and found that debarment was appropriate. The Deputy Secretary began by reviewing the regulation relating to the issue of "unusual circumstances." See 29 C.F.R. § 4.188(b). The regulation itself outlines the factors which the adjudicator must consider before making a finding of unusual circumstances. 29 C.F.R. § 4.188(b)(3).3 It is the violating contractor who has the burden of establishing the existence of unusual circumstances. 29 C.F.R. § 4.188(b)(1). The Deputy Secretary found obvious culpable neglect in petitioners' failure to ascertain whether their practices were in violation of the SCA. He also noted the various and repeated violations of the SCA, including those found by the ALJ. The Deputy Secretary concluded that, based on the record, petitioners had neither established the absence of aggravating circumstances nor the existence of prerequisites for relief as required by the regulations and therefore found no "unusual circumstances" warranting relief from the debarment sanction.

In their petition for review before this court, petitioners Pedrosa and Vigilantes challenge these two rulings by the Deputy Secretary and seek the revocation of the Secretary's Final Decision and Order.

II. Discussion
A. Federal Court Standard of Review

As a preliminary matter, we need to be clear about the scope of federal court review in an SCA action brought pursuant to the Administrative Procedures Act, 5 U.S.C. §§ 701-706. Section 4(a) of the SCA, 41 U.S.C. § 353(a), provides that sections 4 and 5 of the Walsh-Healey Act, 41 U.S.C. §§ 38 and 39, apply with respect to the Secretary's authority to enforce provisions of the Act. Under section 5, the findings of the Secretary of Labor, "if supported by the preponderance of the evidence, shall be conclusive in any court of the United States." 41 U.S.C. § 39; see Federal Food Service Inc. v. Donovan, 658 F.2d 830, 833 (D.C.Ci...

To continue reading

Request your trial
3 cases
  • In re Toyota Motor Corp.. Unintended Acceleration Mktg.
    • United States
    • U.S. District Court — Central District of California
    • 8 d5 Abril d5 2011
    ... ... Alexander Saveri, Saveri & Saveri Inc., Gilmur R. Murray, Murray and Howard LLP, Tracy ... ...
  • Karawia v. U.S. Dept. of Labor
    • United States
    • U.S. District Court — Southern District of New York
    • 7 d4 Maio d4 2009
    ...Cleaning Service, Inc. 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 languag......
  • Vigilantes, Inc. v. Administrator of Wage and Hour Div., U.S. Dept. of Labor, 91-1809
    • United States
    • U.S. Court of Appeals — First Circuit
    • 8 d3 Janeiro d3 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......

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT