Wis. Dep't of Workforce Dev., Div. of Vocational Rehab. v. U.S. Dep't of Educ.
| Decision Date | 03 December 2019 |
| Docket Number | 18-cv-220-jdp |
| Citation | 419 F.Supp.3d 1093 |
| Parties | State of Wisconsin DEPARTMENT OF WORKFORCE DEVELOPMENT, DIVISION OF VOCATIONAL REHABILITATION, Petitioner, v. UNITED STATES DEPARTMENT OF EDUCATION, Betsy Devos, in her official capacity as Secretary of the United States Department of Education, and Theresa Taylor, Respondents. |
| Court | U.S. District Court — Western District of Wisconsin |
Rachel Lee Bachhuber, Wisconsin Department of Justice, Madison, WI, for Petitioner.
David Daly Conway, United States Attorney's Office, Madison, WI, Susan Rockwood Gashel, Honolulu, HI, for Respondents.
This case involves a dispute over the award of a vending machine services contract for two Wisconsin correctional facilities in Racine County, Wisconsin. The contract was awarded under the Randolph-Sheppard Act, a federal law that gives priority to blind persons in awarding contracts to operate vending machines on government property.
Theresa Taylor, a blind vending machine operator, sought the Racine contract from the Wisconsin Department of Workforce Development (DWD), through its Division of Vocational Rehabilitation, which administers the Randolph-Sheppard program in Wisconsin. But DWD awarded the contract to another blind vendor, Joelyn Belsha. As provided under the Randolph-Sheppard Act, Taylor asked the United States Department of Education to convene a panel to arbitrate the dispute between Taylor and DWD over the vending contract. Taylor prevailed in the arbitration, and the arbitration panel ordered that Taylor be given the contract and awarded money damages. DWD has petitioned this court to review the decision of the arbitration panel.
Now before the court are two mirror-image motions: DWD's motion to vacate the arbitration panel's decision, Dkt. 26, and Taylor's motion to confirm and enforce it. Dkt. 24. The Department of Education filed the administrative record, Dkt. 21, but it has not otherwise participated in the case. Taylor asks for oral argument on her motion. The procedural history of this case is protracted, but the court reviews the arbitration decision under the Administrative Procedure Act, which limits review to the administrative record. The parties have adequately briefed the issues and oral argument is unnecessary.
The arbitration panel found that DWD was persistently biased against Taylor, and that she was decisively disadvantaged by DWD's decision to use 2013 profitability data to evaluate the competing applicants. But the key factual findings are not supported by substantial evidence, and the arbitration panel's ultimate conclusions are arbitrary and capricious. The court concludes that there were no material deficiencies in the 2013 selection process and that Taylor unreasonably chose not to participate in that process. The court will deny Taylor's motion to enforce the arbitration award, grant DWD's motion to vacate and reverse the arbitration decision, and remand the case to the Department of Education with instructions to affirm the award of the contract to Belsha.
The Randolph-Sheppard Act, enacted in 1936 and codified at 20 U.S.C. § 107, establishes a voluntary federal-state program to provide employment opportunities to the blind by giving them priority for contracts to operate vending machines on government property. Responsibility for administering this program is divided between state and federal agencies. At the federal level, the Secretary of Education interprets and enforces the Act's provisions and designates state licensing agencies to implement the program in the states. 20 U.S.C. § 107a. The designated state licensing agency for Wisconsin is DWD, which carries out its Randolph-Sheppard Act responsibilities through its "business enterprise program." DWD's business enterprise program is governed by Wis. Stat. § 47.03(4) – (8) and by implementing regulations in the Wisconsin Administrative Code, Chapter DWD 60.
As a condition of participating in the Randolph-Sheppard program, DWD must afford certain procedural protections to blind vendors. A blind vendor licensed under the program who is dissatisfied with DWD action relating to the program can file a grievance, and if dissatisfied with the resolution of the grievance, the vendor can ask for further review, including ultimately a full evidentiary hearing. Wis. Admin. Code DWD 60.05 ; 20 U.S.C. § 107d-1(a). If the vendor is dissatisfied with the results of the full evidentiary hearing, the vendor can submit the matter to arbitration before a panel to be convened for that dispute by the Department of Education. Wis. Admin. Code DWD 60.05(4) ; 20 U.S.C. § 107d-1(a). Decisions by Department of Education arbitration panels are final agency actions reviewable in federal court under the Administrative Procedure Act. 20 U.S.C. § 107d-2(a).
1. The Racine Correctional Institution and Sturtevant Transitional Facility contract
Taylor has worked as a licensed blind vendor since 2006, when she was first appointed to run vending machines at the Southern Wisconsin Center—which serves veterans, the cognitively disabled, and female prisoners in a minimum-security facility. AR-143.1 In October of 2007, Taylor was asked to temporarily take over vending operations at three Wisconsin correctional facilities: Racine Correctional Institution, Sturtevant Transitional Facility, and the Racine Youthful Offender Correctional Facility. She served as the interim operator of those facilities for four years.
In the meantime, DWD was preparing to select permanent operators for those three sites. DWD decided that Racine Correctional Institution and Sturtevant Transitional Facility together would be bid out for selection of a permanent operator as a "stand-alone" facility, because they were considered large enough to provide full-time employment for a single operator. AR-236. That meant that the operator who won that bid would have to give up her existing sites. By contrast, DWD decided to bid out the Racine Youth Offender Correctional Facility vending machines as an "add-on" site, meaning that it would be added to an operator's existing sites. AR-237.
2. 2011 interviews
In July 2011, DWD sent out the bid announcement for Racine Youth Offender Correctional Facility. AR-23. Taylor and Joelyn Belsha, another licensed blind operator, interviewed for the position. Taylor scored 110 points based on scores from three interviewers on the panel; Belsha scored 104 points. AR-412. So DWD offered Taylor the site, and she accepted. AR-345.
DWD sent out the bid announcement for Racine Correctional Institution and Sturtevant Transitional Facility (the "RCI/STF" site) in August 2011. Once again, Taylor and Belsha interviewed for the position, along with two other blind vendors. Taylor scored a total of 96 points from the interview panel, whereas Belsha scored 101 points. AR-410. Belsha was awarded the RCI/STF site.
3. Taylor's grievance and the full evidentiary hearing
Taylor sent a grievance letter to DWD contesting the selection of Belsha as the permanent operator of the RCI/STF site. AR-414–15. Specifically, Taylor contended that DWD had failed to consider a letter of recommendation that she received from the RCI/STF facilities manager, which she had presented at the interview. AR-414. By ignoring her recommendation letter and selecting Belsha, Taylor said, DWD had violated Wisconsin Administrative Code § DWD 60.08, which requires that "the licensee deemed to be best suited for an available business enterprise" be selected.
DWD held a hearing on Taylor's grievance on November 8, 2011, after which business enterprise program director Kim Pomeroy denied Taylor's grievance, explaining that "[r]esumes and references are not requested of the interviewees because [DWD] is responsible for personnel records of the [business enterprise program] operators and is familiar with the training and performance of each operator." AR-418.
At that point, Taylor asked for a full evidentiary hearing in accordance with § 107d-1(a) of the Randolph-Sheppard Act and the corresponding state statute, Wisconsin Statute § 47.03. The full evidentiary hearing took place on May 8, 2012. (The hearing was audio recorded, but the recording was too poor to transcribe, so there is no official transcript of the proceedings.)
According to records from that hearing, Taylor testified that Greg Feypel (a DWD employee who administered the business enterprise program) had contacted her on August 26, 2011 to discuss the RCI/STF bid. According to Taylor, Feypel "expressed the thought of giving Belsha RCI/STF due to her UW-Parkside location not being profitable and to ‘even out’ things." AR-423. Feypel denied that he had said this, and he testified that that "his conversation with Taylor was just trying to explain the ‘stand-alone’ versus ‘add-on’ site" arrangement. AR-425.
The hearing panel determined that the interviews for the RCI/STF contract did not comply with DWD's own policies, and that the selection of Belsha over Taylor had not been "adequately justified" under § DWD 60.08's requirement that the "best suited" licensee be selected. Id. The hearing panel identified the following problems with the process: (1) there had been no site facilities manager or designee on the interview panel, as required by DWD policy, see AR-347; (2) the selection had been based solely on the interview score, whereas DWD policy said that scores would be considered as part of the selection process; (3) the panel had not submitted a written recommendation with justification of their selection to the business enterprise program director; and (4) the panel hadn't accepted Taylor's letter of recommendation. AR-425. The panel acknowledged that DWD's policy allowed for discretion in determining whether to accept recommendation letters and other such materials, but it noted that "resumes and references are almost universally recognized as appropriate and helpful in...
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