COASTAL COUNTIES WORKFORCE INC v. LEPAGE et al
Filing
42
ORDER ON MOTION TO DISMISS AND MOTION FOR A PRELIMINARY INJUNCTION granting in part and denying in part 16 Motion for Preliminary Injunction; denying 17 Motion to Dismiss for Failure to State a Claim By JUDGE JOHN A. WOODCOCK, JR. (ccs)
UNITED STATES DISTRICT COURT
DISTRICT OF MAINE
COASTAL COUNTIES
WORKFORCE, INC.,
Plaintiff,
v.
PAUL R. LEPAGE, et al.,
Defendants.
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1:17-cv-00417-JAW
ORDER ON MOTION TO DISMISS AND
MOTION FOR A PRELIMINARY INJUNCTION
A local workforce training organization claims the Maine Governor and the
Commissioner of the Maine Department of Labor (MDOL) failed to make funds
available to it in a manner and time frame that federal law requires. The local
workforce organization, Coastal Counties Workforce, Inc. (CCWI), seeks declaratory
and injunctive relief under the Workforce Innovation and Opportunity Act (WIOA,
the Act) and 42 U.S.C. § 1983, against Governor Paul R. LePage and Commissioner
John Butera (Defendants). The Defendants filed a motion to dismiss for failure to
state a claim upon which relief may be granted, arguing that WIOA does not provide
CCWI a private right of action.
The Court denies the Defendants’ motion to dismiss because it concludes that
WIOA does provide CCWI a right enforceable through § 1983: the right to the prompt
pass through of federal funds through the state of Maine on a program year basis.
The Court grants CCWI’s motion for a preliminary injunction because it will likely
prevail on the merits, two of the other factors weigh in its favor, and the last, the
public policy question, is in equipoise.
I.
BACKGROUND
A.
Procedural History
On October 24, 2017, CCWI filed a complaint and a motion for temporary
restraining order (TRO). Compl. (ECF No. 1); Pl.’s Mot. for a TRO (ECF No. 3). Six
days later, on October 30, 2017, the Court held a status conference with the parties.
Min. Entry for Telephone Conference (ECF No. 7).
After the conference, the Court ordered the parties to confer and, if unable to
resolve the lawsuit, to discuss scheduling further written submissions and discovery
issues. Order (ECF No. 8). The Court indicated that if the parties could not agree on
scheduling issues, the Court would issue a scheduling order. Id.
On November 9, 2017, the Court held a second telephone status conference.
Min. Entry for Telephone Conference (ECF No. 12). The Defendants agreed to make
certain funds available to CCWI for Program Year 2016 (PY16), but the parties did
not fully resolve the lawsuit, with funds for Program Year 2017 (PY17) still contested.
With some of the urgency removed, counsel for CCWI agreed to pursue a preliminary
injunction, rather than a TRO. Accordingly, the Court dismissed CCWI’s motion for
a TRO without prejudice on the same day. Order (ECF No. 13). Counsel for the
Defendants stated they intended to file a motion to dismiss. On November 13, 2017,
the Court issued a scheduling order for the upcoming motions and a testimonial
hearing. Pre-Hr’g Scheduling Order (ECF No. 14).
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On November 17, 2017, CCWI filed a motion for a preliminary injunction. Pl.’s
Mot. for Prelim. Inj. (ECF No. 16) (Pl.’s Inj. Mot.).
On December 6, 2017, the
Defendants filed their response in opposition to the motion for a preliminary
injunction. Defs. Paul R. Lepage and John Butera’s Mem. of Law in Opp’n to Pl.’s
Mot. for a Prelim. Inj. (ECF No. 24) (Defs.’ Inj. Opp’n). On December 14, 2017, CCWI
filed its reply. Pl.’s Reply Mem. of Law in Support of Mot. for Prelim. Inj. (ECF No.
35) (Pl.’s Inj. Reply).
Also on November 17, 2017, the Defendants filed a motion to dismiss pursuant
to Federal Rule of Civil Procedure 12(b)(6). Defs. Paul R. LePage and John Butera’s
Mot. to Dismiss (ECF No. 17) (Defs.’ 12(b)(6) Mot.). On November 29, 2017, CCWI
filed its response in opposition to the Defendants’ motion. Pl.’s Opp’n to Defs.’ Mot.
to Dismiss (ECF No. 20) (Pl.’s 12(b)(6) Opp’n). On December 4, 2017, the Defendants
filed their reply. Defs. Paul R. LePage and John Butera’s Reply Mem. in Supp. of
Mot. to Dismiss (ECF No. 23) (Defs.’ 12(b)(6) Reply).
On December 18, 2017, the Court held an evidentiary hearing and heard oral
argument at the close of the hearing. Min. Entry for Hr’g (ECF No. 39).
B.
Statutory Background: WIOA
Congress passed WIOA in 2014. Workforce Innovation and Opportunity Act,
Pub. L. No. 113-128, 128 Stat. 1425 (2014).
The purposes of WIOA include
“increas[ing] . . . access to and opportunities for the employment, education, training,
and support services” and the “alignment of workforce investment, education, and
economic development systems in support of a comprehensive, accessible, and high-
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quality workforce development system.”
29 U.S.C. § 3101.
The Act authorizes
appropriations for fiscal years 2015 to 2020 and directs those funds to state and local
workforce development efforts. Id. § 3181.
To receive the federal funds, the Act requires local areas and states to set up a
series of boards to administer the program. A state’s governor establishes a state
workforce development board (SWDB), composed of the governor, a member of each
chamber of the state legislature, business leaders, and officials from labor
organizations. Id. § 3111(a)-(b). The state board assists the governor in developing
a state plan, as well as in overseeing the workforce development system, and in
identifying aspects in need of improvement. Id. § 3111(d). A governor must submit
a state plan on a four-year basis to the Secretary of Labor for approval.1 Id. § 3112(a),
(c). A state plan must include details about the workforce development system,
including how the federal funds will be used, the local areas designated in the state,
and performance and accountability measures. Id. §§ 3112(b), 3141.
A governor must designate local areas to administer the education and training
programs within a state based on considerations such as labor market factors,
regional economic development, and the availability of resources. Id. § 3121(b). A
governor and local chief elected officials, like county commissioners, must establish
local workforce development boards.
Id. § 3122(a), (c).
Local boards must be
composed of individuals from groups like local business leaders, officials from labor
organizations, and members of economic and community development entities. Id. §
The Unified State Plan must also be approved by the United States Secretary of Education.
20 C.F.R. § 676.135(d).
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3122(b). Each local board submits a comprehensive local plan to the governor for
approval on a four-year basis. Id. § 3123(a). The local plan outlines how designated
entities and providers within the local area will implement the workforce
development programs and carry out training, and specifies performance and
accountability measures. Id. §§ 3123(b), 3141.
Once a governor approves the local plans, the Secretary approves the state
plan, and Congress appropriates federal funds, the Secretary makes allotments to
each state based on funding formulae specified in the statute. Id. §§ 3162, 3172. A
governor may reserve certain percentages of the funds for statewide purposes but
then must make allotments to each of the local areas based on statutory funding
formulae. Id. §§ 3163, 3173. The funds “shall be available for obligation only on the
basis of a program year” running from July 1 to the following June 30. Id. § 3249(g).
Funds the states and local areas receive during one program year “may be expended
during that program year and the succeeding program year.” Id.
The statute requires the “prompt allocation of funds” at each level of
administration. Id. § 3242. All funds the Secretary allots to the states “shall be
allotted within 45 days after the date of enactment of the Act appropriating the
funds.” Id. § 3242(c). The funds a governor is required to allot to the local area “shall
be made available . . . for a local area not later than 30 days after the date the funds
are made available” to the governor “or 7 days after the date the local plan for the
area is approved, whichever is later.” Id. § 3242(e).
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C.
The Facts2
1.
The Parties and Maine’s Workforce Training System
Paul R. LePage is the Governor of the state of Maine. Compl. ¶ 8. John Butera
is the Commissioner of MDOL. Id. ¶ 9. CCWI is a Maine non-profit corporation with
a principal place of business in Brunswick, Maine. Id. ¶ 7.
There are three Local Workforce Investment Areas in Maine, each with its own
Local Workforce Development Board. Id. ¶ 14; Stipulation of Facts ¶¶ 9-11 (ECF No.
32) (Stipulations). The local areas consist of the Coastal Counties Region (York,
Cumberland, Sagadahoc, Lincoln, Waldo, and Knox Counties); the Northeastern
Region (Aroostook, Piscataquis, Penobscot, Hancock, and Washington Counties); and
the Central/Western Region (Somerset, Franklin, Oxford, Androscoggin, and
Kennebec Counties). Compl. ¶ 15; Stipulations ¶¶ 9-11. Under the current system,
the local boards and the local chief elected officials delegate the administration and
oversight of WIOA funds to an entity created for that purpose for each of the three
local areas (the workforce groups).
Compl. ¶ 22; Stipulations ¶¶ 12-13.
The
In considering a motion to dismiss, a court is required to “accept as true all the factual
allegations in the complaint and construe all reasonable inferences in favor of the plaintiff [].” Sanchez
v. Pereira-Castillo, 590 F.3d 31, 41 (1st Cir. 2009) (quoting Alternative Energy, Inc. v. St. Paul Fire &
Marine Ins. Co., 267 F.3d 30, 33 (1st Cir. 2001)). For purposes of the Motion to Dismiss, the Court
only considers CCWI’s factual allegations, which are those statements supported by a citation to the
Complaint. Occasionally CCWI’s factual allegations slip into the rhetorical. In accordance with Rule
12(b)(6), the Court has accepted the allegations in the Complaint, but it has sometimes noted that the
statement is as alleged by CCWI, signaling that the Court is aware of the difference between alleging
a demonstrable fact and asserting a policy viewpoint.
For purposes of the motion for a preliminary injunction, the Court considers the evidence the
parties presented, including declarations, testimony at the hearing, and exhibits. Unless otherwise
noted, the Court finds the statements in this section that are only supported by a citation to the
Complaint were supported by other documentary evidence or testimony at the hearing.
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workforce groups are largely or entirely funded by money Congress allocated under
WIOA. Compl. ¶ 23.
CCWI is the entity the local board and the chief elected officials created to
oversee the use of WIOA funds for the Coastal Counties Region. Compl. ¶ 27;
Stipulations ¶ 13. CCWI uses the allocation of approximately $3 million each year to
fund programs designed to help dislocated workers, low income adults, and young
adults with barriers to employment throughout the Coastal Counties Region. Compl.
¶ 28.
By letter dated June 6, 2016, the former Commissioner of MDOL, writing as
the designee for Governor LePage, confirmed that CCWI had been granted local area
designation for the Coastal Counties Region. Compl. ¶ 29. By letter dated September
12, 2016, the former Commissioner of the MDOL granted conditional approval of the
Coastal Counties Workforce Board’s 2016-2020 local plan. Id. ¶ 30; Stipulations ¶
16. This conditional approval remains in effect today. Id. CCWI has satisfied the
conditions MDOL imposed. Id. USDOL approved Maine’s State Plan on October 20,
2016. Stipulations ¶ 4.
Part of the process for making WIOA funds available to the local workforce
groups is the execution of an agreement for each program year between the state of
Maine and each local workforce group. Compl. ¶ 31. For all previous years in which
MDOL distributed WIOA funds, the local workforce group agreements covered the
entire program year.
Id. ¶ 32.
The local workforce groups say they require
agreements for full program years in order to effectively plan and operate their
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programs. Id. ¶ 34. As a general practice, WIOA funds are expended on a FIFO (first
in, first out) accounting basis, as to particular types of expenditures. Stipulations
¶33. Before expending PY17 WIOA funds, CCWI’s service provider must expend its
PY16 funds; similarly before expending its PY17 WIOA administrative funds, CCWI
must expend its PY16 administrative funds. Id.
2.
Defendants’
Dissatisfaction
with
the
Current
Administration of the Workforce Development System
Governor LePage has repeatedly sought to eliminate the local areas and local
boards in favor of a single state-wide system. Id. ¶ 17. In November, 2012, the
Secretary of the United States Department of Labor (USDOL) rejected Governor
LePage’s plan to re-designate the local areas to more closely match Maine’s Chamber
of Commerce regions, under WIOA’s predecessor statute, WIA. Pl.’s Ex. 1. In a letter
dated July 11, 2017, Governor LePage wrote to Secretary Acosta, requesting that
Maine be granted “single State local area designation.” Id. ¶ 18; Joint Ex. 1. This
was at least the second time the Governor had made a similar request. Compl. ¶ 19.
By letter sent on August 30, 2017, the Secretary rejected the Governor’s request
because it was not permissible under WIOA. Id. ¶ 20; Joint Ex. 2. In September,
2017, the Governor sought to remove the State from the funding process in order to
have the federal agency fund the local areas directly. Pl.’s Ex. 3-4.
3.
The Conflict over Program Year 2016 and 2017 Funds
For PY16, the Secretary made $9,372,636 in WIOA funds available to Governor
LePage. Compl. ¶ 35; Notice Regarding PY 2016 WIOA Allotments, 81 Fed. Reg.
22640 (April 18, 2016). The PY16 funds were made available to Governor LePage in
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June 2016. Id. ¶ 36. On July 7, 2016 the state of Maine entered into a contract with
CCWI for CCWI’s full share of the PY16 WIOA funds.
Id. ¶ 37; Joint Ex. 10;
Stipulations ¶ 18.
For PY17, the Secretary made $8,393,050 in WIOA funds available to Governor
LePage. Compl. ¶ 38; Notice Regarding PY 2017 WIOA Allotments, 825 Fed. Reg.
27529 (June 15, 2017). The Secretary made the PY17 funds available to Governor
LePage in a series of awards on June 22, 2017, July 14, 2017, and October 24, 2017.
Compl. ¶ 39; Stipulations ¶¶ 19-21.
On July 7, 2017, MDOL offered CCWI a partial-year agreement for some of the
PY17 funds. Compl. ¶ 43; Defs.’ Ex. 1 ¶ 9-10; Defs.’ Ex. 14 at 2. On August 2, 2017,
CCWI sent a letter to Commissioner Butera to “formally complain/grieve” a violation
of WIOA because MDOL had not yet made a portion of the PY17 funds available on
a full program year basis. Defs.’ Ex. 11. On August 15, 2017, MDOL found no
contractual violation because it believed partial year contracts were permissible
under WIOA, based on guidance from a USDOL grant officer. Defs.’ Ex. 12. On
September 20, 2017, CCWI wrote to the Secretary in order to “complain/grieve”
MDOL’s decision. Defs.’ Ex. 13.
On September 7, 2017, Governor LePage wrote to the Secretary and stated that
“Maine is no longer participating in the WIOA Title 1B program. We ask that no
more of these funds be sent to the Maine Department of Labor.” Id. ¶ 44; Joint Ex.
3. On September 20, 2017, Secretary Acosta responded that he “hope[d] to continue
to work with” Governor LePage and suggested “two vehicles” for the Governor to
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consider, redesignation of the local areas within the State and seeking congressional
action to modify WIOA. Joint Ex. 4.
By letter dated October 23, 2017, MDOL purported to terminate CCWI’s
contract for the remaining PY16 funds. Compl. ¶ 41; Joint Ex. 5.
That letter
indicated that MDOL would only reimburse costs CCWI incurred until November 30,
2017. Id. Three days later, on October 26, 2017, shortly after CCWI filed this lawsuit,
the Defendants rescinded the October 23, 2017 letter and agreed to make the PY16
WIOA funds available to the local workforce groups as before. Joint Ex. 6-7.
Governor LePage, either personally in his official capacity, or through his
designees, including Commissioner Butera, has refused or otherwise failed to make
the PY17 WIOA funds available in their entirety to the three local workforce groups.
Compl. ¶ 42. The Defendants have refused to issue contracts with the local workforce
groups for all of PY17. Id. ¶ 43. Instead, on November 1, 2017, MDOL offered to
enter into a funding agreement with the local areas, conditioned upon submitting a
budget that complied with a new sixty-percent training spending requirement.
Stipulations ¶ 26; Joint Ex. 8.
A prior State Plan contained a similar forty-percent training requirement, but
the current State Plan rescinded that policy, and the sixty-percent requirement is not
in the current State Plan. Stipulations ¶¶ 29-30. On December 1, 2017, the State
Board met, considered the sixty-percent requirement at the Governor’s request, and
rejected the policy. Stipulations ¶ 31.
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Governor LePage directed and approved of all actions taken by state officials
with regards to: (1) the PY16 and PY17 funds allocated to the local boards, including
CCWI; (2) all efforts to change Maine’s participation in WIOA; (3) all efforts to change
the administrative structure of the WIOA program in Maine; and (4) all efforts to
impose a sixty-percent minimum training expenditure requirement on the local
boards. Stipulations ¶ 25. Commissioner Butera, with authority from the Governor,
directed and approved of all actions taken by state officials with regard to the
issuance of partial year award agreements for PY17. Id.
4.
The Impact of the Funding Conflict
Since July 1, 2017, CCWI has continued to submit expenses and draw down
2016 funds. Stipulations ¶ 22. On October 26, 2017, approximately $731,153.56
remained of the PY16 funds allocated to CCWI. Id. As of November 30, 2017,
$583,715.28 remained available to CCWI from PY16 funds. Stipulations ¶ 23. Since
it filed this lawsuit on October 24, 2017, CCWI has drawn down funds in the amount
of $218,880 from PY16 funds. Stipulations ¶ 24.
The PY16 WIOA funds are keeping CCWI’s doors open and allowing it to offer
limited services to workers and businesses through this first half of PY17. Id. ¶ 54.
If the PY17 WIOA funds are not promptly made available, CCWI will be forced to
cease all workforce training operations under WIOA by the end of January 2018, and
CCWI’s other independent funding will run out later in the year, forcing it to shut
down completely by the end of June 2018. Id. ¶ 55; see also Pl.’s Inj. Mot. at 6 (ECF
No. 16). WIOA funds represent seventy-five-percent of CCWI’s budget for the PY17
period. Compl. ¶ 55. The remaining twenty-five-percent comes from stand-alone
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grants which support programs that rely on the infrastructure funded by WIOA
funds. Id.
Last year, CCWI received 49,213 customer visits through the local
CareerCenters and affiliate offices. Id. ¶ 47. Of those visits, 16,512 customers
required additional workforce services. Id. ¶ 48. In PY16, CCWI assisted 564
workers in obtaining employment at an average annual wage of $29,456, adding
approximately $16.7 million to the state’s economy. Id. ¶ 49. There are currently
approximately 908 adult, youth, and dislocated workers enrolled in workforce
intensive services or training. Id. ¶ 50. A majority of these visits and services will
be adversely affected or completely eliminated if the local workforce groups lose
funding. Id. ¶¶ 46, 51. Approximately 500 Maine employers will be adversely
affected by not being able to obtain trained workers or receive business services. Id.
¶ 52. Other grants involving non-WIOA funds that are administered by CCWI for
the benefit of Maine businesses and employers will be terminated should CCWI cease
operating. Id. ¶ 53.
CCWI has already begun curtailing the services it is funding for workers and
employers. Id. ¶ 56. Service providers for CCWI and the other local workforce groups
are beginning to lay off employees. Id. ¶ 57. If forced to shut down its operations,
CCWI anticipates that its personnel will seek other job opportunities, it will lose its
other grants, and that it will be difficult, if not impossible, to resume operations even
if the funds are made available at a later date. Id. ¶ 58. CCWI anticipates the
withholding of the funds to directly result in approximately thirty workforce system
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jobs lost in the Coastal Counties Region and seventy-five jobs statewide. Id. ¶ 59.
CCWI alleges this will cause individual harm to those workers, and a greater harm
though the effect on the workforce training system. Id. Once shut down, CCWI
alleges the workforce training system will be very difficult and expensive to rebuild.
Id.
CCWI alleges that the Defendants’ attempt to reject Title I funds from WIOA
could adversely affect the ability of the State’s workforce system to administer the
other federal programs, like Adult Education (Title II), Employment Services (Title
III), and Vocational Rehabilitation (Title IV). Id. ¶ 60. CCWI claims that this could
in turn place the state of Maine out of compliance with the mandates set forth by
USDOL and WIOA, and that the loss of Title 1 funding under WIOA will also cause
harm to the financial sustainability of multi-agency career centers, and other multiprogram service delivery sites that depend on it to contribute to fixed operating
expenses. Id. ¶¶ 60-61.
II.
LEGAL STANDARDS
A.
Motion to Dismiss
Rule 12(b)(6) requires dismissal of a complaint that “fail[s] to state a claim
upon which relief can be granted.” FED. R. CIV. P. 12(b)(6). Under the general
pleading standards, a complaint must contain “a short and plain statement of the
claim showing that the pleader is entitled to relief.” FED. R. CIV. P. 8(a)(2). In
Ashcroft v. Iqbal, 556 U.S. 662 (2009), the United States Supreme Court elaborated
on this pleading standard in the context of a motion to dismiss: “To survive a motion
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to dismiss, a complaint must contain sufficient factual matter, accepted as true, to
‘state a claim to relief that is plausible on its face.’” 556 U.S. at 678 (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007)).
The First Circuit explained that “[t]he plausibility inquiry necessitates a twostep pavane.” García–Catalán v. United States, 734 F.3d 100, 103 (1st Cir. 2013)
(citing Rodríguez–Reyes v. Molina–Rodríguez, 711 F.3d 49, 53 (1st Cir. 2013)). “First,
the court must distinguish ‘the complaint’s factual allegations (which must be
accepted as true) from its conclusory legal allegations (which need not be credited).’”
Id. (quoting Morales–Cruz v. Univ. of P.R., 676 F.3d 220, 224 (1st Cir. 2012)).
“Second, the court must determine whether the factual allegations are sufficient to
support ‘the reasonable inference that the defendant is liable for the misconduct
alleged.’” Id. (quoting Haley v. City of Boston, 657 F.3d 39, 46 (1st Cir. 2011) (quoting
Iqbal, 556 U.S. at 678)).
B.
Motion for a Preliminary Injunction
“A preliminary injunction is an extraordinary and drastic remedy that is never
awarded as of right.” Peoples Fed. Sav. Bank v. People’s United Bank, 672 F.3d 1, 89 (1st Cir. 2012); Voice of the Arab World, Inc. v. MDTV Med. News Now, Inc., 645
F.3d 26, 32 (1st Cir. 2011); accord Winter v. Nat. Res. Def. Council, Inc., 555 U.S. 7,
24 (2008). When deciding whether to grant a motion for preliminary injunction, the
Court must carefully weigh four factors:
(1) the likelihood of success on the merits; (2) the potential for
irreparable harm [to the movant]; (3) the balance of the relevant
impositions, i.e., the hardship to the nonmovant if enjoined as
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contrasted with the hardship to the movant if no injunction issues; and
(4) the effect (if any) of the court’s ruling on the public interest.
Esso Standard Oil Co. v. Monroig-Zayas, 445 F.3d 13, 17-18 (1st Cir. 2006) (quoting
Bl(a)ck Tea Soc’y v. City of Boston, 378 F.3d 8, 11 (1st Cir. 2004)).
“The party seeking the preliminary injunction bears the burden of establishing
that these four factors weigh in its favor.” Id. at 18. However, “[t]he sine qua non of
this four-part inquiry is likelihood of success on the merits: if the moving party cannot
demonstrate that he is likely to succeed in his quest, the remaining factors become
matters of idle curiosity.” New Comm. Wireless Servs., Inc. v. SprintCom, Inc., 287
F.3d 1, 9 (1st Cir. 2002); see Sindicato Puertorriqueño de Trabajadores v. Fortuño,
699 F.3d 1, 7 (1st Cir. 2012) (confirming that this factor is the “most important part
of the preliminary injunction assessment”) (citation omitted).
Ultimately, “trial
courts have wide discretion in making judgments regarding the appropriateness of
[preliminary injunctive] relief.” Francisco Sánchez v. Esso Standard Oil Co., 572 F.3d
1, 14 (1st Cir. 2009).
III.
THE PARTIES’ POSITIONS
A.
Likelihood of Success on the Merits
CCWI argues that it is likely to prevail on the merits because the Defendants
are depriving it “of a right secured by the ‘laws’ of the United States” that is
enforceable under § 1983. Pl.’s Inj. Mot. at 8-10. The Defendants respond that CCWI
is unlikely to prevail on the merits because WIOA does not confer a “right” on CCWI
that is enforceable under § 1983. Defs.’ Inj. Mot. at 10-15. The Defendants also
respond that, if CCWI has a right under the statute, they have not violated that right
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because they made offers and CCWI refused to execute an agreement. Id. at 15-17.
CCWI replies that the Defendants have violated their right because the State may
not impose unilateral requirements on WIOA funds. Pl.’s Inj. Reply at 1-7.
The parties’ arguments on the first prong of the preliminary injunction
analysis are inextricably bound up in the question of whether CCWI has a right of
action against the Governor and the Commissioner, which implicates the arguments
the parties have made in their memoranda regarding the motion to dismiss.
1.
Governor LePage and Commissioner Butera’s 12(b)(6)
Motion
The Defendants argue that CCWI fails to state a claim because their lawsuit
is based on the erroneous assumption that WIOA creates a federal right enforceable
through 42 U.S.C. § 1983. Defs.’ 12(b)(6) Mot. at 2. The Defendants point out that
when a plaintiff sues “under a federal statute that does not confer an express or
implied cause of action, the lawsuit is properly dismissed for failure to state a claim”
under Federal Rule of Civil Procedure 12(b)(6). Id. (citing, among others, ArroyoTorres v. Ponce Federal Bank, F.B.S., 918 F.2d 276, 280 (1st Cir. 1990)).
The
Defendants contend that all the most recent Supreme Court cases found the statute
in question did not confer a right in similar circumstances.
Id. at 6-8 (citing
Armstrong v. Exceptional Child Center, Inc., 135 S. Ct. 1378 (2015); Gonzaga
University v. Doe, 536 U.S. 273 (2002); Blessing v. Freestone, 520 U.S. 329 (1997)).
The Defendants further assert that alternate enforcement mechanisms in
WIOA indicate that Congress did not intend to create a private right enforceable
through § 1983. Id. at 8, 10 (citing Middlesex County Sewerage Authority v. National
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Sea Clammers Ass'n, 453 U.S. 1 (1981)). The Defendants insist that the funds are
subject to “negotiation of a contract” which makes any entitlement CCWI might
possess “vague and amorphous” and thus unenforceable. Id. at 11. The Defendants
also maintain that the local workforce boards are not the intended beneficiaries of
WIOA, and are at most “incidental beneficiaries.” Id.
The Defendants next point to several cases decided under the predecessor
statute to WIOA, the Workforce Investment Act, Pub. L. No. 105-220, 112 Stat. 936
(1998) (WIA). Defs.’ 12(b)(6) Mot. at 8-9 (citing Brown v. Rotenberg, No.15-CV-6678
EAW, 2017 WL 3332241 (W.D.N.Y. August 3, 2017); Machie v. Nguyen, 824 F. Supp.
2d 146, 151 (D.D.C. 2011); Municipality of San Juan, et al., v. Human Resources
Occupational Development Council, 371 F. Supp. 2d 52 (D.P.R. 2005)).
The
Defendants concede that a “limited number of cases allow[ed] a plaintiff to pursue a
§ 1983 claim under WIA,” but the Defendants distinguish those cases on the basis
that they “involved claims of political discrimination” in violation of provisions that
are markedly different than the one CCWI asserts. Id. at 9 (citing Caraballo Seda v.
Javier Rivera, 261 F. Supp. 2d 76 (D.P.R. 2003)).
The Defendants also argue that any claim that might have existed is now moot
as to the PY16 funds, which were made available without restriction shortly after
CCWI filed this lawsuit. Id. at 5.
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2.
CCWI’s 12(b)(6) Opposition
CCWI recites the three factors to determine whether a statute creates a right
enforceable under § 1983. Pl.’s 12(b)(6) Opp’n at 2-3 (citing Colon-Marrero v. Velez,
813 F.3d 1, 38 (1st Cir. 2016); Blessing, 520 U.S. at 340-41).
CCWI argues that the first factor, whether the provision was intended to
benefit the plaintiff, weighs in favor of finding a right. Id. at 3-4. CCWI argues that
29 U.S.C. § 3242 uses language with an “unmistakable focus on the benefited class”
when it said that funds shall be made available “for a local area.” Id. (quoting
Gonzaga, 536 U.S. at 284) (emphasis in original); also citing Wilder v. Va. Hosp. Ass’n,
496 U.S. 498, 468-469 (1990); Wright v. Roanoke Redevelopment & Housing Authority,
479 U.S. 418 (1987)). CCWI distinguishes cases where the Supreme Court did not
find an individual right because in its view the provisions had an aggregate focus,
suggesting they were “not concerned with whether the needs of any particular person
have been satisfied.”
Id. at 3-5 (quoting Gonzaga, 536 U.S. at 288; also citing
Blessing, 520 U.S. at 342-344; Suter v. Artist M., 503 U.S. 347, 363 (1992)).
CCWI characterizes the cases under WIA, the predecessor statute to WIOA, as
“inapt.” Id. at 7. CCWI points out that WIA did not contain the provision at issue in
this case, and that none of those cases addressed similar issues of funding passthrough requirements. Id. at 7-8. Instead, CCWI analogizes to a recent decision from
another circuit finding an individual right. Id. at 8-9 (citing D.O. v. Glisson, 847 F.3d
374 (6th Cir. 2017)).
18
CCWI contends that the other factors used to determine whether a provision
confers a right weigh in its favor. Id. at 9-10. CCWI claims the statute is not “so
‘vague and amorphous’ that its enforcement would strain judicial competence”
because it only requires a court to decide a binary question, whether the funds have
been made available or not. Id. at 9. CCWI also emphasizes that the provision uses
mandatory rather than precatory terms, thereby imposing a binding obligation. Id.
at 9-10.
CCWI explains that once a court finds a provision confers a right, that right is
presumptively enforceable under § 1983 and this presumption is only overcome if
Congress indicated an intent to foreclose that remedy. Id. at 10-11. CCWI maintains
that WIOA does not contain any comprehensive alternate enforcement mechanism
resembling the ones courts have found sufficient to displace the availability of § 1983
relief. Id. at 11-13.
CCWI argues its claim is not moot as to the PY16 funds because the “voluntary
cessation of a challenged practice does not deprive a federal court of its power to
determine the legality of the practice.” Id. at 13-15 (quoting Friends of the Earth, Inc.
v. Laidlaw Envtl. Servs. (TOC), Inc., 528 U.S. 167, 189 (2000)).
Finally, CCWI insists that this case is not a contract dispute, where the parties
have the power to make offers with conditions attached and decline to enter an
agreement if they do not agree to those conditions. Id. at 15-18. CCWI emphasizes
that, despite the use of the term “contract” and “sub-recipient award agreement,” the
state has no authority to create an offer with additional conditions or decline to enter
19
into an agreement. Id. at 16-18. CCWI claims “the State is responsible for ensuring
that program funds are spent according to the requirements of WIOA, the State Plan,
the Local Plan, and applicable federal grant accounting regulations” but has no
further discretion in making funds available at the subaward stage. Id. at 17-18.
3.
Governor LePage and Commissioner Butera’s 12(b)(6)
Reply
The Defendants argue that the intended beneficiaries of WIOA are the
“individuals needing employment, education, training and support services,” not the
local workforce entities, and Congress denied the beneficiaries any right or
entitlement to service. Defs.’ 12(b)(6) Reply at 2-3.
The Defendants submit that the analytical framework set forth in earlier cases
from the Supreme Court relied upon by CCWI have been “significantly undercut, if
not implicitly overruled” by later cases. Id. at 4.
The Defendants suggest that finding an enforceable right would undermine
principles of federalism. Id. at 5-6. The Defendants explain that Spending Clause
legislation is like a contract between the Federal Government and the State, and the
State “did not voluntarily and knowingly agree to a federally enforceable right.” Id.
at 6. They portray this case as involving “policy decisions that should be left to the
political branches of State government.” Id.
Finally, the Defendants urge that “WIOA expressly contemplates a process of
negotiation and agreement involving the terms and conditions of WIOA programs
within each region between the local board, the [chief elected official], and the
Governor. Id. at 8-9 (citing 29 U.S.C. § 3141(c)(2)).
20
B.
Potential for Irreparable Harm to the Movant
CCWI argues that it will suffer immediate and irreparable harm if the Court
does not promptly issue injunctive relief because it will be forced to stop operating,
shut down its program, and terminate all employees by the end of June 2018, and its
service provider will be forced to do so by the end of January 2018. Pl.’s Inj. Mot. at
10-11.
The Defendants respond that CCWI has not been denied any WIOA funds, and
that it could avoid the alleged harm by accepting the contract the Defendants offered.
Defs.’ Inj. Opp’n at 18-20. The Defendants argue that the other regions’ acceptance
of the sixty-percent condition indicates CCWI will not suffer irreparable harm if it
accepted the contract, because “operational disruptions and inefficiencies” are not
sufficient to constitute irreparable harm. Id. (quoting Experience Works, Inc. v. Chao,
267 F. Supp. 2d 93, 97 (D.D.C. 2003)).
CCWI responds that going out of business constitutes irreparable harm. Pl.’s
Inj. Reply at 7-8.
CCWI argues that it is irrelevant that it could accept the
Defendants’ demands and mitigate the harm, because it need not submit to illegal
conditions, and giving the state the authority that would upset the finely tuned
mechanics of numerous federal funding statutes. Id.
C.
Balance of the Relevant Impositions
CCWI argues that there would be no harm to Governor LePage and
Commissioner Butera if the Court directed them to cease blocking access to federal
funds. Pl.’s Inj. Mot. at 11-12. In fact, CCWI argues, the injunction CCWI seeks
21
would benefit the Defendants by allowing federal funds to flow into the state and
ceasing to imperil other related programs. Id.
The Defendants respond that an injunction would interfere with state’s power
to impose state-wide policy objectives under WIOA. Defs.’ Inj. Opp’n at 20. The
Defendants also assert that CCWI could have avoided any burden it faces by entering
a contract, and the burden of doing so would have been minimal because the state
could not have imposed any sanction for two years following CCWI’s failure to meet
the sixty-percent requirement. Id.
D.
The Effect of the Ruling on the Public Interest
CCWI argues that there is a public interest “of the highest order” in having
government officials follow the law. Pl.’s Inj. Mot. at 12 (quoting Seattle Audubon
Soc'y v. Evans, 771 F. Supp. 1081, 1096 (W.D. Wash. 1991) (citing Olmstead v. United
States, 277 U.S. 438, 485 (Brandeis, J., dissenting)). CCWI emphasizes the risks to
the state workforce training system and the lost wages and economic benefits from
any loss of access to the services the local areas provide with the funds. Id. at 12-13.
The Defendants respond that the injunction would frustrate the state-wide
policy goal of increasing training spending and that frustrating the state wide policy
objectives is against the public interest. Defs.’ Inj. Opp’n at 20. The Defendants
suggest that trainees currently enrolled in WIOA services could switch to alternate
programs, like the State’s Competitive Skills Scholarship Program (CSSP). Id. at 19.
CCWI replies that the there is no “State policy objective” consisting of a sixtypercent training requirement, because the State Board removed the prior forty-
22
percent requirement after finding it led to negative results. Pl.’s Inj. Reply at 9-10.
CCWI also disputes whether the $3.8 million CSSP program could possibly substitute
for the lost public benefits from $8 million in WIOA funding. Id. at 11.
IV.
DISCUSSION
A.
Likelihood of Success on the Merits
Many federal statutory rights are enforceable though § 1983. DeCambre v.
Brookline Hous. Auth., 826 F.3d 1, 10 (1st Cir. 2016) (citing Maine v. Thiboutot, 448
U.S. 1, 4–8 (1980)). But not all violations of federal law are enforceable through a §
1983 action. “[The] plaintiff must assert the violation of a federal right, not merely a
violation of federal law.” Blessing, 520 U.S. at 340 (emphasis in original). Courts
must determine whether the statute “unambiguously confer[s] a right to support a
cause of action . . . .” Colón–Marrero v. Vélez, 813 F.3d 1, 17 (1st Cir. 2016) (quoting
Gonzaga 536 U.S. at 283). The First Circuit instructs that there are three factors
that determine whether a specific statutory provision confers a right:
First, Congress must have intended that the provision in question
benefit the plaintiff. Second, the plaintiff must demonstrate that the
right assertedly protected by the statute is not so “vague and
amorphous” that its enforcement would strain judicial competence.
Third, the statute must unambiguously impose a binding obligation on
the States. In other words, the provision giving rise to the asserted right
must be couched in mandatory, rather than precatory, terms.
Colón–Marrero, 813 F.3d at 17 (quoting Blessing, 520 U.S. at 340-41 (quoting Wright
479 U.S. at 431)). “If a plaintiff satisfies the threshold inquiry and demonstrates that
Congress intended to confer an individual right, the right is presumptively
enforceable by § 1983.” Id. at 16. A defendant can rebut the presumption by showing
that Congress either expressly “shut the door to private enforcement” in the text of
23
the statute creating the right, or impliedly, “by creating a comprehensive enforcement
scheme that is incompatible with individual enforcement under § 1983.” Id. (quoting
Blessing, 520 U.S. at 341).
1.
Does WIOA create a right for CCWI?
Section 3242(e) provides that “[f]unds shall be made available . . . for a local
area not later than 30 days after the date the funds are made available to the
Governor involved . . . or 7 days after the date the local plan for the area is approved,
whichever is later.” Section 3249(g) provides that “appropriations for any fiscal year
for programs and activities funded under this subchapter shall be available for
obligation on the basis of a program year” and that “[f]unds received by local areas
from States . . . during a program year may be expended during that program year
and the succeeding program year.” The Court concludes that, under Supreme Court
and First Circuit caselaw, § 3242(e) and § 3249(g) confer a right on the local areas to
the prompt availability of funds on a full program year basis once the approvals of
the State and Local Plans are in place and USDOL has allocated the funds to the
Governor.
a)
Were § 3242(e) and § 3249(g) intended to benefit
CCWI as “a local area”?
Under the first factor, a preliminary question is whether the provisions at issue
were intended to benefit this class of plaintiffs. With some hesitancy, the Court
ultimately concludes that Congress intended § 3242(e) and § 3249(g) to benefit a
discrete class of beneficiaries, the designated local areas under state plans that
receive the federal funds. The provisions confer a benefit “for a local area.” The
24
provisions require prompt funding on a program year basis and specifies whom that
benefit is “for.”
The Court’s hesitancy is first based on the absence of any prior caselaw on the
precise issue before the Court. Although the parties analogized the provisions of
WIOA to other laws and vigorously disputed each other’s analogies, the parties cited
no cases interpreting the WIOA provisions central to the dispute in this case. Defs.’
12(b)(6) Mot. at 8 (“[N]o reported decisions under WIOA address this precise issue”);
Pl.’s 12(b)(6) Opp’n at 7 (“Defendants’ suggestion that ‘no court has allowed a local
workforce board to bring a § 1983 action against a state under WIOA or its
predecessor statutes based upon the type of WIOA violation asserted here’ is
misleading, as it suggests that courts have addressed the question”). This leaves the
Court with a clean slate. Typically, where injunctive relief is sought, particularly as
in this case against the head of the executive branch of state government, the federal
court is not asked to blaze a new legal trail.
Next, CCWI proclaims that it can do what it acknowledges the ultimate
beneficiaries of the WIOA cannot do, sue the Governor and Commissioner for WIOA
funds.
Section 3554(12) of title 29 reads: “Nothing in this subchapter shall be
construed to provide an individual with an entitlement to a service under this
subchapter.” Under this language, if CCWI were without funds because the Governor
withheld them, a dislocated worker who would benefit from WIOA funding to help
secure “access to and opportunities for the employment, education, training, and
support services,” 29 U.S.C. § 3101, is statutorily barred from suing the Governor to
25
release the WIOA funds.
Nevertheless, under CCWI’s theory, even though its
customers are not legally permitted to sue for federal funds, it may. This anomalous
result gives the Court pause.
Analogizing the provisions of the WIOA to other statutes is imperfect because
the structure of the Act and its specific provisions clash with the goals and language
of other laws. Nevertheless, the Court looked for other cases where the ultimate
beneficiaries of the statute differ from the entities directly affected by the law. Here,
even though WIOA as a whole is focused on providing benefits to individuals in need
of workforce training, not on the local entities overseeing that training, the text of
the specific provisions at issue is focused on those entities that receive the funds from
the federal government through the states. The Court looked for caselaw where the
general principle is the same, even though the specifics differ.
The Court draws guidance from the First Circuit case of Colón–Marrero. In
Colón–Marrero, a voter challenged the legality of Puerto Rico’s removal of individuals
from the active voter registry in violation of the Help America Vote Act. Colón–
Marrero, 813 F.3d at 4. The First Circuit noted that the larger statutory section’s
“primary focus is the obligation of states to adopt measures to ensure accurate
registration records,” and not aimed at individual voter rights. Id. at 17. But the
specific subsection at issue in Colón–Marrero “further[ed] that objective” of enhancing
the accuracy of registration records “by directing state officials to implement certain
safeguards for voter roll maintenance.” Id. The First Circuit concluded this goal of
26
the specific provision, rather than other provisions or the statute as a whole, was
intended to benefit the class of plaintiffs bringing the lawsuit. Id.
As with the Help America Vote Act, WIOA as a whole is intended to benefit
individuals in need of workforce training, but § 3242(e) and § 3249(g) “further[ ] that
objective by directing state officials” to confer a financial benefit to the local areas or
their designated entities. In the words of the First Circuit, “Language that directs
state officials in the implementation of statutory objectives may still create an
enforceable right where it ‘mentions a specific, discrete beneficiary group within the
statutory text.’” Colón–Marrero, 813 F.3d at 17-18 (quoting Rio Grande Cmty. Health
Ctr. v. Rullan, 397 F.3d 56, 74 (1st Cir. 2005)). Sections 3242(e) and 3249(g) specify
a discrete class of beneficiaries – the local workforce areas – and they require states
to hand over funds to those entities in a prompt manner on a full program year basis.
The Court’s conclusion “is reinforced by the contrast drawn by the Supreme
Court in Gonzaga . . . between the language quoted . . . from Titles VI and IX [of the
Civil Rights Act] and the language of the Family Educational Rights and Privacy Act
of 1974 (“FERPA”) under review in that case.” Colón–Marrero, 813 F.3d at 18-19.
The Gonzaga Court pointed out that the FERPA provisions “speak only to the
Secretary of Education, directing that ‘[n]o funds shall be made available’ to any
‘educational agency or institution’ which has a prohibited ‘policy or practice.’” Id.
(quoting Gonzaga, 536 U.S. at 287). The Gonzaga Court noted that this focus on the
federal agency’s actions is “two steps removed” from the individual students who
brought suit in that case. Gonzaga, 536 U.S. at 287. The Supreme Court contrasted
27
that federal agency focus in FERPA with individually focused language which does
confer a right, like Titles VI and IX of the Civil Rights Act. Id. (quoting the Civil
Rights language that “[n]o person . . . shall . . . be subjected to discrimination.”).
The language in § 3242(e) and § 3249(g) is not directed solely at the federal
agency. At most the provisions would be one step removed from the providers, if they
were directed at the Governor. But § 3242(e) and § 3249(g) are not even directed
solely at the Governor. The text simply requires that the funds “shall be made
available” within the deadline and “shall be available for obligation only the basis of
a program year” and thus “speaks to” entities that might block those funds, such as
a governor, state agency, or federal agency. This suggests that Congress enacted §
3242(e) and § 3249(g) to confer individual benefits to the funding recipients and to
restrict the ability of any relevant actor to interfere with that benefit after the
Secretary approves the State Plan and the Governor approves the Local Plans and
the Secretary allots the funds to the Governor. Viewed this way, this language
confers a right on every local area not to have funds restricted beyond the thirty-day
window or on a basis shorter than a program year. See Colón–Marrero, 813 F.3d at
18 (“On its face, [the provision] confers a ‘right’ on every ‘registrant’ not to be removed
from a state's active registry for failure to participate in one general election”).
The Court’s conclusion is also supported by another line of caselaw.
In
Blessing, the Supreme Court declined to find an individual right when the statutory
language required “substantial compliance” or created a “yardstick for the [federal
agency] to measure . . . systemwide performance” rather than an “individual
28
entitlement to services.” Blessing, 520 U.S. at 343-44 (emphases in original). The
Blessing Court explained that if a statute only requires “substantial compliance” with
the provision
a
plaintiff asserts, Congress must
have
anticipated some
noncompliance, and thus did not intend to create a right. Id.
The Court examined § 3242(e) and § 3249(g), and their other subsections, for
language indicating Congress contemplated any level of noncompliance with the
prompt allocation of funds on a program year basis. The statutory language contains
no flexible standard or yardstick. The statutory requirement is binary. The funds
are either available for the local area within the timing window and until the end of
the second program year, or they are not. This further bolsters the Court’s conclusion
that Congress intended the language in question to confer a benefit on the local areas.
One countervailing indication from the caselaw is the source of authority
Congress used to enact WIOA. WIOA is Spending Clause legislation. The First
Circuit and Supreme Court caution against lightly concluding that statutes enacted
under Congress's spending power give rise to enforceable individual rights, as “the
typical remedy for state noncompliance with federally imposed conditions [in
spending legislation] is not a private cause of action for noncompliance but rather
action by the Federal Government to terminate funds to the State.” Colón–Marrero,
813 F.3d at 19 (quoting Gonzaga Univ., 536 U.S. at 280 (quoting Pennhurst State Sch.
& Hosp. v. Halderman, 451 U.S. 1, 28 (1981))).
Even so, the same analysis and tests apply to spending statutes as to any
others. See Rullan, 397 F.3d at 72-75. In Rullan, the First Circuit concluded that
29
certain federally qualified healthcare providers did have a right of action under 42
U.S.C. § 1396a(bb)(5) of the Medicaid statute, despite the fact that Medicaid was
enacted under Congress’ spending power. Id.
Rullan is particularly instructive when coupled with another First Circuit
case, Long Term Care Pharmacy Alliance. v. Ferguson, 362 F.3d 50 (1st Cir. 2004).
Both cases asked whether a certain class of medical service providers had an
enforceable right under a specific provision of the Medicaid statute. The Ferguson
Court examined 42 U.S.C. § 1396a(a)(13)(A), which provided that the State plan shall
provide:
(A) for a public process for determination of rates of payment under the
plan for hospital services, nursing facility services, and services of
intermediate care facilities for the mentally retarded under which—
(i)
proposed rates, the methodologies underlying the
establishment of such rates, and justifications for the
proposed rates are published,
(ii)
providers, beneficiaries and their representatives, and
other concerned State residents are given a reasonable
opportunity for review and comment on the proposed rates,
methodologies, and justifications,
(iii) final
rates,
the
methodologies
underlying
the
establishment of such rates, and justifications for such
final rates are published . . . .
Id. at 56. Rullan examined 42 U.S.C. § 1396a(bb)(5), which provided that:
(A) In general
In the case of services furnished by a [Federally Qualified Healthcare
Center] . . . pursuant to a contract between the center or clinic and a
managed care entity . . ., the State plan shall provide for payment to the
center or clinic by the State of a supplemental payment equal to the
amount (if any) by which the amount determined under [the earlier
paragraphs describing the payment system] of this subsection exceeds
the amount of the payments provided under the contract.
(B) Payment schedule
The supplemental payment required under subparagraph (A) shall be
made pursuant to a payment schedule agreed to by the State and the
30
[Federally Qualified Healthcare Center] . . . , but in no case less
frequently than every 4 months.
Rullan, 397 F.3d at 74.
In Ferguson, the First Circuit concluded the medical service provider did not
have an enforceable right under subsection (13)(A), but in Rullan, the First Circuit
concluded the medical service provider had an enforceable right under subsection
(bb)(5). Id. at 73-75. The Rullan Court explained that subsection (13)(A) “contained
no ‘rights-creating language,’ identified no ‘discrete class of beneficiaries,’ focused on
the state as a regulated entity rather than any individuals protected, and set out
broad, general goals.” Id. at 73. It concluded the opposite was true for subsection
(bb)(5). Id.
The combination of Ferguson and Rullan counsels in favor of the local area’s
possessing an enforceable right under § 3242(e) and § 3249(g).
WIOA, like the
Medicaid statute, ultimately seeks to benefit the individual service seekers, rather
than the service providers, but both statutes contain provisions that further that
larger goal by conferring benefits on certain types of providers in some circumstances.
CCWI’s position is stronger than the plaintiff in Rullan. The provisions of WIOA at
issue here confer a direct, mandatory funding benefit on CCWI as the designee of the
Coastal Counties local area, whereas the provision of the Medicaid statute at issue in
Rullan spoke to the requirements of the state plan, one step further removed from a
mandatory requirement conferred on the service providers. Despite this focus on the
state plan, the Rullan Court still found a right of action. Id. at 74 (“The mere fact
that all the Medicaid laws are embedded within the requirements for a state plan
31
does not, by itself, make all of the Medicaid provisions into ones stating a mere
institutional policy or practice rather than creating an individual right”). CCWI’s
right to the prompt allocation of funds on a program year basis only arises after the
approval of a state plan, but it is not contained within the provisions governing
administrative approval of state plans. It is an independent requirement.
Other provisions of WIOA confirm the viability of Spending Clause legislation
to create individual rights as long as Congress uses the proper language.
For
example, another section in WIOA provides, “No individual shall be excluded from
participation in, denied the benefits of, subjected to discrimination under, or denied
employment in the administration of or in connection with, any such program or
activity because of race, color, religion, sex . . ., national origin, age, disability, or
political affiliation or belief.” Id. § 3248(a)(2). This language is strikingly similar to
the language in Title VI and IX of the Civil Rights Act, which the Supreme Court held
is individually enforceable through § 1983. See Alexander v. Sandoval, 532 U.S. 275,
279 (2001) (discussing Cannon v. University of Chicago, 441 U.S. 677 (1979)). There
is no indication from the Supreme Court or the First Circuit that the presence of the
same language in a Spending Clause statute would not confer a right, when that same
language does so in a statute enacted under the Commerce Clause. Some courts have
concluded that similar language in WIA, WIOA’s predecessor statute, conferred an
enforceable individual right to be free from discrimination even though WIA was
enacted under the Spending Clause. See Caraballo Seda, 261 F. Supp. 2d at 80-83.
32
In sum, the Court concludes § 3242(e) and § 3249(g) were intended to confer a
benefit to the local areas.
b)
Is the asserted right so “vague and amorphous” that
enforcement would strain judicial competence?
CCWI’s asserted right to the prompt allocation of funds on a program year
basis is neither vague nor amorphous. CCWI claims that once the state and local
plans are approved and USDOL makes the state allocation, the funds must be made
available to them within 30 days and for a period of two program years. As noted
earlier, the requirement that § 3242(e) and § 3249(g) outlines is categorical and
binary. The funds are available for the entirety of the correct time window, or they
are not.
Any judicial relief the Court might provide would be similarly
straightforward.
The cases in which courts have found the asserted right too vague or difficult
to enforce involved ambiguous or subjective statutory requirements like “reasonable
efforts,” Suter v. Artist M., 503 U.S. 347, 360 (1992), and “sufficient” staffing levels.
Blessing, 520 U.S. at 345. There is no similar problem with the right to the prompt
allocation of funds on a program year basis that CCWI claims here.
c)
Is there a binding obligation, or is the language
mandatory, rather than precatory?
Section 3242(e) and § 3249(g) contain mandatory terms.
They impose a
binding obligation that the funds “shall” be made available within the specified time
frame and “shall be available for obligation only on the basis of a program year.”
Other provisions in WIOA use precatory or permissive language, which confers
discretion on state and federal actors. See e.g. 29 U.S.C. § 3201 (“The Secretary may
33
require the operator . . .”); id. § 3163 (“the Governor may use the reserved amounts .
. .”). By contrast, § 3242(e) and § 3249(g) are mandatory and binding.
Subsection 3249(g)(2)(A) does contain permissive language. Id. (“Funds
obligated for any program year for a program or activity funded under subtitle B [29
U.S.C. §§ 3151 et seq.] may be expended by each State receiving such funds during
that program year and the 2 succeeding program years. Funds received by local areas
from States under part B [29 U.S.C. §§ 3151 et seq.] during the program year may be
expended during that program year and the succeeding program year”) (emphasis
supplied). It uses the term “may.” But this language specifies what the local area
“may” itself do. Subsection (g)(2)(A) provides that the local areas are permitted to
use the funds for two program years. That is not precatory language providing what
others “may” do as it regards the local areas. This language still imposes a mandatory
obligation, it is simply that the focus on the local area’s ability places that mandatory
obligation on other actors not to interfere with the local areas’ ability. If a state tries
to prevent a local area from using the funds before the end of the second year, that
violates the statutory instruction that the local area is permitted to do so. The
USDOL Grants Management Administrator reached the same conclusion. Pl.’s Ex.
24 (“it would be impermissible for any contract to shorten the period of availability of
funds to the local area from the period specified in [29 U.S.C. § 3249(g)(2)(A)]”).
Since all three factors weigh in favor of a right, the Court concludes § 3242(e)
and § 3249(g) do confer a right to the prompt allocation of funds on a program year
basis to the local areas.
34
2.
Is the right to the prompt allocation of funds on a program
year basis enforceable under § 1983?
Since CCWI has satisfied “the threshold inquiry and demonstrate[d] that
Congress intended to confer an individual right, the right is presumptively
enforceable by § 1983.” Colón–Marrero, 813 F.3d at 17. “Congressional intent to ‘shut
the door to private enforcement’ of a federal statute may be shown by means of
language in the act itself specifically foreclosing a remedy under § 1983 or by
implication from Congress's creation of ‘a comprehensive enforcement scheme that is
incompatible with individual enforcement under § 1983.’” Id. at 20 (quoting Gonzaga,
536 U.S. at 284 n.4). The Supreme Court and the First Circuit caution against
“lightly conclud[ing] that Congress intended to preclude reliance on § 1983.” Id.
(quoting Gonazaga, 536 U.S. at 423-24 (quoting Smith v. Robinson, 468 U.S. 992,
1012 (1984))). The First Circuit instructs that “[a] plaintiff's ability to invoke § 1983
cannot be defeated simply by the availability of administrative mechanisms to protect
the plaintiff's interests.” Id. (quoting Blessing, 520 U.S. at 347 (quoting Golden State
Transit Corp. v. City of Los Angeles, 493 U.S. 103, 106 (1989))) (internal quotation
marks and modifications omitted).
Rather, the “dividing line” for inferring
Congressional intent to foreclose § 1983 enforcement is when “the statute itself”
provides for “a private judicial remedy for the violation of federal rights” but makes
that remedy “more restrictive” than that provided by §1983. Id. (citing City of Rancho
Palos Verdes v. Abrams, 544 U.S. 113, 119–21 (2005)).
There is no express language in WIOA removing § 1983 enforcement of the
local areas’ right to the prompt allocation of funds on a program year basis. The only
35
question is whether Congress created an alternate enforcement scheme incompatible
with individual enforcement. There are several enforcement mechanisms in the
statute that apply to different actors.
The Court proceeds in descending order
through the remedies and enforcement mechanisms, starting with those available to
the highest level actors and ending with the individual trainees.
First, USDOL has broad powers under the statute, including the power to
approve or deny state plans every four years, and at the intermediate two-year mark
if the state board and the governor submits modifications to the state plan. 29 U.S.C.
§ 3112(c). If the Secretary does not believe a state is complying with the requirements
of WIOA, it can use its power to approve or reject the state plan. Any applicant for
financial assistance dissatisfied with the decision of the Secretary to award or not
award assistance or to implement a corrective action can challenge the decision in a
hearing before an Administrative Law Judge (ALJ). Id. § 3246. The decision of the
ALJ constitutes a final agency action unless the Secretary overturns that decision,
and the final agency action is then subject to judicial review by a Court of Appeals.
Id. §§ 3246-47.
Second, governors certify local boards for each local area every two years and
can “decertify” a local board for fraud or abuse, or for failing to carry out their duties
under the statute. Id. § 3122(c)(2)-(3). Governors also have the power to approve or
reject local plans for consistency with the state plan on a four-year basis, and at the
two-year midpoint if the local board submits modifications. Id. § 3123(a), (e).
36
Third, WIOA requires that each state use “fiscal control and fund accounting
procedures as may be necessary to assure the proper disbursal of, and accounting for,
Federal funds allocated to local areas” and maintain records “in accordance with
generally accepted accounting principles applicable in each State.” Id. § 3244(a). The
statute also requires each state, governor, and local area receiving funds to “comply
with the applicable uniform cost principles” and “uniform administrative
requirements” included in federal circulars and rules. Id. § 3244(a)(2). Governors
are tasked with monitoring the local areas to ensure compliance with these uniform
administrative requirements.
Id. § 3244(a)(4).
Governors or the Secretary can
impose a corrective action or sanctions in the event a local area does not comply with
the financial controls. Id. §§ 3244(a)(5), (a)(7), (b). A local area can appeal any
corrective actions by a governor to the Secretary.
Id. § 3244(b)(2).
Any funds
recipients are liable to repay amounts they misspend if the misspending was due to
willful disregard, gross negligence, or a pattern of misspending. Id. § 3244(e)-(f). In
an emergency, the Secretary can give notice and an opportunity for a hearing and
terminate financial assistance to a recipient of the funds. Id. 3244(e). All of these
remedies under § 3244 “shall not be considered to be the exclusive remedies available”
for these violations. Id. §3244(g).
Fourth, governors and local boards create criteria which determine which
educational institutions and organizations are eligible to be service providers. Id. §
3151(a)-(g); id. § 3152(a), (b). They can then designate which individual providers
receive funds, and can deny or terminate eligibility. Id. § 3151(d); id. § 3152(c), (f).
37
There must be an administrative process for service providers to appeal such
determinations. Id. §3151(h)(2)(E); id. § 3152(c)(1).
Fifth and finally, WIOA contains specific requirements that apply to the
individual training recipients. For example, trainees “shall be compensated at the
same rates . . . as trainees or employees who are similarly situated.” Id. § 3241(a).
WIOA requires that “[e]ach state and local area . . . shall establish and maintain a
procedure for grievances or complaints . . . from participants and other interested or
affected parties” which includes an opportunity for a hearing. Id. § 3241(c). The
Secretary must make a final determination within 120 days. Id. § 3241(c)(2)(B). The
remedies from that process shall be limited:
(A) to suspension or termination of payments under this subchapter;
(B) to prohibition of placement of a participant with an employer that
has violated any requirement under this subchapter;
(C) where applicable, to reinstatement of an employee, payment of lost
wages and benefits, and reestablishment of other relevant terms,
conditions, and privileges of employment; and
(D) where appropriate, to other equitable relief.
Id. § 3241(c)(3). But nothing in that paragraph limiting remedies under § 3241 “shall
be construed to prohibit a grievant or complainant from pursuing a remedy
authorized under another Federal, State, or local law for a violation of this
subchapter.” Id. § 3241(c)(4).
For another example, WIOA requires that participants have an expeditious
appeal process if a state chooses to test participants for use of controlled substances.
Id. § 3241(f).
Similarly, WIOA prohibits discrimination against individual
participants based on protected characteristics, and tasks the Secretary with either
referring the matter to the Attorney General for a civil action, or taking “such other
38
action as may be provided by law.” Id. § 3248(b)-(c); § 3244(f). The Secretary’s
discrimination enforcement mechanisms “shall not be considered to be the exclusive
remedies available” for such violations. Id. § 3244(g).
None of these remedies contemplates the kind of dispute that forms the basis
of this litigation over the “Prompt Allocation of Funds” requirement or the “program
year basis” requirement of the statute. Section 3244(b)(2) provides the local areas
with an administrative appeal mechanism to the Secretary, but that process only
applies to corrective actions and sanctions by the Governor, not at issue here. Section
3241(c) requires States and local areas establish a grievance process for individual
“participants and other interested or affected parties” for violations of wage and labor
standard requirements, and the Secretary must respond within 120 days. But this
grievance process is for participants, not the local areas, whom WIOA tasks with
setting up this grievance process. Additionally, this process has limited remedies,
not suited to a conflict between a local areas and a state over these provisions. The
Defendants argue that the Court should not provide relief to CCWI because it sent a
letter to USDOL and initiated the 120 day grievance process. But the Court cannot
find, and the parties do not point to any provision creating an administrative
grievance process for the benefit of the local areas, as opposed to the beneficiaries,
based on violations of the right to the prompt allocation of funds on a program year
basis.
In short, the statute provides no clear alternate remedy for violations of the
right to the prompt allocation of funds on a program year basis. There are no
39
“unusually elaborate enforcement provisions” providing a “carefully tailored
administrative and judicial mechanism” to enforce that right. See Sea Clammers, 453
U.S. at 101; Robinson, 468 U.S. at 1009. For the right to the prompt allocation of
funds on a program year basis, WIOA does not “contain[ ] a remedial system that
includes judicial review but ‘limits relief in ways that § 1983 does not.’” Colón–
Marrero, 813 F.3d at 21 (quoting Rancho Palos Verdes, 544 U.S. at 122, 125.
Accordingly, the Court concludes CCWI’s right to the prompt allocation of
funds on a program year basis is enforceable through § 1983 because Congress did
not indicate an intent to foreclose that enforcement.
3.
Have the Defendants violated CCWI’s right to the prompt
allocation of funds on a program year basis?
The Court has determined that the relevant WIOA provisions confer a right to
the local areas, but it still must define the scope of that right and determine if CCWI
is likely to be able to show that Defendants violated that right.
a)
PY16 Funds
In its October 24, 2017 Complaint, CCWI demanded that Governor LePage and
Commissioner Butera release WIOA funds for both PY16 and PY17. Compl. at 11-12
(“WHEREFORE, Plaintiff [CCWI] respectfully request[s] that the Court: . . . E.
Preliminarily
and
permanently
enjoin
Defendants
Governor
LePage
and
Commissioner Butera to immediately make the PY 16 WIOA Funds available to
CCWI”). On November 1, 2017, however, Ed Upham, Director of the Bureau of
Employment Services for MDOL, wrote to Michael Bourret, Executive Director of
CCWI, and affirmed that the state would release the 2016 funds to CCWI. Joint Ex.
40
8, Letter from Ed Upham Director BES, to Michael Bourret, Executive Director, CCWI
(Nov. 1, 2017). Director Upham wrote:
Please consider this letter as rescission of my letter dated October 23,
2017 where you were told that PY 2016 WIOA funds . . . would not be
available after November 30, 2017 and PY 2017 WIOA contracts would
not be amended to extend past October 31, 2017. As outlined in my
letter of October 26, 2017, PY 2016 funds . . . will be available until your
contract end dates of June 30, 2018.
Id. As the state of Maine rescinded its earlier refusal to restrict access to the PY16
funds, the question arises whether CCWI’s lawsuit for PY16 WIOA funds is still
viable.
Even though the state of Maine has made the PY16 funds available “without
restriction,” CCWI takes the position that the Court should still rule on its claim for
PY16 funds because “there is no guarantee that Defendants will continue to make
the PY16 WIOA Funds available to CCWI.” Pl.’s 12(b)(6) Opp’n at 14. It maintains
that the dispute is “capable of repetition and a preliminary and permanent injunction
should be issued to ensure that Defendants do not withhold access to the funds in the
future.” Id.
CCWI is not willing to trust state government. It points out that although the
Defendants withdrew their October 23, 2017 attempt to block access to the PY16
funds, “defendant[s’] voluntary cessation of allegedly unlawful conduct ordinarily
does not suffice to moot a case.” See Laidlaw, 528 U.S. at 174; United States v. Oregon
State Med. Soc., 343 U.S. 326, 333 (1952) (“When defendants are shown to have
settled into a continuing practice . . . courts will not assume that it has been
abandoned without clear proof. It is the duty of the courts to beware of efforts to
41
defeat injunctive relief by protestations of repentance and reform, especially when
abandonment seems timed to anticipate suit, and there is probability of resumption”)
(internal citations omitted).
The Court is not as cynical about state government as CCWI. As the November
1, 2017 letter was written in the context of CCWI’s lawsuit against the Governor and
Commissioner, the Court views the letter as a promise to release the funds as
demanded. “Article III of the Constitution confines the judicial power of federal
courts to deciding actual ‘Cases’ or ‘Controversies.’” Hollinsworth v. Perry, 133 S. Ct.
2652, 2661 (2013) (citing U.S. CONST. art. III, § 2); see Ernst & Young v. Depositors
Econ. Prot. Corp., 45 F.3d 530, 535 (1st Cir. 1995). The Court does not see the need
to order the Governor and the Commissioner to do what they—through a subordinate
state official—promised to do.
CCWI worries that the Defendants’ promise to release the PY16 funds is a ruse
to avoid a judicial ruling in CCWI’s favor. Pl.’s 12(b)(6) Opp’n at 15 (“Defendants’
voluntary cessation of withholding the PY16 WIOA Funds from CCWI does not
deprive this Court of its power to determine the legality of the practice because
Defendants have failed to meet the ‘heavy burden’ of persuading this Court that they
will not repeat these actions in the future”).
But in this decision the Court is
addressing the PY17 funds and is therefore issuing the very ruling CCWI claims the
Defendants are seeking to avoid.
Given the state of Maine’s promise to release the PY16 funds at issue in
CCWI’s Complaint, the Court does not view the Plaintiff’s claim regarding the PY16
42
funds as necessitating injunctive relief. The Court will dismiss without prejudice so
much of Plaintiff’s Complaint as concerns WIOA funds for PY16. Of course, in light
of the dismissal without prejudice, if the Court’s faith in the state of Maine proves to
have been misplaced, CCWI is free to reinitiate its claim for the PY16 funds. The
Court turns to the real controversy between the parties: WIOA funds for PY17.
b)
PY17 Funds
As to the PY17 funds, the thirty-day time window from the date all the funds
were made available to the Governor has elapsed. Despite this, the Defendants argue
that they have satisfied their legal obligations by offering to enter into a contract with
CCWI provided that CCWI’s budget complied with a new sixty-percent training
requirement. CCWI argues that offering to make the funds available only if CCWI
meets a new condition is not truly making the funds available as the statute requires,
because they argue the Defendants had no authority to impose the new sixty-percent
condition at this stage. Essentially, the parties offer two competing interpretations
of the Governor’s authority under WIOA at the stage when the statute instructs that
the “funds shall be made available . . . within 30 days. . . .”
The parties do not agree on the nature of the legal instrument the state of
Maine uses to make money available to the local areas. Under Federal Office of
Management and Budget (OMB) guidance and regulations, a “federal award” is the
“Federal financial assistance that a non–Federal entity receives directly from a
Federal awarding agency or indirectly from a pass-through entity” or the “costreimbursement contract under the Federal Acquisition Regulations that a non–
Federal entity receives directly from a Federal awarding agency or indirectly from a
43
pass-through entity.” 2 C.F.R. § 200.38. A “recipient” means “a non–Federal entity
that receives a Federal award directly from a Federal awarding agency to carry out
an activity under a Federal program.” Id. § 200.86. A “subaward” means:
an award provided by a pass-through entity to a subrecipient for the
subrecipient to carry out part of a Federal award received by the passthrough entity. It does not include payments to a contractor or
payments to an individual that is a beneficiary of a Federal program. A
subaward may be provided through any form of legal agreement,
including an agreement that the pass-through entity considers a
contract.
Id. § 200.92. A “subrecipient” is “a non–Federal entity that receives a subaward from
a pass-through entity to carry out part of a Federal program; but does not include an
individual that is a beneficiary of such program.” Id. § 200.93. A “pass-through
entity” is “a non–Federal entity that provides a subaward to a subrecipient to carry
out part of a Federal program.” Id. § 200.74.
CCWI argues that it is a subrecipient of a subaward from the state, and the
state is a recipient of the larger federal award, making the state a pass-through
entity. The Defendants insist the state has offered a “contract” to CCWI, and as a
result it can place conditions on that offer just as any offeror could in any typical
contract setting.
On this issue, the Court concludes that CCWI has the better argument. For
purposes of federal funding systems, a “contract” means:
a legal instrument by which a non–Federal entity purchases property or
services needed to carry out the project or program under a Federal
award. The term as used in this part does not include a legal
instrument, even if the non–Federal entity considers it a contract, when
the substance of the transaction meets the definition of a Federal award
or subaward . . .
44
Id. § 200.22. “A contract is for the purpose of obtaining goods and services for the
non–Federal entity's own use and creates a procurement relationship with the
contractor.” In contrast to a contract, the regulations specify that:
Characteristics which support the classification of the non–Federal
entity as a subrecipient include when the non–Federal entity:
(1) Determines who is eligible to receive what Federal
assistance;
(2) Has its performance measured in relation to whether
objectives of a Federal program were met;
(3) Has responsibility for programmatic decision making;
(4) Is responsible for adherence to applicable Federal program
requirements specified in the Federal award; and
(5) In accordance with its agreement, uses the Federal funds to
carry out a program for a public purpose specified in
authorizing statute, as opposed to providing goods or
services for the benefit of the pass-through entity.
Id. § 200.330(a). Perhaps most importantly, the federal funding regulations specify
that “the substance of the relationship is more important than the form of the
agreement.” Id. § 200.330(c).
In short, the relationship of CCWI to the state of Maine is that of a
subrecipient, not a contractor.
There is no procurement relationship.
CCWI
determines which service providers are eligible to receive the federal funds. CCWI
has its performance measured in terms of the objectives laid out in the WIOA State
and Local Plans. It has responsibility for programmatic decision-making and carries
out the program for a public purpose. CCWI does not provide goods or services to the
state in exchange for consideration. The Defendants’ claim that CCWI has a typical
contract relationship with the State is undermined by the federal regulations and by
WIOA itself.
The previous instruments between CCWI and MDOL were called
45
“Subrecipient Award Agreement[s]” and explicitly refer to CCWI as the
“Subrecipient.” Joint Ex. 10.
The Court concludes that WIOA does not create a typical contractual
relationship where the parties have the liberty to make any offer contingent upon any
terms they might desire. An ordinary contract negotiation allows broad discretion on
the offeror, but both the text of the statute and the federal regulations contemplate a
relationship between CCWI and the State distinct from ordinary contract bargaining.
Once all the other conditions for federal WIOA funding have been met, the state in
effect becomes a pass-through of funds from the federal government to the local areas.
Since the Court concludes the Defendants do not have unlimited authority to
impose conditions on the WIOA funds at the subaward stage, the Court must
determine whether the sixty-percent training requirement is within the limits of the
State’s authority at that stage. The OMB regulations do contemplate additional
conditions imposed by a state at the subaward stage, but these are limited to financial
and accounting measures. See e.g. 2 C.F.R. § 200.331(a)(3) (required information on
subaward document includes “[a]ny additional requirements that the pass-through
entity imposes on the subrecipient in order for the pass-through entity to meet its
own responsibility to the Federal awarding agency including identification of any
required financial and performance reports”); id. § 200.331(a)(5) (required
information on subaward document includes “[a]ppropriate terms and conditions
concerning closeout of the subaward”); id. §§ 200.338-39 (“If a non–Federal entity
fails to comply with Federal statutes, regulations or the terms and conditions of a
46
Federal award, the Federal awarding agency or pass-through entity may impose
additional conditions” like “[requiring payments as reimbursements rather than
advance payments,” or requiring additional, more detailed financial reports and
monitoring, or the termination of the federal award).
The Court draws two conclusions from these regulations. First, the specificity
of what a state government may require of the local areas suggests what a state
government may not require.
In other words, there is no indication in these
regulations that state governments, as pass-through entities, may impose new
substantive conditions on the receipt of funds absent noncompliance with the
regulations by the recipient. The state of Maine has not claimed that CCWI violated
any of these regulations. Thus, there is no indication CCWI has ever failed to comply
with any financial, accounting, or any other type of requirement under WIOA or the
federal regulations.
To be clear, the state of Maine has the express authority under the regulations
to negotiate performance conditions with the local areas. At earlier stages, the
statute expressly contemplates negotiation between the Governor and the local areas,
but that negotiation occurs when the state adopts a state plan, and when the local
areas submit local plans for state approval. See 29 U.S.C. § 3141(b)(B) (“A State may
identify in the State plan additional performance accountability indicators”); Id.
§3141(c)(2) (“The local board, the chief elected official, and the Governor shall
negotiate and reach agreement on local levels of performance based on the State
adjusted levels of performance”); Id. § 3123(b)(17) (“the local plan shall include . . . a
47
description of the local levels of performance negotiated with the Governor and chief
elected official”).
At the late stage where a state passes a federal subaward through to a local
area, however, the structure of WIOA eliminates the possibility of a state requiring
additional performance metrics, because the Secretary must first approve any state
performance requirements before the state and localities implement them. See id. §
3141(b)(3)(iv)(I)-(II) (“The State shall reach agreement with the Secretary . . . on
levels of performance for each indicator” for each of the first two years of the state
plan, and then again for any adjustments the State makes as a modification to the
state plan for the third and fourth years); 20 C.F.R. § 677.165 (“States may identify
additional indicators of performance for the six core programs. If a State does so,
these indicators must be included in the Unified or Combined State Plan”).
Since the Court concludes the text and structure of WIOA and the OMB
regulations do not permit the state of Maine to impose additional performance
requirements at the subaward stage, the Court must determine whether the sixtypercent training requirement is consistent with the performance requirements
actually contained in the State Plan.
There is no explicit percentage training
requirement in the State Plan. Maine previously imposed a forty-percent training
requirement but removed it from the 2016 State Plan.
See Defs.’ Ex. 6.
The
Defendants argue that the remaining language in the 2016 State Plan authorizes it
to impose the new sixty-percent training requirement. In particular, the Defendants
point to the following language in the State Plan:
48
While we still feel it is important to set a goal, we now know that the
specific amounts to be set may have to differ from one local area to
another depending upon the differences in infrastructure costs and
percentage of harder to serve customers involved . . . We now feel the
best policy is to work with local areas to establish service spending goals
....
Id.
The Court cannot conclude this language authorizes the state to impose a sixtypercent training requirement at the subaward stage. The language refers to setting
different levels of performance for different local areas, not another flat percentage
requirement.
The language refers to setting “goals” rather than another
“requirement” or “condition.”
The new precatory language in the State Plan
contemplates nonbinding targets, rather than the old mandatory forty-percent
requirement. The language Defendants cite is under the heading “Policies to be
rescinded.” Id. Perhaps most importantly, it is difficult to imagine the public, the
local areas, or the Secretary would have understood this language as authorizing a
sixty-percent requirement when the language revoked the old forty-percent
requirement. Language repealing a more lax performance requirement would not
logically authorize the imposition of a more demanding one.
The Court concludes that the State Plan does not mandate the sixty-percent
training requirement.
The State Board’s recent vote rejecting the sixty-percent
spending requirement for the next round of planning further bolsters the Court’s
conclusion. As a result, the Defendants had no legal power under WIOA or the OMB
regulations to place the sixty-percent condition upon the availability of the funds for
the local areas at this stage.
49
Accordingly, the Court finds that CCWI is likely to prevail on the merits as to
the PY17 funds, because it likely will be able to establish that the Defendants violated
CCWI’s right to the prompt allocation of funds, which is enforceable through § 1983.
B.
Potential for Irreparable Harm to the Movant
CCWI has made a strong showing that it will suffer irreparable harm if the
Court does not issue an injunction.
Mr. Bourret testified about CCWI’s heavy
reliance on the WIOA funds, which the Defendants do not deny.
WIOA funds
represent seventy-five percent of CCWI’s entire PY17 funding stream.
The
remainder of its revenue consists of other grants which are contingent on the
infrastructure and systems CCWI maintains with the WIOA funds. As a result,
without gaining access to the PY17 funds before June 2018, Mr. Bourret testified that
CCWI will be required to shut down entirely at that point. Without access to the
funds, even before June, 2018, Mr. Bourret testified that CCWI will be required to
curtail its activities, and he was concerned that its service provider might be required
to close as early as the end of January, 2018. Once they shut their doors, Mr. Bourret
predicted that CCWI and its provider will not easily be able to reopen.
Mr. Bourret asserted that CCWI’s survival as an entity depends on access to
WIOA funds on the terms and in a time frame that federal law specifies and only on
the conditions contained in the State and Local Plans or contemplated by federal cash
management regulations. An imminent threat to the movant’s survival constitutes
irreparable harm. See e.g. Condon v. Andino, Inc., 961 F. Supp. 323, 331 (D. Me.
1997) (finding irreparable harm in large part because “[a]bsent a preliminary
50
injunction, Plaintiff will likely be forced to terminate his residential waste hauling
business”); Warren v. City of Athens, Ohio, 411 F.3d 697, 711 (6th Cir. 2005) (“. . .the
[entity] would likely go out of business. Such financial ruin qualifies as irreparable
harm”).
C.
The Balance of the Relevant Impositions
The Court must balance the potential harm or burden on CCWI from
withholding an injunction against the burden on the Defendants from issuing an
injunction.
The Court has already discussed the implications to CCWI if its request
for an injunction is denied.
Turning then to the imposition on the state of Maine, one concern that would
make CCWI’s claim more tenuous would be if CCWI were demanding funds from the
state of Maine’s fisc. If so, its lawsuit would have Eleventh Amendment implications.
The Eleventh Amendment provides:
The Judicial power of the United States shall not be construed to extend
to any suit in law or equity, commenced or prosecuted against one of the
United States by Citizens of another State, or by Citizens or Subjects of
any Foreign State.
U.S. CONST. amend. XI. In Edelman v. Jordan, 415 U.S. 651 (1974), the United States
Supreme Court wrote that “the rule has evolved that a suit by private parties seeking
to impose a liability which must be paid from public funds in the state treasury is
barred by the Eleventh Amendment.” Id. at 663. But CCWI’s lawsuit does not
51
demand a remedy that implicates the treasury of the state of Maine. Here, from what
the record reveals, the funds CCWI seeks to access are federal, not state funds.3
In 2004, dealing with a consent decree, the Supreme Court observed:
This case involves the intersection of two areas of federal law: the reach
of the Eleventh Amendment and the rules governing consent degrees.
The Eleventh Amendment confirms the sovereign status of the States
by shielding them from suit by individuals absent their consent. To
ensure enforcement of federal law, however, the Eleventh Amendment
permits suits for prospective injunctive relief against state officials
acting in violation of federal law. This standard allows courts to order
prospective relief, as well as measures ancillary to appropriate
prospective relief.
Frew v. Hawkins, 540 U.S. 431, 437 (2004) (internal citations omitted). Thus, in
Bruns v. Mayhew, 750 F.3d 61 (1st Cir. 2014), in the context of the Medicaid program,
the First Circuit wrote that “[a] state’s participation in the Medicaid program is
voluntary, but once a state chooses to participate it must comply with federal
statutory and regulatory requirements in order to receive federal matching funds.”
Id. at 63. Here, the state of Maine (at least for the time being) has elected to
participate in WIOA and is therefore required to “comply with federal statutory and
regulatory requirements in order to receive federal . . . funds.” Id.
The relief CCWI seeks is an order from a federal court to state officials
requiring them to distribute federal funds in accordance with federal rights. Based
on the record before it, if the Court issues an injunction, there would be little, if any,
burden on the state treasury, since the federal funds pass-through the state on their
way to the local areas.
This conclusion is based on the record before the Court. There is no indication in the parties’
filings that any state funds are involved in WIOA.
3
52
Accordingly, the balance of the equities tips in favor of CCWI.
D.
The Effect of the Ruling on the Public Interest
In the context of this case, balancing the public interest is difficult, because it
requires assessing CCWI’s need for the funds, the value of the tiered bureaucratic
structure that WIOA imposes, the role of state government in the dispersal of federal
funds, and the practical inability of state government to object on policy grounds to
federal law.
On its side of the ledger, CCWI has made a convincing showing that the
injunction it seeks is in the public interest. The Defendants have not suggested that
the underlying goals of WIOA are not laudable. As noted earlier, the stated purposes
of WIOA include “increas[ing] . . . access to and opportunities for the employment,
education, training, and support services” and the “alignment of workforce
investment, education, and economic development systems in support of a
comprehensive, accessible, and high-quality workforce development system . . . .” 29
U.S.C. § 3101. Although the Defendants are concerned about CCWI’s efficiency in
using the money for direct services, the Defendants do not dispute CCWI’s overall
allegation that it uses the approximately $3,000,000 in WIOA funds to directly or
indirectly help dislocated workers, low income adults, and young adults with barriers
to employment throughout the Coastal Counties Region. Compl. ¶ 28.
Congress expressed its intent to give the local areas control of the funds,
subject to prior negotiations with the Governor, State Board, and the Secretary at the
State and Local Plan stage of the process. There is a public interest to see that the
53
congressional intent is fulfilled and that the local and state actors comply with federal
law.
The State Plan also suggests the injunction CCWI seeks is in the public
interest. The State Plan is the end result of a public process of meetings, planning,
and approvals among citizens, the local areas, the State Board, the Governor, and the
Secretary.
The State Plan indicated that the previous forty-percent training
requirement “negatively impacted staff-assisted services” in some of the local areas.
Defs.’ Ex. 6 State of Maine 2016-2020 Unified Plan, at 2.
It also said, “Most
importantly when we reviewed the percentage of participants enrolled in formal
training before imposing the spending requirement and numbers didn’t change,
regardless of the amount spent . . . We did find that the cost per participant went up
significantly with the requirement.”
As a result of these concerns, the current State Plan repealed the previous
forty-percent training requirement and the State Board recently voted not to include
the sixty-percent requirement in the next State Plan. CCWI posits that there is a
public interest to vindicate the process WIOA outlines for setting performance
measures, and to uphold the negotiated choices that all the relevant actors made
during the last two successive planning stages.
In response, however, the Defendants—just as CCWI—justify their position on
the basis of an overriding public interest. This decision has described the tiered,
highly bureaucratic system under WIOA for the distribution of federal job training
funds. As Mr. Bourret conceded, CCWI does not itself provide any direct services to
54
job seekers. Instead, it contracts with Goodwill Industries of Northern New England
through Workforce Solutions, the service provider, which in turn provides direct
services.
Furthermore, Mr. Bourret testified that state government has no direct control
over CCWI’s budget. Instead, CCWI’s local board controls its budget. Mr. Bourret
testified that the local board consists of 51% local employers as well as
representatives of adult education, the community college system, the Job Corps, and
the AFL-CIO. It also has what is termed a Chief Elected Official (CEO), in this case
an elected County Commissioner, as a member of the Board.
As noted, WIOA also creates a state board, the SWDB. The SWDB is free to
agree or disagree with the state’s governor. Thus, on December 1, 2017, according to
Mr. Bourret and Commissioner Crosby, the SWDB voted to reject MDOL’s request
that it commit to spending at least 60% of its budget to direct training as opposed to
administrative costs, such as salaries, and infrastructure, such as leases.
This layered approach to job training comes at a cost. Although Mr. Bourret
certainly believes that CCWI’s oversight function adds value to WIOA’s job training
program, he conceded that he draws an annual salary of $97,000 and receives benefits
equaling an additional $27,000 for an annual total of $124,000. If his salary package
is duplicated in the other two regional local area organizations, the chief
administrators receive $372,000 in salaries, which under a less bureaucratic system
could directly assist people seeking work.
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One reflection of the possible inefficiency of multiple local areas is the
relatively small percentage of WIOA funds actually spent on direct training. Mr.
Bourret testified that in general one-third of CCWI’s budget is spent on staff, onethird on infrastructure, and one-third on direct training. As noted earlier, the 2012
State Plan called for 40% of the funds to be spent on direct training. Pl.’s Ex. 12
Workforce Investment Act, Strategic Plan 2012-2016, at 8 (“The goal is to move the
Training Expenditure statewide average up to 30% in PY13 and then to 40% by PY14.
In PY 14 each LWIB [Local Workforce Investment Board] will be asked to meet or
exceed the 40% goal”). Mr. Bourret testified that the 2012-2016 State Plan put
pressure on the local boards to reach this goal, and although CCWI was concerned
about whether it could meet the goal and objected to the 40% provision, it was
overruled. In the end, Mr. Bourret stated that CCWI’s budget dedicated 38% to direct
training.
During his testimony, Mr. Bourret discussed the fact that the 40% direct
training requirement did not survive into the 2016 State Plan, and that the current
State Plan contains no specific requirement as to the percentage of the local areas’
budgets that must go to direct training. Even though the 2016 version of the State
Plan sought to justify the elimination of even the 40% goal for direct services,
Governor LePage is apparently not convinced and maintains the view that the local
areas, including CCWI, should spend a higher percentage of their funds for direct
services. The Governor’s concerns have been met with resistance from the local
boards, particularly from CCWI.
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On its face, a job training organization that spends only about 30% of job
training funds on actual job training is not a model of efficiency, especially since the
organization has purely an oversight function, does no direct job training, and
contracts out what Mr. Bourret described as the “boots on the ground” work to a
service provider. Mr. Bourret testified that CCWI receives approximately $3,000,000
in WIOA funds and, using the 30% figure, only about $900,000 of that money goes to
direct services with about $2,100,000 going to salaries and infrastructure.
One can sympathize with the Defendants’ view that there must be a more
efficient way to get training funds to the people in need. CCWI properly stressed the
dire consequences flowing from the Governor’s withholding training funds. At the
same time, it may be a fair point that WIOA’s structure weaves into the provision of
training services unusually high administrative and infrastructure costs, annually
diverting millions of dollars that could be used to assist people. On these policy
issues, both CCWI and the Defendants make legitimate points.
Even though CCWI emphasized the tripartite structure of WIOA, consisting of
the federal government, the state government, and the local area organizations, the
plain fact is that under CCWI’s view of WIOA, state government is by far the weakest
among the three.
The Court already mentioned the SWDB’s vote to reject the
Governor’s demand that the local areas spend 60% of WIOA funds on direct services.
In addition, when Governor LePage sought to meet with CCWI’s board on September
26, 2017, Charles Crosby, the President of the CCWI Board and a County
Commissioner for Sagadahoc County, testified that he refused to attend the meeting
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unless it was publicly noticed and unless CCWI staff were allowed to attend.4 In fact,
Commissioner Crosby did not attend the scheduled meeting with the Governor.
Theoretically, the Governor has some influence over the contents of the State
Plan, which must be resubmitted every four years to the United States Secretary of
Labor for approval. 29 U.S.C. § 3112(a), (c). But WIOA and its regulations contain
mandates about the development of the State Plan, which entities must be allowed
to participate, and the process that the state of Maine must follow in developing its
quadrennial version of the State Plan. 20 C.F.R. § 676.105(d)(1)-(3)(i)-(vi). For
example, federal regulations require “an opportunity for public comment on and input
into the development of the Unified State Plan prior to its submission.” 20 C.F.R. §
676.130(d). The regulations specify exactly who must be allowed to comment:
The opportunity for public comment must include an opportunity for
comment by representatives of Local WDBs and chief elected officials,
businesses, representatives of labor organizations, community-based
organizations, adult education providers, institutions of higher
education, other stakeholders with an interest in the services provided
by the six core programs, and the general public, including individuals
with disabilities.
20 C.F.R. § 676.130(d)(1).
As outlined above, WIOA gives state government a number of roles in its
implementation, including audit and compliance functions, decertification authority,
and the ability to negotiate standards, and influence the contents of the State Plan.
The Court takes no position on whether Commissioner Crosby is correct in his interpretation
of Maine’s Freedom of Access Act, 1 M.R.S. §§ 401 et seq. The Court views Commissioner Crosby’s
refusal to meet with the sitting Maine Governor to discuss the Governor’s concerns about CCWI’s use
of public money as a direct reflection of the relative lack of power residing with state government under
WIOA.
4
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But none of the contemplated powers of state government under WIOA gives state
government the authority to effect a significant policy change in WIOA itself. Thus,
not surprisingly, the federal government retains federal authority over a federal law
it funds with federal money.
The same unequal authority under WIOA characterizes the state government’s
relationship with the federal government. Mr. Bourret stated that in 2012, the Maine
State Plan originally called for the elimination of local boards, but the United States
Department of Labor rejected Maine’s proposal and told the state of Maine that it
had to deal with the local boards. On July 17, 2017, Governor LePage wrote United
States Secretary of Labor R. Alexander Acosta, requesting that Maine be granted
“single State local area designation” under WIOA. Joint Ex. 1 Letter from Governor
Paul R. LePage to The Hon. R. Alexander Acosta, Sec. of Labor (Jul 11, 2017). On
August 30, 2017, Deputy Secretary Byron Zuidema responded to Governor LePage,
rejecting his request:
Unfortunately, we are unable to approve your request. WIOA Sec.
189(j)(3)(A)(i) explicitly prohibits the Secretary from waiving any
statutory or regulatory requirements relating to the establishment and
function of local areas and/or allocation of funds to local areas.
Additionally, 20 CFR [§] 679.270(a) provides that only “[the] Governor
of any State that was a single-State local area under the WIA as in effect
on July 1, 2013 may designate the State as a single-State local area
under the WIA as in effect on July 1, 2013 may designate the State as a
single-State local area under the WIOA.” There are currently no
statutory or regulatory procedures for a State with multiple local
workforce development areas to become a single-area State.
Joint Ex. 2 Letter from Deputy Assistant Sec. Byron Zuidema to The Hon. Paul R.
LePage (Aug. 30, 2017). The record therefore reveals that under current state of
things, the governor and state government are virtually impotent in their ability to
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influence significant policy changes with either the federal government or the local
areas under WIOA.5
In describing the policy interests involved here, the Court is not called on to
judge and does not decide who is right. The money is, after all, federal money, and if
Congress wishes to make a layered bureaucracy the price of the receipt of training
funds, it has the legal right to do so. It may be that WIOA’s current scheme is a better
way to obtain the benefit of local control, and to respond to the idiosyncrasies of local
labor markets while at the same time balancing the need for national uniformity
under a federal statute, and infusing a very modest degree of control from state
government. It may be that Governor LePage’s preference for lower administrative
costs and a higher percentage of direct services to people in need would be a more
effective way to deliver more services to the people WIOA was enacted to assist.
The Court cannot and does not resolve this policy debate. CCWI sees its
administrative oversight function as a local area as valuable and essential to the
proper delivery of WIOA services to people in need of training services; the Governor
sees CCWI as a wasteful and inefficient bureaucratic intermediary between the
federal and state governments and the people in need of training services; the Court
sees their policy dispute as in equipoise.
Two of the other local area organizations compromised with the Governor and accepted his
demand that 60% of their budget go directly to customer services. However, their acquiescence was
before the issuance of this Order, which confirms greater legal authority in the local area organizations
than they might have surmised.
5
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E.
The Statute, Timing and the Moral High Ground
The Court concludes that three of the factors weigh in favor of issuing the
injunction and the last is evenly balanced. The Court ends with a few points. The
statute demands the relief CCWI is requesting. The statutory language is mandatory
and clear: the funds a governor is required to allot to the local area “shall be made
available . . . for a local area not later than 30 days after the date the funds are made
available” to the governor “or 7 days after the date the local plan for the area is
approved, whichever is later.” 29 U.S.C. § 3242(e). Once the process reaches the
point where the federal government is ready to transfer WIOA funds to the state, the
state operates merely as a pass-through and must, as the statute says, make those
funds available to the local area “not later than 30 days after the date the funds are
made available to the Governor . . . .”
Another issue is timing. To the extent the Governor has the ability to effect a
significant change in the way the local areas in Maine operate under WIOA, his
efforts at reform cannot be at the moment the funds are to be released.
Thirdly, the Court does not perceive either CCWI or the state officials as
occupying a higher moral ground in this case. CCWI, in particular, occasionally
allowed a degree of rhetorical smugness to creep into its argument, painting itself as
championing the best interests of its customers against the unreasoned objections of
state government. To be clear, the Court is agnostic as to whether the current WIOA
model is a better approach or whether a more flexible, centralized model would result
in more money being spent for people in need of training. The Court does not blame
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CCWI for filing this lawsuit to obtain its allocated WIOA funding nor does it blame
Governor Paul LePage and Commissioner John Butera for seeking to make CCWI
and the other local areas more accountable, efficient and effective.
In addition, cognizant of the importance of judicial restraint, the Court is
extremely reluctant to enjoin the duly elected Governor and a duly appointed State
Commissioner to act, when they have chosen not to do so. The Court is conscious that
its injunction runs not only against a co-equal branch of government but against a
separate sovereign. The Court is exercising its authority to mandate state compliance
with a federal statute because in this case the statute clearly demands it and the
required action is confined and readily achievable.
Finally, although it is clear that an injunction should issue, the Court is not
clear what language would be appropriate for the injunction. This is because of the
rather arcane way the WIOA funds are transferred from Washington, D.C. through
Augusta, Maine to Brunswick, Maine, and the Court’s uncertainty about when the
funds are to be transferred. Mr. Bourret explained a rather complicated process by
which the WIOA funds are made available, and counsel for CCWI echoed the
complexity in his closing remarks. It is the Court’s intention to order the Defendants
to make the PY17 funds available to CCWI in the ordinary course. It may be that a
simple order, requiring the Defendants to release the funds would be appropriate, but
a simple order may be too simple, and would require the Defendants to release funds
before they would ordinarily be released. The Court will give the attorneys for both
CCWI and the Defendants seven days from the date of this opinion to consult and
62
propose to the Court acceptable language to be contained in the injunction. If the
parties are unable to agree on proper language, the Court will resolve their
disagreement.
V.
FINAL INJUNCTION
Prompted by CCWI’s urgent requests for relief and dire predictions of serious
consequences, the Court has driven this case through the system with unusual speed
without the standard discovery period.
Counsel cooperated and supplied some
discovery to the opposing party/parties. However, during the December 18, 2017
hearing, the Court discussed with the parties, the Defendants in particular, what
additional discovery they would need in order to fully litigate this case to a permanent
injunction and to allow for appeal. The Court charged counsel, especially counsel for
the Defendants, with considering what additional discovery was truly necessary after
the issuance of this order. To give counsel an opportunity to digest this opinion and
to propose what should happen next, the Court will grant the parties’ counsel the
same seven days from the date of this decision to notify the Court as to next steps.
VI.
CONCLUSION
The Court DENIES Defendants Paul R. LePage and John Butera’s Motion to
Dismiss (ECF No. 17). The Court DENIES in part and GRANTS in part Plaintiff
Coastal Counties Workforce, Inc.’s Motion for a Preliminary Injunction (ECF No. 16).
The Court DISMISSES without prejudice so much of Coastal Counties Workforce,
Inc.’s motion for preliminary injunction as applies to PY16 funds.
The Court
GRANTS Coastal Counties Workforce, Inc.’s motion for preliminary injunction as it
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applies to PY17 funds. The Court DEFERS issuance of the injunction on the PY17
funds in order to give counsel an opportunity to consult and propose specific language.
SO ORDERED.
/s/ John A. Woodcock, Jr.
JOHN A. WOODCOCK, JR.
UNITED STATES DISTRICT JUDGE
Dated this 3rd day of January, 2018
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