STATE OF NORTH CAROLINA DIVISION OF SERVICES FOR THE BLIND V. UNITED STATES DEPARTMENT OF EDUCATION REHABILITATION SERVICES ADMINISTRATION
Filing
23
MEMORANDUM OPINION AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE signed by MAG/JUDGE L. PATRICK AULD on 08/23/2019, that the Complaint/Petition (Docket Entry 1 ) be granted in part and denied in part as set out herein.(Taylor, Abby)
IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
STATE OF NORTH CAROLINA DIVISION
OF SERVICES FOR THE BLIND,
Plaintiff,
v.
UNITED STATES DEPARTMENT OF
EDUCATION, REHABILITATION
SERVICES ADMINISTRATION, and
LLOYD CHADWICK HOOKS,
Defendants.
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1:17cv1058
MEMORANDUM OPINION AND RECOMMENDATION
OF UNITED STATES MAGISTRATE JUDGE
Moving
pursuant
to
the
Randolph-Sheppard
Act,
20
U.S.C.
§§ 107-107f (the “RSA”), and the Administrative Procedure Act, see
5 U.S.C. §§ 701-706, the State of North Carolina Division of
Services for The Blind (the “Plaintiff” or “NCDSB”) seeks judicial
review of an “Opinion and Award” dated September 26, 2017 (the
“Arbitration
Award”).
“Complaint/Petition”) at 1.)1
(See
Docket
Entry
1
(the
In response, Lloyd Chadwick Hooks
(the “Defendant”), a blind vendor under the RSA, seeks confirmation
of both the Arbitration Award and a supplemental arbitration award
dated January 2, 2018 (the “Supplemental Award”).
Entry 14 at 8.)
(See Docket
For the reasons that follow, the Court should
1
Citations herein to Docket Entry pages use the CM/ECF
footer’s pagination.
affirm in part and vacate in part the Arbitration Award and affirm
the Supplemental Award as specified herein.
BACKGROUND
This dispute arises from the procedures used to award a
vending contract at a federal rest area along Interstate 85 in
Davidson
County,
North
Carolina
(the
“I-85
Rest
Stop”).
(See Docket Entry 1-1 at 1-5 (detailing procedural background in
Arbitration Award); Docket Entry 19-1 at 10-13 (summarizing same
matters in Plaintiff’s opening memorandum); see also Docket Entry
20 at 8 (setting forth Defendant’s agreement that Plaintiff’s
opening memorandum adequately summarized procedural history).)
Prior
to
the
underlying
arbitration,
Plaintiff
and
Defendant
“stipulated to the following facts” (A.R. 341)2 of relevance to
this proceeding:
“[Plaintiff] is the State Licensing Agency [(the “SLA”)]
responsible
for
administering
related regulations.”
(Id.)
the
[RSA]
and
for
implementing
“[Defendant] is a licensed operator
in [Plaintiff’s] Business Enterprises Program” (the “BEP”).
(Id.)
“Around August 2014, [BEP] operators were notified of an opening at
the I-85 [Rest Stop].”
(A.R. 342.)
Defendant and other operators
“submitted their application[s] to be considered for the I-85 [Rest
2 Citations to the “A.R.” refer to the Administrative Record
that Plaintiff and Defendant jointly filed in this matter.
(See Docket Entry 17 at 1, 2; see also Docket Entries 17-1 to 17-7
(containing the Administrative Record).)
2
Stop].”
(Id.)
“An interview panel comprised of Clay Pope ([BEP]
Chief), Steve Noble (Location Counselor), and Ron Eller (Vice-Chair
of the Elected Committee of Blind Vendors) conducted all interviews
. . . .”
(Id.)
“As part of the established interview process,
discretionary points were awarded to all interviewees.”
(Id.)
“Panel members Pope, Noble and Eller scored [Defendant] 8, 6, and
5 respectively on discretionary points.”
(Id.)
“Panel members
Pope, Noble and Eller scored the prevailing candidate 8, 6, and 8
respectively on discretionary points.”
(Id.)
“[Defendant] filed a written appeal to the Operator Relations
Committee [(the “ORC”)], which is a required step for an appeal in
the
[BEP].”
(Id.)
[Defendant’s] appeal.”
“[The
ORC]
(Id.)
entered
a
decision
denying
Next, “the [NCDSB] Director[]
entered a decision upholding the ORC’s determination.”
(Id.)
“[Defendant] requested a Full Evidentiary hearing and one was held
before [a] Hearing Officer . . . .”
(A.R. 343.)
“At the hearing,
[Defendant] contended the established interview procedures were not
followed and challenged the award of discretionary points by Mr.
Eller.”
appeal.”
(Id.)
(Id.)
“The hearing officer . . . den[ied Defendant’s]
Thereafter, “[Defendant] filed a complaint with
the United States Department of Education” (the “DOE”).
The
DOE
Defendant’s
convened
complaint.
an
arbitration
(A.R.
327.)
panel
(Id.)
to
adjudicate
Defendant
“submitted
transcripts of the interviews conducted by the interview panel, ORC
3
hearing, and the transcript of the Full Evidentiary hearing to the
Arbitration Panel.” (A.R. 343.) A three-person arbitration panel3
conducted a hearing on Defendant’s complaint, at which counsel for
Plaintiff and Defendant appeared and Defendant testified as a
witness.
(See A.R. 368-70.)
After the hearing, a divided panel
issued the Arbitration Award.
As relevant to this matter, the Arbitration Award found that
“the SLA failed to conduct a give and take interview as a basis for
awarding
discretionary
points
[in]
violat[ion
of]
Carolina Administrative Code] § 63C.0204(d)(5)(F).”
10A
[North
(A.R. 1161.)
As a result, it ordered (i) that “[a]ll of the discretionary points
awarded for filling the I-85 [Rest Stop] under subsection (5)(F)
shall be deleted from the scoring records of all applicants;”
(ii) that “[Plaintiff] shall reconstitute the original interview
panel with the same members, interview all of the original eight
applicants, record and transcribe all interviews as well as award
points
in
accordance
with
subsection
(5)(F)
and
its
5
+
5
practice;” and (iii) that “[Plaintiff] conduct the reconstituted
interview within sixty (60) days following its receipt of th[e
Arbitration Award].”
(Id.)
It further ordered (i) Plaintiff to
“provide licensees with access to all relevant financial data
3 Pursuant to the RSA, Defendant selected one arbitrator,
Plaintiff selected one arbitrator, and those two arbitrators
jointly selected a third neutral chair.
See 20 U.S.C. § 107d2(b)(1).
4
including, but not limited to, gross sales, gross profit, costs of
goods sold, overhead expenses and net profit for the I-85 [Rest
Stop] in accordance with 20 U.S.C. § 107b-1;” and (ii) the DOE and
Plaintiff to “set aside all regulations prohibiting or restricting
licensee
access
§ 107b-1.”
to
relevant
financial
data
under
20
U.S.C.
(Id.)
Finally, the arbitration panel ordered that, “[i]n the event
[Defendant] has the highest point total after points are awarded by
the reconstituted interview panel, he shall be assigned the I-85
[Rest Stop] and recover compensatory damages from [Plaintiff];” and
that, “[a]s the prevailing party in his section (5)(F) claim,
[Defendant] shall recover attorney fees,” in an amount to be
determined after further briefing.
Award
subsequently
directed
“the
(A.R. 1162.)
SLA
[to]
The Supplemental
pay
[Defendant’s]
attorney fees, expenses and costs in the amount of $52,965.02.”
(Docket Entry 14-1 at 24.)
DISCUSSION
I.
Relevant Standards
Under the RSA, “[a]ny blind licensee who is dissatisfied with
any action arising from the operation or administration of the
vending facility program may submit to a[n SLA] a request for a
full evidentiary hearing.”
20 U.S.C. § 107d-1.
“If such blind
licensee is dissatisfied with any action taken or decision rendered
as a result of such hearing, he may file a complaint with the [DOE]
5
who shall convene a panel to arbitrate the dispute . . . .”
Id.
“[T]he decision of such panel shall be final and binding on the
parties except,” id., that the decision “shall be subject to appeal
and review as a final agency action for purposes of chapter 7 of
such Title 5,” 20 U.S.C. § 107d-2(a), “that is, to judicial review
in accordance with the Administrative Procedure Act ([the] ‘APA’),
5 U.S.C. § 500 et seq., and, specifically, 5 U.S.C. § 706,” Jones
v. DeNotaris, 80 F. Supp. 3d 588, 591 (E.D. Pa. 2015).
See
also Sauer v. United States Dep’t of Educ., 668 F.3d 644, 650 (9th
Cir. 2012) (“An arbitration decision under the [RSA] is ‘subject to
appeal and review as a final agency action’ under the standards set
forth in the [APA].” (quoting 20 U.S.C. § 107d-2(a))); Browder v.
United States Dep’t of Educ., No. 99-2290, 238 F.3d 410 (table),
2000 WL 1724027, at *2 (4th Cir. Nov. 20, 2000) (“The underlying
arbitration panel decision we review today is deemed a final agency
action under the [APA].”).4
4 In the Supplemental Award, the panel majority asserted that
the Federal Arbitration Act (the “FAA”) governs judicial review of
RSA arbitration awards.
(See Docket Entry 14-1 at 4-10.)
In
moving to confirm, Defendant likewise maintained that “[t]he [FAA]
applies to the [Arbitration] Award and the Supplemental Award.”
(Docket Entry 14 at 9.) In subsequent briefing, however, Defendant
argued for confirmation solely pursuant to the APA (see, e.g.,
Docket Entry 20 at 43-44, 48), thereby abandoning his FAA argument.
Regardless, any contention that the FAA applies lacks merit. See,
e.g., Maryland State Dep’t of Educ., Div. of Rehab. Servs. v.
United States Dep’t of Educ., Rehab. Servs. Admin., No. CV 17-1383,
2018 WL 4604305, at *6-7 (D. Md. Sept. 25, 2018) (analyzing and
rejecting argument that either the FAA or a hybrid FAA/APA standard
governs appeal of RSA arbitration award).
6
The APA provides that, “[t]o the extent necessary to decision
and when presented, the reviewing court shall decide all relevant
questions
of
law,
interpret
constitutional
and
statutory
provisions, and determine the meaning or applicability of the terms
of an agency action.”
5 U.S.C. § 706.
As relevant here, the
reviewing Court shall also
hold unlawful and set aside agency action, findings, and
conclusions found to be —
(A) arbitrary, capricious, an abuse of discretion,
or otherwise not in accordance with law;
(B) contrary to constitutional
privilege, or immunity;
right,
power,
(C) in excess of statutory jurisdiction, authority,
or limitations, or short of statutory right;
(D) without observance of procedure required by
law;
(E) unsupported by substantial evidence . . .; or
(F) unwarranted by the facts to the extent that the
facts are subject to trial de novo by the reviewing
court.
5 U.S.C. § 706(2).
“In making [such] determinations, the [C]ourt
shall review the whole record or those parts of it cited by a
party, and due account shall be taken of the rule of prejudicial
error.”
5 U.S.C. § 706.
In other words, as the United States Court of Appeals for the
Fourth Circuit has explained, the Court “must uphold [an RSA
arbitration panel] decision if it is supported by ‘substantial
evidence,’
and
is
not
‘arbitrary,
7
capricious,
an
abuse
of
discretion, or otherwise not in accordance with law.’”
Browder,
2000 WL 1724027, at *2 (quoting 5 U.S.C. § 706(2)(A), (E)).
Further, “[i]n determining whether final agency action,” such as an
RSA arbitration award, “violates [S]ection 706(2)(A) of the APA,
‘[the Court] perform[s] only the limited, albeit important, task of
reviewing agency action to determine whether the agency conformed
with controlling statutes, and whether the agency has committed a
clear error of judgment.’”
Id. (some internal quotation marks
omitted) (quoting Maryland Dep’t of Human Res. v. United States
Dep’t of Agric., 976 F.2d 1462, 1475 (4th Cir. 1992)).
II.
Sovereign Immunity Challenge
In its first assignment of error, Plaintiff asserts that the
arbitration
panel
erred
in
awarding
compensatory
damages
to
Defendant if he wins the I-85 Rest Stop after the reconvened
interview, arguing that “[t]he Eleventh Amendment of the United
States
Constitution
prohibits
th[e
a]rbitration
[p]anel
from
awarding compensatory relief and bars enforcement of such awards in
federal court.”
Plaintiff
makes
attorney’s fees.
(Docket Entry 1 at 9; see also id. at 8.)5
the
same
contention
(See id. at 9.)
regarding
the
award
of
In Plaintiff’s view, “[t]he
5
Plaintiff concedes that the arbitration panel could
properly afford Defendant injunctive relief. (See, e.g., Docket
Entry 19-1 at 7 (“[A] state cannot implicitly waive its sovereign
immunity for compensatory damages by participating in a federal
program. Prospective equitable relief, however, is an appropriate
remedy for parties due to state action in a federal program.”).)
8
[a]rbitration [p]anel’s decision to award attorneys’ fees and
compensatory
damages
violates
sovereign immunity.”
the
State
of
North
(Docket Entry 19-1 at 16.)
Carolina’s
Conversely,
Defendant maintains that, “[a]s several Circuit courts have held,
the
[arbitration
p]anel’s
award
of
compensatory
damages
and
attorneys’ fees is enforceable because North Carolina waived its
Eleventh Amendment immunity when it voluntarily agreed to be an SLA
under the RSA.”
A.
(Docket Entry 20 at 9-10.)6
RSA Background
Congress
enacted
the
RSA
in
1936
“‘for
the
purpose
of
providing blind persons with remunerative employment, enlarging the
economic opportunities of the blind, and stimulating the blind to
greater efforts in striving to make themselves self-supporting.’”
Delaware Dep’t of Health & Soc. Servs., Div. for Visually Impaired
v. United States Dep’t of Educ., 772 F.2d 1123, 1125 (3d Cir. 1985)
(quoting Pub. L. No. 74–732, ch. 638, 49 Stat. 1559, 1560 (1936)
(codified as amended at 20 U.S.C. §§ 107-107f)).
To accomplish
these objectives, the RSA (as originally enacted) authorized “blind
persons licensed under the provisions of this Act . . . to operate
vending stands in” certain “Federal and other buildings in [each
participating] State.”
Id. (internal quotation marks omitted).
6
Defendant does not dispute the applicability of the
Eleventh Amendment to RSA arbitration proceedings. (See id. at 10
(“The
Eleventh
Amendment
applies
to
this
arbitration
proceeding.”).)
9
Section 3 of the original RSA envisioned the participation of
States in the program through SLAs, by providing that “[a] State
commission for the blind or other State agency desiring to be
designated as the agency for licensing blind persons for the
operation of vending stands as provided in this Act shall, with the
approval of the governor of the State, make application to the
Commissioner
of
requirements.
contemplated
Education
and
Id. at 1125-26.
a
contractual
agree”
to
certain
specified
“Thus, as first enacted, the [RSA]
relationship
states and the federal government.”
between
participating
Id. at 1126.
In 1954, Congress “substantially” amended the RSA.
Id.
As
part of this amendment, Congress increased the requirements for
designation as an SLA.
See id.
As amended, Section 3 of the RSA
mandated that “‘[a] State commission for the blind or other State
agency desiring to be designated as the licensing agency shall,
with the approval of the chief executive of the State, make
application to the Secretary and agree,’” inter alia, “‘(6) to
provide to any blind licensee dissatisfied with any action arising
from the operation or administration of the vending stand program
an opportunity for a fair hearing.’”
Id. at 1126-27 (quoting
Vocational Rehabilitation Amendments of 1954, Pub. L. No. 83–565,
ch. 655, 68 Stat. 663, 664).
As the United States Court of Appeals for the Third Circuit
has explained:
10
The 1954 amendment thus carried forward the contractual
relationship feature of the original Act and added [a]
requirement that the state agree that blind vendors have
certain property interests in the businesses established
pursuant to the [RSA].
The blind vendors became, in
effect, third party beneficiaries of the agreements
between the participating states and the federal
government. Moreover the states applying to participate
in the program undertook in [S]ection 3(6) to provide for
blind licensees dissatisfied with the operation of the
program “an opportunity for a fair hearing.” The 1954
amendment did not, however, specify the nature of the
hearing or the relief which should be afforded as a
result of such a hearing. Nevertheless, it is clear that
by authorizing the federal government to contract with
the states on the terms specified in [S]ection 3,
Congress intended to confer legally enforceable rights on
the blind beneficiaries of the program. The term “fair
hearing” cannot otherwise be understood than as an
expression of the intention to require participating
states to provide a mechanism of dispute resolution to
effectively enforce those rights. States participating
in the program after 1954 are so bound. In consideration
of the states’ undertakings, the federal government
grants to state agencies the right to license federal
sites to blind vendors.
Id. at 1127.
Twenty years later, Congress found, “[a]fter review of the
operation of the blind vending stand program authorized under the
[RSA], that the program has not developed, and has not been
sustained, in the manner and spirit in which the Congress intended
at the time of its enactment, and that, in fact, the growth of the
program has
been
inhibited by
a
number
of
external
forces.”
Rehabilitation Act Amendments of 1974, Pub. L. No. 93-516, 88 Stat
1617, 1617 (all-cap font omitted). Congress further found “that at
a minimum [certain] actions must be taken to insure the continued
vitality and expansion of the Randolph-Sheppard Program,” including
11
“establish[ing] administrative and judicial procedures under which
fair treatment of blind vendors, state licensing agencies, and the
federal government is assured.”
Id. (all-cap font omitted).
To
that end, Congress added arbitration provisions to “provid[e] a
means by which aggrieved vendors and State agencies may obtain a
final and satisfactory resolution of disputes under the RSA.”
Kentucky, Educ. Cabinet, Dep’t for the Blind v. United States, 424
F.3d 1222, 1226 (Fed. Cir. 2005) (internal quotation marks omitted)
(observing that, “prior to the [1974] amendment[,] blind vendors
and state licensing agencies had no neutral forum in which to press
claims of violations of the RSA that did not involve violations of
contract rights or federal procurement provisions”).
Accordingly,
Congress
revised
Section
3(6)
to
require
agreement
to provide to any blind licensee dissatisfied with any
action arising from the operation or administration of
the vending facility program an opportunity for a fair
hearing, and to agree to submit the grievances of any
blind licensee not otherwise resolved by such hearing to
arbitration as provided in section 5 of this Act [20
U.S.C. § 107d–1].
Delaware Dep’t of Health, 772 F.2d at 1127 (emphasis and brackets
in original).
In other words, Congress retained the Section 3
mandate that “states desiring to participate must ‘make application
to the Secretary and agree—’” to specified requirements, “add[ing]
to [S]ection (3)(6) the requirement that participating states
‘agree to submit the grievance of any blind licensee not otherwise
12
resolved in a fair hearing to arbitration’ as provided in a new
section of the [RSA].”
Notably,
“[w]hen
Id. at 1128 (internal brackets omitted).
Congress
in
1974
provided
that
states
desiring to gain access to blind vendor locations in federal
facilities must agree to submit to arbitration their disputes with
blind vendors, the term arbitration had a well-recognized meaning.”
Id. at 1136; see also id. (observing that, “[s]ince contract
arbitration
was
in
1974
a
legal
concept
with
a
well-settled
content, there is no ambiguity in [Congress’s] choice of the
term”).
More specifically, by 1974, “arbitrators proceeding under
the authority of the [FAA] or under the authority of the Uniform
Arbitration Act, as a matter of course[,] awarded retrospective
compensatory relief in appropriate cases.”
Id.
In addition,
“awards of back pay in arbitrations under collective bargaining
agreements were, by then, commonplace.”
B.
Id.
Compensatory Damages Challenge
Against this backdrop, Defendant urges the Court to find that
“North
Carolina
waived
its
sovereign
immunity
regarding
[compensatory damages] when it voluntarily agreed to be an SLA.”
(Docket Entry 20 at 10.)7
In turn, Plaintiff maintains that “the
7
“[A] State may waive its immunity by voluntarily
participating in a federal spending program provided that Congress
has expressed a clear intent to condition participation . . . on a
State’s consent to waive its constitutional immunity.” Madison v.
Virginia, 474 F.3d 118, 129 (4th Cir. 2006) (internal quotation
marks omitted) (ellipsis in original); accord New Hampshire v.
(continued...)
13
Eleventh Amendment bars compensatory damages . . . against a state
in a Randolph-Sheppard Arbitration.”
(Docket Entry 19-1 at 20.)8
Both positions find support in appellate decisions outside the
Fourth Circuit.
See, e.g., Tyler v. United States Dep’t of Educ.
Rehab. Servs. Admin., 904 F.3d 1167, 1193 (10th Cir. 2018) (finding
that SLA “has not waived its sovereign immunity to a damages award
from an RSA arbitration panel” (citing as a “[b]ut see” example
Delaware Dep’t of Health, 772 F.2d at 1138 (finding that SLA waived
sovereign immunity through RSA participation)), cert. denied sub
nom. Altstatt v. Fruendt, __ U.S. __, 139 S. Ct. 1214 (2019);
Sauer, 668 F.3d at 654 (explaining that in Premo v. Martin, 119
F.3d 764 (9th Cir. 1997), the court “held that the [SLA] had waived
its
sovereign
immunity
Randolph-Sheppard
program
by
and
agreeing
that
to
the
participate
arbitration
in
the
panel
was
authorized to award compensatory damages”); Tennessee Dep’t of
Human Servs. v. United States Dep’t of Educ., 979 F.2d 1162, 116569 (6th Cir. 1992) (concluding that RSA arbitrators possessed
authority to award retroactive monetary damages, but eleventh-
7(...continued)
Ramsey, 366 F.3d 1, 15 (1st Cir. 2004) (“A state can waive its
Eleventh Amendment immunity to suit . . . by consent to or
participation in a federal program for which waiver of immunity is
an express condition . . . .”).
8 “Because a [litigant] otherwise protected by the Eleventh
Amendment can waive its protection . . . . sovereign immunity is
akin to an affirmative defense, which [Plaintiff] bears the burden
of demonstrating.” Hutto v. South Carolina Ret. Sys., 773 F.3d
536, 543 (4th Cir. 2014).
14
amendment immunity precluded enforcement of such award in federal
court); McNabb v. United States Dep’t of Educ., 862 F.2d 681,
683-84 (8th Cir. 1988) (concluding that RSA arbitration panel could
award prospective, but not retrospective, compensatory damages);
see
also
McNabb,
862
F.2d
at
685
(Lay,
C.J.,
concurring
&
dissenting) (“agree[ing] with the Third Circuit’s conclusion that
the [E]leventh [A]mendment is not a bar to awarding compensatory
relief against state agencies under the [RSA],” but finding,
instead of waiver, that Congress “abrogate[d] sovereign immunity of
the participating states” under the RSA).
Plaintiff and Defendant agree that the Fourth Circuit has not
yet
determined
whether
eleventh-amendment
immunity
precludes
compensatory damages awards against an SLA in RSA proceedings.
(See Docket Entry 19-1 at 18; Docket Entry 20 at 11.)
However, in
an unpublished decision twenty-nine years ago, the Fourth Circuit
briefly addressed the applicability of the Eleventh Amendment to
compensatory damages awards in the RSA context.
See Morris v.
Maryland, No. 89-1013, 908 F.2d 967 (table), 1990 WL 101396, at *6
(4th Cir. July 11, 1990).9
There, blind vendors sued under the RSA
for, inter alia, the State’s alleged improper collection of setaside charges.
See id. at *1.
The district court dismissed the
vendors’ suit for failure to exhaust administrative remedies.
9 The parties did not discuss this decision. (See, e.g.,
Docket Entry 19-1 at 4-5 (listing cited authorities); Docket Entry
20 at 4-7 (same); see generally Docket Entry 21.)
15
See
id.
On
appeal,
the
vendors
argued,
in
part,
that
“an
administrative proceeding would have caused irreparable injury,”
id. at *2, on the theory that, “if the[ vendors] exhaust their
administrative remedies, they would be required to pay [the]
set-aside in the interim, but upon a later victory, recovery of the
charges would be precluded by the State’s eleventh amendment
immunity,” id. at *6.
The Fourth Circuit disposed of that argument as follows:
But the set-aside currently being collected has now
been approved by the Secretary; thus, it seems unlikely
that the amount is being collected in violation of the
[RSA]. The real issue in the merits of their case is
whether the State properly collected set-aside prior to
the Secretary’s approval — any irreparable injury in that
regard has already occurred.
It is also doubtful whether eleventh amendment
immunity would be available to the State if the vendors
do eventually file for a review of the administrative
proceedings. See Delaware Dep’t of Health . . ., 772
F.2d [at] 1136–37 . . . (eleventh amendment does not bar
recovery from state pursuant to Randolph–Sheppard because
the [RSA] requires the states to submit to arbitration,
where damages are commonplace; hence, relationship is
essentially contractual); Committee of Blind Vendors [v.
District of Columbia], 695 F. Supp. [1234,] 1240–41
[(D.D.C. 1988)] (agreeing with the Third Circuit’s
analysis on the issue). We, therefore, do not consider
it “likely” that the vendors will suffer irreparable
injury as a result of the exhaustion requirement.
Morris, 1990 WL 101396, at *6.
The Third Circuit’s decision cited in Morris analyzed both the
RSA arbitration panel’s authority to award compensatory damages and
the Eleventh Amendment’s impact on such damages awards.
As to the
first issue, the Third Circuit concluded that, in light of the
16
well-recognized
arbitration
practice
proceedings
of
awarding
when
compensatory
Congress
added
damages
the
in
arbitration
requirement to the RSA, the “unambiguous” statutory language, and
the absence of “legislative history support[ing] any reading of the
term arbitration other than the conventional one,” RSA arbitration
panels
possessed
authority
“to
award
compensatory
Delaware Dep’t of Health, 772 F.2d at 1136-37.
damages.”
The Third Circuit
then rejected the State’s argument that the Eleventh Amendment
barred such awards.
See id. at 1137 (“Thus Delaware’s only
remaining argument in support of vacating the arbitrators’ award is
that the eleventh amendment somehow authorizes it to withdraw
unilaterally from an arbitration agreement which it made with the
United States, acting in the interest of blind vendors.
contention lacks merit.”).
That
As to the latter issue, the Third
Circuit concluded that Delaware “plainly . . . waived” eleventhamendment
immunity
“when,
after
full
notice
of
the
[RSA’s]
requirements, one of which was an agreement to arbitration, it
voluntarily made application with the Secretary to participate in
the Randolph-Sheppard program.
The waiver of sovereign immunity
with respect to arbitration could hardly have been made more
clearly.”
Id. (citations omitted).
Since the Morris and Delaware Department of Health decisions,
however,
standards
the
United
for finding
States
Supreme
waivers of
17
Court
has
clarified
the
eleventh-amendment immunity.
See Sossamon v. Texas, 563 U.S. 277, 284-86 (2011) (finding that
States did not waive sovereign immunity as to monetary damages
under
statute
government”).
authorizing
“appropriate
relief
against
a
In particular, the Supreme Court explained that “a
waiver of sovereign immunity will be strictly construed, in terms
of its scope, in favor of the sovereign.”
quotation marks omitted).
Id. at 284.
Id. at 285 (internal
As such, “[w]aiver may not be implied.”
Moreover, “a waiver of sovereign immunity to other
types of relief does not waive immunity to damages[.]”
Rather,
“[t]he
waiver
of
sovereign
unambiguously to such monetary claims.”
marks omitted).
immunity
Id. at 285.
must
extend
Id. (internal quotation
Thus, “where a statute is susceptible of multiple
plausible interpretations, including one preserving immunity, [a
court] will not consider a State to have waived its sovereign
immunity.”
Id. at 287.
As relevant here, the RSA provides:
A State agency for the blind or other State agency
desiring to be designated as the licensing agency shall,
with the approval of the chief executive of the State,
make application to the Secretary and agree —
*****
(6) to provide to any blind licensee dissatisfied
with any action arising from the operation or
administration of the vending facility program an
opportunity for a fair hearing, and to agree to
submit the grievances of any blind licensee not
otherwise resolved by such hearing to arbitration
as provided in [S]ection 107d-1 of this title.
18
20 U.S.C. § 107b (emphasis added).
In turn, Section 107d-1
specifies in pertinent part that
[a]ny blind licensee who is dissatisfied with any
action arising from the operation or administration of
the vending facility program may submit to a[n SLA] a
request for a full evidentiary hearing, which shall be
provided by such agency in accordance with [S]ection
107b(6) of this title.
If such blind licensee is
dissatisfied with any action taken or decision rendered
as a result of such hearing, he may file a complaint with
the Secretary who shall convene a panel to arbitrate the
dispute pursuant to [S]ection 107d-2 of this title, and
the decision of such panel shall be final and binding on
the parties except as otherwise provided in this chapter.
20 U.S.C. § 107d-1(a) (emphasis added).
Entitled “[n]otice and hearing,” Section 107d-2(a) states:
Upon receipt of a complaint filed under [S]ection
107d-1 of this title, the Secretary shall convene an ad
hoc arbitration panel as provided in subsection (b).
Such panel shall, in accordance with the provisions of
subchapter II of chapter 5 of Title 5, give notice,
conduct a hearing, and render its decision which shall be
subject to appeal and review as a final agency action for
purposes of chapter 7 of such Title 5.
20 U.S.C. § 107d-2(a).
Finally, under the title “[c]omposition of
panel; designation of chairman; termination of violations,” Section
107d-2(b) specifies the procedure for appointing arbitrators for
arbitrations between an SLA and federal entity as well as between
an SLA and a blind licensee.
See 20 U.S.C. § 107d-2(b).
Notably,
although it specifies the arbitration panel’s scope of authority in
19
an arbitration between an SLA and federal entity,10 Section 107d2(b) provides no further details regarding arbitrations involving
blind licensees.
Compare 20 U.S.C. § 107d-2(b)(2) (SLA-federal
entity arbitration), with 20 U.S.C. § 107d-2(b)(1) (blind licenseeSLA arbitration).
Under these circumstances, and “[g]uided by Sossamon, [the
Court should] conclude that the RSA is insufficiently explicit to
render state participation in the RSA Program a waiver of sovereign
immunity from an RSA arbitration panel award for damages.”
904 F.3d at 1193.
Tyler,
Because “the [RSA] is silent as to any type of
remedy, only mandating the [arbitration p]anel’s decision ‘shall be
final and binding,’” Ohio v. United States Dep’t of Educ., 377 F.
Supp. 3d 823, 838 (S.D. Ohio 2019), appeal filed, No. 19-3397 (6th
Cir. Apr. 30, 2019), it qualifies as “open-ended and ambiguous
about what types of relief it includes,” Sossamon, 563 U.S. at 286.
See Tyler, 904 F.3d at 1193 (“[The RSA] is silent as to what
remedies aggrieved vendors may obtain against SLAs and is therefore
10
To wit:
[i]f the panel appointed pursuant to paragraph (2) finds
that the acts or practices of any such department,
agency, or instrumentality are in violation of this
chapter, or any regulation issued thereunder, the head of
any such department, agency, or instrumentality shall
cause such acts or practices to be terminated promptly
and shall take such other action as may be necessary to
carry out the decision of the panel.
20 U.S.C. § 107d-2(b)(2).
20
just as ‘open-ended and ambiguous’ as [the statute at issue in
Sossamon], if not more.”); see also New Hampshire v. Ramsey, 366
F.3d 1, 21-22 (1st Cir. 2004) (“At best, there is disagreement as
to whether the [RSA] arbitration panels can award damages, with
reasoned arguments made on both sides.”).
Thus, because the RSA
“falls short of the unequivocal textual expression necessary to
waive State immunity from suits for damages,” Madison v. Virginia,
474 F.3d 118, 131 (4th Cir. 2006), the Court should find that
“[Plaintiff] has not waived its sovereign immunity to a damages
award from an RSA arbitration panel,” Tyler, 904 F.3d at 1193.
See
also Tennessee Dep’t of Human Servs., 979 F.2d at 1168 (“[T]he
[RSA] contains no mention of retroactive liability or of states’
liability for, or immunity from, damages.
A mere reference to
binding arbitration in the [RSA] does not unmistakably suggest that
a vendor will be able to collect retroactive damages in federal
court or that a state will surrender its sovereign immunity.
According to the Supreme Court, much more explicit language is
required to abrogate or waive a state’s sovereign immunity.”).
C.
Attorney’s Fees Challenge
Plaintiff’s Complaint/Petition and opening memorandum assert
only
that
eleventh-amendment
attorney’s fees.
immunity
precludes
the
award
of
(See Docket Entry 1 at 9; Docket Entry 19-1 at
21
16,
20.)11
Defendant
responds
that
he
“is
entitled
to
his
attorneys’ fees because he was awarded non-monetary prospective
relief” and because “[t]he Fourth Circuit has upheld the award of
attorneys’ fees in a Randolph–Sheppard challenge.”
(Docket Entry
20 at 18 (emphasis omitted) (citing Almond v. Boyles, 792 F.2d 451,
456-57 (4th Cir. 1986) (“Almond”)).) Defendant’s arguments possess
merit.
In Almond, officials operating the RSA program in North
Carolina
deducted
“employer”
and
“employee”
retirement
contributions from vending machine proceeds in violation of the
RSA, depositing this money in the North Carolina Teachers’ and
State Employees’
Retirement
System
(the
“Retirement
System”).
See Almond v. Boyles, 612 F. Supp. 223, 225-26 (E.D.N.C. 1985)
(“Almond I”), aff’d in part, vacated in non-relevant part, 792 F.2d
451 (4th Cir. 1986).
In 1983, the North Carolina General Assembly
passed an act prohibiting any new blind vendors’ participation in
the Retirement System and requiring currently participating blind
vendors to irrevocably elect one of several options regarding their
Retirement System participation.
included
ceasing
participation
See id. at 226.
in
the
These options
Retirement
System
and
11
Plaintiff’s opening memorandum does not independently
address the interplay between eleventh-amendment immunity and
attorney’s fees; rather, Plaintiff devotes its eleventh-amendment
argument to compensatory damages and asserts without elaboration
that the Eleventh Amendment also bars attorney’s fees. (See Docket
Entry 19-1 at 16-20.)
22
“receiv[ing] a refund of ‘employee’ contributions plus statutory
interest,” but “vendors were not given the option to withdraw both
the ‘employer’ and ‘employee’ contributions from the [Retirement]
System.”
Id.
Blind vendors filed suit under the RSA against officials
administering both the RSA and the Retirement System, “seek[ing]
declaratory and injunctive relief on behalf of themselves and all
similarly situated Randolph-Sheppard vendors to recover all monies
that they were forced to contribute to the [Retirement] System.”
Id. at 225.
Granting the plaintiffs’ summary judgment motion, the
district court found that “[t]here was clearly a violation of the
[RSA] in this case,” and that “[t]he only equitable solution at
this point is to give the vendors the option to withdraw from the
Retirement System and receive a refund of their ‘employer’ and
‘employee’ contributions to the Retirement System plus statutory
interest.”
Id. at 226-27.12
The Almond I court then (i) granted
12 The Almond I court further found that eleventh-amendment
immunity did not preclude recovery of the employer contributions
from the Retirement System, see id. at 227-28, a ruling the Fourth
Circuit affirmed, see Almond, 792 F.2d at 456. That ruling does
not control the sovereign immunity analysis, however, as (i) it
addressed only the question of “whether requiring the Retirement
System to refund the vendors’ ‘employer’ contributions would in
effect be the same as a retroactive award of monetary damages
against the state,” Almond I, 612 F. Supp. at 227, without
considering any interplay between the RSA and sovereign immunity,
see id. at 227-28, and (ii), in any event, due to a subsequent
Supreme Court decision, the framework Almond I used in that regard
“is no longer applicable,” Hutto, 773 F.3d at 546 (citing Regents
of the Univ. of Cal. v. Doe, 519 U.S. 425, 431 (1997)).
23
class certification, (ii) ordered the preparation of class notices
and an accounting of all “employer” contributions to the Retirement
System, and (iii) required the Retirement System to “give members
of the plaintiff class the option of receiving an immediate refund
of
both
the
‘employer’
and
‘employee’
contributions
to
the
Retirement System, reduced by the amount of benefits actually
received, plus four per cent (4%) interest,” id. at 230.
See
id. at 229-30.
The parties thereafter appealed to the Fourth Circuit, with
the
defendants
granting
challenging
summary
judgment
“the
district
court’s
order
and
awarding
attorneys’
[sic]
fees
to
plaintiffs,” and the plaintiffs challenging “the interest component
of the judgment.”
Almond, 792 F.2d at 455.
The Fourth Circuit
rejected the parties’ contentions — mainly “for the reasons stated
by the district court,” id. at 456 (citing Almond I) — except that,
“[w]ith respect to the award of attorneys’ fees, [it] conclude[d]
that the district court applied the wrong standard in calculating
the
award,”
id.
The
Fourth
Circuit
therefore
vacated
the
attorney’s fees award and remanded to the district court for it to
recalculate the “appropriate attorneys’ fees.”
Id. at 457.
Defendant maintains that, although the Fourth Circuit “upheld
the award of attorneys’ fees” in that RSA challenge “without
substantial discussion, Almond remains binding precedent in the
Fourth Circuit.
Accordingly, the [arbitration p]anel’s award of
24
attorneys’ fees to [Defendant], as the prevailing party, should be
affirmed.”
(Docket Entry 20 at 18.)
Plaintiff’s reply counters
that Almond
is not binding precedent regarding awards of attorneys’
fees in [RSA] matters.
First, the context in which
attorneys’ fees were awarded in that case bears no
resemblance to this one. The award of attorneys’ fees in
Almond is also distinguishable from the present case
because the Almond award was an exception to the American
Rule.
(Docket Entry 21 at 7; see also id. at 8 (“Here, there is no
applicable
exception
to
the
American
Rule.”).)13
Plaintiff’s
contentions fall short.
To begin, Plaintiff fails to develop any argument related to
its broad statement that “the context in which attorneys’ fees were
awarded in that case bears no resemblance to this one” (id. at 7).
(See id. at 7-10.)
“A party should not expect a court to do the
work that it elected not to do.”
Hughes v. B/E Aerospace, Inc.,
No. 1:12cv717, 2014 WL 906220, at *1 n.1 (M.D.N.C. Mar. 7, 2014).
Similarly, Plaintiff provides no support for its suggestion that
the
Court
should
strike
the
attorney’s
fees
portion
of
the
Arbitration Award because “the Almond award was an exception to the
American Rule” (Docket Entry 21 at 7). (See generally Docket Entry
21.)
Almond I contains no discussion of attorney’s fees, see id.,
13 Under the so-called American Rule, a prevailing litigant
in the United States “is ordinarily not entitled to collect a
reasonable attorneys’ fee from the loser.” Alyeska Pipeline Serv.
Co. v. Wilderness Soc’y, 421 U.S. 240, 247 (1975).
25
612
F.
Supp.
at
223-30,
and
Almond
provides
no
explanation
regarding the grounds for awarding attorney’s fees, id., 792 F.2d
at 451-57.
In addition, Plaintiff has not presented, and the
undersigned has not found, the district court decision awarding
attorney’s fees.
(See Docket Entry 21 at 7-10.)
Accordingly, the
Court cannot determine that Almond’s affirmance of the awarding of
attorney’s
fees
rests
on a
factual
or
legal
foundation
that
materially differs from this case.
Conversely, a number of factors support the view that Almond’s
upholding of an award of attorney’s fees should control the outcome
here.
fees
First, Almond I and Almond involve an award of attorney’s
against
state
litigants
in
conjunction
with
prospective
equitable relief designed to remedy an RSA violation, the same
situation involved in this case.
Further, prior to the Almond
decision,
held
the
Supreme
Court
had
that
courts
may
award
attorney’s fees ancillary to injunctive relief in appropriate
circumstances, and that such awards do not contravene the Eleventh
Amendment when awarded against state litigants.
Finney, 437 U.S. 678, 689-700 (1978).
defendants
to
raise
a
sovereign
See Hutto v.
The failure of the Almond
immunity
challenge
to
the
attorney’s fees award on appeal, see 792 F.2d at 456, suggests that
the attorney’s fee award arose in the ancillary-to-injunctiverelief context.
Under these circumstances, Plaintiff has not
established that Almond “is not binding precedent regarding awards
26
of attorneys’ fees in [RSA] matters” (Docket Entry 21 at 7).
See
Doe v. Chao, 511 F.3d 461, 465 (4th Cir. 2007) (“It is axiomatic
that in our judicial hierarchy, the decisions of the circuit courts
of appeals bind the district courts . . . .”); see also United
States
v.
Collins,
415
F.3d
304,
311
(4th
Cir.
2005)
(“A
[published] decision of a panel of this court becomes the law of
the circuit and is binding on other panels unless it is overruled
by a subsequent en banc opinion of this court or a superseding
contrary decision of the Supreme Court.” (internal quotation marks
omitted)).
In its reply, Plaintiff next asserts that “[Defendant] relies
on Tennessee Dep’t of Human Servs. to argue that the American Rule
does not apply.”
(Docket Entry 21 at 8.)
However, Defendant did
not raise any arguments regarding the American Rule.
(See Docket
Entry 20 at 18-19 (asserting that the Tennessee Dep’t of Human
Servs. “Court found that the Supreme Court has held that ancillary
costs to the state, such as attorneys’ fees, are not barred by the
Eleventh Amendment if such costs are awarded only to a prevailing
party in regard to prospective relief”).)
Further, to the extent
that Plaintiff’s reply contends that the American Rule deprived the
arbitrators of authority to award attorney’s fees, “[t]he ordinary
rule in federal courts is that an argument raised for the first
time in a reply brief or memorandum will not be considered,”
Clawson v. FedEx Ground Package Sys., Inc., 451 F. Supp. 2d 731,
27
734 (D. Md. 2006).
See, e.g., Hunt v. Nuth, 57 F.3d 1327, 1338
(4th Cir. 1995) (explaining that “courts generally will not address
new arguments raised in a reply brief because it would be unfair to
the [other party] and would risk an improvident or ill-advised
opinion on the legal issues raised”); HSK v. Provident Life &
Accident Ins. Co., 128 F. Supp. 3d 874, 884 (D. Md. 2015) (“To the
extent
[the
plaintiff]
suggests
that
[the
defendant’s]
non-compliance with the settlement agreement is an independent
basis for liability, that argument is procedurally improper.
By
waiting to raise it until his reply brief, [the plaintiff] deprived
[the defendant] of an opportunity to respond, and deprived this
court of the benefit of any such response.”).
This rule has
particular force here, given that the applicability of the American
Rule to RSA arbitrations divides federal courts.
Compare, e.g.,
Tennessee Dep’t of Human Servs., 979 F.2d at 1169 (rejecting
argument that American Rule applies to RSA arbitrations), with
Tyler, 904 F.3d at 1194 (concluding that American Rule applies to
RSA arbitrations).
Finally, Plaintiff’s reply elaborates upon the position (to
which it adverted in its Complaint/Petition and opening memorandum
(see Docket Entry 1 at 9; Docket Entry 19-1 at 16, 20)) that, “[i]n
the context of the [RSA], an award of attorneys’ fees clearly
violates North Carolina’s Eleventh Amendment sovereign immunity.”
(Docket Entry 21 at 9.)
In Plaintiff’s view, “a state cannot have
28
reasonable
notice
that
Congress
intended
it
be
subjected
to
attorneys’ fees in [RSA] arbitrations where the act is silent on
fee assessments to the parties and where Congress expressed an
intent that certain costs be paid by the Secretary.” (Id. at 10.)14
As
such,
Plaintiff
contends,
the
RSA
lacks
the
necessary
“unequivocal expression of congressional intent for a state to
waive its immunity.”
(Id. at 9-10.)
Plaintiff’s assertions miss
the mark.
In Hutto, the Supreme Court rejected a State’s contention that
an attorney’s fee “award was subject to the Eleventh Amendment’s
constraints
on
treasury.”
Missouri v. Jenkins by Agyei, 491 U.S. 274, 278
(1989).15
actions
for
damages
payable
from
a
State’s
“After Hutto, therefore, it must be accepted as settled
14
Plaintiff’s reply does not contend that awarding
attorney’s fees against an SLA runs afoul of the RSA due to the
RSA’s provision that the DOE “pay all reasonable costs of
arbitration under this section in accordance with a schedule of
fees and expenses . . . publish[ed] in the Federal Register,” 20
U.S.C. § 107d-2(c). (See Docket Entry 21 at 9-10.) In any event,
Plaintiff could not have raised such an argument for the first time
in a reply brief. See Clawson, 451 F. Supp. 2d at 734.
15
In so ruling, the Hutto Court relied
on the distinction drawn in [the Supreme Court’s] earlier
cases
between
“retroactive
monetary
relief”
and
“prospective injunctive relief.” Attorney’s fees, [the
Supreme Court] held, belonged to the latter category,
because they constituted reimbursement of “expenses
incurred in litigation seeking only prospective relief,”
rather than “retroactive liability for prelitigation
conduct.”
[The Supreme Court] explained:
“Unlike
ordinary ‘retroactive’ relief such as damages or
(continued...)
29
that an award of attorney’s fees ancillary to prospective relief is
not subject to the strictures of the Eleventh Amendment.”
Id. at
279. Moreover, because “the Eleventh Amendment d[oes] not apply to
an award of attorney’s fees ancillary to a grant of prospective
relief,” Hutto’s holding “is unaffected by [the Supreme Court’s]
subsequent jurisprudence concerning the degree of clarity with
which Congress must speak in order to override Eleventh Amendment
immunity.”
Id. at 280.
Thus, the question of whether the RSA
speaks with sufficient clarity to effect a waiver of a State’s
sovereign immunity has no bearing on an award of attorney’s fees
ancillary to prospective equitable relief.
In sum, Plaintiff’s challenge to the attorney’s fee award
lacks merit.16
III.
Discretionary Points Challenges
A. Oral Exam/Interview
Plaintiff next maintains that the Arbitration Award erred in
“finding [that
Plaintiff]
failed
to
conduct
a give
and take
interview as a basis for awarding discretionary points in violation
15(...continued)
restitution, an award of costs does not compensate the
plaintiff for the injury that first brought him into
court. Instead, the award reimburses him for a portion
of the expenses he incurred in seeking prospective
relief.”
Jenkins, 491 U.S. at 278 (citations omitted).
16
Plaintiff does not challenge the calculation of the
attorney’s fee award. (See Docket Entries 19-1, 21.)
30
of 10A N.C.A.C. § 63C.0204(d)(5)(F)” (the “Interview Subsection”).
(Docket Entry 19-1 at 20 (capitalization and emphasis omitted).)
According to Plaintiff, (i) the Interview Subsection qualifies as
ambiguous (see id.), (ii) “[Plaintiff] interprets the statute to
provide for a single interview with the candidate with two scoring
components” (id. at 23 (citing A.R. 1171)), and (iii) “[Defendant]
was afforded a give and take interview that enabled the interview
panel to achieve its stated purpose of the interview, which is ‘to
evaluate
the
applicant’s
expertise,
maturity,
experience
and
ability’” (id. (quoting 10A N.C. Admin. Code § 63C.0204(d)(5)(F))).
In turn, Defendant contends that, “[a]s the arbitration panel
correctly found, [the Interview Subsection] unambiguously requires
that discretionary points be based on a ‘give and take’ interview,
and that did not occur.”
(Docket Entry 20 at 20.)
Defendant’s
position should prevail.
The North Carolina Administrative Code (the “Code”) provides
that, “[a]fter adding together the points from the sanitation,
seniority,
Financial
Analysis/Operating
Standards,
Customer
Relations and Oral Exam/Interview Sections [Subparagraphs (d), (1),
(2), (3), (4), (5), (6), (7) of this Rule] for each applicant, the
applicant with the highest point total (if above 60 points) shall
be awarded the [BEP facility] vacancy.”
10A N.C. Admin. Code
§ 63C.0204(c)(5) (second set of brackets in original).
to the “Oral Exam/Interview Section[,]” the Code states:
In regard
31
(5) Oral Exam/Interview:
(A) 30 points maximum.
(B) Interview shall be face to face (no conference
calls).
(C) All applicants shall be interviewed.
(D) The Interview Committee shall consist of:
*******
(E) The Oral Exam part shall consist of 10
questions drawn either from a pool of standard
questions or developed by the Interview Committee
prior to the interview.
The oral exam questions
shall relate to any special needs of the vacant
facility as well as to standard responsibilities
and knowledge areas of Business Enterprises
operators. Each member of the Interview Committee
shall evaluate the applicant’s response to each
question in the oral exam.
The applicant shall
receive one point by demonstrating basic knowledge,
the applicant shall receive one and one-half points
for demonstrating above average knowledge, and the
applicant
shall be
awarded
two points
for
demonstrating
exceptional
knowledge
for each
interview question. There shall be at least one
question involving a calculation and a talking
calculator shall be provided, although applicants
may bring their own. The oral exam shall yield a
possible 20 points.
(F) The interview part shall consist of a variety
of questions in a give and take format.
Each
member of the Interview Committee shall evaluate
the applicant’s response to the interview questions
and shall award up to 10 additional points based on
the applicant’s previous food service experience,
knowledge and financial performance.
If the
applicant meets the requirements for the facility,
the applicant shall receive five additional points.
If the applicant’s qualifications exceed the
requirements of the facility, he may be awarded up
to ten additional points.
The interview shall
include the following elements: questions related
to
business
philosophy
to
promote
general
32
discussion to enable the interview panel to
evaluate the applicant’s expertise, maturity,
experience and ability; a discussion of any related
work experience outside the [BEP]; at least two
business math questions. Since points are awarded
for seniority, time in the [BEP] shall not be
considered as a reason to award points; however,
relevant work experience in the [BEP] may be
discussed and taken into consideration. Applicants
may bring letters of recommendation, certificates,
and other documents that would aid the Interview
Committee in awarding its discretionary points.
(G) Each interviewer shall award discretionary
points individually and the total score of Oral
Exam and Interview points from each interviewer
shall be averaged and added to the applicant’s
points from the other Sections.
10A N.C. Admin. Code § 63C.0204(d)(5) (the “Regulation”).
Plaintiff asserts that the Interview Subsection qualifies as
ambiguous.
12.)
not
(See Docket Entry 19-1 at 20-23; Docket Entry 21 at 10-
As such, Plaintiff maintains, the Arbitration Award erred by
deferring
to
Plaintiff’s
alleged
20-year
“policy”
of
interpreting the Regulation “to provide for a single interview with
two scoring components.”
(Docket Entry 21 at 11; see also Docket
Entry 19-1 at 20-23.)
In Plaintiff’s view, contrary to the
arbitrators’ findings, “there is no requirement for panel members
to ask additional ‘give and take’ questions beyond the oral exam
component or to do anything beyond what was done here.”
Entry 21 at 11-12.)
First,
as
the
(Docket
Plaintiff’s contentions warrant no relief.
Arbitration
Award
correctly
found,
the
Regulation and Interview Subsection remain unambiguous on this
33
issue.
(See A.R. 1146-47.)17
The Regulation provides for an “Oral
Exam part” consisting of ten preselected standardized “oral exam
questions [that] relate to any special needs of the vacant facility
as well as to standard responsibilities and knowledge areas of
Business
Enterprises
operators.”
10A
N.C.
Admin.
Code
§ 63C.0204(d)(5)(E) (the “Oral Exam Subsection”) (emphasis added).
These oral exam questions must include “at least one question
involving a calculation,” and “[t]he oral exam shall yield a
possible
20
points,”
id.,
towards
the
“30
points
maximum”
attainable in the “Oral Exam/Interview,” 10A N.C. Admin. Code
§ 63C.0204(d)(5)(A).
The Regulation additionally mandates an “interview part [that]
consist[s] of a variety of questions in a give and take format,”
which can yield “up to 10 additional points” towards the possible
30-point total.
10A N.C. Admin. Code § 63C.0204(d)(5)(F).
Regulation
further
specifies
the
“elements”
“interview
part,”
including
“questions
required
related
to
for
The
the
business
philosophy to promote general discussion . . .[,] a discussion of
any related work experience outside the [BEP, and] at least two
business math questions.”
Id.
Although cautioning that time in
the BEP alone cannot “be considered as a reason to award points,”
the Regulation also permits “relevant work experience in the [BEP
17 “[D]etermining whether a regulation . . . is ambiguous
presents a legal question, which [the Court] determine[s] de novo.
Humanoids Grp. v. Rogan, 375 F.3d 301, 306 (4th Cir. 2004).
34
to] be discussed and taken into consideration.”
Id.
Finally, the
Regulation instructs the Interview Committee to award the ten
possible
points
“evaluat[ion
questions.”
of]
for
the
“interview
the
applicant’s
part”
response
based
to
the
on
their
interview
Id. (emphasis added).
Accordingly, the Regulation unambiguously requires both a tenquestion “Oral Exam,” 10A N.C. Admin. Code § 63C.0204(d)(5)(E), as
well as a separate “interview” involving “a variety of questions in
a give and take format,” 10A N.C. Admin. Code § 63C.0204(d)(5)(F).
Given that the Regulation’s plain language mandates this two-part
process, Plaintiff errs in contending that “there is no requirement
for panel members to ask additional ‘give and take’ questions
beyond the
oral
exam
component”
(Docket
Entry
21
at
11-12).
Rather, as the Arbitration Award correctly concluded, under the
Regulation, “[Plaintiff] has no discretion to conduct or not
conduct a ‘give and take’ discussion interview.
Subsection] has no ambiguity in that regard.
[The Interview
A ‘give and take’
interview is required under the regulations.
[Plaintiff] is
obligated to conduct such interviews and award interview points.”
(A.R. 1146.)
Moreover,
“[b]ecause
the
[R]egulation
is
not
ambiguous
. . .[,] deference [to Plaintiff’s alleged interpretation18] is
18 “Auer deference” refers to the practice of “defer[ring] to
agencies’ reasonable readings of genuinely ambiguous regulations.”
(continued...)
35
unwarranted.”
(2000).
Christensen v. Harris Cty., 529 U.S. 576, 588
As the Supreme Court recently explained:
[A] court should not afford Auer deference unless the
regulation is genuinely ambiguous.
See [id. at] 588;
[Bowles v.] Seminole Rock [& Sand Co.], 325 U.S. [410,]
414 [(1945)] (deferring only “if the meaning of the words
used is in doubt”). If uncertainty does not exist, there
is no plausible reason for deference.
The regulation
then just means what it means — and the court must give
it effect, as the court would any law. Otherwise said,
the core theory of Auer deference is that sometimes the
law runs out, and policy-laden choice is what is left
over. See supra, at 2412 - 2413. But if the law gives
an answer — if there is only one reasonable construction
of a regulation — then a court has no business deferring
to any other reading, no matter how much the agency
insists it would make more sense.
Deference in that
circumstance would “permit the agency, under the guise of
interpreting a regulation, to create de facto a new
regulation.” See Christensen, 529 U.S. at 588.
Kisor v. Wilkie, __ U.S. __, __, 139 S. Ct. 2400, 2415 (2019)
(parallel citations omitted).
Because the Regulation does not
qualify as “genuinely ambiguous,” id. at __, 139 S. Ct. at 2414,
deference
to
Plaintiff’s
alleged
interpretation
that
“the
[Regulation] provide[s] for a single interview with two scoring
components” (Docket Entry 21 at 11) “is ‘unwarranted,’” Kisor, __
U.S. at __, 139 S. Ct. at 2414.19
18(...continued)
Kisor v. Wilkie, __ U.S. __, __, 139 S. Ct. 2400, 2408 (2019).
19 Moreover, even assuming that the Regulation qualified as
ambiguous, Plaintiff has not established that this purported
interpretation reflects the “authoritative, expertise-based, fair[,
and] considered judgment,” id., 139 S. Ct. at 2414 (internal
quotation marks omitted), of the agency tasked with administering
the RSA. As support for its purported policy, Plaintiff cites only
(continued...)
36
In addition, the Arbitration Award correctly determined that
Plaintiff failed to afford Defendant the required interview.20
Here, the interviewers asked Defendant ten questions, each of which
he answered without further follow-up from any of the interviewers.
(See A.R. 688-97.)21
They then asked Defendant whether he had any
19(...continued)
to the conclusory statement in the Arbitration Award’s dissenting
opinion that Plaintiff interprets the Regulation as authorizing “a
single face-to-face event with two scoring components” (A.R. 1171)
and to Clay Pope’s testimony at the full evidentiary hearing that
“for the last 15 years or so” the oral exam/interviews have been
done the “[s]ame way,” with “the interview and oral exam” being
“considered one and the same” (A.R. 54, 55). (See Docket Entry 191 at 23; Docket Entry 21 at 11.) Plaintiff has not shown, however,
that the unsupported assertion of either the dissenting arbitrator
or Clay Pope (chief of the BEP rather than of Plaintiff) represents
the relevant “agency’s ‘authoritative’ or ‘official position,’
rather than [a] more ad hoc statement not reflecting the agency’s
views.” Kisor, __ U.S. at __, 139 S. Ct. at 2416. Absent proof
that the alleged interpretation “at the least emanate[s] from those
actors, using those vehicles, understood to make authoritative
policy in the relevant context,” the Court could not defer to the
purported interpretation even if the Regulation actually suffered
from ambiguity. Id., 139 S. Ct. at 2416.
20 Plaintiff suggests a de novo standard of review applies to
the issue of whether “[D]efendant was . . . afforded a ‘give and
take’ interview in accordance with [the Interview Subsection]”
(Docket Entry 19-1 at 24).
(See id. at 23-25; see also Docket
Entry 21 at 12 (“Under any fair analysis the actions taken by these
panel members would meet the requirements as set out in the
[C]ode.”).) Arguably, the challenged determination constitutes a
factual finding subject to the substantial evidence standard.
See 5 U.S.C. § 706(2)(E). Under any standard of review, however,
the Arbitration Award correctly determined that Defendant did not
receive the required interview.
21 At the time, Clay Pope (the head interviewer (see, e.g.,
A.R. 701)) called these questions the “interview questions” (A.R.
697), but he later described them as the “oral exam” (A.R. 58).
The differing terminology apparently reflects his practice of
(continued...)
37
questions or wished to present anything.
(See A.R. 697 (“All
right. ·That concludes the interview questions.
Now, [Defendant],
any questions you have or anything you’d like to [inaudible]
present?”).)
Defendant then presented “a few things” (id.),
without interruption by, or discussion with, the interview panel
(see
A.R.
697-701).
After
Defendant’s
presentation,
the
interviewers declined to ask any further questions, at which point
the transcript states:
“Interview Concludes.”
(A.R. 701 (all-cap
font omitted).)
This event does not satisfy the requirements for “[t]he
interview part,” 10A N.C. Admin. Code § 63C.0204(d)(5)(F), of the
“Oral
Exam/Interview
§ 63C.0204(c)(5).
Section[],”
10A
N.C.
Admin.
Code
The Regulation specifies that “[t]he interview
part shall consist of a variety of questions in a give and take
format” that “promote general discussion.”
§ 63C.0204(d)(5)(F).
10A N.C. Admin. Code
“Give and take” signifies an “[e]xchange of
talk, esp[ecially] of repartee,” Give and take, Oxford English
Dictionary, https://www.oed.com/view/Entry/78556#eid2944361 (last
visited Aug. 23, 2019), which in turn means, inter alia, “a lively
conversation,”
Repartee,
Oxford
English
Dictionary,
https://www.oed.com/view/Entry/162666 (last visited Aug. 23, 2019).
The record reflects that no such exchange occurred here; instead,
21(...continued)
conflating the interview and oral exam, in which “the interview is
an oral exam” (A.R. 56).
38
it reveals that (i) the interview panel conducted an oral exam
(which contained
no
interview
“elements,”
part’s
questions
regarding
namely
at
least
“related
work
one
of
the
experience
outside the [BEP],” 10A N.C. Admin. Code § 63C.0204(d)(5)(F) (see
A.R. 688-97)), (ii) asked Defendant a single additional question —
“any questions you have or anything you’d like to [inaudible]
present?” (A.R. 697) — and (iii) listened passively to Defendant’s
subsequent presentation (see A.R. 697-701).
In sum, the Regulation unambiguously requires both an Oral
Exam and
an
Defendant.
Interview, which
Plaintiff
failed to
provide
to
Accordingly, the Court should affirm the Arbitration
Award’s “finding [that Plaintiff] failed to conduct a give and take
interview as a basis for awarding discretionary points in violation
of 10A N.C.A.C. § 63C.0204(d)(5)(F)” (Docket Entry 19-1 at 20
(capitalization and emphasis omitted)).
B.
Eller’s Points
Plaintiff
next
contends
that
“there
was
no
substantial
evidence upon which the arbitration panel could reasonably conclude
that Mr. Eller’s [sic] awarded discretionary points arbitrarily.”
(Id. at 28.)
In so arguing, Plaintiff urges the Court to apply the
“[a]rbitrary and capricious standard” of “deferential review” to
Eller’s award of the ten potential points associated with “[t]he
interview part,” 10A N.C. Admin. Code § 63C.0204(d)(5)(F), of
39
Defendant’s Oral Exam/Interview. (See Docket Entry 19-1 at 25-28.)
The Court should reject these arguments.
As a preliminary matter, the Arbitration Award, not Eller’s
discretionary points determination, constitutes the “final agency
action” subject to the APA’s arbitrary and capricious review
standard.
See, e.g., Sauer, 668 F.3d at 650 (“An arbitration
decision under the [RSA] is ‘subject to appeal and review as a
final agency action’ under the standards set forth in the [APA].”
(quoting 20 U.S.C. § 107d-2(a))); Browder, 2000 WL 1724027, at *2
(“The underlying arbitration panel decision we review today is
deemed a final agency action under the [APA].”).
In addition,
because they did not afford Defendant the required interview, the
interviewers’ award of discretionary points for the interview
component of the Oral Exam/Interview necessarily qualifies as
arbitrary. See, e.g., Shipbuilders Council of Am. v. United States
Dep’t of Homeland Sec., 770 F. Supp. 2d 793, 800 (E.D. Va. 2011)
(explaining that an agency’s determination “lacked any evidentiary
foundation and, therefore, violated the APA’s prohibition against
arbitrary and capricious decision making” (internal quotation marks
omitted)).
Finally, substantial evidence supports the Arbitration Award’s
conclusion that Eller’s consideration of information not disclosed
during Defendant’s Oral Exam/Interview violated the Regulation.
(See A.R. 1147.)
Plaintiff maintains that “[it] has consistently
40
interpreted [the Interview Subsection] to mean that an applicant’s
relevant history within the BEP program may be discussed and/or
taken into consideration without any discussion of the same during
the interview.”
(Docket Entry 19-1 at 26.)
As support for this
alleged interpretation, Plaintiff relies on Pope’s description of
awarding discretionary points (see id. (quoting A.R. 77)),22 as well
as on Eller’s testimony that he awards discretionary points based
on information that “[they] don’t discuss [during] the interview”
(A.R. 93; see Docket Entry 19-1 at 27 (citing A.R. 93)).
However,
Plaintiff proffers no evidence that the individual interviewers’
evidentiary
hearing
testimony
as
to
their
personal
practices
regarding discretionary points constitutes the pertinent “agency’s
‘authoritative’ or ‘official position’ rather than a[] more ad hoc
statement not reflecting the agency’s views.”
__, 139 S. Ct. at 2416.
22
Kisor, __ U.S. at
Because Plaintiff fails to show that the
More specifically, the relevant testimony states:
Q. What is your definition of discretionary points?
A. The way I look at it is the way it goes in the rules.
It should be awarded five points if they can do the job.
And then from five to ten, it’s really at your discretion
what they presented, what I know about them as an
operator, how they’ve performed, that kind of thing.
Q. So for each person on the panel it would be a
subjective decision on how many points?
A. Right.
(A.R. 77.)
41
alleged interpretation “at the least emanate[s] from those actors,
using those vehicles, understood to make authoritative policy in
the relevant context,” the Court could not defer to the purported
interpretation
ambiguous.
even
if
the
Interview
Subsection
qualified
as
Id., 139 S. Ct. at 2416; see also id., __ U.S. at __,
139 S. Ct. at 2414 (explaining that courts can defer only to an
agency’s “authoritative, expertise-based, fair[, and] considered
judgment” (internal quotation marks omitted)).
In any event, as the Arbitration Award correctly concluded,
the Regulation unambiguously limits discretionary point awards to
material discussed during the interview.
regulations are clear, however.
(See A.R. 1147 (“The
The awarding of points must be
based on matters covered during an interview.
No provision exists
for ex parte or undisclosed considerations.”).)
The Interview
Subsection specifies that “[e]ach member of the Interview Committee
shall evaluate the applicant’s response to the interview questions
and shall award up to 10 additional points . . . .”
Admin. Code § 63C.0204(d)(5)(F) (emphasis added).
10A N.C.
It further
details “elements” that the interview must include, such as “a
discussion of any related work experience outside the [BEP].”
Id.
It then specifies that, “[s]ince points are awarded for seniority,
time in the [BEP] shall not be considered as a reason to award
points; however, relevant work experience in the [BEP] may be
42
discussed and taken into consideration.” Id.23 Thus, the Interview
Subsection
makes
discussion
of
relevant
BEP
experience
a
precondition to its consideration in awarding discretionary points.
Any other interpretation would impermissibly render superfluous the
phrase “discussed and.”
States
Coast
Guard,
See Shipbuilders Council of Am. v. United
578
F.3d
234,
244
(4th
Cir.
2009)
(“In
interpreting statutes and regulations, [courts] have a duty, where
possible, ‘to give effect’ to all operative portions of the enacted
language, including its ‘every clause and word.’”).
Finally,
substantial
evidence24
supports
the
Arbitration
Award’s finding that Eller did not base his award of discretionary
points
on
information
Exam/Interview.”
discussed
(A.R. 1147.)
during
Defendant’s
“Oral
Eller testified that he based his
discretionary points on three facts not discussed during the Oral
Exam/Interview:
Defendant’s alleged purchase of “Gatorade at a
Sam’s Club for his vending facility” (A.R. 1124), Defendant’s
alleged month-long absence from his location, and Defendant’s
23 In other words, the Interview Subsection permits, but does
not require, an interview committee to discuss and consider
relevant BEP experience in awarding discretionary points.
24 “[Substantial evidence] means such relevant evidence as a
reasonable mind might accept as adequate to support a conclusion.”
Richardson v. Perales, 402 U.S. 389, 401 (1971) (internal quotation
marks omitted); see also Tyler, 904 F.3d at 1178 n.7 (explaining
that, under the “substantial evidence and arbitrary or capricious
. . . . standards, [a court] do[es] not overturn an agency’s
factual findings if ‘a reasonable mind would consider the evidence
adequate to support the conclusion reached’”).
43
allegedly lenient sanitation grader.
(See A.R. 101-03; 842-44.)25
Therefore, substantial evidence supports the Arbitration Award’s
conclusion
that
“grader
Eller
also
violated
[the
Interview
Subsection] when he considered a Gatorade incident, an occasion
when the petitioner was away from his facility as well as his
sanitation grade.”
C.
(A.R. 1147.)
Remedy
To remedy the foregoing violations, the Arbitration Award
ordered Plaintiff to delete the previous discretionary interview
point awards, reconvene the same interview panel, and conduct
proper interviews of “the original eight applicants.”
see A.R. 1148, 1149.)
the
highest
point
(A.R. 1161;
It further ordered that, if Defendant “has
total
after
points
are
awarded
by
the
reconstituted interview panel, he shall be assigned the I-85 [Rest
Stop] . . . .”
(A.R. 1162.)
Plaintiff raises the following
challenge to this order:
The arbitration panel’s order that the licensing
agency delete all discretionary points awarded for the
I-85 [Rest Stop] contradicts the Department of Education
approved licensing agency regulation 10A N.C.A.C.
25 Eller changed his testimony regarding the source of this
information between the Grievance Hearing and the Full Evidentiary
Hearing. (Compare A.R. 101-03, with A.R. 842-44.) However, he
consistently testified that (i) he considered this information,
which (ii) was not discussed in the interview. (See, e.g., A.R.
92, 93, 101-03, 842-50.) Eller further testified that, if he had
not considered this information, he would have given Defendant
“[p]ossibly a six” for discretionary points. (A.R. 110.) If Eller
increased Defendant’s point total at all, Defendant would have won
the I-85 Rest Stop. (See A.R. 342, 1125, 1126.)
44
§ 63C.0204 regarding the award of facilities.
The
arbitration panel’s decision effectively creates an
arbitrary result, as any potential award of a location
that does not consider discretionary points directly
violates 10A N.C.A.C. § 63C.0204.
(Docket Entry 19-1 at 30, 31.)
This argument misconstrues the Arbitration Award, which merely
instructs Plaintiff to redo the interview with fresh discretionary
points awards, to ensure that the award of the I-85 Rest Stop
complies with the Regulation.
(See A.R. 1149 (“The original panel
. . . must be reconstituted to conduct (5)(F) interviews with each
of the applicants seeking a valid point total. Prior (5)(F) points
shall be deleted from the total score of each applicant.
The
reconstituted panel shall conduct interviews with and award points
to
all
eight
subsection
applicants
(5)(F).
recalculated.
and
Each
award points in
applicant’s
score
must
with
be
Then the applicant with the highest score must be
awarded the I-85 [Rest Stop].”).)
contends,
total
accordance
direct the
awarding
of
It does not, as Plaintiff
the I-85
Rest
Stop
without
considering discretionary points.26
Accordingly, Plaintiff’s challenge to the remedy portion of
the Arbitration Award’s conclusions regarding the handling of
discretionary
points,
like
the
related
objections
to
the
26
Indeed, the Arbitration Award explicitly rejected the
prospect of
omitting
discretionary
interview
points
from
applicants’ scores.
(See A.R. 1148 (“The difficulty with this
alternative is its[] noncompliance with subsection (5)(F). . . .
The only remedy for noncompliance is compliance.”).)
45
Arbitration Award’s determinations about the inadequacy of the
Interview and the arbitrary quality of Eller’s assignment of
points, entitle Plaintiff to no relief.
IV.
Confidentiality Regulation Challenges
Lastly, Plaintiff challenges the Arbitration Award’s order
that “[t]he Agency and [Plaintiff] shall set aside all regulations
prohibiting or restricting licensee access to relevant financial
data under 20 U.S.C. § 107b-1” (A.R. 1161).
at 28-30.)27
(See Docket Entry 19-1
This ruling originated with Defendant’s request for
certain financial information to calculate his compensatory damages
claim.
(See A.R. 1150-56.)
Plaintiff refused to disclose such
information (see A.R. 1150), on the grounds that “federal and state
regulations prohibit disclosure of financial information under
confidentiality provisions” (A.R. 1151).
The
Arbitration
Award
found
that
these
confidentiality
provisions violated Section 107b-1 of the RSA, which provides:
27 In that context, “Agency” apparently refers to the DOE.
(See A.R. 1153-55, 1160-62.) However, consistent with the federal
statute, see 20 U.S.C. § 107d-2(b)(1) (providing for arbitration
between SLA and blind vendor), the DOE took no part in the
arbitration between Plaintiff and Defendant. (See, e.g., Docket
Entry 1-1 at 1 (identifying parties in Arbitration Award); Docket
Entry 14-1 at 4 (acknowledging, in Supplemental Award, that “the
agency is not named as a party”).)
The arbitration panel thus
lacked authority over the DOE.
Therefore, to the extent that
Defendant
requests wholesale
confirmation
of both
awards
(see Docket Entry 20 at 51), the Court should decline to enforce
those aspects of the Arbitration Award and Supplemental Award that
address the DOE. See 5 U.S.C. § 706(2)(C).
46
In addition to other requirements imposed in this title
and in this chapter upon [SLAs], such agencies shall —
(1) provide to each blind licensee access to all
relevant financial data, including quarterly and
annual financial reports, on the operation of the
State vending facility program;
20 U.S.C. § 107b-1(1).
As the Arbitration Award stated, “[t]his
language is clear and unambiguous.
and annual financial reports.”
It is not limited to quarterly
(A.R. 1151.)
In the arbitration
panel’s opinion, without information regarding a facility’s “gross
profit,
cost
of
goods
sold,
overhead
expenses[,
and]
net
profit. . . .[,] a licensee may be making a financial mistake” in
applying for a facility, and “Congress did not intend to take
advantage of blind handicapped persons under the [RSA].”
1152.)
(A.R.
As such, the arbitrators concluded that “both federal and
state regulations conflict with the statute.
The regulations
simply
language.
are
not
in
accord
with
the
statutory
The
regulations prohibiting licensee access to facility financial data
must be set aside.”
(Id.)
Notably, in asking the Court to vacate this portion of the
Arbitration Award, Plaintiff fails to address the arbitrators’
ruling that the regulation conflicts with Section 107b-1 of the
RSA.
(See Docket Entry 19-1 at 28-30.)
In turn, Defendant
maintains only that this ruling “should be affirmed for the reasons
provided by the Panel at [A.R.] 1150-56, which are incorporated
[into Defendant’s memorandum] by reference.”
47
(Docket Entry 20 at
50.)
The parties “cannot expect the Court to do [their] work for
[them] . . . .”
Baptiste v. Capital One Bank (USA), N.A., No. CIV.
11-3535, 2012 WL 1657207, at *1 (D. Md. May 10, 2012).
Nevertheless,
certain
state
and
it
bears
federal
noting
that,
regulations
in
determining
violated
the
RSA,
that
the
arbitrators overlooked the fact that the RSA distinguishes between
“the
operation
program,”
20
[and]
U.S.C.
administration
§
107b(6),
of
but
the
the
vending
pertinent
facility
statutory
provision addresses only the “operation” of such programs, 20
U.S.C. § 107b-1(1). (See A.R. 1150-56.) This distinction “invokes
the rule that ‘[w]here Congress includes particular language in one
section of a statute but omits it in another section of the same
Act, it is generally presumed that Congress acts intentionally and
purposely in the disparate inclusion or exclusion.’”
Gardner,
513
U.S.
115,
120
(1994)
(brackets
in
Brown v.
original).
Moreover, this distinction carries particular relevance here given
that the challenged state regulation specifically references the
administration of the program. See 10A N.C. Admin. Code § 63C.0206
(“All information and records pertaining to participants in the
[BEP] shall be confidential and may not be revealed except in the
administration of the program, by the consent of the participant,
or as otherwise required by law.”).
Further, as the arbitrators
themselves posit, arguably the state regulation permits disclosure
48
of the disputed facility financial information in connection with
filling a facility vacancy.
(See A.R. 1151.)
In addition, that Section 107b-1’s “language is clear and
unambiguous” insofar as “[i]t is not limited to quarterly and
annual financial reports” (id.), does not automatically mean that
Section 107b-1 mandates the disclosure of all information obtained
in
the
“operation
or
administration
program,” 20 U.S.C. § 107b(6).
of
the
vending
facility
Indeed, Section 107b-1 limits the
permissible information to “relevant financial data” rather than
“all financial data,” see 20 U.S.C. § 107b-1(1), suggesting that
licensees should have access only to certain operation-specific
financial
information.
Such
information
might
include,
for
instance, information regarding accrued vending machine income, see
20 U.S.C. § 107d-3(c).
Defendant
point
to
However, neither the arbitrators nor
anything
in
the
RSA
suggesting
that
the
“relevant” financial data encompasses the desired facility-specific
information
(see
A.R.
1150-52;
Docket
Entry
20
at
50),
and
Plaintiff merely asserts, without support or elaboration, that
“[f]inancial data of individual blind vendors’ sales performance is
not relevant to ‘the operation of the State vending facility
program.’” (Docket Entry 19-1 at 29 (quoting 34 C.F.R. § 395.12).)
In sum, the arbitrators’ reasoning, which Defendant adopts,
does
not
conflict
clearly
with
the
establish
that
statute”
(A.R.
49
the
challenged
1152),
and,
in
“regulations
any
event,
Plaintiff’s sovereign immunity effectively moots the need for
disclosure of the disputed information, as Defendant cannot recover
compensatory damages.
Under these circumstances, the Court should
decline to enforce this portion of the Arbitration Award.
CONCLUSION
Sovereign
immunity
precludes
the
Arbitration
Award’s
contingent grant of compensatory damages, but not its award of
attorney’s fees.
In addition, the Arbitration Award correctly
determined (i) that Plaintiff violated the Regulation by failing to
conduct the required give and take interview, (ii) that Eller
violated the Regulation by basing his discretionary points award on
undisclosed considerations, and (iii) that Plaintiff must re-award
discretionary points after conducting proper interviews.
However,
the Court should not enforce the Arbitration Award’s directive
regarding disclosure of financial information.
IT
IS
THEREFORE
RECOMMENDED
that
the
Complaint/Petition
(Docket Entry 1) be granted in part and denied in part as follows:
1. The Arbitration Award be vacated insofar as it authorizes
compensatory damages.
(See Docket Entry 1-1 at 51.)
2. The Arbitration Award and Supplemental Award be affirmed in
their award of attorney’s fees.
24.)
50
(See id.; Docket Entry 14-1 at
3. The Arbitration Award be affirmed in its findings that
Plaintiff and Eller violated the Regulation. (See Docket Entry 1-1
at 50.)
4. The Arbitration Award be affirmed in ordering the deletion
of previous discretionary point awards.
(See id.)
5. The Arbitration Award be affirmed in ordering Plaintiff to
reconstitute the original interview panel, perform the required
give and take interviews with all eight original applicants, award
discretionary points based only on information disclosed in such
interviews, in conformity with the Regulation (see id.), and award
the I-85 Rest Stop to Defendant if he “has the highest point total
after points are awarded by the reconstituted interview panel” (id.
at 51).
6. The Arbitration Award be vacated insofar as it orders
Plaintiff to set aside confidentiality regulations and provide
blind licensees access to specified financial information.
(See
id.)
This 23rd day of August, 2019.
/s/ L. Patrick Auld
L. Patrick Auld
United States Magistrate Judge
51
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