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ALJ rejects federal contractor’s novel attempt to obtain, via administrative forum, declaratory judgment that OFCCP violated its Fourth Amendment rights

September 20th, 2012  |  Cynthia L. Hackerott

A federal contractor’s administrative complaint against the OFCCP, seeking declaratory judgment that the agency violated the contractor’s Fourth Amendment rights by subjecting it to numerous audits without probable cause, has been dismissed by a Department of Labor (DOL) administrative law judge (ALJ) for lack of subject matter jurisdiction (U.S. Security Associates, Inc v OFCCP, ALJ Case No 2012-OFC-00004, September 17, 2012, Purcell, S). The ALJ ruled that the applicable regulations allow the DOL’s Office of Administrative Law Judges (OALJ) jurisdiction over complaints filed only by the OFCCP through the DOL’s Office of the Solicitor and that the regulations do not expressly authorize the initiation of a hearing before the OALJ by the filing an administrative complaint or other motion for relief by a contractor or subcontractor.

Administrative complaint filed by contractor, rather than OFCCP.  In an extraordinary move, the contractor, U.S. Security Associates Inc. (USSA), filed the complaint with the OALJ on June 21, 2012, alleging that the OFCCP violated USSA’s Fourth Amendment rights protecting against “unreasonable searches and seizures” because the agency lacked probable cause to commence audits at 21 of 34 establishments in which it initiated compliance reviews in approximately the last year.  According to the complaint, the OFCCP selected those 21 establishments without reference to a ”neutral administrative plan” and without evidence of a current violation of any of the laws enforced by the OFCCP, or their implementing regulations, as to any of the establishments at issue. USSA asserted that the OALJ had subject matter jurisdiction over the complaint pursuant to Executive Order 11246, as amended (EO 11246)); the Declaratory Judgment Act (28 USC Sec. 2201 et seq.); the OFCCP’s Rules of Practice (41 CFR Sec. 60-30); and Federal Rule of Civil Procedure (FRCP) 57.

On June 25, 2012, the ALJ ordered the parties to file briefs, within 10 days, addressing the OALJ’s authority to conduct a hearing on a contractor or subcontractor’s request for declaratory relief in the absence of an administrative complaint filed by the OFCCP under 41 CFR Sec. 60-30.5. Both parties filed briefs on July 5, 2012.

OFCCP regulations. The OALJ has subject matter jurisdiction over EO 11246 when an administrative complaint is filed under 41 CFR Sec. 60-30.5. That regulation expressly limits authorization to institute such proceedings to “[t]he Solicitor of Labor, Associate Solicitor for Labor Relations and Civil Rights Regional Solicitors and Regional Attorney upon referral from the [OFCCP],”  the ALJ explained, citing 41 CFR Sec. 60-30.5(a). Administrative cases brought pursuant to EO 11246 and the other laws enforced by the OFCCP are often based on the refusal of a contractor or subcontractor to give the OFCCP access to or to supply records or other information as required by law or to allow the OFCCP to conduct an on-site compliance review, but such proceedings are initiated by the filing of an administrative complaint under 41 CFR Sec. 60-30.5, the ALJ noted.

Thus, the regulations contemplate that the OALJ obtains the regulatory authority to adjudicate an OFCCP dispute only upon the filing of an administrative complaint by the OFCCP through the Office of the Solicitor. The regulations do not expressly authorize the initiation of a hearing before OALJ by the filing an administrative complaint or other motion for relief by a contractor or subcontractor. Therefore, the OALJ did not have subject matter jurisdiction over the contractor’s complaint under EO 11246 and the OFCCP’s Rules of Practice, the ALJ ruled.

FRCP 57. The ALJ also rejected the contractor’s argument that FRCP 57 was applicable to the complaint, ruling that FRCP 57 does not provide independent adjudicatory authority for the OALJ. USSA argued that FRCP 57 was applicable because it was incorporated by reference in the OALJ’s Rules of Practice, but the ALJ concluded that the OALJ’s Rules of Practice do not establish jurisdiction for proceedings before the OALJ. Moreover, the Federal Rules of Civil Procedure expressly provide that such rules govern the procedure for obtaining declaratory judgments under the Declaratory Judgment Act. Rule 57 is not applicable here because the complaint was not filed under the Declaratory Judgment Act which provides for filing a pleading seeking declaratory relief in “any court of the United States” and the OALJ is not a “court of the United States” in this context, the ALJ determined.

What next? Of course, the ALJ’s decision may not be the final word. USSA could appeal the ALJ’s decision to the DOL’s Administrative Review Board, and if unsuccessful, file a complaint in federal court.  Even if the ARB, and/or ultimately, a federal court, agrees with the ALJ’s conclusion that a contractor cannot initiate an administrative action, the merits of USSA’s Fourth Amendment claims could eventually be addressed if raised as a defense to any potential OFCCP enforcement action.