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DOL ARB affirms ALJ finding that subject matter jurisdiction was lacking over contractor’s administrative complaint challenging OFCCP audit activity

June 9th, 2014  |  Cynthia L. Hackerott

Ruling that only the OFCCP has the authority, under the laws enforced by that agency, to file a complaint with the Department of Labor’s (DOL) Office of Administrative Law Judges (OALJ), the department’s Administrative Review Board (ARB) has affirmed an administrative law judge’s (ALJ) dismissal of a complaint filed by Entergy Services, Inc and related companies which asserted that the OFCCP engaged in unconstitutional audit activities. The plaintiffs had sought a declaratory judgment that the agency violated the contractor’s Fourth Amendment rights by subjecting it to numerous audits without probable cause. But the ARB agreed with the ALJ’s decisions in this and another case, made just months apart in 2012, that federal contractors are not authorized to initiate administrative actions against the OFCCP. (Entergy Services v OFCCP, ARB No 13-025, May 19, 2014, posted June 5, 2014, Igasaki, P., Corchado, L. and Edwards, L.)

On October 26, 2012, six subsidiaries of Entergy Corporation, including lead plaintiff Entergy Services, Inc (collectively, “Entergy”), a Delaware corporation headquarted in New Orleans, filed an administrative complaint with the DOL’s Office of Administrative Law Judges (OALJ), seeking declaratory relief from compliance review searches scheduled by the OFCCP pursuant to the laws enforced by the agency — Executive Order (EO) 11246, Section 503 of the Rehabilitation Act and the Vietnam Era Veterans’ Readjustment Assistance Act of 1974. In their complaint, the plaintiffs asserted that the manner in which the OFCCP selected Entergy establishments for compliance reviews violated their Fourth Amendment rights to be free from “unreasonable searches and seizures.”

ALJ ruling. On November 27, 2012, ALJ Stephen Purcell dismissed the complaint for lack of subject matter jurisdiction (ALJ No 2013-OFC-1). For reasons similar to those cited in his September 17, 2012 ruling in U.S. Security Associates, Inc v OFCCP (ALJ No 2012-OFC-4), the ALJ determined that the contractor’s arguments asserting that the OALJ had subject matter jurisdiction over the action, pursuant to the Administrative Procedure Act and the regulations governing the adjudication of OFCCP matters before the OALJ, were unavailing.

U.S. Security Associates decision. In U.S. Security Associates, the ALJ ruled 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 under 41 CFR Section 60-30.5, and therefore the OALJ did not have subject matter jurisdiction to entertain an administrative complaint filed by the target of an OFCCP compliance review seeking declaratory relief from that compliance review. On June 20, 2013, the ARB dismissed as moot the contractor’s appeal of the ALJ’s decision in U.S. Security Associates due to a settlement reached by the parties (ARB No 13-003). The Entergy plaintiffs are represented by the same law firm as plaintiffs in U.S. Security Associates.

ARB ruling. On December 12, 2012, Entergy appealed the ALJ’s ruling to the ARB. Deciding that the ALJ correctly determined that Entergy’s complaint for declaratory relief was not properly before the OALJ, the ARB found no authorization in the laws enforced by the OFCCP or their implementing regulations empowering any party other than the OFCCP, represented by the DOL Solicitor’s Office, to file a complaint under these laws.

Specifically, the prehearing procedures set forth in the Rules of Practice and Procedure for Administrative Proceedings pertaining to the laws enforced by the OFCCP (at 41 CFR Section 60-30.5(a), incorporated at 41 CFR Section 60-250.65(a) – (b) and 41 CFR Section 60-741.65(a) – (b)), provide that:

“The Solicitor of Labor, Associate Solicitor for Labor Relations and Civil Rights Regional Solicitors and Regional Attorney upon referral from the Office of Federal Contract Compliance Programs, are authorized to institute enforcement proceedings by filing a complaint and serving the complaint upon the contractor which shall be designated as the defendant. The Department of Labor, OFCCP, [] shall be designated [as] plaintiff.”

This section expressly grants only the OFCCP the authority to file a complaint, the ARB pointed out, citing in a footnote the ALJ’s decision in U.S. Security Associates. In addition, the ARB noted that the same is true for the rules governing expedited hearings (41 CFR Section 60-30.32(a)). Accordingly, the complaint for declaratory relief that Entergy filed was not properly before the OALJ because the events in this case did not show that the Solicitor of Labor, or her designate, instituted an administrative enforcement proceeding by filing a complaint with OALJ as required by 41 CFR Section 60-30.5.