the Compliance Officer learned from the company's employees that A to Z had failed to make payments directly to employees for the succeeding three month period. When contacted, A to Z explained that it was on the verge of reaching agreement with the union, and that it had not made payments for that reason.
Upon hearing this, the Compliance Officer gave A to Z another month to reach agreement with the union, and then contacted the company to determine the matter's status. The Officer found that A to Z still had not agreed with the union, but had still not paid its employees. As before, only when the DOL contacted A to Z did the company pay its employees.
Finally, approximately two months later, the Compliance Officer again received calls from A to Z's employees, asking about the status of the benefit payments. During her third investigation of A to Z within nine months, the Officer learned that an agreement with the union had been signed approximately two months earlier (shortly after her previous contact with the company), but that still no payments had been made, either to the union or directly to the employees.
This despite the fact that the alleged obstacle to payment -- difficulties with the employees' union -- had been removed.
In the Court's view, A to Z's behavior during this period, as revealed in the record, indicates consistent and pervasive non-compliance with the company's contractual and statutory obligations. The Court concludes that ALJ Bober's finding that A to Z's actions during this period should be considered among the company's "repeated violations" of the SCA is supported by a preponderance of the evidence.
A to Z's violations of the two contracts just discussed undoubtedly suffice to support ALJ Bober's finding of "repeated violations" of the SCA. Even so, the record indicates, and ALJ Bober discussed, several other instances in which A to Z violated the terms of its contracts, and thereby deprived its employees over several years of the timely payment of as much as $ 287,000. A to Z may be correct that, in certain of these instances, the violations were the product of shabby recordkeeping or inadvertence. In others, the violations may (if one accepts A to Z's version of reality) have been the product of legitimate disputes or good faith misunderstandings. Nevertheless, as ALJ Bober found, substantial violations did occur, and, as in the cases described above, certain of the violations occurred with no discernible justification. Both individually and as a whole, these violations involved substantial amounts of money, and, therefore, significant interests. The "unusual circumstances" analysis, as expressed in 29 C.F.R. § 4.188(b)(3)(i), clearly contemplates the Secretary of Labor's authority to free the federal government (and the national labor pool) from chronic contract violators in circumstances such as these. The facts underlying the conclusions of ALJ Bober and the Deputy Secretary, in this Court's view, are supported by a preponderance of the evidence. Further, the facts found provide ample support for their conclusion that "unusual circumstances" do not exist in this case; their findings on this question are not arbitrary and capricious within the meaning of 5 U.S.C. § 706(2)(A).
3. Improper Review by the Deputy Secretary
A to Z's final argument is that the Deputy Secretary failed to apply a proper standard in reviewing ALJ Bober's initial determination. For the most part, A to Z's argument on this point simply rehashes the company's challenge to ALJ's Bober's decision. For instance, A to Z claims that the Deputy Secretary erred in failing to recognize that ALJ Bober had ignored evidence in the record which, according to A to Z, supported its position. Further, A to Z contends that the Deputy Secretary failed to correct ALJ Bober's statement that a contractor who escapes once through the "unusual circumstances" loophole is "put on notice" that strict contract compliance will be required. Essentially, A to Z seeks two bites at the apple: A to Z claims, first, that ALJ Bober erred in initially taking these positions, and, second, that the Deputy Secretary erred in failing to correct ALJ Bober's mistakes. As discussed above, however, ALJ Bober did not err in reaching his conclusions. The premise of A to Z's argument therefore fails. Further, as a simple analytical matter, the Court rejects A to Z's attempt to stretch its briefing by reiterating arguments previously made.
A to Z does offer, however, the "new" argument that the Deputy Secretary erred as a matter of law in not applying a "reasonable management" standard in accordance with Federal Food Services, Inc. v. Donovan, 212 U.S. App. D.C. 82, 658 F.2d 830 (1981). According to A to Z, Federal Food Services requires the Secretary of Labor to determine whether the violations which underlie the denial of an "unusual circumstances" exemption could have been prevented through "reasonable management." Because the Deputy Secretary failed to do so in this case, A to Z contends that the decision to affirm ALJ Bober's determination was improperly rendered.
A to Z misreads Federal Food Services, and the context in which the "reasonable management" issue arose. In that case, the DOL and the district court had relied upon their belief that "reasonable management" could have prevented the contractor's nearly de minimis violations of the SCA. For that reason, Secretary denied an "unusual circumstances" exemption, and the district court affirmed. The Court of Appeals reversed, finding an absence of evidence in the record from which a reasonable factfinder could have concluded that "reasonable management" would have avoided the minor violations in that case. The Court reasoned that, insofar as the record indicated, the violations might well have occurred even with reasonable management. According to the Court of Appeals:
We hold that where, as here, the ALJ has made an inference of improper management solely on the basis of virtually de minimis underpayments, the Secretary must consider the particular circumstances of the business under review -- for example, the actual problems it has faced, the precautions normally taken by well-managed companies in the field, the likelihood that it could have avoided its violations with proper management -- before implementing the severe debarment provision. If as here he relies on a history of previous violations to support debarment, he must apply the standards of reasonable management to them as well.
Id. 658 F.2d at 834.
The instant case is clearly distinguishable from Federal Food Services, in that the violations at issue here are substantially greater than de minimis. The violations, and the amounts involved, are simply not of a type that might arise inadvertently in the operations of a well managed company. Instead, as ALJ Bober found, the violations in this case reflect, if not willfulness, at the very least culpable negligence. The record supports this conclusion. Accordingly, the circumstances which moved the Court of Appeals to order application of a "reasonable management" standard in Federal Food Services do not apply here; A to Z's effort to extend that test to all "unusual circumstances" cases involving prior violations must fail.
The Court finds that ALJ Bober's conclusion (as affirmed by the Deputy Secretary of Labor) that A to Z violated the SCA in several respects, and that those violations do not present "unusual circumstances" within the meaning of § 354(a) is, as to facts, supported by a preponderance of the evidence, and, as to law, not arbitrary and capricious. Because this finding is derived from facts not in genuine dispute, summary judgment under Fed. R. Civ. P. 56(c) shall be granted in favor of the DOL.
In closing, the Court wishes to note that it recognizes the severity of the debarment sanction involved in this case. Frankly, the Court is uncomfortable with the unforgiving impact that its decision will have on A to Z, Mr. Williams and A to Z's employees. Nevertheless, the Court is constrained to apply the law as written. The severity of the sanction under § 354(a) must be the concern of Congress, not of the courts; appeals for leniency should be directed to those who draft statutes, not to those who apply them.
An Order shall issue.
For the reasons expressed in the Opinion issued of even date herewith, it is, by the Court, this 14 day of April, 1989,
ORDERED, that the motion for summary judgment filed by the defendant shall be, and hereby is, GRANTED, and the motion for summary judgment filed by the plaintiff shall be, and hereby is, DENIED; and it is further
ORDERED, that judgment shall be, and hereby is, entered in favor of the defendant, and the above-captioned matter shall be removed from the dockets of this Court.