OFCCP v. The Boeing Co., 1999-OFC-14 (ALJ Aug. 16, 1999)

USDOL/OALJ Reporter

OFCCP v. The Boeing Co., 1999-OFC-14 (ALJ Aug. 16, 1999)

U.S. Department of Labor

Office of Administrative Law Judges
800 K Street, NW, Suite 400-N
Washington, DC 20001-8002

(202) 565-4357
(202) 565-5325 (FAX)

Date Issued: Aug. 16, 1999
Case No. 1999-OFC-14

In the Matter of

U.S. DEPARTMENT OF LABOR
OFFICE OF FEDERAL CONTRACT
COMPLIANCE PROGRAMS
Plaintiff

THE BOEING COMPANY
Defendant

ORDER GRANTING MOTION TO REMOVE FROM EXPEDITED
HEARING PROCEDURES,
GRANTING DOCUMENT AND OTHER DISCOVERY,
AND
NOTICE OF HEARING

Before: Stuart A. Levin,
Administrative Law Judge

By complaint filed July 6, 1999, the Department of Labor, Office of Federal Contract Compliance Programs (OFCCP) charged The Boeing Company with breach of its federal contract obligations under Executive Order 11246, Section 503, and 38 U.S.C. § 4212, for failing to develop, maintain, and submit upon request by OFCCP the contractor's affirmative action documents and records for its Commercial Airline and Military, Space, and Defense facilities located at Wichita, Kansas. The complaint was filed under the expedited hearing procedures set forth at 41 CFR 60-30.31, et seq., because Boeing refused to provide access to or supply records requested by OFCCP, and refused to allow OFCCP to complete an on-site compliance review.

I.
Motion to Waive Expedited Hearing Rules

Boeing did indeed refuse to cooperate fully with OFCCP, but it resisted, it claims, because OFCCP improperly targeted its Wichita facilities "to increase

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OFCCP's leverage in settlement negotiations" regarding a nationwide series of audits which stalled when Boeing refused to accept OFCCP's settlement demands. Boeing now seeks to remove this matter from the expedited hearing procedures and engage in limited document discovery otherwise barred by expedited hearing Rule 30.33(c). Its document demands are designed to explore its contention that OFCCP improperly selected its Wichita facilities for compliance review in violation of Boeing's rights under the Fourth Amendment. U.S. v. Harris Methodist Fort Worth, 970 F.2d 94, 101 (5th Cir. 1992); U.S. v. New Orleans Public Service, Inc., 723 F.2d 422, 428 (5th Cir. 1984). It finds objectionable the notion that otherwise routine avenues of discovery are barred in this proceeding. Under the expedited hearing rules, a contractor may, for good cause shown, and with permission of the Administrative Law Judge, take depositions, but "[N[o other discovery will be permitted." 41 CFR § 60-30.33(c). Straitjacketed by this subtly crafted language, Boeing protests that it cannot be afforded a fair hearing on its defense, and it thus demands that this matter be removed from the expedited hearing procedures. A pre-trial hearing on this and other motions convened on August 4, 1999.

II.
Authority to Waive Expedited Hearing Procedures

OFCCP rebuffs Boeing's protestations, contending that it, alone, decides whether the expedited hearing procedures will be invoked, and its decision, once rendered, is beyond the purview of any of the adjudicative powers vested in an Administrative Law Judge. In OFCCP's considered judgment, the decision to "proceed under the expedited hearing rules lies solely in OFCCP's discretion." (See, OFCCP, Memo in Support of Motion to Strike, pg. 2). oreover, as fully illuminated in argument at the pre-trial hearing, (Hearing Transcript, August 4, 1999, at Tr. 66), once OFCCP invokes the expedited hearing procedures, any document which supported a contractor's Fourth Amendment defense, would not, due process concerns notwithstanding, be discoverable. Tr.71-73, 79,102-103.

Thus, OFCCP, by selecting the hearing procedures it wishes to use in its discretion, determines the scope of a Defendant's discovery, constitutional defenses and due process concerns notwithstanding. As OFCCP understands its prerogatives, even if a "hot" document did exist and demonstrated the unconstitutional nature of an investigation, Rule 30.33(c) would nevertheless require the presiding judge to proceed without it, and potentially enjoin a government contractor, under the coercive threat of a debarment, from failing and refusing to

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comply with what, in the circumstances described, would be an improper, unconstitutional demand for information. Tr. 102-103. An agency interpretation of its own rules is entitled to deference, but I find, upon careful consideration of the applicable regulations, that OFCCP's perspective may be a bit too narrow. An Administrative Law Judge is not bound to such untenable participation as a mere instrument in OFCCP's enforcement arsenal. The Part 60 rules, as discussed below, provide the presiding judge with sufficient resources to conduct a fair hearing fully consistent with a rigorous adherence to the demands of due process.

Initially, the agency cites OFCCP v. Northeast Methodist Hospital, 97 OFC 2 (ALJ, Order dated December 4, 1996) and OFCCP v. Beverly Industries, Inc., 99 OFC 11 ( ALJ, Order dated June 18, 1999) as authority supporting its contention that OFCCP alone determines the applicability of the expedited hearing procedures, and thereby defines the scope of discovery. As OFCCP correctly notes, Northeast ethodist did construe the term "expedited hearings shall be commenced" in Section 60-30.32(a) as mandatory language "that the Administrative Law Judge does not have discretion in denying access to these procedures." Northeast Methodist at pg. 3. In context, however, the decision has limited application here.

Northeast Methodist involved a defendant hospital's status as a government contractor not a constitutional issue predicated upon allegedly improper motivations on the part of OFCCP in selecting it for compliance review. Indeed, the issues in Northeast ethodist were, as described by the presiding judge, not especially complex or fact intensive. If the defendant hospital was not a contractor, OFCCP's case "would end there." If it was a government contractor, "OFCCP [would] be granted access to the material and information requested." Northeast Methodist at pg. 3.

Under these circumstances, two aspects of the decision are especially pertinent. First, it was specifically determined that "...defendant's charge of prejudice is not supported." Northeast Methodist at pg. 3. Second, in the absence of any prejudice arising from implementation of the expedited hearing rules, it was unnecessary for the presiding judge, and it appears he was not specifically asked, to invoke Rule 60-30.2 which affords an Administrative Law Judge broad authority to "modify or waive any rule herein upon a determination that no party will be prejudiced and that the ends of justice will be served thereby." ( emphasis added). Accordingly, the application of Northeast Methodist must be limited to its facts.

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While Northeast Methodist considered the commencement of an expedited proceeding, Beverly Enterprises confronted a practical aspect of the discovery bar in such proceedings. Although OFCCP cites it as authoritative, Beverly Enterprises does not really support the wooden interpretation of Rule 30.33(c) OFCCP here advances. To the contrary, the Beverly Enterprises order actually provides limited support for Boeing's plea.

OFCCP originally viewed Beverly Enterprises as evidence of an Administrative Law Judge's adherence to OFCCP's document discovery bar. As OFCCP contends, the Judge did indeed note the Rule 30.33(c) bar in denying production of documents listed and attached to deposition notices. As pointed out to counsel at the hearing, however, the Judge in Beverly Enterprises, apparently uncomfortable enforcing an absolute bar on all document discovery, went on to require production of the Contractor Selection Documentation Form. (Tr. 123-128). In the interest of justice, Beverly Enterprises, therefore, accorded considerable, but nevertheless only partial, deference to the absolute document discovery bar in Rule 30.33(c), causing OFCCP, upon further reflection, to grumble that the Judge, in this respect, acted in complete derogation of OFCCP's rule. Tr. 124-125, 127-128. Yet, Rule 60- 30.2 seems singularly designed to accommodate precisely this sort of modification when necessary to foster the ends of justice.

To be sure, neither Northeast Methodist nor Beverly Enterprises specifically mentions Section 60-30.2, and plainly neither purports to define the authority of an Administrative Law Judge under circumstances in which the denial of document discovery under the expedited hearing rules results in prejudice and a denial of due process in an adjudicative proceeding. Section 60-30.2 addresses that situation, however, and it permits the trier of fact to modify or waive, in appropriate circumstances, any of the Part 60 adjudicative rules, of which Section 60-30.31, 60-32(a) and Section 60-30.33 are subsets. Although OFCCP contends that the more specific expedited hearing rules override the general rules in Part 60 (Tr. 63, 82-83), the language of Rule 60-30.2 leaves little doubt that it, in particular, applies to "any rule" in Part 60. Upon consideration of the expedited hearing rules and Rule 60-30.2, I conclude that an Administrative Law Judge is empowered to waive or modify any rule promulgated and published at 41 CFR Part 60, including the expedited hearing rules, so long as no party is prejudiced by his or her action and the interests of justice are served. Consequently, an expedited hearing initiated in OFCCP's discretion by the filing of a complaint under Rule 60-30.32 may be

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removed from the expedited hearing process, in whole or in part, not as a matter of the Administrative Law Judge's discretion, but under circumstances which satisfy the criteria set forth in Rule 60-30.2.

II.
Fourth Amendment Defense

As noted at the outset, Boeing contends that OFCCP targeted its Wichita facilities for compliance review not through random selection criteria or specific complaints of discrimination at these facilities, but rather as a means of exerting pressure on Boeing to settle two other pending matters. Apparently, Boeing and OFCCP were engaged in negotiations involving findings of discrimination at Boeing facilities in Ridley Park, Pennsylvania, and Long Beach, California. According to Boeing, the underlying theory of OFCCP's case was predicated upon a flawed "median analysis" or "DuBray analysis," and Boeing refused to abandon its detailed cohort analysis or multiple regression analysis when OFCCP presented it with a "take-it-or-leave- it" demand. In late May or mid June, 1998, Boeing rejected OFCCP's demand; and on July 27, 1998, OFCCP sent letters to Boeing scheduling the compliance reviews at the Wichita facilities, and Boeing initially cooperated. In September, 1998 Boeing supplied desk audit materials, and on January 12, 1999, it participated in a pre-onsite meeting. Yet, it remained suspicious of the agency's action.

Boeing pursued its concerns by filing a Freedom of Information Act (FOIA) request seeking an explanation of the agency's basis for selecting the Wichita facilities. The limited release of redacted documents Boeing secured through its FOIA request only served to intensify its suspicion of the agency's motivations and heighten its concern that the compliance review at Wichita was improper and in violation of its Fourth Amendment rights. Believing the agency was less than forthcoming with information otherwise accessible under the FOIA, it initiated a collateral action in District Court seeking additional information and full compliance with its inquiry. In addition, it determined to withhold further cooperation with OFCCP's compliance review, and to seek in this proceeding document discovery which includes access to the redacted portions of documents provided under the FOIA and not otherwise privileged from discovery. Appreciating that the Rule 30.33(c) bars such discovery, Boeing moved to remove this matter from the expedited hearing procedures.

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Now OFCCP argues that even if one were to accept the misguided notion that an Administrative Law Judge may modify or waive the expedited hearing rules, it would be inappropriate to do so merely upon a baseless assertion that the agency breached a contractor's Fourth Amendment rights, and in any event, Boeing compromised any right it may have had when it initially consented and cooperated with OFCCP's Wichita inquiry. While denying any nexus between the collapse of the settlement negotiations and the institution of the Wichita compliance review, OFCCP concedes that it did not select the Wichita facilities based upon random selection criteria or specific complaints. Rather, relying upon documents submitted to Boeing pursuant to its FOIA request, and thereby essentially conceding the importance of document discovery in a proceeding such as this, OFCCP contends that it acted instead based upon "community concerns," a term used by OFCCP to describe criteria which are no longer factored into the compliance audit selection mix. Boeing counters that "community concerns" constitute a vague and, in this instance, misused pretext for retaliation fostered by agency-generated contacts initiated when settlement negotiations broke down in May or June of 1998.

III.
Grounds for Waiver

I have carefully considered Boeing's submission. The grounds upon which it pursues its Fourth Amendment defense are not, as OFCCP contends, utterly without foundation. Initially, OFCCP's contention that Boeing consented to the search even if the agency abridged the Fourth Amendment is not well-founded. Boeing's preliminary and voluntary cooperation confers no blanket consent to OFCCP's search once it had reasonable cause to believe that the Wichita compliance review may have been inconsistent with OFCCP's compliance audit criteria. See, Florida v. Jimeno, 500 U.S. 248, 252 (1991). Federal contract clauses granting access to OFCCP do not deprive an improperly targeted contractor of Fourth Amendment protection. OFCCP must satisfy its own established selection criteria before it may invoke the access provisions of the

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contract, See generally, Marshall v. Barlow's, Inc., 436 U.S. 307, 320- 21 (1978); NationsBank Corp. v. Herman, 174 F.3d 424, 430 (4th Cir. 1999), and a contractor's consent may be withdrawn when it fails to do so. See, U.S. v. Leary, 846 F.2d 592 (10th Cir. 1988); Mason v. Pulliam, 557 F.2d 331 (6th Cir. 1977).

More specifically, Boeing cites a temporal nexus of approximately one to two months between the collapse of settlement negotiations and the commencement of the Wichita compliance review. It is not seriously disputed that a compliance audit launched against a contractor as a means of exerting leverage in settlement negotiations could be construed as an improper exercise of OFCCP's investigational powers, notwithstanding a contractor's prior agreement to contract terms which promise cooperation with OFCCP inquiries. See, First Alabama Bank of ontgomery v. Donovan, 692 F.2d 714, 719-20 (11th Cir. 1982). Moreover, proximity in time between an action which may displease an agency, such as the rejection of a take-it- or-leave-it settlement demand, and a potentially adverse action, such as a compliance audit, could be construed as sufficient to infer a causative link between the two occurrence. See generally, LaTorre v. Coriell Institute For Medical Research, 97 ERA 46 (ALJ, Dec. 3, 1997), aff'd and remanded on other grounds, 98 ARB 40 ( February 26, 1999); Mandreger v. The Detroit Edison Co., 88 ERA 17 (Dec. of Secretary, March 30, 1994) (Six month interval between whistleblower activity and adverse job transfer); White v. The Osage Tribal Council, 95 SDW 1 (ARB Aug. 8, 1997) (Proximity in time ... is solid evidence of causation). While a temporal nexus may not alone be sufficient in all cases to establish a causal link between two actions, Jackson v. Ketchikan Pulp Co. , 93 WPC 7 and 8 (Dec. of Sec. March 4, 1996), Bartlik v. U.S Dept. of Labor, 1996 U.S. App. LEXIS 394, 1996 Fed. App. 0012p (6th Cir. 1996), it is a factor which may be considered along with other circumstantial evidence which either strengthens or severs the connection. Coriell Institute, supra; Jackson, supra; Bartlik, supra; Zinn v. Univ. of Missouri, 93 ERA 34 (Dec. of Sec. Jan. 18, 1996).

Yet the timing of the Wichita audit is not Boeing's only concern. Records obtained under the FOIA reveal that as of May 1, 1998, OFCCP had no current and open complaints against Boeing, nor was the Wichita facilities selected from OFCCP's EEDS list. Random selection is not a factor here. Instead, Boeing

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contends that OFCCP personnel solicited interviews with Boeing employees and third parties, essentially to instigate expressions of "community concern," and on July 15, 1998, OFCCP convened a "national strategy" meeting to discuss, Boeing believes, the means to secure its acquiescence to OFCCP settlement demands. Finally, on July 27, 1998, OFCCP commenced its compliance review in response to "community concerns," later identified as four news reports and various conversations with individuals who were not Boeing employees, but who allegedly had heard others complain about Boeing. Boeing believes that discovery is essential to determine whether these "solicited" concerns are a mere pretext for an improper compliance review in violation of the Fourth Amendment. U.S. v. Harris Methodist Fort Worth, 970 F.2d 94, 101 (5th Cir. 1992); U.S. v. New Orleans Public Service, Inc., 723 F.2d 422, 428 (5th Cir. 1984).

In another but still pertinent context, OFCCP argued successfully to the Fourth Circuit Court of Appeals, in briefs seeking to overturn an injunction issued against it by a U.S. District Court, that a challenge to the constitutionality of an OFCCP audit must be raised in the administrative enforcement proceeding. The Court agreed: "If ... OFCCP did single out NationsBank for investigation and either has no policy governing its selection of targets for compliance review or has one but intentionally disregarded it," it should be allowed in the administrative context to correct its mistake, NationsBank Corp. v. Herman, 174 F.3d 424, 430 (4th Cir. 1999), and now is the proper time to adjudicate Boeing's contention that further pursuit of the Wichita inquiry would violate the Fourth Amendment. (See, Pennsylvania Bd. of Probation and Parole v. Scott, 524 U.S. 357 (1998)). Under these circumstances, it is respectfully submitted that no useful purpose will be served by depriving the contractor of its Fifth Amendment right to due process in pursuing its Fourth Amendment defense. See, Commercial Drapery Contractors v. U.S., 133 F.3d 1 (D.C. Cir. 1998). It simply compounds the mistakes the Fourth Circuit had hoped to cure in NationsBank if inappropriately rigid rules superimpose a Fifth Amendment violation on an asserted Fourth Amendment defense. Nor is it clear what harm befalls OFCCP if Defendant is afforded a fair, meaningful hearing.

The question thus posed by Boeing's pending motion is, of course, not whether Boeing has established facts sufficient to warrant a finding that the Wichita inquiry violated Boeing's Fourth Amendment right to be free from an unreasonable search and seizure. The question here is whether Boeing has presented a sufficient

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basis for concluding that its Fourth Amendment defense could not fairly proceed under restrictive discovery provisions imposed by the expedited hearing rules. For all of the foregoing reasons, I find that it has satisfied its burden.

IV.
Rule 60-30.2
Serving the Ends of Justice
While Avoiding Prejudice
to OFCCP

Now in most adjudicative environments, the foregoing finding would probably suffice to allow discovery to move forward. In view of the Rules governing this proceeding, however, additional findings need be made.

The modification or waiver provision of Rule 60-30.2 is conditional; it may be invoked if no party is prejudiced and if the ends of justice would be served. Turning first to the issue of dispensing justice in this proceeding, I should clarify that I am not persuaded by Boeing's contention that the expedited hearing rules were improperly invoked by OFCCP because they were designed to try uncomplicated matters ( See, Fed. Reg., Vol. 44, No. 250, December 28, 1979) whereas this matter, in Boeing's view, involves unusual complexities. I do not minimize the importance of Boeing's constitutional defense by noting that the issues involved here are fact dependent, but not especially complex. Defendant needs adequate discovery tools to explore its defense, but its theory is fairly straightforward. Consequently, I do not view the timetable imposed by the expedited hearing rules as the source of any significant problem. I am, however, persuaded that the Rule 60-30.33(c) discovery bar denying Boeing access to pertinent OFCCP documents threatens due process. Thus, a waiver of the Rule 60-30.33(c) discovery bar and a minor modification of the hearing timetable would clearly promote the ends of justice.

It is, of course, also necessary to address the alleged prejudice OFCCP believes it or the public interest may suffer if the expedited hearing rules are waived or modified. At the hearing on August 4, OFCCP explained that the expedited hearing rules are necessary to quickly resolve disputes about access to records while incidents of discrimination are still fresh in the minds of potential witnesses and timely remedies can be imposed to cure any violations. In light of the

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important purposes served by the expedited hearing procedures, Boeing's document requests were explored in detail at the hearing to determine how much delay would likely accrue if the Rule 60- 30.33(c) discovery bar were waived. Under the expedited hearing rule, the trial in this matter would convene on September 9, 1999. Although some flexibility in the hearing date will be needed, a waiver of the expedited hearing rules, thus allowing for limited document discovery, would not cause any inordinate delay.

Although redactions must be removed and privileges asserted where appropriate, it otherwise appears most of the documents Boeing seeks in discovery were supplied to it in response to its FOIA request. Since Boeing's Fourth Amendment defense is predicated upon alleged retaliation for its refusal in May or June, 1998, to accept OFCCP's terms of settlement, there is no need for the scope of its document request to date back to 1993. Document discovery for the period January 1, 1998 through July 27, 1998, provides adequate scope to explore most of its contentions. Beyond that, Boeing has justified its discovery demands for the particular date OFCCP adopted "community concerns" as a basis for initiating compliance reviews and the date it ceased using the "community concerns" criteria. See, Tr. 95-96. In addition, its request for permission to depose was addressed at the August 4 hearing and will be granted as set forth below.

OFCCP estimated that it would take one to two weeks to respond to Boeing's request for documents, as refined at the hearing; and given the urgency the agency accords this matter, a week should be sufficient. It thus appears a fair opportunity for discovery of OFCCP documents and depositions of OFCCP personnel can be provided while maintaining a hearing schedule which very nearly meets the otherwise invariable expedited hearing deadlines. Under such circumstances, a partial waiver may entail some additional work, but any actual prejudice to OFCCP would appear negligible. Pursuant to Rule 60-30.2, Boeing's motion will, therefore, be granted, in part, as follows:

ORDER

IT IS ORDERED that Boeing's Motion to Remove Complaint From Expedited Hearing Procedures will be, and hereby is, GRANTED, in part, to the extent that the document discovery bar in Rule 60-30.33(c) is, hereby, WAIVED with respect to OFCCP documents subject to Boeing's Request for Production;

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and FURTHER the time limit governing expedited hearings set forth in Rule 60-30.32(d) is, hereby, ODIFIED in accordance with the Notice of Hearing set forth below. OFCCP's Motion to Strike, is accordingly, DENIED.

Discovery Schedule

The parties shall proceed with discovery as follows:

1. On or before August 27, 1999, OFCCP shall submit its documents to Defendant in response to Defendant's pending document request as modified by Defendant at the hearing on August 4, 1999; and provided further that in the event OFCCP claims any privilege, OFCCP shall simultaneously submit the alleged privilege documents for in camera review together with the grounds supporting the assertion of the privilege;

2. Boeing's request for permission to take depositions is GRANTED, as follows: during the period August 16, 1999, through September 16, 1999, Defendant Boeing shall schedule and take the depositions of the following OFCCP personnel;

A. Harold Busch, Director of Operations, OFCCP, National Office, Washington, D.C.;

B. Shirley Oderkirk, District Director, OFCCP, Kansas City;

C. Norma Conrad, Office of Information and Public Affairs, OFCCP, Kansas;

D. William Smitherman, District Director, OFCCP, Los Angeles, California.

Boeing has failed to establish a basis for deposing an OFCCP Rule 30(b)(6) Representative in this proceeding, and accordingly, its request to depose in this respect is denied.

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VI.

NOTICE OF HEARING

The parties are hereby advised that a hearing on the merits of the complaint in this matter will convene at 8:30 A.M. on September 17, 1999, at the U.S. Department of Labor, Office of Administrative Law Judges, 800 K Street, N.W. (North Building), Suite 400, Washington, D.C.

Stuart A. Levin
Administrative Law Judge