Opinion ID: 658534
Heading Depth: 2
Heading Rank: 2

Heading: The Department's Application of the Risk of Loss Test

Text: 41 CATA asserts that the growers do bear a risk of loss in the Jamaican loan arrangement, essentially on the theory that FLECTS, as the employers' agent for purposes of inbound travel, must pay for travel costs regardless of whether FLECTS receives funds from the Bank. Appellants' Brief at 34-35; Appellants' Reply Brief at 14-19. The DOL's decision was based on its assessment that the Bank bears the full risk of loss for any worker who does not complete 50 percent of the harvest. Letter from Lynn Martin, at Enclosure p. 2 (J.A. 4). In response to appellants' additional contention that a failure by the Bank to pay FLECTS, e.g., as a result of a bank failure, would place upon the growers the burden of paying the carriers for their service, the DOL maintains that any such bank failure would leave FLECTS--not the growers--with the burden of paying the carriers. We agree with the DOL's position. 42 As an initial matter, in the absence of a bank failure or similar extraordinary occurrence, the Bank pays FLECTS prior to receiving the assigned reimbursement from the growers. See Brief for Appellees S & A Chaissan & Sons, Inc., at 14 (citing Deposition of Craig T. Titterud, at p. 16 reprinted in J.A. at 127, 143). Therefore, the Bank will necessarily sustain the loss if the employer does not remit the assigned reimbursement on the basis that the worker has not completed the requisite amount of work. 43 And even if we entertain appellants' bank failure hypothetical, the loss still does not fall on the growers. Pursuant to the agency agreement between FLECTS and the growers (upon which appellants rely for their argument), FLECTS serves as the growers' transportation coordinator. Agency Agreement, at p. 1 p 2(a) (J.A. 332). Contrary to CATA's assertion, FLECTS does not enter into contracts between FLECTS and the carriers ... on [the growers'] account. Appellants' Reply Brief at 17. While [a]n undisclosed principal is bound by contracts and conveyances made on his account by an agent acting within his authority, RESTATEMENT (SECOND) OF AGENCY Sec. 186 (1957); see id. at Sec. 144 (same for disclosed or partially disclosed principals), the agency agreement in this case cannot be read to convey authority to execute contracts with [304 U.S.App.D.C. 153] carriers on behalf of the employers. The agency agreement specifically requires FLECTS to [a]ssure that all costs ... and ... expenses associated with in-bound movement of West Indian workers be paid for by the West Indian workers and not, under any circumstances, by the [growers], any West Indian Government, or [FLECTS], either directly or indirectly. Agency Agreement, at p. 2 p 2(e) (emphasis added) (J.A. 333). Thus while the terms of the contract require FLECTS to [m]ake all necessary arrangements, including the negotiation and execution of contracts with such common carriers as are necessary to carry out the purposes of this agreement, id. at pp. 1-2 p 2(c) (J.A. 332-33), FLECTS would be overstepping its authority as circumscribed by p 2(e) were it to enter into such contracts with carriers on the growers' behalf. RESTATEMENT (SECOND) OF AGENCY Sec. 7 (Authority is the power of the agent to affect the legal relations of the principal by acts done in accordance with the principal's manifestations of consent to him.) (emphasis added). Indeed, the affidavit of Craig Titterud (upon which appellants equally rely) explains: 44 ... FLECTS agrees to serve as transportation coordinator on behalf of the growers and to make all necessary arrangements to transport foreign workers from Jamaica to the place of employment in New York. FLECTS operates as an independent contractor and provides the services to the growers for a fee. 45 ... In order to provide transportation services to the growers, FLECTS enters into contracts in its own name with air carriers (including Air Jamaica) and ground carriers (including Greyhound). The growers are not parties to these contracts with the carriers. The payment terms are negotiated between FLECTS and the carriers. ... FLECTS must pay the carriers by the dates specified in the contracts regardless of whether FLECTS receives funds from the National Commercial Bank of Jamaica. The growers play no role in negotiating or setting the terms of these contracts. 46 Supplemental Declaration under Penalty of Perjury of Craig T. Titterud, p. 2 pp 2-3, reprinted in J.A. at 508, 509 (emphasis added). Thus there is no evidence in the record that under any reasonably imaginable scenario the growers bear the risk of loss in the event that any link in the loan scheme breaks down. We agree that the DOL's conclusion from these facts that the growers do not bear any risk of loss was reasonable. 47