Court Opinion

ID: 9439975
Source: CourtListenerOpinion
Date Created: 2023-08-03 07:03:52.251828+00
Date Added: 2024-06-11T17:26:52.776241
License: Public Domain

CUDAHY, Senior Circuit Judge,
concurring in part and dissenting in part.
With some reluctance, I undertake a critique of Judge Selya’s monumental analysis of this tangled case. But in several respects I think a different approach may be required.
Before reaching the more troubling question, I generally approve of the direction taken by the majority’s dissection of the fringe benefit provisions. However, I do not come away from this examination entirely convinced that the Department’s reading of its regulations is wrong and Dantran’s is right. As far as it goes, the majority’s analysis is persuasive. That analysis does not, however, fully account for the use of terms like “contract-by-contract,” “employees performing on more than one contract,” “on each contract” and the like. The regulations, particularly the latter pertinent sentence of 29 C.F.R. § 4.172,1 emphasize a need to calculate fringe benefits as separately attributable to specific contracts. It is not a complete answer to suggest, as does the majority, that this language is designed merely to mandate accounting for all of the hours worked on the various contracts in order to make up the allowed forty hours. If this were all that was involved, why would the regulations specify that the calculation be made “contract-by-contract?” The emphasis is too insistent, it seems to me, merely to convey the meaning suggested by the majority.
*76I believe that the language that I have quoted above does tend to support the Department’s position. However, reading this language together with the other language which the majority opinion correctly analyzes as supporting Dantran’s view,2 the only fair conclusion is that these regulations are self-contradictory and too vague and ambiguous to be enforced. One reason for this is that the Department has not seen fit to explain to us the rationale for its reading of the rule. One would think that, for example, fifty hours worked under several contracts should be rewarded with the same fringe benefits as fifty hours worked under a single contract, as Dantran has interpreted the regulations. It may be, giving maximum ambit to one’s imagination, that somehow two contracts provide more funds to cover fringe benefits than does a single contract. We can hardly be expected to speculate that this is the ease, however. The best we can do is leave the subject scratching our heads and concluding that the regulations are indecipherable. If that is the case, they are unenforceable. They cannot furnish any basis for an order of debarment.
On the other matter in dispute — the frequency of wage payments — I part company in a significant way with the majority. The record here does not reflect any good reason why an employer, exercising normal prudence, is entitled to assume, without checking, that monthly payment of wages is an available option or that the applicable regulations would endorse this practice. This is not an esoteric matter, like the methodology of furnishing fringe benefits. Instead, it is easily understood and likely to be of immediate concern to employees. It is something about which a prudent employer would take reasonable steps to acquaint himself — even to the point of actually looking at the regulations.
In that connection, did Dantran make any effort between 1986 (when it apparently began monthly payments) and 1991 to ensure compliance with the frequency of payment provisions? It appears not. Holmes testified that he spoke with his Post Office contacts about the propriety of cross-crediting fringe benefits, but he never mentioned asking how often he was required to pay his employees. His wife, who kept Dantran’s books and ran its payroll, was similarly remiss. The majority does not even note this major omission but apparently adopts Dantran’s thesis that if the contract specifies monthly payments to Dantran by the government, Dantran is entitled to infer that Dantran’s employees need be paid only monthly. See ante at 63. This seems specious to me. Although Dantran apparently did not keep large cash reserves, it ought to have better access to working capital than its employees. Dantran is in a better position to adjust for temporary mismatches of revenue and expense than are its employees to wait a full month for their pay. Contractors and merchants the world around receive progress payments, remittances on invoices and other payments from customers on a variety of schedules, but I am not aware that these schedules determine how often they are expected or required to pay their own employees. This inference, for which Dantran argues persistently, is simply a non-sequitur. And I know no reason why government contractors would have some special dispensation to pay their employees less frequently than businessmen in the economy at large.
I am therefore not nearly as indulgent of Dantran’s frequency of pay practices as is the majority. On the other hand, I am certainly not convinced that debarment is appropriate. I believe the matter of frequency of wage payments should be remanded to the Board for separate eonsid-*77eration, the fringe benefit matter having dropped out of the case.
Remand would clearly not be an empty exercise. Notwithstanding the majority’s apparent effort to consign the Board to irrelevance, the Board does — and should— retain some discretion to determine whether debarment is warranted. The plain language of 41 U.S.C. § 39 — “findings of fact ... shall be conclusive upon all agencies of the United States, and if supported by the preponderance of the evidence, shall be conclusive in any court of the United States” — suggests that reviewing bodies may exercise what amounts to de novo review of the record. If the finder of fact and the reviewing authority are bound by the same standard in establishing the facts (preponderance of the evidence), the logic of the situation is that review is essentially de novo. First Circuit case law apparently supports such a literal reading. See Vigilantes, Inc. v. Administrator of Wage & Hour Div., 968 F.2d 1412, 1418 (1st Cir.1992) (“We review the Secretary’s findings to determine whether a preponderance of the evidence supports his conclusion that [the appellants] should be barred from bidding on government contracts.”). The Eleventh Circuit case cited by the majority, Amcor, Inc. v. Brock, 780 F.2d 897, 899 (11th Cir.1986), at best only stirs up already murky waters by mentioning “clear error” and “preponderance of the evidence” in consecutive sentences.
In addition, the majority’s reliance on interpretations of ■ the MPPAA is misplaced, since that statute frames the standard of review more conventionally: “there shall be a presumption, rebuttable only by a clear preponderance of the evidence, that the findings of fact made by the arbitrator were correct,” 29 U.S.C. § 1401(c) (emphasis added). This language simply establishes á presumption in favor of the factfinder (something like the clear error standard). This is quite different than the language of 41 U.S.C. § 39 (governing this case) which establishes no such presumption but instead instructs the reviewing body to accept findings only if they are supported by a preponderance of the evidence.
Moreover, even though the Secretary’s own regulations appear to vest the Board with essentially appellate powers, appellate bodies need -defer, if they are to defer at all, only to findings of historical fact; how the law applies to the facts is certainly within the de novo reviewing powers of the appellate body. The majority offers no reasons why we would defer to the ALJ’s application of the law to the facts rather than accept the same application by the Board.
I therefore disagree with the majority about the degree of deference in factual matters the Board owes to the ALJ. But these differences are not crucial in resolving the question of debarment, since relief from debarment does not issue automatically from determinations of fact. Instead, as prescribed by the regulations, the absence of aggravating circumstances, the presence of mitigating elements and a sensitive balancing of related factors (potentially either aggravating or mitigating) determines whether a case presents truly unusual circumstances. An adjudicator must address, for example, a contractor’s efforts to ensure compliance and a contractor’s culpability, if any, in failing to make the necessary efforts. None of these determinations simply requires findings of fact; each requires a judgment about how the facts relate to the legal standards set out in the regulations. Ultimately, there must be a discretionary judgment about the relative weight to be accorded each factor.
Again, with respect to Dantran’s efforts at compliance, the majority is persuaded that inspector Rioux’s “clean bill of health” provides some sort of “equitable overlay,” see ante at 65, excusing Dantran’s failure to inquire about or read the applicable regulations. I do not find this convincing.At the same time, the majority goes to considerable lengths to reject Dantran’s estoppel argument. It follows from this *78emphatic denial of estoppel that any reliance by Dantran on Rioux’s report to justify its own breach of regulations is unreasonable. In that context, it is not clear why fairness requires us to credit Dan-tran’s mistaken beliefs.
In my view, equitable considerations of whatever sort are better left in the first instance to the Board, precisely because the regulations mandate a factor-specific balancing with accompanying judgments about the relative weights of the factors. The present case illustrates the potential for competing inferences and varying weights to be attached to findings of historical fact. Thus, even if the Secretary must review the ALJ’s fact-finding with deference, she must still make an independent determination whether the facts add up to circumstances unusual enough for Dantran to avoid debarment. I would permit the Secretary or her delegate, the Board, to undertake this balancing anew, consistent with this opinion, of course. To that extent, I respectfully dissent.

. "Since the Act's fringe benefit requirements are applicable on a contract-by-contract basis, employees performing on more than one contract subject to the Act must be furnished the full amount of fringe benefits to which they are entitled under each contract and applicable wage determination.” 29 C.F.R. § 4.172.

. "[E]very employee performing on a covered contract must be furnished the fringe benefits required by that determination for all hours spent working on that contract up to a maximum of 40 hours per week and 2,080 (i.e. 52 weeks of 40 hours each) per year, as these are the typical number of nonovertime hours of work in a week, and in a year, respectively." 29 C.F.R. § 4.172.