Soon after informing NationsBank of the alleged violations found in the Charlotte office, OFCCP decided to initiate additional compliance reviews at NationsBank offices in Tampa, Florida and Columbia, South Carolina. NationsBank refused to acquiesce to those reviews. In March 1995, it filed an action in the United States District Court for the Western District of North Carolina, alleging that the selection of its facilities in Tampa and Columbia violated the Fourth Amendment.

   In February 1997, NationsBank amended the complaint it had filed in federal district court (contesting OFCCP's selection for review of its Tampa, Florida and Columbia, South Carolina facilities) to allege that OFCCP's selection of the Charlotte facility for review violated the Fourth Amendment. The district court granted NationsBank's request for a preliminary injunction restraining OFCCP from prosecuting an enforcement action against NationsBank for the alleged violations found in the compliance review of the Charlotte facility. But on April 6, 1999, the United States Court of Appeals for the Fourth Circuit granted summary judgment to the Department of Labor and vacated the District Court's entry of the preliminary injunction on the grounds that NationsBank first had to exhaust its administrative remedies.

   On July 18, 1997, OFCCP filed the complaint in this proceeding, requesting that NationsBank comply with the Executive Order or be debarred (except for contracts for government deposits or share insurance). Bank of America (BOA) moved for summary decision on the grounds that OFCCP violated the Fourth Amendment when it selected the Charlotte facility for review. A U.S. Department of Labor ALJ granted that motion. He concluded that the selection of the Charlotte facility for review was not based on an administrative plan containing neutral criteria and was arbitrary and unconstitutional. Recommended Order at 15. The record for the summary judgment decision consisted of selected excerpts from depositions and documents produced in the course of discovery in the federal district court proceeding, the motion for summary judgment, and the parties' briefs and findings of fact. The ALJ held no hearing but issued a Recommended Order based on this record alone.

   OFCCP filed exceptions to the ALJ's Recommended Order with this Board. We remand because we determine that genuine issues of material fact exist and therefore summary judgment was improperly granted.

   In January 1992, OFCCP issued the Equal Employment Data System (EEDS) User's Manual, for use by its regional and district offices in "selecting supply and service contractors for compliance reviews." The EEDS included "specific procedures and criteria for making decisions and a series of reports that provide the data on which selection decisions are to be based." Exhibit D, section titled "Equal Employment Data System." The EEDS provided that "[a]pproximately 1 percent of the selections are made from [a] random sample, 84 percent from the list of flagged establishments, and 15 percent discretionary." Id. at 2. The EEDS directed that "[w]hen the

district office receives its fiscal year program, it should decide how many supply and service reviews must be scheduled and follow [the listed] steps." Id. at 2-3. Among those steps was the following:

Fifteen Percent Discretionary Selections, District Office Directors may select up to 15 percent of their supply and service compliance reviews from among contractors other than those flagged on the rank listing [and] [w]hen deciding, the Director should consider [five factors, including] [e]xpansion of employment in an industry or at specific locations.

Id. at 5.

   The Regional Director, Carol Ann Gaudin, testified that, at that meeting in Atlanta, she decided not to select Duke Power because another district in the Atlanta region had already selected a utility for review. She selected NationsBank because "it was one of the top five largest corporations in our region and it had not been reviewed as NationsBank as such, the corporate headquarters. We knew we had jurisdiction, and we thought that there would be a lot of opportunities for affirmative action there because it was a growing corporation." Deposition of Carol Gaudin of Dec. 17, 1996, Exhibit M at 74-75. On November 24, 1993, Gaudin sent the letter to NationsBank scheduling the compliance review.

   The ALJ stated that the search of NationsBank's Charlotte headquarters was made pursuant to Executive Order No. 11,246, as amended. He recognized that the contract between NationsBank and the government included a clause providing consent to searches conducted to determine compliance with the Executive Order, citing 41 C.F.R. § 60-1.4(a)(5):

The contractor will furnish all information and reports required by Executive Order 11246 . . . and will permit access to his books, records, and accounts by the contracting agency and the Secretary of Labor for purposes of investigation to ascertain compliance with such rules, regulations, and orders.

   He also noted that the Secretary had held, in a case arising under Section 503 of the Rehabilitation Act of 1973, "that the Plaintiff (OFCCP) has the authority under Executive Order 11246" to conduct a search of a defendant's records because the defendant "had consented to be searched by the government for the administration and enforcement of Section 503." Id. at 10, citing OFCCP v. City Pub. Serv. of San Antonio, 1989 OFC-5 (Sec'y Jan. 18, 1995). The ALJ suggested that, because the search in that case had been initiated in response to a complaint, the Secretary's decision did not stand for the proposition that consent alone was sufficient.

   In addition, he stated, "Courts have held that any consent given was consent only to searches that comport with the Fourth Amendment's constitutional standards of reasonableness." Recommended Order at 11. According to the ALJ, "[t]herefore, the reasonableness of the search in this case must be established upon a showing that the search is pursuant to an administrative plan containing neutral criteria." Recommended Order at 10, citing United States v. New Orleans Pub. Serv., Inc., 723 F.2d 422, 426 (5th Cir. 1984) (also known as NOPSI III). The ALJ then set about determining whether this requirement had been met.

   The ALJ found that at the time the Charlotte facility was chosen, OFCCP's administrative plan for the selection of contractors for compliance reviews was the EEDS. He based this finding, in part, on an April 1995 Policy Alert issued by the then Deputy Assistant Secretary reminding "that the criteria and procedures described in the January 1992 . . . (EEDS) Manual are to be used to select contractors for service and supply compliance reviews." ALJ Recommended Order at 12. Because OFCCP did not specifically dispute the Policy Alert's applicability, he considered this finding undisputed for purposes of summary decision. Id.

    Further, the ALJ found that there was no genuine issue of material fact with respect to whether OFCCP followed its administrative plan containing specific neutral criteria (EEDS Manual). He stated:

Plaintiff's description of the procedures used to select Defendant for review clearly do not follow that described in the EEDS Manual. Defendant's assertions of fact numbered 5 through 9 make a powerful case to establish that the Plaintiff did not follow the procedures of the EEDS Manual when it selected Defendant for review. These facts are fully supported by the record submitted in support of the motion for summary decision and are not addressed in Plaintiff's response.

Recommended Order at 12.

   BOA's asserted facts were that the EEDS Manual provided for only three types of compliance reviews, "random selections," "selections based on analysis or flagged reviews," and "discretionary reviews," but that OFCCP Charlotte District Director admitted, or OFCCP's own documents showed, that BOA did not fall under any of these categories.

   Moreover, he found that the selection process actually used by OFCCP "was not neutral, but was arbitrary to the point of being unconstitutionally unreasonable." Id. at 12-13. As support for those findings, the ALJ cited BOA's statements of fact numbered 11 through 21 and its attached exhibits. In particular, he noted the affidavit of Charles J. Cooly (Defendant's Personnel Officer) describing a December 12, 1994 telephone conversation in which Gaudin allegedly said that banks are "notorious" for having the "worst record of affirmative action." Id. Based on the affidavit, and his determination that no evidence in the record "exists to rebut the assertion that the ‘notoriety' of banks . . . was not [sic] a factor in the selection process," he specifically found that selecting NationsBank's Charlotte office for review "was in part due to Plaintiff's perception that ‘banks have notoriously poor affirmative action records.'" Id. at 13-15. He also found that the selection was "because the Defendant happened to be located in Charlotte, North Carolina." Id. at 15.

   Accepting BOA's assertion that "there were approximately thirty contractors which satisfy the threshold criteria for ‘corporate management review' within the Charlotte District," and that "twenty of those are located either within Charlotte's city limits or within a short driving distance," the ALJ stated that OFCCP had not explained or documented "how the list was narrowed to the two candidates selected by Mr. Geathers." Id. at 14. He found that "[n]o documentation exists for the process used in the selection of Defendant for compliance review, which was in large part as a result of unreviewable discretion." Id. According to the ALJ, "such a selection process cannot be found to be part of an ‘administrative plan containing specific neutral criteria.'" Id.

   After making these findings of fact, the ALJ determined that "no genuine issue of material fact exists with respect to whether the selection of Defendant for compliance review was reasonable" and that the Defendant's motion for summary judgment must be granted. He recommended that OFCCP's complaint be dismissed. Id. at 15.

    1. OFCCP's Position

   Alternatively, BOA argues that any consent it gave was, as the ALJ held, only consent to a reasonable investigation within the Fourth Amendment – that is, one in which BOA had been chosen according to constitutional standards. BOA also urges the Board to reject OFCCP's position that BOA could have refused to consent to the review and litigated its Fourth Amendment claim in the resulting enforcement action. This, it contends, would have put BOA in an "impossible" position: either risk the imposition of serious sanctions in order to test the constitutionality of the search, or permit the search when BOA had no evidence of a violation of the Fourth Amendment and by doing so relinquish its rights. Id. at 1-13.

   We consider the following issues:

(1) Whether genuine issues of material fact exist and

(2) Whether BOA was entitled to judgment as a matter of law on the grounds that the compliance review violated the Fourth Amendment because

A) BOA did not voluntarily consent to the compliance review of its Charlotte facility or

B) The Charlotte facility was not selected for review pursuant to an administrative plan containing neutral criteria.

   The ARB has jurisdiction in this matter pursuant to Sections 208 and 209 of Executive Order No. 11,246, and the regulations implementing the contract compliance laws, 41 C.F.R. §§ 60-1.26, 60-250.64, and 60-741.65, and 41 C.F.R. § 60-30 (2002). The ALJ's decision is a recommendation, and the Board has plenary power to determine whether summary judgment should be granted. 41 C.F.R. §§ 60-30.29 and 60-30.30; Secretary's Order No. 1-2002, 67 Fed. Reg. 64272 (October 17, 2002).

   1. The Fourth Amendment

   We start with the constitutional context in which searches must be examined. The Fourth Amendment provides:

The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.

The Fourth Amendment requires balancing competing interests.

It is well established that the Fourth Amendment protects a citizen's legitimate expectation of privacy in the "invaded place." Minnesota v. Olson, 495 U.S. 91, 95 (1990). It is also well-established that "[a]s the text of the Fourth Amendment indicates, the ultimate measure of the constitutionality of a governmental search is ‘reasonableness,' ... [and] [w]hether a particular search meets the reasonableness standard is judged by balancing its intrusion on the individual's Fourth Amendment interests against its promotion of legitimate governmental interest." Vernonia School District 47J v. Acton, 515 U.S. 646, 652-53 (1995).

S.L. v. Whitburn, 67 F.3d 1299, 1307 (7th Cir. 1995).

   The history, context and case law under the Fourth Amendment make it clear that its protection applies to businesses as well as private individuals and their residences, although the strictures on government intrusion into businesses vary significantly from intrusion upon a person or his home. "The businessman, like the occupant of a residence, has a constitutional right to go about his business free from unreasonable official entries upon his private commercial property." See v. City of Seattle, 387 U.S. 541, 543 (1967).

   Indeed, the Fourth Amendment's protection of business owners is firmly rooted in the American experience:

The Warrant Clause of the Fourth Amendment protects commercial buildings as well as private homes. To hold otherwise would belie the origin of that Amendment, and the American colonial experience. An important forerunner of the first 10 Amendments to the United States Constitution, the Virginia Bill of Rights, specifically opposed "general warrants, whereby an officer or messenger may be commanded to search suspected places without evidence of a fact committed." The general warrant was a recurring point of contention in the Colonies immediately preceding the Revolution. The particular offensiveness it engendered was acutely felt by the merchants and businessmen whose premises and products were inspected for compliance with the several parliamentary revenue measures that most irritated the colonists. "[T]he Fourth Amendment's commands grew in large measure out of the colonists' experience with the writs of assistance . . . [that] granted sweeping power to customs officials and other agents of the King to search at large for smuggled goods." United States v. Chadwick, 433 U.S. 1, 7-8, 97 S.Ct. 2476, 2481, 53 L.Ed.2d 538 (1977). See also G. M. Leasing Corp. v. United States, 429 U.S. 338, 355, 97 S.Ct. 619, 630, 50 L.Ed.2d 530 (1977). Against this background, it is untenable that the ban on warrantless searches was not intended to shield places of business as well as of residence.

Marshall v. Barlow's Inc., 436 U.S. 307, 311-12 (1978).

   2. Application of the Fourth Amendment to Administrative Searches

   The Fourth Amendment's requirements clearly apply to a search of a business by an administrative agency. Barlow's is one of the leading Supreme Court decisions on the constitutional strictures applicable to administrative searches. There, a provision of the Occupational Safety and Health Act gave OSHA the authority to inspect establishments without a warrant, but the Court held that "the Act is unconstitutional insofar as it purports to authorize inspections without warrant or its equivalent." Id. at 320.

   The Court held that inspections of business premises under OSHA may be conducted only where there is probable cause. However, it stated that probable cause for administrative search could be based on "a showing that ‘reasonable legislative or administrative standards for conducting an . . . inspection are satisfied with respect to a particular [establishment].'" Id. The Court explained that:

A warrant showing that a specific business has been chosen for an OSHA search on the basis of a general administrative plan for the enforcement of the Act derived from neutral sources such as, for example, dispersion of employees in various types of industries across a given area, and the desired frequency of searches in any of the lesser divisions of the area, would protect an employer's Fourth Amendment rights.

Id. at 321. (Citations and footnotes omitted).

   Later in Barlow's, the Court rephrased the purpose of requiring a warrant for OSHA administrative searches: "[a] warrant . . . would provide assurances from a neutral officer that the inspection is reasonable under the Constitution, is authorized by statute, and is pursuant to an administrative plan containing specific neutral criteria." Id. at 323. The Court rejected the government's assertion that the warrantless search provisions in other regulatory statutes would be unconstitutional if warrants were required for OSHA searches, saying "[t]he reasonableness of a warrantless search . . . will depend upon the specific enforcement needs and privacy guarantees of each statute." Id.

   3. Administrative Searches Pursuant to Executive Order 11,246

(Citations omitted.) See also Freeman v. City of Dallas, 242 F.3d 642, 668 (5th Cir. 2001) ("in the absence of consent or exigent circumstances, administrative searches or seizures of private houses or buildings without a judicial warrant violate the Fourth Amendment. . . ."); United States v. Griffin, 555 F.2d 1323, 1324 (5th Cir. 1977) ("Warrantless searches are per se unreasonable subject to a few narrowly drawn exceptions. . . . One such exception is the knowing and voluntary consent of the person subject to the search.").

   5. Requirements for proof of consent to search

   Schneckloth is also the leading Supreme Court case on what constitutes consent to a search. In that case the Court held:

[W]hen the . . . State attempts to justify a search on the basis of . . .consent, the Fourth and Fourteenth Amendments require that it demonstrate that the consent was in fact voluntarily given, and not the result of duress or coercion, express or implied. Voluntariness is a question of fact to be determined from all the circumstances, and while the subject's knowledge of a right to refuse is a factor to be taken into account, the prosecution is not required to demonstrate such knowledge as a prerequisite to establishing a voluntary consent.

412 U.S. at 248-49.

   Consent can be established by proof of contemporaneous consent at the time of the actual search. Evidence of a prior agreement to permit a search for specific documents and of specific places in connection with obtaining a government benefit or contract may also establish consent.

    A. Contemporaneous consent

   In cases involving challenges to administrative searches, courts have held that when contemporaneous consent to the search was given, the search was lawful. In Simplex Time Recorder Co. v. Sec'y of Labor, 766 F.2d 575 (1985), for example, the D.C. Circuit held that the employer consented to a search broader than the parameters of a complaint filed with OSHA. It found evidence of consent in the fact that Simplex's safety engineer consulted with counsel before permitting the search, indicating he knew he could object at any time to the wider search, but remained silent as the inspection proceeded. 766 F.2d at 581. See also cases cited in Simplex at 766 F.2d 581-82: Stephenson Enterprises, Inc. v. Marshall, 578 F.2d 1021, 1023-24 (5th Cir. 1978) (company consented to walk-through inspection when its representative accompanied inspector and failed to raise any objections); Sec'y of Labor v. Concrete Constr. Co., 1992 O.S.H.D. (CCH) P 29,681, 1992 WL 117120, at *3 (O.S.H.R.C.) ("there is no indication that [the OSHA inspector coerced the foreman] or misled [him] in any way. [The OSHA inspector] simply explained that he was on the worksite to conduct an inspection, and [the foreman] made no further inquiry."). See also Lake Butler Apparel Co. v. Sec'y of Labor, 519 F.2d 84, 88 n.14 (5th Cir. 1975) (holding that a consensual inspection exists "where the compliance officer presented himself at the plant in the same manner as might any other government official and the [employer's representative] had the same right of refusal," and distinguishing cases in which the search is not lawful because consent was given only after law enforcement officials made misrepresentations regarding their authority to conduct the search); Sec'y of Labor v. Sanders Lead Co., 1993 O.S.H.D. (CCH) P 29,980, 1993 WL 840006 (O.S.H.R.C.) (consent to inspection voluntarily given where employer had previous experience with OSHA inspections and had benefit of professional consultant and legal counsel at all stages of inspection). Cf. Cody-Zeigler, Inc. v. Sec'y of Labor, 2002 WL 595167, 19 O.S.H. Cas. (BNA) 1777, 2002 O.S.H.D. (CCH) P 32,559, (D.C. Cir. Mar. 15, 2002) (employer's objection under OSHA Section 8(a) and Fourth Amendment to manner in which it was selected for inspection, after unsuccessful challenges to five citations, rejected because employer consented to 12 inspections); Donovan v. Carolina Stalite Co., 734 F.2d 1547 (D.C. Cir. 1984) (company effectively consented to inspection under Mine Safety and

   The court first set forth "general considerations" relevant to the case. 692 F.2d at 720. It found "most significant . . . the finding of the district court that the search would have imposed ‘no real burden' on the bank [because] the records in question either already had been prepared or would have been prepared in any event," and that this was relevant to the reasonableness of the search.

   In addition, the Eleventh Circuit found that First Alabama Bank's "express and voluntary" agreement to the record keeping and access requirements of the Executive Order, as well as the low burden on the bank in providing the information, decreased the strength of the bank's privacy interest. The court contrasted that low privacy interest with the "relatively strong public interest in providing for full equal employment opportunity." Id. at 720-21.

1. Existence of genuine issues of material fact

A. Voluntary contemporaneous consent

   As noted above, we would not dismiss this case even if we found the OFCCP review was not conducted pursuant to a plan with neutral criteria. Whether there was such a plan remains a relevant concern because, if OFCCP had such a plan and implemented it, the motion for summary judgment should be denied on that ground alone as well. We therefore next address that issue.

   B. Search pursuant to an administrative plan containing neutral criteria

   Genuine issues of material fact exist as to whether there was a plan with neutral criteria and whether that plan was implemented. The ALJ therefore erred in granting summary judgment to BOA.

The Compliance Manual, the court said, is in the nature of "interpretive rules, guidelines, general policy statements, and instructions to staff" which are internal guidelines for EEOC and confer no rights on private parties. Id. at 100. Even if the investigation was of the type covered by a particular section of the Compliance Manual, the court held that failure to follow that section did not "render the subpoena illegal and unenforceable." Id.

   Hall was a case involving differing internal agency guidance documents quite similar to the facts here. After EEOC had issued its Compliance Manual, it also issued an Accelerated Procedures Memorandum (APM) for use during the so-called Transitional Quarter in 1976. Plaintiffs claimed that their charges were not adequately investigated and no bona fide attempt was made to conciliate the charges because of the use of accelerated procedures. The court rejected that claim, holding, among other things, that the APM "did not have a substantial impact on private rights" and was not subject to the rulemaking requirements of the Administrative Procedure Act. 456 F. Supp. at 701-02. The court held:

The Accelerated Procedures Memorandum modified temporarily the procedures established by the EEOC Compliance Manual for processing charges filed with the EEOC. . . . The purpose of manuals such as this one is to instruct and provide guidance for the agency's staff in administering its responsibilities. The Compliance Manual fleshes out the bare bones of the statute and regulations with explanations of the agency's specific policies and procedures; however, the Manual does not determine any rights or obligations of parties before the EEOC. Thus, the changes in EEOC procedures brought about by the Accelerated Procedures Memorandum did not significantly affect any existing rights or obligations.

Id. at 702. See also United States v. Craveiro, 907 F.2d 260, 264 (1st Cir. 1990) ("the internal guidelines of a federal agency, that are not mandated by statute or the constitution, do not confer substantive rights on any party" (citations omitted)) (government's alleged violation of its Handbook on the Comprehensive Crime Control Act of 1984); United States v. Tipton, 11 F.3d 602, 612 (6th Cir. 1993) (government's alleged violation of Petite policy).

   Sunbeam and Hall suggest that, like the EEOC Compliance Manual, the EEDS Manual did not confer any rights on private parties. OFCCP, therefore, had no obligation to BOA to utilize only the EEDS procedures for selecting contractors for compliance reviews. Just as EEOC could implicitly modify its Compliance Manual ("the Accelerated Procedures Memorandum . . . in effect modified the procedures of the EEOC's Compliance Manual") with regard to the processing of certain charges, Hall, 456 F. Supp. at 697 (emphasis added), OFCCP could modify the EEDS by means of another selection plan for particular circumstances. OFCCP's obligation, vis-à-vis BOA, only was to utilize selection procedures that met Fourth Amendment requirements as articulated in Barlow's and NOPSI III. (The record contains no indication that the OFCCP officials lacked authority to adopt alternative procedures.). We therefore reject the premise of the ALJ's decision that OFCCP acted arbitrarily simply by not following the EEDS.

   We next consider whether it was undisputed fact, as BOA contends, that OFCCP had only one plan for selecting contractors for compliance reviews, and the EEDS was that plan (BOA Fact #3). Careful reading of the record indicates that BOA's assertion cannot be accepted as an undisputed fact. See McKinney v. Dole, 765 F.2d 1129, 1135 (D.C. Cir. 1985) "‘the record must show the movant's right to [summary judgment], with such clarity as to leave no room for controversy,'" quoting National Association of Government Employees v. Campbell, 593 F.2d 1023, 1027 (D.C. Cir. 1978). See also Weiss v. Kay Jewelry Stores, Inc., 570 F.2d 1259, 1262 (D.C. Cir. 1972) (Summary judgment "should be awarded only when the truth is quite clear.").

   The FY'94 Operational Plan, issued by the Acting Director of OFCCP in September 1993, directed the Regional Offices to conduct corporate management reviews. Attachment to BOA Exhibit I. It listed such reviews under the heading "special initiatives" and specifically advised the Regional Offices that special initiatives were compliance reviews. There is no evidence that the FY '94 Operational Plan was not a legitimate document or that its instructions were not based on a legitimate exercise of authority. OFCCP listed the FY '94 Operational Plan, but not the EEDS Manual, as a document on which it relied in selecting the Charlotte facility. Id., OFCCP Response To First Request for Production of Documents, Response to Request No. 11.

   BOA made an additional argument for its proposition that the uncontested facts established that Charlotte was not selected based on a plan with neutral criteria, to wit that OFCCP's selection of the Charlotte headquarters was the product of the agency's unbridled discretion. The ALJ agreed and found that the selection process actually used by OFCCP was "not neutral, but was arbitrary to the point of being unconstitutionally unreasonable." Recommended Order at 13.

   The ALJ found that the selection of the Charlotte facility was arbitrary in part because he accepted BOA's assertion that at least 20 eligible contractors had headquarters facilities in the Charlotte area and OFCCP did not explain how it selected BOA from among those 20 facilities. BOA cites this ALJ finding in arguing before the Board that the selection was arbitrary.