On June 23, 1997, Chief Judge John M. Vittone issued a pre-hearing order
advising the parties to notify the Office of Administrative Law Judges immediately if a settlement
of the issues set for hearing were reached. The pre-hearing order also advised the parties that a
settlement judge could be appointed at the request of the parties, pursuant to 29 C.F.R.
§18.9(e), and that requests for such appointment should be directed to either the Chief Judge
or to the ALJ who would subsequently be assigned to hear the case.
On April 13, 1998, ALJ Rudolph L. Jansen, to whom the case had been
assigned, issued a Notice of Hearing advising the parties that the hearing was scheduled for June 30,
1998, and setting deadlines for the completion of discovery, the parties' pre-hearing submissions and
exchanges, and the filing of any preliminary motions. By letter of April 21, 1998, Indiana informed
the ALJ that the parties had reached an oral settlement agreement and requested that the ALJ remove
the case from his hearing docket. Indiana also indicated that the parties would submit a copy of the
signed settlement agreement to the ALJ upon its execution. On April 24, 1998, the ALJ's office
advised Indiana by telephone that the case would be removed from the ALJ's hearing schedule after
he had received the settlement agreement. On June 30, 1998, the ALJ convened the hearing, at
which Indiana informed the ALJ that the parties had executed a settlement agreement and that a joint
stipulation requesting dismissal of the case was being drafted. The ALJ stated that he would leave
the record open until July 10, 1998, for submission of the settlement documentation.
On July 7, 1998, the Grant Officer filed the parties' Stipulation of Dismissal,
without a copy of the settlement agreement. The ALJ subsequently requested a copy of the
settlement agreement. The Grant Officer responded by letter of July 13, 1998, advising the ALJ that
the parties' agreement expressly prohibited disclosure of the agreement's contents to the ALJ. In
addition, the Grant Officer requested that the ALJ dismiss the case based on the joint stipulation of
the parties, pursuant to Rule 41(a)(1)(ii) of the Federal Rules of Civil Procedure (FRCP). The Grant
Officer urged that such a dismissal was permitted by 29 C.F.R. §18.9(c).
On July 21, 1998, the ALJ issued an order declining to dismiss the case unless
the parties' settlement agreement was submitted to him for review, and conditioning dismissal of the
case upon his approval of the terms of the agreement. Specifically, the ALJ concluded that the
parties' Stipulation of Dismissal did not fulfill the requirements of 29 C.F.R. §18.9(c) for
dismissal based on a settlement between the parties. The ALJ determined that Section 18.9 was
controlling, and interpreted that regulation to require ALJ review of a settlement agreement upon
which parties based a stipulation of dismissal. The ALJ thus concluded that voluntary dismissal
under Rule 41(a)(1)(ii) was precluded. Order at 2-3. This appeal followed.
DISCUSSION
The ALJ ruled that 29 C.F.R. §18.9 is applicable to this case, that Rule
41 of the FRCP is not, and that public policy requires review of a settlement of a JTPA audit action.
For the reasons discussed below, we disagree, and dismiss this case.
First, we disagree with the ALJ's conclusion that 29 C.F.R. §18.9 is
applicable to the circumstances involved in this case. Section 18.9 is included in the Rules of
Practice and Procedure for Administrative Hearings before the Office of Administrative Law Judges
(OALJ rules). 29 C.F.R. Part 18. As the ALJ noted, regulations promulgated under the JTPA
provide for application of the OALJ rules to hearings requested by JTPA grantees to dispute Grant
Officers' audit determinations. 20 C.F.R. §627.802(a) (1998). Section 18.9 expressly applies
when the parties request deferral of the hearing to pursue "negotiation of a settlement or an
agreement containing findings and an order disposing of the whole or any part of the
proceeding." 29 C.F.R. §18.9(a) (1998); see also 58 Fed. Reg. 3822 (Jan. 11,
1993) (notice of proposed rulemaking, addition of subsection (e), settlement judge procedure, to 29
C.F.R. §18.9); 58 Fed. Reg. 38498 (July 16, 1993) (final rule, 29 C.F.R. §18.9(e)).
In the instant case, the parties did not request a period of time in which to
pursue a settlement agreement. Rather, Indiana (as the JTPA grantee that had requested the hearing)
advised the ALJ more than two months before the hearing date that the parties had agreed to a
settlement. Indiana ltr. of Apr. 21, 1998. Although the parties have offered no explanation for their
failure to submit their joint Stipulation of Dismissal until after the scheduled hearing date, the fact
remains that the parties did not request deferral in order to reach a settlement, or the formal
supervision of a settlement judge, or the informal supervision of the ALJ assigned to the case.
Cf. 29 C.F.R. §18.9(a), (c), (e) (1998); 29 C.F.R. §627.805 (providing for
alternative dispute resolution of appeals from Grant Officer's final determinations). Thus, no
provisions of Section 18.9 were ever invoked by the parties; nor need they have been, given the fact
that the parties reached a settlement without the need for deferral or judicial supervision. Without
a request for deferral or ALJ supervision of settlement negotiations, Section 18.9 simply does not
apply.
It follows, therefore, that the ALJ's conclusion that "the Federal Rules
[of Civil Procedure] are not applicable to this case since our own procedural rules provide guidelines
for disposition . . ." is erroneous. Order at 2. Section 18.1 of the OALJ rules requires that the
FRCP "shall be applied in any situation not provided for or controlled by these rules, or by any
statute, executive order or regulation." 29 C.F.R. §18.1(a) (1998). Although, as we
have held above, Section 18.9(c)(2) does not provide for dismissal of a case based on the
mutual agreement of the parties without the prior invocation of Section 18.9, that regulation clearly
does not prohibit such dismissal action. Consequently, the mandate of Section 18.1(a)
regarding resort to the FRCP would apply, unless such dismissal action were governed by other
regulatory or statutory provision or executive order. 29 C.F.R. §18.1(a) (1998); see
generally Nolder v. Raymond Kaiser Engineers, Case No. 84-ERA-5, Sec. Dec., June 28, 1985,
slip op. at 5-7 (holding resort to FRCP appropriate under 29 C.F.R. §18.1(a)). Inasmuch as
neither the provisions of the JTPA nor the regulations promulgated thereunder address the dismissal
action that is sought by the parties in this case, FRCP Rule 41 applies. See 29 U.S.C.
§§1574-76 (1994); 29 C.F.R. Part 627, Subpart H (1998).
Finally, the ALJ erroneously concluded that the public interest requires review
by the ALJ of a settlement resolving an audit dispute between the Department of Labor and a JTPA
grantee. In drawing that conclusion, the ALJ relied on the Secretary's decision in Hoffman v.
Fuel Economy Contracting, Case No. 87-ERA-33, Sec. Ord. Denying Request to Reconsider,
Aug. 4, 1989. Order at 2. Hoffman involved a whistleblower complaint filed under the
Energy Reorganization Act (ERA), 42 U.S.C. §5851, and is clearly distinguishable from the
instant case arising under the JTPA.
In Hoffman , the Secretary rejected the parties' reliance on FRCP 41
and 29 C.F.R. §18.9(c)(2) to support dismissal because such dismissal would be in conflict
with the ERA. Specifically, the Secretary concluded that dismissal based on the parties' stipulation
under FRCP 41(a)(1)(ii) or Section 18.9(c)(2) would have been improper because the parties'
stipulation was linked to a settlement agreement that had not been reviewed and approved by the
Secretary as required by a provision of the ERA, 41 U.S.C. §5851(b)(2)(A) (1988).
Hoffman , slip op. at 2-4. Thus, the Hoffman decision applies the Section 18.1(a)
principle that the FRCP and the OALJ rules must yield when inconsistent with a controlling statutory
provision. Hoffman , slip op. at 2-4; see 29 C.F.R. §18.1(a). In contrast to the
ERA, there is no statutory provision under the JTPA requiring Secretarial approval of parties'
settlements of audit disputes. See 29 U.S.C. §1576 (1994); see also 29 C.F.R.
Part 627 (1998).
Inasmuch as the JTPA does not require Secretarial review of settlements
entered into between a Grant Officer and a grantee, the Rule 41 provision allowing for dismissal
based on the stipulation of the parties should be applied. Cf. U.S. Department of Labor v. UGI
Corp., Case No. 89-OFC-36, Sec. Notice of Case Closing, Sept. 25, 1990 (applying FRCP
41(a)(1)(ii) to dismiss case and holding that review of settlement was not necessary under the
Vietnam Era Veterans Readjustment Assistance Act of 1974, 38 U.S.C. §2012 (1972), and
the Rehabilitation Act of 1973, 29 U.S.C. §793 (1982)). We therefore reverse the
ALJ's Order denying dismissal of the case and apply Rule 41(a)(1)(ii) of the Federal Rules of Civil
Procedure to the parties' Stipulation of Dismissal. The parties' stipulation provides that the
complaint be dismissed with prejudice, which is permitted by the terms of Rule 41(a)(1)(ii).
ORDER
The case is therefore DISMISSED with prejudice.
SO ORDERED.
PAUL
GREENBERG
CYNTHIA
L. ATTWOOD
[ENDNOTES]
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