USDOL v. LEROY F. SURFACE, 1982-SCA-78 (Dep. Sec'y July 14, 1987)
CCASE:
DOL V. L.F. SURFACE
DDATE:
19870714
TTEXT:
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[1] U.S. DEPARTMENT OF LABOR
DEPUTY SECRETARY OF LABOR
WASHINGTON, D.C.
20210
DATE: July 14, 1987
CASE NO. 82-SCA-78
IN THE MATTER OF
U.S. DEPARTMENT OF LABOR
v.
LEROY F. SURFACE,
RESPONDENT.
BEFORE: THE DEPUTY SECRETARY OF LABOR
FINAL DECISION AND ORDER
This case is before me /FN1/ pursuant to an appeal by the
Government under the Service Contract Act of 1965, as amended
(SCA), 41 U.S.C. [secs] 351-358 (1982), and the rules and
regulations promulgated thereunder, 29 C.F.R. Parts 4, 6 and 8
(1986).
The sole issue involved in this appeal is the authority of an
administrative law judge (ALJ) to assess costs against the
Employment Standards Administration (ESA). ALJ Stuart A. Levin
ordered that ESA pay to Leroy F. Surface (Respondent) the sum of
$1,418.86 for expenses incurred in traveling from Denver, Colorado,
to Kansas City, Missouri, to attend the hearing in this case
brought under the SCA. [1]
/FN1/ The Deputy Secretary has been designated by the Secretary to
perform the functions of the Board of Service Contract Appeals
pending the appointment of a duly constituted board. 29 C.F.R.
[sec] 8.0 (1986); Department of Labor Executive Level Conforming
Amendments of 1986, Pub. L. No. 99-619 (November 6, 1986). [1]
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[2] Respondent, who had been charged with violations of the SCA,
had relocated from Kansas City, Missouri, the site of the alleged
violations, to Denver, Colorado. He had filed a motion with the
Office of Administrative Law Judges (OALJ) in which he requested
that the hearing in this case be conducted in Denver, Colorado,
because he was in poor health, his lawyer and witnesses were
located in Denver, and he had severe financial problems which would
result in great hardship if he were forced to defend in Kansas
City. See ALJ's Order Granting, In Part, and Denying, In Part,
Motion For Attorney's Fees and Expenses (O.) at 2.
During the pendency of that motion, a separate action was
commenced against the Secretary of Labor by Respondent's employee
in the United States District Court for the Western District of
Missouri. Respondent had no notice of the action, nor was he a
party thereto. /FN2/ The complaint contained no issue relating to
the location of the hearing in this case. However, during the
proceeding in the District Court, a stipulation was entered into,
in which it was stipulated that the hearing in this case was to be
held in Kansas City, Missouri, although Respondent's motion that
the hearing be held in Colorado was still pending.
Because the Respondent was not a party to the stipulation, the
venue issue was not involved in the proceeding before the [2]
/FN2/ That case involved two counts in an action brought by Anis B.
Scarlett and others, including Robert Mires (the employee alleged
to have been underpaid in this proceeding), seeking injunctive and
declaratory relief against the Department of Labor, in an unrelated
matter, and a third count by Robert Mires, individually, seeking a
decree compelling the Chief Administrative Law Judge to immediately
set a date for hearing in this proceeding. Anis B. Scarlett v.
Raymond J. Donovan, No. CV83-1344-CV-W-8. [2]
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[3] District Court, "and for good cause shown, including the fact
that a previous hearing involving this Respondent and the same mail
route was held in Denver" the ALJ granted Respondent's motion. O.
at 3. This order was later vacated because of the stipulation which
was "binding on the Department's Office of Administrative Law
Judges, and all of its agents, servants, and employees, including
the administrative law judge before whom Respondent's motion was
pending." O. at 3.
The ALJ recited this background of events, O. at 3-4, and then
set forth his rationale for granting Respondent's motion for costs,
in part, as follows:
There can be little doubt that the stipulation deprived
Respondent of the right to a fair decision on his
then-pending venue motion. The regulations governing the
conduct of Service Contract Act adjudications
specifically provide that: "The hearing examiner is
authorized to rule upon all motions or requests filed or
made prior to the filing of his report." 29 CFR 6.5.
Respondent properly filed his motion in accordance with
Section 6.5. The stipulation, however, vitiated his
opportunity to obtain a fair ruling on his motion. It set
aside, for purposes of this hearing, the requirements of
29 CFR 6.19(c) (7) and (9), and 29 CFR 18.27(b) and (c).
Thus, CFR 18.29(b) and (c) expressly authorize a change
of venue for good cause shown and with due regard for the
convenience of the parties and witnesses. (See also, 5
U.S.C. 554(b) which provides that: "In fixing the time
and place for hearings, due regard shall be had for the
convenience and necessity of the parties or their
representatives.") As previously mentioned, however, no
notice was afforded Respondent nor was any regard for his
hardship considered when the collateral agreement was
executed setting Kansas City as the hearing site. By
depriving him of access to a fair ruling on his motion,
the stipulation, as interpreted by the Department and the
plaintiff, contravened numerous published Department
regulations upon which Respondent had a right to rely,
(See, 29 CFR 615, [sic] 6.19(c) (7) and (c) (9); 29 CFR
18.26, 18.27(b) and (c), 18.29(a) and 18.43(b)), and 5
U.S.C. 554(b) as well. [3]
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[4] The terms of the stipulation as they relate to this
case have been satisfied. In the process, an individual
who was not a party to the stipulation has been injured
by the suspension of adjudicative rules designed to afford
him a fair, impartial hearing process. As a matter of
justice, Respondent petitions for his costs, and, as a
matter of fairness, his motion shall be granted under the
authority of 29 CFR 6.19(c) and 18.29(a)(7).
O. at 4.
In its Petition for Review, the Government argues first that,
"[t]he Service Contract Act does not authorize the administrative
law judge to tax costs against the Government," Government's
Petition for Review of the Decision of Administrative Law Judge
(Petition) at 5 (underscoring omitted), and second, that "[t]he
administrative law judge is barred from taxing costs against the
Government because the Secretary of Labor has no funds appropriated
for such expenditures." Petition at 7 (underscoring omitted).
Both arguments are premised on the doctrine of sovereign immunity,
which, it is argued, "protects the Government from being taxed for
costs or expenses without express authorization by Congress,"
Petition at 5-6 and "prevents the expenditure of Government funds
without the authorization of Congress." Petition at 7.
The Government is correct in its assertion that sovereign
immunity prevents the United States or, as in this case, an agency
thereof, from being taxed for costs except when provided for by
statute. The general rule is that in the absence of a statute
directly authorizing it, courts will not give judgment against the
United States for costs or expenses. United States [4]
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[5] v. Chemical Foundation, Inc., 272 U.S. 1, 20 (1926). See also
United States v. Bodcaw, 440 U.S. 202, 203, n.3 (1979); Alyeska
Pipeline Co. v. Wilderness Society, 421 U.S. 240, 266-268 n.42 (1975).
The ALJ, however, has relied on 29 C.F.R. [secs] 6.19(c) /FN3/
and 18.29(a)(7) as his authority to assess costs against the ESA.
Section 6.19(c) set forth the powers of a hearing examiner (ALJ)
who presides at a hearing. As note 3 indicates however, Section
6.19(c) was revised before the ALJ ruled and the ALJ's general
powers are now set forth in Section 18.29(a) of 29 C.F.R. That
section provides that an ALJ "shall have all powers necessary to
the conduct of fair and impartial hearings," and includes
subsection (7), upon which the ALJ specifically relied to make the
award. Subsection (7) authorizes an ALJ to "exercise, for the
purpose of the hearing and in regulating the conduct of the
proceeding, such powers vested in the Secretary of Labor as are
necessary and appropriate therefor."
In considering this issue it is necessary to recognize that
the powers granted to the ALJ by Part 18 are, as the heading of
that Part indicates, "Rules of Practice and Procedure...", and do
not give him any substantive powers. However "[t]he right to costs
is not a question of procedure but is a substantive right." United
States v. French Sardine Co. Inc., 80 F.2d 325,
326 [5]
/FN3/ As the Government correctly asserts, Section 6.19(c) "is no
longer effective because on March 21, 1984, new SCA regulations
were published." Petition at 6. Section 6.19 as revised and as in
effect on July 18, 1984, when the ALJ issued his order, is entitled
"Decision of the Administrative Law Judge" and eliminated any
reference to the powers of the hearing examiner. [5]
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[6] (9th Cir. 1935). The court in French Sardine Co., quoted from
earlier cases as follows:
'The rules by which proceedings are governed are rules of
procedure; those by which rights are established and
defined, rules of law. It is the law which gives a right
to costs and fixes their amount. It is procedure which
declares when and by whom the costs, to which a party has
a previous title, shall be adjusted or taxed, and when
and by whose direction a judgment in his favor shall be
entered.'
Id. at 326 (citations omitted).
The case of Aycrigg v. United States, 124 F. Supp. 416 (N.D.
Cal. 1954), also involved a claim for costs against the
United States. In that case the court reiterated the language
quoted above from French Sardine Co. Inc., that the right to costs
is substantive and not procedural. 124 F. Supp. at 418. Assuming
arguendo, however, that the powers vested in the ALJ are
substantive, as well as procedural, the question then is, whether
the Secretary, having vested the ALJ with "such powers vested in
the Secretary," has the authority to make an award of costs. In
Aycrigg, the court stated that "The Rule of Strict Construction is
Especially Applicable when it is Sought to Mulct the Sovereign with
Costs." Id. The court continued:
The above rule of construction is applied with especial
rigor in cases where it is sought to hold the United
States liable for costs.
In United States v. Chemical Foundation, Inc., 1926, 272
U.S. 1, 20, 47 S.Ct. 1, 8, 71 L.Ed. 131 the Supreme Court
used the following language:
"The general rule is that, in the absence of a
statute [*] directly [*] authorizing it,
courts will not give judgment against the
United States for costs or expenses. (Cases
cited.) * * *. [6]
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"Equity Rule 50 [28 U.S.C.A. Appendix] in
general terms provides that stenographers'
fees shall be fixed by the court and taxed as
costs, but it does not [*] specify [*] costs,
or judgment for money against the United
States. The rule does not mention the United
States [*] and does not affect the sovereign
prerogative not to pay costs. Congress alone
has power to waive or qualify that immunity
[*]. But no statute authorizes the giving of
judgment against the United States for these
items or authorizes the Attorney General or
other counsel in the case to consent to such a
judgment. No such authority is necessary for
the proper conduct of litigation on behalf of
the United States, [*] and there is no ground
for implying that authority [*]. It follows
that the direction for judgment against the
United States for costs cannot be sustained."
[*](Emphasis supplied)[*]
Id. (footnote omitted). See also E.E.O.C. v. Kenosha Unified
School District No. 1, 620 F.2d 1220, (7th Cir. 1980). /FN4/
The SCA makes no mention of an award of costs and there is no
basis for implying that authority. Although 28 U.S.C. [sec] 2412(a)
(1982) provides a judgment for costs "to the prevailing party [*]
in any civil action [*] brought by or against the United States or
any agency . . .," [*](emphasis added)[*], such authority to award
costs, as the emphasized language indicates, is limited to civil
actions. The hearing before the ALJ was not a civil action.
Moreover, as the Government noted, any waiver of the
sovereign immunity from the assessment of costs must be explicit
and may not be implied. Petition at 6-7. There is no indication at
[7]
/FN4/ In Kenosha the Court recognized that "an assessment [of
costs] against the United States is not permissible in the absence
of explicit authority that may serve as a waiver of the
Government's traditional immunity . . . [and] the equitable power
of the judiciary cannot supply the necessary authorization in the
absence of some statutory basis." 620 F.2d at 1227. [7]
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[8] all that the general regulation at 29 C.F.R. [sec] 18.29
purports to waive anything. Thus, I find that the ALJ erred in
awarding costs to Respondent. /FN5/
Accordingly Part III of the ALJ's Order is reversed and the
specific order that ESA pay Respondent $1,418.86 is reversed.
SO ORDERED.
[Dennis E. Whitfield]
Deputy Secretary of Labor
Washington, D.C. [8]
5/ Because I find the Government's first argument sufficient, I do
not address the further contention that the taxation of costs is
barred because no funds have been appropriated for such
expenditures. [8]
