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<![CDATA[
CCASE:
FAST FREIGHT, INC. & J.W. LASATER & J.W. LASATER II
DDATE:
19940506
TTEXT:
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[1] BOARD OF SERVICE CONTRACT APPEALS
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matter of:
FAST FREIGHT, INC., BSCA CASE NO. 92-35
FAST FREIGHT WEST, INC.,
FAST FREIGHT NORTH, INC.,
FAST FREIGHT SOUTH, INC.,
JAMES W. LASATER, AND
JAMES W. LASATER II
BEFORE: Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
DATED: May 6, 1994
DECISION OF THE BOARD OF SERVICE CONTRACT APPEALS
This matter is before the Board of Service Contract Appeals
pursuant to the McNamara-O'Hara Service Contract Act of 1965, as
amended (41 U.S.C. [sec] 351 et seq.; "SCA"), and the regulations
of the Department of Labor at 29 C.F.R. Part 8. The case is
pending on the petition of Fast Freight, Inc.; Fast Freight West,
Inc.; Fast Freight North, Inc.; Fast Freight South, Inc.; James
W. Lasater, and James W. Lasater II (collectively referred to as
"Petitioners" or "Fast Freight"), seeking review of the September
15, 1992 decision and order of Administrative Law Judge ("ALJ")
G. Marvin Bober. The ALJ determined that Petitioners violated
the SCA by failing to pay their employees for all hours worked
and by failing to comply with the SCA's recordkeeping
requirements. The ALJ further determined that Petitioners should
be debarred, because they had failed to establish "unusual
circumstances" that would warrant relief from debarment. For the
reasons stated below, the ALJ's decision and order is affirmed in
part and reversed in part, and this case is remanded to the ALJ
for further proceedings consistent with this decision.
I. BACKGROUND
During the 1980s Fast Freight entered into four contracts
with the United States Postal Service to haul mail. The first
contract was performed by [1]
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[2] Fast Freight South, Inc.; the contract began on July 1, 1981,
and ended on June 30, 1989. During the intervening years Fast Freight
subsidiaries -- Fast Freight North, Inc.; Fast Freight West, Inc.;
and Fast Freight South, Inc. -- entered into similar contracts.
(ALJ's Decision ("ALJD") at p. 2.)
The Department of Labor initiated an investigation of Fast
Freight in 1985. Following an audit of Fast Freight's records,
the Department filed a complaint on February 11, 1988. The
complaint alleged that Petitioners underpaid wages and fringe
benefits to drivers. The complaint also sought debarment of
Petitioners.
A hearing was held before the ALJ on February 24-25, 1992.
The ALJ issued his decision and order on September 15, 1992. The
ALJ noted the findings of the Department's investigator, Louis
Greer, who determined that Fast Freight's drivers were being paid
according to a pre-arranged schedule set forth by the company for
a particular route. Greer determined that this schedule did not
account for the time required to inspect the truck before
departure, as well as unloading time upon arrival. Greer also
determined that drivers were not being paid for short breaks en
route, and that many drivers were not receiving a full 30- minute
meal period. (ALJD at pp. 2-3.) The investigator based his
findings on a comparison of Fast Freight's time cards with
tachographs recorded within the trucks and with Department of
Transportation ("DOT") logs recorded by the drivers. Greer
determined that the DOT logs were the most accurate
representation of the hours worked, since the time cards
reflected the pre- arranged route schedule and the tachographs
often malfunctioned. Based on the DOT logs, the investigator
found that Fast Freight owed $16,459.29 in back wages. (Id. at p.
3.) Upon completing the audit in 1986, Greer informed James
Lasater -- at that time, Fast Freight's president -- of the
differences he had found between the time cards and the DOT logs.
Six months after completion of the audit, the DOT logs and
tachographs were discarded. (Id. at p. 4.)
The ALJ stated that under the Department's SCA regulations
(29 CFR 4.6(g)(1)), a service contractor is required by its
contract to keep all wage information on file and to keep the
information available to the government for three years following
the termination of the contract. He noted that a failure to make
wage information available is a violation of the regulations and
of the contract. (ALJD at p. 4.) "Whether intentionally or not,"
the ALJ stated, "Fast Freight clearly violated their contract by
failing to retain the DOT logs and the tachographs after the DOL
audit." Furthermore, he added, Fast Freight disposed of those
records nearly two years before the contracts ended. "These
actions," the ALJ stated, "lend credibility to the testimony of
Louis Greer and therefore to the allegation that Fast Freight
violated the SCA." (Id. at p. 5.) Applying the "best evidence"
rule (29 CFR 18.1004), the ALJ stated that since the DOT logs and
tachographs no longer existed, the Department's wage and hour
transcriptions and summaries were the best representations of the
hours actually worked by the [2]
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[3] drivers (Id.). The ALJ determined that the transcriptions and
summaries contained sufficient evidence to establish a pattern of SCA
violations, and found that Fast Freight failed to submit evidence that
was sufficient to rebut the Department's prima facie case (Id. at p. 6).
On the issue of debarment, the ALJ applied the test set
forth in the Department's regulations at 29 CFR 4.188(b)(3).
Under that test, the ALJ stated:
First, if the violator's conduct was either willful,
deliberate or the result of culpable conduct, such as
"culpable failure to comply with recordkeeping
requirements," then relief from debarment will not be
allowed. 29 C.F.R. [sec] 4.188(b)(3)(i). Second, if no
such conduct existed, "[a] good compliance history,
cooperation in the investigation, repayment of moneys
due, and sufficient assurances of future compliance are
generally prerequisites to relief." 29 C.F.R. [sec]
4.188(b)(3)(ii). (Footnote omitted.)
(ALJD at p. 6.) Applying the first part of the test, the ALJ
determined that Fast Freight's conduct was "culpable" within the
meaning of the Department's regulations. Fast Freight, he
stated, "failed to comply with the recordkeeping requirements of
the SCA by disposing of the [DOT] logs and the tachographs
following the audit." He concluded that "[s]ince this failure is
explicitly referenced in the regulations as grounds for
debarment, I must deny Fast Freight relief from placement on the
debarment list." Id.
The ALJ added that "even though Fast Freight demonstrated
some measure of compliance with the DOL investigation . . .,
which is one element listed in the regulations as a prerequisite
for relief from debarment," he was required to deny relief from
debarment because he had found the existence of culpable conduct
under the first part of the test (ALJD at p. 7).
Fast Freight filed a petition for review of the ALJ's
decision and order with this Board./FN1/[3]
/FN1/ "Fast Freight II" -- described as the corporate entities
Fast Freight, Inc.; Fast Freight North, Inc.; Fast Freight South,
Inc., and Fast Freight West, Inc., "as they are currently
constituted and have existed subsequent to the sale of the named
corporate Respondents by Respondent James W. Lasater in 1988"
(Intervenor's Reply to Acting Administrator's Opposition to
Petition to Intervene, at p. 1) -- filed a petition to intervene
and a petition for review with this Board. The petition to
intervene is hereby denied for the reasons set forth in the
Acting Administrator's Opposition to Petition to Intervene.[3]
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[4] II. DISCUSSION
A. The underpayments issue
In its petition for review, Fast Freight first argues that
the ALJ erred in concluding that Petitioners violated the SCA by
underpaying the drivers. Before the ALJ, Fast Freight stated,
Petitioners argued that the drivers worked only the time
reflected on the time sheets, and the Department argued that the
drivers worked additional time which was not reflected on the
time sheets but was reflected in the DOT logs. The ALJ accepted
the Department's argument, Fast Freight stated, based on the
testimony of investigator Greer and five drivers. (Brief in
Support of Petitioners' Petition for Review, at pp. 10-11.) Fast
Freight argues before this Board that the ALJ's findings are not
supported by the record, and that the ALJ ignored substantial
testimony supporting Fast Freight's contention that the time
sheets accurately reflected the time that the drivers worked (Id.
at p. 11).
Upon review, the Board concludes that the ALJ's decision and
order on this point should be affirmed. The Board is reluctant
to set aside the factual findings and credibility resolutions of
the trier of fact absent clear error, and it can not be said that
the findings of the ALJ on this issue are clearly erroneous.
B. The recordkeeping issue
Fast Freight also challenges the ALJ's determination that
Fast Freight committed recordkeeping violations by disposing of
the DOT logs and tachographs after the audit. On this point, the
Board concludes that the ALJ erred as a matter of law and must be
reversed. First, the Board agrees with Fast Freight that
Petitioners did not receive adequate notice of the allegation of
recordkeeping violations. Specifically, such an allegation was
not listed in the complaint or in any prehearing documents. We
reject the Acting Administrator's argument that Fast Freight "at
least implicitly" (Response to Petition for Review, at p. 20)
consented during the hearing to litigation of the recordkeeping
violations. Although there was some discussion of the missing
DOT logs, it does not follow that Fast Freight was made aware by
such discussion of the legal basis for the Department's argument
that the DOT logs were records that were required to be
maintained and retained pursuant to the Department's SCA
regulations. Accordingly, the ALJ erred by entertaining and
ruling upon the allegation of recordkeeping violations; the
recordkeeping issue can not appropriately be used as a basis for
finding that Fast Freight violated the SCA or implementing
regulations, or as a basis for debarment. See Thompson Brothers,
Inc., BSCA Case No. 92-32 (Jan. 29, 1993), at pp. 4-5.[4]
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[5] C. Debarment
The ALJ denied Petitioners relief from debarment after
applying the regulatory test for determining whether "unusual
circumstances" exist which would warrant relief from the
debarment sanction. The basis for the ALJ's ruling was his
conclusion that the recordkeeping violations constituted culpable
conduct within the meaning of Part I of the test. This Board,
however, has concluded that the ALJ erred in ruling that Fast
Freight committed recordkeeping violations. Accordingly, this
matter must be remanded to the ALJ for a redetermination of
whether Fast Freight has demonstrated the existence of "unusual
circumstances" which would warrant relief from debarment.
BY ORDER OF THE BOARD:
Charles E. Shearer, Jr., Chairman
Ruth E. Peters, Member
GERALD F. KRIZAN, ESQ.
Executive Secretary [5]
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