PUBLIC DEVELOPERS CORP., WAB No. 94-02 (WAB July 29, 1994)
CCASE:
PUBLIC DEVELOPERS CORPORATION
DDATE:
19940729
TTEXT:
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[1] WAGE APPEALS BOARD
UNITED STATES DEPARTMENT OF LABOR
WASHINGTON, D. C.
In the Matter of:
PUBLIC DEVELOPERS
CORPORATION, WAB CASE NO. 94-02
Contractor
and
ROBERT D. DUNN,
President
BEFORE: David A. O'Brien, Chair
Ruth E. Peters, Member
DATED: July 29, 1994
DECISION OF THE WAGE APPEALS BOARD
This matter is before the Wage Appeals Board on the petition
of the Administrator of the Wage and Hour Division for review of
a decision and order issued by Administrative Law Judge ("ALJ")
Robert D. Kaplan on December 9, 1993. The ALJ dismissed this
case after ruling that as the result of "extreme delay" Public
Developers Corporation and its president, Robert E. Dunn
(collectively referred to as "Respondents" or "PDC"), had been
prejudiced in their ability to present a defense to Wage and
Hour's allegations of violations of the Davis-Bacon Act (40
U.S.C. [sec] 276a et seq.) and the Contract Work Hours and Safety
Standards Act (40 U.S.C. [sec] 327 et seq.) ("CWHSSA"). For the
reasons stated below, this matter is remanded to the ALJ for
further proceedings consistent with this decision.[1]
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[2] I. BACKGROUND
A. Case history
As noted above, the ALJ ruled that PDC was prejudiced by
"extreme delay" in the processing of this case. Since delay is
an issue in this case, we have set forth the case history in
chronological order.
November 14, 1983: PDC was awarded a contract by the U.S.
Department of Agriculture for construction of a flood control dam
at the Assunpink Creek Watershed in West Windsor, Mercer County,
New Jersey. Tresource, Inc. ("Tresource") subcontracted with PDC
to clear about 24 acres of forest land. The prime contract work
began on December 5, 1983 and ended on September 26, 1985;
Tresource's work under the subcontract began on December 21, 1983
and ended on January 13, 1984. (Tresource did not complete its
work under the subcontract with PDC.) The contracts were subject
to the requirements of the Davis-Bacon Act, the CWHSSA, and the
labor standards regulations of the Department of Labor ("DOL") at
29 C.F.R. Part 5.
October 1984: DOL conducted an investigation of Tresource's
compliance with Davis-Bacon and CWHSSA requirements.
October 1985: DOL commenced an investigation of PDC's
performance under the prime contract.
November 1985: At DOL's request the Department of
Agriculture withheld $150,000 from PDC's contract to cover back
wages allegedly owed by the prime contractor and subcontractor
Tresource.
March 1986: The amount of withholding was reduced to
$70,202.69.
December 8, 1987: DOL issued charging letters to PDC and
Tresource. In the Tresource charging letter, DOL alleged that
the investigation disclosed a failure to pay prevailing wage
rates and proper overtime compensation, as well as a failure to
submit certified payroll records. DOL alleged that Tresource
owed a total of $32,517.74 in unpaid wages and overtime
compensation to 10 employees. DOL also alleged that the
violations revealed by the investigation warranted debarment for
disregard of obligations to employees under section 3(a) of the
Davis-Bacon Act. DOL sent a copy of the Tresource charging
letter to PDC, and advised PDC of DOL's position that a prime
contractor is responsible for the payment of back wages owed by a
subcontractor when the subcontractor fails to make payment. The
charging letter advised both Tresource and PDC of the opportunity
for a hearing regarding the alleged violations by Tresource.[2]
~3
[3] In the PDC charging letter, DOL alleged that the
investigation disclosed a failure to pay prevailing wage rates
and proper overtime compensation, misclassification of employees,
failure to submit certified payroll records and the submission of
falsified payroll records. DOL alleged that PDC owed $37,684.95
in unpaid wages and overtime compensation to 12 employees. DOL
also alleged that the violations warranted debarment for
disregard of Davis-Bacon obligations. DOL offered PDC an
opportunity for a hearing before an ALJ.
The U.S. Postal Service returned the December 8, 1987
charging letters, marked "unclaimed," to the Wage and Hour
Division.
April 5, 1988: Wage and Hour contacted PDC's attorney and
informed him of the return of the charging letters and of
Respondents' right to a hearing.
April 13, 1988: PDC, in a letter to Wage and Hour,
requested a hearing in this matter.
January 18, 1989: Wage and Hour issued an Order of
Reference, referring this matter for hearing before an ALJ. The
Order of Reference stated that the case involved disputes over
payment of prevailing wages and overtime compensation, the proper
classification of employees, and the proposed debarment of Public
Developers Corporation and its president, Robert E. Dunn, and
Tresource and its president, Richard Miller, for disregard of
obligations to employees within the meaning of section 3(a) of
the Davis-Bacon Act.
July 25, 1989: PDC again made a written request for a
hearing.
March 24, 1992: A DOL memorandum transmitting the Order of
Reference was date-stamped as received in the Office of
Administrative Law Judges ("OALJ").
January 21-22, 1993 and March 11, 1993: A factfinding
hearing at which the parties presented documentary and
testimonial evidence was held before the ALJ. As noted earlier,
DOL initially sought a total of $70,202.69 in back wages --
$32,517.74 for 10 Tresource employees and $37,684.95 for 12 PDC
employees. At the conclusion of the hearing, DOL reduced its
calculation of the total amount of back wages owed to 10
Tresource employees $23,215.01. In addition, DOL dropped the
claim for one PDC employee, Emmet Hill, after the hearing and
calculated the amount of back wages owed to the remaining 11 PDC
employees as $36,797.30. Thus, the total amount of back wages
alleged to be owed was reduced at the close of the hearing to
$60,012.31.[3]
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[4] B. The ALJ's Decision and Order
In the decision and order issued on December 9, 1993, the
ALJ did not rule on the merits of DOL's claims against PDC and
Tresource. The ALJ did, however, address PDC's allegations that
DOL was barred from taking action against Respondents. The ALJ
rejected PDC's contention that DOL was barred from taking action
against Respondents by the statute of limitations set forth at 28
U.S.C. [sec] 2415(a) (ALJ's Decision ("ALJD") at pp. 3-6). He
likewise rejected the contention that the doctrines of waiver and
estoppel operated to bar DOL from taking action against
Respondents (Id. at pp. 6-7).
Turning to PDC's laches defense, the ALJ accepted
Respondents' contention that DOL's action was barred because of
the delay between the occurrence of the alleged violations and
the filing of the Order of Reference. Laches, he noted, "is the
principle that a party who delays doing a thing at the proper
time is barred from bringing a legal proceeding" (ALJD at p. 7).
Although laches ordinarily is not available against the United
States, he added, the Wage Appeals Board in J. Slotnik Company,
WAB Case No. 80-05 (Mar. 22, 1983) ("J. Slotnik") "proclaimed the
principle that it is unfair `to pursue a contractor after many
years of inexcusable delay' " (Id. at pp. 7-8).
The ALJ noted that the Board found it inappropriate to
invoke the laches doctrine in the factual circumstances presented
in J. Slotnik. However, he stated, the Board clearly held in J.
Slotnik that " `extreme delay' by the government warrants the
imposition of laches against it whether or not `palpable' injury
to the contractor is demonstrated. Presumably, the [Board]
recognized that extreme delay is inherently injurious to a
contractor because the more time that passes between the
occurrence of the contractor's acts of which DOL complains and
DOL's commencement of its prosecution against the contractor, the
more difficult it is for the contractor to defend itself: e.g.,
memories of witnesses grow dim" (footnote omitted). (ALJD at p.
8.)
The ALJ went on to analyze whether DOL's conduct in this
case warranted the imposition of laches. The first delay in this
case occurred, he stated, between commencement of the
investigation in October 1984 and the issuance of charging
letters on December 8, 1987. "Nowhere does DOL provide an
explanation of the reason why it took over 3 years to issue the
charging letters," the ALJ stated. Furthermore, he added, the
Order of Reference was not issued until January 18, 1989, "more
than 4 years after the start of the investigation and 13 months
after the issuance of the charging letters." In addition, he
noted that the time between onset of the alleged violations and
service of the Order of Reference on Respondents was more than 5
years -- a longer period that the 4-year delay between those two
events in J. Slotnik. The ALJ also found it significant that the
Order of Reference had been delayed for 9 [4]
~5
[5] months after PDC submitted, on April 13, 1988, a written request
for a hearing. (ALJD at p. 9.)
The ALJ noted that on July 25, 1989, PDC again submitted a
written request for scheduling of a hearing. Despite that
request, he stated, "it appears that DOL did nothing to determine
why OALJ had not scheduled a hearing although the Order of
Reference had issued 6 months earlier. Indeed, there is no
evidence that DOL thereafter did anything at all to move the case
to a hearing." (ALJD at p. 9.)
"A significant and baffling delay" occurred, the ALJ stated,
between April 13, 1988 when PDC made a formal request for a
hearing and March 24, 1992 when the memorandum transmitting the
Order of Reference was stamped as received in the OALJ more than
8 years after commencement of the alleged violations (ALJD at p.
9). The ALJ listed four reasons for his finding that DOL failed
to transmit the Order of Reference to the OALJ until March 1992.
First the transmittal memorandum accompanying the Order of
Reference was date- stamped as received by the OALJ on March 24,
1992. Second, the certificate of service listing those who were
served with a copy of the Order of Reference on January 18, 1989
made no reference to the OALJ. Third, DOL provided no evidence
that the Order of Reference was transmitted to the OALJ on
January 18, 1989. And fourth, "[D]elay in transmitting the Order
of Reference to OALJ is consistent with DOL's earlier processing
of this case which was performed in an inexplicably slack and
laggardly manner." (Id.) The ALJ further found that even if DOL
was not responsible for the failure of the Order of Reference to
have been date-stamped as received at the OALJ until March 24,
1992, Respondents had nevertheless been "prejudiced by
governmental inaction" (Id. at p. 10 n.6).
The ALJ noted that the 8-year delay between commencement of
the alleged violations in this case and receipt of the Order of
Reference at the OALJ was twice the length of the delay in J.
Slotnik. The delay, he stated, "had a serious impact on
Respondents' ability to defend themselves against DOL's actions
as no hearing could have been scheduled until after OALJ received
the Order of Reference" (citations omitted). (ALJD at p. 10.)
The ALJ found that "in the particular circumstances of this
case -- which includes an extreme delay in the completion of
DOL's investigatory phase as well as a subsequent extreme delay
in DOL's processing of this action to a formal hearing before an
administrative law judge -- Respondents have been treated
unfairly by DOL and thereby have been prejudiced in their ability
to present a defense to DOL's allegations" (ALJD at p. 10).
Accordingly, he concluded, "whether the concept utilized to
afford Respondents fairness at the hands of the federal
government is called laches or a denial of due process of law, I
find that DOL's actions against Respondents in this case are
barred" (Id.). The ALJ [5]
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[6] ordered that the actions against Respondents be dismissed, and that
the withheld funds be released to Public Developers Corporation.
The Administrator of the Wage and Hour Division subsequently
filed with this Board a petition for review of the ALJ's decision
and order. The Board held oral argument in this matter on June
29, 1994.
II. DISCUSSION
A. Board precedent on issues arising from administrative
delay
As noted above, the ALJ concluded his consideration of the
laches defense raised by PDC by stating that "whether the concept
utilized to afford Respondents fairness at the hands of the
federal government is called laches or a denial of due process of
law, I find that DOL's actions against Respondents in this case
are barred." Our resolution of the issues raised by the ALJ's
conclusion requires the review of principles enunciated in
previous Board decisions which involved questions of
administrative delay -- in particular, the Board's recent
decision in Tom Rob, Inc., WAB Case No. 94-03 (June 21, 1994)
("Tom Rob"), and J. Slotnik.
1. The Board's decision in J. Slotnik
The Board held in J. Slotnik that it was without authority
to apply the two- year statute of limitations of the
Portal-to-Portal Act (29 U.S.C. [sec] 255) to Davis- Bacon
proceedings; at the same time, however, the Board expressed its
awareness of the problems caused by delay in administrative
proceedings. The Board stated (at p. 7) that it was
aware that excessive delays in processing Davis-Bacon
appeals may impugn the fairness of such proceedings in
appearance or in fact. The Board sees itself as a
ready and available means to prevent excessive delays
by timely action. But it is not within its power to
hold that the provisions of the Portal-to-Portal Act
will cover an administrative activity of this nature.
The Board likewise declined (at p. 8) to establish an
"equivalency doctrine" which would require that in Davis-Bacon
cases -- as in cases governed by the Portal-to-Portal Act statute
of limitations -- a proceeding before an ALJ must be initiated
within two years of the time that the cause of action accrued.
The Board in J. Slotnik went on to address whether the
doctrine of laches should be applied in that case. After noting
that the time elapsed from the time [6]
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[7] that the violations began until the Order of Reference was filed was
nearly 4 years, the Board stated (at pp. 8-9):
In the absence of a clear showing of sufficient injury
or disadvantage caused by the delay, we believe it
inappropriate to invoke a laches doctrine here.
However, the Board would like to put the Department of
Labor's administrative and legal arms on notice that
extreme delay in particular cases may create
presumptions of improper treatment with or without the
showing of a palpable injury to the contractor under
investigation. While it is fair to say that the
consequences of the government's delays in processing
appeals should not be placed upon employees because it
may turn out that they have been wronged, the Board
sees a balance can be reached where it becomes equally
unfair to pursue a contractor after many years of
inexcusable delay in cases in which it may turn out
that employees have not been wronged.
Thus, the decision in J. Slotnik established several
precepts that provide guidance to the Board in resolving the
issues that emanate from instances of administrative delay.
First, the Board declined to formulate a "bright line" test
for evaluating issues of delay when it decided not to establish
an "equivalency doctrine" that would require that ALJ proceedings
in Davis-Bacon cases must be initiated within two years from the
time that the cause of action accrued, just as in cases that are
subject to the two-year statute of limitations of the
Portal-to-Portal Act.
Second, the Board in J. Slotnik declined in the
circumstances presented in that case to apply laches "[i]n the
absence of a [*] clear showing of sufficient injury or
disadvantage caused by the delay[*]" [*](emphasis supplied)[*].
Thus, the Board established that, at least in most cases, an
employer involved as a respondent in a Davis-Bacon proceeding
must make a showing of actual prejudice before the Board will
give further consideration to applying laches.
Third, the Board also made clear that [*]"extreme delay in
particular cases may create presumptions of improper treatment
with or without the showing of palpable injury"[*] [*](emphasis
supplied)[*].
Fourth, the Board in J. Slotnik emphasized the need to
balance the interests of the employees and the employer, stating
that "[w]hile it is fair to say that the consequences of the
government's delays in processing appeals should not be placed
upon employees because it may turn out that they have been
wronged, the Board sees that a balance can be reached where it
becomes equally unfair to pursue a contractor after many years of
inexcusable delay in cases in which it may turn out that
employees have not been wronged."[7]
~8
[8] 2. The Board's decision in Tom Rob
The Board also discussed the appropriate framework for
resolving questions of administrative delay in its recent
decision in Tom Rob. The ALJ in Tom Rob had granted the
respondents' motion for summary judgment and dismissed the
administrative proceeding against the prime contractor on the
ground that DOL's delay of 4 years and 11 months in filing an
Order of Reference denied the respondents due process of law in
violation of the Fifth Amendment. The Board ruled that the ALJ
erred in deciding the constitutional issue and disposing of the
case on a motion for summary judgment, and remanded the case to
the ALJ for a factfinding hearing. In reaching its decision, the
Board discussed the issues raised by the ALJ in the
constitutional context in which the issues were raised, noting
(at p. 6) that "many of the same issues and a similar analysis
may apply on remand regardless of whether the issues are
discussed in a constitutional context, as laches, as
administrative due process, or in some other manner."
On the issue of delay, the Board in Tom Rob stated (at p. 7)
that the test set forth in Barker v. Wingo, 407 U.S. 514 (1927),
as applied in United States v. $8,850, 461 U.S. 555 (1983), is
the appropriate framework for analyzing a question of
administrative delay. That analytical framework involves the
weighing of four factors to determine if a person's due process
rights have been violated because of a delay in holding a hearing
in a civil proceeding. The four factors to be considered are (1)
the length of the delay; (2) the reason for the delay; (3) the
defendants' assertion of her/his right to a hearing; and (4)
prejudice to the defendants.
B. PDC's laches defense
The primary issue in this proceeding is whether the ALJ
properly dismissed this case based upon laches, which was raised
by PDC as an affirmative defense in the proceeding before the
ALJ. As the ALJ stated, "Laches is the principle that a party
who delays doing a thing at the proper time is barred from
bringing a legal proceeding" (ALJD at p. 7). The Administrator's
first line of argument is that the equitable doctrine of laches
cannot be invoked in actions brought by the United States to
protect and promote the public interest (Statement in Support of
Petition for Review at p. 13). The Administrator acknowledges,
however, that courts have indicated that "laches may be asserted
against the government upon a showing that the government's
actions were dilatory and resulted in actual prejudice to the
asserting party" (Id., citing Occidental Life Ins. Co. v. EEOC,
432 U.S. 355, 373 (1977), and Dole v. Local 427, 894 F.2d 607 (3d
Cir. 1990). Given this acknowledgment that court precedent does
not completely foreclose the assertion of laches against the
government, the Board will proceed to analyze the laches issue
according to the framework set forth in Tom Rob and the guidance
set forth in J. Slotnik.[8]
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[9] 1. The first three Barker factors -- the length of
the delay, the reason for the delay, and the
assertion of the right to a hearing
A consideration of the first three factors in the four-part
test that was established in Barker v. Wingo and adopted by the
Board in Tom Rob as the framework for examining questions of
administrative delay leads ineluctably to these conclusions: (1)
The delay in moving this case from investigation of Tresource and
PDC to a hearing before an ALJ was unconscionably long; (2) the
delay was not caused by PDC; and (3) PDC timely asserted the
right to a hearing.
The ALJ found that a delay of more than 8 years occurred
between commencement of the alleged violations in this case and
the receipt of the Order of Reference in the OALJ. The first
element of this delay, he noted, occurred between the beginning
of the Tresource investigation in 1984 and the issuance of the
charging letters in 1987. "Nowhere," he stated, "does DOL
provide an explanation of the reason why it took over 3 years to
issue the charging letters." Although the Board agrees with the
ALJ that the delay of more than 8 years in this case is entirely
too long, we are less concerned than the ALJ with the amount of
time devoted to the investigatory phase of this proceeding.
First, we note that DOL regulations require an employer to
maintain "payrolls and basic records relating thereto" during the
course of the contract work and to preserve those pay records for
three years thereafter. 29 C.F.R. 5.5(a)(3). The contracting
agency is also required to preserve the certified payrolls and
the contractor's statements of compliance with Davis-Bacon
requirements for three years, and to produce those records at the
request of DOL during that period. 29 C.F.R. 5.6(a)(2). The
obligation to preserve pay records is included in the list of
contractor obligations that are incorporated in Davis-Bacon
contracts signed by the contractor.
The DOL regulations accomplish two things. The regulations
provide for the preservation of documentary evidence relating to
compliance with prevailing wage and overtime requirements for
three years after the work is completed. The regulations also
put the contractor on notice that an investigation -- which may
result in allegations of prevailing wage or overtime violations
-- may be initiated during that three-year period. We also
observe that in this case the 3-year period from commencement of
the investigation of subcontractor Tresource to issuance of the
charging letters is the only period of delay for which the
Administrator offers a reasonable explanation -- that is, that
Wage and Hour and Respondents held several meetings during that
period in an effort to resolve the matter, and that DOL commenced
a second investigation (of prime contractor PDC) during that
period. [9]
~10
[10] However, the delay in this case did not cease with
issuance of the charging letters, but instead continued to
accumulate. Thus, another 13 months passed before the Order of
Reference was issued by DOL. The most disturbing period of delay
-- aptly described by the ALJ as "significant and baffling" --
occurred between April 13, 1988 when Respondents formally
requested a hearing, and March 24, 1992 when the Order of
Reference was date-stamped as received in the OALJ. The ALJ
found that this delay occurred because Wage and Hour failed to
transmit the January 18, 1989 Order of Reference to the OALJ
until March 1992. The Board sees no basis for setting aside the
ALJ's finding on this point. However, even if OALJ and not DOL
were responsible for misplacing the Order of Reference for
several years, the delay was still considerable, the delay was
not caused by Respondents, and there is no indication that Wage
and Hour contacted OALJ to check on the status of the referral of
this matter for a hearing. In Bright Construction Company, WAB
Case No. 85-03 (Oct. 1, 1985), the Board stated that imposition
of laches "requires more than delay; it requires a lack of
diligence on the part of the Wage and Hour Division." The
"significant and baffling" delay that occurred in this case
certainly demonstrates a "lack of diligence" on the part of Wage
and Hour.
Thus, the record reveals that an intolerably long delay
occurred in processing this case to the hearing stage, that the
delay must be attributed to actions (or inaction) of DOL and not
to the actions of Respondents, and that Respondents made a timely
request for a hearing before an ALJ. Accordingly, we will
proceed to the fourth prong of the Barker test -- whether the
interests of Respondents were prejudiced by the delay.
2. Prejudice to PDC
Although the ALJ conducted a factfinding hearing on the
merits of this case, the ALJ did not address the merits in his
decision and order. Instead, the ALJ concluded that "Respondents
have been treated unfairly by DOL and thereby have been
prejudiced in their ability to present a defense to DOL's
allegations." Upon review, the Board concludes that the ALJ
erred both by failing to make any findings or conclusions on the
merits of this case and by failing to make any specific findings
of fact to support his conclusion that PDC was prejudiced in its
ability to present a defense. The Board is sorely tempted to
bring this proceeding to a close at this point by examining the
record and making the findings that the ALJ failed to make.
However, it is the ALJ who is trier of fact and who has had the
opportunity to hear the testimony of witnesses and to observe
their demeanor. Accordingly, the Board concludes that this case
must be remanded to the ALJ so that he can make the requisite
findings of fact. In order to speed the disposition of this case
on remand, the Board sets out the following framework for
addressing whether a respondent has been prejudiced in its
ability to present a defense to the allegations made by DOL in
the charging letter and referred to the OALJ for hearing. [10]
~11
[11] a. The merits of the case
In Tom Rob, where the ALJ proceeded to decide the
constitutional due process issue without holding a hearing on the
merits of the case, the Board remanded the case for a factfinding
hearing, stating (at p. 9) that "[t]he only way to determine
whether or not Rob has actually been prejudiced by the delay is
to proceed with a hearing on the merits." In this case, where
the ALJ held a factfinding hearing but failed to make any
findings of fact or conclusions of law with respect to the merits
of the case, we add the following point: Before addressing
whether an employer has demonstrated actual prejudice or whether
a presumption of prejudice should apply in the circumstances of a
particular case, an ALJ must first address the merits of the
case.
There are several reasons for requiring that an ALJ address
the merits of a case before moving on to the issue of prejudice.
First, we note that in any particular case it is possible that
when the ALJ decides the merits of the case, DOL may prevail with
respect to all alleged violations. However, it is also possible
that after reviewing the record evidence the ALJ will reduce the
back wage award or dismiss all or some of the charges against the
employer. [FN1] Furthermore, in a case that has been affected by
administrative delay it is possible that the same factors that
may be alleged to have harmed the employer's ability to present a
defense -- for example, the unavailability of witnesses or
documentary evidence or the dimming of the memory of witnesses
due to the passage of time -- may also hinder DOL's ability to
establish a prima facie case. Indeed, in the instant case PDC's
arguments, both in its written pleadings and at oral argument,
that Respondents were prejudiced in their ability to present a
defense were intertwined with arguments that DOL has failed to
establish that violations occurred.
Thus, by deciding the merits of a case before moving on to
the prejudice issue, the need to determine whether an employer
has been prejudiced in its ability to present a defense is
limited to those violations as to which the ALJ has determined
that DOL has established a prima facie case which has not been
rebutted by the employer. In cases where an employer alleges
that delay has resulted in a deprivation of constitutional due
process, limiting the case in this [11]
~12
[12] fashion permits an ALJ to avoid deciding matters on constitutional
grounds where non constitutional grounds are available. It is also
important to limit the case in this manner where laches has been raised
as an affirmative defense, for imposition of laches is an extraordinary
remedy and should only be considered and applied where circumstances
make it necessary to do so.
The Board, as an appellate body, must also be able to
discern from an ALJ's decision whether the principles of law that
govern the disposition of Davis- Bacon cases have been correctly
applied. In the instant case the ALJ stated that Respondents
had been prejudiced without providing any supporting findings of
fact and without discussing the merits of the case. If the Board
were to permit ALJs to resolve issues of prejudice in this
manner, it would be impossible for the Board to discern on appeal
whether an ALJ had considered the merits of the case sub silentio
and had, for example inappropriately decided to refuse back wages
for employees who were not able to provide precise records of
wages paid and hours worked when their employer failed to do so
(see Apollo Mechanical, Inc., WAB Case No. 90-42 (Mar. 13,
1991)), or that a respondent was "prejudiced" by DOL's invocation
of an informer's or deliberative processes privilege (see
Industrial Maintenance Service, Inc., supra). The requirement
that an ALJ address the merits of a case, fully setting forth the
findings of fact and conclusions of law on merits issues, will
permit the Board to review appropriately both the merits issues
and the issue of prejudice.
b. Actual prejudice
After examining the merits of the case, the ALJ should then
determine whether an employer has demonstrated that it was
prejudiced in its ability to present a defense. In Tom Rob the
Board, citing Gemini Construction Corporation, WAB Case No. 91-23
(Sept. 21, 1991), emphasized (at p. 9) that a respondent "must
show actual prejudice, not just allege potential prejudice." The
ALJ's consideration of the merits of the case will assist the ALJ
in evaluating the employer's claim of prejudice. The ALJ will
know, for example, whether the DOL alleges that violations are
apparent on the face of the certified payrolls, or that
violations are apparent from discrepancies between the certified
payrolls and in-house payroll records, or whether testimonial
evidence provided by employees and other witnesses is
particularly important to DOL's case or to a respondent's efforts
to rebut DOL's allegations. The ALJ will know whether the
documentary evidence that is critical to resolution of the merits
is evidence (such as payroll records) which is within the
possession or control of the employer or is instead within the
possession or control of another party. In short, the ALJ will
be able to assess the type of evidence that is critical to DOL's
case or the respondent's efforts to rebut the case, as well as
the ability of the respondent to preserve documentary and
testimonial evidence during the course of the delayed
administrative proceeding. This will assist the ALJ in
determining whether the respondent has made the requisite showing
that it suffered actual prejudice.[12]
~13
[13] In this case, the ALJ concluded that PDC had been
prejudiced in its ability to present a defense, but offered no
findings of fact to support that conclusion. On remand, the ALJ
must revisit the issue of prejudice, and must set forth the
findings of fact that support his conclusion on that issue.
c. Presumption of prejudice
As noted earlier, the Board in J. Slotnik declined in the
circumstances of that case to apply laches "in the absence of a
clear showing of sufficient injury or disadvantage caused by the
delay." Thus, in most cases a respondent must demonstrate actual
prejudice before the ALJ can give further consideration to the
imposition of laches. However, the Board also emphasized in J.
Slotnik that "extreme delay in particular cases may create
presumptions of improper treatment with or without the showing of
palpable injury." Accordingly, even in a case in which a
respondent is unable to show actual prejudice, an ALJ may
proceed to examine whether the administrative delay in that case
creates a presumption of prejudice.
The Board emphasizes, however, that only the most
extraordinary circumstances would warrant application of a
presumption of prejudice. First, as the Board stated in J.
Slotnik, the delay in the case must be "extreme." Second, the
Board in J. Slotnik properly emphasized the need to balance the
interests of the employees who may be owed back wages with the
interests of the employer. Thus, the application of a
presumption of prejudice should not be seen as a device to be
used in the ordinary case to relieve the employer of the
obligation to demonstrate actual prejudice. Instead, the
application of a presumption of prejudice should be reserved for
those rare cases where, after a review of the record evidence and
the parties' contentions, it appears that the egregious delay in
the proceedings has operated to deprive the factfinder of the
ability to determine whether the respondent has suffered actual
prejudice.
Finally, we note that PDC has urged this Board (Statement in
Opposition to Administrator's Petition for Review, at pp. 12-13)
to create a presumption of prejudice when the delay in the
administrative proceeding exceeds an analogized statute of
limitations. However, the Board in J. Slotnik declined to take
such an approach, and we likewise decline to do so here.
C. Constitutional due process
PDC also argued in its Statement to this Board (at pp.
19-24) that the ALJ specifically decided that Respondents had
been denied due process of law, and urged the Board to affirm
that conclusion on the basis of the ALJ's decision in Tom Rob.
Since the submission of PDC's statement, however, this Board has
reversed and remanded the ALJ's Tom Rob decision. Furthermore,
it is not clear from the ALJ's decision in this case whether the
ALJ's reference to the denial of [13]
~14
[14] due process was intended as a reference to constitutional due
process or to some notion of administrative fairness and due process
(see Tom Rob at p. 6). Indeed, the focus of the ALJ's decision in the
instant case was on the equitable doctrine of laches. For these
reasons, and because this matter is being remanded to the ALJ for the
making of findings of fact on the merits and prejudice issues, the Board
declines to rule on the constitutional due process question.
D. Statute of limitations
As noted earlier, the ALJ ruled against PDC on the waiver,
estoppel and statute of limitations issues. PDC has not raised
the waiver and estoppel issues before this Board, but does argue
(Statement, at p. 23) that the statute of limitations issue "is
still an open issue for this Board to decide." However, PDC did
not prevail on the statute of limitations issue before the ALJ,
and did not petition for review of the ALJ's decision on that
issue. Accordingly, PDC is foreclosed from raising that issue
before the Board in this proceeding. See Ocean Habitability,
Inc., WAB Case No. 87-22 (Mar. 28, 1991); S.D.F. Inc., WAB Case
No. 92-12 (Aug. 31, 1993).
III. CONCLUSION
For all the foregoing reasons, this matter is remanded to
the ALJ for issuance of a decision and order consistent with this
opinion within 60 days.
BY ORDER OF THE BOARD:
Ruth E. Peters, Member
Concurring Opinion of David A. O'Brien, Chair:
I generally agree with the Board's analysis of the
administrative delay issue. I disagree with two particular
holdings contained in the decision. However, I concur in the
Board's decision in order to move the case to conclusion as
expeditiously as possible. My disagreement can be placed into
two narrow categories. First, remand for specific factual
findings on the merits of the case should not be necessary in
this egregious factual situation. Secondly, the specific factual
finding of the ALJ that "this delay had a serious impact on [14]
~15
[15] Respondents' ability to defend themselves. . ." is more
than adequately supported by the record.
I concur with a result with which I disagree because failure
to do so would only further delay the conclusion of this matter.
The Wage Appeals Board consisted of only two members at the time
of the oral argument held in this matter. Member Peters, for all
the reasons set out in the decision of the Board, has remanded
the matter to the ALJ for further factfinding. Even though I do
not believe remand to be necessary, I do recognize that the
resulting delay will be insignificant compared to the delay
required to reargue this matter to the Board. The decision
does not require that any additional evidence be taken since a
complete factfinding hearing has already been held. The ALJ need
only make additional factual findings based upon the record which
already exists. The factfinding portion of the case will be
finished, by the very terms of the Board's decision, within 60
days.
The Board has generally decided that the prosecution of an
alleged DBRA violation should not be dismissed due to delay in
the pursuit of the case, unless the merits of the case have been
resolved in favor of the government. Thus, the question of
improper delay ordinarily should be the last question reviewed by
the ALJ. However, where "extreme delay" (as contemplated by the
Board in Matter of Slotnik Company, WAB Case No. 80-05 (Mar. 22,
1983) and as actually happened in this case) has occurred and the
first three prongs of the Barker test are not reasonably
contested (also, as in this case), it should not be necessary
for the ALJ to consider the merits of the case. The proper
balance must be struck between the right of employees to receive
the appropriate wage and the fundamental fairness that must be
accorded to a contractor accused of violating that right.
Generally, this weighing of competing interests would require an
analysis of the merits of the case. However, in this situation
the balance is tilted so far in favor of fundamental fairness to
the contractor that evaluating the merits of the case is
unnecessary.
The ALJ followed the holding of this Board in Slotnik, that
"extreme delay . . . may create presumptions of improper
treatment with or without the showing of palpable injury to the
contractor under investigation." (emphasis added). In this case
it took the government just under four years after the
Respondents made a request for a hearing to transmit the Order of
Reference to the Office of Administrative Law Judges. And that
delay was just part of the more than eight-year delay from the
inception of the investigation by DOL until the time that a
hearing was actually held. Pursuant to our holding in Slotnik it
should not be necessary for the ALJ to find actual prejudice to
the Respondent because of the "extreme delay" involved.
Even though it was not necessary to make such a finding, the
ALJ concluded that "this delay had a serious impact on
Respondents' ability to defend [15]
~16
[16] themselves against DOL's actions...." A review of the record
indicates significant support for this factual conclusion. The
government's case is primarily based upon witness interviews conducted
up to nine years ago. At the hearing the government's witnesses were
contradicted not only by the records of the Department of Agriculture,
but also by their own recollections. Virtually all of the witnesses
cited the passage of time as the basis for their inability to accurately
recall salient facts.
Pursuant to our holding in Slotnik it was not necessary for
the ALJ to make specific findings of prejudice due to the
"extreme delay" in prosecuting this case. Even if a specific
finding of prejudice was necessary the record reflects a
sufficient factual basis on which to uphold the ALJ's general
conclusion of prejudice. The factual findings of an ALJ should
not be set aside absent a showing of clear error. Howell
Construction, Inc., WAB Case No. 93-12 (May 31, 1994).
Therefore, I would have affirmed the decision of the ALJ
without requiring remand, but concur in the remand in order to
expeditiously conclude this case.
David A. O'Brien, Chair[16]
[FOOTNOTES]
ÄÄÄÄÄÄÄÄÄÄÄÄÄÄ
/PAGE 11, FN1/ See e.g., Miller Insulation Company, Inc., WAB
Case No. 91-38 (Dec. 30, 1992), at pp. 9-10 (Board upheld ALJ's
conclusion that employer should not be debarred for disregard of
Davis-Bacon Act obligations, where the record failed to show that
the employer falsified certified payrolls to conceal Davis-Bacon
violations); Maintenance Pace Setters, Inc., BSCA Case No. 92-24
(May 26, 1993) (ALJ not clearly erroneous in discrediting the
testimony of three employees and denying them back wages; ALJ
also upheld in finding that the testimony of other employees did
not show a pattern or practice which would provide the ALJ with
reasonable inferences regarding the weight to be given the
interview statements of employees who did not testify);
Industrial Maintenance Service, Inc., BSCA Case No. 92-22 (Apr.
5, 1993) (ALJ concluded that the record did not support a finding
that the employer misclassified employees).
