State v. U.S. Dep't of Educ.
State v. U.S. Dep't of Educ.
Opinion of the Court
This matter is before the Court on Petitioner State of Ohio, Opportunities for Ohioans with Disabilities, Bureau of Services for the Visually Impaired, Business Enterprise Program's ("BSVI") Motion for Judgment on the Administrative Record (ECF No. 23 ); Intervenor-Respondent James Cyrus's ("Mr. Cyrus") Motion to Enforce Arbitration and Memorandum in Opposition to Petitioner's Motion for Judgment on the Administrative Record (ECF No. 28 ); BSVI's Reply brief (ECF No. 29 ); Mr. Cyrus's Reply brief (ECF No. 31 ); and Mr. Cyrus's Motion to Supplement the Administrative Record Filed by Petitioner (ECF No. 32 ). For the reasons set forth below:
1) BSVI's Motion for Judgment on the Administrative Record (ECF No. 23 ) is GRANTED in part and DENIED in part ;
2) Mr. Cyrus's Motion to Enforce Arbitration (ECF No. 28 ) is GRANTED in part and DENIED in part ; and
3) Mr. Cyrus's unopposed Motion to Supplement the Administrative Record (ECF No. 32 ) is GRANTED .
*827I.
A. Randolph-Sheppard Act & Mini Randolph-Sheppard Act
Congress enacted the Randolph-Sheppard Act ("the Act") in 1936 to "provide blind persons with remunerative employment, enlarge their economic opportunities and stimulate them to greater efforts in becoming self-supporting."
Some states, including Ohio, have passed Mini Randolph-Sheppard Acts to expand priority vending to state properties. See 33 O.R.C. §§ 3304.28 - 3304.35. Under Ohio's Mini Randolph-Sheppard Act, blind vendors have priority to operate on all "governmental property"-including "any real property, building, or facility owned, leased, or rented by the state or any board, commission, department, division, or other unit or agency thereof." 33 O.R.C. § 3304.28(C).
In addition to granting blind vendors priority to government facilities, both the Act and the Mini Act provide a method for addressing grievances. Under the Act, dissatisfied vendors have access to "an evidentiary hearing before the state agency and arbitration before a panel convened by the Secretary."
B. Mr. Cyrus's Grievances Against BSVI
Mr. Cyrus is a licensed blind vendor who operates vending facilities in Toledo, Ohio, pursuant to the Act and the Mini Act. (Cyrus Hearing Exhibit 4, ECF No. 20-49 ). Mr. Cyrus first became a Randolph-Sheppard vendor in 1989. (Agency Hearing Tr. 125:7-13, ECF No. 20-1 ). In 1992, Mr. Cyrus began operating vending facilities at several locations in Lucas County (also "the County"), including the Lucas County Corrections Center, the Lucas County Work Release Program, the Adult Treatment Center, the Youth Treatment Center, and the Lucas County Probation Department. (Id. at 129:1-9). In addition, Mr. Cyrus began providing vending services at the University of Toledo (also "the University") Health Science Campus. (Id. ).
As the designated Ohio agency responsible for implementing the Act and Mini Act, BSVI is also responsible for overseeing Mr. Cyrus's vending operations. (Id. at 70:16-71-8). BSVI is a division of Opportunities for Ohioans with Disabilities ("OOD"). The blind vendor program set up by OOD and overseen by BSVI is known as the "Business Enterprise Program." (Id. ). To facilitate the Business Enterprise Program, OOD negotiates Bureau Grantor Agreements with state or federal entities for the purpose of establishing blind vending facilities. (Id. at 71:14-72:15). OOD has the ability to enter Bureau Grantor Agreements *828with federal, state, county, municipal, and private locations. (Id. at 71:14-72:22). In addition, OOD executes Bureau Operator Agreements with vendors to establish the requirements "to manage their facilities, [comply] with the statute, [comply] with whatever Bureau Grantor Agreements are involved with their facility, and [detail] other duties that they are to follow." (Id. at 71:19-25).
In connection with the vendor sites operated by Mr. Cyrus, OOD executed Bureau Grantor Agreements with the University and Lucas County in 2006 and 2011 respectively. (Id. at 75:1-19). The Bureau Grantor Agreement between OOD and the University of Toledo contained a provision requiring vendors to make commission payments directly to the University. (Exhibit 19 at 397, ECF No. 20-19 ). Specifically, provision 11(a) read as follows:
11. Commission and Debit Card Reimbursement.
(a) In order to partially reimburse the University for utilities, data lines, and other amenities it provides to the Contractor in connection with the vending services provided by the Contractor under this Agreement, the Contractor, through the operator, shall pay to the University a 7% commission on gross sales less food and pastry sales representing vending revenue it obtains from the Vending Service Locations on the Campus (the "Commission"). The Commission shall be paid to the University on or before the 15th day of each month based up the previous month's gross sales, less sales tax and shall be deposited in a band account designated by the University.
(Id. ) (emphasis in original). The Bureau Grantor Agreement between OOD and Lucas County included a similar provision, requiring the vendor to pay a commission directly to the County. (Exhibit 23-1 at 899, ECF No. 20-26 ). The amount of the commission that Mr. Cyrus paid varied by the vending location in Lucas County. (Id. at 886-894).
On March 19, 2010, Mr. Cyrus signed a Bureau Operator Agreement with ODD regarding his operation of a vendor facility at the University of Toledo (i.e., facility # 304). (Id. at 385). Under the terms of the Bureau Operator Agreement, Mr. Cyrus agreed to "[c]omply with all provisions of the Ohio Administrative Code Chapter 3304:1-21, including but not limited to operating the BEP Facility in accordance with said Administrative Code, Bureau-Grantor Agreement, facility permit(s), and any other agreements related to the facility." (Id. ).
The Lucas County Bureau Operator Agreement, executed in 1993, contained a similar provision. (Id. at 847-850). Under the terms of that contract, Mr. Cyrus agreed to "operated the facility in accordance with the requirements of the Bureau-Grantor Agreement, facility permit, or other BSVI contract for the facility." (Id. at 847). As required by the Bureau Grantor Agreements, Mr. Cyrus paid his commissions on time. (Agency Hearing Tr. 76:7-9). According to his testimony, Mr. Cyrus estimates that he paid at least $ 504,000 in commissions during his time as a licensed vendor. (Id. at 49:25-50:4) (see also Exhibit 23-1 at 943, ECF No. 20-49 ).
On March 14, 2014, the Ohio Attorney General issued Opinion 2014-008 ("AG Opinion") regarding the legality of obligating blind vendors to pay commissions out of their gross vending revenues. (Exhibit 17-1 at 432, ECF No. 20-19 ). The AG Opinion concluded: "BSVI has no authority, under the current statute or rules, to collect commission payments based on the sales of a vending facility from a blind vendor and pay those commissions to a college or university." (Id. at 438). This *829conclusion was specific to any "state university, medical university, technical college, state community college, community college, university branch district, or state affiliated college or university," and did not concern any other type of vending property. (Id. ).
Mr. Cyrus filed a grievance against OOD on April 29, 2014 to challenge the commission payments. (Exhibit 17-1 at 408, ECF No. 20-19 ). Citing the AG Opinion, Mr. Cyrus stated: "the BSVI has no legal authority to charge these commissions or to remit them to these government entities, including state or state affiliated colleges and universities." (Id. ). Mr. Cyrus further stated: "[c]ollection of all these unlawful commission charges should be immediately halted. I also wish to grieve the unlawful imposition of these charges in past years and demand reimbursement of all unlawfully imposed charges." (Id. ). During his agency hearing, Mr. Cyrus testified that he discontinued his commission payments to the University of Toledo on May 12, 2014. (Agency Hearing Tr. 40:2-7).
On May 28, 2014, OOD sent the University of Toledo a letter informing it that, pursuant to the AG Opinion, "the requirement in the contract to pay commissions is void and can longer be part of the agreement." (Id. at 411). Despite receiving notification of OOD's letter, Mr. Cyrus declined to withdraw his grievance. (Agency Hearing Tr. 85:1-86:1). The matter proceeded to an administrative hearing in February 2015. On February 25, 2015, the hearing officer issued a report and recommendation that Mr. Cyrus's grievance be denied. (Exhibit 17-1 at 422, ECF No. 20-19 ). In the hearing officer's view, "[a]s BE-BSVT did not receive the funds which were paid to third parties equity suggests that it is the third parties who should reimburse Mr. Cyrus." (Id. at 421). The Deputy Director of BSVI approved the recommendation in March 2015. (Id. at 425).
In response, Mr. Cyrus filed a Complaint with the Secretary of the Department of Education to request an arbitration of his claims. (Exhibit 3 at 250-251, ECF No. 20-3 ). Seeking compensatory damages for financial losses, Mr. Cyrus aggrieved that BSVI acts and omissions violated the Act and the Mini Act. (Id. at 251). On October 14, 2016, OOD and the University of Toledo amended their Bureau Grantor Agreement to remove the requirement that blind vendors pay commissions to the University. (Exhibit 23-1 at 70, ECF No. 20-27 ). The arbitration panel ("the Panel") conducted a motion hearing on December 12, 2016. (Mot. Hearings Tr., ECF No. 20-22 ). On January 27, 2017, the case proceeded to a hearing on the merits. (Arb. Hearing Tr., ECF No. 20-25 ).
C. The Panel's Decision
On August 8, 2017, the Panel Majority issued an Opinion and Award in favor of Mr. Cyrus. (See generally Arb. Op. & Award at 1-36, ECF No. 20-43 ). The Panel Majority granted Mr. Cyrus the following relief: (1) a declaration "that it is impermissible under the Randolph Sheppard Act and the Mini Randolph Sheppard Act ... to compel blind vendors to pay commissions for the operation of vending facilities under Bureau Grantor Agreements with state or county entities[;]" (2) a declaration that BSVI violated the Act and the Mini Act "by requiring Cyrus to pay commissions under the 2010 Bureau-Operator Agreement to the University of Toledo and to Lucas County[;]" (3) prospective relief; (4) monetary relief for commissions paid from 2010 to 2016; (5) pre and post judgment interest on the monetary relief; and (6) attorney fees. The prospective relief awarded by the Panel Majority included: (1) enjoining BSVI from requiring Mr. Cyrus *830to pay commissions under the 2010 Bureau Operator Agreement or taking other adverse action against Mr. Cyrus for non-payment, (2) notifying all grantors that commission payments are now void, and (3) publishing notice to all state or state-affiliated universities that BSVI will enforce 33 O.R.C. § 3304.30 - 3304.33 going forward.
One member of the Panel filed a dissenting opinion. (See Arb. Op. & Award at 37-42, ECF No. 20-43 ). The dissent agrees with the Panel Majority's factual findings. (Id. at 37). However, the dissent disagrees with the Panel Majority's "application of law to the facts of this case as expressed in the section entitled AWARD commencing on page 33." (Id. ) (emphasis in original). First, the dissent contends the prohibition on commissions should not apply to counties because the AG Opinion only addresses "commissions paid to a state university, medical university, technical college, state community college, community college, university branch district or state affiliated college or university." (Id. ). Second, the dissent avers that any prospective relief should not apply to counties. (Id. at 38). Third, the dissent contends that the Panel lacks the authority to award monetary relief to Mr. Cyrus because "there has been no consent by the State of Ohio to waive sovereign immunity under the 11th amendment." (Id. at 38-39). Fourth, the dissent argues the award of pre and post judgment interest is improper for the reasons stated above. (Id. at 41). Finally, the dissent claims there are no "special circumstances" present which justify the award of attorney fees under the American Rule. (Id. at 42).
BSVI filed the instant action on May 15, 2018, challenging the Panel Majority's judgment. (Mot. for J. on Admin. Rec., ECF No. 23 ). BSVI asserts three arguments. First, the monetary damages award was improper because sovereign immunity applies to Article I proceedings and the State did not waive it. (Id. ). Second, attorney fees are barred by sovereign immunity or are otherwise unavailable under the Act. (Id. ). Third, BSVI avers that the Panel's decision was "arbitrary, capricious, an abuse of discretion, and otherwise not in accordance with law." (Id. at 11). On June 29, 2018, Mr. Cyrus filed a Motion to Enforce the Arbitration Award jointly with his Response in Opposition. (Mot. to Enforce, ECF No. 28 ). BSVI filed a Reply brief on July 27, 2018. (ECF No. 29 ). A month later, Mr. Cyrus filed his own Reply brief and moved to supplement the administrative record. (ECF Nos. 31 & 32). On September 5, 2018, BSVI filed a response indicating that it does not oppose Mr. Cyrus's Motion to Supplement the Administrative Record. (ECF No. 33 ). All motions are ripe for review.
II.
A. Does Sovereign Immunity Apply to Article I Proceedings Under the Act?
The Eleventh Amendment of the United States Constitution provides that "[t]he judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State." U.S. Const. amend. XI. As held by the Supreme Court in Hans v. Louisiana ,
*831Edelman v. Jordan ,
BSVI contends that sovereign immunity bars the Panel Majority's award of monetary damages to Mr. Cyrus. (Mot. for J. on the Admin. Rec. at 12). Citing Federal Maritime Commission v. South Carolina State Ports Authority et al. ,
In Mr. Cyrus's view, BSVI's arguments are "based on an overly-broad, overly simplistic, and erroneous reading of the Sixth Circuit's decision in Tennessee Department of Human Services v. U.S. Dept. of Educ. ,
As an initial matter, the Court notes the Panel Majority's decision is "subject to appeal and review as a final agency action for purposes of chapter 7 of such title 5."
(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law;
(B) contrary to constitutional right, power, privilege, or immunity;
*832(C) in excess of statutory jurisdiction, authority, or limitations, or short of statutory right;
(D) without observance of procedure required by law; [or]
(E) unsupported by substantial evidence in a case ... reviewed on the record of an agency hearing provided by statute; or
(F) unwarranted by the facts to the extent that the facts are subject to trial de novo by the reviewing court.
BSVI maintains the Court should not award the Panel Majority's decision Chevron deference because the Act does not grant the Panel interpretive authority. In support of its view, BSVI cites Sauer v. U.S. Dep't of Educ. ,
The Sixth Circuit has not yet ruled on whether an arbitration panel convened for the purpose of deciding a Randolph-Sheppard dispute should be awarded Chevron deference. Moreover, a brief review of the case law in other circuits suggests the question remains unsettled.
In Federal Maritime , the Supreme Court narrowly held that FMC proceedings are entitled to sovereign immunity, *833therefore "bar[ring] the FMC from adjudicating complaints filed by a private party against a nonconsenting State." Federal Maritime ,
Accordingly, Federal Maritime abrogated the Sixth Circuit's holding in Tennessee Dept. of Human Services. See Ramsey , 366 F.3d at 30 n.19 (citing Tennessee Dept. of Human Services but acknowledging "the reasoning behind the court's first holding [that sovereign immunity only applies in Article III proceedings] has since been overruled in Fed. Mar. Comm'n ,
1. Did the Administrative Procedures Trigger Sovereign Immunity?
An administrative arbitration that "walks, talks, and squawks" like a judicial proceeding triggers the protections of sovereign immunity. Federal Maritime ,
In Tyler v. United States Dept. of Edu. Rehabilitation Services Admin. ,
This Court agrees with the Tenth Circuit's analysis. For one, the Supreme Court recently denied certiorari in Tyler , suggesting the Tenth Circuit reached an accurate conclusion. In addition, although Mr. Cyrus briefly addresses the Federal Maritime factors in his Reply brief, the parties focus their arguments on the question of waiver. Consequently, the Court assumes, arguendo , that sufficient similarities exist between the arbitration below and Article III proceedings to trigger sovereign immunity. It will next consider whether BSVI waived sovereign immunity with respect to appearing before the Panel.
2. Did BSVI Waive Sovereign Immunity with Respect to the Arbitration?
A state cannot be coerced into arbitration against its will. Federal Maritime ,
The language of the Act conditions state participation in the blind vendor program on the agreement to arbitrate disputes. Specifically, the Act provides in pertinent part:
(a) Hearing and Arbitration
Any blind licensee who is dissatisfied with any action arising from the operation or administration of the vending facility program may submit to a State licensing agency a request for a full evidentiary hearing, which shall be provided by such agency in accordance with section 107b(6) of this title. If such blind licensee is dissatisfied with any action taken or decision rendered as a result of such hearing, he may file a complaint with the Secretary who shall convene a panel to arbitrate the dispute pursuant to section 107d-2 of this title, and the decision of such panel shall be final and binding on the parties except as otherwise provided in this chapter.
*835
A State agency for the blind or other State agency desiring to be designated as the licensing agency shall, with the approval of the chief executive of the State, make application to the Secretary and agree-
(6) to provide to any blind licensee dissatisfied with any action arising from the operation or administration of the vending facility program an opportunity for a fair hearing, and to agree to submit the grievances of any blind licensee not otherwise resolved by such hearing to arbitration as provided in section 107d-1 of this title.
Numerous circuits have acknowledged that states consent to participate in arbitration when they apply to operate a blind vendor program. See Delaware Dept. of Health & Social Services v. United States Dept. of Edu. ,
Accordingly, this Court agrees with the Panel Majority that "the State of Ohio has not been 'hauled' into an arbitration proceeding without its consent." (Majority Opinion on Mot. to Dismiss at 9, ECF No. 20-23 ; adopted by Arb. Op. & Award, ECF No. 20-43 ). BSVI's voluntary participation in the blind vendor program was a sufficient waiver of sovereign immunity with respect to appearing before the Panel.
*8363. Did BSVI Waive Sovereign Immunity with Respect to Monetary Damages?
Next, the Court turns to the central issue in the parties' dispute-whether BSVI's participation in the blind vendor program was also a sufficient waiver of immunity from monetary damages. BSVI argues the text of the Act provides no language supporting a waiver of immunity for damages. (Mot. for J. on Admin. Rec. at 16). Citing Sossamon ,
Mr. Cyrus contends that sovereign immunity does not constitute a bar on the Panel Majority's monetary award. (Mot. to Enforce at 41). Citing Pennhurst State School and Hospital v. Halderman ,
BSVI's arguments are well taken. In Sossamon ,
*837Moreover, the Court stated: "a waiver of sovereign immunity to other types of relief does not waive immunity to damages : '[T]he waiver of sovereign immunity must extend unambiguously to such monetary claims.' "
The Panel Majority did not cite Sossamon in its Opinion and Award. Instead, the Panel Majority analyzed immunity from damages as follows:
The conclusion that the Panel may award damages against the Bureau under Randolph Sheppard is supported by Premo v. Martin ,119 F.3d 767 [764], 770 (9th Cir. 1997) ; Del.Dep[']t of Health and Soc'l Servs. v. U.S. Dep't of Educ. ,772 F.2d 1123 , 1136-1137 (3d Cir. 1985) ] ; Committee of Blind Vendors of District of Columbia v. District of Columbia ,736 F.Supp. 292 , 308 (D.D.C. 1990) (following Delaware Dep't of Health and Soc'l Servs. . and declining to follow McNabb ). See also Morris v. State of Maryland ,908 F.2d 967 (4th Cir. 1990) (stating in dicta that it is doubtful that the eleventh amendment would bar the recovery of damages by blind vendors in a Randolph Sheppard proceeding, citing Delaware Dep't of Health and Soc'l Servs. ); and Tamashiro v. Department of Human Services, State of Hawaii ,146 P.3d 103 , 118-119 (Hawaii 2006) (citing with approval the holding in Premo that "[t]he overwhelming implication of the statute is that by agreeing to participate in the [Randolph Sheppard] program states have waived their sovereign immunity to enforcement of such [damages] awards in federal courts. 119 F.3d at 770").
(Majority Opinion on Mot. to Dismiss at 9, ECF No. 20-23 ; adopted by Arb. Op. & Award, ECF No. 20-43 ). The Panel Majority further relied on Tennessee Dept. of Human Services ,
We conclude, therefore, that while the Eleventh Amendment does not prevent the arbitration panel from rendering its award [to the blind vendor], any attempt by [the blind vendor] to enforce the award in federal court necessarily implicates the Eleventh Amendment.
(
The Court finds Mr. Cyrus's reliance on Tennessee Dept. of Human Services misplaced. Tennessee Dept. of Human Services , as well the persuasive cases cited by Mr. Cyrus and the Panel Majority, were decided pre- Sossamon .
The Court turns to the Tenth Circuit's post- Sossamon decision for guidance.
*838Tyler ,
The Court finds Tyler persuasive. As the Tenth Circuit averred, the Act permits a blind vendor to "file a complaint with the Secretary who shall convene a panel to arbitrate the dispute ... and the decision of such panel shall be final and binding on the parties except as otherwise provided in this chapter."
Even were the Court to apply a deferential standard-as opposed to de novo review-the Panel Majority unreasonably ignored binding precedent by failing to analyze the Act under Sossamon . Accordingly, the Panel Majority exceeded its authority by awarding Mr. Cyrus monetary damages. As such, the Panel Majority's award of pre and post-judgment interest was also improper. The Court hereby OVERRULES the Panel Majority with respect to its award of monetary damages, pre-judgment interest, and post-judgment interest.
B. Did the Panel Majority Properly Award Prospective Relief?
BSVI contends the Panel Majority improperly awarded prospective relief by enjoining all grantors with vending facilities on state or county property from collecting commission payments from blind vendors. (Mot. for J. on the Admin. Rec. at 34). According to BSVI, "[a]t the time of the arbitration, OOD had already provided Cyrus the injunctive relief he requested with respect to the University [of Toledo]; namely, he no longer paid commission to the University, and the contract provision requiring commission payments was removed." (Id. ). Therefore, BSVI contends any prospective relief with respect to the University of Toledo is moot. BSVI also argues that the Panel Majority's order improperly "involves dozens of entities that were not parties in the panel arbitration (and some who were not even party to a contract with OOD)"-rendering it "arbitrary, capricious, and not in accordance with law." (Id. ). Finally, BSVI avers that the AG's Opinion should not be applied to commission payments from vendors at county facilities.
Mr. Cyrus claims the Panel Majority's prospective relief award was proper. First, Mr. Cyrus avers his grievance was broad in scope, "challenging the unlawful practice of charging commissions to 'Blind Vendors' in Ohio." (Mot. to Enforce at 45). Mr. Cyrus cites his Complaint, in which he asked that "Respondent be compelled to take steps reasonable and necessary to *839ensure its future compliance with federal and state law." (Id. at 46). Second, Mr. Cyrus argues "the factual record before the panel demonstrated, without contradiction, that the Bureau's violations of the law were statewide." (Id. ). Accordingly, Mr. Cyrus contends the Panel Majority did not exceed its authority by ordering OOD to notify all vendor sites that commission provisions are unlawful.
Mr. Cyrus also points out that arbitration panels "have broad discretion to fashion a remedy." (Id. ) (citing Decorative Panels International v. International Ass. of Machinists ,
The Court first notes that BSVI does not assert that sovereign immunity bars the Panel Majority's award of prospective relief. (BSVI Reply at 10). Therefore, the Court will not discuss whether the Eleventh Amendment renders state entities immune from injunctions under the Act. Instead, the Court will review the Panel Majority's decision for an abuse of discretion. As stated supra , a reviewing court must "hold unlawful and set aside agency action" that is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law," or agency action that is "unsupported by substantial evidence."
1. Prospective Relief-University of Toledo and State-Affiliated Universities
In its Opinion and Award, the Majority Panel notes that OOD's Grantor Agreement with the University of Toledo "was amended effective October 2016 to remove the obligation to pay a commission." (Arb. Op. & Award at 12). The Panel Majority also acknowledges that Mr. Cyrus stopped paying the commissions owed under the Bureau Grantor Agreement in May 2014, and that "neither the Bureau not the University has requested that Cyrus pay the commissions owed for the period May 2014 to October 2016." (Id. at 13). The Majority Panel concluded "these facts alone do not irrevocably relieve Cyrus of the effects of the obligation imposed by the [University of Toledo] Agreement." (Id. ). Accordingly, the Panel Majority held the "record clearly demonstrates that, absent an adjudication of the Bureau's authority to impose a commission obligation on blind vendors, Cyrus has a reasonable and legitimate expectation that such commissions will be required by the Bureau as a condition of future opportunities even at priority sites." (Id. at 14).
This Court agrees. For one, BSVI noted in its pre-hearing briefing that the AG Opinion is not binding on the courts. (BSVI Pre-hearing Brief at 13, ECF No. 20-18 ) (citing In re Swesey ,
2. Prospective Relief-Lucas County and Other County Properties
Next, the Court considers whether the Panel Majority's prospective relief was proper with respect to grantors on county properties. BSVI maintains the AG Opinion "only discusses vending facilities on state-affiliated colleges or universities," and that the Panel Majority improperly expanded the scope of the AG Opinion to cover county properties. (Mot. for J. on Admin. Rec, at 31). In addition, BSVI argues county property is not "governmental property" under the Mini Act, and therefore does not enjoy priority for blind vendor sites. (Id. at 30-31). Generally, BSVI avers, "[p]riority means that a facility must give preference to a licensed blind vendor, regardless of whether another vendor provides a more lucrative offer (such as including a commission)." (BSVI Reply at 21). According to BSVI, blind vendors must compete with private vendors on county sites-meaning commission payments drive the contractual agreements. (Id. at 22).
Mr. Cyrus and the Panel Majority disagree. In its Opinion and Award, the Panel Majority points out that the Act can apply to "other property," "which is defined to include 'property which is not Federal property and on which vending facilities are established or operated by the use of any funds derived in whole or in part, directly or indirectly, from the operation of vending facilities on any Federal property.' " (Arb. Op. & Award at 29) (citing 34 C.R.F. § 395.1(n) ). Specifically, the Act directs the Secretary of Education to "[d]esignate as provided in section 107b of this title the State agency for the blind in each State ... to issue licenses to blind persons who are citizens of the United States for the operating of vending facilities on Federal and other property in such State."
BSVI's arguments are well taken. The Act directed the Secretary of Education to designate a state agency to implement the program by "the operating of vending facilities on Federal and other property."
The Mini Act's definition of "governmental property" does not include counties. Although counties may enter into Bureau Grantor Agreements with OOD, they are "not required to accept OOD's contract." (BSVI Reply at 25). As a result, counties may properly entertain the most lucrative offers from both private and blind vendors-including the incentive of commission payments. Because the Panel Majority disregarded the distinction between county and state property under the Act and the Mini Act, its prohibition of commission provisions in county agreements was contrary to law. Therefore, the Court OVERRULES the Panel Majority's prospective relief award with respect to counties.
C. Did the Panel Majority Properly Award Attorney Fees?
BSVI asserts two arguments against the Panel Majority's award of attorney fees. First, BSVI contends attorney fees are barred by sovereign immunity. (Mot. for J. on the Admin. Rec. at 21). Once again, BSVI argues "[a] waiver of sovereign immunity must be 'expressly and unequivocally stated in the text of the relevant statute.' " (Id. ) (citing Sossamon , 563 U.S. at 290,
In Summit , the Supreme Court held that "even if attorney's fees are necessary to provide 'full compensation' to an employer, 'this justification alone is not sufficient to create an exception to the American Rule in the absence of express congressional authority.' " (Mot. for J. on Admin. Rec. at 25) (citing Summit ,
Mr. Cyrus counters that, pursuant to the Sixth Circuit's decision in Tennessee Dept. of Human Services , sovereign immunity does not apply to the award of attorney's fees. (Mot. to Enforce at 43). In addition, Mr. Cyrus contends the American Rule does not apply to the arbitration proceeding in this case. (Id. ). Again citing Tennessee Dept. of Human Services ,
*8421. Does the American Rule Apply?
"Our basic point of reference when considering the award of attorney's fees is the bedrock principle known as the American Rule: Each litigant pays his own attorney's fees, win or lose, unless a statute or contract provides otherwise." Baker Botts L.L.P. v. ASARCO LLC , --- U.S. ----,
Notably, the Sixth Circuit considered this exact question in Tennessee Dept. of Human Services ,
2. Does Sovereign Immunity Bar Attorney Fees?
As discussed supra , a waiver of sovereign immunity must be clear and unambiguous from the text of the statute. Lane ,
D. Statute of Limitations
Finally, the parties dispute whether the Panel Majority applied the correct statute of limitations. BSVI argues the Panel Majority "erred by applying the six-year statute of limitations set forth in Ohio Rev. Code § 2305.07, which pertains to contracts not in writing and liabilities created by statute." (Mot. for J. on Admin. Rec. at 29). According to BSVI, the Panel Majority *843should have applied the two-year statute of limitations set forth in Ohio Rev. Code § 2743.16(A), which applies to "civil actions against the state permitted by sections 2743.01 to 2743.20 of the Revised Code." (Id. at 30). Furthermore, BSVI claims Mr. Cyrus's action was untimely under either statute of limitations. BSVT points out that Ohio requires a blind vendor to file his or grievance within 45 days of the allegedly improper action. (Id. at 29) (citing O.A.C. 3304:1-21-14 ). Here, BSVI argues Mr. Cyrus did not file a grievance regarding commission payments until April 20, 2015-years after he agreed to pay commissions in his 2006 and 2010 agreements. (Id. ).
Mr. Cyrus contends the Panel Majority applied the correct statute of limitations, arguing that " O.R.C. § 2743.16 is part of a larger state statutory framework that waives state sovereign immunity and establishes a right to assert claims against the state of Ohio in its Court of Claims." (Mot. to Enforce at 27). According to Mr. Cyrus, the Ohio Court of Claims has no "jurisdictional involvement or other relationship to an arbitration proceeding arising under the Randolph-Sheppard Act." (Id. ). Moreover, Mr. Cyrus asserts that his grievance was timely. (Id. at 30). Mr. Cyrus filed his grievance on April 29, 2014, fifteen days after the AG Opinion notified blind vendors that commissions are unlawful. (Id. at 31).
As noted by the Panel Majority, "[w]hen a federal statute contains no period of limitations, courts are directed to 'borrow' the most applicable state limitations period." (Arb. Op. & Award at 20). The Act does not establish a statute of limitations. Therefore, the Panel Majority selected a six-year period of limitations for "an action upon liability created by statute." O.R.C. § 2305.07. A "liability created by statute" under O.R.C. § 2305.07 is a liability that would not exist but for the statute. McAuliffe v. Western States Import Co., Inc. ,
Consequently, the Court finds the Panel Majority did not abuse its discretion in applying a six-year statute of limitations to Mr. Cyrus's action. In addition, the Court agrees with the Panel Majority that Mr. Cyrus's Complaint was timely because the reason for his grievance did not become apparent until April 29, 2014-fifteen days before he filed his Complaint. Accordingly, Mr. Cyrus's prospective relief with respect to state-affiliated universities and colleges is not barred by the statute of limitations.
III.
Mr. Cyrus's Motion to Supplement the Administrative Record is unopposed by BSVI. (See ECF No. 33 ). Accordingly, the Court GRANTS Mr. Cyrus's Motion. (ECF No. 32 ).
IV.
For the reasons set forth above, the Court GRANTS in part and DENIES in part BSVI's Motion for Judgment on the Administrative Record (ECF No. 23 ); the Court GRANTS in part and DENIES in part Mr. Cyrus's Motion to Enforce Arbitration (ECF No. 28 ); and the Court GRANTS Mr. Cyrus's unopposed Motion to Supplement the Administrative Record (ECF No. 32 ). Mr. Cyrus is entitled to injunctive relief in accordance with this *844Opinion and Order. The Clerk is DIRECTED to enter Judgment forthwith.
IT IS SO ORDERED.
A Circuit split exists regarding the applicability of Chevron deference. In Sauer ,
However, in NISH; Goodwill Services, Inc. v. Cohen ,
The dissenting Panel member argues Ohio has not explicitly waived its sovereign immunity concerning the arbitration action. In his or her Dissenting Opinion on BSVI's Motion to Dismiss, the member averred: "the Eleventh Amendment bars not only a monetary award [but even] an action for monetary damages in this arbitration panel because the State of Ohio has certainly not explicitly or clearly consented to such an award in other than an action in the Court of Claims." (Dissenting Opinion on Mot. to Dismiss at 6, ECF No. 20-24 ; adopted by Arb. Op. & Award, ECF No. 20-43 ). Citing Tennessee Dept. of Human Services ,
This Court finds the Dissent's quote inapplicable here for several reasons. First, the Tennessee Dept. of Human Services court did not consider whether the state entity waived sovereign immunity to appear before an arbitration panel. Second, the Dissent takes this quote out of context. In the paragraph immediately preceding the quote, Sixth Circuit stated: "By contrast, the Randolph-Sheppard Act contains no mention of retroactive liability or of states' liability for, or immunity from, damages. A mere reference to binding arbitration in the Act does not unmistakably suggest that a vendor will be able to collect retroactive damages in federal court or that a state will surrender its sovereign immunity."
The Supreme Court decided Sossamon ,
The Attorney General's Opinions are not binding precedent on courts. State ex rel. Data Trace Information Servs., L.L.C. v. Cuyahoga Cty. Fiscal Officer ,
BSVI argues two cases have since overturned the Tennessee court's holding that the American Rule does not apply in arbitration proceedings. See Crossville Med. Oncology, P.C. v. Glenwood Sys., LLC ,
Reference
- Full Case Name
- State of OHIO, Opportunities for Ohioans with Disabilities, Bureau of Services of Visually Impaired, Business Enterprise Program v. UNITED STATES DEPARTMENT OF EDUCATION, Rehabilitation Services Administration
- Cited By
- 2 cases
- Status
- Published