Administrator, Wage and Hour Division v. Fernandez Farms, Inc. and Gonzalo Fernandez (agency decision, September 16, 2019)

Plain-English summary

The Wage and Hour Division sought to debar three individuals and two businesses as successors to Fernandez Farms based on H-2A program violations. Those proposed successors were not named in the enforcement notices and first faced requested relief during the ALJ hearing. The Board held that the H-2A regulations require a written debarment notice stating the grounds, duration, appeal rights, and deadline, even when the target is a successor in interest. Constructive notice and the asserted difficulty of investigating evasive conduct did not replace those procedural requirements. The Board affirmed the denial of relief and reconsideration as to those non-respondents without deciding whether they actually were successors.

Decision snapshot

• Cited authorities: 8 U.S.C. §§ 1101(a)(15)(H)(ii)(a) and 1188(g)(2); 29 C.F.R. §§ 501.20, 501.31, 501.32, and 501.42
• Outcome: Denial of successor debarment relief and denial of reconsideration affirmed.
• Key point: H-2A successor debarment requires the same written notice and hearing opportunity prescribed by the regulations.

Full text (DOL official public release)

U.S. Department of Labor Administrative Review Board
200 Constitution Avenue, N.W.
Washington, D.C. 20210

  In the Matter of:


  ADMINISTRATOR, WAGE AND                          ARB CASE NO. 2016-0097
  HOUR DIVISION,
                                                   ALJ CASE NO. 2014-TAE-00008
                  PROSECUTING PARTY,
                                                   DATE: September 16, 2019
         v.

  FERNANDEZ FARMS, INC and
  GONZALO FERNANDEZ,

                  RESPONDENTS.

  Appearances:

  For the Respondents:
        Fenn C. Horton III, Esq., and Servando R. Sandoval, Esq.; Pahl &
        McCay; San Jose, California

  For the Prosecuting Party, Administrator, Wage and Hour Division:
        Kate S. O’Scannlain, Esq.; Jennifer S. Brand, Esq.; William C. Lesser,
        Esq.; Paul L. Frieden, Esq.; and Katelyn J. Poe, Esq.; U.S. Department
        of Labor, Office of the Solicitor; Washington, District of Columbia

  Before: William T. Barto, Chief Administrative Appeals Judge; James A.
  Haynes and Thomas H. Burrell, Administrative Appeals Judges


                         FINAL DECISION AND ORDER

        PER CURIAM. This case arises under the employee protection provisions of
  the H-2A temporary agricultural worker program of the Immigration and
  Nationality Act (INA) as amended by the Immigration Reform and Control Act of



  1986. 1 The Administrator, Wage and Hour Division (the Administrator), urges the
  Administrative Review Board (Board) to reverse the Order Denying Request for
  Relief Against Celia Fernandez, Lucia Fernandez, Juan Escobar, CFE Farms,
  Incorporated (CFE Farms) and Royal Berry Farms, Incorporated (Royal Berry
  Farms) of the Administrative Law Judge (ALJ). The ALJ denied the
  Administrator’s request to debar Celia Fernandez, Lucia Fernandez, Juan Escobar,
  CFE Farms, and Royal Berry Farms as successors-in-interest to Fernandez Farms,
  Incorporated (Fernandez Farms) and Gonzalo Fernandez, concluding that the
  Administrator did not give the named individuals and entities proper notice of the
  action or an adequate opportunity to be heard. 2 The Administrator appealed to the
  Board, 3 and we now affirm.


                         JURISDICTION AND STANDARD OF REVIEW

         The Secretary of Labor has delegated to the Board the authority to issue final
  agency decisions in review or on appeal of matters arising under the INA’s H-2A
  provisions and its implementing regulations at 29 C.F.R. Part 501. 4 The Board will
  affirm the ALJ’s factual findings if supported by substantial evidence but reviews
  all conclusions of law de novo.




  1      8 U.S.C. § 1101(a)(15)(H)(ii)(a)(2014); 8 U.S.C. § 1188(g)(2) (2000); 29 C.F.R. Part
  501 (2018); 20 C.F.R. Part 655 Subpart B (2018).

  2     The ALJ confirmed his findings and rejected the Administrator’s Motion for
  Reconsideration in an Order Denying Reconsideration dated October 30, 2015.

  3      We agree with the Administrator that the ALJ’s interlocutory decisions regarding
  the requested relief became ripe for review as of his final decision and order in this matter
  on August 25, 2016.

  4      See 8 U.S.C. § 1188(g)(2); 29 C.F.R. § 501.42; see also Secretary’s Order No. 01-2019
  (Delegation of Authority and Assignment of Responsibility to the Administrative Review
  Board), 84 Fed. Reg. 13,072 (April 3, 2019).




                          LEGAL AND PROCEDURAL BACKGROUND

         Under the H-2A program, immigrants may receive visas to work temporarily
  in the United States when domestic workers who are able, willing, and qualified are
  not available at the time and place where agricultural labor and services are
  needed. 5 An employer participating in the H-2A program must arrange to house
  temporary foreign workers, provide them with coverage under workers’
  compensation insurance, provide necessary tools, meals, and transportation,
  guarantee a number of paid work days at the prevailing wage rates, pay workers at
  frequent intervals, and keep records to demonstrate compliance with all
  requirements. 6

         The Secretary of Labor, through the Administrator, enforces the wages and
  working conditions required for workers in the H-2A program. 7 Failure to comply
  with the applicable regulations may result in enforcement proceedings by the
  Administrator for specific performance and injunctive or other equitable relief, as
  well as civil money penalties and—most significantly for the instant facts—
  temporary debarment from participating in the H-2A program. Administrator v.
  Global Horizons, Inc., ARB No. 11-058, ALJ Nos. 2005-TAE-001, -006, slip op. at 4
  (ARB May 31, 2013).

        The Administrator filed a Notice of Determination in this matter on July 31,
  2013, alleging multiple violations of the H-2A program by Fernandez Farms. 8 The
  Administrator amended the Notice of Determination on December 4, 2013, to allege
  the same violations by Gonzalo Fernandez in his individual capacity. The Notice of
  Determination was amended again on May 4, 2015, to allege additional violations of


  5      8 U.S.C. §§ 1101(a)(15)(H)(ii)(a), 1184(a), (c); 20 C.F.R Part 655 Subpart B.

  6      29 C.F.R. Part 655 Subpart B.

  7      8 U.S.C. § 1188(g)(2); 29 C.F.R. § 501.1(c).

  8      The ALJ dismissed the order of reference as to Fernandez Farms, Inc., after it failed
  to appear and pursue its appeal. Thus, the Administrator’s Notice of Determination filed on
  July 31, 2013, is the final order of the Secretary as to Fernandez Farms.




  the H-2A housing regulations. The ALJ held a formal hearing in July 2015,
  involving only Respondent in his individual capacity. The ALJ observed during the
  hearing that the Administrator was also seeking relief for the first time against
  three employees of Fernandez Farms, Inc., specifically Celia Fernandez, Juan
  Escobar, and Lucia Fernandez, as well as two businesses, CFE Farms, Inc., and
  Royal Berry Farms, Inc., as “successors in interest” to Fernandez Farms, Inc.

         The ALJ allowed the parties to brief the issue of what relief could be granted
  against the individuals and businesses that had not been named in the original
  complaint or amendments thereto. After considering the parties’ positions, the ALJ
  concluded that relief would not be granted against parties that were not listed in
  the complaint as they did not have notice that they would be subject to debarment
  in the proceeding. 9 The ALJ also denied the Administrator’s Motion for
  Reconsideration, and the Administrator then appealed to the Board. The
  Respondents have filed a response brief, and the Administrator filed a rebuttal
  brief.



                                          DISCUSSION

         On appeal, the Administrator contends that the H-2A regulations provide the
  Administrator with broad authority to debar an employer, and any successor in
  interest to the employer, from receiving future H-2A labor certifications where the
  employer has “substantially violated” a term or condition of its H-2A labor




  9       In a separate Decision and Order issued on August 25, 2016, the ALJ found that
  Respondent Gonzalo Fernandez violated provisions of the H-2A program and ordered him
  to pay to the Administrator a total of $1,109,381.19 for distribution to the affected workers.
  However, the ALJ found that Respondent did not violate 20 C.F.R. § 655.122(d)(1)(i) related
  to providing H-2A workers with housing that met OSHA standards. For the substantiated
  violations of the H-2A program, the ALJ assessed Respondent civil money penalties in the
  amount of $1,293,950, to be paid to the Administrator. In addition, the ALJ found that due
  to his substantial violations of the H-2A program, Respondent was debarred from
  participating in the H-2A program for the period of three years from the date of the Order.
  That decision was not reviewed by the ARB and is the final agency decision in that matter.
  29 C.F.R. § 501.41(d)(2010).




  certification. 10 We do not disagree with this assertion, but nevertheless conclude
  that the proper procedures, as outlined in the implementing regulations, apply to
  any party the Administrator seeks to debar from receiving future labor
  certifications. In reaching this holding we have reviewed the applicable regulations
  giving weight to the plain language of the rules. The same rules of interpretation
  that are generally applicable to statutes may also be used to interpret
  administrative regulations. 11 If the plain language of a statute or regulation is clear,
  “there is no need for further inquiry and the plain language of the statute will
  control its interpretation.” 12

         While the Board and other reviewing entities will often defer to agencies in
  the interpretation of their own regulations, this deference is based on the agency’s
  technical expertise about the subject matter being regulated, but it does not apply
  to an agency’s “interpretation” of procedural requirements written in plain




  10      See 29 C.F.R. § 501.20(a). The Administrator also contends that “requiring a written
  notice of debarment to the successors in interest in this case would prove futile due to these
  successors’ evasive and deceptive conduct—by the time the Administrator fully uncovered
  the facts regarding Fernandez Farms’ ongoing operations, issuing a new notice of
  debarment would simply have permitted these successor entities to reconstitute themselves
  once more.” Administrator’s Reply Brief at 2. Despite obvious efficiency benefits American
  law has never adopted a “futility standard” when considering the need for substantive or
  procedural safeguards in litigation. We are not insensitive to the difficulties of the often
  competitive enterprise of ferreting out unlawful conduct. The government cannot, however,
  ignore the requirements of existing regulations and then ask the administrative judiciary to
  approve that conduct. We observe that had the Administrator complied with current agency
  regulations after the discovery of the putatively “evasive and deceptive conduct,” any
  arguments regarding the statute of limitations established under § 501.20(c) would have
  been adjudicated before an ALJ. We presume that necessary findings of fact and
  conclusions of law would have been made as to whether the statute of limitations could be
  tolled in light of the evidence. Alternatively, we observe that the regulatory time limitations
  and administrative requirements could be amended through the rule-making process to
  provide explicitly for handling situations such as those presented in this case.

  11    See Administrator v. Advanced Professional Marketing, Inc., ARB No. 12-069, ALJ
  Case No. 2008-LCA-017, slip op. at 10 (ARB June 3, 2014).

  12    Luckie v. United Parcel Serv., Inc., ARB Nos. 05-026, -054; ALJ No. 2003-STA-039
  (ARB June 29, 2007) (citing United States v. Fisher, 289 F.3d 1329, 1338 (11th Cir. 2002)).




  language. 13 Contrary to the Administrator’s contentions on appeal, the ALJ did not
  add a requirement of written notice of debarment and an opportunity to be heard.
  Rather, the implementing regulations promulgated (in part) by the Wage and Hour
  Division found in 29 C.F.R. Part 501 establish such a requirement.

         The regulations in 29 C.F.R. Part 501 cover the enforcement of all contractual
  obligations applicable to the employment of H–2A workers under 8 U.S.C. § 1188. 14
  Section 501.16(a)(2) provides that the remedies referenced in the regulations may
  be sought directly from the employer, or from its successor in interest, as
  appropriate, and § 501.20(e) provides the procedural requirements for the
  Administrator when seeking debarment of an employer, or any successor in interest
  to that employer, from receiving future labor certifications, subject to the time
  limits set forth in the section. Specifically, § 501.20(e) requires that the Notice of
  Debarment be in writing, that it must state the reason for the debarment finding,
  and must identify appeal opportunities and a timeframe under which such rights
  must be exercised. 15 The requirement for a written notice of debarment is further
  emphasized in § 501.31, which states plainly that “whenever the WHD decides . . .
  to debar . . . the person against whom such action is taken shall be notified in
  writing of such determination,” and § 501.32 specifies the requirements of the
  notice, including the right of the affected party to request a hearing.

         In the proceedings below, the Administrator followed these requirements in
  the pursuit of disbarment of Fernandez Farms, and subsequently when seeking to
  debar Gonzalo Fernandez as an individual. A Notice of Determination was issued
  against Fernandez Farms on July 31, 2013. This notice included the violations
  found in the investigation, the remedies sought, including debarment for three
  years, and the proper procedure to request a hearing before the OALJ. Fernandez

  13    See, e.g., OFCCP v. Keebler Co., ARB No. 97-127, ALJ No. 1987-OFC-020, slip op. at
  14 (ARB Dec. 21, 1999); see generally Puri v. Univ. of Alabama Birmingham Huntsville,
  ARB No. 10-004, ALJ Nos. 2008-LCA-008, -043 (ARB Nov. 30, 2011).

  14     This section delegates to the Secretary of Labor the authority to take such actions as
  may be necessary to assure employer compliance with terms and conditions of employment
  under the INA.

  15     Similar language is also found in 20 C.F.R. § 655.182(f), which prescribes the
  procedure for the Office of Foreign Labor Certification (OFLC) Administrator must follow to
  debar an employer, attorney or agent from receiving future labor certifications.



  Farms filed a request for hearing on August 26, 2013. Subsequently, on December 4,
  2013, after further investigation, the Administrator filed a Notice of Determination
  against Gonzalo Fernandez finding that he was personally liable for the violations
  described in the July 31, 2013 letter. This notice also listed the remedies sought,
  including a three year debarment, and explained the right for and procedures to
  request a hearing. On December 31, 2013, Gonzalo Fernandez requested a hearing
  before the OALJ, and objected to the Administrator’s finding that he should be held
  personally liable for the violations found with regard to Fernandez Farms. In an
  Order dated June 11, 2015, the ALJ found that the Administrator presented
  sufficient evidence warranting piercing the corporate veil of Fernandez Farms and
  holding Gonzalo Fernandez personally liable for the debts of the corporation in this
  case. In May 2015, just prior to the July 2015 hearing, the Administrator filed a
  motion seeking to amend the determination order to include claims for violating the
  “no cost” housing provisions of the Act. The ALJ permitted amendment of the Notice
  of Determination as it was within the scope of the original complaint and involved
  the same parties. See Order Granting Leave to Amend at 2.

         Given the Administrator’s knowing failure to follow the requirements of the
  implementing regulations concerning the non-Respondent entities, we affirm the
  ALJ’s finding that the minimal regulatory notice requirements were not met, and
  reject the Administrator’s contention that sufficient constructive notice was given to
  the named individuals and two businesses for them to be on notice that they would
  be subject to the debarment proceedings. 16 As the regulations plainly provide that
  “the person against whom such action is taken shall be notified in writing of such
  determination,” 29 C.F.R. § 501.31, and it is not disputed that a Notice of
  Debarment was not issued against Celia Fernandez, Lucia Fernandez, Juan
  Escobar, CFE Farms, and Royal Berry Farms. 17 Therefore, we affirm the ALJ’s




  16      As the parties were not given a Notice of Debarment stating the reason for the
  debarment finding, including a detailed explanation of the grounds for and the duration of
  the debarment, and identifying appeal opportunities, it is not clear for which particular
  violations the Administrator is pursuing debarment as to each non-Respondent entity.

  17     We also note that the regulations provide the following:




  conclusion that these non-Respondent entities and individuals were not properly
  before the ALJ for debarment at the hearing. 18

                                        CONCLUSION

        The ALJ correctly declined to grant the relief requested by the Administrator.
  Accordingly, the ALJ’s Order Denying Request for Relief against Celia Fernandez,
  Lucia Fernandez, Juan Escobar, CFE Farms and Royal Berry Farms and the ALJ’s
  Order Denying Reconsideration are AFFIRMED.

         SO ORDERED.




         Where an employer has violated 8 U.S.C. 1188, 20 CFR part 655, subpart B,
         or the regulations in this part, and has ceased doing business or cannot
         be located for purposes of enforcement, a successor in interest to that
         employer may be held liable for the duties and obligations of the violating
         employer in certain circumstances.

  29 C.F.R. § 501.3. Although Fernandez Farms has declared bankruptcy, we note that the
  Administrator zealously pursued remedies against Gonzalo Fernandez in his individual
  capacity and does not allege that he cannot be located for purposes of enforcement.

  18     Given our disposition of this case, we decline to address the Administrator’s
  contentions regarding whether the named individuals and businesses may be considered
  successors in interest of Fernandez Farms.