McNabb v. United States Department of Education

862 F.2d 681

• Court: Court of Appeals for the Eighth Circuit
• Decided: December 5, 1988
• Docket: Nos. 87-2017, 87-2078
• Status: Published

Opinions

PER CURIAM.

The United States Department of Education and the Division of Services for the Blind of the Arkansas Department of Human Services (the state) appeal from the district court’s¹ grant of summary judgment in favor of George McNabb. The district court ordered the Secretary of Education to convene an arbitration panel pursuant to the Randolph-Sheppard Vending Stand Act, 20 U.S.C. §§ 107-107Í, to consider McNabb’s request for compensatory relief, attorney’s fees, and costs.

I. BACKGROUND

The Randolph-Sheppard Act (the Act) created a cooperative federal-state program for the licensing, training, and placement of blind persons as operators of vending facilities on federal, state, and other properties. The Department of Education administers the Act on the federal level, and has designated the Arkansas Department of Human Services, Division of Services for the Blind, to administer the Act in Arkansas.

McNabb is a blind person licensed under the Act to operate a vending facility in Arkansas. On September 12, 1980, McNabb bid for three telephone company vending facilities. In violation of applicable laws and regulations, two of these facilities, which were more profitable than the stand McNabb then operated, were awarded to blind vendors with less seniority than McNabb.

On October 20, 1980, McNabb filed a grievance, requesting a full evidentiary hearing as provided for in 20 U.S.C. § 107d-l(a).² On February 11, 1981, the hearing officer upheld the denial of the vending stands to McNabb.

McNabb then filed a complaint with the Department of Education, also pursuant to 20 U.S.C. § 107d-l(a), requesting that an arbitration panel be convened to decide his entitlement to one of the facilities he had been denied. He later amended his complaint to request specific relief: assignment to one of the stands with damages for the period he was denied a stand, as well as attorney's fees and costs.

The arbitration hearing was held on September 8, 1983. After the hearing but before the arbitration panel issued its decision, Commissioner Conn, the Rehabilitation Services Administrator of the Department of Education, informed the parties-that the Secretary of Education took the position that neither compensatory relief nor attorney’s fees were contemplated under the Act and that such awards would be contrary to the principle of sovereign immunity.

On December 29, 1983, the arbitration panel issued its decision, finding that McNabb had wrongfully been denied one of the stands. As relief, the panel gave McNabb a continuing right of assignment to the first of the two stands at issue that became vacant. He was also given a continuing right of assignment to any other facility for which he submitted an application. The panel also stated that after McNabb was assigned a vending facility, he had the right to request the panel to consider awarding additional compensatory relief in the form of back pay, attorney’s fees, and costs.

On October 10, 1985, McNabb accepted assignment to a new vending facility. The following month, he asked Commissioner Conn to reconvene the arbitration panel to award him additional relief. Conn refused to reconvene the panel, once again taking the position that the Act and the eleventh amendment precluded the panel from awarding compensatory relief or attorney’s fees against state agencies. He later informed McNabb that his refusal to reconvene the panel constituted the final agency decision of the Secretary of Education.

McNabb sought review in federal district court of the Secretary’s decision, pursuant to 20 U.S.C. § 107d-2(a).³ The district court held that arbitration panels convened pursuant to the Act have the authority to award compensatory relief and attorney’s fees. Without specifically discussing the issue of whether the eleventh amendment barred such awards, the district court stated that it chose to follow the Third Circuit’s decision in Delaware Dep’t of Health and Social Servs., Div. for the Visually Impaired v. United States Dep’t of Educ., 772 F.2d 1123 (3d Cir.1985). In Delaware, the Third Circuit, which is the only circuit court that has considered this question, held that: (1) the Act impliedly authorizes compensatory damage awards against state agencies; (2) states that choose to participate in this federally-created program for blind vendors thereby waive their eleventh amendment immunity; and (3) attorney’s fees are an appropriate element of compensatory damages for breach of a contract between a blind vendor and a state agency.

Both the United States Department of Education and the Arkansas Department of Human Services appeal the district court’s decision. We affirm as hereinafter modified. Judges Fagg and Doty find that the arbitration panel is not authorized to award McNabb retroactive money damages against the state. Judge Fagg would hold that the Act does not authorize any awards of money damages against the states. Judge Doty would hold that the state has not waived its eleventh amendment immunity to retroactive money damages. Chief Judge Lay and Judge Doty find that the arbitration panel is authorized to award prospective damages from the date of the panel’s decision, December 29, 1983, to the date McNabb accepted assignment to a new vending facility, October 10, 1985.

The district court’s order to the Secretary of Education to reconvene the arbitration panel is therefore affirmed, with the above-stated modification of the scope of the panel’s authority to award damages.

1 . The Honorable William R. Overton, United States District Judge for the Eastern District of Arkansas.

2 . 20 U.S.C. § 107d-l(a) (1982) provides:

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.

3 . 20 U.S.C. § 107d-2(a) (1982) provides:

Upon receipt of a complaint filed under section 107d-l of this title, the Secretary shall convene an ad hoc arbitration panel as provided in subsection (b) of this section. Such panel shall, in accordance with the provisions of subchapter II of chapter 5 of Title 5, give notice, conduct a hearing, and render its decision which shall be subject to appeal and review as a final agency action for purposes of chapter 7 of such Title 5.

The statute’s references to Chapters 5 and 7 of Title 5 are to the administrative procedure and judicial review provisions of the Administrative Procedure Act. The Act thus incorporates by reference 5 U.S.C. § 706, which allows district courts to set aside agency actions that are arbitrary, capricious, an abuse of discretion or otherwise not in accordance with law, without observance of legally-required procedures, or unsupported by substantial evidence.