[Federal Register Volume 77, Number 64 (Tuesday, April 3, 2012)]
[Notices]
[Pages 20012-20014]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-7994]
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DEPARTMENT OF EDUCATION
Arbitration Panel Decision Under the Randolph-Sheppard Act
AGENCY: Department of Education.
ACTION: Notice of decision.
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SUMMARY: The Department of Education (Department) gives notice that, on
May 23, 2011, an arbitration panel rendered a decision in the matter of
Carole Morris v. Kentucky Office for the Blind, Case No. R-S/09-5. This
panel was convened by the Department under the Randolph-Sheppard Act
(Act) after the Department received a complaint filed by Carole Morris
(Complainant).
FOR FURTHER INFORMATION CONTACT: You may obtain a copy of the full text
of the arbitration panel decision from Mary Yang, U.S. Department of
Education, 400 Maryland Avenue SW., room 5162, Potomac Center Plaza,
Washington, DC 20202-2800. Telephone: (202) 245-6327. If you use a
telecommunications device for the deaf (TDD), call the Federal Relay
Service (FRS), toll-free, at 1-800-877-8339.
Individuals with disabilities can obtain this document in an
accessible format (e.g., braille, large print, audiotape, or compact
disc) on request to the contact person listed under FOR FURTHER
INFORMATION CONTACT.
SUPPLEMENTARY INFORMATION: Under section 6(c) of the Act, 20 U.S.C.
107d-2(c), the Secretary publishes in the Federal Register a synopsis
of each arbitration panel decision affecting the administration of
vending facilities on Federal and other property.
Background
Complainant alleged that the Kentucky Office for the Blind, the
State licensing agency (SLA), violated the Act and its implementing
regulations in 34 CFR part 395. Complainant alleged that the SLA
violated the Act, implementing regulations and State rules and
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regulations by improperly administering the policies and procedures of
the Kentucky Randolph-Sheppard Vending Facility Program in
Complainant's bid to manage the laundry services at the United States
Penitentiary McCreary (McCreary Prison) at Pine Knot, Kentucky,
administered by United States Department of Justice, Federal Bureau of
Prisons.
Complainant was licensed as a Randolph-Sheppard vendor on March 8,
2004. In April 2004, the SLA was approached by McCreary Prison
regarding the possibility of installing a laundry vending facility
consisting of washer and dryer vending machines at McCreary Prison.
The SLA informed staff at McCreary Prison that the SLA would
provide the services or would work out an arrangement with a third-
party contractor. McCreary Prison informed the SLA that it would
require a 15 percent commission on the gross sales up front. In May
2005, the SLA agreed to McCreary Prison's terms and the SLA and
McCreary Prison officials entered into an Intergovernmental Agreement
(IGA) whereby the SLA would provide the laundry services at McCreary
Prison.
Following the signing of the IGA between the SLA and McCreary
Prison officials, the SLA negotiated a contract with the third-party
contractor to install, operate and repair the laundry vending machines
for McCreary Prison. Additionally, the SLA developed a subcontract with
the third-party contractor to pay 5 percent commission on laundry
royalties to Complainant in exchange for the assignment of laundry
vending rights.
Thereafter, the laundry vending facility at McCreary Prison
produced income and Complainant received commissions. The SLA also
received 5 percent of the net proceeds of the laundry vending facility
income as set aside fees from Complainant. The set aside fees were used
to help pay for the health insurance costs of the vendors. On May 19,
2006, McCreary Prison decided to terminate the laundry vending facility
contract and requested that the SLA remove the laundry vending machines
by July 1, 2006.
On July 25, 2007, the third-party contractor filed a lawsuit
against the SLA for alleged injuries suffered because of the contract
termination. The third-party contractor also filed a lawsuit against
Complainant for breach of contract since she received commissions from
the sales at the laundry vending facility at McCreary Prison. On August
8, 2007, Complainant contacted the SLA to request legal services or
payment of legal fees. However, legal counsel for the SLA informed
Complainant that the SLA would not pay her legal expenses since she was
not an employee of the State. On March 25, 2008, Complainant filed a
request for an evidentiary hearing with the SLA concerning its denial
of her request for payment of legal fees.
On September 30, 2008, Complainant filed an amended grievance with
the SLA adding additional issues to her original evidentiary hearing
request. The new issues alleged by Complainant were that: (1) The SLA
had denied Complainant the opportunity to maximize her vocational
potential; and, (2) as a result, Complainant could have realized a
larger income with the appropriate training by the SLA to manage
laundry equipment.
On February 6, 2009, a hearing officer denied Complainant's request
for payment of legal fees, reimbursement for lost profits and her claim
that the SLA had not maximized her vocational potential. Complainant
appealed this decision. On December 4, 2009, the same hearing officer
ruled that the SLA must establish a training assistance program to help
Complainant maximize her vocational potential. On March 1, 2010, the
SLA denied Complainant's claims as final agency action. Complainant
then requested the Department to convene a Federal arbitration panel to
appeal her grievance.
The Federal arbitration panel initially heard the following issues:
(1) Whether Complainant's claim is barred under the doctrine of
sovereign immunity as alleged by Respondent; and (2) whether
Complainant's request for an evidentiary hearing is time-barred. The
panel then determined that, if both of these issues were resolved in
Complainant's favor, it must hear the following issues: (1) Whether the
SLA allegedly failed to maximize Complainant's vocational potential in
a timely manner; and (2) whether the SLA was responsible for the legal
expenses of Complainant in the lawsuit brought against her by the
third-party vendor. The panel then concluded that, if Complainant
prevails on one or both of these claims, it must determine what remedy
she should receive.
Arbitration Panel Decision
After hearing testimony and reviewing all of the evidence, the
panel majority denied the SLA's claim of sovereign immunity.
Specifically, the panel majority found that, under the Eleventh
Amendment, a State is free to waive its sovereign immunity rights.
However, under the Kentucky constitution, the power to waive sovereign
immunity is vested in the State legislature. The Kentucky legislature
enacted a statute that states in relevant part that, ``Any person, firm
or corporation, having a lawfully authorized written contract with the
Commonwealth at the time of or after June 21, 1974, may bring an action
against the Commonwealth on the contract, including but not limited to
actions either for breach of contracts or enforcement of contracts or
for both.''
Accordingly, the panel majority ruled that both the SLA in
negotiating the subcontract with the third-party contractor and
Complainant receiving commissions from that contract constituted a
contract agreement between the SLA and Complainant.
Regarding the timeliness of Complainant's request for an
evidentiary hearing, the panel majority concluded that Complainant's
deadline to request an evidentiary hearing expired no later than the
date the SLA signed the subcontract with the third-party contractor in
2004. Therefore, Complainant's original request for an evidentiary
hearing and her amended request were untimely.
Also, the panel majority concluded that the subcontract with the
third-party contractor was initiated by the SLA, including making all
of the arrangements with the third-party contractor, drafting the
subcontract, and having Complainant sign the subcontract. As a result,
the panel majority ruled that Complainant was not provided guidance
from the SLA regarding the ramifications for entering into a
subcontract, nor did the SLA assist Complainant when McCreary Prison
dissolved the subcontract and the third-party contractor sued
Complainant.
Accordingly, after consideration, the panel majority ruled that
Complainant shall provide the SLA with evidence regarding the amount of
legal expenses paid by her to be reimbursed by the SLA.
One panel member concurred with the panel majority's decision
regarding the issues of sovereign immunity, 15-day time limit for
Complainant to request an evidentiary hearing and maximization of
vocational potential.
This panel member dissented from the panel majority's decision
regarding Complainant's request for legal fees, stating that there was
no evidence that Complainant pursued her rights diligently or that
there were extraordinary circumstances that prevented a timely filing.
The panel member also noted that, based on the evidence presented at
the hearing, there did not appear to be official
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documentation or proof on file of the amount of legal fees and expenses
paid by Complainant.
The views and opinions expressed by the panel do not necessarily
represent the views and opinions of the Department.
Electronic Access to This Document: The Official version of this
document is the document published in the Federal Register. Free
Internet access to the official edition of the Federal Register and the
Code of Federal Regulations is available via the Federal Digital System
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as all other documents of this Department published in the Federal
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You may also access documents of the Department published in the
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feature at this site, you can limit your search to documents published
by the Department.
Dated: March 29, 2012.
Alexa Posny,
Assistant Secretary for Special Education and Rehabilitative Services.
[FR Doc. 2012-7994 Filed 4-2-12; 8:45 am]
BILLING CODE 4000-01-P