SUN VALLEY ORCHARDS, LLC v. U.S. DEPARTMENT OF LABOR

UNITED STATES DISTRICT COURT

DISTRICT OF NEW JERSEY

SUN VALLEY ORCHARDS, LLC, :

: Hon. Joseph H. Rodriguez

Plaintiff, :

:

v. : Civil No. 1:21-cv-16625

:

U.S. DEPARTMENT OF LABOR, et al., :

: OPINION

Defendants. :

:

Plaintiff, Sun Valley Orchards, LLC (“Sun Valley”), moves for partial summary

judgment to all claims that are susceptible to the decision based on the administrative

record but not as to Sun Valley’s additional claims seeking a de novo trial before the

Court. The defendants, U.S. Department of Labor (“DOL”), move to dismiss and for

summary judgment on all Sun Valley’s claims.

Sun Valley is a New Jersey family farm owned and operated by Joe and Russell

Marino. During the 2015 growing season, Sun Valley hired nineteen H-2A workers to

harvest asparagus. The workers left the farm later that year and the Department of

Labor investigated their departure and found several violations of the H-2A program

requirements. Following adjudications against Sun Valley by the Administrative Law

Judge and the Administrative Review Board, Sun Valley filed the instant action.

The Court has considered the written submissions of the parties and the arguments

advanced at the hearing on April 20, 2023. The record of that hearing is incorporated.

I. Background

a. The H-2A Visa Program

To appreciate the facts of this case, some legal background is necessary. The

Immigration and Nationality Act of 1952 established the modern framework for

regulation of immigration in the United States, including provisions for the admission of

permanent and temporary foreign workers. See Immigration and Nationality Act of 1952

(“INA”), Pub.L. No. 82–414, 66 Stat. 163 (codified as amended at 8 U.S.C. §§ 1101 et

seq.). One such provision was the H–2 visa program, which governed the recruitment of

foreign workers for agricultural and non-agricultural jobs. 8 U.S.C. § 1101(a)(15)(H)(ii).

In 1986, Congress enacted the Immigration Reform and Control Act of 1986 (“IRCA”),

which amended the INA by, among other things, bifurcating the H–2 visa program into

the H–2A and H–2B programs,1 which govern the admission of agricultural and non-

agricultural workers, respectively. See Pub.L. No. 99–603, § 301(a), 100 Stat. 3359, 3411

(amending 8 U.S.C. § 1101(a)(15)(H)(ii)(a)-(b)).

The Immigration and Nationality Act provides temporary work authorization for

foreign agricultural workers under the H-2A program. See 8 U.S.C. §

1101(a)(15)(H)(ii)(a); § 1184(c)(1). The H-2A program permits employers to temporarily

hire foreign workers upon certification that “(A) there are not sufficient workers who are

able, willing, and qualified, and who will be available at the time and place needed, to

perform the labor or services involved in the petitioner” and “(B) the employment of the

1 The H-2A program is for agricultural workers, and the H-2B program is for non-agricultural

workers.

alien in such labor or services will not adversely affect the wages and working conditions

of workers in the United States similarly employed.” 8 U.S.C. § 1188(a)(1)(A)–(B).

“Congress directed the Secretary of Labor (“Secretary”) to promulgate regulations

that would set the parameters of the program, particularly for temporary workers

coming ‘to perform agricultural labor or services.’” Overdevest Nurseries, L.P. v. Walsh,

2 F.4th 977, 980 (D.C. Cir. 2021) (quoting 8 U.S.C. § 1101(a)(15)(H)). Pursuant to this

authority, the Secretary promulgated regulations2 to protect American workers. Under

these regulations, employers must first offer the job to workers in the United States. 20

C.F.R. § 655.121. Furthermore, the employer must offer domestic workers “no less than

the same benefits, wages, and working conditions that the employer is offering, intends

to offer, or will provide to H-2A workers.” 20 C.F.R. § 655.122(a). Only if an American

worker does not accept a position offered through this process can the employer submit

an Application for Temporary Employment Certification (an “H-2A Application”) to the

Department of Labor (“DOL”). See generally 8 U.S.C. § 1188(a), (c)(3)(A).

Before submitting an Application for Temporary Employment Certification, an

“employer must submit a completed job order.” 20 C.F.R. § 655.121(a)(1). The job order

lists the “[j]ob qualifications and requirements[,]” 20 C.F.R. § 655.122(b), and

“[m]inimum benefits, wages, and working conditions[,]” 20 C.F.R. § 655.122(c). Once

the DOL certifies an employer’s petition, the employer can petition the Department of

2 The H-2A visa is also governed by regulations issued by the Immigration and Naturalization

Service. See 8 C.F.R. § 214.2(h). H-2A workers are only admitted into the United States to work

for the designated employer and for the duration of the certified period of employment, which

cannot exceed one year. If the employment relationship ends, whether the employee quits or the

employer terminates the employment, the H-2A visa expires, and the workers must leave the

United States. See 8 C.F.R. § 214.2(h)(5)(viii), (h)(11)(iii)(A)(1), & (h)(13).

Homeland Security to designate foreign workers as H-2A workers. See Overdevest

Nurseries, 2 F.4th at 980.

b. The H2-A Enforcement System

The Secretary of Labor is “authorized to take such actions, including imposing

appropriate penalties and seeking appropriate injunctive relief and specific performance

of contractual obligations, as may be necessary to assure employer compliance with

terms and conditions of employment” of the H-2A program. 8 U.S.C. § 1188(g) (2); 29

C.F.R. § 501.1. The Secretary of Labor may also initiate administrative proceedings as

necessary, or alternatively may petition “any appropriate District Court of the United

States” for injunctive relief, or “specific performance of contractual obligations.” 29

C.F.R. § 501.16. The Department’s Wage and Hour Division Administrator

(“Administrator”) investigates possible H-2A violations. If the Administrator determines

violations occurred, it may recover back wages, debar the employer from receiving

future H-2A labor certifications, and impose civil money penalties. 29 C.F.R. §§ 501.15,

501.16(a)(1), 501.19(a), 501.20(a). The Administrator may also impose civil monetary

penalties for “each violation of the work contract, or the obligations imposed by 8 U.S.C.

§ 1188, 20 C.F.R. part 655.” 29 C.F.R. § 501.19(a). “In determining the amount of

penalty to be assessed for each violation, the Administrator shall consider the type of

violation committed and other relevant factors.” 29 C.F.R. § 501.19(b).

To institute administrative proceedings, the Administrator issues a written

determination explaining the Wage and Hour Division’s findings and imposes sanctions

and remedies. 29 C.F.R. §§ 501.31, 501.32. An employer can request an administrative

hearing before an Administrative Law Judge (“ALJ”) to review the Administrator’s

determination. 29 C.F.R. §§ 501.33(a), 501.34, 501.35. The Federal Rules of Civil

Procedure are generally applicable to litigation before the ALJ. In proceedings before

the United States Department of Labor, Office of Administrative Law Judges, “[t]he

Federal Rules of Civil Procedure (FRCP) apply in any situation not provided for or

controlled by these rules, or a governing statute, regulation, or executive order.” 29

C.F.R. § 18.10(a). The ALJ will prepare a decision on the issues referred by the

Administrator. 29 C.F.R. § 501.41(a). Any party wishing review of the ALJ decision can

petition the Administrative Review Board (“ARB”). 29 C.F.R. § 501.42(a).

c. Sun Valley’s H-2A Violations

During the 2015 growing season, Sun Valley hired nineteen H-2A workers to

harvest asparagus. In completing the H-2A paperwork, Sun Valley stated they would

provide the workers access to a kitchen on the premises of the farm when instead, the

workers’ supervisor cooked out of the kitchen adjacent to the crew quarters and charged

the workers a flat rate of $75-$80 per week for food. The supervisor also sold beverages

to the workers.

The contract with the nineteen workers entitled them to forty hours of work per

week during the season, totaling 1,040 hours. However, if the workers left voluntarily or

were fired for cause, they were not entitled to those hours. Fired for cause included a

failure “to perform the work as specified,” as well as failure “to meet applicable

production standard.” See Dkt. 19-1 at 5 (quoting A.R. 1516).

Upon a dispute between the workers and Russel Marino in May 2015, the

workers left the farm. When the workers left Sun Valley, they had to complete

paperwork stating their reason for departure. The contractor, whom the Marinos hired

to assist them with the H-2A program, advised the workers would hamper Sun Valley’s

future employment opportunities if they stated they quit because they did not like the

work. Instead, the contractor advised Sun Valley that the workers should state they left

for personal reasons. Sun Valley then had the workers sign departure forms disclosing

they resigned due to personal issues.

After an investigation in July 2015, the Administrator concluded Sun Valley

violated various aspects of the H-2A program and assessed $369,703.22 in back wages

and $212,250 in penalties. Sun Valley timely requested an ALJ hearing in July 2016,

and Judge Theresa Timlin was assigned to the case, holding a four-day evidentiary

hearing in July 2017. The Secretary of Labor ratified Judge Timlin’s appointment “to

address any claim that administrative proceedings pending before, or presided over by,

administrative law judges of the U.S. Department of Labor violate the Appointments

Clause.” See Dkt. 22-1 at 6 (quoting Ltr. To Hon. Theresa C. Timlin (Dec. 21, 2017)).

Almost two years later after the appointment on October 28, 2019, Judge Timlin

issued the decision, finding numerous H-2A violations and imposing $344,945.80 in

back wages and $211,800 in penalties, a reduction of over $25,000 from the

Administrator’s assessment. Sun Valley then appealed to the ARB, which affirmed the

ALJ decision.

Sun Valley argues the DOL’s adjudication of these claims in agency courts, before

agency judges, violated Article III; the DOL’s award must be vacated because the ALJ

was neither appointed nor subject to removal as required by the Constitution; the DOL’s

award is contrary to law and cannot be sustained based on the evidence in the

administrative record; and the DOL’s award violates the Excessive Fines Clause.3 The

DOL argues the adjudication does not violate Article III; the ALJs do not violate the

Appointments Clauses or the President’s removal power; the adjudicatory system is

authorized by the statute and Sun Valley is not entitled to a trial de novo; the imposition

of back pay and penalties is fully supported by the record and is neither arbitrary nor

capricious; and the DOL did not violate the Excessive Fines Clause.

II. Standard of Review

a. Federal Rule of Civil Procedure 12(b)(6)

Federal Rule of Civil Procedure 12(b)(6) allows a party to move for dismissal of a

claim based on “failure to state a claim upon which relief can be granted.” Fed. R. Civ. P.

12(b)(6). A complaint should be dismissed pursuant to Rule 12(b)(6) if the alleged facts,

taken as true, fail to state a claim. Id. In general, only the allegations in the complaint,

matters of public record, orders, and exhibits attached to the complaint are taken into

consideration when deciding a motion to dismiss under Rule 12(b)(6). See Chester

County Intermediate Unit v. Pa. Blue Shield, 896 F.2d 808, 812 (3d Cir. 1990). It is not

necessary for the plaintiff to plead evidence. Bogosian v. Gulf Oil Corp., 561 F.2d 434,

446 (3d Cir. 1977). The question before the Court is not whether the plaintiff will

ultimately prevail. Watson v. Abington Twp., 478 F.3d 144, 150 (3d Cir. 2007). Instead,

the Court simply asks whether the plaintiff has articulated “enough facts to state a claim

to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570

(2007).

3 Sun Valley states in addition to the claims presented in their motion for partial summary

judgment, its complaint includes separate allegations seeking de novo review of the DOL’s

factual determinations after trial. Because Sun Valley cannot request summary judgment in its

favor on those claims, they are not encompassed in the motion for partial summary judgment.

“A claim has facial plausibility4 when the plaintiff pleads factual content that

allows the court to draw the reasonable inference that the defendant is liable for the

misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (citing Twombly, 550

U.S. at 556). “Where there are well-pleaded factual allegations, a court should assume

their veracity and then determine whether they plausibly give rise to an entitlement to

relief.” Iqbal, 556 U.S. at 679.

The Court need not accept “‘unsupported conclusions and unwarranted

inferences,’” Baraka v. McGreevey, 481 F.3d 187, 195 (3d Cir. 2007) (citation omitted),

however, and “[l]egal conclusions made in the guise of factual allegations . . . are given

no presumption of truthfulness.” Wyeth v. Ranbaxy Labs., Ltd., 448 F. Supp. 2d 607,

609 (D.N.J. 2006) (citing Papasan v. Allain, 478 U.S. 265, 286 (1986)); see also Kanter

v. Barella, 489 F.3d 170, 177 (3d Cir. 2007) (quoting Evancho v. Fisher, 423 F.3d 347,

351 (3d Cir. 2005) (“[A] court need not credit either ‘bald assertions’ or ‘legal

conclusions’ in a complaint when deciding a motion to dismiss.”)). Accord Iqbal, 556

U.S. at 678–80 (finding that pleadings that are no more than conclusions are not

entitled to the assumption of truth).

Further, although “detailed factual allegations” are not necessary, “a plaintiff’s

obligation to provide the ‘grounds’ of his ‘entitlement to relief’ requires more than labels

and conclusions, and a formulaic recitation of a cause of action’s elements will not do.”

Twombly, 550 U.S. at 555 (internal citations omitted). See also Iqbal, 556 U.S. at 678

4 This plausibility standard requires more than a mere possibility that unlawful conduct has

occurred. “When a complaint pleads facts that are ‘merely consistent with’ a defendant’s

liability, it ‘stops short of the line between possibility and plausibility of ‘entitlement to relief.’’’’

Id.

(“Threadbare recitals of the elements of a cause of action, supported by mere conclusory

statements, do not suffice.”).

Thus, a motion to dismiss should be granted unless the plaintiff’s factual

allegations are “enough to raise a right to relief above the speculative level on the

assumption that all of the complaint’s allegations are true (even if doubtful in fact).”

Twombly, 550 U.S. at 556. “[W]here the well-pleaded facts do not permit the court to

infer more than the mere possibility of misconduct, the complaint has alleged-but it has

not ‘shown’-‘that the pleader is entitled to relief.’” Iqbal, 556 U.S. at 679.

b. Federal Rule of Civil Procedure Rule 56

Summary judgment shall be granted if “the movant shows that there is no

genuine dispute as to any material fact and the movant is entitled to judgment as a

matter of law.” Fed. R. Civ. P. 56(a). Thus, the Court will enter summary judgment in

favor of a movant who shows that it is entitled to judgment as a matter of law and

supports the showing that there is no genuine dispute as to any material fact by “citing

to particular parts of materials in the record, including depositions, documents,

electronically stored information, affidavits or declarations, stipulations ... admissions,

interrogatory answers, or other materials.” Fed. R. Civ. P. 56 (c)(1)(A).

A fact is “material” only if it might impact the “outcome of the suit under the

governing law.” Gonzalez v. Sec'y of Dep't of Homeland Sec., 678 F.3d 254, 261 (3d Cir.

2012). A “genuine” dispute of “material” fact exists where a reasonable jury’s review of

the evidence could result in “a verdict for the non-moving party” or where such fact

might otherwise affect the disposition of the litigation. Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 248 (1986). In determining whether a genuine issue of material fact exists,

the court must view the facts and all reasonable inferences drawn from those facts in the

light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith

Radio Corp., 475 U.S. 574, 587 (1986).

“[T]he party moving for summary judgment under Fed. R. Civ. P. 56(c) bears the

burden of demonstrating the absence of any genuine issues of material fact.” Aman v.

Cort Furniture Rental Corp., 85 F.3d 1074, 1080 (3d Cir. 1996). The moving party may

satisfy its burden by producing evidence showing the absence of a genuine issue of

material fact or by showing there is no evidence in support of the nonmoving party’s

case. Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986). Once the moving party has met

this burden, the nonmoving party must identify, by affidavits or otherwise, specific facts

showing that there is a genuine issue for trial. Id.; Maidenbaum v. Bally’s Park Place,

Inc., 870 F. Supp. 1254, 1258 (D.N.J. 1994). Thus, to withstand a properly supported

motion for summary judgment, the nonmoving party must identify specific facts and

affirmative evidence that contradict those offered by the moving party. Andersen v.

Liberty Lobby, Inc., 477 U.S. 242, 256-57 (1986). “A nonmoving party may not ‘rest

upon mere allegations, general denials or ... vague statements….’” Trap Rock Indus.,

Inc. v. Local 825, Int'l Union of Operating Eng'rs, 982 F.2d 884, 890 (3d Cir. 1992)

(quoting Quiroga v. Hasbro, Inc., 934 F.2d 497, 500 (3d Cir. 1991)). Indeed,

the plain language of Rule 56(c) mandates the entry of summary judgment,

after adequate time for discovery and upon motion, against a party who fails

to make a showing sufficient to establish the existence of an element

essential to that party's case, and on which that party will bear the burden

of proof at trial.

Celotex, 477 U.S. at 322. That is, the movant can support the assertion that a fact cannot

be genuinely disputed by showing that “an adverse party cannot produce admissible

evidence to support the [alleged dispute of] fact.” Fed. R. Civ. P. 56(c)(1)(B); accord Fed.

R. Civ. P. 56(c)(2).

III. Analysis

a. The Department of Labor’s Adjudication does not Violate

Article III

“The judicial power of the United States, shall be vested in one Supreme Court,

and in such inferior courts as the Congress may from time to time ordain and establish.”

U.S. Const. art III, § 1. Congress cannot “confer the Government’s ‘judicial Power’ on

entities outside Article III.” Oil States Energy Servs., L.L.C. v. Greene’s Energy Grp.,

L.L.C., 138 S. Ct. 1365, 1373 (2018) (quoting Stern v. Marshall, 564 U.S. 462, 484

(2011)).

“When determining whether a proceeding involves an exercise of Article III

judicial power, this Court’s precedents have distinguished between ‘public rights’ and

‘private rights.’” Oil States Energy Servs., L.L.C., 138 S. Ct. at 1373 (quoting Executive

Benefits Ins. Agency v. Arkison, 573 U.S. 25, 32 (2014)). “Those precedents have given

Congress significant latitude to assign adjudication of public rights to entities other than

Article III courts.” Id.

The Supreme Court has not “‘definitively explained’5 the distinction between

public and private rights,” id. (quoting Northern Pipeline Constr. Co. v. Marathon

5 Crowell v. Benson, 285 U.S. 22 (1932), attempted to list some of the matters that fall within the

public-rights doctrine: “Familiar illustrations of administrative agencies created for the

determination of such matters are found in connection with the exercise of the congressional

power as to interstate and foreign commerce, taxation, immigration, the public lands, public

health, the facilities of the post office, pensions and payments to veterans.” Id., 285 U.S. at 51.

Pipeline Co., 458 U.S. 50, 69 (1982)), and the Court’s precedents “applying the public-

rights doctrine have ‘not been entirely consistent.’” Id. (quoting Stern, 564 U.S. at 488).

However, precedents have recognized that the public-rights doctrine covers matters

“which arise between the Government and persons subject to its authority in connection

with the performance of the constitutional functions of the executive or legislative

departments.” Crowell, 285 U.S. at 50.

The Supreme Court continues to limit the public-rights doctrine to “cases in

which the claim at issue derives from a federal regulatory scheme, or in which resolution

of the claim by an expert Government agency is deemed essential to a limited regulatory

objective within the agency’s authority.” Stern, 564 U.S. at 490. Thus, the public-rights

doctrine applies “when the right is integrally related to [a] particular Federal

Government action.” Id.

The public-rights doctrine applies to the DOL’s case against Sun Valley for its H-

2A violations because the H-2A involves immigration, which is a matter that falls within

the doctrine. Under the Constitution, “control of the admission of aliens is committed

exclusively to Congress, and … may lawfully impose appropriate obligations, sanction

their enforcement by reasonable money penalties, and invest in administrative officials

the power to impose and enforce them.” Lloyd Sabaudo Societa Anonima Per Azioni v.

Elting, 287 U.S. 329, 334 (1932). “Congress has often created new statutory obligations,

provided for civil penalties for their violation, and committed exclusively to an

administrative agency the function of deciding whether a violation has in fact occurred.”

Atlas Roofing Co. v. Occupational Safety & Health Rev. Comm’n, 430 U.S. 442, 450

(1977).

Sun Valley argues this is a private right case because it involves “claims that

historically were the subject action at common law, and because imposing over half a

million dollars in liability on a family farm (on a breach-of-contract theory) is an

inherently judicial matter.” Dkt. 19-1 at 14. However, the enforcement action here is by

the federal government based on Sun Valley’s DOL’s violations, which arise under the

public-rights doctrine. See Stern, 564 U.S. at 489 (The public rights exception arises

“between the Government and persons subject to its authority in connection with the

performance of the constitutional functions of the executive or legislative departments”

and private rights involve “the liability of one individual to another under the law as

defined.”). Because this matter is based on Sun Valley’s violations of DOL’s regulations,

derives from a federal regulatory scheme under the federal government’s immigration

related powers, and is integrally related to a particular Federal Government action, the

enforcement action is adjudicated outside Article III. Thus, the DOL did not violate

Article III and the claim is therefore dismissed.6

b. The Department of Labor’s Adjudicatory System is Authorized

by Statute

6 Additionally, “Article III’s guarantee of an impartial and independent adjudication by the

federal judiciary is subject to waiver.” Commodity Futures Trading Comm’n v. Schor, 478 U.S.

833, 834 (1986). “[A] party may impliedly consent through his “actions rather than [his] words.”

In re Trib. Media Co., 902 F.3d 384, 394 (3d Cir. 2018) (quoting Roell v. Withrow, 538 U.S.

580, 589-90 (2003)). Here, Sun Valley impliedly consented to a non-Article III adjudication

based upon the continued litigation through the DOL for four years and never objected to the

agency’s non-Article III status.

Sun Valley argues “Congress has not authorized the Agency adjudication in this

case.” Dkt. 19-1 at 25. However, by the plain language of the statute:

The Secretary of Labor is authorized to take such actions, including

imposing appropriate penalties and seeking appropriate injunctive relief

and specific performance of contractual obligations, as may be necessary to

assure employer compliance with terms and conditions of employment

under this section.

8 U.S.C. § 1188(g)(2). Per the statute, the Secretary could have just decided to impose

such penalties. However, the Secretary may “prescribe regulations for the government of

his department” and “the distribution and performance of its business.” 5 U.S.C. § 301.

Here, the Secretary prescribed regulations for the government of its department and the

distribution and performance of its business by allowing H-2A violators to challenge

these assessments through an adjudicatory process where ALJs can consider testimony

and evidence. If a party is dissatisfied with the ALJ’s decision, they then may petition

the ARB to review the decision. 29 C.F.R. § 501.42.

Based on the clear language of the statute, Congress authorized the DOL to

adjudicate

civil monetary penalties or back pay in administrative proceedings.

c. Sun Valley Bore the Responsibility to Develop Issues for the

Adjudicator’s Consideration

“Administrative review schemes commonly require parties to give the agency an

opportunity to address an issue before seeking judicial review of that question.” Carr v.

Saul, 141 S. Ct. 1352, 1358 (2021). “Where statutes and regulations are silent, however,

courts decide whether to require issue exhaustion based on ‘an analogy to the rule that

appellate courts will not consider arguments not raised before trial courts.” Id. (quoting

Sims v. Apfel, 530 U.S. 103, 108-09 (2000)). When determining to impose an issue

exhaustion requirement, the court “depends on the degree to which the analogy to

normal adversarial litigation applies in a particular administrative proceeding.” Id. at

1358 (quoting Sims, 530 U.S. at 109). Issue exhaustion is at its greatest where the

parties are expected to develop the issues in an adversarial administrative proceeding.

Sims, 530 U.S at 110.

The ALJ does not look into its own issues. The DOL’s H-2A enforcement

proceedings require “formal adversarial adjudications.” 29 C.F.R. § 18.101. “Any person

desiring review of a determination referred to in § 501.32, including judicial review,

shall make a written request for an administrative hearing….” 29 C.F.R. § 501.33(a). The

request must “[s]tate the specific reason or reasons the person requesting the hearing

believes such determination is in error[.]” 29 C.F.R. § 501.33(b)(3). Additionally, within

the prehearing statement, it must state “[t]he issues of law to be determined with

reference to the appropriate statute, regulation, or case law[.]” 29 C.F.R. §18.80(c)(2).

Because issue exhaustion was required and Sun Valley bore the responsibility to

develop issues for the adjudicator’s consideration and failed to raise its Appointments

Clause and Removal Power objections in the agency proceedings, the claims are deemed

forfeited and are hereby dismissed.

d. The Administrative Law Judge did not Violate the Appointments

Clause

Despite, Sun Valley’s procedural missteps. Sun Valley argues the DOL’s award

must be vacated because the ALJ was not constitutionally appointed. See Dkt. 19-1 at 28.

However, “ratification can remedy a defect arising from the decision of ‘an improperly

appointed official ... when.... a properly appointed official has the power to conduct an

independent evaluation of the merits and does so.’” Wilkes-Barre Hosp. Co. v. Nat’l

Lab. Rels. Bd., 857 F.3d 364, 371 (D.C. Cir. 2017). There are three general requirements

for ratification: (1) “the ratifier must, at the time of ratification, still have the authority

to take the action to be ratified[,]” (2) “the ratifier must have full knowledge of the

decision to be ratified[,]” and (3) “the ratifier must make a detached and considered

affirmation of the earlier decision.” Advanced Disposal Servs. E., Inc. v. N.L.R.B., 820

F.3d 592, 602 (3d Cir. 2016). Evidence of a detached and considered judgment can be

“implied from subsequent conduct, [], such when a later act is necessarily an affirmation

on an earlier act.” Id. at 603. Ratification may be done by a properly appointed superior

official or a properly appointed official is capable of ratifying their own decisions. Id. at

605. In determining whether ratification has occurred, agency officials are owed “proper

deference” under the “presumption of regularity.” Id.

Here, Judge Timlin’s appointment was ratified by the head of her department,

the Secretary of Labor, after she held the hearing, but nearly two years before she

decided Sun Valley’s case. Upon her appointment, Judge Timlin then ratified all prior

proceedings. The knowledge requirement is easily satisfied since Judge Timlin presided

over Sun Valley’s case and the four-day hearing. The detached and considered

affirmation of all earlier decisions is also satisfied since Judge Timlin did not decide

anything of substance for nearly two years after the Secretary ratified her appointment.

Additionally, Judge Timlin’s later decision was an affirmation of the validity of her

earlier actions in conducting the case. Because Judge Timlin was a properly appointed

inferior officer when she decided Sun Valley’s case, there was no Appointment Clause

Violation.7

e. The Administrative Law Judge did not Enjoy Impermissible

Protections Against Removal

Sun Valley claims “[t]he ALJ who adjudicated Sun Valley’s case [] was not subject

to effective control by the President through the removal power.” Dkt. 19-1 at 30. Article

II provides “[t]he executive Power shall be vested in a President of the United States of

America[,]” and “he shall take Care that the Laws be faithfully executed[.]” U.S. Const.

art. II § 1; id. at § 3. “The entire ‘executive Power’ belongs to the President alone.” Seila

L. L.L.C. v. CFPB, 140 S. Ct. 2183, 2197 (2020). However, lesser executive officers will

assist and “remain accountable to the President, whose authority they wield.” Id. The

President’s authority includes “the ability to remove executive officials, for it is ‘only the

authority that can remove’ such officials….” Id. (quoting Bowsher v. Synar, 478 U.S.

714, 726 (1986)).

As inferior officers, the DOL’s ALJs are appointed by the Secretary of Labor, the

Head of their Department. Such power of appointment of executive officers comes with

it “necessary incident of removal.” Myers v. United States, 272 U.S. 52, 126-27 (1926).

In Humphrey's Executor v. United States, the Supreme Court held that Congress can,

under certain circumstances, create independent agencies run by principal officers

appointed by the President, whom the President may not remove at will but only for

good cause. Humphrey's Executor v. United States, 295 U.S. 602 (1935). Likewise,

7 Because Sun Valley does not allege its previous claim in its complaint that the ALJs who make

up the Review Board violate the Appointments Clause because they qualify as principal officers

of the United States insofar as their decisions are final decisions of the Labor Department and are

not subject to review by a superior executive officer, the Court deems the alleged claim from Sun

Valley’s complaint abandoned.

in United States v. Perkins, 116 U.S. 483 (1886), and Morrison v. Olson, 487 U.S. 654

(1988), the Court sustained similar restrictions on the power of principal executive

officers, themselves responsible to the President, to remove their own

inferiors. Congress has the power to limit and regulate removal of such inferior officers

in the heads of departments. Perkins, 116 U. S. at 485.

The Supreme Court has upheld limited restrictions on the President’s removal

power where “only one level of protected tenure separated the President from an officer

exercising executive power.” Free Enter. Fund v. Pub. Co. Acct. Oversight Bd., 561 U.S.

477, 495, (2010). When there is only one level of protected tenure separating the

President from an officer, there is no removal problem because “[i]t [is] the President—

or a subordinate he [can] remove at will—who decide[s] whether the officer’s conduct

merit[s] removal under the good-cause standard.” Id.

Despite the Merit Systems Protection Board (the “Board”) determining whether

there is removal for “good cause,” the action is taken by the agency which the

administrative law judge is employed. 5 U.S.C. § 7521(a). The Board is simply there to

make sure the agency properly invoked “good cause” for removal. Because ALJs may be

removed by the Secretary of Labor for “good cause,” there is no removal problem. See id.

There is only one level of protected tenure separating the President from an officer since

the Secretary of Labor is removable by the President.

Further, there is no removal problem when the Secretary of Labor does not need

to use ALJs at all. Thus, “[t]he President has broad executive power to order the

Secretary of Labor to change DOL’s regulatory scheme and remove ALJs from the

adjudicatory process under 30 U.S.C. § 932a.” Decker Coal Co. v. Pehringer, 8 F.4th

1123, 1134 (9th Cir. 2021). For the above reasons, Sun Valley’s removal-power claim is

hereby dismissed.

f. The Department of Labor’s Imposition of Back Pay and

Penalties was Neither Arbitrary nor Capricious

Sun Valley makes two arguments regarding the agency’s award for the meal plan

and beverage issues: (1) the ALJ and ARB did not adequately justify its imposition of

monetary penalties, and (2) the DOL’s award of back wages is not supported by

substantial evidence. “Judicial review under [the arbitrary-and-capricious standard] is

deferential, and a court may not substitute its own policy judgment for that of the

agency.” Fed. Commc'ns Comm'n v. Prometheus Radio Project, 141 S. Ct. 1150, 1158

(2021). “A court simply ensures that the agency has acted within a zone of

reasonableness and, in particular, has reasonably considered the relevant issues and

reasonably explained the decision.” Id.

First addressing the imposition of monetary damages. “In determining the

amount of penalty to be assessed for each violation, the WHD Administrator shall

consider the type of violation committed and other relevant factors.” 29 C.F.R. §

501.19(b). “The decision [of the ALJ] shall [] include an appropriate order which may

affirm, deny, reverse, or modify, in whole or in part, the determination of the WHD

Administrator.” 29 C.F.R. § 501.41(b). Further, the ALJ must state the reason or reasons

for such order. Id.

Sun Valley complains that Judge Timlin deferred to the enforcement personnel

instead of conducting a de novo review of the Administrator’s determination. Dkt. 19-1

at 33. However, the ALJ only had to affirm, deny, reverse, or modify the determination

of the WHD Administrator and state the reasons for such order. Such requirements

were met by the ALJ when she affirmed the Administrator’s assessment of penalties for

meal and beverage violations and stated the reason for such order is to “deter other H-

2A employers from making the same failure to disclose in a potentially exploitative

way.” See AR 4500-02.

Insofar as the regulatory factors considered by the WHD Administrator, the

Administrator assessed one penalty for Sun Valley’s combined meal and drink violations

in the amount of $1,350 for each of Sun Valley’s 147 workers, where instead, the

Administrator had the discretion to assess the meal and drink penalties separately.

Judge Timlin found the Administrator applied the factors appropriately and assessed

the penalty in this way due to the seriousness of the violation and great impact on

workers.

Secondly, addressing the award of back wages. “The employer must make all

deductions from the worker’s paycheck required by law. The job offer must specify all

deductions not required by law which the employer will take from the worker’s

paycheck.” 20 C.F.R. § 655.122(p)(1). “A deduction that is primarily for the benefit or

convenience of the employer will not be recognized as reasonable and therefore the cost

of such an item may not be included in computing wages.” 20 C.F.R. § 655.122(p)(2).

In this matter, Sun Valley deducted meal-plan and beverages charges from the

workers’ pay without prior disclosure in the job order. The undisclosed deductions from

the meal-plan charges reduced the workers’ wages below the required wages specified in

the job order. Further, the meal-plan changed a material term of the job order, which

harmed both the workers’ reliance on the H-2A program to ensure the protection of

workers’ rights and the overall integrity of the H-2A program. It is evident Sun Valley

profited from the sales of the meal-plan and beverages charges. Such profits are clearly

prohibited in the H-2A regulations noted above. Thus, the award of back wages due to

the unlawful deductions are not improper because it makes the workers’ whole in

compensation.

The ALJ reasonably considered the relevant issues of Sun Valley’s H-2A

violations and reasonably explained the imposition of back wages and penalties. Thus,

such imposition of back wages and penalties in regard to Sun Valley’s H-2A violations

are neither arbitrary nor capricious.

g. Sun Valley Improperly Terminated Nineteen Workers

“The employer must guarantee to offer the worker employment for a total

number of work hours equal to at least three-fourths of the workdays of the total

period…and ending on the expiration date specified in the work contract….” 20 C.F.R. §

655.122(i)(1). The employer is not responsible for paying the three-fourths guaranteed if

a “worker voluntarily abandons employment before the end of the contract period, or is

terminated for cause….” 20 C.F.R. § 655.122(n).

Sun Valley argues the agency’s award for early termination is not supported by

substantial evidence. See Dkt. 19-1 at 36. The ALJ and ARB affirmed that Sun Valley

improperly fired nineteen workers after the May 2015 altercation. Judge Timlin relied

on testimony of various workers to determine they were fired. When evaluating the

witnesses’ credibility, Judge Timlin found that “the [worker] witnesses were consistent

in describing the heated events at the meeting while Joseph Marino was unable to

remember specifically what was said.” Dkt. 22-1 at 38; see AR 4343. Upon appeal, the

ARB reviewed Judge Timlin’s cited evidence and properly deferred to the credibility

determinations, affirming the ALJ’s ruling.

“[T]he ALJ must necessarily make certain credibility determinations, and this

Court defers to the ALJ’s assessment of credibility.” Zirnsak v. Colvin, 777 F.3d 607, 612

(3d Cir. 2014); see Diaz v. Comm'r, 577 F.3d 500, 506 (3d Cir.2009) (“In determining

whether there is substantial evidence to support an administrative law judge’s decision,

we owe deference to his evaluation of the evidence [and] assessment of the credibility of

witnesses....”). However, the ALJ must specifically identify and explain what evidence it

found not credible and why it found it not credible. Adorno v. Shalala, 40 F.3d 43, 48

(3d Cir.1994) (citing Stewart v. Sec’y of Health, Education and Welfare, 714 F.2d 287,

290 (3d Cir.1983)); see also Stout v. Comm’r, 454 F.3d 1050, 1054 (9th Cir.2006)

(stating that an ALJ is required to provide “specific reasons for rejecting lay testimony”).

An ALJ cannot reject evidence for an incorrect or unsupported reason. Ray v. Astrue,

649 F.Supp.2d 391, 402 (E.D.Pa.2009) (quoting Mason v. Shalala, 994 F.2d 1058, 1066

(3d Cir.1993).

Because the Court owes deference to the ALJ’s evaluation of the evidence and

assessment of the credibility of witnesses, the Court agrees with Judge Timlin’s

determination. Based on the workers’ testimony and explanation for why the ALJ found

the workers’ testimony credible, the ARB reasonably affirmed that Sun Valley

Improperly terminated nineteen workers in May 2015.

h. The Department of Labor is Authorized to Assess Back Wages

Sun Valley argues the “Agency’s entire award of back pay (for all the various

violations) must be vacated because the statute does not authorize back pay.” Dkt. 19-1

at 38. “The Secretary of Labor is authorized to take such actions, including imposing

appropriate penalties and seeking appropriate injunctive relief and specific performance

of contractual obligations, as may be necessary to assure employer compliance with

terms and conditions of employment….” 8 U.S.C. § 1188(g)(2).

Nothing in the statute prevents the agency from awarding back wages. The

statute merely includes a list of some actions the Secretary of Labor is authorized to

take. See generally INCLUDE, Black's Law Dictionary (11th ed. 2019) (“The participle

including typically indicates a partial list.”). Additionally, when 8 U.S.C. § 1188 has been

violated, actions including “the recovery of unpaid wages” may be taken. 29 C.F.R. §

501.16(a)(1).

i. The Labor Department did not Violate the Excessive Fines

Clause

Sun Valley argues the “Agency’s award for the meal plan and beverages violations

also violates the Eighth Amendment’s Excessive Fines Clause.” Dkt. 19-1 at 39. The

Eighth Amendment provides that: “Excessive bail shall not be required, nor excessive

fines imposed, nor cruel and unusual punishments inflicted.” U.S. Const. amend. VIII.

The Eighth Amendment is applicable if the forfeiture constitutes a “fine” and is violated

only if that fine is “excessive.” See Tillman v. Lebanon Cnty. Corr. Facility, 221 F.3d

410, 420 (3d Cir. 2000). In Bajakajian, the Supreme Court held that the forfeiture of a

sum of money grossly disproportionate to the defendant’s offense constituted an

Excessive Fines Clause violation and was therefore, unconstitutional. United States v.

Bajakajian, 524 U.S. 321, 337 (1998).

The DOL’s award of penalties was not grossly disproportional to Sun Valley’s

meal plan and beverages violations. Sun Valley’s violations harmed the workers’ reliance

and overall integrity of the H-2A program. Instead of imposing separate penalties for

each of the meal and drink violations, the DOL only imposed one penalty of $1,350 per

worker for Sun Valley’s combined violations. The DOL also applied a ten percent

reduction to the penalties due to Sun Valley not having a prior history with the H-2A

program. Such reduction and imposition of one penalty is not grossly disproportionate

to Sun Valley’s offenses when the sum is less than legally permissible. See Tillman, 221

F.3d at 420-21.

Additionally, a reviewing court should evaluate “the sentences imposed for

commission of the same crime in other jurisdictions.” United States v. Cheeseman, 600

F.3d 270, 284 (3d Cir. 2010). “From 2005 through August 2021, the DOL [] imposed

three civil monetary penalties over $1 million; fifty-two penalties between $100,000 and

$1 million; 482 penalties between $10,000 and $100,000; and 1,850 penalties under

$10,000 for alleged violations of the H-2A program.” Dkt. 19-1 at 3. Thus, there is

nothing out of the ordinary about Sun Valley’s $198,450 penalties, and Sun Valley’s

Excessive Fine claim is dismissed.

IV. Conclusion

For the reasons stated above Defendants’ Motion to Dismiss [Dkt. 22-1] is granted

without prejudice, and Plaintiff’s Motion for Partial Summary Judgment [Dkt. 19-1] and

Defendant’s Cross-Motion for Summary Judgment [Dkt. 22-1] are denied as moot.

An appropriate Order shall issue.

Dated: July 27, 2023

s/ Joseph H. Rodriguez

Hon. Joseph H. Rodriguez,

UNITED STATES DISTRICT JUDGE