Adjudicating Employment Discrimination in Federal Contracting: Is OFCCP Regulating Without Authority?

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Dean Reuter:  Welcome to Teleforum, a podcast of The Federalist Society's Practice Groups. I’m Dean Reuter, Vice President, General Counsel, and Director of Practice Groups at The Federalist Society. For exclusive access to live recordings of Practice Group Teleforum calls, become a Federalist Society member today at fedsoc.org.

 

 

Nick Marr:  Welcome to The Federalist Society's Teleforum Conference call, as this afternoon -- just afternoon, September 29, 2020, we're hosting a discussion on "Adjudicating Employment Discrimination in Federal Contracting: Is OFCCP Regulating Without Authority?" is the question.

 

      My name is Nick Marr, and I'm Assistant Director of Practice Groups at The Federalist Society. As always, please note that expressions of opinion on today's call are those of the experts.

 

First up, I'll introduce our Moderator, and he'll take it from there. So we're pleased to have Mark Chenoweth moderate our discussion today. He's the Executive Director and General Counsel at New Civil Liberties Alliance. He's also a member of The Federalist Society's Administrative Law and Regulation Practice Group.

 

After we have a bit of moderated discussion, we'll go to audience questions. So be thinking of those, have them in mind for when we get to that portion of the call.

 

All right. Thanks for being with us here today, Mark. The floor is yours.  

 

Mark Chenoweth:  Thanks very much, Nick.

 

      The Office of Federal Contract Compliance Programs, or OFCCP, was setup in response to an executive order from President Lyndon Johnson back in the 1960s. Over time, a series of republican and democrat administrations have continued to operate by executive order to put more and more adjudicative responsibility on OFCCP, even where Congress has not acted to provide statutory authority for that agency conduct.

 

This apparent gap in statutory authority raises some serious questions. And those who are concerned about a runaway administrative state should be especially concerned when agencies that are not even created by Congress have the power to exact gigantic fines, bar companies from federal contracting, and take other measures that can destroy companies and individual careers without respecting the kind of due process that would obtain an enforcement proceedings brought in federal district court.

 

Of course, these concerns do not mean that today's speakers necessarily object to federal enforcement of employment discrimination laws. Even if such laws are perfectly good ideas from a policy perspective, though, there is still room for concern when agencies are operating outside of any statutory authority or in excess of whatever statutory authority they have been given.

 

When the Executive Branch has sought to alter the balance between the Title VII of the Civil Rights Act of 1964 and some of the other employment discrimination provisions that are out there, it's not clear that there's an ability to constrain those agencies when they're operating outside of the statutory framework.

 

This Teleforum will consider these concerns. And even though OFCCP is a relatively obscure federal agency, it does oversee thousands of federal jobs. So because the agency doesn’t just oversee workers who are directly working on government contracts, it also has power to oversee the work force of companies that have federal contracts, even the work force that's outside of that government contracting relationship.

 

So as I say, even though it's a relatively obscure agency, it has quite a bit of power over the work force and over employment discrimination law. And as we noted in the description for this program on the website, OFCCP has often sought to impose controversial expansive theories of employment discrimination, sometimes including theories that the Department of Justice itself is no longer willing to rely on.

 

And as a result, this regulatory framework is sometimes unchecked by the federal courts because of some of the factors that our speakers will talk about today. Unlike OSHA and other Department of Labor enforcement programs, there are relatively few federal court decisions involving the merits of OFCCP enforcement actions against federal contractors.

 

Here today to discuss these problems for The Federalist Society audience, we have two great guests. First up will be Bill Doyle. Bill is a Partner at McGuireWoods and a former deputy director at the Office of Federal Contract Compliance Programs. Because he has once managed the agency's enforcement and policy making activities, he obviously knows the agency inside and out. Bill has defended clients against OFCCP compliance reviews, audits, and discrimination allegations hundreds of times and is lead counsel in a high-profile matter brought in the final days of the Obama administration.

 

Kara Rollins is Litigation Counsel at the New Civil Liberties Alliance, a non-partisan, non-profit civil rights organization that protects people from violations of their civil liberties by the administrative state, including enforcement agencies like OFCCP. Kara has been with NCLA for just over a year and has been involved in NCLA's litigation against Governor Murphy over COVID-related executive orders.

 

And she's also tracked federal agency compliance with President Trump's executive orders from last October that sought to reign in the administrative state. And I should also mention that she's been heavily involved in NCLA's amicus brief efforts in support of the Oracle Corporation, which is another company that has faced OFCCP action brought in the final days of the Obama administration.

 

With that, Bill, let me turn it over to you to educate the audience a little bit more about some of the concerns with OFCCP.

 

William Doyle, Jr.:  Okay. Thanks so much, Mark. And as I begin, I certainly want to emphasize the [inaudible 6:20] of our discussion involves certain statutory authorization problems that are really important when we think about the structure of our government under the Constitution. But that in no way diminishes our view about the seriousness of the problem of preventing and eradicating employment discrimination from American workplace.

 

Workplaces, indeed, that been the point of my entire career both in government as the deputy director of OFCCP in the administration of George W. Bush, which at that time was a political non-career SES position, and in private practice over the last 25 years helping employers comply with Title VII and other equal employment opportunity requirements.

 

And I think really OFCCP has a unique position, and this is what our thought was when I was at OFCCP, to really provide a partnership with the contractor community to work together to prevent and eradicate employment discrimination. And one of the concepts, for example, that we put in place back in 2005-2006 timeframe were voluntary guidelines on how to conduct pay equity audits to both informed the contractor community the best way to ensure pay equity and then offered a supporting and coordinating role.

 

So I think there's lots of opportunities that don't involve controversial enforcement but involve really a partnership. And I think the current political administration at OFCCP really has picked up on that point with what they call the ERCA program, no time to get into that, but the ERCA program basically is a way for OFCCP to establish a partnership, forward looking partnership, with the contractor community to ensure pay equity or ensure equity in other employment practices through some fairly innovative frameworks.

 

      So I think that's a model that we see as a really important and sometimes underappreciated model for ensuring compliance. By the way, that's actually the model that Congress thought -- the Supreme Court has told us that Congress always quite important in Title VII. Voluntary compliance really is the emphasis in that statute.

 

      So we're here now talking about this problem of statutory authority. And so the first question is why does it matter? What is the problem? And we'll start with just reminding ourselves what the Supreme Court has told us, and the Supreme Court has said, "An agency literally has no power to act unless and until Congress confers power upon it." And that was in 1986 in Louisiana Public Service Commission and then more recently in City of Arlington, which is a very off-sited case where Justice Scalia explained that both agencies' power to act and how they are to act is authoritatively prescribed by Congress.

 

      So we can't avoid the statutory authority question. It's paramount and really the starting point. So what would we -- the beginning of our analysis of that question is let's look at the executive order itself and say okay, what statute does it rely on as its basis? And immediately, our problem begins because the executive order itself identifies no statutory basis. The 1967 amendment to Executive Order 11246 that added sex as a protected classification again doesn't reference any statute as its basis. The only statute referenced is Title VII of the Civil Rights Act of 1964.

 

Then in 1979, in development of this question, the Supreme Court addressed it fairly directly and was, in the context of Chrysler v. Brown, then Justice Ranquist was writing for a unanimous court in evaluating several of the arguable statutory basis for 11246 and walked through what those were.

 

So for Title VII, the Court and Justice Ranquist indicated that it contains no substantive delegation to the President and therefore can't serve as a statutory basis for 11246. The Court also said the Title VI of the Civil Rights Act is not a basis for 11246 because 11246 contains no provision for congressional review which is part of the requirement under Title VI.

 

The Court also looked at the Federal Property and Administrative Services Act of 1948. It's often called the Property Act or the Procurement Act, and that statute really tends to be the one that OFCCP historically has used, DOL historically has used as the basis for its authority. And that authorizes the president to issue directives for the purposes of obtaining economy and efficiency in federal procurement.

 

And the Court looked at that, the Supreme Court in Chrysler v. Brown, and Justice Ranquist pointed out that nowhere in the act is there any specific reference to employment discrimination. So ultimately, after reviewing these various authorities and some others I didn't mention, the Court concluded that the statutory basis for Executive Order 11246 is "somewhat obscure."

 

Now, it's important -- so it really didn't completely answer the question and say look, there is no statutory basis. But it did have some important additional rulings where the Court very much called in to doubt the different types of statutory grounds that people have cited up to that point.

 

One of the important rulings the Court identified was it rejected a compatibility argument which is the idea that any regulatory enforcement position that's merely compatible with what one might deem a reasonable anti-discrimination regime is thereby automatically authorized just based on the mere compatibility. And the Court said no, that's not the way it's going to work because the statutory authorization is obscure. You really need to have a basis for each regulatory position you take, and that position has to find itself as being reasonably contemplated by some alleged grant of statutory authority.

 

And the test of the Court articulated is, "What is important is that the reviewing court reasonably be able to conclude that the grant of authority contemplates the regulations issued." This holding of Chrysler v. Brown does seem to foreclose what is a common deal argument made even to this day, which is a two-step argument that well, all I need to do is show 11246 is generally authorized. Then anything that DOL and OFCCP does in implementing 11246 in terms of its regulatory implementation policies, that doesn't require any question of statutory authorization. It's just like once 11246 is generally authorized, that serves as a blank check for anything we do.

 

There's a number of practical applications of continuing importance regarding this problem with OFCCP's statutory authority. And I'll mention two, and then turn it over to Kara to talk about another important aspect. The first one is just the authority issue, legislative rules establishing substantive discrimination standards with the force and effect of law.

 

And what we mean by substantive discrimination standard is something that is opposed to rule governing agency procedures. An example would be whether employees are similarly situated for purposes of raising an inference of compensation discrimination. What is your standard for that? Does OFCCP have the authority to issue a legislative rule defining who are similarly situated employees for purpose of raising an inference of compensation discrimination?

 

What's curious about the situation is that Congress expressly withheld that power from EEOC as the Supreme Court has recognized in a number of cases. And this recently was applied in 2019 in the Fifth Circuit where the Fifth Circuit invalidated the EEOC criminal background guidelines precisely because there wasn't -- because under Title VII, Congress withheld the power from EEOC to promulgate legislative rules.

 

However, on the other hand, OFCCP has said in its regulatory actions that it does have the power to issue substantive discrimination standards as interpretations of the non-discrimination provisions of 11246 and that those would be legislative rules that have the force and effect of law. So it's curious that Congress expressly withheld that power from EEOC but by mere implication granted that broad power to OFCCP versus, for example, the structure of Title VII which is the federal courts are first to decide and define those discrimination standards interpreting the text of Title VII.

 

It's also an odd position because we know that interpretations of statute can qualify for Chevron-Mead deference. But interpretations of executive orders have historically received only Seminole Rock or Auer deference and you could look at Udall v. Tallman Supreme Court case in the '60s to understand that. And it's been applied in several cases since then. And we also know more recently from the Mortgage Bankers v. Perez case that Auer deference doesn't mean that the text being interpreted has the force and effect of -- or that the interpretation has the force and effect of law.

 

And the Supreme Court in a footnote in Mortgage Bankers expressly disclaimed that. The type of deference that is being granted in now Kisor deference is not deference to a text that has the force and effect of law unlike Chevron or Mead deference. And that is important to understand. So it's odd how you get to the point that interpretations of an executive order, 11246, then can have the force and effect of law.

 

The second application I would reference before turning it over to Kara is just the statute of limitations. So Congress has expressed a very specific statute of limitations structure in Title VII that's focused on prompt notice to the employer of discrimination allegations. And that's been ruled to apply both to EEOC when it uses commissioner's charge and EEOC in pattern of practice actions.

 

And the Title VII statute of limitations is focused on the charge of discrimination in relation to the alleged adverse employment action and you can seek to remedy an adverse employment action generally only if the action occurred within 300 days of the filing of the charge, whether that's an individual charge or an EEOC commissioner's charge. That's more self-directed.

 

Now, OFCCP, by contrast, has asserted its actions, its audits, and its subsequent enforcement actions are governed by literally no statute of limitations. So it argues that it can conduct broad audits and then notify an employer of an allegation of discrimination many years after the employment decisions or actions took place.

 

Now, OFCCP has been successful in avoiding this issue for, really, 40 years of administrative action. And there's a variety of things that have allowed that to take place that one could generalize as the reason we're not seeing the development of any authority by the federal courts in the OFCCP space under 11246. One of those -- and I'll list several different things here before turning it over to Kara with regard to why these issues are not getting keyed up for federal court review.

 

Number one, DOL ALJs are generally reluctant to grant employers motions to dismiss or for summary judgment to avoid a full merits hearing. And the ALJs have even ruled the Twombly-Iqbal minimal plausibility standard doesn't even apply to OFCCP cases on a motion to dismiss. Then there's no interlocutory appeal that's available for the employer to go the ARB or the Secretary of Labor from those ALJ denials on motions to dismiss or motions for summary judgment.

 

DOL has been very successful historically arguing against immediate judicial review under various doctrines such as exhaustion, finality, ripeness, and other similar doctrines where the courts have pushed things back to the administrative process. And then OFCCP is able to impose significant cost in defending these cases in terms of attorney's fees and experts' fees that really aren't recoverable in any way even if the employer prevails.

 

So for the employer to get to federal court to raise something at federal court, it has to endure the entirety of the administrative litigation process that can take 10 years and then before it can ever get into federal court. And DOL has kind of flip flopped a lot between what it tells the administrative tribunals about the fact -- the certainty that its position is that the well-established DOL position is that there is no governing statute of limitations.

 

Then when it gets into federal court, it often will say well, no, you need to have exhaustion because we haven't had a final ruling on that issue. And they've been able to do that dance for about 40 years to avoid having a federal court even substantively look at that question about whether there is a statute of limitation. Pretty extreme position to say that a claim is not governed by any statute of limitations at all. That's fairly foreign to our jurisprudence. So that kind of is a pretty extreme position, but it's never been decided in 40 years. And it's the currently operative position in the administrative tribunal.

 

So let me turn it over now to Kara to talk about another example where the statutory authorization issue comes up. Kara?

 

Kara Rollins:  Thanks, Bill. That was an excellent background. So I'm going to be talking particularly about what's going on with Oracle right now. Some of you might have seen some chatter last week that Oracle actually won before the ALJ, which has announced a point. Winning in front of an ALJ against an agency is an incredibly rare occurrence, especially in high stakes administrative adjudications.

 

      So this case is particularly interesting, one, because Oracle ended up winning at the ALJ level but also because Oracle ended up instituting a district court case challenging constitutional authority, statutory authority for OFCCP's enforcement regime.

 

      As Bill was talking about the history, I wanted to just lay out the background of the Oracle case, both in the administrative realm and in the district court case. But one of the things that we think about that makes this case particularly interesting to me is that we here at NCLA look at agency adjudication, particularly in light of how those agency adjudicatory processes and agency enforcement actions deprive people of their civil liberties.

 

      Anything that you can think of in terms of critiques about agency adjudications also applies to OFCCP actions, with the additional issue of its dubious statutory basis. So, as Bill mentioned, midnight lawsuits, these are lawsuits typically filed on the eve of a transfer of power between administrations, which was the case with Oracle.

 

      We talk about issues with administrative law judges, removal considerations, the other issue that they work for the agency so you're in an adjudicatory position where two-thirds of the people in the room all work for the same agency. And that has some fundamental fairness issues that arise with that.

 

      There's also denial of due process, the right to an independent adjudicator, access to Article III courts, lack of immediate availability of judicial review. That's something that Bill talked on. Because of the system that's been setup, if you have to go to the ALJ, then you have to go to the ARB. And then after the ARB, there's now, as of last spring, discretionary review by the secretary. And then, and only then, do you get to go to federal court and have an independent judge look at this issue.

 

      Bill mentioned this is something that can take decades in some instances. And most contractors or most agency enforcement targets just don't have the ability to sustain litigation for that long.

 

      And then the final is, and this is a related issue in terms of timing, is that there's the same agency adjudication problem that occurs that litigation practices are somewhat inherently coercive. You're talking discovery requests, high fines and fees. In the case of Oracle, the initial agency adjudication, we've called for something in the realm of about $400 million in back wages, or that was the initial allegation.

 

      Oracle only does about $100 million in government contracts. So you're talking about a penalty that's four times the amount of the initial contract at issue that allow OFCCP to look at this in the first instance. So the enforcement against Oracle began in 2014. And it went through an internal audit process investigation, discovery demands.

 

And then around the time around the 2016 presidential election, and this is all from Oracle federal district court complaints. It's all public information, but they talk about how the discussion with the agency broke down. And the administrative complaint was filed only three days before President Trump was sworn into office.

 

      And that's where we talk about midnight lawsuits. These, on the way, out the door, we're just going to get one last one in. And so Oracle's been citing that in the agency, since January of 2017, and then simultaneously, last year in November, Oracle filed a case. It's Oracle America v. Department of Labor in the District of Columbia and challenging essentially the entire structure of OFCCP's enforcement regime under 11264.

 

      It gets a little messy. There's a couple of interveners, Communications Workers of America, United Steelworkers filed motions to intervene and motions for summary judgment, government file motions to dismiss. There's several amici, including New Civil Liberties Alliance, on both sides of these issues.

 

And I do recommend, folks who are interested in this, to seek out the briefing in that. There's some excellent briefing and background information, particularly, I like to point out, there's a CATO U.S. Chamber NFIB WLF brief that talks a lot about what this process really looks like for enforcement targets. And you can get a real sense of what the coercive nature of this is and how enforcement targets don't really have a lot of power on their side to do anything about it. And I think they'll hint that this -- one of the responses that you get from the government is well, that's just the cost of contracting, where you know the terms coming into it. And I think that when we start considering that in light of dubious statutory authority, that argument breaks down a little bit.

 

      So turning more towards the nature and the challenges, one of the big points that we talk about is does 11264 and its featured subsequent executive orders have any authority whatsoever? My answer to that is I believe no. I don't believe its Procurement Act can support it. I don't believe that subsequent executive orders amending and modifying it do any substantial justice to the argument that the Procurement Act forms a basis of statutory support.

 

      But there is a couple of interesting nuances in the history of the amendment that kind of point to that obscure nature of the statutory authority that Bill had mentioned. In 1977, the basis of the apparatus as we know it was formed through a final rule. And if you look at how that rule is structured, it tracks very closely to two statutes that OFCCP also administers. And that’s the Rehabilitation Act and the Vietnam Era Veterans' Rehabilitation Act.

 

And I don't think it's any consequence, or any coincidence rather, that after they were given the statutory authority to enforce programs under those two statutes, that they then created another enforcement regime under a final rule that looked substantively the same.

 

      And I think that that's one of the things that we start looking at is their statutory authority for this. It becomes curious that Congress was able to setup a system for enforcement of these two issues and remain silent on what an enforcement apparatus looks like under the executive order.

 

      And so one of the things to think about is how these developed over time, and Bill again touched on it a little bit, but as the executive orders were amended, there's kind of a mixed history of whether or not there was any statutory authority cited. Under the Bush administration, there were protections added for religious practices and peoples' religious identity. That seated a subsection of the Procurement Act.

 

      And then during the rule implementing that, they stated no authority. And you see that pattern occur in the Obama administration too. They amended the executive order by an additional executive order and then the final implementing rules are silent on what their statutory authority is. Actually, until 2016, no final rule related to OFCCP's enforcement in this area under the executive order ever cited a single piece of statutory authority.

 

      I know that sounds like a semantics argument, but I do think it gives at least force to the argument that there could be no authority or that the agency didn't think it was necessary to -- or I should say, that the agency thought it had the power and authority to do it and then didn't state the statutory authority. It thought it was fully enveloped under the executive order.

 

      Trying to go through my notes. And so where we stand now, as I said, Oracle won of these adjudications before the OFCCP ALJ. And they obviously, as I mentioned, this then goes into exceptions and additional reviews inside and challenges in the agency, see they move froward. Briefing, I believe, is near complete in the federal district court case. But it remains to be seen how that fight will settle out.

 

      Two other things that do come up in the district court case that are not at issue in the agency adjudication are the issues of ratification and inherent executive power. And ratification, to an extent, relates to what I was just mentioning about the idea that this has changed overtime and whether or not that there's statutory authority for it.

 

Department of Labor's position ends up being in the district court case that while Congress has amended certain things or Congress has been silent over time or that Congress has provided general funds and appropriations, and all of that leads to an implicit ratification of congressional authority.

 

      I'm not convinced by that argument. I think that that's a real tenuous argument to make, and if that's the fallback argument, I think that the agency's in a rough position because going back to just that basic analysis of agencies cannot do anything unless Congress gives them the power to, I don't think an implicit ratification of an enforcement regime could ever be sufficient.

 

      And the other challenge that currently were brought up is that there is an implicit authority here. And, again, I'm not convinced -- or I should say inherent executive power. Again, I'm not really convinced by that argument either. They couch it in the terms of well, the president has an inherent right to contract, and this is all just part of that. As Oracle answered, that's not a basis that was ever given in any of the rulemakings developing this or amending this infrastructure over time.

 

      So I think that the Department of Labor has an uphill battle in defending this. I'm not saying it's a clear win either way, but I do think that, as Bill said, this issue doesn't get before the courts very often. Certainly, these particular issues regarding statutory authorization, haven't really been squarely in front. The question hasn't been asked to a court. And I think that that's where Department of Labor is in a rough position because they've never had to defend this in front of an independent judge.

 

      So, I don't know, Mark. I think maybe we could be ready for questions. I think we're getting up there in time.

 

Mark Chenoweth:  Yeah. Let me throw out a couple questions. But before I do, Bill, I just wanted to ask you. I know you've been following the Oracle case closely as well and just wondered if you had any takeaways from Oracle's recent victory in front of the ALJ that you'd like to share with today's audience.

 

William Doyle, Jr.:  Well, I think -- can you hear me okay?

 

Mark Chenoweth:  Yes.

 

William Doyle, Jr.:  Okay. I think that the ALJ's decision in Oracle was quite thoughtful and careful. It spans some almost 300 pages of analysis. On the law, I thought that the ALJ did a good job of addressing the key issues that I've been kind of saying is the nature of the law for many years. And the first is basically the key concepts that were implemented by OFCCP in its systemic compensation discrimination standards that I worked on when I was at DOL and were implemented and adopted through notice and comment procedures were adopted in 2006, that those -- that the requirement is that you have to compare similarly situated employees. And they have to be factually similarly situated based on their actual job duties and responsibilities and the skills and qualifications needed for the role.

 

Also the emphasis on the importance of anecdotal evidence and the consequences of not having any anecdotal evidence. And anecdotal evidence being not just generalized statements of unfairness but testimony or evidence that leads to an inference that an individual was subject to the discriminatory pattern or practice that you're talking about.

 

      And the second larger point that I thought was really important, and I've written about this extensively, relates to the implications of the Supreme Court -- Justice Scalia's holdings in the Dukes litigation, Wal-Mart v. Dukes, that the Supreme Court decided in 2011 that was, really, seemed like it was a Rule 23 commonality case but really, because of the overlap with the merits, the analysis that Justice Scalia offered really went to key holdings about the pattern and practice framework and what is needed to show a pattern or practice of paid discrimination.

 

And one of the aspects was picked up on Oracle is just the idea that there's not really any glue that holds the various employment decision that were challenged in Oracle together that's like the common practice or policy that you're alleged is the mechanism for the systemic discrimination. And I think that was a critical recognition by the administrative law judge. And it was correct in that regard.

 

      So I thought it was a very well -- that ALJ did a -- really earned his government salary and then some with the effort that he put into that case and the thoughtful analysis that he engaged in, painstaking analysis. And he was extremely fair-minded, gave OFCCP every benefit of the doubt in considering their arguments and -- but rejecting them ultimately. So I thought it was a tribute to the best of administrative adjudication and is in contrast to some other situations. I thought it was quite a well-reasoned decision.

 

Mark Chenoweth:  It'll be interesting to see if the ALJ keeps his job for very long if there's a turnover in administration come January.

 

      But the other question I had for you, Bill, was you talk about OFCCP claiming this ability to issue legislative rules. And yet, those rules overlap substantive discrimination standards under Title VII that are being adjudicated in federal court and so forth. It just seems like there's a lot of opportunities for conflict between the substantive standards OFCCP is trying to enforce in a federal contracting context and the substantive discrimination standards that federal courts or DOJ is enforcing under Title VII outside of the federal contracting context. And just wondered if is that the case, and can you speak to that concern a little bit if so?

 

William Doyle, Jr.:  Yes. There's definitely opportunity for conflict. And historically, that has actually occurred and is one of the reasons why the idea of a -- if the agency could promulgate legislative rules with the force and effect of law would become really problematic in this context. And the historical example relates to Section 703(h) of Title VII, which basically says it insulates bona fide seniority provisions from disparate impact challenges under Title VII.

 

And the Supreme Court decided Teamsters v. United States in, I think, '78, '77-'78 timeframe and ruled that 703(h) does indeed protect bona fide seniority provisions from disparate impact challenges under Title VII. And then OFCCP stepped in and say well, yeah, that's okay for under Title VII, but that's not the way we're going to interpret 11246 and went about trying to challenge bona fide seniority provisions under disparate impact theory.

 

And both the D.C. Circuit and the Fifth Circuit rejected that. The Fifth Circuit first in 1977, shortly after Teamsters, in United States v. East Texas Motor Freight. And then the D.C. Circuit in '81 in United States v. Trucking Management, Inc. And so that's -- and both courts said look, this is kind of a clear conflict and you can't -- the Executive can't try to make unlawful something that Congress has not made unlawful.

 

      Now, that case had talked about insulating bona fide seniority provisions. But I think the same logic would go beyond that just to having different standards under the two laws even where the Title VII doesn't insulate some practices. There's a practical sense of insulation.

 

      For example, if Title VII is applied in a narrower idea of who's similarly situated for pay equity purposes and then OFCCP tries to adopt a broader standard, the OFCCP requirement will seek then to have employers make pay equity adjustments based on race or gender that couldn't survive the Ricci standard of having a strong basis in evidence that the reason you're doing that is to avoid a Title VII violation because it isn't a Title VII violation.

 

So it'd have the executive requiring employers to engage in disparate treatment that would be subject to Title VII scrutiny as being unlawful under Ricci. And that's something that I think Title VII has no generalized safe harbor for OFCCP settlements or OFCCP claims. So somebody could settle with OFCCP and be implementing their settlement and be subject to a disparate treatment claim under Title VII.

 

Those aren't frequent, but certainly, the generalized point is you can't avoid the conflict just by saying well, it's not something that Title VII insulates as an employment practice. You still would invariably get to the idea of providing race or gender pay adjustments or hiring or whatever the case might be where Title VII wouldn’t require that.

 

Mark Chenoweth:  Nick, I think we're at -- thanks, Bill. That's great. And Nick, I think we're ready to open it to audience questions. And I can throw a question out to Kara while folks are hopping on the line. But I thought I'd give you an opportunity to ask the audience for questions.

 

Nick Marr:  Okay, great. Thanks, Mark. Let me make a quick announcement and then we'll send it back to Kara. So, okay, Mark, send it back to you.

 

Mark Chenoweth:  Okay. Yeah. Well, while people are queueing up there, Kara, I just thought you might want to speak to this question. It seems to me that the OFCCP adjudication regime is quite opposed in many aspects to the executive orders that President Trump signed last October trying to reign in the administrative state a little bit. And I just wondered -- I know you had followed those EOs and enforcement of those EOs closely -- or rather implementation of those EOs closely. I thought you might want to speak to any conflicts you see there.

 

Kara Rollins:  Yeah. I mean, I think the main conflict that we see -- and I want to add in too, what you're saying is all through 13924, which the President issued this spring, is collectively these three executive orders, 13891, 13892, and 13924, all speak broadly on two requirements of government to make adjudicative processes transparent, fair, and making sure they're acting within the color of the law.

 

      And I think that, again, given the dubious nature of the statutory authority for OFCCP, it really puts them at odds with the executive orders, particularly enforcement. About two or three weeks ago, OIRA issued a memo regarding implementation of Executive Order 13924, which I think sets forth some general principles and policy considerations that agencies should be making when they're doing enforcement. And I think one of them that they say is applying limiting principles for the duration of investigation such as ending an investigation with a defined period of time and applying similar thoughts to how long agency adjudications take.

 

      As we mentioned earlier, sometimes it can take 10 years to go through this process. In Oracle's case, just to get through the first round of adjudication, it's been three years from the first enforcement letter -- or well, I should say, three years in the adjudication process, but it's been six years from the first enforcement letter to winning at the ALJ level.

 

      And I think these are the types of considerations that agencies should be making but the issue is implementation within the agencies and really holding people internally to account for these policy choices that create, as I said, more transparent and fair administrative adjudication.

 

Mark Chenoweth:  Nick, do you have a question in the queue?

 

Nick Marr:  We actually don't at this time. Mark, do you have another question for our speakers? Oh, we actually do have one.

 

Mark Chenoweth:  Oh, okay.

 

Nick Marr:  We just got one. We'll go to it now.

 

Caller 1:  Can the government moot the Oracle complaint by not appealing the ALJ's decision?

 

Mark Chenoweth:  Bill, do you have a thought on that?

 

William Doyle, Jr.:  I don't think the government can moot the -- can you guys hear me okay?

 

Mark Chenoweth:  Yes. 

 

William Doyle, Jr.:  Okay. I don't think they can moot it by not appealing it because the action in the district court was pretty clear that it's designed not to be something that would interfere, or it's not supposed to be part of the pending administrative action. And Oracle was also subject to the same enforcement regime in other audits or other future activities, so it's a regulated entity. I think it still would have a basis to maintain that action.

 

      I have no doubt that DOJ might argue for mootness, but I think that they would still be able to maintain the action notwithstanding that there wasn't an appeal. Although, it could be -- that's obviously a doctrine that the courts would decide in that case. And there might be some basis for that worry that the court would do it that way, that there's not a pending adjudication that's creating a problem for you. What are the odds that you would get a future adjudication? They're not frequent. So one could see a court jumping on that and trying to drop the case from its docket.

 

As Kara indicated, it's a challenging case because you have what appears to be a pretty clear deficit of statutory authority in a time when the Supreme Court is telling us that that's paramount. And you have this long-standing civil rights enforcement program, and so I think a lot of judges -- in other words, the consequences of the decision, at least from some of the intervener's arguments, are broad. I don't think they're quite as broad as been made up.

 

If you think about the idea of OFCCP having to litigate in federal court, that's the way Title VII is enforced. And the federal courts have been quite diligent in enforcing Title VII. So I don’t think that's really a big -- a significant loss. But it could have broader -- if the court went beyond the aspect that Oracle is challenging and said not only that that is invalid, the administrative adjudication process is invalid but went further and said oh, there's no statutory authorization for any of this and it's gone, then that would certainly have much broader implications that would likely trouble a jurist looking at this case.

 

Mark Chenoweth:  But if Congress --

 

Kara Rollins:  Then that -- oh. I was just going to say --

 

Mark Chenoweth:  Go ahead, Kara.

 

Kara Rollins:  -- echoing those statements, the existence of the administrative adjudication obviously plays a role in the complaint. But I think as Bill was hinting at is as long as Oracle remains a government contractor with these provisions in their contracts, then they're subject to the enforcement regime.

 

Whether or not a future enforcement will occur, isn't necessarily clear, but I do think that it's enough to keep it from getting mooted. But I could also see a federal judge looking at this and saying well, is there really justiciability issue? So I think it could go either way. My inclination is to say that because they continue to be government contractors, the mootness concern is somewhat reduced.

 

Mark Chenoweth:  Is there another question, Nick?

 

Nick Marr:  Not at this time.

 

Mark Chenoweth:  Then, Bill, I was going to follow up on what you were saying and just ask if a court were to strike down the OFCCP -- I started to say in its entirety, but I think there's no question that it would uphold its ability to continue adjudicating as Kara alluded to in veterans' cases and disability cases. But if the other aspects were struck down, my assumption is that Congress would move pretty speedily to restoring that or providing statutory authority for at least some of what OFCCP is doing. But I wonder if maybe it would deny OFCCP substantive rulemaking authority much as it has denied that substantive rulemaking authority to EEOC, for example.

 

William Doyle, Jr.:  Yeah. I think that that would be the likely response that Congress would move to provide statutory authority but do so in a measured way, similar to the compromises that are embodied in Title VII. And a lot of the questions regarding the interplay between Title VII and the executive order could be addressed in that -- or sensibly would be addressed in that.

 

So it is true that there could be a positive aspect out of a ruling like that. It's not just like the end of the line. It's the basis to throw things over to Congress to create and work among the various parties, which is what our legislative is supposed to be doing after all, is come, perhaps hold hearings, understand what the different perspectives are of employers and civil rights groups, try to come up with something that makes sense, balancing all those sometimes competing but also sometimes very much aligned interests to develop something that is reasonable and solves all these questions in the way that everybody can view as reasonable and sensible.

 

      So I definitely think I agree with that perspective that that kind of a ruling is not the -- the sky is not falling down. It actually has opportunities for legislative action where this actually should take place and should be addressed in a coherent way that takes into account the very legitimate and valid concerns of many different stakeholders in this issue.

 

Mark Chenoweth:  Kara, if there are small government contractors out there who feel like their civil liberties are being violated by this process, would you be interested in hearing from them at NCLA?

 

Kara Rollins:  Oh, for sure. This is the exact type of case that we look for. And as Bill mentioned because of the amount of time and effort and money that goes into this, what you tend to find, I see this across agency adjudications, when small businesses are targeted, it becomes a business decision. To stay in litigation is incredibly expensive, and that's where organizations like NCLA can step in and help and further the cause of defending individual liberties and rights while also breathing life into businesses who have been harmed in the enforcement process.

 

      That's something that we do every day here. I love working with small business owners because they often put their life, their livelihood on the line. And to have the government and the full weight of the government come after them is incredibly scary. And to be able to be a part of helping ease them through that process, that's why I wake up every morning. So if there are folks out there that have come into this issue or know somebody that's come into this issue, we at NCLA would be more than happy to talk to them.

 

Mark Chenoweth:  And one thing I left out of Kara's background at the beginning is she used to be at NFIB as well. So she knows the small business community very well.

 

      Well, Nick, I think we'll leave it there. Speaking for myself, I think it's surprising that an executive order, 11246, dating from 1965 can have such a long life without every anyone pointing at it and saying hey, the emperor has no clothes. There is no statutory authority for a lot of what OFCCP is doing. And yet, that is the situation I think we find ourselves in. And if and when this issue reaches the U.S. Supreme Court, I think this agency could be in for a rude awakening.

 

Nick Marr:  Thanks, Mark, and thank you all of you for calling in today. And on behalf of The Federalist society, I want to thank you, our experts, for the benefit of your valuable time and expertise this afternoon. For the audience, we welcome listener feedback by email at [email protected]. And as always, be keeping an eye on your emails and on our website for announcements about upcoming Teleforum calls. We have a few more scheduled for the rest of the week so hope to see you all call back in. Thank you all for joining us today. We are adjourned.

 

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Dean Reuter:  Thank you for listening to this episode of Teleforum, a podcast of The Federalist Society’s practice groups. For more information about The Federalist Society, the practice groups, and to become a Federalist Society member, please visit our website at fedsoc.org.