RICHARD J. LEON, United States District Judge.
On October 31, 2019, Plaintiffs Everglades Harvesting and Hauling, Inc. ("Everglades"),
The "H-2" temporary foreign worker program dates back to the original enactment of the Immigration and Nationality Act ("INA") in 1952. See Pub. L. 82-414 § 101(15)(H)(ii) (June 27, 1952).
8 U.S.C. § 1101(a)(15)(H)(ii)(a).
Pursuant to the statutory directive above, the Department of Labor ("DOL") has promulgated a number of different definitions of "agricultural labor or services" over the years. See, e.g., 52 FR 20496 (June 1, 1987); 73 FR 8538, 8555 (Feb. 13, 2008); 73 FR 77110, 77212 (Dec. 18, 2008); 75 FR 6884, 6887-6889 (Feb. 12, 2010). The current version of the regulations, adopted in 2010, almost mirrors the
20 C.F.R. § 655.103(c) (emphasis added). As relevant here, the definition of "agricultural labor" under IRC § 3121(g)(1):
26 U.S.C. § 3121(g)(1). The DOL has not adopted any of its own regulations further elaborating on the meaning of IRC § 3121(g)(1), but the Department of the Treasury has:
26 C.F.R. § 31.3121(g)-1(b).
In addition to these statutes and regulations, the DOL's most recent pronouncement regarding the H-2A program is a document containing a series of frequently asked questions ("FAQs") and responses, which DOL distributed on October 23, 2019 in response to the controversy that gave rise to this case. See 2010 H-2A Final Rule FAQs: Round 14: H-2A Definition of Agricultural Labor or Services ("H2-A FAQs"), Oct. 23, 2019 [Dkt. #1-6].
In order to obtain an H-2A Temporary Labor Certification ("TLC"), an employer must go through a multi-step application process, the relevant parts of which can be summarized as follows: First, the employer submits a "job order" to a state agency between sixty and seventy-five days before the labor is needed. See 20 C.F.R. § 655.121(a). The state agency checks for
When their application for an H-2A TLC is denied, an employer has seven days to request either an expedited administrative review by, or a de novo administrative hearing before, an Administrative Law Judge ("ALJ"). See id. §§ 655.164(b), 655.171. If the employer does not request such a review within seven days, the CO's decision is final. See id. § 655.164(c). If the employer requests an expedited review, the ALJ will review the written record and any written submissions within five days of receiving the administrative record and either affirm, reverse, or modify the CO's decision, or remand to the CO for further action. See id. § 655.171(a). If the employer requests a de novo hearing, the ALJ will schedule a hearing for within five days of receiving the administrative record, consider any new evidence, and render a decision affirming, reversing, or modifying the CO's determination, or remand to the CO for further action, within ten days of the hearing. See id. § 655.171(b). The ALJ's decision after either an expedited review or a de novo hearing is the final decision of the Secretary. See id. § 655.171.
Plaintiffs Everglades and Statewide are agricultural labor contractors ("ALCs"), also known as H-2A Labor Contractors. In laymen's terms, these ALCs contract with growers to provide them needed labor and then use the H-2A program to hire foreign workers to complete this labor. More formally, DOL regulations define an ALC as:
20 C.F.R. 655.103(b).
Plaintiff Everglades was founded in 1991 to provide harvesting and hauling services
Meador Decl. ¶ 4; Decl. of Brian D. Pasternak ("Pasternak Decl."), Gov'ts Opp'n to P.I. Mot. ("P.I. Opp'n") [Dkt. #10], Ex. 1 ¶ 17(a), (c), (d).
This year, on August 16, 2019, Everglades applied
As a result of this decision, Everglades represents that it is losing $86,000 per week, totaling $430,000 at the time of plaintiffs' reply brief, and that it expects to lose over $4.7 million dollars over the course of this season. Meador Reply Decl. at 2. This loss represents over 21% of Everglades's total projected revenue. Id.
Plaintiff Statewide contracts with growers to provide labor to harvest crops and transport those crops to off-side storage and processing locations. Compl. ¶ 14. DOL has certified two applications filed by Statewide for H-2A workers in connection with truck driving positions over the past two years:
Id.; Pasternak Decl. ¶ 17(e), (f). When Statewide applied for a TLC for three truck drivers for this season, however, its application, like that submitted by Everglades, was denied. See Pasternak Decl. ¶ 19.
Sugarland Ag, LLC ("Sugarland") is not a named plaintiff in this case, but it is a NCAE member and therefore falls within the scope of plaintiffs' proposed injunction. P.I. Reply at 10; Decl. of William Wilkes, II ("Wilkes Decl."), P.I. Reply Ex. 3 [Dkt. #13-1] ¶¶ 1-2. Sugarland was started by the Wilkes family in May 2018 to provide sugarcane harvest hauling and other services to Florida sugarcane growers through a contract with the Sugarcane Growers Cooperative of Florida ("SCGC"). Wilkes Decl. ¶ 1. DOL certified one previous application filed by Sugarland for fifteen drivers to haul sugarcane during the 2018-2019 season. Id. ¶ 4. Based on the successful completion of that work, Sugarland "substantially increased [its] scope of planned operations" for 2019-2020 and took on debt to finance the planned expanded operation. Id. ¶¶ 5, 7. As part of this expansion, Sugarland applied for a TLC for sixty-five drivers to haul sugarcane during 2019-2020. See id. ¶ 5. DOL denied Sugarland's application in September 2019.
Plaintiffs contend that each of these H-2A ALCs (and one other, Fresh Harvest) will suffer irreparable injury if injunctive relief is denied by this Court.
The factors a court must weigh in deciding whether to grant a preliminary injunction are familiar: (1) whether the plaintiffs have a substantial likelihood of success on the merits; (2) whether the plaintiffs would suffer irreparable injury in the absence of preliminary relief; (3) whether the balance of equities tips in their favor; and (4) whether the requested injunction would further the public interest. Guedes v. Bureau of Alcohol, Tobacco, Firearms and Explosives, 920 F.3d 1, 10 (D.C. Cir. 2019). The last two factors merge when the Government is the opposing party. Id. A preliminary injunction is "an extraordinary remedy that may only be awarded upon a clear showing that the plaintiff[s] [are] entitled to such relief," and the plaintiffs bear the burden of persuasion in seeking preliminary relief. Id. (quoting Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 22, 129 S.Ct. 365, 172 L.Ed.2d 249 (2008) (internal quotation marks omitted)).
At first blush, it might appear that plaintiffs seek injunctive relief in the form of an order from this Court directing the DOL to immediately grant TLCs to those falling within the scope of its proposed relief. But as the plaintiffs themselves recognize, such an order is not, for obvious reasons, an option. County of Los Angeles v. Shalala, 192 F.3d 1005, 1011 (D.C. Cir. 1999). Instead, they seek a more appropriate remedy: remand back to the agency of those applications that were filed by ALCs that had previously received TLCs and that were filed this year before the DOL released its FAQ document in late October. In essence, they seek a reevaluation of their applications under the DOL's "old" standard, which had previously resulted in the applications being granted. The DOL, not surprisingly, argues strenuously that there is no "old" standard and that plaintiffs are not entitled to TLCs under any reading of the INA and its applicable regulations. Although I agree that there is no coherent, clearly designated, "old" standard, I disagree that there is no reading of the law under which the plaintiffs could be granted TLCs. After all, similar applications by these same companies had been granted on numerous occasions in prior years. As I explain below, I believe the plaintiffs have the better of the legal argument here, especially in light of the reliance interests stake. Therefore, I will remand this limited group of applications back to the DOL for reevaluation.
Plaintiffs underlying suit seeks relief under the APA, which requires a court to set aside agency action it finds to be, among other things, "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; ... in excess of statutory jurisdiction, authority, or limitations; or short of statutory right; ... [or] without
The DOL essentially contends that under the INA and its regulations, hauling activities performed off the farm site cannot be "agricultural labor or services" unless performed in the employ of a farmer. See P.I. Opp'n 10, 15, 23; Pasternak Decl. ¶ 10. It further contends that H-2A workers may perform only agricultural labor or services and that any non-agricultural labor job duties render a job ineligible to be filled by an H-2A worker. See P.I. Opp'n 7. Plaintiffs disagree with both contentions, although their arguments have evolved over the course of the briefing in this case. First, plaintiffs contend that the term "agricultural labor or services" is properly read to include hauling off the farm site as long as it is performed incident to harvesting and even when done by ALC employees. See Compl. ¶ 20 (relying on the term "including" in the INA); Mem. in Support of P.I. Mot. [Dkt. #6] at 4-5 (repeating argument based on "including" and adding arguments about inadequate notice and reliance interests); P.I. Reply at 2-8 (repeating notice and reliance arguments and adding argument based on the IRC definition of agricultural labor). Second, plaintiffs contend that the DOL has misinterpreted Congress's intent in separating the original H-2 program into separate agricultural (H-2A) and non-agricultural (H-2B) programs. P.I. Reply at 3.
Plaintiffs, of course, bear the burden of persuasion.
Second, the plaintiffs contend that the DOL misinterprets congressional intent in the way it imposes a rigid separation between agricultural and non-agricultural labor. This argument, as I understand it, is that the inclusion of some job duties that do not constitute agricultural labor should not, at least automatically, defeat plaintiffs' applications for H-2A TLCs. See Draft Tr. of P.I. Hr'g 7 ("[T]he work involved some work in the harvest so the same people that are driving would also be part of the harvest crew. The interpretation from the Department of Labor, though, was that they can't leave that farm essentially. They're locked into that parcel of land.").
Before weighing the plaintiffs' construction of the DOL's regulation against its own, however, I must determine how much deference to accord the DOL's interpretation. Here, the reliance interests and lack of prior announcement lead me not to accord Auer deference to the DOL's apparent construction of its own regulation. How so?
The Supreme Court's decision in Christopher v. SmithKline Beecham Corp., 567 U.S. 142, 132 S.Ct. 2156, 183 L.Ed.2d 153 (2012), is instructive in answering this question. There, a group of sales representatives sued their pharmaceutical company employers for failure to pay overtime under the FLSA. See id. at 150-52, 132 S.Ct. 2156. The employers argued that the sales representatives fell under the FLSA exemption for "outside salesm[e]n," under DOL regulations and so did not need to be paid overtime. See id. at 152, 132 S.Ct. 2156. In response, the sales representatives pointed to a recent interpretation by the DOL contradicting this argument. See id. The DOL had announced this interpretation for the first time in an amicus brief filed in a similar case then on appeal. See id. The Supreme Court first concluded that although DOL's regulations were entitled to Chevron deference, the interpretation of those regulations at issue in the case was not entitled to Auer deference. See id. at 159, 132 S.Ct. 2156. Writing for the Court, Justice Alito explained that such deference was unwarranted because:
Id. at 155-57, 132 S.Ct. 2156.
The parallels to this case are undeniable. Here, as in Christopher, the plaintiffs relied on one interpretation of DOL's regulations in organizing their businesses, and here, as in Christopher the DOL announced (the DOL, of course, would say clarified) its much narrower interpretation of its regulations after that reliance had occurred. Indeed, in evaluating the reliance interests at play in Christopher, the Supreme Court found it especially important that "despite the industry's decades-long practice of classifying [outside pharmaceutical sales representatives] as exempt employees, the DOL never initiated any enforcement actions with respect to [these sales representatives] or otherwise suggested that it thought the industry was acting unlawfully." Id. at 157, 132 S.Ct. 2156. And it added that where "an agency's announcement of its interpretation is preceded by a very lengthy period of conspicuous inaction, the potential for unfair surprise is acute." Id. at 158, 132 S.Ct. 2156. The Court quoted approvingly from a Seventh Circuit decision explaining that "while it may be `possible for an entire industry to be in violation of the [FLSA] for a long time without the Labor Department noticing,' the `more plausible hypothesis' is that the Department did not think the industry's practice was unlawful." Id. (quoting Dong Yi v. Sterling Collision Ctrs., Inc., 480 F.3d 505, 510-11 (2007)). All this reasoning applies even more forcefully in the present case, where the ALCs relied not on silence or tacit acquiescence by DOL but on it actually approving their applications year after year after year!
The Court in Christopher also pointed to a policy rationale underlying its decision, warning that the practice of deferring to agency interpretations of ambiguous regulations "creates a risk that agencies will promulgate vague and open-ended regulations that they can later interpret as they see fit, thereby `frustrat[ing] the notice and predictability purposes of rulemaking.'" Id. (quoting Talk America, Inc. v. Mich. Bell Telephone Co., 564 U.S. 50, 69, 131 S.Ct. 2254, 180 L.Ed.2d 96 (2011) (Scalia, J., concurring)). Again, this policy rationale is even stronger here. If agencies can promulgate ambiguous regulations, lull industry stakeholders into a false sense of security by granting years' worth of applications under those regulations, and then suddenly shift gears, deny applications, and claim that the time to challenge the regulation has passed,
Thus, the Court in Christopher declined to grant Auer deference to the DOL's interpretation of its regulation, instead according it "a measure of deference proportional to the `thoroughness evident in its consideration, the validity of its reasoning, its consistency with earlier and later pronouncements, and all those factors which give it power to persuade.'" Id. at 159, 132 S.Ct. 2156 (quoting United States v. Mead Corp., 533 U.S. 218, 228, 121 S.Ct. 2164,
At oral argument, and in the FAQ document it issued last month, the DOL pointed to the text of IRC provision defining "agricultural labor" and Treasury regulations for its argument that plaintiffs' hauling activities are not "agricultural labor or services" within the meaning of the INA and the DOL's regulations. To the extent the DOL argues that any activity incident to harvesting performed by ALC employees (i.e., non-farm employees) is no longer agricultural labor once those ALC employees leave the farm site, I agree. See 26 C.F.R. § 31.3121(g)-1(b)(1) (limiting agricultural labor to "[s]ervices performed on a farm" (emphasis added)). However, to the extent the DOL argues that hauling is not "agricultural labor" even on the farm site, I must disagree in the face of contrary statutory and regulatory language.
The DOL additionally contends that even if ALC employee hauling activities constitute "agricultural labor or services" when on the farm site, H-2A TLCs may only be granted when an H-2A employee's job duties would consist solely of "agricultural labor or services," so the applications were properly denied. See P.I. Opp'n 7. DOL, not surprisingly, repeated this point ad nauseum in its recent FAQ publication. See, e.g., H-2A FAQs ¶ 1 ("Only those duties encompassed by the Department's definition of agricultural labor or services. . . may be included on an H-2A application."), ¶ 2 (answering "No" in response to question "May I include both agricultural and nonagricultural duties on my H-2A application?"), ¶ 3 ("[A]n H-2A application for a job opportunity that contains ... a combination of agricultural and nonagricultural duties, cannot be certified."). And the preamble to the 2010 regulation published in the Federal Register makes the same claim in explaining why the DOL modified the portion of the 2008 regulation defining "agricultural labor or services":
75 F.R. 6888 (Feb. 12, 2010) (emphasis added). But the fact that Congress chose to create separate programs for agricultural and non-agricultural work does not necessarily mean that Congress intended that workers in the agricultural program could not perform any other work.
What's more, an examination of the broader statutory and regulatory scheme suggests that the DOL is borrowing its adherence to a strict bright line between agricultural and non-agricultural labor from the separate and distinct FLSA context. DOL regulations implementing the FLSA have long provided that an employee who would be exempt as working in agriculture under the Act loses that exemption by performing any work not defined as agriculture under the Act. See 29 C.F.R. § 780.11. But the incorporation of the FLSA's definition of agriculture into the INA does not mean that this rigid FLSA rule should also be incorporated. As the Second Circuit once explained in an analogous context involving the NLRB:
N.L.R.B. v. Kelly Bros. Nurseries, 341 F.2d 433, 438-39 (2d Cir. 1965). Rules relating to FLSA exemptions are especially inapplicable here because the FLSA is a remedial statute whose exemptions traditionally have been interpreted narrowly, see A.H. Phillips, Inc. v. Walling, 324 U.S. 490, 65 S.Ct. 807, 89 S.Ct. 1095 (1945); but see Encino Motorcars, LLC v. Navarro, ___ U.S. ___, 138 S.Ct. 1134, 1142, 200 L.Ed.2d 433 (2018) (rejecting this principle), whereas whether a worker performs agricultural labor or not under the INA is subject to no such canon of construction.
To the extent the DOL sought to borrow from a different regulatory framework, the one I would look to here is the IRC and Treasury regulations, as I am examining the INA's definition of "agricultural labor and services" derived from the IRC. In contrast to the FLSA context, where even a de minimis amount of non-agricultural work prevents an employee from being an exempt agricultural employee, in the tax context (indeed, in the same section of the same statute that defines "agricultural labor"),
As such, it seems that there is little reason to accept, and good reason to doubt, the DOL's proffered (but not formally adopted) interpretation that an employer is ineligible for an H-2A TLC if the employer's application includes any non-agricultural job duties. To me, at least at this admittedly preliminary stage, the better reading of the statute and its context allows for non-agricultural work to be included, so long as agricultural work predominates.
The question, then, is whether the six applications at issue in this case would qualify even under a more relaxed standard allowing some non-agricultural work. With respect to Everglades, at least, the answer appears to be yes. See Everglades ALJ Decision at 3 (Everglades represented that "[o]f the estimated hours worked by [its] drivers, 60 percent of their workweek hours takes place on the sugarcane farm property."). And based on plaintiffs' representations to date, I presume the answer will be yes for the other applicants as well. But, as my accompanying order makes clear, the DOL will need to conduct this evaluation for itself.
Plaintiffs allege two types of harm: economic and reputational. To start with the economic harm, each H-2A ALC that has had one of its applications denied for this season faces economic losses that are certain, actual, and imminent.
There is strong evidence to suggest that plaintiffs' businesses will be threatened without injunctive relief. Plaintiff Everglades is facing a loss of more
Moving on to reputational harm, it is unquestionable that plaintiffs will suffer severe reputational harm if they are forced to renege on their contracts with growers, and such reputational harm will almost certainly be irreparable. Courts have recognized that such harm to a business's reputation can constitute irreparable harm sufficient to qualify for a preliminary injunction. See Patriot, Inc. v. U.S. Dep't of Housing & Urban Dev., 963 F.Supp. 1, 5 (D.D.C. 1997) (grating P.I. where plaintiffs "demonstrated irreparable harm in damage to their business reputation"). Here, the structure of the H-2A visa program makes it unquestionable that at least some growers will be unable to find sufficient labor to haul their harvest and haul their crops to market absent injunctive relief.
Once again, the third and fourth factors required for injunctive relief—balancing of the equities and the public interest—merge where a plaintiff seeks preliminary relief against the government. Nken v. Holder, 556 U.S. 418, 435, 129 S.Ct. 1749, 173 L.Ed.2d 550 (2009). Here, these factors weigh very heavily in favor of plaintiffs. As I have explained above, the structure of the H2-A program and its application process effectively requires serious and advanced reliance interests because ALCs must sign contracts committing to provide a certain amount of labor in order to apply for H-2A TLCs in the first place. Where, as here, the state workforce agencies and the DOL have reviewed and approved these applications,
Fortunately, the relief sought here is also very narrowly tailored. The plaintiffs seek only a re-evaluation by the DOL of applications filed before October 31, 2019
The DOL points to this Court's language in a previous case for the proposition that issuing an injunction here would work great harm by subverting Congress's plenary power over the admission of aliens and substituting the Court's judgment for that of the agency Congress chose to handle these matters. See P.I. Opp'n 30. Of course, issuing a preliminary injunction is always a weighty matter, especially when doing so against the Government. But notwithstanding the DOL's claims to be acting pursuant to a clear congressional intent, this claim falls on skeptical ears when the DOL's interpretation here bears such a dubious legislative pedigree. It is ironic, indeed, that the DOL stresses the need for uniformity in the implementation of regulations, when uniformity with years of prior DOL decisions is precisely what plaintiffs crave.
As such, considering the balance of equities and the public interest between reevaluating six applications for TLCs—which will expire in any event in the first half of next year—on the one hand and wreaking havoc with the settled expectations of small businesses who without fair warning to the contrary very reasonably relied on the DOL's past actions on the other, I find in favor of the plaintiffs.
Thus, for the reasons set forth above, the plaintiffs Motion for Preliminary Injunction [Dkt. #5] is GRANTED. A separate Order consistent with this decision accompanies this Memorandum Opinion.
20 C.F.R. 655.103(b).
