Hunton Employment & Labor Perspectives

The Supreme Court’s recent opinion in Securities and Exchange Commission v. Jarkesy (“Jarkesy”) was predicted to spur a wave of litigation challenging the constitutionality of various administrative agency’s civil enforcement powers. In our previous article, we noted that the Office of Federal Contract Compliance Programs (“OFCCP”) may be an agency that faces such a challenge. A complaint filed in the Southern District of Texas by ABM Industry Groups (“ABM”) does just that.

The lawsuit challenges OFCCP’s administrative action against ABM in which OFCCP claimed ABM breached their contract with the federal government by allegedly discriminating against White and Black applicants for janitorial and cleaning jobs. The complaint states that an OFCCP administrative action, where “a single agency is simultaneously prosecuting and adjudicating an administrative complaint accusing ABM of having breached its contracts and seeking, among other remedies, multimillion-dollar damages for the alleged breach,” violated ABM’s constitutional right to a jury trial.

The complaint relies on the Seventh Amendment framework articulated by the Supreme Court in Jarkesy. In Jarkesy, the Court found that the SEC’s action for securities fraud seeking civil penalties mirrored common law fraud, and was akin to a “private right” for which defendants are entitled to a jury trial under the Seventh Amendment.

The ABM complaint analogizes the administrative action against ABM to the SEC enforcement action in Jarkesy. First, the action against ABM is in essence a breach of contract action, which is a common law action and a “private right.” Second, OFCCP seeks money damages, which are a prototypical common law remedy. The complaint thus alleges that the OFCCP proceeding violates the Seventh Amendment and Article III by depriving ABM of its constitutional right to have the claims resolved by a jury in a court of law. 

The ABM complaint further alleges that adjudication of the administrative action by an Administrative Law Judge (“ALJ”) violates Article II of the Constitution. More specifically, the complaint alleges that ALJ’s are Officers of the United States and are improperly insulated from presidential control by two lawyers of for-cause removal protection. This argument regarding ALJs was examined by the Fifth Circuit in Jarkesy, but the Supreme Court did not reach the issue.

Federal contractors should follow the ABM case closely as its resolution may drastically alter the landscape of future OFCCP compliance actions.