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Business Communications, Inc. v. United States Dept. of Education

United States Court of Appeals, Eighth Circuit

December 2, 2013

UNITED STATES DEPARTMENT OF EDUCATION; Arne Duncan, in his official capacity as Secretary of Education, Respondents. Brandon Mueller, Intervenor.

Submitted: March 14, 2013.

Order Granting Rehearing in Part March 7, 2014.

Page 375

[Copyrighted Material Omitted]

Page 376

Stephen James Carmody, argued, Jackson, MS, (Cody C. Bailey, on the brief), appellant.

Jeffrica Jenkins Lee, argued, Washington, DC, (Marleigh Doveron the brief), appellee.

Brandon Mueller did not participate.

Before MURPHY, SMITH, and GRUENDER, Circuit Judges.

GRUENDER, Circuit Judge.

Business Communications, Inc. ("BCI" ) was awarded contracts to install cable in the El Dorado and Beebe Arkansas school districts under the American Recovery and Reinvestment Act ("ARRA" ), Pub.L. No. 111-5, 123 Stat. 115 (2009). Branden Mueller, who worked for BCI on both projects, filed a complaint with the Department of Education (" DOE" ) alleging that BCI had terminated his employment after he complained about not being paid " prevailing wages" as required by ARRA. The Secretary of Education (" Secretary" ) reviewed a report by the Department of Education's Office of the Inspector General (" DOE's OIG" ) and ordered Mueller reinstated with back pay. BCI petitions for review of the Secretary's order, arguing that it was deprived of its Fifth Amendment due process rights because it never was afforded a hearing, either before or after the Secretary's decision. Because we find BCI was deprived of its due process rights, we grant the petition and vacate the Secretary's order.


Congress enacted ARRA as a " stimulus bill" to fund a variety of projects and thereby encourage economic recovery. The statute imposes several conditions on contractors working on ARRA-funded projects, including that they pay their workers the wages " prevailing" among similar workers on similar projects in the region. ARRA § 1606, 123 Stat. at 303. Through § 1553 of the ARRA, Congress sought to encourage the reporting of improper action in connection with ARRA projects by providing whistleblower protections for employees of non-federal employers working on projects funded by ARRA appropriations. Section 1553 prohibits employers who receive stimulus funds from discharging, demoting, or otherwise discriminating against an employee as reprisal for disclosing, among other things, a violation of law, rule, or regulation related to an agency contract. Id. § 1553(a)(5), 123 Stat. at 297. A person who believes he or she has been subjected to a prohibited reprisal may submit a complaint to the appropriate agency's inspector general. Id. § 1553(b)(1), 123 Stat. at 297. Section 1553 specifies the standards for establishing reprisal against a whistleblower. " A person alleging reprisal under this section shall be deemed to have affirmatively established the occurrence of the reprisal if the person demonstrates that a disclosure [covered by § 1553(a) ] was a contributing factor in the reprisal." Id. § 1553(c)(1)(A)(I), 123 Stat. at 299. The complainant may satisfy this burden

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through circumstantial evidence, including evidence that the retaliating employer knew of the disclosure or that the reprisal occurred within a period after the disclosure such that a reasonable person might conclude that the disclosure had been a contributing factor in the reprisal. Id. § 1553(c)(1)(A)(ii), 123 Stat. at 299. The employer, however, has an opportunity for rebuttal, and " [t]he head of an agency may not find the occurrence of a reprisal ... if the non-Federal employer demonstrates by clear and convincing evidence that the non-Federal employer would have taken the action constituting the reprisal in the absence of disclosure." Id. § 1553(c)(1)(B), 123 Stat. at 299.

The agency's office of the inspector general (here, the DOE's OIG) has 180 days to investigate the complaint and make a determination whether the complaint is frivolous or otherwise not actionable and, if not, submit a report to the complainant, the complainant's employer, and the head of the federal agency overseeing the contract.[1] Id. § 1553(b)(1)-(2),123 Stat. at 297-98. Upon receipt of the OIG's report, the head of the agency (here, the Secretary) has a non-extendable thirty-day period to " determine whether there is sufficient basis to conclude that the non-Federal employer has subjected the complainant to a reprisal prohibited by [§ 1553(a) ]." Id. 1553(c)(2), 123 Stat. at 300. If the agency head finds that the employer has engaged in unlawful reprisal, the agency head " shall" take one or more of three remedial actions: (1) order the employer to abate the reprisal, id. § 1553(c)(2)(A), 123 Stat. at 300; (2) order the employer to reinstate the complainant and to provide " compensation (including back pay), compensatory damages, employment benefits, and other terms and conditions of employment that would apply to the person in that position if reprisal had not been taken," id. § 1553(c)(2)(B), 123 Stat. at 300; or (3) order the employer to pay the complainant " an amount equal to the aggregate amount of all costs and expenses (including attorneys' fees and expert witnesses' fees) that were reasonably incurred" in connection with bringing the complaint, id. § 1553(c)(2)(C), 123 Stat. at 300.

Section 1553 then provides that any person " adversely affected or aggrieved" by an agency's order " may obtain review of the order's conformance with this subsection, and any regulations issued to carry out this section, in the United States court of appeals for a circuit in which the reprisal is alleged in the order to have occurred." Id. § 1553(c)(5), 123 Stat. at 300. Review in the courts of appeals must conform to chapter seven of the Administrative Procedure Act. Id. If the non-federal employer does not comply with the agency's order, the head of the agency is required to file an action for enforcement of such order in the United States district court in which the reprisal was found to have occurred in order to compel compliance. Id. § 1553(c)(4), 123 Stat. at 300. The district court may " grant appropriate relief, including injunctive relief, compensatory and exemplary damages, and attorneys fees and costs." Id.

BCI entered into contracts with the DOE under ARRA to install cable in the El Dorado and Beebe school districts in Arkansas. BCI hired Branden Mueller as a helper in April 2010, and in November 2010, BCI promoted Mueller to lead technician. In ...

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