by Robert R. Humphreys, Esq.
(Reprinted from “The Vendorscope,” Winter/Spring 2004.)
Late-breaking news — on April 29, 2004, the federal First Circuit Court of Appeals handed down a decision in New Hampshire v. David Ramsey et al, an important case in which the Randolph-Sheppard Vendors of America (RSVA), American Council of the Blind (ACB), and National Educational and Legal Defense Services for the Blind (NELDS) participated as friends of the court. The First Circuit Court strongly upheld the Randolph-Sheppard priority, and ruled that the district court, which had heard the case earlier, was correct in affirming a decision of an arbitration panel. That panel had granted the blind vendor committee an injunction against the state of New Hampshire, requiring the state to recognize the so-called Kennelly Amendment to the Surface Transportation Act. The Kennelly Amendment provided, pursuant to the Randolph-Sheppard Act, a priority for the blind vendor program with respect to income from vending machines at interstate highway rest stops.
The decision is the culmination of almost six years of effort by the New Hampshire Committee of Blind Vendors to force the state of New Hampshire to recognize the Randolph-Sheppard Act’s priority as it applies to interstate highway vending. The result will have an impact on the blind vending facility program, but the nature of that impact is not yet clear. The reason: Although the court upheld the arbitration decision favoring the blind vendors, it also found that award of damages was not proper, because the state of New Hampshire had not waived its sovereign immunity with respect to damages under section 111(b) of the Surface Transportation Act. This will be as confusing to many in the legal profession as well as to readers of “The Braille Forum.” Let me explain.
On the matter of damages, the First Circuit asserted first that the Randolph-Sheppard Act does not expressly authorize the award of damages. That is true, and there is no disagreement with the statement. Blind vendors and their attorneys have in litigation argued (usually successfully) that a state licensing agency waives sovereign immunity against an award of compensatory damages (1) by its participation in the Randolph-Sheppard program, under which it agrees to be subject to awards by arbitration panels, which routinely award damages, and (2) by accepting federal funds for Randolph-Sheppard activities, both under the Rehabilitation Act and from vending machine income on federal property.
The court determined that the state had not raised a sovereign immunity defense until the arbitration hearing. The arbitration panel awarded “prospective” damages in the amount of all commissions on vending machines located at the subject interstate rest areas dating from October 1998, when the blind vendors’ arbitration complaint was filed. On appeal, the Federal District Court generally approved the arbitration award. The First Circuit concluded that the state of New Hampshire waived sovereign immunity by its litigation conduct (demanding that the blind vendors exhaust their administrative remedies under the Randolph-Sheppard Act) and that it waived any objection to “prospective equitable relief.” The court said that, “By its voluntary agreement and participation in the federal program created by the Randolph-Sheppard Act, the state has been given a right it would not otherwise have: access to federal property,” and that Congress was “quite clear” that states participating in the program agree “to submit any disputes that blind vendors may have regarding the vending program to the hearing and arbitration procedures [of the act].”
As to whether New Hampshire had waived Eleventh Amendment immunity from liability for damages, the First Circuit said the state had not waived such immunity “largely because the blind vendors’ 1998 complaint in federal court contained no demand for damages.” By failing to ask for damages in the first federal suit they brought, the blind vendors did not put the state on notice to assert its sovereign immunity defense, and therefore a finding of waiver of sovereign immunity would be unfair. The court further rejected the blind vendors’ argument that the mere seeking by the state of judicial review of the arbitration decision constituted a waiver of sovereign immunity.
The key finding of the First Circuit on the damages issue is that, even if the Randolph-Sheppard Act “allows damages to be awarded against states based on complaints by blind vendors, it is not clear whether Congress intended in section 111(b) of the [Surface Transportation] Act to subject states to damages awards for violations found in R-S grievance procedures. Given Congress’ silence in the Surface Transportation Act itself and the disagreement about damages under the Randolph-Sheppard grievance procedures, we cannot, as a matter of statutory construction of the STA Act find an intent to subject states to damage awards under the STA Act.” This means that the First Circuit did not address whether damages may be awarded under the Randolph-Sheppard Act, but that Congress could not be found to intend that damages be awarded under the Surface Transportation Act. The court somehow reasons that even though this case began (in the arbitration process) as a Randolph-Sheppard case, it morphed back into a Surface Transportation Act case because the blind vendors asserted in 1998 that it was a Surface Transportation Act case.
For me, the logic of the First Circuit is highly questionable. I think the case is Randolph-Sheppard through and through, and because of that the state of New Hampshire waived its sovereign immunity under that act (as several other federal circuit courts have determined), it should have been held to have waived it in this case. Since the court ruled as it did, however, the question as to whether a state waives sovereign immunity for damages under Randolph-Sheppard remains undecided in the First Circuit. There may be additional action on this case, and if there is, we will report it to you.