Zirkle Fruit Company v. United States Department of Labor et al, No. 1:2019cv03180 - Document 49 (E.D. Wash. 2019)
Court Description: ORDER GRANTING 4 PRELIMINARY INJUNCTION; Plaintiffs Motion for a Temporary Restraining Order, ECF No. 4, is CONVERTED into a motion for a preliminary injunction, and that motion is GRANTED. Signed by Judge Salvador Mendoza, Jr. (AN, Courtroom Deputy)
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Zirkle Fruit Company v. United States Department of Labor et al Doc. 49 1 FI LED I N THE U.S. DI STRI CT COURT EASTERN DI STRI CT OF WASHI NGTON 2 Sep 11, 2019 UNITED STATES DISTRICT COURT EASTERN DISTRICT OF WASHINGTON 3 SEAN F. MCAVOY, CLERK 4 5 ZIRKLE FRUIT COMPANY, a Washington Corporation, Plaintiff, 6 7 8 9 10 11 12 13 14 15 No. 1:19-cv-03180-SMJ ORDER GRANTING PRELIMINARY INJUNCTION v. UNITED STATES DEPARTMENT OF LABOR; PATRICK PIZZELLA, in his official capacity as Acting United States Secretary of Labor; JOHN P. PALLASCH, in his official capacity as Assistant Secretary of Labor, Employment & Training Administration, United States Department of Labor; CHERYL M. STANTON, in her official capacity as Administrator of the Wage & Hour Division, United States Department of Labor; Defendants. 16 17 On September 5, 2019, the Court held a hearing on Plaintiff Zirkle Fruit 18 Company’s Motion for Temporary Restraining Order, ECF No. 4. Because the time 19 for a temporary restraining order had passed, the Court converted the motion into 20 one for a preliminary injunction and, with the parties’ consent, heard oral argument ORDER GRANTING PRELIMINARY INJUNCTION - 1 Dockets.Justia.com 1 on that motion. At the end of the hearing the Court ruled orally, granting a 2 preliminary injunction. This order memorializes the Court’s oral ruling. BACKGROUND 3 4 Plaintiff Zirkle Fruit Company (“Zirkle”) is a Washington farming company. 5 ECF No. 1 at 3. One of Zirkle’s primary crops is blueberries. Id. Each year, Zirkle 6 harvests that crop of blueberries by hand, relying on a combination of domestic and 7 foreign laborers. ECF No. 4 at 5. Many of those foreign laborers—2750 of them, 8 for the 2019 blueberry harvest—arrive by way of the H-2A program, which 9 authorizes visas for temporary agricultural workers when there is a shortage of 10 domestic laborers in a particular region. See ECF No. 1 at 10; see also Hispanic 11 Affairs Project v. Acosta, 901 F.3d 378, 382 (D.C. Cir. 2018) (citing 8 U.S.C. § 12 1101(a)(15)(H)(ii)(a)). 13 To ensure that incoming H-2A laborers do not depress the wages of domestic 14 workers employed in the same industry, H-2A employers must pay the highest of 15 four potential wages: the adverse effect wage rate (AEWR), any collectively- 16 bargained wage, the applicable state or federal minimum wage, or the prevailing 17 hourly or piece wage rate (PWR). 20 C.F.R. § 655.120(a). The PWR is at issue in 18 this case. 19 A. 20 The PWR The PWR is intended to reflect the average wage paid to domestic laborers, ORDER GRANTING PRELIMINARY INJUNCTION - 2 1 engaged in an activity like blueberry harvesting, in the agricultural region in which 2 the H-2A employer intends to hire foreign laborers. 20 C.F.R. § 653.501(c)(2)(i). 3 The United States Department of Labor (“DOL”)—which administers the H-2A 4 program—is ultimately responsible for setting the PWR, but states gather the data 5 from which it is calculated. Id. Designated state “workforce agencies,” like 6 Washington’s Employment Security Department (ESD), do this by conducting 7 annual wage surveys. See ECF No. 24 at 3. 8 The states are guided in this process by a DOL publication known as 9 Handbook 385, which lays out the requirements1 for wage surveys and provides the 10 methodology by which states calculate the PWRs. See generally ECF No. 1-2 at 4– 11 50. After the state workforce agency has done so, it submits its conclusions to DOL, 12 which reviews the information and “determines whether the survey results may be 13 validated.” ECF No. 21 at 6. If so, the PWR is published, and H-2A employers must 14 15 16 17 18 19 20 1 Initially, the parties appeared to dispute whether Handbook 385 constitutes “requirements,” see ECF No. 1 at 13, or merely “guidance,” see ECF No. 21 at 6. At this point, both apparently agree that Handbook 385 definitively sets the standards governing wage surveys. This understanding of Handbook 385 is confirmed by DOL’s statements outside this litigation, where the agency has proposed revisions to the Handbook. See 84 Fed. Reg. 36168 (“Currently, the [state workforce agencies] are required to conduct prevailing wage surveys using standards set forth in Handbook 385.”) The heart of the disagreement, it seems, is the discretion afforded by Handbook 385 itself. The parties do not dispute whether ESD was bound by Handbook 385, but rather what Handbook 385 required it to do. Thus, because the matter is apparently undisputed, the Court refers to the standards set out in Handbook 385 as “requirements.” ORDER GRANTING PRELIMINARY INJUNCTION - 3 1 pay it immediately, even if the change comes mid-harvest.2 Id. 2 1. PWR for Blueberries in Washington 3 The PWR for blueberries is of relatively recent vintage. See ECF No. 23 at 4 4. In 2016, the first year one was published, it was $0.47/lb.; in 2017 it was $0.50/lb. 5 with a guarantee of $9.47 per hour; and in 2018 it was $11.00 per hour. ECF No. 6 21 at 6. In March 2019—prior to ESD’s completion of the year’s wage survey— 7 DOL approved Zirkle’s application to hire 2750 foreign laborers for the blueberry 8 harvest at a wage rate of $0.50/lb. ECF No. 4 at 9. 9 The 2019 PWR3 survey was conducted by online survey, telephone calls, and 10 forms sent through the mail.4 ECF No. 23 at 10. Before ESD began the survey, it 11 met with “stakeholders” in the Washington agricultural community and previewed 12 the survey form it planned to use. ECF No. 23 at 5–6. Although Zirkle was invited 13 to this presentation, it is unclear if it attended. Id. at 18–19. ESD did, however, 14 specifically solicit Zirkle’s feedback on the form of the survey, and Zirkle indicated 15 it had no concerns. Id. at 7. 16 17 18 19 20 2 If the PWR increases mid-harvest, an H-2A employer must pay the new rate immediately. 20 C.F.R. § 655.120(b). Moreover, besides filing a lawsuit like this one, an employer has no means to appeal a mid-season change to the PWR. Id. 3 The data used to calculate the 2019 PWR for blueberries was collected between October 2018 and January 2019. ECF No. 23 at 7. For clarity, the Court refers to this as the 2019 PWR survey. 4 ESD interviewed laborers in person after the survey ended, but did not include that information in setting the PWR. ECF No. 23 at 10. ORDER GRANTING PRELIMINARY INJUNCTION - 4 1 Washington economist Joshua Moll oversaw the 2019 survey and calculated 2 the updated PWR for blueberries, among other crops. Id. at 1–3. He estimated that 3 5622 laborers worked during the 2019 blueberry harvest’s “peak week,” or the week 4 during which the greatest number of laborers was employed. Id. at 13. A total of 54 5 employers responded to ESD’s survey, representing wage information for 1,786 6 domestic blueberry laborers, or roughly one-third the total estimated population. Id. 7 at 12; ECF No. 24-2 at 7. Zirkle did not respond to the survey. ECF No. 23 at 17; 8 ECF No. 31 at 12. Once the survey period closed, ESD calculated the new 9 prevailing wage rate for blueberries as $0.75/lb. ECF No. 23 at 17. After the survey 10 was complete, ESD again met with stakeholders and reviewed the updated PWRs. 11 ECF No. 23 at 18–19. 12 ESD then reported its findings to DOL. Id. A DOL analyst confirmed that the 13 sample size of ESD’s survey was adequate, checked ESD’s calculation of the PWR, 14 and published the result. ECF No. 24 at 4–5. On July 24, 2019—in the seventh week 15 of an approximately 15-week harvest, see ECF No. 4 at 9—DOL notified Zirkle of 16 the increased PWR, which Zirkle was immediately required to pay. ECF No. 24-6 17 at 2–3. 18 2. Procedural History 19 Zirkle sued DOL less than two weeks later, seeking a temporary restraining 20 order enjoining DOL from enforcing the increased PWR. ECF Nos. 1, 4. The Court ORDER GRANTING PRELIMINARY INJUNCTION - 5 1 set a hearing for five days later, but it was continued approximately three and a half 2 weeks at the request of the parties. ECF No. 17, 26. The parties agreed to the delay 3 because Zirkle, by agreement with DOL, began depositing the disputed wages into 4 a trust account maintained by its counsel’s law firm. ECF No. 31 at 16. DOL is 5 concerned, however, that if the harvest ends before the case is resolved, many of 6 Zirkle’s laborers will leave the country and never be paid. Id. Zirkle assured the 7 Court that because many of its workers return year after year, and because it 8 contracts with the same recruiter in Mexico each season, it would not be difficult to 9 locate and pay its H-2A laborers if it later loses on the merits. Id. Moreover, at the 10 hearing on the preliminary injunction, Zirkle informed the Court that it had already 11 recorded the names and mailing addresses for all H-2A employers, making it a 12 relatively simple matter to locate them later on. 13 3. 14 Zirkle claims the increased PWR is invalid because the process by which 15 ESD calculated it was flawed. See generally, ECF No. 1. Specifically, Zirkle claims 16 that in at least five ways, ESD deviated from the requirements set out by Handbook 17 385, and that as a result, the PWR for blueberries was artificially, and inaccurately, 18 inflated. Id. 19 20 Zirkle’s Claims i. Failure to Conduct In-Person Interviews Zirkle first argues that ESD erred by conducting wage surveys utilizing the ORDER GRANTING PRELIMINARY INJUNCTION - 6 1 internet, phone, and mail, rather than through in-person interviews. ECF No. 1 at 2 16. Handbook 385 provides that: 3 4 5 6 7 All wage surveys must include a substantial number of personal employer interviews. Survey information obtained from employers may be supplemented to a limited extent by telephone or mail contacts. Under certain conditions, employer contacts by mail or by telephone may be made, in lieu of personal field contacts, but the State agency must assure itself that information gathered in this manner is representative of the rates being paid in the crop activity. 8 ECF No. 1-2 at 23. Zirkle contends that if ESD conducted in-person 9 interviews, it would have been more likely to collect wage data from the largest 10 Washington growers, like Zirkle, and therefore, the PWR would have been 11 “substantially lower than $0.75 per pound.” ECF No. 16. DOL argues that 12 Handbook 385 gives states discretion not to conduct in-person interviews, and Mr. 13 Moll states that telephone and online surveys are a “survey administration best 14 practice.” ECF No. 23 at 10. 15 ii. 16 17 18 19 20 Failure to Distinguish Between Crop Variety, Crop Activity, or Geographic Location Next, Zirkle claims that ESD failed to distinguish between different categories of blueberry harvesting—for instance, between the first pick (when bushes will be densely packed) and subsequent picks (when density will be lower), or between organic and conventional blueberries. ECF No. 1 at 15. Handbook 385 states that if the wage rates “vary substantially” based on such factors, a separate ORDER GRANTING PRELIMINARY INJUNCTION - 7 1 PWR should be assigned to each commodity or crop activity. ECF No. 1-2 at 14. 2 According to Zirkle, if ESD had considered such factors, it would have calculated 3 multiple blueberry PWRs, “in the vast majority of instances [] significantly lower 4 than $.75 per pound.” ECF No. 1 at 15. Mr. Moll, by contrast, states that he could 5 not identify any factor that would affect the PWR for blueberries, and thus that 6 individual PWRs were unnecessary. ECF No. 23 at 17. 7 Relatedly, Zirkle claims that ESD failed to account for climatic and 8 agricultural variations between different regions in Washington, improperly setting 9 a single, statewide blueberry PWR. ECF No. 4 at 16. Handbook 385 recognizes that 10 individual PWRs may be necessary for different agricultural regions within a single 11 state. ECF No. 23-3 at 3. Mr. Moll states that he did not do so because, as with 12 different crop activities and varieties, he identified no difference in the wage rates 13 between different Washington regions. ECF No. 23 at 17. 14 iii. Inaccurate Underlying Data 15 Zirkle next contends that ESD relied on inaccurate, statistically skewed data 16 in calculating the blueberry PWR. See ECF No. 31 at 11. Regarding the sample size 17 necessary to calculate a PWR, Handbook 385 dictates that if more than 3000 18 workers are engaged in a crop activity, the state must collect wage data representing 19 at least 15% of that population. ECF No. 23-3 at 4. ESD estimated that 5622 laborers 20 worked during the 2019 blueberry harvest’s “peak week,” and collected survey ORDER GRANTING PRELIMINARY INJUNCTION - 8 1 responses representing 1786 laborers—roughly 31% of the total population, more 2 than twice the necessary sample size. ECF No. 23 at 12–13. 3 Zirkle, however, claims, “on information and belief,” that the data ESD used 4 to set the blueberry PWR must have included too many small growers—which, it 5 states, generally pay higher wages—and too few large companies. ECF No. 31 at 6 13. Handbook 385 states that the “wage survey sample should include workers of 7 small, medium, and large employers.” ECF No. 23-3 at 4. The survey data from 8 which the blueberry PWR was calculated has not been produced because DOL and 9 ESD state that it is confidential. ECF No. 23 at 25. 10 iv. Improper Conversion of Pay Units 11 Zirkle initially argued that ESD improperly converted wage units—for 12 instance, by equating payment by pound with payment by hour—and that this 13 skewed the data. ECF No. 1 at 17–19. Mr. Moll states that the wage rates for 14 blueberries were not converted, see ECF No. 23 at 23, and Zirkle seems to have 15 abandoned this theory. ECF No. 21 at 15. 16 v. Failure to Note PWR Increase 17 Finally, Zirkle claims that ESD failed to note a 50% increase in the PWR for 18 blueberries when reporting to DOL. ECF No. 4 at 17–18. The form used to report 19 wage survey results to DOL provides space to explain any “increase or decrease in 20 [the] prevailing rate from [a] comparable period of [the] previous year.” ECF No. ORDER GRANTING PRELIMINARY INJUNCTION - 9 1 24-2 at 7. DOL states that because the PWR in 2018 was hourly, and in 2019 the 2 PWR was per-pound, there was no “increase” to report. ECF No. 21 at 16. LEGAL STANDARD 3 4 A. Preliminary Relief 5 Zirkle first applied for a temporary restraining order (TRO). ECF No. 4. “The 6 underlying purpose of a TRO is to preserve the status quo and prevent irreparable 7 harm before a preliminary injunction hearing is held.” Hawai'i v. Trump, 241 F. 8 Supp. 3d 1119, 1133 (D. Haw. 2017). A TRO may only be issued for 14 days— 9 subject to brief extension for “good cause”—until a hearing on a preliminary 10 injunction can be held. Fed. R. Civ. P. 65(b)(2). 11 A preliminary injunction provides longer-term temporary relief until a case 12 is resolved on the merits. Shell Offshore, Inc. v. Greenpeace, Inc., 709 F.3d at 1281, 13 1291 (9th Cir. 2013). To obtain a preliminary injunction, a plaintiff must generally 14 establish four things: (1) likelihood of success on the merits, (2) that irreparable 15 harm is likely if preliminary relief is denied, (3) that the balance of equities tips in 16 its favor, and (4) that an injunction is in the public interest. Winter v. Nat. Res. Def. 17 Council, Inc., 555 U.S. 7, 20 (2008). In the Ninth Circuit, when the balance of 18 equities tips “sharply” in the plaintiff’s favor, preliminary injunctive relief is 19 appropriate if there are “serious questions going to the merits,” even if the plaintiff 20 cannot necessarily establish a likelihood of success. All. for the Wild Rockies v. ORDER GRANTING PRELIMINARY INJUNCTION - 10 1 Cottrell, 632 F.3d 1127, 1135 (9th Cir. 2011). 2 There are two kinds of preliminary injunction: mandatory and prohibitory. 3 Arizona Dream Act Coal. v. Brewer, 757 F.3d 1053, 1060 (9th Cir. 2014). A 4 mandatory injunction, which “orders a responsible party to take action,” is generally 5 disfavored and requires a heightened showing of need by the plaintiff. Id. (quoting 6 Marlyn Nutraceuticals, Inc. v. Mucos Pharma GmbH & Co., 571 F.3d 873, 878–79 7 (9th Cir. 2009)). By contrast, a prohibitory injunction “prohibits a party from taking 8 action and preserves the status quo pending a determination of the action on the 9 merits.” Id. “‘Status quo’ refers to the legally relevant relationship between the 10 parties before the controversy arose.” Id. (quoting McCormack v. Hiedeman, 694 11 F.3d 1004, 1019 (9th Cir. 2012)). An injunction which “prohibit[s] enforcement of 12 a new law or policy” is prohibitory, even if the order is issued after the challenged 13 law or policy is announced. Id. 14 B. The Administrative Procedures Act 15 Under the Administrative Procedures Act (APA), a court must invalidate 16 “agency action, findings, and conclusions” that are “arbitrary, capricious . . . or 17 otherwise not in accordance with law.” 5 U.S.C. § 706(2)(A). 18 19 20 Review under the arbitrary and capricious standard is narrow, and [the Court does] not substitute [its] judgment for that of the agency. Rather, [it] will reverse a decision as arbitrary and capricious only if the agency relied on factors Congress did not intend it to consider, entirely failed to consider an important aspect of the problem, or ORDER GRANTING PRELIMINARY INJUNCTION - 11 offered an explanation that runs counter to the evidence before the agency or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise. 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 League of Wilderness Defs. Blue Mountains Biodiversity Project v. Allen, 615 F.3d 1122, 1130 (9th Cir. 2010) (quoting Lands Council v. McNair, 537 F.3d 981, 987 (9th Cir. 2008)). “This deference is highest when reviewing an agency’s technical analyses and judgments involving the evaluation of complex scientific data within the agency’s technical expertise.” Id. Moreover, agency action is not arbitrary and capricious simply because it relies on a “dataset [that] was less than perfect.” Dist. Hosp. Partners, L.P. v. Burwell, 786 F.3d 46, 61 (D.C. Cir. 2015). However, “[a]n agency’s unannounced departure in practice from a written regulation is a distinct form of agency action that is challengeable, separate and apart from adoption of the regulation itself.” Acosta, 901 F.3d at 387. Thus, although a plaintiff cannot obtain relief simply by showing that an agency reached an imperfect conclusion, if the agency followed a “general policy by which its exercise of discretion [was] governed, an irrational departure from that policy”— rather than “an avowed alteration of it”—may be arbitrary and capricious independent of the result it reaches. I.N.S. v. Yueh-Shaio Yang, 519 U.S. 26, 32 (1996). 19 20 ORDER GRANTING PRELIMINARY INJUNCTION - 12 DISCUSSION 1 2 A. A Temporary Restraining Order is Inappropriate 3 The Court first denies Zirkle’s request for a TRO. The time for emergency, 4 stopgap relief had long passed by the time of the hearing. Hawai'i, 241 F. Supp. 3d 5 at 1133. Because the issues were fully briefed, and the parties consented, the Court 6 converted the motion into one for a preliminary injunction, and heard argument. 7 B. Zirkle Seeks a Prohibitory, Not a Mandatory, Injunction 8 Before turning to the merits of Zirkle’s motion for a preliminary injunction, 9 the Court must first characterize the type of injunctive relief sought. DOL argues 10 that Zirkle is seeking a mandatory injunction because the relief it seeks would force 11 DOL to take action by “revert[ing] back” to the $0.50/lb. PWR. ECF No. 21 at 11, 12 n.1. DOL errs, however, in construing the “status quo” as the state of affairs after 13 the increased PWR was announced. See Brewer, 757 F.3d at 1060. The proper status 14 quo is the relationship between the parties “before the controversy arose.” Id. 15 (quoting Hiedeman, 694 F.3d at 1019). In this case, the operative “controversy” is 16 the increased PWR, and so the Court looks to the relationship between Zirkle and 17 DOL prior to the time the increased rate was announced—when the PWR was 18 $0.50/lb. An injunction returning the parties to that state of affairs is prohibitory, 19 not mandatory. Id. (“[L]ike other injunctions that prohibit enforcement of a new law 20 or policy, Plaintiffs’ requested injunction is prohibitory.”). ORDER GRANTING PRELIMINARY INJUNCTION - 13 1 C. Zirkle Is Entitled to a Preliminary Injunction 2 Having concluded that Zirkle’s request is best characterized as one for a 3 prohibitory injunction, the Court now turns to whether one should issue. To obtain 4 relief, Zirkle must establish either likelihood of success on the merits, or serious 5 questions going to the merits; irreparable harm if an injunction is denied; that the 6 balance of equities tips in its favor; and that the public interest favors preliminary 7 relief. Winter, 555 U.S. at 20. After reviewing what little of the administrative 8 record is available at this stage, the Court determines that Zirkle has established 9 each of these four elements, and that a preliminary injunction should issue. 10 1. The Equities Tip Sharply In Zirkle’s Favor 11 The Court begins with the balance of equities because the outcome of this 12 factor affects the extent to which Zirkle must establish its odds of prevailing on the 13 merits. See All. for the Wild Rockies, 632 F.3d at 1135. If the equities tip “sharply” 14 in Zirkle’s favor, the Court should issue an injunction if Zirkle establishes “serious 15 questions going to the merits.” Id. Otherwise, it must satisfy the more onerous 16 threshold burden of showing that it is likely to ultimately succeed on the merits. Id. 17 The Court finds the balance of equities tips sharply in Zirkle’s favor, and several 18 factors influence this conclusion. 19 If Zirkle is forced to pay the increased PWR and later succeeds in showing 20 that DOL was arbitrary and capricious in adopting it, it would be a hollow victory. ORDER GRANTING PRELIMINARY INJUNCTION - 14 1 If the increased wages are paid, recovering them from Zirkle’s non-immigrant, 2 temporary laborers would be difficult, and perhaps impossible. More importantly, 3 to do so would likely be Zirkle’s only available recourse, because a successful APA 4 challenge against DOL would not entitle Zirkle to collect money damages from the 5 agency. See Tucson Airport Auth. v. Gen. Dynamics Corp., 136 F.3d 641, 645 (9th 6 Cir. 1998). 7 By contrast, if an injunction is issued—and Zirkle continues to pay the 8 $0.50/lb. PWR, to which DOL and Zirkle’s H-2A laborers agreed at the beginning 9 of the season—it would result in little identifiable harm to the Government, and 10 substantial, but remediable, damage to the H-2A laborers. As to DOL, while the 11 Court recognizes that any injunction prohibiting enforcement of a government 12 regulation results in some form of injury, here that injury is somewhat abstract and 13 minor in comparison to Zirkle’s. See New Motor Vehicle Bd. of California v. Orrin 14 W. Fox Co., 434 U.S. 1345, 1351 (1977). As to Zirkle’s employees who will not 15 immediately receive additional wages to which they would otherwise be entitled, 16 the Court recognizes that this is a substantial injury. But in contrast to the financial 17 situation facing Zirkle, this harm to its laborers can later be rectified by forcing 18 Zirkle to pay those wages, and Zirkle has assured the Court that, because it has 19 deposited the difference in wages into a trust account maintained by its attorneys, it 20 will able to do so. ORDER GRANTING PRELIMINARY INJUNCTION - 15 1 The Court is also struck by the apparent inequity of the manner in which the 2 increased PWR was announced. Before the blueberry harvest began, Zirkle 3 contracted with DOL and nearly 3000 temporary workers to ensure it had the 4 necessary manpower for the relatively brief harvest. A basic component of that 5 agreement was the wage Zirkle would pay—$0.50/lb. ECF Nos. 24-11; 24-15. 6 Zirkle, as any sophisticated business would, planned around the cost of labor, and 7 contracted with others in reasonable reliance on the assumption that if the cost 8 changed, it would do so only modestly, as the PWR for blueberries had only 9 increased $0.03/lb. since it was first announced in 2016. ECF No. 6 at 4; ECF No. 10 21 at 6. DOL then notified Zirkle—in the middle of the harvest—that the deal had 11 changed, and it would immediately be required to pay 50% more, a substantial 12 increase in Zirkle’s costs, which it contends cannot be recovered or passed on. ECF 13 No. 24-5; ECF No. 6 at 5–6. 14 15 In light of the above, the Court has little difficulty finding the equities tip in Zirkle’s favor, and do so sharply. 16 2. Zirkle Has Shown Serious Questions Going to the Merits 17 Having found the balance of equities tips sharply in Zirkle’s favor, the Court 18 next turns to whether Zirkle has shown “serious questions going to the merits” on 19 any of its five claims. All. for the Wild Rockies, 632 F.3d at 1135. 20 ORDER GRANTING PRELIMINARY INJUNCTION - 16 a. 1 In-Person Interview Requirement 2 Zirkle has met its burden of showing serious questions going to the merits on 3 its claim that ESD failed to conduct the 2019 wage survey through in-person 4 interviews as required by Handbook 385. ECF No. 4 at 14–15. As an initial matter, 5 the fact that ESD conducted no in-person interviews is undisputed. Id.; ECF No. 23 6 at 10. 7 Handbook 385 assumes that wage surveys will generally be conducted via 8 in-person interviews. See ECF No. 24-1 at 6. It notes, however, that under “certain 9 conditions,” mail or phone surveys5 are permissible if the state “assures itself that 10 information gathered in this manner” is accurate. ECF No. 24-1 at 6. The 11 circumstances under which this exception might apply are unclear, and DOL has 12 made no attempt to interpret this provision of Handbook 385 for the Court. 13 Elsewhere, in proposing revisions to the PWR methodology, DOL states that 14 Handbook 385 “requires in-person interviews.” 84 Fed. Reg. 36185. The agency 15 goes on to describe the in-person interview requirement as the “[m]ost burdensome” 16 of Handbook 385’s requirements, calling it “outdated” and “unrealistic given 17 current [state workforce agency] limitations.” Id. At oral argument, DOL reiterated 18 this line of reasoning, arguing that insisting on in-person interviews elevates form 19 5 20 The Court assumes without deciding that, under circumstances in which Handbook 385 permits phone or mail surveys, online surveys would also be permitted. ORDER GRANTING PRELIMINARY INJUNCTION - 17 1 over substance. 2 It may well be that requiring in-person interviews is unrealistic and 3 unnecessary in the computer age. But Handbook 385 has not yet been modernized, 4 and, at least with respect to ESD’s 2019 wage survey, DOL countenanced a 5 wholesale departure from one of the Handbook’s central requirements. See ECF 6 No. 23 at 10. Because “an agency’s unannounced departure in practice from a 7 written regulation is a distinct form of agency action that is challengeable,” this fact 8 alone amounts to a cognizable APA claim. Acosta, 901 F.3d at 387 (D.C. Cir. 2018). 9 At this stage, Zirkle lacks convincing proof that ESD’s failure to conduct in- 10 person interviews resulted in an inflated PWR—in other words, evidence of 11 causation. Zirkle contends that if ESD conducted the required in-person interviews, 12 it would have been more likely to collect wage data from the largest Washington 13 blueberry growers, resulting in a more accurate, and presumably lower, PWR. ECF 14 No. 4 at 15. This argument will require a more substantial basis in evidence if Zirkle 15 is to ultimately prevail. Even so, because the factual basis for this claim is 16 undisputed, and Zirkle has made a plausible showing of causation, the Court finds 17 it has shown serious questions going to the merits, and is therefore entitled to a 18 preliminary injunction. All. for the Wild Rockies, 632 F.3d at 1135. 19 20 b. Crop Variety Claim Zirkle’s next claim, that ESD failed to account for differences in crop variety, ORDER GRANTING PRELIMINARY INJUNCTION - 18 1 density, or climate when setting the PWR for blueberries, has also been sufficiently 2 established to warrant preliminary relief. ECF No. 4 at 14. At this early stage, there 3 is little direct evidence6 that had ESD considered such factors, it would have 4 calculated multiple PWRs for blueberries. But this deficiency cannot be attributed 5 entirely to Zirkle because DOL refuses to produce the survey data on which ESD 6 relied. ECF No. 31 at 8. Thus, the Court must decide if Zirkle has shown serious 7 questions going to the merits of this claim based on the minimal administrative 8 record presently available. All. for the Wild Rockies, 632 F.3d at 1135. 9 The Court’s review is most deferential to agency conclusions involving “the 10 evaluation of complex scientific data within the agency’s technical expertise,” as is 11 the case here. Allen, 615 F.3d at 1130. Mr. Moll, the ESD economist who managed 12 ESD’s 2019 wage survey, states that he was unable to identify any factor, such as 13 climate or crop variety, that would influence the PWR for blueberries and require 14 calculating multiple PWRs. ECF No. 23 at 17. Nevertheless, Zirkle has articulated 15 several plausible factors that could have necessitated the calculation of multiple 16 PWRs. ECF No. 1 at 8. Therefore, once Zirkle obtains access to the underlying 17 survey data, it may be able to show that Mr. Moll’s conclusion in this regard was 18 so flawed as to be arbitrary and capricious. For this reason, the Court finds that 19 6 20 Zirkle offers examples of how such factors can affect a blueberry laborer’s efficiency, but nothing by way of direct evidence that those factors were present in the data collected by ESD. ECF No. 1 at 8. ORDER GRANTING PRELIMINARY INJUNCTION - 19 1 Zirkle has met its burden of establishing serious questions going to the merits, and 2 that a preliminary injunction is warranted. All. for the Wild Rockies, 632 F.3d at 3 1135. c. 4 Data Inaccuracy 5 Zirkle’s third claim, that ESD relied on flawed data in calculating the PWR 6 for blueberries, is also sufficient to warrant preliminary injunctive relief. ECF No. 7 4 at 18–19. The 2019 survey purportedly captured sufficient wage data to exceed 8 Handbook 385’s sample-size requirement, and Zirkle does not appear to contend 9 otherwise. ECF No. 23-3 at 4; ECF No. 24-2 at 2. Even so, Zirkle argues, if the 10 survey data included wage information from too many small growers paying higher 11 wages, this could result in an inflated PWR, non-representative of what most 12 Washington growers pay. ECF No. 31 at 13; ECF No. 1 at 22. This claim, like 13 Zirkle’s claim about crop and climate variations, lacks a clear basis in evidence 14 because DOL has not provided the source data needed to prove or disprove it. ECF 15 No. 31 at 8. 16 The Court will not set aside the updated PWR simply because it derives from 17 a “dataset [that] was less than perfect.” Dist. Hosp. Partners, L.P. v. Burwell, 786 18 F.3d 46, 61 (D.C. Cir. 2015). But the evidence may later reveal that the wage data 19 from which Mr. Moll calculated the PWR for blueberries was so misrepresentative 20 that DOL’s decision to certify the result “could not be ascribed to a difference in ORDER GRANTING PRELIMINARY INJUNCTION - 20 1 view or the product of agency expertise,” and was therefore arbitrary and 2 capricious. Allen, 615 F.3d at 1130 (quoting McNair, 537 F.3d at 987). 3 As Zirkle convincingly argues, it is remarkable that the PWR for 4 blueberries—which is supposed to reflect the average wage actually paid to 5 domestic laborers—would suddenly jump 50% in the space of a year, after 6 increasing only $.03/lb. since it was first calculated in 2016. See ECF No. 21 at 6. 7 An informal survey of an agricultural trade group consisting of more than 300 8 employers suggests that none pays $0.75/lb. during the blueberry harvest, which 9 only serves to confirm that the increase may be attributable to flawed data, rather 10 than a significant shift in local labor conditions. ECF No. 10 at 2. Although this 11 circumstantial evidence is, of course, insufficient for Zirkle to prevail on the merits 12 of this or any of its other claims, at this stage the Court considers it in determining 13 whether Zirkle has established a “serious question” going to the validity of ESD’s 14 survey and calculations. The Court finds that it has. 15 d. Zirkle’s Two Remaining Claims 16 Zirkle’s two remaining arguments do not rise to the level of creating serious 17 questions going to the merits. First, the record seems to clearly establish that ESD 18 did not improperly convert between pay units in setting the PWR, and Zirkle seems 19 to have abandoned this argument. ECF No. 1 at 18. Second, Zirkle’s argument that 20 ESD failed to note the significant increase in the PWR when reporting to DOL fails ORDER GRANTING PRELIMINARY INJUNCTION - 21 1 at this stage because Zirkle has not made a convincing argument regarding 2 causation. The gravamen of Zirkle’s claim is that ESD calculated the PWR 3 improperly—and by extension, that it was arbitrary and capricious for DOL to rely 4 on that calculation. See ECF No. 31 at 2. Thus, whether ESD highlighted the 5 increase is largely beside the point, and because Zirkle has failed to show how its 6 failure to do so might have contributed to its alleged injury, it does not merit 7 preliminary relief.7 8 3. Irreparable Injury 9 Zirkle has shown that it will suffer irreparable harm if the new PWR is 10 enforced. ECF No. 1 at 11. Zirkle credibly states that if it is forced to pay the 11 additional $0.25/lb. for the remainder of this year’s harvest, it will incur $1,400,000 12 in added labor costs. Id. Zirkle also credibly contends that it cannot pass these 13 increased costs on to consumers, and that being forced to pay them would seriously 14 harm its business. ECF No. 4 at 20. DOL argues that Zirkle’s purely monetary loss 15 is insufficient to warrant a preliminary injunction because the money can be 16 17 18 19 20 7 This evidence could support Zirkle’s argument that DOL “blindly rubberstamped” ESD’s conclusions. ECF No. 31 at 5. If substantiated, this claim could amount to arbitrary and capricious agency action. City of New Orleans v. S.E.C., 969 F.2d 1163, 1167 (D.C. Cir. 1992). But Zirkle has little evidence to support it, and DOL, the party in the best position to state how closely it scrutinized ESD’s data, reports that it engaged in meaningful review. ECF No. 24 at 4–5. Accordingly, at this point, Zirkle has not met its burden of showing a serious question going to the merits on this claim. ORDER GRANTING PRELIMINARY INJUNCTION - 22 1 recouped, but this argument falls flat. ECF No. 21 at 20. 2 Once the additional wages are paid to workers, the odds of recovering them 3 directly from those individuals are infinitesimally small. More importantly, the 4 APA does not afford this Court jurisdiction to award monetary damages against 5 DOL if Zirkle prevails on the merits. 5 U.S.C. § 702; see also Dep't of Army v. Blue 6 Fox, Inc., 525 U.S. 255, 261 (1999). Thus, while DOL is correct that purely 7 monetary injury is generally insufficient to warrant preliminary injunctive relief, in 8 this case, there is no “possibility that adequate compensatory or other corrective 9 relief will be available at a later date.” Colorado River Indian Tribes v. Town of 10 Parker, 776 F.2d 846, 850-51 (9th Cir. 1995) (citing Sampson v. Murray, 415 U.S. 11 61, 90 (1974); see also Wisconsin Gas Co. v. F.E.R.C., 758 F.2d 669, 674 (D.C. 12 Cir. 1985) (“Recoverable monetary loss may constitute irreparable harm only where 13 the loss threatens the very existence of the movant's business.” (emphasis added)). 14 Because Zirkle has shown that the additional wages, if paid now, will be virtually 15 unrecoverable, it has met the burden of showing that irreparable harm would result 16 if a preliminary injunction is denied. 17 4. Public Interest 18 In this case, the public interest supports preliminary injunctive relief. On the 19 one hand, the laudable goal of the H-2A program, and the PWR component of that 20 program, is to ensure the Washington agricultural industry remains strong, and that ORDER GRANTING PRELIMINARY INJUNCTION - 23 1 the addition of non-immigrant foreign laborers does not harm American 2 farmworkers. See Acosta, 901 F.3d at 382. On the other hand, the public interest 3 favors a statistically rigorous, economically accurate implementation of this 4 important program. Accordingly, because Zirkle has made a legally sufficient initial 5 showing that the 2019 blueberry PWR may have been artificially inflated, the public 6 interest merits preliminary relief while the merits of its claims are resolved. CONCLUSION 7 8 For the foregoing reasons, the Court finds Zirkle has met the burden of 9 showing that it is entitled to a preliminary injunction. Until the merits of the 10 litigation are resolved or the injunction is dissolved, the parties will be bound by the 11 $0.50/lb. PWR approved by DOL at the beginning of the blueberry harvest. Zirkle 12 shall continue to set aside the difference in wages, as well as all applicable state and 13 federal taxes it would otherwise be required to pay if the increased PWR were 14 enforced. Finally, Zirkle shall compile and maintain a record of the names and 15 mailing addresses of all H-2A blueberry laborers that may later become entitled to 16 payment of those wages and shall inform the Court once it has done so. 17 Accordingly, IT IS HEREBY ORDERED: 18 1. Plaintiff’s Motion for a Temporary Restraining Order, ECF No. 4, is 19 CONVERTED into a motion for a preliminary injunction, and that 20 motion is GRANTED. ORDER GRANTING PRELIMINARY INJUNCTION - 24 1 2. Until the litigation is resolved or the preliminary injunction is 2 dissolved, DOL is ENJOINED from enforcing the $0.75/lb. 3 prevailing wage rate announced on July 24, 2019, ECF No. 24-5. 4 3. Zirkle shall CONTINUE to pay all H-2A laborers employed in the 5 blueberry harvest the $0.50/lb. wage DOL approved prior to the 6 beginning of the blueberry harvest, ECF Nos. 24-11; 24-15. 7 4. Zirkle shall DEPOSIT into a trust account maintained by its counsel 8 the difference in wages it would be required to pay if the increased 9 PWR was enforced, as well as all applicable state and federal taxes it would be required to pay if the wages were paid to its employees. 10 11 5. Zirkle shall RECORD the name and permanent mailing address for 12 all H-2A workers who may later be entitled to those wages, and shall 13 make reasonable efforts to ensure that the information remains current. 14 Zirkle shall FILE a notice of compliance with the Court once it has 15 done so. 16 17 18 19 20 IT IS SO ORDERED. The Clerk’s Office is directed to enter this Order and provide copies to all counsel. DATED this 11th day of September 2019. ___________________________ SALVADOR MENDOZA, JR. United States District Judge ORDER GRANTING PRELIMINARY INJUNCTION - 25
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