MEMORANDUM DECISION AND ORDER RE DEFENDANTS' MOTION TO DISMISS
(ECF No. 24)
LAWRENCE J. O'NEILL, District Judge.
Plaintiffs Ileana S. Arvizu and ISA Contracting Services, Inc. ("Plaintiffs") filed this action against Defendants Alexander Acosta, the Secretary of the United States Department of Labor ("DOL"); Ruben Rosalez, the Western Regional Administrator of the DOL; and Susan Seletsky, an attorney employed by the DOL Office of the Solicitor (collectively, "Defendants"). ECF No. 20 (First Amended Complaint or "FAC"). This case stems from the initial refusal by the DOL on February 3, 2017, to renew Plaintiffs' Contractor Certificate of Registration, which Plaintiffs require to operate their business, and alleges that Defendants violated Plaintiffs' constitutional due process rights and the Administrative Procedure Act ("APA"), 5 U.S.C. §§ 702, 706. See id. Therefore, Plaintiffs now seek the following relief: 1) a writ of mandamus compelling Defendants to withdraw or strike any reference to a denial of Plaintiffs' renewal of the Farm Labor Contractor Certificate of Registration; 2) declaratory relief and monetary damages under Bivens v. Six Unknown Named Agents, 403 U.S. 388 (1971), for the alleged constitutional violations; 3) relief pursuant to the Administrative Procedure Act ("APA"); and 4) attorneys' fees pursuant to the Equal Access to Justice Act ("EAJA"). Id.
Defendants now move for dismissal of all claims in the FAC pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6).
SUMMARY OF ALLEGATIONS 3
Arvizu is the owner and founder of ISA Contracting Services, Inc. ("ISA"), a farm labor contracting corporation that provides labor to farmers to plant, cultivate, and harvest agricultural commodities. FAC ¶ 12-13. ISA provides jobs for approximately 200-300 agricultural employees every year. Id. As a farm labor contractor ("FLC"), ISA is "subject to a comprehensive regulatory scheme" and must have a DOL Certificate of Registration ("Certificate"), in addition to a license from the California Labor Commissioner. Id. ¶ 29. The state licensure is contingent upon the federal Certificate remaining current. Id. Arvizu and ISA have held a Certificate continuously since they began FLC work, and have renewed every year or two depending on whether the Certificate was issued for twelve or twenty-four months. Id. ¶ 40.
Item 9 on the Certificate application instructs the applicant to list "the Greatest Number of Migrant and/or Seasonal Agricultural Workers that will be in the Crew(s) at Any Time." Id. ¶ 41. Arvizu understood this question to address the number of workers in each crew. Id. ¶ 41. Because Plaintiffs generally employed seven or eight crews of 20 to 30 workers each during each harvest season, Arvizu normally estimated about 30 workers in each crew in response to this question. Id. In 2006, the first year Arvizu applied for a renewal, she wrote "50" in response to this question, and received a registration renewal without question. Id. ¶ 53. In 2008, Arvizu filed for a Certificate renewal and again wrote "50" in response to the question above. Id. ¶ 54. In 2009, Plaintiffs (after the formation of ISA as a corporation), wrote "35" in response to the question above. Id. ¶ 55. In 2010, Plaintiffs wrote "40." Id. ¶ 56. In 2011, Plaintiffs wrote "35." Id. ¶ 57. In 2012, Plaintiffs wrote "30." Id. ¶ 58. In 2013, Plaintiffs wrote "25." Id. ¶ 59. Every year, the registration was renewed without question. Id. ¶¶ 55-59. In 2015, Plaintiffs, assisted by an insurance broker with their paperwork, wrote "1000." Id. ¶ 60. Although this response was a "significant variance" from prior years, the registration was renewed without question. Id. ¶ 60.
For the 2017 renewal, which they filed in January 2017, Plaintiffs submitted an application for the Certificate renewal, listing "30" in response to the question at Item 9. Id. ¶ 42. "Defendants did not renew the application promptly as they had in the past, but instead held it, ostensibly for review." Id. When Plaintiffs inquired about the status of the Certificate renewal, they were told it was under review. Id. On February 3, 2017, less than one month before Plaintiffs were scheduled to begin seasonal farm labor contracting activities, Defendant Rosalez sent a letter notifying Plaintiffs that their registration would not be renewed. Id. ¶ 44. The letter read as follows:
Id. ¶¶ 45-46, 49; ECF No. 20-1, Ex. A.
Given the prior pattern of uncontested renewals using a similar range of numbers in Item 9 over the last decade, Plaintiffs were "completely surprised" by the DOL's decision not to renew their Certificate. FAC ¶ 52. Plaintiffs assert that instead of issuing the refusal notice, Defendants should have "notif[ied] [Plaintiffs] in writing of any incompleteness or error in the application and return the application for correction and completion, as specified in 29 C.F.R. § 500.48. Id. ¶¶ 65-66. Thus, Plaintiffs allege that "[t]he stated reason for denial of registration, misstating the number of workers employed, was a pretext for retaliation against Plaintiffs for asserting their rights in [a separate citation investigation
Furthermore, as a result of DOL's refusal to renew Plaintiffs' Certificate, Plaintiffs "faced an immediate threat to business," as they were scheduled to begin farm labor contracting activities in or around late February 2017, and Defendants' actions "forced Plaintiffs to file for an appeal of the non-renewal, incurring attorney fees and costs," which "cast uncertainty around the Registration that harmed Plaintiffs' reputation and threatened Plaintiffs' business relationships." Id. ¶ 69. Although Plaintiffs were allowed to operate while their appeal was pending and ultimately negotiated a settlement that included reinstatement of their Certificate, the initial non-renewal of the registration "tainted" Plaintiffs' Certificate, "by suggestion that they were lawbreakers on the verge of being shut down by the government." Id. ¶ 70. "Plaintiffs needed a stable, untainted, and fully renewed Registration in order to explore business opportunities, apply for H2-A certification, and to avoid uncertainty that could cause customers to cease doing business with them." Id. ¶ 72. It is Plaintiffs' position that "[t]he characterization of the answer to Item 9 on the application as a `knowing misrepresentation' was nothing more than a pretext to deny Plaintiffs' due process and gain an undue advantage in related litigation." Id. ¶ 76.
STANDARD OF DECISION
A motion to dismiss pursuant to Rule 12(b)(6) is a challenge to the sufficiency of the allegations set forth in the complaint. A 12(b)(6) dismissal is proper where there is either a "lack of a cognizable legal theory" or "the absence of sufficient facts alleged under a cognizable legal theory." Balisteri v. Pacifica Police Dep't, 901 F.2d 696, 699 (9th Cir. 1990). In considering a motion to dismiss for failure to state a claim, the court generally accepts as true the allegations in the complaint, construes the pleading in the light most favorable to the party opposing the motion, and resolves all doubts in the pleader's favor. Lazy Y Ranch Ltd. v. Behrens, 546 F.3d 580, 588 (9th Cir. 2008).
To survive a 12(b)(6) motion to dismiss, the plaintiff must, in accordance with Rule 8, allege "enough facts to state a claim to relief that is plausible on its face." Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570 (2007). "A claim has facial plausibility when the Plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009). "The plausibility standard is not akin to a `probability requirement,' but it asks for more than a sheer possibility that a defendant has acted unlawfully." Id. (quoting Twombly, 550 U.S. at 556). "While a complaint attacked by a Rule 12(b)(6) motion to dismiss does not need detailed factual allegations, a Plaintiff's obligation to provide the `grounds' of his `entitlement to relief' requires more than labels and conclusions." Twombly, 550 U.S. at 555 (internal citations omitted). Thus, "bare assertions . . . amount[ing] to nothing more than a `formulaic recitation of the elements' . . . are not entitled to be assumed true." Iqbal, 556 U.S. at 681. "[T]o be entitled to the presumption of truth, allegations in a complaint . . . must contain sufficient allegations of underlying facts to give fair notice and to enable the opposing party to defend itself effectively." Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011). In practice, "a complaint . . . must contain either direct or inferential allegations respecting all the material elements necessary to sustain recovery under some viable legal theory." Twombly, 550 U.S. at 562.
"Under Rule 12(b)(1), a defendant may challenge the plaintiff's jurisdictional allegations in one of two ways." Leite v. Crane Co., 749 F.3d 1117, 1121 (9th Cir. 2014). In a "facial" attack, the challenger accepts as true the plaintiff's allegations but "asserts that the allegations contained in the complaint are insufficient on their face to invoke federal jurisdiction." Safe Air for Everyone v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). The court "resolves a facial attack as it would a motion to dismiss under Rule 12(b)(6)." Pride v. Correa, 719 F.3d 1130, 1133 (9th Cir. 2013). In a "factual" attack, the challenger "contests the truth of the plaintiff's factual allegations, usually by introducing evidence outside the pleadings." Leite, 749 F.3d at 1121. In such circumstances, a court may examine extrinsic evidence without converting the motion to one for summary judgment, and there is no presumption of the truthfulness of the plaintiff's allegations. Safe Air for Everyone, 373 F.3d at 1039. Moreover, the plaintiff "bears the burden of proving by a preponderance of the evidence that each of the requirements for subject-matter jurisdiction has been met." Leite, 749 F.3d at 1121.
Writ of Mandamus
District courts "have original jurisdiction of any action in the nature of mandamus to compel an officer or employee of the United States or agency thereof to perform a duty owed to plaintiff." 28 U.S.C. § 1361. "Mandamus is an extraordinary remedy and is available to compel a federal official to perform his duty only if: (1) the individual's claim is clear and certain; (2) the official's duty is nondiscretionary and ministerial, and so plainly prescribed as to be free from doubt, and (3) no other adequate remedy is available." Patel v. Reno, 134 F.3d 929, 931 (9th Cir. 1997). Even if these requirements are satisfied, the district court retains the discretion to deny mandamus relief. Johnson v. Reilly, 349 F.3d 1149, 1154 (9th Cir. 2003).
The Court agrees with Defendants that Plaintiffs have failed to state a claim for mandamus relief. See ECF No. 24-1 at 4-6. The FAC's request that the Court issue a writ of mandamus to compel Defendants to withdraw or strike the initial denial of Plaintiffs' Certificate is not a cognizable claim. In their opposition, Plaintiffs argue that Defendants' failure to provide Plaintiffs with the opportunity to address Plaintiffs' response to Item 9 before issuing the denial was a violation of their statutory duty under 29 U.S.C. § 1812 to undertake an "appropriate investigation," which they contend is nondiscretionary, ministerial, and free from doubt," as contemplated by the Ninth Circuit in Patel. ECF No. 27 at 12-14. Upon review of the relevant statutes and regulations, the Court rejects Plaintiffs' argument. The regulation governing the issuance of certificate, 29 C.F.R. § 500.48, provides in relevant part as follows:
The Administrator or authorized representative shall:
(emphasis added). The statue governing the issuance of FLC certificates, 29 U.S.C. § 1812, provides in relevant part as follows:
The statute governing registration determination, 29 U.S.C. § 1813(a), provides in relevant part as follows:
(emphasis added). The plain language of the statutes and regulations, emphasized above, indicate that the determination of whether to issue the FLC certificates is a discretionary, non-ministerial task that is not subject to a writ of mandamus. See, e.g., Epstein v. Burwell, CV 13-8728-GHK (CWx), 2014 WL 12591476, at * 8 (C.D. Cal. Aug. 5, 2014) ("[B]ecause the determination to allow individual adjudication is discretionary, mandamus will not lie to compel the Secretary to pass regulations."). Plaintiffs cite no authority for their argument that Defendants had a nondiscretionary duty to inquire with Plaintiffs as to why they listed "30" in response to Item 9, and that Defendants' failure to do so amounted to a derogation of Defendants' statutory duty. Rather, it is clear that the statues and regulations vest discretionary authority with the DOL Secretary to make determinations as to whether he or she will issue FLC Certificates, and that the Secretary does not have a nondiscretionary duty to inquire with applicants and provide them with an opportunity to cure before issuing a refusal notice, as the Secretary has the discretion to determine when it is appropriate to do so. 29 C.F.R. § 500.48; see also Heckler v. Ringer, 466 U.S. 602, 617 (1984) (in context of adjudicating a writ of mandamus for a social security case, finding that the decision by the Secretary of Health and Human Services "as to whether a particular medical services is `reasonable and necessary' and the means by which she implements her decision, whether by promulgating a generally applicable rule or by allowing individual adjudication, are clearly discretionary decisions" that are not subject to mandamus relief).
The Court further agrees with Defendants that the availability of an alternative administrative remedy serves as a basis to find that Plaintiffs have failed to state a claim for mandamus relief. See ECF No. 24-1 at 5-6. "The common-law writ of mandamus, as codified in 28 U.S.C. § 1361, is intended to provide a remedy for plaintiff
For these reasons, the Court GRANTS Defendants' motion to dismiss Plaintiffs' mandamus claim for failure to state a claim. In an abundance of caution, the Court will permit Plaintiffs to amend this claim.
Due Process Claim and Bivens
In Count 2, Plaintiffs allege that they "have a right to due process before being denied their right to engage in their chosen profession [under the Fifth Amendment]" and that Defendants' initial refusal to renew Plaintiffs' FLC Certificate was arbitrary and capricious. FAC ¶¶ 92-93, 97. With regard to Defendants Rosalez and Seletsky, Plaintiffs allege that because they were both involved in the investigation and prosecution of Plaintiffs in the citation matter as an adversary, their involvement "in the role of the neutral decision maker" as to whether to grant Plaintiffs' FLC Certificate was a violation of Plaintiffs' due process rights. Id. ¶¶ 94-96. Plaintiffs further allege that Rosalez and Seletsky acted "arbitrarily and capriciously, and with the wrongful and improper intent to gain undue advantage in the citation matter, to retaliate against Plaintiffs for demanding a hearing on the citation and to chill Plaintiffs and others similarly situated from exercising their statutory and Constitutional rights." Id. ¶ 96. Plaintiffs thus seek an order from this Court declaring that Defendants' actions violated Plaintiffs' right to due process and that Seletsky and Rosalez face monetary damages pursuant to Bivens. Id.
Defendants seek dismissal of this claim, arguing that sovereign immunity bars Plaintiffs from making claims against Defendants, all of whom are federal government employees. ECF No. 24-1 at 7-8. Defendants further argue that Bivens is inapplicable in this case. Id. at 8-10. In the alternative, Defendants contend that even if a Bivens remedy was available, that Plaintiffs fail to state a claim for a Fifth Amendment due process violation, and that qualified immunity shields Rosalez and Seletsky from liability. Id. at 10-11.
As a general matter, Defendants are correct that the federal government is immune from suit unless it has waived its immunity. Dep't of Army v. Blue Fox, Inc., 525 U.S. 255, 260 (1999). "When the United States consents to be sued, the terms of its waiver of sovereign immunity define the extent of the court's jurisdiction." United States v. Mottaz, 476 U.S. 834, 841 (1986). Plaintiffs' citation to the waiver of sovereign immunity contained in the APA at 5 U.S.C. § 702 erroneously contends that the APA sovereign immunity waiver also applies to Constitutional claims. See ECF No. 27 at 17. All but one
Here, Plaintiffs have alleged a violation of their Fifth Amendment due process rights—a constitutional tort. FAC ¶ 97. To the extent Plaintiffs bring this claim against Defendant Acosta, who is specifically sued in his official capacity as the DOL Secretary, this claim is therefore barred by sovereign immunity because the federal government has not consented to liability for constitutional tort claims. FDIC v. Meyer, 510 U.S. 471, 477-78 (1994); see also Ardalan v. McHugh, No. 13-cv-01138-LHK, 2013 WL 6212710, at *10 (N.D. Cal. Nov. 27, 2013) (citing Consejo, 482 F.3d at 1173 for the notion that "sovereign immunity bars constitutional claims against federal employees in their official capacities, and thus district courts lack subject matter jurisdiction to hear such claims."). To the extent Plaintiffs bring this claim against Defendants Rosalez and Seletsky in their individual capacities pursuant to Bivens, the Court finds that their Fifth Amendment due process claim is not cognizable under Bivens jurisprudence. "In Bivens, the Supreme Court provided a judicially-created cause of action for damages arising out of constitutional violations by federal officers, holding that `petitioner is entitled to recover money damages for any injuries he has suffered as a result of the agents' violation of the [Fourth] Amendment.'" Solida v. McKelvey, 820 F.3d 1090, 1094 (9th Cir. 2016) (quoting 403 U.S. at 397) (emphasis added). The Supreme Court has set forth a two-step inquiry for deciding whether or not to recognize a Bivens remedy. Wilkie v. Robbins, 551 U.S. 537, 550 (2007). First, "there is the question of whether any alternative, existing process for protecting the interest amounts to a convincing reason for the Judicial Branch to refrain from providing a new and freestanding remedy in damages." Id. Second, even in the absence of an alternative, a court must "pay particular heed ... to any special factors counselling hesitation before authorizing a new kind of federal litigation." Id. However, the Supreme Court has recognized Bivens claims in only three
In Western Radio Servs. Co. v. U.S. Forest Serv., the Ninth Circuit considered whether to extend a Bivens remedy to a factual scenario similar to the one in this case—a plaintiff alleging that individual defendants were responsible for a federal agency's denial of its application to conduct activities for its business. 578 F.3d 1116, 1123 (9th Cir. 2009). The panel reasoned that because "[t]he APA expressly declares itself to be a comprehensive remedial scheme," and the APA sets forth the procedures for judicial review of agency action, that the APA "leaves no room for Bivens claims based on agency action or inaction." Id. at 1122-23. "In sum, the design of the APA raises the inference that Congress `expected the Judiciary to stay its Bivens hand' and provides a `convincing reason for the Judicial Branch to refrain from providing a new and freestanding remedy in damages." Id. (quoting Wilkie, 551 U.S. at 550). Here, as discussed above, Plaintiffs clearly had an administrative remedy for the DOL's initial adverse action, and they availed themselves of this administrative remedy. Under the logic of all of the cases cited above, Plaintiffs therefore do not have a remedy under Bivens against Defendants Rosalez and Seletsky.
Furthermore, in light of the foregoing, the Court sees no basis or any legal authority upon which it could grant Plaintiffs the declaratory relief they seek. The facts alleged do not state a due process
Next, Plaintiffs allege that Defendants violated the APA through "willfully and unlawfully" denying Plaintiffs' Certificate renewal application and seek an order from the Court "enjoining Defendants' actions from retaliating against employers who challenge DOL citations and prohibiting Defendants from using the Registration process to gain an undue advantage in related civil prosecutions." FAC ¶¶ 101, 107.
The Court must dismiss this claim for lack of subject matter jurisdiction. Under the APA, federal courts may review "final agency action for which there is no other adequate remedy in court." 5 U.S.C. § 704. "Only final agency decisions are subject to review under the APA." Pac. Coast Fed'n. of Fishermen's Ass'ns, Inc. v. Nat'l Marine Fisheries Serv., 265 F.3d 1028, 1033 (9th Cir. 2001). The Ninth Circuit has adopted a two-part test for determining the finality of agency decisions. See id. "[F]or an administrative agency action to be considered final, `the action should mark the consummation of the agency's decision making process; and (2) the action should be one by which rights or obligations have been determined or from which legal consequences flow." Id. Here, the initial denial of Plaintiffs' Certificate renewal is not a "final agency action" over which this Court would have jurisdiction. According to the statute governing the FLC Certificate process, judicial review in federal district court is available to "[a]ny person against whom an order has been entered after an agency hearing . . . ." 29 U.S.C. § 1813(c). Plaintiffs requested and received a hearing after the initial denial of their FLC Certificate, and then obtained the renewal of their Certificate. As described by Defendants, "[t]he interim denial . . . was not the consummation of the agency's decision-making process and did not determine the rights or obligations of any party," ECF No. 24-1 at 12, and therefore does not qualify as a final agency action under the Ninth Circuit's two-part test. See Nat'l Marine Fisheries, 265 F.3d at 1033. The Court thus DISMISSES this claim for lack of subject matter jurisdiction, but in an abundance of caution, will permit Plaintiffs leave to amend.
In Count IV, Plaintiffs state that if they prevail, they will seek attorney's fees and costs under the EAJA. FAC ¶ 109. However, because the Court found it appropriate to dismiss all of Plaintiffs' preceding claims, the Court need not address whether Plaintiffs are entitled to EAJA awards at this time.
CONCLUSION AND ORDER
For the foregoing reasons, the Court GRANTS Defendants' motion to dismiss the FAC (ECF No. 24). Plaintiffs must file their amended complaint within twenty (20) days of electronic service of this Order, and should only amend if amendment would not be futile based on the law and findings in this Order.
IT IS SO ORDERED.