Minnesota Department of Economic Security v. Riley

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

_____________

No. 96-2477MN
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Minnesota Department of *
Economic Security, State *
Services for the Blind and *
Visually Handicapped; *
*
Plaintiff-Appellee, *
*
Dennis Groshel, *
*
Intervenor Plaintiff- * Appeal from the United States
Appellee, * District Court for the District
* of Minnesota.
v. *
*
Richard Riley, United States *
Secretary of Education; *
United States Department of *
Veterans Affairs; James B. *
Donahoe, in his official *
capacity as Director, Veterans *
Canteen Service, *
*
Defendants-Appellants.*
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Submitted: October 23, 1996

Filed: February 26, 1997
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Before FAGG, BOWMAN, and HANSEN, Circuit Judges.
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FAGG, Circuit Judge.

The Randolph-Sheppard Vending Stand Act, 20 U.S.C. §§ 107-107f
(1994) (the Act), gives blind persons licensed by a state licensing
agency priority to operate vending facilities on federal property.
This dispute began more than ten years ago, when Minnesota's
licensing agency, the Minnesota Department of Economic Security
(formerly the Minnesota Department of Jobs and Training)
(Minnesota), applied under the Act and its corresponding
regulations for a vending permit for the Veterans Affairs Medical
Center in St. Cloud, Minnesota (VA Medical Center). Minnesota's
application was rejected by the Department of Veterans Affairs and
the Veterans' Canteen Service (collectively VCS), which claimed to
be exempt from the Act. Minnesota sought arbitration, as the Act
provides. See 20 U.S.C. § 107d-1(b). The arbitration panel (the
Panel) held the VCS was subject to the Act. The VCS and Minnesota
then jointly submitted five disputed issues for the Panel to
resolve. Only two are relevant to this appeal. The Panel decided
Minnesota's licensed blind vendor Dennis Groshel should pay the VCS
a commission on vending sales, and the VCS does not have the "right
to install and operate its own vending machines" at the VA Medical
Center.

Minnesota sought judicial review in the district court, which
decided commission payments violate the Act. The VCS appealed to
this court, and we affirmed. See Minnesota Dep't of Jobs &
Training v. Riley, 18 F.3d 606, 608 (8th Cir. 1994). We held the
Act applies to the VCS. See id. at 608-09. We also held that
commission payments, like any limitation on a blind vendor's
operation, are unlawful unless approved by the Secretary of
Education. See id. at 609; 20 U.S.C. § 107(b). Although Riley
paved the way for Minnesota to receive its vending permit, the VCS
continued and continues to stonewall Minnesota and its blind
licensee. Ignoring the Act, the Panel's decision, and our opinion
in Riley, the VCS offered Minnesota a permit, but only if Minnesota
agrees the VCS can install competing vending machines at the VA
Medical Center. Minnesota returned to the district court, which
granted Minnesota's motion to enforce the Panel's decision. In
doing so, the district court recognized that "installation of
vending machines by the VCS is undoubtedly an attempt to limit the
income of the blind vendor[] which must be approved [by] the
Secretary of the [Department of Education] prior to
implementation." Although the district court characterized its
enforcement order as a preliminary injunction, we agree with the
VCS that, for the purpose of review, we should treat the order as
a permanent injunction because Minnesota and the VCS disagree only
about the law, and nothing remains for the district court to
resolve. Likewise, we agree with the VCS that we review the
disputed questions of law de novo. See International Ass'n of
Machinists & Aerospace Workers, Dist. Lodge No. 19 v. Soo Line R.R.
Co., 850 F.2d 368, 374 (8th Cir. 1988) (en banc). On appeal, the
VCS once again claims exemption from the Act. Our earlier opinion
in Riley forecloses this claim.

Echoing its argument in Riley, the VCS contends it need not
comply with § 107(b), which prohibits any limitation on a blind
vendor's operation unless approved by the Secretary of Education,
because the Veterans' Canteen Service Act independently authorizes
the VCS to operate vending machines at the VA Medical Center. See
38 U.S.C. § 7802. Further, the VCS asserts that when it operates
within the parameters of § 7802, neither an arbitration panel
convened under 20 U.S.C. § 107d-1(b) nor the district court can
hold the VCS answerable for violations of the Act. In Riley,
however, we held the VCS must comply with every provision of the
Act, and that includes §§ 107(b) and 107d-1(b). See 18 F.3d at
608-09. We have never questioned the VCS's authority to operate
canteens, install vending machines, or do anything else the VCS's
enabling legislation empowers it to do. But in Riley, we held the
Act precludes the VCS's exercise of its statutory authority when
that exercise would limit a blind vendor's operation, unless the
Secretary approves the limitation. See id. at 609-10. Here, the
VCS does not challenge the district court's finding that "competing
vending machines will . . . undermine or . . . destroy [the] blind
vendor's ability to obtain what is already a small income." No
less than commission payments, competing machines would limit the
blind vendor's operation. Riley rules out both, unless the
Secretary decides otherwise.

In truth, the VCS has done far more than merely limit the

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blind vendor's operation at the VA Medical Center. Congress
assumed federal agencies would respect a blind person's vending
enterprise and willingly comply with the Act. See 20 U.S.C.
§ 107d-2(b)(2). Instead, the VCS has tried to drive the blind
vendor out of its domain. Testifying before the Panel in 1988, a
VCS official said:
Basically as long as this dispute lasts the guy who
is going to suffer over it is going to be [the
blind vendor] because prices are going to continue
to go up, and we are going to continue to hold
until this is resolved. The longer it goes on the
less money he is going to make.
Nine years later, the VCS is still at it, demanding the right to
install machines that would, as the district court found, destroy
the blind vendor's livelihood. It is time for the VCS's scorched-
earth campaign to end. Although Minnesota, in securing a permit,
must work within the Act's regulatory scheme, Riley makes clear--
and we hold today--that unless the VCS gets the Secretary's
approval, the VCS may not insist Minnesota accept the presence of
VCS vending machines at the VA Medical Center as the price of
Minnesota's permit.

Finally, the VCS raises two other issues. First, the VCS
contends arbitration panels convened under § 107d-1(b) have no
authority to order remedies for violations of the Act. See
Maryland State Dep't of Educ. v. United States Dep't of Veterans
Affairs, 98 F.3d 165, 169-71 (4th Cir. 1996); Georgia Dep't of
Human Resources v. Nash, 915 F.2d 1482, 1491-92 (11th Cir. 1990).
The VCS's argument is misplaced. The Panel never ordered the VCS
to take any remedial action, but simply decided competing VCS
vending machines at the VA Medical Center would violate the Act.
The Panel did exactly what the statute authorizes. See 20 U.S.C.
§ 107d-2(b)(2); Maryland State Dep't of Educ., 98 F.3d at 169-71;
Nash, 915 F.2d at 1491-92. Indeed, by insisting on a permit
condition at odds with the Panel's decision, it is the VCS that
ignores its statutory responsibility to bring itself into

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compliance with the Act. See Maryland State Dep't of Educ., 98
F.3d at 171. Second, the VCS questions whether the Panel's no-VCS-
machines decision continues in force because the Panel's reasoning
interweaves that decision with its overturned ruling on commission
payments. If the two decisions were as mutually dependent as the
VCS now claims, it is surprising the VCS did not say so when the
commissions issue was before us in Riley. Nevertheless, the
argument is without merit. The VCS itself, together with
Minnesota, asked the Panel to resolve two separate disputed issues,
commission payments and competing machines. In deciding against
the VCS's vending machines, the Panel took into consideration that
the VCS would receive commissions. The Panel never said, however,
that if Minnesota pays no commissions, the VCS may then go ahead
and install its machines. Rather, the Panel said yes to
commissions and no to competing VCS vending machines. The Panel's
decision was the final word on what the VCS must do to comply with
the Act. See § 107d-1(b).

The VCS is no different from any other steward of federal
property. If the VCS wants to impose limitations on a blind
vendor's operation, it must get permission from the Secretary of
Education. Of course, if the Secretary approves installation of
the VCS's vending machines, the VCS need not share its income with
the blind vendor. See § 107d-3(d). We affirm the decision of the
district court.

A true copy.

Attest:

CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.

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