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Growers seek refund of ‘hot goods’ penalties

Mateusz Perkowski
A federal judge has vacated settlements deals between the U.S. Labor Department and Oregon blueberry farmers accused of "hot goods" labor law violations.

Oregon farms will be seeking roughly $220,000 from the U.S. Labor Department now that their settlements over “hot goods” labor law violations have been overturned.

“That is our top priority now, to get that money returned,” said Tim Bernasek, attorney for the growers.

The two blueberry farms — Pan-American Berry Growers and B&G Ditchen — were accused by DOL of paying pickers less than the minimum wage in 2012.

They settled the lawsuits, but a federal judge recently threw out those consent decrees because DOL unlawfully coerced the farmers by threatening to block shipments of their fruit.

The Labor Department had declared the blueberries “hot goods” that can’t be sold in interstate commerce unless the farms agreed to pay settlements.

To avoid having the fruit spoil, the growers paid a total of $240,000 in alleged back wages and fines to settle the charges.

They also waived their right to appeal the agency’s findings.

However, Pan-American Berry Growers and B&G Ditchen eventually sought to have the deals thrown out.

The settlement reached by the third farm for roughly $20,000 remained in place.

Earlier this year, U.S. Magistrate Judge Coffin agreed that the farmers had signed the consent decrees under economic duress and recommended invalidating the deals.

The DOL challenged this finding before U.S. District Judge Michael McShane, but he has now rejected the agency’s arguments and vacated the settlements.

In an April 24 order, McShane said the situation involved a “highly perishable product at peak harvest,” so any shipping delay “threatened to cripple the growers.”

“Under these circumstances, defendants had no choice but to agree to the consent judgments,” said McShane.

The judge also agreed with the finding that DOL had changed the implementation of its hot goods policy.

In the past, the agency allowed farms to pay the disputed amount into an escrow account if they chose to fight the allegations of labor law violations.

In this case, DOL officials did not offer the escrow option and required the growers to waive their right to appeal the findings.

“Although the government’s use of the hot goods authority is authorized by statute to resolve wage and hour violations, applying such authority in this situation, in effect, prevented defendants from having their day in court,” according to the previous ruling from Coffin.

A spokesman for the DOL said the agency is “reviewing the decision and considering its options.”

The agency faces several possibilities, such as dropping its lawsuits against the farmers, trying to prove the allegations or appealing the ruling that invalidated the settlement deals.

Because the deals have been vacated, there’s no final judgments to challenge before the 9th U.S. Circuit Court of Appeals.

The agency could attempt an “interlocutory appeal” of the ruling, but not all intermediate orders can be challenged this way.

“We will be prepared for whatever they decide to do,” said Bernasek.

The farms have serious concerns about the agency’s investigative practices and are ready to confront them in court if necessary, he said.

The DOL’s case against the farms appears weak, said Dave Dillon, executive vice president of the Oregon Farm Bureau.

“I don’t know how much effort they will want to put in for a really bad hand,” he said.

The bureau filed a Freedom of Information Act lawsuit to obtain documents about the agency’s investigations.

E-mails among DOL officials indicated they failed to identify a vast majority of the 1,000 “ghost workers” who were allegedly underpaid and working off the books.

The documents also showed the agency assumed that pickers who harvested more than 55.5 pounds per hour were assisted by ghost workers.

DOL may also think twice about appealing to the 9th Circuit, said Dillon.

If the federal appeals court agrees the agency coerced the farms, that ruling would become legal precedent across much of the West, he said.

“I think they’d be very foolish to do that, but that doesn’t mean they won’t,” Dillon said.



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