A federal judge has recommended that “hot goods” settlements between two Oregon blueberry farms and the U.S. Labor Department be overturned.
U.S. Magistrate Judge Thomas Coffin has recommended vacating the deals because the growers signed them under economic duress.
The deals “unfairly stacked the deck” against the farms, which faced the “potential loss of millions of dollars’ worth of berries” if they didn’t capitulate to the agency’s demands, Coffin said in his decision.
In 2012, the farms — Pan-American Berry Growers and B&G Ditchen — paid the agency $220,000 to settle allegations of minimum wage law violations.
The growers claimed they were coerced by the agency, which threatened to halt shipment of their blueberry crops under the “hot goods” provision of federal labor law.
The Labor Department also notified the farms’ customers that the crop was subject to the “hot goods” provision, which allows the agency to block shipment of unlawfully produced goods.
Coffin said the DOL’s hot goods objection “effectively eliminates any potential market for the goods in question” until the threat is lifted.
Due to the perishable nature of the blueberries, the farms “were left with no choice but to accept the judgments,” Coffin said.
Under the settlement deals, the farms also had to waive their rights to appeal the agency’s findings.
The judge held that the agency’s actions amounted to misconduct because the farmers signed the deals against their will.
“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,” he said.
Coffin also said he could “think of no good reason” the Labor Department didn’t allow the farms to place the $220,000 in an escrow account while they challenged the agency’s findings.
The agency exercised “heavy handed leverage,” forcing the farms to endure major financial losses “simply to engage in the judicial process,” he said.
The Department of Labor had argued that the farms waited too long to fight the deals in court.
They waited nearly a year to oppose the judgments, when they could have sought an injunction immediately, the agency argued.
The judge rejected that argument, finding that it made sense for the growers to seek more information before resorting to litigation.
Attacking the judgments immediately “could have had uncertain repercussions for the defendants in any future interactions with the DOL in view of its more aggressive tactics,” he said.
The Labor Department must object to Coffin’s findings by Feb. 3, or else the agency loses its right to challenge the opinion.
If the agency objects, the order vacating the settlements must be finalized by U.S. District Judge Michael McShane.
“The Department of Labor is reviewing the ruling and considering its options,” said agency spokesman Jose Carnevali in an email.
The opinion sends a very strong message that DOL violated the farms’ due process rights and should never do so again, said Dave Dillon, executive vice president of the Oregon Farm Bureau.
“If we would have written the ruling, I’m not sure it could have been any better,” Dillon said.
Steve Erickson, CEO of Pan-American Berry Growers, said he’s glad the farms stood up for themselves against the agency.
“We are ecstatic that the judge backed us up,” he said.
The growers aim to provide decent wages for their workers and were frustrated not to be able to defend themselves against DOL’s accusations, he said.
The ruling will probably discourage the agency from using its hot goods powers in such a coercive fashion in the future, said Tim Bernasek, attorney for the farms.
“I would be very surprised if they tried these heavy handed tactics,” he said.
While it’s very rare for a consent decree to be overturned, the judge in this case solidly based his decision on legal precedent, Bernasek said.
The ruling probably won’t be significantly modified or reversed by McShane, he said.
It’s possible the Labor Department will challenge the decision before the 9th U.S. Circuit Court of Appeals.
However, DOL may want to avoid such an appeal — if 9th Circuit ruled against the agency, the decision would become legal precedent across its large jurisdiction, Bernasek said.