[Federal Register Volume 60, Number 200 (Tuesday, October 17, 1995)]
[Notices]
[Pages 53768-53769]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-25719]



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DEPARTMENT OF EDUCATION

Arbitration Panel Decision Under the Randolph-Sheppard Act

AGENCY: Department of Education.

ACTION: Notice of arbitration panel decision under the Randolph-
Sheppard Act.

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SUMMARY: Notice is hereby given that on December 27, 1994, an 
arbitration panel rendered a decision in the matter of Jeana Martin v. 
California State Department of Rehabilitation (Docket No. R-S/92-13). 
This panel was convened by the Secretary of the U.S. Department of 
Education pursuant to 20 U.S.C. 107d-2, upon receipt of a complaint 
filed by Jeana Martin.

FOR FURTHER INFORMATION CONTACT: A copy of the full text of the 
arbitration panel decision may be obtained from George F. Arsnow, U.S. 
Department of Education, 600 Independence Avenue, S.W., Room 3230, 
Switzer Building, Washington, D.C. 20202-2738. Telephone: (202) 205-
9317. Individuals who use a telecommunications device for the deaf 
(TDD) may call the TDD number at (202) 205-8298.

SUPPLEMENTARY INFORMATION: Pursuant to the Randolph-Sheppard Act (20 
U.S.C. 107d-2(c)), the Secretary publishes a synopsis of arbitration 
panel decisions affecting the administration of vending facilities on 
Federal and other property.

Background

    The complainant, Jeana Martin, a licensed blind vendor, was 
assigned to operate the facility at the United States Post Office 
General Mail Facility (GMF) in Santa Ana, California, in 1985 by the 
California Department of Rehabilitation, the State licensing agency 
(SLA) responsible for the Randolph-Sheppard Vending Facility Program in 
California.
    The facility consists of a snack bar/lunchroom and vending machines 


[[Page 53769]]
located in the breakroom areas throughout GMF. At the time the 
complainant began operating the GMF facility, there were 40 vending 
machines, 11 of them under the management of Ms. Martin. Complainant 
received monies from the remaining vending machines in accordance with 
the income-sharing provisions of the Randolph-Sheppard Act (the Act) 
and implementing regulations and the California Code of Regulations.
    Following her placement at the GMF facility, Ms. Martin submitted a 
request to the SLA for remodeling and expansion of the facility as the 
result of requests from patrons and the Federal property managing 
officials to increase her service level. In August 1989, the SLA began 
working with complainant, the Postal Service, and an architect to 
develop plans for the remodeling of the GMF vending facility.
    Subsequently, in September 1989, a dispute arose between the SLA 
and the Postal Service regarding the 29 vending machines at GMF not 
under Ms. Martin's management. Prior to this time, the SLA had informed 
postal officials at the GMF Facility of its desire to participate in 
the bidding process when the contract for these vending machines would 
be opened for bid. However, without formal notification to the SLA, the 
Postal Service began negotiations with a private vending company 
regarding the renewal of the contract. The negotiations culminated in a 
renewed contract between the Postal Service and the private vending 
company, which implemented a ``break-even'' vending machine arrangement 
with the Postal Service. That arrangement affected the complainant's 
income by eliminating the income-sharing of profits from the sales of 
the vending machines under the previous contract arrangement.
    Shortly after the ``break-even'' pricing of the contract with the 
private vending company was instituted, complainant requested 
assistance from the SLA to stop what she termed unfair competitive 
pricing practices by the private vending company.
    In October 1989, staff of the SLA's Business Enterprise Program 
informed the facility manager at GMF that the Postal Service was in 
violation of the Act and implementing regulations and that the ``break-
even'' policy was adversely affecting the income of the complainant.
    In April 1990, Ms. Martin filed a complaint with the SLA requesting 
a fair hearing on the matter. This request was heard by the SLA in May 
1990. The SLA agreed with the portion of her complaint that dealt with 
the ``break-even'' policy of the private vending company. However, the 
SLA found no basis for granting an administrative remedy.
    Subsequently, in March 1991, Ms. Martin filed an appeal of this 
decision. The Appeals Board found that the complainant had suffered as 
the result of the ``break-even'' pricing. The Appeals Board ruled, 
however, that the SLA had taken steps to correct the problem, although 
those efforts were unsuccessful.
    In October 1990, the SLA filed a request for arbitration with the 
U.S. Department of Education against the United States Postal Service, 
seeking cancellation of the ``break-even'' policy at GMF. This dispute 
was resolved in a negotiated settlement between the parties.
    After the settlement between the SLA and the Postal Service, 
complainant alleged that she continued to operate the GMF facility with 
the same level of expenses and a decreasing level of income.
    By August 1991, complainant made a decision to leave the GMF 
facility as its manager and to relocate with the assistance of the SLA 
to other vending locations in Southern California. However, 
complainant's relocation efforts did not produce sufficient income to 
enable complainant to pay the sales tax and business suppliers she owed 
while managing the GMF facility.
    By letter dated June 25, 1992, the SLA notified the complainant 
that her license would be terminated for non-payment of the sales tax 
and other financial obligations pursuant to State rules and 
regulations. Subsequently, complainant's license was revoked and on 
June 29, 1992, complainant filed with the Secretary of the U.S. 
Department of Education a request to convene a Federal arbitration 
panel. A hearing was held on April 14 and 15, 1994.

Arbitration Panel Decision

    The issue before the arbitration panel was whether the California 
Business Enterprise Program failed to fulfill its obligations to 
complainant in its capacity as the State licensing agency charged with 
the operation and administration of the Randolph-Sheppard vending 
program in California.
    In a majority opinion, the panel ruled that the SLA violated the 
Act in its relationship with complainant by failing to protect the 
priority accorded to the complainant as a licensed blind vendor under 
the Act; by failing to insist upon remittance to the SLA's vending 
program all vending machine income to which the SLA and complainant 
were entitled; by failing to stand firm against the promulgation and 
continuance of a ``break-even'' contract; by the lack of completed 
renovation of the GMF facility; and by the termination of complainant's 
license without sufficient foundation.
    In a separate opinion on remedy, the panel awarded monetary 
compensation, including damages, restitution, and fees and expenses in 
the amount of $449,923.70. The panel ordered the respondent to pay this 
amount, with interest to be determined in accordance with California 
law, to complainant within 30 days following the date of the award.
    The arbitration panel further directed the respondent to reinstate 
complainant's license to operate a vending facility and to place her in 
a vending facility comparable to the GMF facility. In the event no 
comparable facility was immediately available, respondent was directed 
to pay compensation to complainant each month, beginning January 1995, 
in an amount equal to the net income complainant would have received 
had she been placed in such a facility. The panel fixed this amount as 
$5,731.94 per month based upon the records submitted in the arbitration 
hearing.
    The panel retained jurisdiction of the case for 90 days following 
the date of the award. One panel member concurred with the award in its 
entirety and one panel member dissented from the award of monetary 
compensation for damages.
    The decision of the arbitration panel has been appealed to the 
United States District Court for the Central District of California, 
Brenda Premo, Director of the Department of Rehabilitation, State of 
California v. Jeana Martin, United States Department of Education, 
Richard Riley, Secretary of Department of Education and DOES I-XX, Case 
No. 95-0546 JGD (CTx).
    The views and opinions expressed by the arbitration panel do not 
necessarily represent the views and opinions of the U.S. Department of 
Education.

    Dated: October 11, 1995.
Howard R. Moses,
Acting Assistant Secretary for Special Education and Rehabilitative 
Services.
[FR Doc. 95-25719 Filed 10-16-95; 8:45 am]
BILLING CODE 4000-01-P