Arbitration Panel Rules USPS Violated Randolph-Sheppard Act At Chicago P & DC

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“Thus, the panel majority ruled that USPS must compensate the SLA 100 percent of vending machine income for all of the vending machines located in the rotunda and in the cafeteria at the Chicago Processing and Distribution Center in accordance with the income sharing provisions of the Act and implementing regulations at  34 CFR 395.32 as of September 21, 2006.”

Arbitration Panel Decision Under the Randolph-Sheppard Act

Summary:

The Department of Education (Department) gives notice that on July 17, 2009, an arbitration panel rendered a decision in the matter of the Illinois Department of Human Services, Division of Rehabilitation Services v. United States Postal Service, Case No. R-S/06-14. This panel was convened by the Department under 20 U.S.C. 107d-1(b) after the Department received a complaint filed by the petitioner, the Illinois Department of Human Services, Division of Rehabilitation Services.

Background

The Illinois Department of Human Services, Division of Rehabilitation Services, the State licensing agency (SLA) alleged violations by the United States Postal Service (USPS) of the Act and the implementing regulations in 34 CFR part 395. Specifically, the SLA alleged that USPS violated the Act, the implementing regulations, and the vending permits held by the SLA concerning a vending machine facility operated by a blind vendor at the USPS’s Chicago Processing and Distribution Center.

According to the arbitration panel, the issues to be resolved were: (1) Whether the USPS cafeteria operations are exempt from the Act and whether the vending machines operated by a private vendor at the Chicago Processing and Distribution Center are in direct competition with the vending machines operated by the SLA’s blind vendor; (2) Whether the no-commission contracts let by USPS for cafeteria vending violated the Act, and what compensatory damages, if any are due the SLA; and (3) Whether the SLA may amend its complaint against USPS to address information which surfaced during settlement negotiations, namely, whether USPS violated the Act, its regulations, and the vending permits by closing Break Room A and removing the vending machines for 34 days, and what compensatory damages, if any, are due the SLA.

Arbitration Panel Decision

After hearing testimony and reviewing all of the evidence, the panel majority ruled that: (1) USPS cafeterias are not exempt from the protections of the Act, including the vending machine income sharing provisions; (2) The vending machines operated in the cafeteria at the Chicago Processing and Distribution Center by a private vendor are in direct competition with the blind vendor and are subject to the 100 percent income sharing provisions under the Act; and (3) The no-commission contracts let by USPS for cafeteria vending machines at the Chicago Processing and Distribution Center under its break-even policy violated the purpose and terms of the Act and implementing regulations.

Thus, the panel majority ruled that USPS must compensate the SLA 100 percent of vending machine income for all of the vending machines located in the rotunda and in the cafeteria at the Chicago Processing and Distribution Center in accordance with the income sharing provisions of the Act and implementing regulations at 34 CFR 395.32 as of September 21, 2006.

The panel majority further ruled that the USPS must pay interest at the Federal interest rate and the method of calculating interest should begin only at the end of the month in which the income originally would have been earned by the blind vendor and continue forward from that time. Additionally, the panel majority determined there was no need to allow the SLA to amend its complaint because those issues had already been resolved.

One panel member dissented to a portion of the decision regarding the monetary remedy award. Specifically, it was this panel member’s belief that within 30 days following the date of the arbitration panel’s decision, USPS should compensate the SLA the amount of $5,934.70 for income lost by the blind vendor from January 29 to March 3, 2007, resulting from violations of the Act. Also, this member believed that USPS should compensate the SLA the amount of $318,600 for income lost by the SLA and blind vendor as a consequence of vending machines operated by a private vendor in direct competition with the blind vendor in violation of the income sharing provisions of the Act and the relevant permits. Finally, this member believed that USPS should pay the SLA interest in the amount of $17,556.83 calculated at 5 percent per annum, compounded.