973 F.3d 383
5th Cir.2020Background
- Texas Workforce Commission (TWC), the State Licensing Agency for blind vendors in Texas, sought priority under the Randolph–Sheppard Act for vending contracts at Fort Bliss cafeterias.
- From 2003–2014 one blind vendor held a single contract covering both Full Food Services (FFS) and Dining Facility Attendant (DFA) tasks; in 2014 the Army split the work into separate FFS and DFA contracts.
- The Army reserved the DFA contract for small businesses, excluding TWC and denying it Randolph–Sheppard priority for the DFA work.
- TWC initiated arbitration under the Act; the arbitration panel held DFA contracts do not constitute the “operation” of a cafeteria and thus are outside the Act’s priority requirement.
- The district court set aside the arbitration award and granted summary judgment for TWC; the Fifth Circuit affirmed, holding this DFA contract falls within the Act after construing the ambiguous term “operate.”
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the DFA contract is subject to the Randolph–Sheppard Act (i.e., whether it is a contract to “operate” a cafeteria) | The Act covers all contracts integral to operating a cafeteria, including sanitation/custodial DFA tasks; TWC was entitled to bidding priority | DFA contracts are limited to janitorial/custodial support and do not entail managing or directing the cafeteria, so they are not contracts to “operate” | The court held the DFA contract at issue is subject to the Act because, taken together, its listed tasks are integral to the cafeteria’s operation and not merely discrete chores |
| Proper meaning and scope of the statutory term “operate” | Broad meaning: includes performing necessary functions for a cafeteria to function (consistent with the Act’s purpose to expand employment for the blind) | Narrow/organizational meaning: “operate” means to direct, manage, or conduct affairs — a level of executive control; ordinary usage supports this | The court found “operate” ambiguous and, given the Act’s remedial purpose and customary application, adopted a broader interpretation applicable to this contract; Secretary of Education’s guidance was persuasive |
| Reviewability and standard for overturning arbitration panel decision under the Act | The arbitration panel misapplied the statute; courts review panel decisions under the APA for arbitrary and capricious action | The panel correctly concluded the DFA category does not implicate operation; its interpretation should stand | The court applied de novo review of summary judgment and APA arbitrary-and-capricious standards and concluded the panel decision was inconsistent with the statute’s purpose and customary application, so it was set aside |
Key Cases Cited
- United States v. Bestfoods, 524 U.S. 51 (1998) (interpreting "operate" in an organizational sense in environmental-liability context)
- United States v. Nature’s Way Marine, L.L.C., 904 F.3d 416 (5th Cir. 2018) (adopting Bestfoods’ managerial meaning of “operator” for vessels)
- Ivy v. Williams, 781 F.3d 250 (5th Cir. 2015) (broad definitions of “operations” in the Rehabilitation Act context cited for comparison)
- Conn. Nat’l Bank v. Germain, 503 U.S. 249 (1992) (canon that unambiguous statutory language ends inquiry)
- Christensen v. Harris County, 529 U.S. 576 (2000) (agency interpretations in nonbinding formats are entitled to respect under certain standards)