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Oracle Sues DOL Over Discrimination Enforcement ‘Power Grab’ (1)

Nov. 27, 2019, 2:43 PMUpdated: Nov. 27, 2019, 5:23 PM

The Labor Department’s enforcement of workplace discrimination claims against federal contractors is unconstitutional, Oracle America Inc. alleges in a federal lawsuit filed in Washington, D.C.

The Nov. 27 lawsuit accuses the DOL and its Office of Federal Contract Compliance Programs of exceeding their authority by creating an administrative trial system “wherein agency officials prosecute and adjudicate discrimination claims against government contractors and then award broad injunctive and compensatory relief if the agency finds violations.” Oracle said this system, which it called a “power grab,” violates the U.S. Constitution’s separation of powers.

“The issue here—and what Oracle objects to—is the unlawful, agency-originated and agency-based administrative-enforcement and adjudicative regime to which Oracle and other government contractors are currently subject,” Oracle’s lawyers wrote in the complaint. Oracle is represented by Orrick, Herrington and Sutcliffe partner Andrew Silverman and Managing Associate Robbie Manhas.

The lawsuit comes one week before Oracle is expected to appear before a DOL administrative law judge to defend against a $400 million pay discrimination suit brought by the OFCCP. The technology company and the agency have been locked in contentious litigation in the past three years over the agency’s claims that Oracle systemically underpaid women and minorities at its Redwood City, Calif., headquarters. A hearing on the merits of the case is scheduled for Dec. 5 in San Francisco.

“The Department of Labor intends to vigorously defend the validity of its equal employment opportunity program,” a DOL spokesperson said in an email.

An ALJ rejected Oracle’s attempts to end the OFCCP’s lawsuit on Nov. 25, scolding the company for repeatedly objecting to the agency’s allegations.

“Oracle’s scorched earth approach is either a cynical attempt to delay hearing and waste government resources or a form of economic assistance to its lawyers, who Oracle is paying to pour over OFCCP’s submissions and compile this list of every conceivable objection,” Judge Richard M. Clark wrote. “I decline the invitation to rule on every objection Oracle’s lawyers could imagine. Some of these objections may well be genuine, but Oracle has buried them in an undifferentiated mass of what mostly appear to be meritless objections or arguments about the evidence.”

Oracle didn’t respond to a request for comment.

‘Unprecedented Overreach’

In its lawsuit, Oracle argues that the OFCCP’s enforcement “regime” goes beyond presidential or congressional authorization, and is also incompatible with the statutory and regulatory framework of resolving discrimination claims.

“When the OFCCP suspects that a contractor has violated the contractual provision by engaging in employment discrimination or by failing to comply with the Department of Labor’s affirmative-action regulations, the process for resolving that dispute is far removed from how breach-of-contract claims are normally resolved,” the lawyers wrote in the complaint.

The agency routinely and randomly audits federal contractors for compliance with Executive Order 11246, which prohibits discrimination in workplaces that do over $10,000 in government business annually, and Section 503 of the Rehabilitation Act of 1973, and the Vietnam Era Veterans’ Readjustment Assistance Act of 1974. If an alleged violation is found, the agency is currently required to attempt to resolve it with the business through a settlement. If not resolved, then the dispute is referred to the DOL’s Office of the Solicitor, which initiates administrative litigation that’s overseen by a Labor Department ALJ.

The company alleges the agency’s “unprecedented overreach” began in 1977, when it says the OFCCP gave itself more power by opting to bring discrimination disputes before the DOL’s administrative trial courts, instead of federal district courts.

“The OFCCP’s unexplained power grab remains in place today,” wrote the lawyers.

Pursuing Pay Discrimination

Oracle isn’t the only company the OFCCP has hit with pay discrimination claims. The agency sued JPMorgan Chase and TIAA over alleged compensation discrimination, and recently settled with Goldman Sachs, Dell, and Intel for a combined sum of about $22 million.

In March, the agency also lost a case against Analogic Corp. that alleged female employees were paid less than men. An ALJ ruled the agency’s statistical evidence of alleged bias was insufficient.

Causes of Action: Violation of Constitutional separation of powers and the Administrative Procedure Act; contradiction of Executive Order 11,246.

Relief: Declaratory relief, attorneys’ fees, costs, any other relief the court deems proper.

Attorneys: Orrick, Herrington and Sutcliffe represents Oracle. Attorneys haven’t yet entered an appearance for the agency.

The case is Oracle Am. Inc. v. U.S. Dep’t of Labor, Dist. Ct. D.C., No. 1:19-cv-03574, 11/27/19.

(Updated with additional reporting.)

To contact the reporter on this story: Paige Smith in Washington at psmith@bloomberglaw.com

To contact the editors responsible for this story: Jay-Anne B. Casuga at jcasuga@bloomberglaw.com; Martha Mueller Neff at mmuellerneff@bloomberglaw.com

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