Summary
The Seventh Circuit affirmed the district court's vacatur of an arbitration panel's award under the Randolph‑Sheppard Act, holding that the panel applied the wrong burden of proof (substantial evidence instead of preponderance of the evidence) and that its key factual findings were unsupported by substantial evidence, making its ultimate remedy arbitrary and capricious. The case clarifies that blind vendors challenging state licensing agency decisions bear the burden of proof by a preponderance of the evidence before the arbitration panel, and that federal courts review panel decisions under the APA’s arbitrary‑and‑capricious and substantial‑evidence standards.
Topics
Practice areas
Questions Presented
- 1. Did the arbitration panel err by applying the substantial evidence standard instead of the preponderance of the evidence standard?
- 2. Were the arbitration panel's factual findings regarding the DWD's actions supported by substantial evidence?
- 3. Was the arbitration panel's decision to award the Racine/Sturtevant site to Taylor arbitrary and capricious?
Holdings
- The arbitration panel applied the wrong burden of proof by using the substantial evidence standard instead of the preponderance of the evidence standard.
- The arbitration panel's key factual findings regarding the DWD's use of 2013 data, failure to accept letters, interim operator decision, and delay were not supported by substantial evidence.
- The arbitration panel acted arbitrarily and capriciously by awarding the site to Taylor without sufficient evidence to compare competing candidates, especially because Taylor did not participate in the 2013 reinterviews.
Key quotations
“The Randolph-Sheppard Act 'provid[es] blind persons with remunerative employment, enlarg[es] the economic opportunities of the blind, and stimulat[es] the blind to greater efforts in striving to make themselves self-supporting[.]'” (2)
“'The reviewing court shall … hold unlawful and set aside agency action, findings, and conclusions found to be—(A) arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law; … (D) without observance of procedure required by law; [or] (E) unsupported by substantial evidence in a case … .'” (10)
“It 'is unsupported by substantial evidence when the record lacks evidence that "a reasonable mind might accept as adequate to support the conclusion."'” (10)
Factual background
The Randolph-Sheppard Act grants blind persons priority to operate vending facilities on government property. Taylor and Belsha, both blind vendors, competed for the vending operations at the Racine/Sturtevant site in Wisconsin. The DWD initially awarded the site to Belsha after interviews in 2011. Taylor challenged the award through state and federal procedures. An arbitration panel subsequently found that the DWD acted arbitrarily and capriciously and awarded Taylor the site and damages. The district court vacated the arbitration panel's decision.
Procedural history
The DWD filed a complaint in district court to vacate the arbitration panel's decision. Taylor moved to confirm the award. The district court granted the DWD's request to vacate and reverse the arbitration panel's decision. Taylor appealed to the Seventh Circuit.