Aramark Facility v. Service ( 2008 )


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  •                  FOR PUBLICATION
    UNITED STATES COURT OF APPEALS
    FOR THE NINTH CIRCUIT
    ARAMARK FACILITY SERVICES,           
    Plaintiff-counter-
    defendant-Appellee,
    No. 06-56662
    v.
    SERVICE EMPLOYEES INTERNATIONAL             D.C. No.
    CV-06-00608-GPS
    UNION, LOCAL 1877, AFL CIO
    OPINION
    CLC,
    Defendant-counter-
    claimant-Appellant.
    
    Appeal from the United States District Court
    for the Central District of California
    George P. Schiavelli, District Judge, Presiding
    Argued and Submitted
    April 10, 2008—Pasadena, California
    Filed June 16, 2008
    Before: Cynthia Holcomb Hall, Thomas G. Nelson, and
    Barry G. Silverman, Circuit Judges.
    Opinion by Judge Hall
    6913
    6916 ARAMARK FACILITY SERVS v. SERVICE EMPLOYEES INT’L
    COUNSEL
    Steven R. Wall and Robert Jon Hendricks, Morgan, Lewis &
    Brockius, Philadelphia, Pennsylvania, and Los Angeles, Cali-
    fornia, for the defendant-counter-claimant-appellant.
    Manjari Chawla and David A. Rosenfeld, Weinberg, Roger &
    Rosenfeld, Alameda, California, for the plaintiff-counter-
    defendant-appellee.
    Monica Guizar, National Immigration Law Center, Los Ange-
    les, California, for the amicus curiae.
    OPINION
    HALL, Circuit Judge:
    I.   INTRODUCTION
    This case arose from the response by Aramark Facility Ser-
    vices (“Aramark”) to a “no-match letter” from the Social
    Security Administration (“SSA”), which indicated that Ara-
    ARAMARK FACILITY SERVS v. SERVICE EMPLOYEES INT’L 6917
    mark had reported information for 48 of its employees at the
    Staples Center in downtown Los Angeles that did not match
    the SSA’s database. Suspecting immigration violations, Ara-
    mark told the listed employees they had three days to correct
    the mismatches by proving they had begun the process of
    applying for a new social security card. Seven to ten days
    later, Aramark fired the 33 employees who did not timely
    comply.
    Local 1877 of the Service Employees International Union
    (“SEIU”) filed a grievance on behalf of the fired workers,
    contending the terminations were without just cause and thus
    in breach of the collective bargaining agreement (“CBA”)
    between Aramark and SEIU. An arbitrator ruled for SEIU and
    awarded the fired workers back-pay and reinstatement, find-
    ing there was no convincing information that any of the fired
    workers were undocumented. The district court vacated the
    award on the ground that it violated public policy. SEIU
    timely appealed.
    This case boils down to a single issue: whether the SSA’s
    no-match letter — and the fired employees’ responses — put
    Aramark on constructive notice that it was employing
    undocumented workers. If so, the arbitrator’s award would
    force Aramark to violate federal immigration law, and there-
    fore was properly vacated as against public policy. If not, the
    award must stand.
    As we explain below, Aramark has not established con-
    structive knowledge of any immigration violations. Construc-
    tive knowledge is to be narrowly construed in the immigration
    context and requires positive information of a worker’s
    undocumented status. Moreover, we are required to defer to
    the arbitrator’s factual findings even when evaluating an
    award for violation of public policy. Accordingly, given the
    extremely short time that Aramark gave its employees to
    return with further documents and the arbitrator’s finding that
    Aramark had no “convincing information” of immigration
    6918 ARAMARK FACILITY SERVS v. SERVICE EMPLOYEES INT’L
    violations, the employees’ failure to meet the deadline simply
    is not probative enough of their immigration status to indicate
    that public policy would be violated if they were reinstated
    and given backpay. Therefore, the district court erred and the
    award must be confirmed.
    II.    FACTUAL AND PROCEDURAL BACKGROUND
    A. The Letter Sent to Aramark and Aramark’s
    Response
    Aramark is a corporation that employs approximately
    170,000 people in the United States, and its facilities manage-
    ment division provides labor for the Staples Center, a 19,000-
    seat sports and entertainment venue in downtown Los Ange-
    les. In early 2003, Aramark received letters from the SSA
    notifying it that the social security numbers of some 3,300 of
    its employees nationwide did not match those in the SSA’s
    database. Aramark reacted to these “no-match” letters by ask-
    ing its regional managers to confirm that the information it
    provided SSA matched the information provided by employ-
    ees and, if so, to require corrective steps from the employees
    they supervised. On April 15 and 16, 2003, instructions were
    relayed to 48 Aramark employees working at the Staples Cen-
    ter, who were represented by SEIU and employed pursuant to
    a CBA between SEIU and Aramark. Aramark’s instructions
    to the Staples Center employees read as follows:
    1.   Please return to the [SSA] office to correct [the]
    discrepancy
    2.   Return to Aramark Facility Services at Staples
    Center with one of two items.
    a) A new social security card, [sic] photo
    copies will not be accepted
    b) Verification form that shows a new card
    is being processed.
    ARAMARK FACILITY SERVS v. SERVICE EMPLOYEES INT’L 6919
    3.   You have three working days from the post-
    marked date of this letter to bring either.[ ]You
    have 90 days from the date of re-application on
    your receipt to bring in your new card.
    4.   A new card or verification of renewal must be
    in the office no later then [sic] close of business
    4pm on Wednesday April 23rd, 2003.
    ...
    If you fail to comply with this letter and you do not
    bring in the proper documents then unfortunately
    your employment with Aramark will be terminated.
    (emphasis added).
    No employee was aware of the policy before receiving the
    mismatch letter. Believing the three-day turnaround time was
    too onerous, SEIU requested an extension, but Aramark
    denied this request.
    Fifteen of the Staples Center employees obtained the
    requested documentation in time and continued to work.
    However, 33 employees did not timely comply and were
    fired. The last day of work for virtually all of them was either
    April 16, 2003, or April 18, 2003. Most were officially fired
    effective April 23, while a few were fired April 28, 2003.
    Although the instruction letters from Aramark stated that
    employees were expected to visit an SSA office and provide
    the initial documentation within three days, the employees
    were actually given seven to ten days to provide the required
    paperwork, though nothing in the record indicates that they
    knew they had this much time. The fired workers were told
    that they would be rehired if they supplied the required docu-
    mentation; nothing indicates when they received this informa-
    tion.
    6920 ARAMARK FACILITY SERVS v. SERVICE EMPLOYEES INT’L
    Though it suspected immigration violations, Aramark did
    not know for sure why the terminated employees did not pro-
    vide additional documents and even argued to the arbitrator
    that they could have had “valid” work eligibility. Each of the
    fired employees had, at the time they were hired, properly
    completed the federal Employee Eligibility Verification Form
    (“Form I-9”) and provided Aramark with facially valid docu-
    ments establishing their identity and eligibility to work in the
    United States. Moreover, Aramark was not notified by any
    federal agency that its workers were suspected of being
    undocumented.
    B.   Arbitration
    After the terminations, SEIU filed a grievance on behalf of
    the Staples Center employees, contending that Aramark had
    violated the CBA by firing them without just cause. Pursuant
    to the CBA, the matter was submitted to binding arbitration.
    Over two days of hearings, the parties presented testimony
    concerning the no-match letters, Aramark’s obligation to
    comply with applicable tax and immigration laws, and the
    procedures by which the Staples Center employees were fired.
    Ultimately, the arbitrator concluded that there was no “con-
    vincing information” that any of the terminated workers were
    undocumented. He thus found that the firings were without
    just cause, ruled in favor of SEIU, and awarded the workers
    back-pay and reinstatement.
    C.   District Court Proceedings
    After the arbitrator’s ruling, Aramark filed a complaint in
    U.S. District Court to vacate the arbitration award, and SEIU
    counter-claimed to confirm it. The parties filed cross-motions
    for summary judgment, and at a hearing held September 29,
    2006, the district court ruled in favor of Aramark. The court
    reasoned that because the fired employees failed to indicate
    that they were beginning the process of correcting the SSN
    ARAMARK FACILITY SERVS v. SERVICE EMPLOYEES INT’L 6921
    mismatch, Aramark had constructive notice that they were
    ineligible to work in the United States. Therefore, the court
    held that the arbitrator’s award of reinstatement and back-pay
    violated public policy because it would require Aramark to
    violate the immigration laws. SEIU timely appealed.
    III.   STANDARD OF REVIEW
    We review vacation of arbitration awards like “any other
    district court decision . . . accepting findings of fact that are
    not ‘clearly erroneous’ but deciding questions of law de
    novo.” Barnes v. Logan, 
    122 F.3d 820
    , 821 (9th Cir. 1997)
    (quoting First Options of Chicago, Inc. v. Kaplan, 
    514 U.S. 938
    , 947-48 (1995)). Here, the district court resolved the mat-
    ter on the parties’ cross-motions for summary judgment,
    which necessarily present questions of law. We must there-
    fore decide de novo whether there are any genuine issues of
    material fact and whether the district court correctly applied
    the relevant substantive law. See Olsen v. Idaho State Bd. of
    Med., 
    363 F.3d 916
    , 922 (9th Cir. 2004); Arakaki v. Hawaii,
    
    314 F.3d 1091
    , 1094 (9th Cir. 2002) (stating standard for
    cross-motions).
    IV.   DISCUSSION
    A. The Legal Standard for Review of the Arbitrator’s
    Award
    “The scope of review of an arbitrator’s decision in a labor
    dispute is extremely narrow.” Federated Dep’t Stores v.
    United Food & Commercial Workers Union, Local 1442, 
    901 F.2d 1494
    , 1496 (9th Cir. 1990). Arbitration awards are ordi-
    narily upheld so long as they represent a “plausible interpreta-
    tion of the contract.” Phoenix Newspapers, Inc. v. Phoenix
    Mailers Union Local 752, 
    989 F.2d 1077
    , 1080 (9th Cir.
    1993). However, one narrow exception to this generally defer-
    ential review is the “now-settled rule that a court need not, in
    fact cannot, enforce an award which violates public policy.”
    6922 ARAMARK FACILITY SERVS v. SERVICE EMPLOYEES INT’L
    Stead Motors v. Automotive Machinists Lodge No. 1173, 
    886 F.2d 1200
    , 1209 (9th Cir. 1989) (en banc); accord SFIC
    Properties, Inc. v. Int’l Ass’n of Machinists & Aerospace
    Workers, 
    103 F.3d 923
    , 925 (9th Cir. 2003). “[T]he question
    of public policy is ultimately one for resolution by the
    courts.” United Food & Commercial Workers Int’l Union,
    Local 588 v. Foster Poultry Farms, 
    74 F.3d 169
    , 174 (9th Cir.
    1995). The public policy exception is Aramark’s sole basis for
    attacking the arbitration award in this case.
    [1] “To vacate an arbitration award on public policy
    grounds, we must (1) find that an explicit, well defined and
    dominant policy exists here and (2) that the policy is one that
    specifically militates against the relief ordered by the arbitra-
    tor.” Id. at 174 (citations and quotation marks omitted);
    accord W.R. Grace & Co. v. Local Union 759, Int’l Union of
    United Rubber, Cork, Linoleum & Plastic Workers of Am.,
    
    461 U.S. 757
    , 766 (1983). In evaluating a public policy argu-
    ment, we “must focus on the award itself, not the behavior or
    conduct of the party in question.” S. Cal. Gas Co. v. Utility
    Workers Union of Am., Local 132, AFL-CIO, 
    265 F.3d 787
    ,
    795 (9th Cir. 2001). We have stressed that “courts should be
    reluctant to vacate arbitral awards on public policy grounds,”
    because “[t]he finality of arbitral awards must be preserved if
    arbitration is to remain a desirable alternative to courtroom
    litigation.” Arizona Elec. Power Co-op., Inc. v. Berkeley, 
    59 F.3d 988
    , 992 (9th Cir. 1995). Moreover, before the award
    will be vacated as against public policy, the policy violation
    must be “clearly shown.” Stead Motors, 
    886 F.2d at 1225
    (quoting United Paperworkers Int’l Union, AFL-CIO v.
    Misco, Inc., 
    484 U.S. 29
    , 43 (1987)).
    Importantly, the public policy inquiry proceeds by taking
    the facts as found by the arbitrator. “The parties did not bar-
    gain for the facts to be found by a court, but by an arbitrator
    chosen by them . . . [.] Nor does the fact that it is inquiring
    into a possible violation of public policy excuse a court for
    doing the arbitrator’s task.” Id. at 1211 (quoting Misco, 484
    ARAMARK FACILITY SERVS v. SERVICE EMPLOYEES INT’L 6923
    U.S. at 45); accord Prudential-Bache Secs., Inc. v. Tanner, 
    72 F.3d 234
    , 242 (1st Cir. 1995); Bd. of County Comm’rs of
    Lawrence County, Ohio v. L. Robert Kimball & Assocs., 
    860 F.2d 683
    , 686 (6th Cir. 1988); see also Int’l Bhd. of Elec.
    Workers, Local 97 v. Niagra Mohawk Power Corp., 
    143 F.3d 704
    , 716 (2d Cir. 1998) (“[I]n reviewing an arbitral award for
    possible violations of public policy . . . [a] court is not autho-
    rized to revisit or question the fact-finding or the reasoning
    which produced the award.”); E.I. DuPont de Nemours & Co.
    v. Grasselli Employees Indep. Ass’n, 
    790 F.2d 611
    , 617 (7th
    Cir. 1986) (rejecting a public policy attack because it would
    “require[ ] this Court to re-find facts found by the arbitrator”),
    disapproved on other grounds by Misco, 
    484 U.S. at
    35 n.7.
    Accordingly, in evaluating whether the arbitrator’s award vio-
    lated public policy here, we will not revisit the arbitrator’s
    factual findings, in particular the finding that there was no
    “convincing information” that any of the terminated workers
    were undocumented.
    B.     Analysis
    As we explain below, Aramark has identified a sufficiently
    explicit, well-defined, and dominant public policy — compli-
    ance with immigration law — that, in the proper case, would
    be the basis for vacating an arbitration award. However, the
    policy in this case does not specifically militate against the
    arbitrator’s award of reinstatement and back-pay.
    1.    The Asserted Public Policy
    [2] The main public policy to which Aramark points is
    expressed in the Immigration Reform and Control Act of
    1986 (“IRCA”), Pub. L. No. 99-603, 
    100 Stat. 3359
     (1986).
    Specifically, Aramark cites the laws that (1) employers are
    subject to civil and criminal liability if they employ undocu-
    mented workers “knowing” of their undocumented status, and
    (2) the term “knowing” includes constructive knowledge. See
    6924 ARAMARK FACILITY SERVS v. SERVICE EMPLOYEES INT’L
    8 U.S.C. § 1324a(a)(1), (2);1 8 C.F.R. § 274a.1(l). We agree
    that these policies are germane to the arbitrator’s reinstate-
    ment award because they would necessarily be violated if
    Aramark knowingly reinstated undocumented workers. They
    are also germane to the back-pay award because the Supreme
    Court has held that immigration policy precludes such awards
    to undocumented workers. Hoffman Plastic Compounds, Inc.
    v. NLRB, 
    535 U.S. 137
    , 148-152 (2002). These policies are
    “explicit,” “well-defined,” and “dominant,” expressed not by
    “general considerations” but by the IRCA, its implementing
    regulations, and Supreme Court case law interpreting it. They
    are therefore an adequate basis for Aramark’s public policy
    attack. See S. Cal. Gas Co., 
    265 F.3d at 794-95
     (quoting
    Misco, 
    484 U.S. at 42
    ).2
    1
    8 U.S.C. § 1324a(a) provides in relevant part:
    (1) In general
    It is unlawful for a person or other entity—
    (A) to hire, or to recruit or refer for a fee, for employment in the
    United States an alien knowing the alien is an unauthorized alien
    (as defined in subsection (h)(3) of this section) with respect to
    such employment, or
    (B) (i) to hire for employment in the United States an individual
    without complying with the requirements of subsection (b) of this
    section or (ii) if the person or entity is an agricultural association,
    agricultural employer, or farm labor contractor (as defined in sec-
    tion 1802 of Title 29), to hire, or to recruit or refer for a fee, for
    employment in the United States an individual without comply-
    ing with the requirements of subsection (b) of this section.
    (2) Continuing employment
    It is unlawful for a person or other entity, after hiring an alien for
    employment in accordance with paragraph (1), to continue to
    employ the alien in the United States knowing the alien is (or has
    become) an unauthorized alien with respect to such employment.
    2
    Aramark also argues in passing that enforcement of the arbitrator’s
    award would violate tax policy, citing Treasury Department regulations
    prohibiting employers from reporting incorrect SSN information to the
    IRS. 
    26 C.F.R. § 301.6721-1
    (c)(2)(i). However, this policy would not
    ARAMARK FACILITY SERVS v. SERVICE EMPLOYEES INT’L 6925
    2. Whether the Policy Specifically Militates Against
    the Award
    The more difficult question is whether these policies “spe-
    cifically militate” against the arbitrator’s award here — that
    is, whether the arbitrator’s award would have forced Aramark
    to reinstate and provide back-pay to undocumented workers
    where Aramark had “constructive knowledge” that they were
    undocumented. See 8 U.S.C. § 1324a(a)(1), (2); 8 C.F.R.
    § 274a.1(l).
    [3] As defined in the relevant regulation, “[c]onstructive
    knowledge is knowledge that may fairly be inferred through
    notice of certain facts and circumstances that would lead a
    person, through the exercise of reasonable care, to know
    about a certain condition.” 8 C.F.R. § 274a.1(l). We have
    stressed that, for purposes of the IRCA, “constructive knowl-
    edge” is to be narrowly construed:
    IRCA . . . is delicately balanced to serve the goal of
    preventing unauthorized alien employment while
    avoiding discrimination against citizens and autho-
    rized aliens. The doctrine of constructive knowledge
    has great potential to upset that balance, and it
    should not be expansively applied. The statute pro-
    hibits the hiring of an alien “knowing the alien is an
    unauthorized alien . . . with respect to such employ-
    ment.” 8 U.S.C. § 1324a(a)(1)(A) (emphasis added).
    Insofar as that prohibition refers to actual knowl-
    edge, as it appears to on its face, any employer can
    “specifically militate” against the arbitrator’s award, because the award
    did not require reporting of incorrect numbers, or prohibit further verifica-
    tion procedures after the employees were reinstated. Aramark also sug-
    gests that it might be forced to violate RICO and the Sarbanes-Oxley Act
    if the arbitrator’s award were enforced. But it has waived these arguments
    by failing adequately to brief them. See Indep. Towers of Wash. v. Wash-
    ington, 
    350 F.3d 925
    , 929-30 (9th Cir. 2003).
    6926 ARAMARK FACILITY SERVS v. SERVICE EMPLOYEES INT’L
    avoid the prohibited conduct with reasonable ease.
    When the scope of liability is expanded by the doc-
    trine of constructive knowledge, the employer is sub-
    ject to penalties for a range of undefined acts that
    may result in knowledge being imputed to him. To
    guard against unknowing violations, the employer
    may, again, avoid hiring anyone with an appearance
    of alienage. To preserve Congress’ intent in passing
    the employer sanctions provisions of IRCA, then, the
    doctrine of constructive knowledge must be spar-
    ingly applied.
    Collins Foods Int’l, Inc. v. INS, 
    948 F.2d 549
    , 554-55 (9th
    Cir. 1991). In Collins, we reversed an ALJ’s holding that the
    employer had constructive knowledge of an immigration vio-
    lation because it had extended an offer of employment over
    the telephone and overlooked that the employee’s social
    security card was fraudulent. See 
    id. at 551, 555-56
    . We dis-
    tinguished other cases finding constructive knowledge on the
    grounds that the employer there did not have “positive infor-
    mation” that the employee was undocumented. 
    Id. at 555
    . In
    those distinguishable cases, on which Aramark relies heavily
    here, the INS specifically visited the employer and notified it
    that its employers were suspected unlawful aliens and should
    be terminated if inspection of their documents did not allay
    the concerns. See New El Rey Sausage Co. v. INS, 
    925 F.2d 1153
    , 1155 (9th Cir. 1991); Mester Mfg. Co. v. INS, 
    879 F.2d 561
    , 564 (9th Cir. 1989).3
    3
    Contrary to Aramark’s contention, Collins is not distinguishable on the
    ground that in this case, there is no accusation of discriminatory conduct
    by the employer. Collins did not involve discrimination either. Rather, the
    court stressed that by too expansively viewing constructive knowledge, the
    doctrine would risk encouraging employers to avoid liability through dis-
    criminatory practices. 
    948 F.2d at 554-55
    ; see also Incalza v. Fendi N.
    Am., Inc., 
    479 F.3d 1005
    , 1013 (9th Cir. 2007) (holding that the IRCA did
    not require an employer to terminate a worker whose visa had expired but
    could be readily renewed).
    ARAMARK FACILITY SERVS v. SERVICE EMPLOYEES INT’L 6927
    Here, Aramark essentially argues that two facts gave it con-
    structive notice of immigration violations: (1) the no-match
    letters themselves and (2) the employees’ responses (or lack
    thereof). We address each contention in turn.
    a.   The Letters Themselves
    [4] Given the narrow scope of the constructive knowledge
    doctrine, the “no-match” letters themselves could not have put
    Aramark on constructive notice that any particular employee
    mentioned was undocumented. To understand why, some
    background on the purpose of the no-match letters is helpful.
    The SSA routinely sends the letters when an employer’s W-2
    records differ from the SSA’s database regarding an employ-
    ee’s social security number (“SSN”). When there is a discrep-
    ancy, the SSA cannot post an employee’s social security
    earnings to his or her account, and instead must deposit the
    funds into a national “earnings suspense fund,” which is a
    very large fund containing more than 250 million mismatched
    records and totaling more than $500 billion. Social Security
    Number High-Risk Issues: Hearing Before the Subcomms. on
    Social Security and Oversight of the H. Comm. on Ways and
    Means, 109th Cong. 60 (Feb. 16, 2006) (statement of Patrick
    P. O’Carroll, SSA Inspector General), available at
    http://waysandmeans.house.gov/hearings.asp?formmode=
    printfriendly&id=4710 (last visited June 9, 2008).4 The
    Inspector General of the SSA believes that “the chief cause of
    wage items being posted to the [earnings suspense fund]
    instead of an individual’s earnings record is unauthorized
    work by noncitizens.” 
    Id.
     However, the main purpose of the
    no-match letters is not immigration-related, but rather is sim-
    ply to indicate to workers that their earnings are not being
    properly credited. See 
    id.
     (statement of James B. Lockhart, III,
    Deputy Commissioner of Social Security), available at http://
    4
    Both the parties and amicus cite various agency and legislative materi-
    als that are not part of the record. We treat these citations as requests for
    judicial notice and grant the requests. Fed. R. Evid. 201(b), (d).
    6928 ARAMARK FACILITY SERVS v. SERVICE EMPLOYEES INT’L
    waysandmeans.house.gov/hearings.asp?formmode=
    printfriendly&id=4708 (last visited June 9, 2008).
    In addition to misuse by undocumented workers, SSN mis-
    matches could generate a no-match letter for many reasons,
    including typographical errors, name changes, compound last
    names prevalent in immigrant communities, and inaccurate or
    incomplete employer records. By SSA’s own estimates,
    approximately 17.8 million of the 430 million entries in its
    database (called “NUMIDENT”) contain errors, including
    about 3.3 million entries that mis-classify foreign-born U.S.
    citizens as aliens. Congressional Response Report: Accuracy
    of the Social Security Administration’s NUMIDENT File
    (Dec. 2006), available at http://www.socialsecurity.gov/oig/
    ADOBEPDF/auditt xt/A-08-06-26100.htm (last visited June
    9, 2008).
    [5] As a result, an SSN discrepancy does not automatically
    mean that an employee is undocumented or lacks proper work
    authorization. In fact, the SSA tells employers that the infor-
    mation it provides them “does not make any statement about
    . . . immigration status” and “is not a basis, in and of itself,
    to take any adverse action against the employee.” Social
    Security Number Verification Service Handbook, available at
    http://www.ssa.gov/employer/ssnvs_handbk.htm (last visited
    June 9, 2008). This information is included in the no-match
    letters, and was added at the urging of advocacy groups such
    as amicus National Immigration Law Center to combat abuses
    by employers who assumed that the workers mentioned in the
    letters were undocumented.
    Moreover, employers do not face any penalty from SSA,
    which lacks an enforcement arm, for ignoring a no-match let-
    ter. The IRS also imposes no sanctions stemming from the no-
    match letters. It requires no additional solicitations of an
    employee’s SSN unless it sends a “penalty notice” to the
    employer indicating that the SSN is incorrect — a notice Ara-
    mark does not contend it received. Internal Revenue Service
    ARAMARK FACILITY SERVS v. SERVICE EMPLOYEES INT’L 6929
    Pub. 1586: Reasonable Cause Regulations and Requirements
    for Missing and Incorrect Name/TINs at 8-9 (2007 Rev.),
    available at http://www.irs.gov/pub/irs-pdf/p1586.pdf (last
    visited June 9, 2008). The IRS also does not require any
    reverification of a worker’s documents following receipt of a
    mismatch notice from the SSA. See id. at 9.
    To the same effect are statements from the Office of Spe-
    cial Counsel of Immigration-Related Practices, which is an
    agency of the Department of Justice authorized to investigate
    unfair immigration-related employment practices. See 8
    U.S.C. § 1324b(c). The Office of Special Counsel states that
    “[a] no match does not mean that an individual is undocu-
    mented” and that employers “should not use the mismatch let-
    ter by itself as the reason for taking any adverse employment
    action against any employee.” Office of Special Counsel, Fre-
    quently Asked Questions, available at http://www.usdoj.gov/
    crt/osc/htm/facts.htm#verify (last visited June 9, 2008).
    As Aramark notes, the Department of Homeland Security
    (“DHS”) recently has taken steps to use the no-match letters
    in its enforcement of the immigration laws. In June 2006,
    DHS proposed to amend 8 C.F.R. § 274a.1, which sets forth
    DHS interpretations of terms including “knowing,” to include
    receipt of no-match letters in its discussion of “constructive
    knowledge.” Safe-Harbor Procedures for Employers Who
    Receive a No-Match Letter, 
    71 Fed. Reg. 34281
    -01, 34281
    (June 14, 2006). After some changes prompted by extensive
    public comment, see 
    72 Fed. Reg. 45611
     (Aug. 15, 2007), the
    proposed amendment was adopted and the resulting regula-
    tion currently provides in relevant part:
    The term knowing includes having actual or con-
    structive knowledge. Constructive knowledge is
    knowledge that may fairly be inferred through notice
    of certain facts and circumstances that would lead a
    person, through the exercise of reasonable care, to
    know about a certain condition. Examples of situa-
    6930 ARAMARK FACILITY SERVS v. SERVICE EMPLOYEES INT’L
    tions where the employer may, depending on the
    totality of relevant circumstances, have constructive
    knowledge that an employee is an unauthorized alien
    include, but are not limited to, situations where the
    employer . . . [f]ails to take reasonable steps after
    receiving information indicating that the employee
    may be an alien who is not employment authorized,
    such as . . . [w]ritten notice to the employer from the
    Social Security Administration reporting earnings on
    a Form W-2 that employees’ names and correspond-
    ing social security account numbers fail to match
    Social Security Administration records.
    8 C.F.R. § 274a.1(l) (emphases added). So, even the DHS reg-
    ulations, which were adopted after Aramark received the let-
    ter at issue here and are currently subject to a preliminary
    injunction,5 would not treat the no-match letter by itself as
    creating constructive knowledge of an immigration violation.
    Instead, the regulations would look further to “the totality of
    the circumstances” and whether the employer took reasonable
    steps after receiving the no-match letter.
    [6] In sum, the letters Aramark received are not intended by
    the SSA to contain “positive information” of immigration sta-
    tus, and could be triggered by numerous reasons other than
    fraudulent documents, including various errors in the SSA’s
    NUMIDENT database. Indeed, the letters do not indicate that
    5
    In October 2007, the United States District Court for the Northern Dis-
    trict of California preliminarily enjoined the government from enforcing
    the new regulations, including through sending no-match letters that refer
    to them. See AFL v. Chertoff, No. 07-4472, ___ F. Supp. 2d ___, 
    2007 WL 2972952
    , at *15 (N.D. Cal. Oct. 10, 2007). After the district court’s ruling,
    the government then moved to stay proceedings pending new administra-
    tive rule-making. The district court granted the motion and stayed pro-
    ceedings until March 28, 2008. DHS then proposed to repromulgate the
    regulation without change. See Safe-Harbor Procedures for Employers
    Who Receive a No-Match Letter: Clarification; Initial Regulatory Flexibil-
    ity Analysis, 
    73 Fed. Reg. 15944
    , 15955 (March 26, 2008).
    ARAMARK FACILITY SERVS v. SERVICE EMPLOYEES INT’L 6931
    the government suspects the workers of using fraudulent doc-
    uments. Rather, they merely indicate that the worker’s earn-
    ings were not being properly credited, one explanation of
    which is fraudulent SSNs. This falls short of the “positive
    information” from the government that was held to provide
    constructive notice in Mester and New El Rey and held lack-
    ing in Collins. See Collins, 
    948 F.2d at 554-55
    . Without more,
    the letters did not provide constructive notice of any immigra-
    tion violations.
    b.     Employees’ Reactions
    Aramark also maintains that constructive notice resulted
    from the fired workers’ reactions to the no-match letters and
    Aramark’s directive to return quickly with documents from
    the SSA. It argues that it provided the employees a reasonable
    time in which to correct their SSN discrepancies, and that
    their failure to do so is sufficiently probative of their immigra-
    tion status to rise to the level of “constructive notice” that
    they were undocumented.
    We disagree. Though the question is a close one, two con-
    siderations weigh against a finding of constructive notice
    here: (1) the arbitrator’s findings, and (2) the short turn-
    around time. Moreover, contrary to the district court’s conclu-
    sion, the analysis is unaffected by Aramark’s offer to rehire
    any terminated employees who later came forward with
    proper documentation.
    (1)   The Arbitrator’s Findings
    [7] First, as we indicated above, the entire inquiry must
    proceed in light of the arbitrator’s finding that there was no
    “convincing information” that any of the fired workers were
    undocumented. The arbitration came down to essentially the
    same question that the court must answer here: whether it
    could be said that the fired workers were undocumented. The
    arbitrator weighed the same evidence that the parties point to,
    6932 ARAMARK FACILITY SERVS v. SERVICE EMPLOYEES INT’L
    and concluded that none of it constituted “convincing infor-
    mation” of immigration violations. While it is true that it is
    ultimately for the court to determine whether the arbitrator’s
    award would violate public policy, Foster Poultry Farms, 74
    F.3d at 174, his factual findings are not up for discussion, see,
    e.g., Misco, 
    484 U.S. at 45
    , and weigh strongly against Ara-
    mark’s position. Put simply, it is difficult to conclude that
    Aramark had “constructive notice” — meaning “positive
    information” — of a fact when there was no “convincing
    information” of it.6
    (2)    The Turnaround Time
    [8] Second, and related, is the extremely short time period
    in which the workers were told they should respond before
    they would be fired. Both parties spin the record to some
    degree — SEIU says the workers had only three days to
    respond, while Aramark stretches the period to 90 days. In
    fact, workers were told they had three days from the postmark
    of a letter from Aramark to return with further documentation
    — either a new social security card, or a “verification form”
    from SSA that a new card was being processed. If the worker
    returned with the verification form, they would still have to
    provide a new card within 90 days.
    This adds up to an extremely demanding policy. The initial
    three-day deadline was from the post-mark of the letter from
    Aramark, so, given at least one day in the mail, it meant
    6
    Indeed, the arbitrator’s findings completely foreclose Aramark’s reli-
    ance on arbitration testimony that “[s]ome employees came in and said
    they were not able to provide the proper documentation and asked if they
    could work anyways.” The arbitrator excluded this statement as hearsay.
    The ruling was erroneous, as a statement from an employee in this context
    would be a party admission. Fed. R. Evid. 801(d)(2). Nonetheless, we
    must take the facts as found by the arbitrator, and we cannot revisit his
    evidentiary rulings. See Misco, 
    484 U.S. at 40
     (“[W]hen the subject matter
    of a dispute is arbitrable, ‘procedural’ questions which grow out of the dis-
    pute and bear on its final disposition are to be left to the arbitrator.”).
    ARAMARK FACILITY SERVS v. SERVICE EMPLOYEES INT’L 6933
    workers had at most two days to respond. And in these two
    days, the workers were expected to gather information that
    would prove to SSA that they were entitled to a social secur-
    ity number, perhaps obtain legal representation, and navigate
    their way to a SSA office during business hours while still
    attending to whatever work and family obligations they had.
    It seems entirely possible — even likely — that many of the
    Staples Center employees concluded they could not meet the
    initial deadline, and then simply stopped trying. Nothing in
    the record indicates otherwise, and indeed nothing indicates
    that the workers understood beforehand that they would actu-
    ally have seven to ten days before their terminations became
    effective.7
    [9] Notably, and contrary to Aramark’s contention, its
    reverification policy was significantly more accelerated than
    the one envisioned by the federal safe harbor regulations
    (which, as we mentioned above, were promulgated after the
    arbitrator’s ruling in this case and are currently subject to a
    preliminary injunction). As currently written, employers
    would qualify for the safe-harbor (that is, not be subject to
    prosecution on a “constructive knowledge” theory) so long as
    they asked the employees to provide further documentation
    from the SSA within 90 days of the date the employer
    received the no-match letter. See 8 C.F.R. § 274a.1(l)(2)(i)(B).8
    7
    Moreover, Aramark has introduced no evidence to suggest that the
    “verification form” workers were instructed to obtain was actually avail-
    able from nearby SSA offices. Testimony at the arbitration hearing indi-
    cated that not all SSA offices provide receipts that would evidence an
    applicant’s request for a new card. So, it is entirely possible that workers
    were asked to return with a document that was, in practice, unavailable.
    8
    This 90-day deadline was adopted after staff at the EEOC recom-
    mended to DHS that the initial proposal, which would have given only a
    60-day deadline, be extended because it did not provided enough time for
    employees to “collect, organize, deliver documentation, and perhaps meet
    with the relevant federal agency and/or seek legal advice while maintain-
    ing their work hours.” Letter from Peggy R. Mastroianni, Associate Legal
    Council, EEOC (Aug. 14, 2006), available at http://www.eeoc.gov/foia/
    letters/2006/vii_national_immigration.html (last visited June 9, 2008); see
    also 
    71 Fed. Reg. 34,281
    , 34,285 (June 14, 2006) (proposing Rule with
    60-day deadline).
    6934 ARAMARK FACILITY SERVS v. SERVICE EMPLOYEES INT’L
    Nothing requires the employer to demand action of any kind
    before 90 days, including any “verification form” indicating
    that the employee has contacted SSA. Moreover, even if the
    employee cannot resolve the discrepancy within 90 days, the
    employer can still qualify for the safe-harbor if it completes
    a new Form I-9 for the employee (using documents that do
    not depend on the disputed social security number). See 
    id.
    § 274a.1(l)(2)(iii). Had the safe-harbor provision been in
    effect, Aramark could easily still have qualified for it when it
    fired the Staples Center employees. This weighs strongly
    against constructive notice here.
    (3)   The Offer to Rehire
    Perhaps realizing that it had imposed too short a turn-
    around time, Aramark told the workers that they would be
    rehired at any point if they provided the requested documenta-
    tion. Aramark relies heavily on this fact in its appeal, and the
    district court found it to weigh heavily in Aramark’s favor,
    stating:
    It kind of startled me a little bit. In terms of the situa-
    tion now and that is that none of these employees, as
    I understand it, have provided anything — reconcili-
    ation to show that there’s valid social security num-
    bers, et cetera. What is Aramark supposed to do?
    Keep them on until when?
    [10] With all due respect to the district court, this question
    misses the mark. It presupposes that the court, in determining
    whether the arbitrator’s award ran specifically counter to pub-
    lic policy, could reweigh the evidence of events after the fir-
    ings. This was improper: the district court should not have
    disturbed the arbitrator’s implicit conclusion that the post-
    termination evidence did not constitute “convincing informa-
    tion” of immigration violations. See, e.g., Stead Motors, 
    886 F.2d at 1211
    .
    ARAMARK FACILITY SERVS v. SERVICE EMPLOYEES INT’L 6935
    The Supreme Court addressed a similar situation in Misco.
    In that case, a manufacturing employee was fired under a pol-
    icy prohibiting possession and consumption of marijuana on
    company property. 
    484 U.S. at
    32 & n.2. The employer knew
    at the time of firing that the employee (1) had been arrested
    for possession of marijuana at his home; and (2) had been
    present in someone else’s car in a company lot where mari-
    juana was found. See 
    id. at 33
    . At an arbitration hearing, the
    company learned for the first time that police had searched the
    fired employee’s own car while it was parked on company
    property, and had found marijuana inside. See 
    id.
     The arbitra-
    tor declined to consider this evidence, however, because the
    employer did not rely on it as a basis for the discharge. 
    Id. at 34
    . The arbitrator found insufficient evidence that the
    employee had violated company policy, and therefore ordered
    reinstatement. The employer then sued in district court, which
    held that the award of reinstatement violated public policy
    concerning intoxicated individuals operating dangerous
    machinery. 
    Id. at 34-35
    . The court of appeals agreed, reason-
    ing that the arbitrator should have considered the evidence
    that marijuana was found in the employee’s own car on the
    company lot. See 
    id.
    The Supreme Court reversed and specifically disavowed
    the court of appeals’ reweighing of the facts based on the
    post-termination evidence. It held that the arbitrator’s decision
    to disregard the evidence was part of his authority to decide
    procedural questions arising in the arbitration, which were not
    subject to review absent evidence of dishonesty or bad faith.
    
    Id. at 39-40
    . It also criticized the appellate court for making
    a factual inference based on this evidence (that is, that an
    employee who had marijuana in his car would, if reinstated,
    likely operate dangerous machinery while under the influ-
    ence). The court stated:
    [I]t was inappropriate for the Court of Appeals itself
    to draw the necessary inference . . . . The parties did
    not bargain for the facts to be found by a court, but
    6936 ARAMARK FACILITY SERVS v. SERVICE EMPLOYEES INT’L
    by an arbitrator chosen by them . . . . Nor does the
    fact that it is inquiring into a possible violation of
    public policy excuse a court for doing the arbitrator’s
    task. If additional facts were to be found, the arbitra-
    tor should find them in the course of any further
    effort the Company might have made to discharge
    [the employee] for having had marijuana in his car
    on company premises.
    
    Id. at 44-45
    .
    [11] Here, similarly, the arbitrator declined to credit the
    post-termination evidence — i.e., that the fired employees had
    not returned with new social security documents to accept
    Aramark’s offer of a rehire. True, the arbitrator did not explic-
    itly state whether he viewed the evidence as irrelevant
    because Aramark could not have considered it as a basis for
    the terminations,9 or whether it was simply unpersuasive
    given the variety of potential explanations why the employees
    had not returned (for example, advice from the union, the
    availability of other jobs, or Aramark’s failure to include an
    offer of back-pay). But regardless of whether he deemed the
    evidence irrelevant or unpersuasive, under Misco, the courts
    cannot second-guess the arbitrator’s findings, even while con-
    ducting a public policy inquiry. The arbitrator found no “con-
    vincing information” of immigration violations, which
    necessarily included any inferences that could have been
    drawn from the employees’ failure to later return with docu-
    9
    As SEIU notes, “arbitrators generally hold that a discharge must stand
    or fall upon the reason given at the time of discharge; the employer cannot
    add other reasons when the case reaches arbitration.” Elkouri & Elkouri,
    How Arbitration Works 406 (6th ed. 2003) (citations and quotations omit-
    ted); see also Misco, 
    484 U.S. at
    40 n.8 (“Labor arbitrators have stated that
    the correctness of a discharge must stand or fall upon the reason given at
    the time of discharge, . . . and arbitrators often, but not always, confine
    their considerations to the facts known to the employer at the time of the
    discharge.” (citations and internal quotation marks omitted)).
    ARAMARK FACILITY SERVS v. SERVICE EMPLOYEES INT’L 6937
    ments. The district court erred by reweighing this evidence
    and substituting its own judgment for that of the arbitrator.
    Moreover, the district court’s approach is problematic
    because it suggests that employers could fire employees men-
    tioned in no-match letters without providing any time at all
    for a correction, since they could always defend themselves
    in later proceedings on the ground that employees had still not
    come forward with appropriate documentation. This risks
    encouraging discriminatory practices in the name of compli-
    ance with the IRCA, in direct contravention of this court’s
    teachings in Collins.
    One final point. Aramark has introduced no evidence con-
    cerning the fired employees’ actual employment status other
    than that they were named in the no-match letters and did not
    quickly respond to the request for further verification of their
    social security status. In addition to creating no “constructive
    notice,” this evidence simply does not demonstrate that any of
    the workers actually were unauthorized to work, particularly
    because a social security card is only one way to prove work
    authorization. See Office of Special Counsel, Frequently
    Asked Questions, available at http://www.usdoj.gov/crt/osc/
    htm/facts.htm#verify (last visited June 9, 2008). Absent evi-
    dence that the workers were actually unauthorized, Aramark
    would not violate the statute if it reinstated them. 8 U.S.C.
    § 1324a(a)(1) (providing it is unlawful to hire an alien “know-
    ing the alien is an unauthorized alien” (emphasis added)); id.
    § 1324a(a)(2) (prohibiting knowing continued employment of
    “an unauthorized alien”).
    [12] Accordingly, the public policy against knowing
    employment of undocumented workers does not specifically
    militate against the arbitrator’s award.10
    10
    SEUI contends that Aramark’s reverification procedures themselves
    violated public policy. We need not address this argument. True, an arbi-
    tration award that violates some public policies may at times be confirmed
    6938 ARAMARK FACILITY SERVS v. SERVICE EMPLOYEES INT’L
    V.    CONCLUSION
    This case turns on the deference owed to the arbitrator’s
    factual findings, as well as the narrowness of both the public
    policy exception and the doctrine of constructive knowledge
    in the immigration context. Though it seems reasonable to
    suspect that some of the fired workers were undocumented,
    the law did not permit the district court to rely on this suspi-
    cion in vacating the arbitration award.
    We find no issues of material fact and, even viewing the
    record in the light most favorable to Aramark, conclude that
    SEIU is entitled to judgment as a matter of law. The decision
    of the district court is REVERSED and the matter
    REMANDED with instructions to confirm the arbitration
    award. See Foster Poultry Farms, 74 F.3d at 173 (“An arbi-
    tration award must be confirmed as long as the arbitrator is
    even arguably construing or applying the contract and acting
    within the scope of his authority.” (citations, quotation marks,
    and alterations omitted)).
    because of countervailing considerations. See Virginia Mason Hosp. v.
    Wash. State Nurses Ass’n, 
    511 F.3d 908
    , 917 (9th Cir. 2007) (citing E.
    Associated Coal Corp. v. United Mine Workers of Am., Dist. 17, 
    531 U.S. 57
     (2000)). But here, we conclude that public policy does not militate
    against the arbitrator’s award here, so there is no need to balance compet-
    ing interests.
    

Document Info

Docket Number: 06-56662

Filed Date: 6/16/2008

Precedential Status: Precedential

Modified Date: 10/14/2015

Authorities (19)

W. R. Grace & Co. v. Local Union 759, International Union ... , 103 S. Ct. 2177 ( 1983 )

Collins Foods International, Inc. v. U.S. Immigration and ... , 948 F.2d 549 ( 1991 )

lorna-a-olsen-v-idaho-state-board-of-medicine-idaho-state-board-of , 363 F.3d 916 ( 2004 )

Phoenix Newspapers, Inc. v. Phoenix Mailers Union Local 752,... , 989 F.2d 1077 ( 1993 )

Giancarlo Incalza v. Fendi North America, Inc. , 479 F.3d 1005 ( 2007 )

Southern California Gas Company v. Utility Workers Union of ... , 265 F.3d 787 ( 2001 )

95-cal-daily-op-serv-5371-95-daily-journal-dar-9198-arizona-electric , 59 F.3d 988 ( 1995 )

Hoffman Plastic Compounds, Inc. v. National Labor Relations ... , 122 S. Ct. 1275 ( 2002 )

independent-towers-of-washington-on-behalf-of-themselves-and-a-class-of , 350 F.3d 925 ( 2003 )

United Paperworkers International Union v. Misco, Inc. , 108 S. Ct. 364 ( 1987 )

International Brotherhood of Electrical Workers, Local 97 v.... , 143 F.3d 704 ( 1998 )

Eastern Associated Coal Corp. v. United Mine Workers, ... , 121 S. Ct. 462 ( 2000 )

First Options of Chicago, Inc. v. Kaplan , 115 S. Ct. 1920 ( 1995 )

prudential-bache-securities-inc-v-robert-d-tanner-jose-f-rodriguez-v , 72 F.3d 234 ( 1995 )

Mester Manufacturing Company v. Immigration and ... , 879 F.2d 561 ( 1989 )

New El Rey Sausage Company, Inc. v. U.S. Immigration and ... , 925 F.2d 1153 ( 1991 )

Milton BARNES, Petitioner-Appellant, v. Martin LOGAN, Koren ... , 122 F.3d 820 ( 1997 )

federated-department-stores-dba-ralphs-grocery-company , 901 F.2d 1494 ( 1990 )

Virginia Mason Hospital v. Washington State Nurses Ass'n , 511 F.3d 908 ( 2007 )

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