The court rejected the appeal of Royal Crown Insurance Company from a decision by a hearing officer in a bonding case.
In May 2009, a hearing officer awarded more than $28,000 in back pay to workers at the former Rifu Garment Mfg. operation in Saipan. Rifu closed its doors in January 2009.
William Fitzgerald argued the case in the 9th Circuit representing the commonwealth on a pro bono basis.
Howard Willens wrote the briefs in the 9th Circuit in his capacity as an assistant attorney general. Willens also serves as special legal counsel to the governor. Anthony Long appeared for Royal Crown.
Royal Crown took its appeal from the hearing officer’s order to federal court, where Judge Alex Munson denied the appeal.
Royal Crown, suing both the commonwealth and Kaipat as an individual, claimed that Labor’s process with respect to bonding cases had violated its constitutional rights.
Royal Crown refused to pay the workers what was owed under the bonds guaranteeing Rifu’s payment of wages.
Munson held that Royal Crown had filed its appeal in federal court too late. Royal Crown’s appeal was due no later than Aug. 1, 2009. Royal Crown did not file until Aug. 17, 2009.
Royal Crown said its right to due process of law had been denied but Munson rejected that argument.
Assistant Attorney General Eli Golob represented the commonwealth in the District Court proceeding.
Royal Crown filed its appeal from the hearing officer’s decision on June 1, 2009.
Under CNMI law, the Labor secretary has 30 days in which to act on an appeal.
If the secretary does not act within the time allowed, the hearing officer’s decision is affirmed automatically by operation of law.
In this case, the secretary had not issued an order by July 1, 2009, so the hearing officer’s decision requiring Royal Crown to pay the workers became final.
Then, the law provides a party has 30 days in which to appeal to the courts. Royal Crown missed this 30-day deadline for appeal to the courts.
The 9th Circuit held that Royal Crown could not sue the commonwealth because it is not a “person” under the civil rights statutes.
The court held that Royal Crown was barred from suing then-acting Labor Secretary Jacinta M. Kaipat as well.
According to the court: “Because the agency’s adjudication was fair according to federal law and Royal Crown failed to petition in a timely manner for review from the secretary’s final action, both the legal and factual issues resolved in that action gained preclusive effect in federal court pursuant to the doctrine of administrative res judicata.”
Res judicata, also known as claim preclusion, is the Latin term for “a matter [already] judged.”
The court explained that “the department in the instant matter adjudicated the question whether its procedures in its bond action against Royal Crown comported with due process.”
Labor said it acted promptly on the Rifu workers’ claims for back pay. The company notified the department in January 2009 that it would be unable to stay in business. The department said it held hearings and issued an order on back pay on February 27, 2009.
The employer was unable to pay, so the department served a notice on Royal Crown in March 2009 to collect on the bonds.
The hearing on the bonds was held on May 1, 2009, and the hearing officer’s order directing Royal Crown to pay the workers was issued on May 18, 2009.
Royal Crown obtained a delay of more than two years, from May 2009 to July 2011, with its appeals.
