The Government Fined This Farm Over $550,000—Mostly for a Paperwork Violation
Joe and Russell Marino will finally get their day in court. The ruling represents a turning of the tide when it comes to the fairness of such proceedings, where agencies have long played both prosecutor and jury.
The government has fined you more than $550,000—most of it for an alleged paperwork violation. You are a small business owner, so the only universe where you can pay that is a parallel one. And when you challenge that determination, you're fed a rotten cherry on top: The same agency that hit you with those penalties also gets to play judge and jury.
That's what happened to Joe and Russell Marino, the brothers who own Sun Valley Orchards, who eked out a win last week when the U.S. Court of Appeals for the 3rd Circuit ruled that they're entitled to have their case heard in an independent federal court. The decision represents a turning of the tide when it comes to the fairness of such proceedings, where in-house judges have long evaluated penalties imposed by the very agency that employs them.
Sun Valley Orchards came under the scrutiny of the Department of Labor (DOL) in 2015, when inspectors visited the business to see if it was conforming with an employment agreement formed under the H-2A nonimmigrant visa program. The farm had provided workers with a meal plan, the investigators noted, while the paperwork for the job order said employees would purchase their own food and cook it in the kitchen. For that, the agency assessed $198,450 in monetary penalties and $128,285 (the price of the meals) in back wages, even though it is perfectly legal for such businesses to offer meal plans—many do—and even though the meal plan offered by Sun Valley was cheaper than the ceiling allowed under Labor Department regulations.
The Department of Labor's "only concern with Sun Valley Orchards' meal plan was that it was not accurately described on the farm's paperwork," says Sun Valley's complaint. "Instead, the contractor who filled out Sun Valley Orchards' application erroneously stated that employees would have access to the kitchen so that they could cook their own meals….In subsequent years, after the 2015 season, Sun Valley Orchards has continued to offer a meal plan for H-2A workers but has described the meal plan on its H-2A paperwork. DOL has not expressed any concern with Sun Valley Orchards' meal plan in those later years, confirming that DOL's sole concern with the meal plan in 2015 was that it was not fully described on the farm's paperwork."
And the rest of the fine? A big chunk of it comes down to a dispute over the departure of a handful of employees. The Labor Department alleged that 19 employees left early in 2015 because they were "constructively forced" to do so, and that they had "sign[ed] a form…stating that they were leaving early for 'personal reasons'" after being coerced. Sun Valley counters that those individuals left because they were asked to pick asparagus and objected to the physical demands of the task. The farm was hit with $2,700 in penalties and $135,623.94 in back wages.
Smaller issues added to the total, in one case because a supervisor sold non-alcoholic drinks to the employees (sodas for $1, energy drinks for $1.50, and bottled water for $0.75). While it is not unlawful to sell drinks to workers, the DOL took issue with the fact that a supervisor was gaining a small profit from those sales (though an independent third-party vendor could very well charge more than those prices). For this the farm was assessed $71,000 in back wages.
Until last year, it looked as if the Marino brothers would not have much luck in getting an independent court to review those penalties. A lifeline came in June 2024 with the Supreme Court's decision in SEC v. Jarkesy. The case concerned a hedge fund manager who faced $300,000 in penalties from the Securities and Exchange Commission (SEC), only for that same agency—the SEC—to evaluate and adjudicate the matter. That violated the Seventh Amendment, the Court ruled, which promises the right to a trial by jury in most civil cases.
The Department of Labor attempted to escape that precedent in Sun Valley's case by claiming this was primarily about immigration, which it hoped would constrain the proceedings to an administrative judge. "We are unpersuaded," wrote Thomas Hardiman for the 3rd Circuit. "While history does sanction non-Article III adjudication for certain immigration-related matters, this case falls well outside the heartland of that tradition." The order from the administrative tribunal ordering the business to pay those penalties, then, would not suffice.
When the Supreme Court issued its opinion in SEC v. Jarkesy, not everyone heralded it as good news for the little guy. Justice Sonia Sotomayor, for example, said in dissent that it was a "power grab."
As I wrote at the time, it was, in some sense, a power grab. The decision, as applied here in Sun Valley's case, took power away from government agencies who held a monopoly on it. And that's good. The feds should not be able to cripple a business with the same effort it takes to click "I agree" on terms no one reads.