[Federal Register Volume 76, Number 11 (Tuesday, January 18, 2011)]
[Pages 2890-2891]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-922]                      

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Arbitration Panel Decision Under the Randolph-Sheppard Act

AGENCY: Department of Education.

ACTION: Notice of arbitration panel decision under the Randolph-
Sheppard Act.


SUMMARY: The Department of Education (Department) gives notice that on 
March 31, 2010, an arbitration panel rendered a decision in the matter 
of Daniel Czubak v. Illinois Department of Human Services, Division of 
Rehabilitation Services, Case no. R-S/08-5. This panel was convened by 
the Department under 20 U.S.C. 107d-1(a), after the Department received 
a complaint filed by the petitioner, Daniel Czubak.

FOR FURTHER INFORMATION CONTACT: You may obtain a copy of the full text 
of the arbitration panel decision from Suzette E. Haynes, U.S. 
Department of Education, 400 Maryland Avenue, SW., Room 5022, Potomac 
Center Plaza, Washington, DC 20202-2800. Telephone: (202) 245-7374. If 
you use a telecommunications device for the deaf (TDD), you may call 
the Federal Relay Service (FRS), toll-free, at 1-800-877-8339.
    Individuals with disabilities may obtain this document in an 
accessible format (e.g., braille, large print, audiotape, or computer 
diskette) on request to the contact person listed under FOR FURTHER 

SUPPLEMENTARY INFORMATION: Under section 6(c) of the Randolph-Sheppard 
Act (the Act), 20 U.S.C. 107d-2(c), the Secretary publishes in the 
Federal Register a synopsis of each arbitration panel decision 
affecting the administration of vending facilities on Federal and other 


    Daniel Czubak (Complainant) alleged violations by the Illinois 
Department of Human Services, Division of Rehabilitation Services, the 
State licensing agency (SLA), under the Act and implementing 
regulations at 34 CFR part 395. The allegations pertained to his 
operation of a vending facility comprised of vending machines at the 
Shapiro Developmental Center (SDC) from November 2005 until February 
2009 when his vending operator's agreement at the SDC was terminated by 
the SLA.
    The Complainant began operation of the vending facility at SDC when 
granted a Temporary Income Opportunity in 2005. Later, after being the 
successful bidder and signing a vending operator's agreement in May 
2006, he continued operating the facility until February 2009.
    Appended to the May 2006 vending operator's agreement was a 
Memorandum of Understanding (MOU) dated April 2004 between the SLA and 
the SDC. As a part of the MOU, the SDC required that the SLA ensure 
that the vendor operating the vending machines would make monthly 
commission payments to the SDC in the amount of $3,699.00 based upon 
the following: (a) Current vending machines at the SDC, (b) current 
prices established for items sold in the vending machines, and (c) the 
current amount of sales from the vending operation. This formula and 
the commission amount were based on a report from the private 
commercial operator, who previously operated the vending machines and 
made monthly commission payments to SDC based on a percentage of its 
vending sales.
    Additionally, the MOU limited the ability of the vendor to change 
prices on vended products without prior concurrence by the SDC. 
Moreover, the MOU stipulated that price changes could only reflect the 
increased cost of products provided for the vending facility. The MOU 
also stated that the SLA or the vendor would pay any and all claims, 
losses, liabilities, or other expenses, including repair expenses 
arising from the operation of the vending machine facility.
    The vending facility operator's agreement signed by the Complainant 
in May 2006 required Complainant to comply with the MOU between the SLA 
and the SDC, including the amount of commissions to be paid to the SDC.
    In mid-2007, after operating the vending machine facility for 
almost a year, the Complainant began having problems paying the 
commission to the SDC. The Complainant alleged that the resident 
population at the SDC had declined considerably since he began managing 
the facility. At the same time, the Complainant alleged that his costs 
for goods and supplies had increased.
    On September 1, 2007, an agreement was reached between the SLA, the 
SDC, and the Complainant to reduce his monthly commission payments to 
$2,500 with the SLA paying the $1,199 difference to the SDC. From 
September 2007 through March 2008, the SLA made the payments of $1,199 
to the SDC out of Vocational Rehabilitation, Section 110 (VR 110) funds 
until the SLA was advised by the U.S. Department of Education, 
Rehabilitation Services Administration, that VR 110 funds could not be 
used for vendor commission payments.
    Thus, beginning April 2008, the Complainant was again required to 
make the $3,699 monthly payment to the SDC. In early September 2008, 
the director at the SDC sent a formal request to the SLA asking that 
the Complainant be removed, citing a combination of factors, including 
late commission payments, bounced checks, spoiled food, and safety-
related operational problems based upon complaints that the director 
had received. The SLA contacted the director at the SDC and he withdrew 
his request for the Complainant's removal with the stipulation that the 
Complainant would be more closely supervised and that he would become 
current with his commission payments. However, after October 2008, the 
Complainant ceased making commission payments to the SDC.

[[Page 2891]]

    Subsequently, both the Complainant and the Illinois Committee of 
Blind Vendors (ICBV) filed a complaint with the SLA alleging that staff 
of the Business Enterprise Program for the Blind (BEPB) entered into an 
illegal agreement with the Department of Mental Health regarding 
vending services at the SDC. The Complainant alleged that the SLA 
agreement with the Department of Mental Health had severely affected 
the Complainant's ability to earn a living. On November 12, 2008, a 
hearing on this matter was held.
    On December 30, 2008, the hearing officer denied both the 
Complainant and ICBV's complaint stating that neither party had met the 
burden of proof required to show that BEPB's actions were not in 
accordance with State laws, regulations, or policy, were inappropriate, 
or violated any rights of the Complainant. On December 31, 2008, the 
SLA adopted the hearing officer's decision as final agency action. It 
was this decision that the Complainant sought review on appeal by a 
Federal arbitration panel.

Arbitration Panel Decision

    After hearing testimony and reviewing all of the evidence, the 
panel majority ruled that the Illinois Department of Human Services, 
Division of Rehabilitation Services' determination that a blind vendor 
could be required to make monthly commission payments to the SDC 
regarding the vending machine facility was appropriate.
    However, the panel majority concluded that the commission was too 
high, the manner in which the commission was calculated and assessed 
was inconsistent with the manner in which commission amounts being 
charged to blind vendors at other State facilities were being 
calculated and assessed, and that the commission payments were based on 
the private vendor's monthly payments without regard for the 
Complainant's seasonal costs or changes in the cost of purchasing 
products. Accordingly, the panel majority ruled that the SLA's actions 
were not in accordance with the Randolph-Sheppard Act, implementing 
regulations, and State laws, rules, and regulations.
    Thus, the panel majority awarded the Complainant $22,589 in 
compensatory damages for overpayment of commissions to the SDC, plus 
$7,000 in partial compensation for attorney fees for a total award 
amount of $29,589. The panel also retained jurisdiction for 60 days 
from the date of the final decision and award to monitor compliance 
with the terms of the decision.
    One panel member dissented from the panel majority's decision 
stating that the commission structure as a whole and the way the 
commission payments were determined did not violate the Act, 
implementing regulations, and State law, rules, and regulations. With 
regard to the remedy, the dissenter concluded that there is no 
authority for the arbitration panel to order any payments to the 
    The views and opinions expressed by the panel do not necessarily 
represent the views and opinions of the Department.
    Electronic Access to This Document: You can view this document, as 
well as all other Department of Education documents published in the 
Federal Register, in text or Adobe Portable Document Format (PDF) on 
the Internet at the following site: http://www.ed.gov/news/fedregister. 
To use PDF you must have Adobe Acrobat Reader, which is available free 
at this site.

    Note: The official version of this document is the document 
published in the Federal Register. Free Internet access to the 
official edition of the Federal Register and the Code of Federal 
Regulations is available on GPO Access at: 

    Dated: January 12, 2011.
Alexa Posny,
Assistant Secretary for Special Education and Rehabilitative Services.
[FR Doc. 2011-922 Filed 1-14-11; 8:45 am]