Randolph-Sheppard Vending Stand Act (RSA); 20 USC §§ 107(a) & (b); §§ 107a(a)(5) & 107b; 34 CFR § 395.3; Whether commissions are prohibited; Grievance procedure; §§ 107d-1(a) & 107d-2; Sovereign immunity & RSA panels; U.S. Const. amend. XI; Tennessee Dep’t of Human Servs. v. U.S. Dep’t of Educ. (T-DHS); Federal Mar. Comm’n v. South Carolina Ports Auth. (FMC); Tyler v. United States Dep’t of Educ. Rehab. Servs. Admin. (10th Cir.); Waiver; Sossamon v. Texas; Attorney fees; The “American Rule”; Bureau of Services for the Visually Impaired (BSVI)

The court held that the district court erred by ruling that petitioner-Ohio’s BSVI could require blind vendors under the RSA to pay commissions to counties for using state and county facilities. But while prospective relief was appropriate, Eleventh Amendment sovereign immunity barred the RSA arbitration panel from awarding intervenor-Cyrus damages and pre- and post-judgment interest. The court also held that the “American Rule” as to attorney fees applies to administrative proceedings. Cyrus contracted with Ohio under the RSA to operate vending machines on state and county property. As a condition, he agreed to pay commissions to a county grantor and a university grantor. After the Ohio Attorney General issued a formal opinion making the commissions illegal, he stopped making the payments and filed a grievance with the Department of Education under the RSA grievance procedure. The arbitration panel awarded Cyrus damages, interest, attorneys’ fees, and prospective relief. Ohio sued, and the district court primarily ruled for the State. On appeal, the court held that it erred by ruling that the BSVI, which implements the RSA in Ohio, could charge blind vendors commissions for using county facilities. It held that the “RSA and its relevant regulations govern the legality of taking money from blind vendors” and that the RSA does not “grant the federal government, or any other entity, the power to collect funds from blind vendors.” It concluded that the BSVI “cannot cause a county, by operation of the agreements that it enters into, to collect the money for impermissible reasons any more than it can directly fund such purposes.” But the court rejected Cyrus’s argument that “the Eleventh Amendment does not bar the RSA panel from imposing liability against BSVI in proceedings brought by private parties.” Rather, it held that sovereign immunity applies to RSA proceedings and that the BSVI did not waive it. Thus, the RSA panel “exceeded its authority when it awarded Cyrus damages, prejudgment interest, and post-judgment interest; its decision is ‘contrary to constitutional . . . immunity.’” The court also agreed with the district court’s rejection of the panel’s attorney fee award. “The federal RSA does not provide for—or even mention—attorneys’ fees.” Further, the court joined two other circuits by applying the American Rule to administrative proceedings. Reversed in part, affirmed in part, and remanded.