Marcos Montes v. Janitorial Partners, Inc. , 859 F.3d 1079 ( 2017 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued May 15, 2017 Decided June 16, 2017
No. 15–7107
MARCOS MONTES,
APPELLEE/CROSS-APPELLANT
v.
JANITORIAL PARTNERS, INC. AND RAY PARK,
APPELLANTS/CROSS-APPELLEES
GEOFF OGDEN, ET AL.,
CROSS-APPELLEES
Consolidated with 16–7063
Appeals from the United States District Court
for the District of Columbia
(No. 1:13–cv–00410)
Denise M. Clark argued the cause and filed the briefs for
the appellee/cross-appellant.
John A. DiNucci argued the cause and filed the briefs for
the appellants/cross-appellees.
Before: GARLAND, Chief Judge, and HENDERSON and
WILKINS, Circuit Judges.
2
Opinion for the Court filed by Circuit Judge HENDERSON.
KAREN LECRAFT HENDERSON, Circuit Judge: Manuel
Montes sued his employer for wage underpayment. When his
employer failed to respond, Montes obtained a default
judgment for himself and two fellow employees. But there
was a problem: the statute he sued under required the fellow
employees to formally “opt in” to the lawsuit. They had not
done so. Reacting to their failure, the district court vacated its
default judgment as to Montes’s two fellow employees,
concluding it had lacked subject matter jurisdiction to enter it.
That was error. The opt-in omission did not oust the court of
subject matter jurisdiction of their claims. Nevertheless, the
judgment may be void for a different reason: two defendants
claim they were never served with the complaint. To decide
the service issue, the district court must hold an evidentiary
hearing on remand.
I. BACKGROUND
Janitorial Partners, Inc. (JPI) is a Virginia corporation that
provides janitorial services throughout the District of Columbia
(D.C.) metropolitan area. For several years, it employed
Montes as a janitor. In March 2013, Montes sued JPI and four
of its officers, including President Ray Park. He asserted
claims under the Fair Labor Standards Act (FLSA), 29 U.S.C.
§§ 201 et seq. and two D.C. statutes,1 alleging the defendants
failed to pay, inter alia, minimum wage or overtime.
Montes styled his lawsuit as an FLSA collective action.
In a collective action, the named plaintiff sues on behalf of
1
The statutes are the D.C. Minimum Wage Revision Act, D.C.
CODE §§ 32-1001 et seq. (2013), and the D.C. Wage Payment and
Collection Law, D.C. CODE §§ 32-1301 et seq. (2013).
3
himself and other similarly-situated employees. 29 U.S.C.
§ 216(b). Section 16(b) of the FLSA provides that “[n]o
employee shall be a party plaintiff to [a collective] action
unless he gives his consent in writing . . . and such consent is
filed in the court in which such action is brought.” Id.
Montes alleged that “there [were] 2 similarly-situated persons”
whose “harms suffered . . . were the same as or substantially
similar” to his. Compl. ¶¶ 57, 59, Joint Appendix 19. He
also alleged that collective-action “[c]onsents . . . have [been]
and continue to be executed.” Id. ¶ 10, Joint Appendix 11.
But he did not file the consents with his complaint.
Summonses issued for each defendant. According to
process server Dervin Romero’s two affidavits, service was
effectuated on Park both individually and as JPI’s registered
agent on June 6, 2013, at JPI headquarters.2 This meant JPI
and Park had until June 27 to answer but neither did. The clerk
of court therefore declared them in default on July 2.
Montes’s counsel subsequently moved for entry of default
judgment on behalf of “Plaintiffs Marcos Montes, Victor
Palma, and Sandra Zelaya.” Joint Appendix 52. Although a
supporting memorandum asserted that Palma and Zelaya
“consented to th[e] action,” Joint Appendix 54 n.2, their
consent forms remained unfiled. The district court
nonetheless entered a default judgment for Montes, Palma and
Zelaya. It also awarded costs and attorney’s fees.
The three soon began efforts to collect on their judgment.
But because the judgment caption listed only Montes’s name,
they could not register it in the Virginia courts. Accordingly,
they requested the district court to “issue a new Order and
Judgment with the full caption.” Joint Appendix 89. The
2
The district court docket contains no evidence that Romero
served the other three named defendants and no judgment was
entered against them.
4
district court obliged. Several months later, they sought and
obtained an entry of judgment and writ of execution against
PNC Bank, N.A., JPI’s and Park’s garnishee. The bank then
paid Montes, Palma and Zelaya the full amount of the default
judgment.
JPI and Park moved to vacate the default judgment under
Federal Rule of Civil Procedure 60(b). They argued, inter
alia, that the judgment was void because Palma and Zelaya had
not opted in. JPI and Park also claimed they had never been
served and therefore the district court lacked personal
jurisdiction of them. In support, they submitted several
declarations. Park’s declaration asserted that he generally
worked from home, not at JPI headquarters where Romero
allegedly served him. Park also noted that Romero’s affidavit
described him as thirty-five years old when in fact he was over
fifty. According to the declaration of JPI general manager,
Donald Garrett, Romero went to JPI headquarters but did not
serve Park while there. In another declaration, Jeffrey
Lawson, a former JPI business advisor, stated he e-mailed Park
on June 6, 2013 shortly after 3:00 pm. Had Park come in that
day, Lawson said, the two would not have corresponded by e-
mail. In light of this evidence, JPI and Park requested the
district court to conduct a hearing before crediting Romero’s
affidavit.
In September 2015, the district court rejected JPI’s and
Park’s defense without a hearing. It emphasized that
Romero’s “affidavits unequivocally state[d] that . . . Park . . .
was served . . . at 2:24PM on June 6, 2013.” Montes v.
Janitorial Partners, Inc., 128 F. Supp. 3d 188, 192 (D.D.C.
2015). The court did not find Park’s, Garrett’s or Lawson’s
declarations sufficiently credible. Nevertheless, it set aside its
judgment for Palma and Zelaya. Reasoning that the FLSA’s
opt-in requirement was “more than just a procedural
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technicality,” id. at 193, the court concluded it lacked subject
matter jurisdiction because Palma and Zelaya were not party
plaintiffs and vacated the judgment in their favor. It then
referred the case to a magistrate judge for a report and
recommendation regarding Montes’s attorney’s fees award in
light of the partial vacatur.
II. ANALYSIS
Each party challenges one of the district court’s rulings.
Montes principally attacks the substance of the district court’s
vacatur decision, arguing that “the District Court’s judgment in
Ms. Zelaya and Mr. Palma’s favor, while perhaps granted in
error, was not void.” Cross-Appellant Br. 13. JPI and Park
challenge the district court’s failure to hold an evidentiary
hearing before ruling on whether service had been effectuated.3
A. DISTRICT COURT’S PARTIAL VACATUR
We begin with Montes’s argument. Before reviewing its
merits, we address our own jurisdiction. JPI and Park argue
that we lack jurisdiction of Montes’s appeal because it is moot.
The United States Constitution limits our jurisdiction to
“Cases” and “Controversies.” U.S. CONST. art III., § 2, cl. 1.
“A case becomes moot—and therefore no longer a ‘Case’ or
3
JPI and Park also argue that the default judgment was void
as to Palma and Zelaya because they had no notice of their claims.
But the complaint itself gave them notice, as it brought a collective
action under the FLSA, asserted that two persons similarly situated
to Montes qualified as Collective Action Members and requested
“unpaid minimum wages and overtime against Defendants in favor
of Plaintiff and all Collective Action Members.” Joint Appendix 24
(emphasis added). Assuming for this argument that JPI and Park
were in fact properly served, they were therefore on notice that any
default judgment could reach employees other than Montes.
6
‘Controversy’ for purposes of Article III—when the issues
presented are no longer ‘live’ or the parties lack a legally
cognizable interest in the outcome.” Already, LLC v. Nike,
Inc., 568 U.S. ___, 133 S. Ct. 721, 726 (2013) (some internal
quotation marks omitted). If an intervening circumstance
deprives the plaintiff of a personal stake in the lawsuit’s
outcome, the action must be dismissed as moot. Genesis
Healthcare Corp. v. Symczyk, 569 U.S. ___, 133 S. Ct. 1523,
1528 (2013). Because Montes retains a personal stake in the
controversy regarding whether the judgment in favor of Palma
and Zelaya should be reinstated, however, the action is not
moot. The district court directed a magistrate judge to
recalculate Montes’s attorney’s fees award in light of its having
vacated Palma’s and Zelaya’s judgment. Presumably, the
district court concluded that the attorney’s fees award could
require reduction given Palma’s and Zelaya’s non-plaintiff
status. Cf. 29 U.S.C. § 216(b) (In FLSA collective action,
“[t]he court . . . shall, in addition to any judgment awarded to
the plaintiff . . . , allow a reasonable attorney’s fee to be paid
by the defendant, and costs of the action.”). If so, Montes
might not have been able to recover as great a share of the
litigation costs. He also had an interest in ensuring the
attorney’s fees award was not reduced. Cf. Richards v. Delta
Air Lines, Inc., 453 F.3d 525, 529 (D.C. Cir. 2006) (“So long
as [a class-action] plaintiff retains a personal stake in shifting
to successful class litigants a portion of those fees and expenses
incurred as the purported class representative, the plaintiff has
a sufficient interest to appeal the denial of class certification.”
(brackets and internal quotation marks omitted)).
We proceed to the merits of his argument. Conducting de
novo review, United States v. Philip Morris USA Inc., 840 F.3d
844, 849 (D.C. Cir. 2016) (“[w]e review a district court’s Rule
60(b)(4) decision de novo.”), we believe the district court erred
in vacating the judgment for Palma and Zelaya. Rule 60(b)(4)
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permits a district court “[o]n motion and just terms” to “relieve
a party . . . from a final judgment, order, or proceeding” if “the
judgment is void[.]” FED. R. CIV. P. 60(b). But “[a]
judgment is not void . . . simply because it . . . may have been
erroneous.” United Student Aid Funds, Inc. v. Espinosa, 559
U.S. 260, 270 (2010) (internal quotation marks omitted). On
the contrary, it is void only in limited circumstances—for
example, if entered by a court without subject matter
jurisdiction. See Philip Morris, 840 F.3d at 850. This
principle has an important corollary: Not every “claim of
procedural deficiency” implicates subject matter jurisdiction.
Bell Helicopter Textron, Inc. v. Islamic Republic of Iran, 734
F.3d 1175, 1179 (D.C. Cir. 2013). We therefore must decide
whether section 16(b)’s opt-in requirement is of jurisdictional
significance.4
The distinction between jurisdictional and
nonjurisdictional requirements is important. Jurisdictional
requirements “govern a court’s adjudicatory authority[.]”
Gonzalez v. Thaler, 565 U.S. 134, 141 (2012) (internal
quotation marks omitted). By contrast, a nonjurisdictional
requirement, “even if important and mandatory,” Henderson ex
rel. Henderson v. Shinseki, 562 U.S. 428, 435 (2011), does not.
The United States Supreme Court has prescribed a “readily
administrable bright line” to distinguish the two. Arbaugh v.
4
JPI and Park argue Montes has forfeited any argument that
section 16(b) is procedural by not raising it in district court. We
disagree. In district court, Montes argued that Palma’s and Zelaya’s
judgment was within the Court’s subject matter jurisdiction. He
also contended their failure to file consent forms did not change that.
The district court disagreed. Montes v. Janitorial Partners, Inc.,
128 F. Supp. 3d 188, 193 (D.D.C. 2015). Montes’s current
argument is thus an effort to “refine and clarify [his] analysis in light
of the district court’s ruling.” Teva Pharm., USA, Inc. v. Leavitt,
548 F.3d 103, 105 (D.C. Cir. 2008).
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Y&H Corp., 546 U.S. 500, 516 (2006). If the Congress
“clearly states that a threshold limitation on a statute’s scope
shall count as jurisdictional,” that is the end of the matter. Id.
at 515–16. But if the Congress “does not rank a statutory
limitation on coverage as jurisdictional,” a court must not treat
it as such. Id. at 516. We examine the provision’s “text,
context, and relevant historical treatment,” Reed Elsevier, Inc.
v. Muchnick, 559 U.S. 154, 166 (2010), and ask whether
“traditional tools of statutory construction . . . plainly show
that Congress imbued a procedural bar with jurisdictional
consequences[,]” United States v. Kwai Fun Wong, 575 U.S.
___, 135 S. Ct. 1625, 1632 (2015).
Applying these principles, we readily conclude section
16(b)’s opt-in requirement is nonjurisdictional. Section 16(b)
is a broad provision. See 29 U.S.C. § 216(b). It creates a
right of action against employers for wage and hours violations.
It provides for the recovery of costs and attorney’s fees. And
it sets out the circumstances in which certain action by the
Secretary of Labor affects an employee’s right to sue. But it
does not purport to limit the court’s power. Gonzalez, 565
U.S. at 141. In fact, its sole reference to jurisdiction is the
clause permitting a plaintiff to sue “in any Federal or State
court of competent jurisdiction.” 29 U.S.C. § 216(b). This
language confirms our conclusion in that it assumes a grant of
jurisdiction elsewhere. And, here, there is such a grant. 28
U.S.C. § 1331 assigns the federal district court original
jurisdiction over all civil actions “arising under the . . . laws . . .
of the United States.” Montes’s action arose under the FLSA,
plainly a law of the United States. And “nothing in § [1331]
conditions its jurisdictional grant on compliance with
§ [16(b)’s opt-in requirement].” Musacchio v. United States,
577 U.S. ___, 136 S. Ct. 709, 717 (2016) (internal quotation
marks omitted). The district court therefore had subject
matter jurisdiction. Palma’s and Zelaya’s failure to comply
9
with section 16(b) means instead that they failed to establish
their cause of action. See Trudeau v. FTC, 456 F.3d 178, 183–
85 (D.C. Cir. 2006).
B. DISTRICT COURT’S FAILURE TO HOLD
EVIDENTIARY HEARING
Although a district court “[t]ypically . . . enjoys broad
discretion in managing its docket[,]” Grimes v. District of
Columbia, 794 F.3d 83, 90 (D.C. Cir. 2015), that discretion is
not limitless. And in some circumstances, failure to hold an
evidentiary hearing constitutes an abuse of discretion. E.g.,
Cobell v. Norton, 391 F.3d 251, 261–62 (D.C. Cir. 2004). As
we long ago explained, a district court “cannot rest its decision
simply on the paper record” if a factual dispute’s resolution
turns on the parties’ credibility. Prakash v. Am. Univ., 727
F.2d 1174, 1180 (D.C. Cir. 1984). It must instead hold a
hearing to assess credibility. Id.
That principle controls here. The record before the
district court contained contradictory evidence regarding
service of process. Romero swears he served Park. Park,
Garrett and Lawson insist otherwise. Had one of the written
submissions “demonstrate[d] the falsity of [another] with
reasonable certainty,” perhaps the district court could have
avoided assessing credibility. Id. But there was reason to
question whether Romero served Park. Park emphasized that
he was a decade and a half older than Romero believed. And
Lawson’s e-mail to Park may suggest Park was not at JPI
headquarters on June 6. Relying as it did on the declarations
only, the district court’s “opportunity to judge credibility was
nonexistent.” Autera v. Robinson, 419 F.2d 1197, 1202 (D.C.
Cir. 1969). It therefore lacked a sufficient basis to credit one
declaration over another. See Durukan Am., LLC v. Rain
Trading, Inc., 787 F.3d 1161, 1164 (7th Cir. 2015) (“Only a
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live hearing can resolve [a] factual dispute” regarding service
in deciding Rule 60(b)(4) motion.). Under these
circumstances, the district court abused its discretion in failing
to conduct an evidentiary hearing.
For the foregoing reasons, we reverse the district court’s
vacatur of the default judgment for Palma and Zelaya. On
remand, the district court must hold an evidentiary hearing to
determine whether its original judgment was void for lack of
personal jurisdiction based on defective service of process.
So ordered.