Cannon v. District of Columbia ( 2013 )

United States Court of Appeals
FOR THE DISTRICT OF COLUMBIA CIRCUIT
Argued March 14, 2013 Decided June 4, 2013
No. 12-7064
LOUIS P. CANNON, ET AL.,
APPELLANTS
v.
DISTRICT OF COLUMBIA,
APPELLEE
Appeal from the United States District Court
for the District of Columbia
(No. 1:12-cv-00133)
Matthew August LeFande argued the cause and filed the
briefs for appellants.
Richard S. Love, Senior Assistant Attorney General,
Office of the Attorney General for the District of Columbia,
argued the cause for appellee. With him on the brief were Irvin
B. Nathan, Attorney General, Todd S. Kim, Solicitor General,
and Donna M. Murasky, Deputy Solicitor General.
Before: HENDERSON, GRIFFITH and KAVANAUGH, Circuit
Judges.
Opinion for the Court filed by Circuit Judge GRIFFITH.
2
GRIFFITH, Circuit Judge: Like many state and local
governments, the District of Columbia has passed laws against
“double-dipping”: the simultaneous drawing of both a pension
and a salary by a retired employee who has been rehired by the
District. The District enforced a law aimed at curbing
double-dipping against the six plaintiffs, sharply reducing their
salaries by the amount of their pension payments. We hold that
the plaintiffs’ federal challenges to this action are meritless
except in one respect. In slashing three of the plaintiffs’
salaries, the District overstepped the boundaries of the Fair
Labor Standards Act.
I
The plaintiffs are retired from the Metropolitan Police
Department (MPD). During their time with the MPD, they
contributed portions of their salaries to the Police Officers’ and
Firefighters’ Retirement Plan (Retirement Plan), which
provides retirement and disability benefits to employees of the
MPD and the District of Columbia Fire Department. Upon
retirement, each of the plaintiffs began receiving annuities
from the Retirement Plan.
Under § 5-723(e) of the D.C. Code, the salary of a retired
MPD employee drawing on a Retirement Plan pension, who
has been rehired by the District, is offset by the amount of the
pension payments:
Notwithstanding any other provision of law, the salary
of any annuitant who first becomes entitled to [a
Retirement Plan pension], after November 17, 1979,
and who is subsequently employed by the government
of the District of Columbia shall be reduced by such
amount as is necessary to provide that the sum of such
annuitant’s annuity under this subchapter and
3
compensation for such employment is equal to the
salary otherwise payable for the position held by such
annuitant.
D.C. CODE § 5-723(e). In other words, the statute requires the
District to reduce the salary of employees who simultaneously
draw money from the Retirement Plan. Other state and local
governments across the nation also forbid double-dipping by
employees. See, e.g., Connolly v. McCall, 254 F.3d 36, 43 (2d
Cir. 2001) (per curiam) (New York’s “policy of preventing
receipt of a public pension while also receiving a public salary
reflects the notion that such simultaneous income streams
could constitute an abuse of the public fisc.” (internal quotation
marks omitted)); Mascio v. Pub. Employees Ret. Sys. of Ohio,
160 F.3d 310, 312 (6th Cir. 1998) (describing an Ohio statute
preventing double-dipping by state elected officials).
Between 2008 and 2011, the District rehired the plaintiffs
to work in its Protective Services Police Department
(Protective Services), a local law enforcement agency that
protects government agencies and property. Notwithstanding
§ 5-723(e), through the end of 2011, the District paid the
plaintiffs their full salaries while they continued to receive
Retirement Plan annuities. On October 12, 2011, however, the
District sent the plaintiffs letters notifying them that in
November it would begin reducing their salaries by the amount
of their pension payments. The plaintiffs were told that they
could choose to suspend those payments as an alternative to the
salary offset. None did. November passed, and the
double-dipping continued.
With the coming of the new year, however, the District
followed through on its warning and enforced § 5-723(e)
against the plaintiffs. The effect was dramatic. One of the
plaintiffs, Harry Weeks, received no pay for the first pay period
4
of 2012 after the District deducted the amount he received in
pension payments from his Protective Services salary.
When the plaintiffs learned that the District had reduced
their salaries, they immediately filed suit on January 26, 2012,
claiming numerous violations of federal and D.C. law arising
out of the salary offset. Two weeks after the plaintiffs sued, the
District fired plaintiff Louis Cannon from his position as chief
of Protective Services. At the same time, the plaintiffs
discovered that the District had not paid them by direct deposit
for the preceding pay period. Instead, they were issued paper
paychecks. The plaintiffs amended their complaint on
February 14 to allege that the firing and the missed payday
were retaliatory.
Only the plaintiffs’ federal claims are at issue in this
appeal. Three of the plaintiffs assert that they did not receive
the minimum wage required by the Fair Labor Standards Act
(FLSA), 29 U.S.C. § 201 et seq., and all of them claim that: the
salary offset violated the Fifth Amendment, the manner in
which the District administered the offset violated the Equal
Protection Clause, and the District violated the First
Amendment by retaliating against them for filing their suit. On
February 23, 2012, the District moved to dismiss the plaintiffs’
suit, or, in the alternative, for summary judgment. The
plaintiffs also moved for summary judgment on the FLSA
claim. On July 6, 2012, the district court entered summary
judgment for the District on the FLSA and First Amendment
claims, and dismissed the plaintiffs’ Fifth Amendment claims
under Fed. R. Civ. P. 12(b)(6). The district court declined to
exercise supplemental jurisdiction over the plaintiffs’
remaining D.C. law claims. See Cannon v. District of
Columbia, 873 F. Supp. 2d 272, 287-88 (D.D.C. 2012).
5
The plaintiffs timely appealed, and we have jurisdiction
pursuant to 28 U.S.C. § 1291. Summary judgment is
appropriate when “there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter
of law.” FED. R. CIV. P. 56(a). Our review is de novo.
Figueroa v. D.C. Metro. Police Dep’t, 633 F.3d 1129, 1131
(D.C. Cir. 2011). We also review a Rule 12(b)(6) dismissal de
novo and affirm if, accepting all allegations in the plaintiffs’
complaint as true, they have nevertheless failed to state
plausible grounds for relief. Winder v. Erste, 566 F.3d 209, 213
(D.C. Cir. 2009).
II
We first address the FLSA claim brought by plaintiffs
Sheila Ford-Haynes, Gerald Neill, and Weeks. They allege that
the District has failed to pay them the federal minimum wage
required by the FLSA since January 2012, when the District
began applying the salary offset. Weeks also claims that the
FLSA entitles him to overtime. In response, the District asserts
that these employees are not covered by the FLSA, and that the
District had no obligation to pay them minimum wage and
overtime.
An employee is entitled to the federal minimum wage and
overtime unless specifically exempted by the FLSA. See Smith
v. Gov’t Emp. Ins. Co., 590 F.3d 886, 892 (D.C. Cir. 2010).
The employer bears the burden of demonstrating that its
employee is exempt, and exemptions are “narrowly
construed.” Havey v. Homebound Mortg., Inc., 547 F.3d 158,
163 (2d Cir. 2008) (citation omitted).
The District contends that Ford-Haynes, Neill, and Weeks
are exempt under the terms of § 13(a)(1) of the FLSA because
they are employed in a “bona fide executive, administrative, or
6
professional capacity,” as those terms are defined by
Department of Labor (DOL) regulations. 29 U.S.C.
§ 213(a)(1). One such regulation requires that employees
exempted under § 13(a)(1) be “compensated on a salary basis
at a rate of not less than $455 per week . . . , exclusive of board,
lodging or other facilities.” 29 C.F.R. § 541.600(a); see also
Orton v. Johnny’s Lunch Franchise, LLC, 668 F.3d 843,
847-51 (6th Cir. 2012) (describing the “salary basis test”);
Hilbert v. District of Columbia, 23 F.3d 429, 431 (D.C. Cir.
1994) (same). 1 To be “compensated on a salary basis,” an
employee must “regularly receive[] each pay period on a
weekly, or less frequent basis, a predetermined amount
constituting all or part of the employee’s compensation, which
amount is not subject to reduction because of variations in the
quality or quantity of the work performed.” 29 C.F.R.
§ 541.602(a).
The crux of the dispute is whether Ford-Haynes, Neill, and
Weeks receive less than $455 per week in compensation; if so,
the District fails the salary basis test and they are covered by
the FLSA’s minimum wage and overtime requirements. Both
parties agree that the amount each of these plaintiffs receives in
their paychecks has fallen below $455 per week since January
2012. There is likewise no disagreement that if these plaintiffs’
annuities are counted as compensation, they are paid well
above $455 per week, and the District is entitled to summary
judgment.
1
The employer must also demonstrate that its employee
performs duties associated with “bona fide executive,
administrative, or professional” employees, as set forth in DOL
regulations. Orton, 668 F.3d at 846 (citation omitted). The plaintiffs
do not dispute that their duties fit the exemption. The dispute is
whether they are “compensated on a salary basis.”
7
We hold that the District may not count these plaintiffs’
annuities as compensation for purposes of the salary basis test.
Under no reasonable reading of the term can the pension
payments be considered “compensation” for these plaintiffs’
current work. Rather, the money they receive from their
pensions is a retirement benefit, earned over the course of their
past employment with the MPD, not their present work for the
District. The pensions were funded in part by the plaintiffs’
own required contributions, which were automatically
deducted from their MPD paychecks. See District of Columbia
Retirement Board, District of Columbia Police Officers’ and
Firefighters’ Retirement Plan, Summary Plan Description –
2007, at 9 (2007), available at http://dcrb.dc.gov/publication/
police-officers-and-firefighters-summary-plan-description
(last visited April 23, 2013). 2 There is no connection between
their pensions and the work they currently perform for the
District, and thus no sense in which their annuities constitute
“compensation” for that work.
Conversely, as the plaintiffs correctly argue, their
compensation comes in the form of the salaries the District
pays them. But the District slashed those salaries. As
paychecks in evidence demonstrate, Ford-Haynes, Neill, and
Weeks did not actually receive $455 per week in pay once the
District began applying the offset. Thus, the District cannot
carry its burden of showing that these three plaintiffs are
compensated “at a rate of not less than $455 per week.”
The District argues that the annuities became
compensation through the operation of § 5-723(e). According
2
The District of Columbia Retirement Board administers the
Retirement Plan. This document, which summarizes the operation of
the pension fund for its beneficiaries, is available on the Retirement
Board’s website. We take judicial notice of its contents. See FED. R.
EVID. 201.
8
to the District, because the D.C. Code required the District to
reduce the plaintiffs’ salaries so that the sum of their annuities
and the “compensation for [their] employment” equals the
salaries they were otherwise entitled to receive, the annuities
are the functional equivalent of salary. That is not a reasonable
reading of the D.C. Code. Section 5-723(e) provides no
authority for the District to claim that pension payments may
be “included as salary,” Appellee’s Br. at 21, or that they have
been transformed into compensation. Indeed, the statute
explicitly distinguishes between the annuities and
“compensation.” See D.C. CODE § 5-723(e) (stating that a
re-employed annuitant’s salary “shall be reduced by such
amount as is necessary to provide that the sum of such
annuitant’s annuity . . . and compensation for such employment
is equal to the salary otherwise payable for the position . . . .”
(emphasis added)).
The District also asserts that the plaintiffs’ pension
payments should be considered compensation because the
plaintiffs were given the choice between accepting the salary
offset and suspending annuities in the letters the District sent
them in October 2011. Asking the plaintiffs to choose between
losing their pension payments and taking a pay cut to satisfy
§ 5-723(e) does not convert the annuities into compensation
for purposes of the FLSA. Indeed, placing this choice in the
plaintiffs’ hands merely underscores the salient point in our
analysis: their pensions are not contingent upon their current
work. The District could not force the plaintiffs to suspend
receipt of the pension payments. Whatever else it may have
authorized the District to do, § 5-723(e) surely does not allow
the District to interfere with their pensions. It directs the
District to reduce the salaries of double-dipping employees,
while leaving annuity payments unaffected. Had the District
invoked § 5-723(e) to reduce the plaintiffs’ salaries to $455 per
week, it would be in compliance with the FLSA. But for these
9
three plaintiffs, the District went further. The choice described
in the October 2011 letters does not muddy a record that is
sufficiently clear: the District has paid these three plaintiffs
less than $455 per week since January 2012.
Ford-Haynes, Neill, and Weeks do not receive the $455
weekly compensation necessary to qualify for the exemption as
“bona fide executive, administrative, or professional”
employees. Because the District raises no other defense, we
hold that it has violated the FLSA. We therefore reverse the
grant of summary judgment against Ford-Haynes, Neill, and
Weeks on their FLSA claim and direct that summary judgment
be entered for those three plaintiffs on that claim. As the parties
have not briefed the issues of back pay and liquidated damages,
the extent of the District’s FLSA liability remains to be
determined. On remand, therefore, the district court should
calculate any back pay and damages to which these plaintiffs
may be entitled under 29 U.S.C. § 216.
III
The district court found the plaintiffs’ constitutional
claims meritless, and we agree.
A
All of the plaintiffs claim a “cognizable property interest”
in the simultaneous receipt of their annuities and full salaries.
The District’s use of the offset, they argue, amounted to a
taking and interfered with that property interest. The plaintiffs
seek to avoid the force of § 5-723(e) by arguing that it has been
superseded by amendments to § 1-611.03(b), a different
section of the D.C. Code that provides, in relevant part: “No
reduction shall be made to the pay of a reemployed individual
for any retirement benefits received by the reemployed
10
individual pursuant to 5 U.S.C. § 8331 . . . .” D.C. CODE
§ 1-611.03(b).
It is true that, as a result of these amendments, retirees
from District employment who receive pension benefits
pursuant to 5 U.S.C. § 8331, the Civil Service Retirement Act
(CSRA), may continue to receive benefits while retaining their
full salary if they are rehired by the District. But this does not
help these plaintiffs, because they do not receive pension
benefits under 5 U.S.C. § 8331. The Retirement Plan is
separate from the CSRA. “The [CSRA] codified at 5 U.S.C. §§
8331 et seq., provides for payment of annuities to retired
federal employees and their surviving spouses.” Fornaro v.
James, 416 F.3d 63, 64 (D.C. Cir. 2005). In the past, when the
“District personnel apparatus” was “awkwardly
meshed . . . with the federal personnel system,” District of
Columbia v. Thompson, 593 A.2d 621, 632 (D.C. 1991)
(internal quotation marks omitted), some District employees
participated in the federal pension program established under
the CSRA. 51 D.C. Reg. 8779 (Sept. 10, 2004). The
Retirement Plan, by contrast, originated in a wholly different
statute, the “stated purpose” of which was “to provide benefits
comparable to those given under the” CSRA. Ridge v. Police
& Firefighters Ret. & Relief Bd., 511 A.2d 418, 427 (D.C.
1986) (emphasis added).
The plaintiffs have no entitlement to both full salary and
their annuities. Lacking such an entitlement, their due process
and takings claims fail. See Hettinga v. United States, 677 F.3d
471, 479-80 (D.C. Cir. 2012) (per curiam) (holding that
plaintiffs must plead a “threshold requirement” of due process
claims: “that the government has interfered with a cognizable
liberty or property interest”); see also Kentucky Dep’t of Corr.
v. Thompson, 490 U.S. 454, 460 (1989) (“[A]n individual
11
claiming a protected interest must have a legitimate claim of
entitlement to it.”).
B
Around the same time that the District reduced the
plaintiffs’ salaries, the plaintiffs allege that the MPD gave large
raises to senior officers who, like the plaintiffs, were retirees
who had been rehired by the District and collected both salaries
and Retirement Plan annuities. Although the officers were
subject to the salary offset, the raises meant that their incomes
remained roughly what they had been before the offset.
The plaintiffs argue that exposing them to the full force of
the offset while shielding others from its impact violated their
right to equal protection of the laws. “To prevail on an equal
protection claim, the plaintiff must show that the government
has treated it differently from a similarly situated party and that
the government’s explanation for the differing treatment does
not satisfy the relevant level of scrutiny.” Muwekma Ohlone
Tribe v. Salazar, 708 F.3d 209, 215 (D.C. Cir. 2013) (internal
quotation marks omitted). Because plaintiffs do not allege that
the pay raises “target[ed] a suspect class or burden[ed] a
fundamental right,” we apply rational basis review. Id. The
District’s challenged action “must be upheld against [an] equal
protection challenge if there is any reasonably conceivable
state of facts that could provide a rational basis for the
classification,” and the plaintiffs bear the burden of showing
that the pay raises were “not a rational means of advancing a
legitimate government purpose.” Hettinga, 677 F.3d at 478-79
(citation omitted).
We affirm the district court’s dismissal of the plaintiffs’
equal protection claim. As the district court observed, their
claim boils down to “the fact that the District gave raises to
12
some District employees, but not to them.” Cannon, 873
F. Supp. 2d at 283. Before the district court, the plaintiffs
essentially conceded that there are two ways in which they are
not similarly situated to the officers who received pay raises.
The plaintiffs work for Protective Services and not the MPD,
and they do not “perform the same functions, have the same
duties and responsibilities, or the same background or
experience, as these MPD employees.” Pls. April 3, 2012 Opp.
to Summ. J. (April 3, 2012), at 18-19.
In any event, the plaintiffs cannot show that it was
arbitrary and irrational for the District to give raises to the
senior MPD officers. As the District asserts, “[g]iven their
differing responsibilities, the District may have a greater need
and/or desire to re-hire and retain experienced officers for the
MPD than it does for [Protective Services] and, therefore, may
offer salary increases to attract and retain the former and not
the latter.” Appellee’s Br. at 36. In other words, the District
may have had greater use for the senior officers’ services and a
greater fear of losing them. That plausible explanation for the
raises is more than sufficient to survive rational basis review.
C
The plaintiffs claim that the District took two retaliatory
actions against the exercise of their First Amendment right to
bring this suit. The District fired plaintiff Louis Cannon, then
chief of Protective Services, on February 8, 2012. Two days
later, the plaintiffs did not receive their pay as expected
through direct deposit. The District issued them paper
paychecks instead.
As to the paycheck claim, the district court concluded that
“receiving a single paycheck in the form of a paper check,
rather than by direct deposit,” would not be sufficient to “deter
13
a person of ordinary firmness” from exercising First
Amendment rights. Cannon, 873 F. Supp. 2d at 286-87
(quoting Toolasprashad v. Bureau of Prisons, 286 F.3d 576,
585 (D.C. Cir. 2002)). On appeal, the plaintiffs do not contest
this conclusion. They argue instead that summary judgment
was improper because a jury should have determined the
District’s intent in issuing the paper paychecks. But the
question of retaliatory intent was rendered irrelevant by the
court’s holding that the District’s use of a paper paycheck in
the place of direct deposit would not deter the exercise of First
Amendment rights. The plaintiffs’ challenge fails.
As to Cannon’s firing, the District produced documentary
evidence and an affidavit demonstrating that the director of the
Department of Human Resources approved the firing on
January 18, 2012, before the plaintiffs filed suit and for
unrelated reasons. The district court therefore held that the
plaintiffs could not establish that the lawsuit “was a substantial
or motivating factor” in Cannon’s firing. Id. at 285 (quoting
Wilburn v. Robinson, 480 F.3d 1140, 1149 (D.C. Cir. 2007)).
The plaintiffs claim they needed additional discovery to
demonstrate that the District’s documentary evidence about
Cannon’s firing was fraudulent. They contend that the district
court abused its discretion by failing to stay its summary
judgment while the plaintiffs pursued that theory. See FED. R.
CIV. P. 56(d) (“If a nonmovant shows by affidavit or
declaration that, for specified reasons, it cannot present facts
essential to justify its opposition, the court may: (1) defer
considering the motion or deny it; [or] (2) allow time to obtain
affidavits or declarations or to take discovery . . . .”).
The plaintiffs, however, failed to comply with the
requirements of Rule 56(d). “To obtain [Rule 56(d)] relief, the
movant must submit an affidavit which states with sufficient
particularity why additional discovery is necessary.”
14
Convertino v. U.S. Dep’t of Justice, 684 F.3d 93, 99 (D.C. Cir.
2012) (citation omitted).
The affidavit must satisfy three criteria. First, it must
outline the particular facts [the movant] intends to
discover and describe why those facts are necessary to
the litigation. Second, it must explain why [the movant]
could not produce the facts in opposition to the motion
for summary judgment. Third, it must show the
information is in fact discoverable.
Id. at 99-100 (internal quotation marks and citations omitted).
The plaintiffs submitted no Rule 56(d) affidavit, nor did they
make any of the required representations discussed in
Convertino. The district court did not abuse its discretion in
deciding the District’s summary judgment motion on the
record before it.
IV
We affirm the district court’s judgment on the
constitutional claims, but reverse and remand as to the claim
under the FLSA. Because the district court’s decision not to
exercise supplemental jurisdiction over the plaintiffs’ D.C. law
claims was premised on the dismissal of all federal claims from
this case, see Cannon, 873 F. Supp. 2d at 287-88, we vacate
that part of the district court’s order dismissing the D.C. law
claims and remand for further proceedings.
So ordered.