Marrs v. United States

In the United States Court of Federal Claims
No. 16-1297C
(E-Filed: October 27, 2017)
)
FRANK MARRS, et al., )
)
Plaintiffs, ) Civilian Pay; Fair Labor Standards Act
) of 1938, 29 U.S.C. § 201 et seq.
v. ) (2012); Statute of Limitations, 29
) U.S.C. § 255(a); Willful Violation Not
THE UNITED STATES, ) Found.
)
Defendant. )
)
Heidi R. Burakiewicz, Washington, DC, for plaintiffs. Steven A. Skalet and Michael
Lieder, Washington, DC, of counsel.
Joseph E. Ashman, Senior Trial Counsel, with whom were Chad A. Readler, Acting
Assistant Attorney General, Robert E. Kirschman, Jr., Director, Reginald T. Blades, Jr.,
Assistant Director, and Erin Murdock-Park, Trial Attorney, Commercial Litigation
Branch, Civil Division, United States Department of Justice, Washington, DC, for
defendant.
OPINION
CAMPBELL-SMITH, Judge.
This matter is before the court on plaintiffs’ motion for partial summary judgment,
ECF No. 19, and defendant’s cross-motion for partial summary judgment, ECF No. 20,
filed pursuant to Rule 56 of the Rules of the United States Court of Federal Claims
(RCFC). Plaintiffs filed a reply brief, ECF No. 21. Defendant informed the court that the
government did not intend to file a reply brief. See Jt. Status R., ECF No. 14, at 1. This
matter is thus fully briefed and ripe for decision. For the reasons set forth below, the
court denies plaintiffs’ motion and grants defendant’s motion.
I. Background
This is the companion case to Martin v. United States, Case No. 13-834C
(Martin). These two cases were consolidated on November 2, 2016 for the determination
of certain common issues of law. ECF No. 9. Consolidation of these cases ended on
March 17, 2017. ECF No. 13. Familiarity with the three opinions issued in Martin, Case
No. 13-834C, is presumed. See Martin v. United States, 117 Fed. Cl. 611 (2014) (Martin
I) (denying in part and granting in part defendant’s motion to dismiss); Martin v. United
States, No. 13-834C, 2015 WL 12791601 (Fed. Cl. Oct. 15, 2015) (Martin II) (denying
plaintiffs’ request to apply equitable tolling to the relevant statute of limitations to permit
as many as 18,300 additional plaintiffs to join that suit); Martin v. United States, 130 Fed.
Cl. 578 (2017) (Martin III) (granting plaintiffs’ motion for summary judgment as to
liability). Only the facts pertinent to the parties’ cross-motions are discussed here.
Plaintiffs in these companion cases are current or former government employees
who allege that they were not timely compensated for work performed during a shutdown
of the federal government in October 2013, in violation of the Fair Labor Standards Act
of 1938 (“FLSA”), 29 U.S.C. § 201 et seq. (2012). This court has found that the failure
to pay these workers in a timely fashion was indeed a violation of the FLSA, and that
liquidated damages provide the remedy for such a violation. See generally Martin III.
This case presents one additional issue, whether the government’s violation of the FLSA
was willful under 29 U.S.C. § 255(a). A willful violation of the statute would extend the
statute of limitations in section 255(a) from two years to three years. See id. This
particular question was not litigated in Martin, but is of crucial relevance here.
Whether the statute of limitations for plaintiffs’ claims is three years, not two
years, is the “single legal issue . . . dispositive of this case.” Jt. Status R., ECF No. 12, at
1. As plaintiffs note, the complaint in this case “was filed more than two but less than
three years after Plaintiffs’ claims accrued.” ECF No. 19-1, at 6-7. Thus, although the
parties have styled their motions as motions for partial summary judgment, a ruling in the
government’s favor would entirely dispose of this case. Accordingly, the viability of
plaintiffs’ claims turns on the court’s interpretation of “willful violation,” 29 U.S.C.
§ 255(a), as that term is applied in this particular circumstance of the government’s
violation of the FLSA.
II. Legal Standard for Finding a Willful Violation of the FLSA
The statutory text states in relevant part:
Any action . . . to enforce any cause of action for unpaid minimum wages,
unpaid overtime compensation, or liquidated damages, under the Fair Labor
Standards Act of 1938, as amended [29 U.S.C. § 201 et seq.],
2
(a) . . . may be commenced within two years after the cause of action
accrued, and every such action shall be forever barred unless commenced
within two years after the cause of action accrued, except that a cause of
action arising out of a willful violation may be commenced within three
years after the cause of action accrued[.]
29 U.S.C. § 255 (emphasis added). Some courts have interpreted the term “willful,” and
the test for willfulness, so broadly as to encompass all employers acting in violation of
the FLSA who knew that the FLSA was “in the picture.” See, e.g., Coleman v. Jiffy June
Farms, Inc., 458 F.2d 1139, 1142 (5th Cir. 1971) (“Stated most simply, we think the test
should be: Did the employer know the FLSA was in the picture?”). This interpretive
approach, referred to here as the Jiffy June test, was rejected by the United States
Supreme Court as overly broad.
In the place of the Jiffy June test, the Supreme Court announced a more restrictive
definition of willfulness to establish a three year statute of limitations for FLSA
violations: “The standard of willfulness [is] that the employer either knew or showed
reckless disregard for the matter of whether its conduct was prohibited by the statute.”
McLaughlin v. Richland Shoe Co., 486 U.S. 128, 133 (1988) (Richland Shoe) (citing
Trans World Airlines, Inc. v. Thurston, 469 U.S. 111 (1985)). Under the Richland Shoe
standard, even an unreasonable action in contravention of the FLSA is not enough to
establish willfulness:
If an employer acts reasonably in determining its legal obligation, its action
cannot be deemed willful . . . . If an employer acts unreasonably, but not
recklessly, in determining its legal obligation, . . . it should not be . . .
considered [willful] under Thurston or the identical standard we approve
today.
Id. at 135 n.13; see, e.g., Bull v. United States, 479 F.3d 1365, 1379 (Fed. Cir.
2007) (same).
The Richland Shoe Court specifically rejected another proposed standard for
willfulness, which it described as an “intermediate standard.” 486 U.S. at 131. Under the
intermediate standard, a finding of willfulness would be proper “‘if the employer,
recognizing it might be covered by the FLSA, acted without a reasonable basis for
believing that it was complying with the statute.’” Id. at 134. While the court reserves
further discussion of the willfulness standard, a standard hotly debated by the parties, for
the analysis section of this opinion, the court does observe that the burden is on plaintiffs
to establish willfulness. See Bull, 479 F.3d at 1379; Adams v. United States, 350 F.3d
1216, 1229 (Fed. Cir. 2003) (“Unlike good faith, the employee bears the burden of
proving the willfulness of the employer’s FLSA violations.”) (citation omitted).
3
III. Standard of Review on Summary Judgment
“[S]ummary judgment is a salutary method of disposition designed to secure the
just, speedy and inexpensive determination of every action.” Sweats Fashions, Inc. v.
Pannill Knitting Co., 833 F.2d 1560, 1562 (Fed. Cir. 1987) (internal quotations and
citations omitted). The party moving for summary judgment will prevail “if the movant
shows that there is no genuine dispute as to any material fact and the movant is entitled to
judgment as a matter of law.” RCFC 56(a). A genuine dispute of material fact is one that
could “affect the outcome” of the litigation. Anderson v. Liberty Lobby, Inc., 477 U.S.
242, 248 (1986). “[A]ll evidence must be viewed in the light most favorable to the
nonmoving party, and all reasonable factual inferences should be drawn in favor of the
nonmoving party.” Dairyland Power Coop. v. United States, 16 F.3d 1197, 1202 (Fed.
Cir. 1994) (citations omitted). “With respect to cross-motions for summary judgment,
each motion is evaluated on its own merits and reasonable inferences are resolved against
the party whose motion is being considered.” Marriott Int’l Resorts, L.P. v. United
States, 586 F.3d 962, 968-69 (Fed. Cir. 2009) (citation omitted).
A summary judgment motion is properly granted against a party who fails to make
a showing sufficient to establish the existence of an essential element to that party’s case
and for which that party bears the burden of proof at trial. Celotex Corp. v. Catrett, 477
U.S. 317, 324 (1986). A nonmovant will not defeat a motion for summary judgment
“unless there is sufficient evidence favoring the nonmoving party for a jury to return a
verdict for that party.” Anderson, 477 U.S. at 249 (citation omitted). “A nonmoving
party’s failure of proof concerning the existence of an element essential to its case on
which the nonmoving party will bear the burden of proof at trial necessarily renders all
other facts immaterial and entitles the moving party to summary judgment as a matter of
law.” Dairyland, 16 F.3d at 1202 (citing Celotex, 477 U.S. at 323).
IV. Analysis
Defendant in its cross-motion and plaintiffs in their reply brief cite to Richland
Shoe as support for their positions on the “willful violation” issue. ECF No. 20, at 13;
ECF No. 21, at 3-4. Not only is Richland Shoe binding precedent, it provides the best
tool for understanding the concept of willfulness, as that concept is employed in section
255(a).1 In that case, the Supreme Court noted, first, that the statute of limitations for the
FLSA is two-tiered. Richland Shoe, 486 U.S. at 132. Plaintiffs are allowed two years to
lodge claims for “nonwillful” violations, and three years to file claims for “willful”
1
To the extent that plaintiffs’ reply brief could be read to urge the court to conduct
a de novo construction of section 255(a), see ECF No. 21, at 8, this court is bound by
Richland Shoe and cannot stray from the statutory interpretation of section 255(a)
presented therein. E.g., Crowley v. United States, 398 F.3d 1329, 1335 (Fed. Cir. 2005).
4
violations. Id. at 133. There must, therefore, be a “significant distinction” separating
willful violations from violations that are not willful. Id. at 132.
The Supreme Court then specifically clarified its earlier decision in Thurston
which could have been misread to accept the “unreasonableness” of agency action as
sufficient proof of willfulness. See Richland Shoe, 486 U.S. at 135 n.13 (citing Thurston,
469 U.S. at 126). The Supreme Court explained that, on the spectrum of agency behavior
ranging from unreasonable to reckless, anything short of recklessness in an agency’s
determination of its legal obligations under the FLSA is not a “willful violation” under
section 255(a). See id. (“If an employer acts unreasonably, but not recklessly, in
determining its legal obligation, then, although its action would be considered willful
under petitioner’s [intermediate standard], it should not be so considered under Thurston
or the identical standard we approve today.”).
Although decisions have issued from this court reflecting different takes on the
Richland Shoe test for willfulness, none of the formulations cited by the parties has
binding effect in this case. Hewing closely to the Supreme Court’s articulation, the court
requires -- as the test for plaintiffs to prevail here on the “willful violation” issue -- that
plaintiffs show that the government agencies violating the FLSA during the October 2013
shutdown acted recklessly, i.e., more than unreasonably, when determining their
liabilities under the FLSA. See Abbey v. United States, 106 Fed. Cl. 254, 283 (2012)
(finding that a “negligent and unreasonable” determination of obligations under the
FLSA by a federal agency did not “rise[] to the level of willfulness as defined by the
Supreme Court in [Richland Shoe]”).
As a threshold matter, the court notes that in Martin III the principal legal issue
decided by the undersigned was whether the government’s “act or omission giving rise to
[the plaintiffs’ FLSA claim for liquidated damages] was in good faith.” 29 U.S.C. § 260.
The court did not find the government’s acts and omissions during the October 2013
shutdown regarding its FLSA obligations to be in good faith. Martin III, 130 Fed. Cl. at
586. That determination, however, was not informed by the applicable legal test for
resolving the willfulness issue currently pending before the court, even though the factual
underpinnings for the two legal issues do overlap.2 The court now turns to the undisputed
evidence in the record.
2
Plaintiffs err when they contend that the two legal questions are the same. See
ECF No. 19-1, at 22-23 (“The Court’s ruling [on the issue of good faith in Martin III]
also controls the issue of whether the Government violated the FLSA willfully within the
meaning of 29 U.S.C. § 255(a).”).
5
A. Undisputed Evidence Regarding the FLSA Violations
Plaintiffs rely on the joint stipulations of fact acknowledged and filed by the
parties in Martin. See ECF No. 19, at 1 (citing Case No. 13-834C, ECF No. 151). The
government relies on the same stipulations of fact. See ECF No. 20, at 7-8. Plaintiffs
assert that a willful violation of the FLSA occurred because
the Government admittedly did not prior to or during the 2013 Government
shutdown (a) consider whether requiring employees to work without paying
them minimum or overtime wages on their regularly scheduled paydays for
that work would violate the FLSA, or (b) seek a formal legal opinion
regarding how to meet its obligations under both the Anti-Deficiency Act[3]
and FLSA.
ECF No. 19-1, at 5.
The first relevant joint stipulation of fact not in dispute cited by plaintiffs is as
follows:
Based upon the information received from relevant personnel and review of
the relevant documents, the agencies that advise the Federal Government on
the implementation of labor law and policy did not prior to or during the
2013 Government shutdown consider whether requiring employees
designated as “non-exempt” under the Fair Labor Standards Act (FLSA),
29 U.S.C. § 201 et seq., and as “excepted” for purposes of the shutdown to
work during the shutdown without paying them minimum or overtime
wages on their regularly scheduled paydays for work performed during the
first week of the shutdown would violate the FLSA. Based upon the
information described above, defendant is not aware of any other agency
that considered the issue prior to or during the 2013 Government shutdown.
Case No. 13-834C, ECF No. 151 ¶ 3. The second relevant joint stipulation of fact not in
dispute cited by plaintiffs is as follows:
The Government did not seek a formal legal opinion regarding how to meet
its obligations under both the Anti-[D]eficiency Act and FLSA as to
employees designated as “non-exempt” under the FLSA and as “excepted”
for purposes of the shutdown who were required to work during the
shutdown.
3
The Anti-Deficiency Act (“ADA”) prohibits the government from spending
money when specific appropriations authorizing those expenditures are not in place. See
31 U.S.C. § 1341(a)(1)(A) (2012).
6
Id. ¶ 4. Based on these two undisputed facts, plaintiffs assert that they have established a
willful violation of the FLSA. See ECF No. 19-1, at 24-25.
The government argues, however, that these facts do not rise to the level of a
willful FLSA violation. ECF No. 20, at 14-17. A third joint stipulation of fact not in
dispute is cited by the government in support of its position in this suit:
The Government understood that during a lapse in appropriations the Anti-
Deficiency Act, 31 U.S.C. § 1341(a), prohibited payment of wages for
work performed during the 2013 Government shutdown until funds had
been appropriated.
Case No. 13-834C, ECF No. 151 ¶ 2. The court agrees with the parties that there are no
material disputes of fact in this case, because all of the relevant facts are undisputed. The
court next summarizes the caselaw discussed in the parties’ briefs.
B. Guidance from Caselaw Interpreting Richland Shoe
The parties cite a number of decisions that were issued by this court and which
involve an examination of willfulness in the context of FLSA violations, but which do
not involve a federal government shutdown. The court therefore finds the parties’
interpretations of the holdings of those cases to be of limited assistance. The court also
finds decisions of the United States Court of Appeals for the Federal Circuit to be
similarly unhelpful here in refining the willfulness inquiry.
The discussion of willfulness in Bull, for example, is brief and is anchored in
factual circumstances that are not analogous to the government shutdown that underlies
this case:
In finding that Customs had in fact acted willfully, the court below relied
upon extensive testimony to establish that Customs knew the plaintiffs were
working off duty without compensation, as well as an internal memo
predicting that such work “could open Customs management to
compensation issues because the [officers] are using their off duty time to
meet Customs requirements.” The court also found that the [agency
official’s] memorandum (directing that previously off-duty work was to be
performed during working hours) was “an admission by defendant that it
knew it had been engaging in activity in possible violation of the FLSA.”
This evidence is plainly sufficient to support a finding of willfulness.
Bull, 479 F.3d at 1379 (internal citations omitted). Given that the standard of review in
Bull was the “clear error” standard, id. (citing Adams, 350 F.3d at 1229), and given that
its discussion of willfulness does not provide any clarification of the term “willful
7
violation,” and given the difference in the factual backgrounds of this case and Bull, the
holding in Bull does not aid the court in its resolution of the dispositive issue in this case.
Also of no assistance to the court here is the Federal Circuit’s decision in Cook v.
United States, 855 F.2d 848 (Fed. Cir. 1988), cited correctly by plaintiffs as a case
distinguishable on its facts. Cook announces a per se rule that a federal agency which
follows the advice of the United States Department of Labor as to the FLSA cannot have
committed a willful FLSA violation. See id. at 850 (stating that when “a federal agency .
. . has in good faith accepted and followed the advice of the Secretary of Labor . . . [,] any
mistake in responding to the demands of the FLSA is not willful”). But, no advice of the
Secretary of Labor regarding FLSA obligations during the federal shutdown is part of the
factual record of this case.4
C. Willfulness Not Found on These Facts
The court is faced, then, with an issue of first impression, guided primarily by
Richland Shoe.5 If the government understood that it could not obey the ADA and timely
pay its excepted employees, was that a willful violation of the FLSA under section
255(a)? The court concludes that it was not for the reasons set forth below.
The court finds that the FLSA violation for these plaintiffs, which may have been
caused by an unreasonable interpretation of the FLSA by federal agencies, see Martin III,
130 Fed. Cl. at 586, does not rise to the level of a willful violation. Although the
government’s pay actions during the shutdown did not evince good faith under the FLSA,
see id., none of the undisputed evidence before the court, notwithstanding all favorable
inferences accorded to plaintiffs, establishes that the federal government exhibited
reckless disregard for the FLSA when it complied with the ADA and violated the FLSA.
1. Richland Shoe
As the court examines the facts underlying this suit to determine whether the
federal government exhibited a reckless disregard for FLSA requirements during the
4
Nor are the pay practices of the Department of Labor for its own employees during
the shutdown part of the record in this case.
5
Plaintiffs rely on Salazar v. Ramah Navajo Chapter, 567 U.S. 182, 197 (2012), and
the Supreme Court’s discussion therein of the government’s contract obligations
notwithstanding the ADA, as support for their position on the willfulness of the
government’s FLSA violation here. ECF No. 19-1, at 25-26; ECF 21, at 15 n.1. The
court does not interpret the holding in Salazar as containing guidance for drawing a
distinction between nonwillful and willful FLSA violations, which is the issue before the
court.
8
2013 shutdown, the Supreme Court’s decision in Richland Shoe offers a few guideposts,
in addition to the conceptual framework for willfulness described earlier in this opinion.6
First, although not adopted with any precision, common synonyms of “willful” --
“voluntary,” “deliberate” and “intentional” -- were cited approvingly by the Court.
Richland Shoe, 486 U.S. at 133. During the shutdown, bowing to the imperatives of the
ADA, agencies did not pay excepted employees and did not inquire into their FLSA
obligations. In the court’s view, the agencies’ compliance with the ADA and
nonpayment of owed wages was more in the nature of involuntary and unintentional
violations of the FLSA, rather than willful conduct. See id.
Similarly, the Richland Shoe Court distinguished “merely negligent” conduct from
willful violations of the FLSA. Id. As this court has found, there was no good faith
inquiry into FLSA obligations by federal agencies before or during the 2013 shutdown.
Martin III, 130 Fed. Cl. at 586. The court does not, however, view the agencies’ focus on
the ADA and not on the FLSA as going beyond “merely negligent” conduct and rising to
the level of reckless disregard of the FLSA and its pay requirements.
Finally, the Richland Shoe Court clearly disfavored a test for willfulness that
turned on the employer’s request for legal advice before, or during, its violation of the
FLSA. 486 U.S. at 134-35. Although plaintiffs rely to a great extent on the agencies’
failure to seek legal advice as to their FLSA obligations before or during the 2013
shutdown, ECF No. 19-1, at 25-26, that circumstance alone does not, according to
Richland Shoe, determine willfulness. 486 U.S. at 134-35. Plaintiffs’ burden to show
willfulness is not met simply by pointing out that the agencies did not obtain legal
opinions regarding their FLSA obligations before violating the FLSA during the 2013
shutdown.
2. Adequate Inquiry in These Circumstances
The parties agree that 5 C.F.R. § 551.104 (2013) is the regulation that applies to
the FLSA violations at issue in this suit. Section 551.104 provides two relevant
definitions. First, a willful FLSA violation “means a violation in circumstances where
the agency knew that its conduct was prohibited by the [FLSA] or showed reckless
disregard of the requirements of the [FLSA]. All of the facts and circumstances
surrounding the violation are taken into account in determining whether a violation was
willful.” Id. Second, reckless disregard of the requirements of the FLSA “means failure
to make adequate inquiry into whether conduct is in compliance with the [FLSA].” Id.
6
Plaintiffs do not argue that the federal government “knew” of its FLSA violations
during the 2013 shutdown. Thus, only the “reckless disregard” prong of the willfulness
inquiry is at issue in the parties’ cross-motions for summary judgment.
9
As this court has explained, when Richland Shoe and section 551.104 are read
together, an agency’s failure to make adequate inquiry into its FLSA obligations “must be
more than a merely negligent or unreasonable failure” for that failure to constitute a
willful violation of the FLSA. See Abbey, 106 Fed. Cl. at 282 (citations omitted).
Indeed, the adequacy of an agency’s inquiry into its FLSA obligations is measured not in
terms of mere negligence or unreasonableness, but in the sense of reckless disregard of
the FLSA that meets the definition of willfulness established by Richland Shoe. See
Angelo v. United States, 57 Fed. Cl. 100, 109 (2003) (noting that section 551.104 is
secondary to Richland Shoe for purposes of the willfulness inquiry (citing Bankers Trust
N.Y. Corp. v. United States, 225 F.3d 1368, 1375 (Fed. Cir. 2000))). In other words, the
court must reject any attempt by plaintiffs to circumvent Richland Shoe by relying on an
“adequate inquiry” test that cleaves more to the Jiffy June test, described supra, or the
intermediate test, described supra, both of which were rejected in Richland Shoe.
Instead, plaintiffs remain bound by Richland Shoe and cannot rely on section 551.104 to
alter the Supreme Court’s precedential test for willfulness.
Here, the undisputed facts show that the federal government, as a whole,
understood that it could not pay excepted employees during the 2013 shutdown due to the
constraints of the ADA. Case No. 13-834C, ECF No. 151 ¶ 2. The court must take these
circumstances into account. See 5 C.F.R. § 551.104. Complying with the ADA and not
paying excepted employees during the shutdown does not, in the court’s view, mean that
these federal agencies showed a reckless disregard of the FLSA. Instead, the agencies’
conduct, in the context of the 2013 government shutdown governed by both the ADA and
the FLSA, did not exceed a level of merely negligent or unreasonable conduct vis-à-vis
the FLSA.
Although there is no case directly on point, this court has found, on at least one
occasion, that a federal agency did not recklessly disregard the FLSA when it attempted
to comply with a particular federal statute and, as a result, neglected its obligations under
the FLSA. In Abbey, the Federal Aviation Administration (FAA) was directed to comply
with a personnel management overhaul set forth in a new statute. 106 Fed. Cl. at 259.
Facing a short transition deadline, the FAA decided to maintain certain pay practices
which violated FLSA requirements because the agency did not understand the full
implications of the statute requiring the personnel management overhaul. Id. at 281-83.
Thus, although the background facts in Abbey and this case are dissimilar, the decision in
Abbey shows that federal agencies may blunder in their interpretation of a federal statute
that implicates their responsibilities under the FLSA, without committing a willful
violation of the FLSA.7 As was the case in Abbey, the FLSA violation affecting these
plaintiffs during the 2013 government shutdown was nonwillful, not willful.
7
This court has also reasoned that where there was some doubt about whether the
FLSA or a displacing statute applied instead, no willful violation of the relevant pay
10
V. Conclusion
Having considered the undisputed facts and all of the parties’ arguments, the court
concludes that plaintiffs have failed to meet their burden to show a willful violation of the
FLSA. Plaintiffs’ motion for partial summary judgment, ECF No. 19, is DENIED, and
defendant’s motion for partial summary judgment, ECF No. 20, is GRANTED. Because
the two-year statute of limitations in 29 U.S.C. § 255(a) applies to plaintiffs’ claims, and
because this suit was filed more than two years after plaintiffs’ claims accrued, plaintiffs’
claims are barred by the statute of limitations and must be dismissed for lack of subject
matter jurisdiction. The clerk’s office is directed to ENTER judgment for defendant,
DISMISSING this case without prejudice. No costs.
IT IS SO ORDERED.
s/ Patricia Campbell-Smith
PATRICIA CAMPBELL-SMITH
Judge
statute could be found. Blair v. United States, 15 Cl. Ct. 763, 767 n.6 (1988) (citing
generally Cook, 855 F.2 at 848).
11