Nevada v. U.S. Dep't of Labor
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Opinion
AMOS L. MAZZANT, UNITED STATES DISTRICT JUDGE
Before the Court is Non-Party Chipotle Mexican Grill, Inc. and Non-Party Chipotle Services, LLC's (collectively "Chipotle") Motion for Contempt (Dkt. # 89). After reviewing the relevant pleadings and motion, the Court finds that the motion should be granted.
BACKGROUND
Congress passed the Fair Labor Standards Act ("FLSA") in 1938. The FLSA mandates that employees earn no less than the federal minimum wage for every hour worked. Employees must also earn one and one-half times their regular pay for each hour worked beyond a forty-hour week. When enacted, the FLSA had several exemptions to the overtime requirement. Specifically, anyone employed in a bona fide executive, administrative, or professional capacity was exempt from the minimum wage and overtime requirements.
At passage, Congress did not define "bona fide executive, administrative, or professional capacity."
In March 2014, President Obama directed the DOL to revise the FLSA's overtime exemption for "executive, administrative, and professional employees." Memorandum on Updating and Modernizing Overtime Regulations, 2014 DAILY COMP. PRES. DOC. 201400165 (Mar. 13, 2014). The DOL
*714announced its plan to revise Code of Federal Regulations Title 29 Part 541 to increase exempt employees' salaries from $455 per week ($23,660 annually) to $921 per week ($47,892 annually) (the "Final Rule"). Soon after, a collection of states ("State Plaintiffs") filed suit against the DOL, the DOL's Wage and Hour Division, and their agents, challenging the validity of the Final Rule. On October 12, 2016, the State Plaintiffs moved for emergency preliminary injunctive relief. The Court issued a preliminary injunction against the Final Rule on November 22, 2016, holding the DOL likely lacked statutory authority to enact the Final Rule and the Final Rule would cause irreparable harm if implemented on December 1, 2016 (the "Court's Order" or the "Injunction"). The Court's Order read as follows:
[T]he Court has authority to enjoin the Final Rule on a nationwide basis and decides that it is appropriate in this case, and therefore GRANTS the State Plaintiffs' Emergency Motion for Preliminary Injunction (Dkt. # 10).
Therefore, the Department's Final Rule described at81 Fed. Reg. 32,391 is hereby enjoined. Specifically, Defendants are enjoined from implementing and enforcing the following regulations as amended by81 Fed. Reg. 32,391 ;29 C.F.R. §§ 541.100 , 541.200, 541.204, 541.300, 541.400, 541.600, 541.602, 541.604, 541.605, and 541.607 pending further order of this Court.
(Dkt. # 60 at pp. 19-20) (emphasis in original).1 Six months later, Carmen Alvarez ("Alvarez") sued Chipotle under the FLSA and New Jersey State Wage and Hour Law, alleging Chipotle ignored the Final Rule by not paying her proper overtime wages. Alvarez claimed to bring suit on behalf of herself and others "similarly situated" so as to certify an FLSA collective action and class action under Federal Rules of Civil Procedure 23(a) and (b)(3). Alvarez's counsel-Joseph Sellers ("Sellers") and Miriam Nemeth ("Nemeth") of Cohen Milstein Sellers & Toll PLLC, Justin Swartz ("Swartz") and Melissa Stewart ("Stewart") of Outten & Golden LLP, and local counsel Glen Savits ("Savits") (the "Lawyers")-acknowledged the Injunction in Alvarez's complaint but stated it did not apply to them or to their client:
32. Although it preliminarily enjoined the Department of Labor from implementing and enforcing the Overtime Rule, the Eastern District of Texas did not stay the effective date of the Rule or otherwise prevent the Rule from going into effect. Therefore, as a rule duly promulgated pursuant to the requirements of the APA, the Rule went into effect on December 1, 2016.
33. Because the Eastern District of Texas's preliminary injunction was limited to implementation and enforcement of the Overtime Rule by the Department of Labor and its officials, it did not affect the ability of persons not party to the Nevada case, including Plaintiff and similarly situated employees, to bring private lawsuits pursuant to the FLSA's *715private cause of action,29 U.S.C. § 216 (b), to enforce their right to overtime pay under the Rule, nor did it prevent non-parties from bringing lawsuits under state law.
(Dkt. # 89, Exhibit 1 at pp. 13-14). This is the second lawsuit in which one of Alvarez's counsel-Swartz-has argued that this Court's Injunction of the Final Rule does not apply to him or to his client. In the United States District Court for the District of Massachusetts, Swartz also ignored this Court's Order2 :
107. On November 22, 2016, the United States District Court for the Eastern District of Texas issued an injunction in Nevada v. United States Dep't of Labor , No. 16 Civ. 731[218 F.Supp.3d 520 , 533-34,]2016 WL 6879615 , at *9 (E.D. Tex. Nov. 22, 2016) that enjoined only the U.S. Department of Labor from "implementing and enforcing" the amended versions of, inter alia ,29 C.F.R. §§ 541.100 and 541.200.3
(Dkt. # 89, Exhibit 1 at p. 205). On August 1, 2017, Chipotle filed its Motion for Contempt against Alvarez and the Lawyers (collectively "Respondents") (Dkt. # 89). On August 2, 2017, Chipotle filed a Motion for Judicial Notice regarding its Motion for Contempt (Dkt. # 96).
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AMOS L. MAZZANT, UNITED STATES DISTRICT JUDGE
Before the Court is Non-Party Chipotle Mexican Grill, Inc. and Non-Party Chipotle Services, LLC's (collectively "Chipotle") Motion for Contempt (Dkt. # 89). After reviewing the relevant pleadings and motion, the Court finds that the motion should be granted.
BACKGROUND
Congress passed the Fair Labor Standards Act ("FLSA") in 1938. The FLSA mandates that employees earn no less than the federal minimum wage for every hour worked. Employees must also earn one and one-half times their regular pay for each hour worked beyond a forty-hour week. When enacted, the FLSA had several exemptions to the overtime requirement. Specifically, anyone employed in a bona fide executive, administrative, or professional capacity was exempt from the minimum wage and overtime requirements.
At passage, Congress did not define "bona fide executive, administrative, or professional capacity."
In March 2014, President Obama directed the DOL to revise the FLSA's overtime exemption for "executive, administrative, and professional employees." Memorandum on Updating and Modernizing Overtime Regulations, 2014 DAILY COMP. PRES. DOC. 201400165 (Mar. 13, 2014). The DOL
*714announced its plan to revise Code of Federal Regulations Title 29 Part 541 to increase exempt employees' salaries from $455 per week ($23,660 annually) to $921 per week ($47,892 annually) (the "Final Rule"). Soon after, a collection of states ("State Plaintiffs") filed suit against the DOL, the DOL's Wage and Hour Division, and their agents, challenging the validity of the Final Rule. On October 12, 2016, the State Plaintiffs moved for emergency preliminary injunctive relief. The Court issued a preliminary injunction against the Final Rule on November 22, 2016, holding the DOL likely lacked statutory authority to enact the Final Rule and the Final Rule would cause irreparable harm if implemented on December 1, 2016 (the "Court's Order" or the "Injunction"). The Court's Order read as follows:
[T]he Court has authority to enjoin the Final Rule on a nationwide basis and decides that it is appropriate in this case, and therefore GRANTS the State Plaintiffs' Emergency Motion for Preliminary Injunction (Dkt. # 10).
Therefore, the Department's Final Rule described at81 Fed. Reg. 32,391 is hereby enjoined. Specifically, Defendants are enjoined from implementing and enforcing the following regulations as amended by81 Fed. Reg. 32,391 ;29 C.F.R. §§ 541.100 , 541.200, 541.204, 541.300, 541.400, 541.600, 541.602, 541.604, 541.605, and 541.607 pending further order of this Court.
(Dkt. # 60 at pp. 19-20) (emphasis in original).1 Six months later, Carmen Alvarez ("Alvarez") sued Chipotle under the FLSA and New Jersey State Wage and Hour Law, alleging Chipotle ignored the Final Rule by not paying her proper overtime wages. Alvarez claimed to bring suit on behalf of herself and others "similarly situated" so as to certify an FLSA collective action and class action under Federal Rules of Civil Procedure 23(a) and (b)(3). Alvarez's counsel-Joseph Sellers ("Sellers") and Miriam Nemeth ("Nemeth") of Cohen Milstein Sellers & Toll PLLC, Justin Swartz ("Swartz") and Melissa Stewart ("Stewart") of Outten & Golden LLP, and local counsel Glen Savits ("Savits") (the "Lawyers")-acknowledged the Injunction in Alvarez's complaint but stated it did not apply to them or to their client:
32. Although it preliminarily enjoined the Department of Labor from implementing and enforcing the Overtime Rule, the Eastern District of Texas did not stay the effective date of the Rule or otherwise prevent the Rule from going into effect. Therefore, as a rule duly promulgated pursuant to the requirements of the APA, the Rule went into effect on December 1, 2016.
33. Because the Eastern District of Texas's preliminary injunction was limited to implementation and enforcement of the Overtime Rule by the Department of Labor and its officials, it did not affect the ability of persons not party to the Nevada case, including Plaintiff and similarly situated employees, to bring private lawsuits pursuant to the FLSA's *715private cause of action,29 U.S.C. § 216 (b), to enforce their right to overtime pay under the Rule, nor did it prevent non-parties from bringing lawsuits under state law.
(Dkt. # 89, Exhibit 1 at pp. 13-14). This is the second lawsuit in which one of Alvarez's counsel-Swartz-has argued that this Court's Injunction of the Final Rule does not apply to him or to his client. In the United States District Court for the District of Massachusetts, Swartz also ignored this Court's Order2 :
107. On November 22, 2016, the United States District Court for the Eastern District of Texas issued an injunction in Nevada v. United States Dep't of Labor , No. 16 Civ. 731[218 F.Supp.3d 520 , 533-34,]2016 WL 6879615 , at *9 (E.D. Tex. Nov. 22, 2016) that enjoined only the U.S. Department of Labor from "implementing and enforcing" the amended versions of, inter alia ,29 C.F.R. §§ 541.100 and 541.200.3
(Dkt. # 89, Exhibit 1 at p. 205). On August 1, 2017, Chipotle filed its Motion for Contempt against Alvarez and the Lawyers (collectively "Respondents") (Dkt. # 89). On August 2, 2017, Chipotle filed a Motion for Judicial Notice regarding its Motion for Contempt (Dkt. # 96). On September 25, 2017, Chipotle filed its Addendum to Motion for Judicial Notice (Dkt. # 112). On September 18, 2017, Respondents filed their Response (Dkt. # 107). On September 25, 2017, Chipotle filed its Reply (Dkt. # 113). On October 9, 2017, Respondents filed their Sur-reply (Dkt. # 118). On November 6, 2017, the Court held a hearing on Chipotle's Motion for Contempt and Motion for Judicial Notice. Respondents filed supplemental briefing on November 8, 2017 (Dkt. # 122) and Chipotle responded to that supplemental briefing on November 10, 2017 (Dkt. # 123). On November 17, 2017, Respondents filed a Motion to Supplement the Record with several affidavits (Dkt. # 125). On November 22, 2017, Chipotle responded in opposition to the Motion to Supplement the Record (Dkt. # 126).
LEGAL STANDARD
To succeed on a motion for contempt, the movant must show by clear and convincing evidence that: (1) a court order was in effect; (2) the order required or prohibited certain conduct by the respondent; and (3) the respondent did not comply with the court's order. United States v. City of Jackson ,
ANALYSIS
Chipotle moves for contempt, contending that Respondents sued to enforce the *716Final Rule in violation of the Court's Order. Respondents counter that (I) the Court has no jurisdiction over them, (II) Respondents did not violate the Court's Order as the Order did not apply to them, and (III) if the Court does hold Respondents in contempt, it should spare the junior Lawyers-Savits, Nemeth, and Stewart-from sanctions. The Court will address each argument in turn.
I. The Court Has Jurisdiction over Respondents
Respondents were not parties to the original action giving rise to the Court's Order. Respondents claim that the Court has no jurisdiction over them since (A) they lacked notice of the Court's Order, (B) the first-filed doctrine precludes the Court's jurisdiction, and (C) they did not receive sufficient service and were prejudiced by insufficient process. Conversely, Chipotle claims that the Court has personal jurisdiction over any party with sufficient notice of the Court's Order who subsequently defies the Court's Order. The Court will address each of these arguments separately.
A. Respondents Had Notice of the Order
"Nonparties who reside outside the territorial jurisdiction of a district court may be subject to that court's jurisdiction if, with actual notice of the court's order, they actively aid and abet a party in violating that order." Waffenschmidt v. MacKay ,
Respondents had notice of the Court's Order. In actions before the District Court for the District of New Jersey and the District Court for the District of Massachusetts, some or all of Respondents recognized the Injunction. When filing suit in the United States District Court for the District of Massachusetts, one of the Respondents-Swartz-acknowledged the Court's Order:
107. On November 22, 2016, the United States District Court for the Eastern District of Texas issued an injunction in Nevada v. United States Dep't of Labor , No. 16 Civ. 731[218 F.Supp.3d 520 , 533-34,]2016 WL 6879615 , at *9 (E.D. Tex. Nov. 22, 2016) that enjoined only the U.S. Department of Labor from "implementing and enforcing" the amended versions of, inter alia ,29 C.F.R. §§ 541.100 and 541.200.
(Dkt. # 89, Exhibit 1 at p. 205). Further, Respondents acknowledged the Court's Order when filing the following in the United States District Court for the District of New Jersey:
32. Although it preliminarily enjoined the Department of Labor from implementing and enforcing the Overtime Rule, the Eastern District of Texas did not stay the effective date of the Rule or otherwise prevent the Rule from going into effect. Therefore, as a rule duly promulgated pursuant to the requirements of the APA, the Rule went into effect on December 1, 2016.
(Dkt. # 89, Exhibit 1 at p. 13). These pleadings prove that Respondents had notice of the Court's Order.
B. The First-Filed Doctrine Does Not Apply
Respondents claim that the first-filed doctrine locks this litigation in the District of New Jersey. Chipotle counters that the first-filed doctrine does not apply since the contempt proceeding before the Court is distinct from the lawsuit in New Jersey.
A court must defer to the first-filed action when there is a substantial overlap between that action and the subsequently filed action before it.
*717Save Power Ltd. v. Syntek Fin. Corp. ,
C. Chipotle Alerted Respondents of Its Contempt Motion Through Sufficient Process
Respondents argue that the Court has no jurisdiction over them because Chipotle did not alert them to the contempt proceeding through sufficient process. Chipotle counters that process was sufficient.
"[W]hen it is sought to charge a person with contempt who was not a party to the original action and thus not already within the jurisdiction of the court, that party must be served with process as in any other civil action." 11 CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 2960 at 589 (3d ed. 2017) ; accord McGuire v. Sigma Coatings, Inc. ,
Under civil process requirements, the moving party must serve a summons on the alleged contemnor. The summons must:
(A) name the court and the parties;
(B) be directed to the defendant;
(C) state the name and address of the plaintiff's attorney or-if unrepresented-of the plaintiff;
(D) state the time within which the defendant must appear and defend;
(E) notify the defendant that a failure to appear and defend will result in a default judgment against the defendant for the relief demanded in the complaint;
(F) be signed by the clerk; and
(G) bear the court's seal.
FED. R. CIV. P. 4(a). To satisfy service requirements, the moving party must satisfy several criteria:
(1) In General . A summons must be served with a copy of the complaint. The plaintiff is responsible for having the summons and complaint served within the time allowed by Rule 4(m)4 and must furnish the *718necessary copies to the person who makes service.
(2) By Whom . Any person who is at least 18 years old and not a party may serve a summons and complaint.
(3) By a Marshal or Someone Specially Appointed. At the plaintiff's request, the court may order that service be made by a United States marshal or deputy marshal or by a person specially appointed by the court. The court must so order if the plaintiff is authorized to proceed in forma pauperis under28 U.S.C. § 1915 or as a seaman under28 U.S.C. § 1916 .
FED. R. CIV. P. 4(c). If a movant substantially complies with Rule 4, however, a defendant must show actual prejudice, or the defense of insufficient process is waived. Sanderford v. Prudential Ins. Co. of Am. ,
Though Respondents rely heavily on McGuire , its holding does not fit the facts at bar. In McGuire , the alleged contemnor-an in-house counsel sanctioned for destroying documents allegedly responsive to a discovery request-was sanctioned without receiving any form of process. McGuire ,
Chipotle filed its Motion for Contempt with the Court on August 1, 2017 (Dkt. # 89). On August 21, 2017, Chipotle attempted to serve Swartz at his office (Dkt. # 113, Exhibit 8 at p. 4). After Swartz allegedly refused to accept service, Chipotle's process server left a copy of the Proposed Order Granting Chipotle's Motion for Contempt, Motion for Judicial Notice, Proposed Order Granting Chipotle's Motion for Judicial Notice, Motion for Contempt, and Exhibits with a security guard of "suitable age and discretion" on the premises (Dkt. # 113, Exhibit 8 at p. 4). Chipotle's process server inferred that Swartz was deliberately fleeing service:
CALLED [SWARTZ] AT 212-245-1000. SPOKE TO A FEMALE WHO STATED THAT JUSTIN WILL NOT COME DOWNSTAIRS TO ACCEPT DOCUMENTS AND THAT NO ONE FROM THE OFFICE WILL COME DOWN TO ACCEPT SERVICE ON HIS BEHALF. I FEEL HE IS EVADING SERVICE.
(Dkt. # 113, Exhibit 8 at p. 4). After Chipotle could not serve Respondents with process on August 21, 2017, it emailed Respondents to address the process issue. On August 24, 2017, Chipotle's counsel emailed Respondents informing them that "Chipotle is moving forward with service of the contempt motion, accompanying exhibits and proposed orders, and notice of hearing." (Dkt. # 113, Exhibit 7 at p. 4).
*719Chipotle's counsel added that "I am confirming that none of you are willing to waive and accept service of these papers in your individual capacities or on behalf of Ms. Alvarez." (Dkt. # 113, Exhibit 7 at p. 4). Thereafter, Chipotle's counsel informed Respondents that if Chipotle had to effect personal service, it would seek the fees and costs incurred in doing so pursuant to Federal Rule of Civil Procedure 4(d)(2) (Dkt. # 113, Exhibit 7 at p. 4).
Chipotle also mailed to the Respondents notification of the Motion for Contempt, related filings, and notice of hearing set for August 17, 2017 (Dkt. # 113, Exhibit 7 at pp. 346-48). This notification included a request to waive service of process (Dkt. # 113, Exhibit 7 at pp. 346-48).
Chipotle's attempted notice was effective. Upon learning of the motion for contempt, Sellers deemed it "regrettable" that the company "has mounted a frivolous attack on [Alvarez] and her lawyers" rather than defending the New Jersey lawsuit. Sellers so elaborated in a Law360 article:
Rather than defend against the FLSA claims in the New Jersey court in which they are pending, Chipotle has rushed to a forum of its choice to argue that a preliminary injunction issued in the [Eastern District of] Texas that applies solely to the Department of Labor has barred the plaintiffs from proceeding with a wholly independent private claim against the company. Chipotle should pay its workers for the overtime they've earned rather than engaging in these legal gymnastics.
(Dkt. # 113, Exhibit 6 at p. 4). Respondents have not shown that they were actually prejudiced by the imperfect service of process. At each and every step of this contempt proceeding, Chipotle sent notice to Respondents of the ensuing developments in the litigation. This notice permitted Respondents to repeatedly contest Chipotle's contempt motion through briefs and in a contempt hearing before the Court. In turn, Respondents enjoyed substantially compliant service and suffered no prejudice. Thus, the Court has jurisdiction over Respondents.
II. Motion for Contempt
To succeed on a motion for contempt, the movant must show by clear and convincing evidence that: (A) a court order was in effect; (B) the order required or prohibited certain conduct by the respondent; and (C) the respondent did not comply with the court's order. City of Jackson ,
A. The Court Order Was in Effect
The Court must first determine whether the Injunction was in effect. City of Jackson ,
B. The Order Required or Prohibited Certain Conduct by Respondents
In this instance, because Respondents are non-parties to the original injunction proceeding, the Court must decide whether the Injunction applied to and prohibited Respondents' conduct. City of Jackson ,
i. Respondents Acted in Privity with the DOL
An injunction binds not only "the parties defendant but also those identified with them in interest, in 'privity' with them, represented by them or subject to their control." Regal Knitwear Co. v. N.L.R.B. ,
[Privity] represents a legal conclusion that the relationship between the one who is a party on the record and the non-party is sufficiently close to bind the nonparty to the injunction ... An injunction may not extend to persons who act independently and whose rights have not been adjudged according to law. A similar requirement governs when res judicata may bind a nonparty to a prior judgment.
ADT LLC v. NorthStar Alarm Servs., LLC,
A non-party achieves privity with a party in a prior lawsuit in three situations:
First, a nonparty who has succeeded to a party's interest in property is bound by any prior judgments against that party ... Second, a nonparty who controlled the original suit will be bound by the resulting judgment ... Third, federal *721courts will bind a nonparty whose interests were represented adequately by a party in the original suit...
Benson & Ford, Inc. v. Wanda Petrol. Co. ,
"[T]he proposition that governments may represent private interests in litigation, precluding relitigation, is clear." Sw. Airlines Co. ,
This case presents facts similar to Southwest Airlines Co. v. Texas International Airlines, Inc. (" Southwest Airlines "). In Southwest Airlines , the Civil Aeronautics Board ("CAB") issued an Order in 1964, mandating that the City of Dallas and the City of Fort Worth (the "Cities") designate a single airport for CAB-approved commercial air service in their region.
In 1971, Southwest Airlines ("Southwest") started offering intrastate commercial air service from Love Field under a certificate issued by the Texas Aeronautics Commission ("TAC"). Sw. Airlines Co. ,
On May 11, 1973, the court entered an order, declaring that the Cities and the *722DFW Airport Board could "not lawfully exclude [Southwest] from the use of Love Field, Dallas, Texas, and its airport facilities so long as Love Field remains open." Southwest I ,
Next, the CAB-Carriers filed claims to enforce the 1968 Ordinance against Southwest in state court. Sw. Airlines Co. v. Tex. Int'l Airlines, Inc. ,
This court is of the opinion that under the doctrines of 'virtual representation', 'res judicata', 'collateral estoppel', by whatever label we call it ('that which we call a rose-by any other name would smell as sweet'), and the facts of this case, plaintiff Southwest is entitled to an injunction enjoining and restraining defendants from relitigating in state court or in any other court action the validity, effect or enforceability of the [1968 Ordinance].
An injunction to protect a federal judgment can restrain only those bound by the judgment. Because [the CAB-Carriers] did not appear as parties in Southwest I , they now argue that the holding of that case cannot preclude them from relitigating issues there decided. They present the question whether the 1968 [O]rdinance can be enforced by private parties against Southwest after a federal court has held public enforcement of the ordinance invalid.
Sw. Airlines Co. ,
[U]nder the Restatement Second system of preclusion, a private party must show more than a special pecuniary interest when attempting to vindicate the breach of a public duty already litigated by a government agency. Permission to relitigate appears reserved for the private plaintiff who would vindicate a breach of duty owed specifically to the plaintiff or who would recover under a "statutory system of remedies (that) may contemplate enforcement of private interests both by a public agency and the affected private parties."
First, [the CAB-Carriers] do not claim a breach of legal duty by Southwest, apart from the alleged violation of the general duty to obey valid ordinances. Second, [the CAB-Carriers] request the same remedy denied the City of Dallas, namely the enforcement of the phase-out provision of the [1968 Ordinance] to exclude Southwest from Love Field. Third, the [1968 Ordinance] does not establish a *723statutory scheme looking toward private enforcement of its requirements. Because legal interests of [the CAB-Carriers] do not differ from those of Dallas in Southwest I , we hold that they received adequate representation in the earlier litigation and should be bound by the judgment in that litigation.
Dallas, as a government, represented ... the only legal interests [the CAB-Carriers] possess regarding enforcement of the ... 1968 [O]rdinance against Southwest. In other words, the relationship between the city as public enforcer of the [1968 Ordinance] and the airlines as private enforcers [was] close enough to preclude relitigation.
Relevant to the facts at bar, the Fifth Circuit disagreed with the CAB-Carriers' argument that they were not in privity with the City of Dallas because "the interests of the cities in Southwest I differ[ed] from the pecuniary interests of [the CAB-Carriers]."
To allow relitigation by any private litigant with a pecuniary interest in the success of the new airport would open the door to recurrent, burdensome litigation. Besides [the CAB-Carriers], all of the individuals and companies that provide goods and services at the new airport have a pecuniary interest, distinct from that of the general public, not only in the ultimate survival of the facility, but also in the volume of air traffic attracted to the airport. More planes means more passengers, more sales, more jobs, more profits for all of the businesses involved. Furthermore, a pecuniary interest could be claimed by investors, developers, hotels, restaurants, and other retail interests attracted to the vicinity by the new facility. Even the businesses at or near Love Field could claim a similar, although converse, interest.
The DOL declared that it represented the rights of employees like Alvarez in the original injunction proceeding before the Court. In opposing the Injunction, the DOL warned that enjoining the Final Rule would trample the public interest:
[B]locking this particular regulation would have a profoundly harmful impact on the public. More than four million workers in Fiscal Year 2017 meet the duties test and have a weekly salary of more than $455 but earn below the 40th earnings percentile in the South; staying the Final Rule would deprive these workers of the protections that Congress intended they receive on the basis of an outdated and less effective salary level-one that has not been updated in over a decade.
(Dkt. # 37 at p. 56) (emphasis added). The DOL adequately represented the interests of employees like Alvarez when advocating for the validity and enforceability of the Final Rule in the original injunction *724proceeding. That proceeding resulted in the Court enjoining the Final Rule on a nationwide basis and enjoining the DOL from enforcing the Final Rule (Dkt. # 60 at pp. 19-20). In turn, the Injunction can be read to say, "the Court has authority to enjoin the Final Rule on a nationwide basis and decides that it is appropriate in this case.... Specifically, [the DOL, which represented all employees regulated by federal minimum wage laws, is] enjoined from ... enforcing [the Final Rule.]" (Dkt. # 60 at pp. 19-20). If the DOL had prevailed in the original injunction proceeding, the Final Rule would have been deemed valid and enforced, and Alvarez's cause of action-the recovery of unpaid overtime wages based on the criteria in the Final Rule-would have been unwarranted.7 Whether or not Chipotle ultimately complied with the Final Rule, the DOL advocated for legal interests congruent to those in Alvarez's lawsuit-the validity and enforceability of the Final Rule. See Sw. Airlines Co. ,
The Fifth Circuit distinguished the facts in Southwest Airlines from another case where it found that the federal government did not adequately represent employees' interests in a racial discrimination action against an employer so as to preclude a class action lawsuit for racial discrimination by those employees against the same employer. Rodriguez v. East Tex. Motor Freight ,
The Fifth Circuit found that the government's and employees' respective lawsuits protected different interests.
In Southwest , the Fifth Circuit found that the CAB-Carriers' situation:
Differs from that of the job discrimination victims [in Rodriguez ] who could *725claim that under the Civil Rights Acts the employers had breached legal duties owed specifically to them, not just to the general public. Furthermore, in Rodriguez and Williamson v. Bethlehem Steel Corp .,468 F.2d 1201 (2d Cir. 1972) the workers claimed remedies distinct from the relief imposed in the government litigation. In the [suit to enforce the 1968 Ordinance against Southwest], however, [the CAB-Carriers] attempt only to exclude Southwest from Love Field, the remedy already denied the City of Dallas.
Sw. Airlines Co. ,
(a) The Congress finds that the existence, in industries engaged in commerce or in the production of goods for commerce, of labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers (1) causes commerce and the channels and instrumentalities of commerce to be used to spread and perpetuate such labor conditions among the workers of the several States; (2) burdens commerce and the free flow of goods in commerce; (3) constitutes an unfair method of competition in commerce; (4) leads to labor disputes burdening and obstructing commerce and the free flow of goods in commerce; and (5) interferes with the orderly and fair marketing of goods in commerce. That Congress further finds that the employment of persons in domestic service in households affects commerce.
(b) It is declared to be the policy of this chapter, through the exercise by Congress of its power to regulate commerce among the several States and with foreign nations, to correct and as rapidly as practicable to eliminate the conditions above referred to in such industries without substantially curtailing employment or earning power.
Finally, an Injunction binds "the following who receive actual notice of it by personal service or otherwise: (A) the parties; (B) the parties' officers, agents, servants, employees, and attorneys; and (C) other persons who are in active concert or participation with anyone described in Rule 65(d)(2)(A) or (B)." FED. R. CIV. P. 65(d)(2)(A)(B)(C). The Injunction bound the Lawyers since they served as Alvarez's attorneys with actual notice of the Injunction. FED. R. CIV. P. 65(d)(2)(B). See supra Part I.A.: "Respondents Had Notice of the Order."
ii. The Injunction Clearly Applied to Alvarez's Actions
Since the Injunction was binding on Alvarez, the Court must determine whether the Injunction clearly prohibited her actions. Alvarez claims that the Injunction did not clearly enjoin the Final Rule's enforcement by non-parties. Chipotle avers *726that the Injunction "could not be clearer." (Dkt. # 113 at p. 11).
"A party commits contempt when he violates a definite and specific order of the court requiring him to perform or refrain from performing a particular act or acts with knowledge of the court's order." SEC v. First Fin. Grp. of Tex. ,
The Court's Order explained that it had "authority to enjoin the Final Rule on a nationwide basis and decides that it is appropriate in this case." (Dkt. # 60 at p. 19). The Court's Order further stated:
[T]he Department's Final Rule described at81 Fed. Reg. 32,391 is hereby enjoined. Specifically, Defendants are enjoined from implementing and enforcing the following regulations as amended by81 Fed. Reg. 32,391 ;29 C.F.R. §§ 541.100 , 541.200, 541.204, 541.300, 541.400, 541.600, 541.602, 541.604, 541.605, and 541.607 pending further order of this Court.
(Dkt. # 60 at pp. 19-20). The Court's Order explained that it enjoined the Final Rule on a "nationwide basis." (Dkt. # 60 at p. 19). Given the plain language of the Court's Order, its direct recognition of the Final Rule, and the sheer dearth of parties so confused by the Court's Order,8 the Court finds that the Injunction was wholly unambiguous. As such, the Court's Order clearly applied to Respondents. Thus, the Injunction prohibited Respondents from suing to enforce the Final Rule.
C. Respondents Did Not Comply with the Court's Order
Finally, the Court must determine whether Respondents did not comply with *727the Court's Order. Respondents argue that their lawsuit to enforce the Final Rule was not contemptable since it was based on a reasonable, good faith investigation of the Injunction. Chipotle counters that Respondent's good faith is irrelevant to the Court's contempt analysis.
"Good faith is not a defense to civil contempt; the question is whether the alleged contemnor complied with the court's order." Chao ,
Respondents submitted affidavits to show that they relied on the advice of several academics before suing to enforce the Final Rule (Dkt. # 125, Exhibits A-D). These included Professors David C. Vladeck of Georgetown University Law Center (Dkt. # 125, Exhibit A), Professor Alan B. Morrison of The George Washington University School of Law (Dkt. # 125, Exhibit B), and Professor David Marcus of the University of Arizona Rogers College of Law (Dkt. # 125, Exhibit C) (collectively "the Professors"). In their respective affidavits, the Professors explained that they believed that the Court's Order did not prevent Respondents from suing to enforce the Final Rule (Dkt. # 125, Exhibits A-C). Sellers also submitted an affidavit explaining that he consulted with the Professors before filing suit in New Jersey (Dkt. # 125, Exhibit D at p. 3).
Good faith is irrelevant. Chao ,
III. The Court Will Not Limit the Motion for Contempt to Senior Attorneys
Since contempt is proper, the Court will address Respondents' third argument-the Court should not hold junior attorneys Nemeth, Stewart, and Savits in contempt. Respondents advance that these attorneys had no decision-making authority in bringing the New Jersey Action. To that end, Sellers submitted an affidavit to the Court, explaining that Nemeth, an associate at his law firm, had no decision-making authority over bringing Alvarez's claim (Dkt. # 125, Exhibit D). Swartz also submitted an affidavit, claiming that Stewart, an associate at his law firm, had no decision-making authority over bringing Alvarez's claim (Dkt. # 125, Exhibit E). Chipotle counters that this argument is untimely, claiming that "Respondents cannot now, at the final hour, raise new arguments attempting to alleviate Nemeth, Stewart, and Savits from responsibility for their actions." (Dkt. # 123 at p. 7). Chipotle also argues that if the Court does not find these lawyers in contempt, it would allow their pursuit of the New Jersey action. Further, Chipotle argues that the facts of this case do not support the notion that these lawyers were just following orders.
All five of the Lawyers-Sellers, Swartz, Nemeth, Stewart, and Savits-appeared on the New Jersey Class Action Complaint as "Attorneys for Plaintiff and the Putative Class and Collective." (Dkt. # 89, Exhibit 1 at p. 5). At that time, Savits had practiced law for thirty-five years. Savits signed the complaint. Nemeth had practiced law for eight years. Nemeth featured *728the New Jersey Class Action on her firm biography and listed herself as the sole point of contact for parties looking to join the action. Stewart had also practiced law for eight years. One of Respondents' law firm websites advised the public to contact her with "any questions, concerns, or information about Chipotle or the overtime issues" in the New Jersey Class Action (Dkt. # 123, Exhibit 12 at p. 3). After three years of law school and eight to thirty-five years of practice, a lawyer should know that signing his or her name to a document has consequences. Given their experience, avidity, and ownership of this case, it is difficult to accept that these seasoned professionals simply followed orders. Thus, the Court will not limit Chipotle's Motion for Contempt to the Respondents' senior attorneys.
IV. Chipotle's Relief
A district court has broad discretion to remedy civil contempt. In re Gen. Motors Corp. ,
The Court will exercise civil contempt to ensure compliance with the Court's Order. Respondents have amply showed that they are ready and willing to violate the Court's Order. In statements to the press, to a New Jersey District Court, to a Massachusetts District Court, and to this Court, Respondents have repeatedly and summarily dismissed the Injunction's bearing on them and on their clients. They have done so despite the Injunction's plain language, clear construction, and self-evident application to their causes of action. The Court's Order enjoined the enforcement of the Final Rule, Respondents were acutely aware of the Court's Order, and Respondents sued to recover wages based on the enforcement of the Final Rule in violation of the Court's Order. Such disobedience mandates coercive action to ensure compliance with the Court's Order. Thus, the Court orders Respondents to withdraw their allegations, both individual and representative, concerning the enforcement of the Final Rule against Chipotle within seven days of this order. Furthermore, the Court affirms that the Court's Order (1) applies to Alvarez and to all proposed plaintiffs similarly situated to her and (2) bars her from enforcing the Final Rule on behalf of herself and on behalf of all others similarly situated to her.
Compensation for Chipotle's fees and expenses in their pursuit of contempt is also appropriate. "Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct."
Respondents sued to enforce the Final Rule in direct violation of the Court's Order. In doing so, they recklessly disregarded a duty owed to the Court-the long-standing and elementary duty to obey its orders, including a nationwide injunction. In doing so, they pursued a claim that they should have known was unwarranted in fact or law. As mentioned earlier, Respondents uniquely claim that the Court's Order only enjoined the DOL's enforcement of the Final Rule but not the enforcement of the Final Rule itself. When asked to support this claim with precedent, they could not. Novel readings of law arise from linguistic ambiguities, circuit court splits, and divergent canons of interpretation. Bond v. United States ,
CONCLUSION
It is hereby ORDERED that Chipotle's Motion for Contempt (Dkt. # 89) is GRANTED . It is further ORDERED that Respondents withdraw their allegations, both individual and representative, concerning the Final Rule against Chipotle within seven days. It is also ORDERED that Respondents file a notice of compliance with the Court within eight days.
It is additionally ORDERED that Chipotle is entitled to compensation for fees and expenses tied to this contempt proceeding. To that end, it is finally ORDERED that Chipotle submit affidavits in support of all attorneys' fees related to this contempt proceeding within fourteen days of this Order.
Related
Cite This Page — Counsel Stack
321 F. Supp. 3d 709, Counsel Stack Legal Research, https://law.counselstack.com/opinion/nevada-v-us-dept-of-labor-txed-2018.