Ackinclose v. Palm Beach County, Fla.

• Decision Date: 20 May 1988
• Docket Number: No. 87-5186,87-5186
• Citation: 845 F.2d 931
• Parties: 28 Wage & Hour Cas. (BN 1057, 109 Lab.Cas. P 35,073 Robert ACKINCLOSE, Joseph F. Barcia, et al., Plaintiffs-Appellants, v. PALM BEACH COUNTY, FLORIDA, Defendant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 931

845 F.2d 931

28 Wage & Hour Cas. (BN 1057, 109 Lab.Cas. P 35,073

Robert ACKINCLOSE, Joseph F. Barcia, et al., Plaintiffs-Appellants, v. PALM BEACH COUNTY, FLORIDA, Defendant-Appellee.

No. 87-5186.

United States Court of Appeals, Eleventh Circuit.

May 20, 1988.

Susan N. Brattebo, Kenneth L. Minerley, Edwards & Angell, Carl Angeloff, Palm Beach, Fla., for plaintiffs-appellants.

Glenn J. Torcivia, Asst. Atty. Gen., West Palm Beach, Fla., for defendant-appellee.

Appeal from the United States District Court for the Southern District of Florida.

Before KRAVITCH and CLARK, Circuit Judges, and ESCHBACH ^*, Senior Circuit Judge.

ESCHBACH, Senior Circuit Judge:

This action was brought by certain present and former employees of the Water Utility Department of Palm Beach County, Florida claiming violations of the minimum wage (29 U.S.C. Sec. 206) and maximum hours/overtime compensation (29 U.S.C. Sec. 207) provisions of the Fair Labor Standards Act of 1938 (FLSA), 29 U.S.C. Secs. 201-219. The district court dismissed appellants' complaint with prejudice for failure to state a claim upon which relief can be granted. They appeal that dismissal.

I

Appellants filed this suit on January 17, 1986. The complaint arose as a result of the Department's policy, from January 13, 1983 until about October, 1985, of requiring its employees on a rotating basis to remain at home, by their telephones available for immediate call-in to work. The hours spent in this standby duty status were not compensated and they were not considered hours worked for purposes of overtime hours calculation.

Three events that preceded the January 17, 1986 filing of this suit are of significance. First is the 1976 decision of the Supreme Court in National League of Cities v. Usery, 426 U.S. 833, 96 S.Ct. 2465, 49 L.Ed.2d 245 (1976). In National League of Cities the Court found a Tenth Amendment-based limitation precluding Congress from exercising its Commerce Clause authority to enforce the minimum wage and overtime compensation provisions of the FLSA against the states and their political subdivisions for the benefit of employees working in areas of traditional governmental functions. 426 U.S. at 853, 96 S.Ct. at 2474. Some nine years later, in Garcia v. San Antonio Metropolitian Transit Authority, 469 U.S. 528, 105 S.Ct. 1005, 83 L.Ed.2d 1016 (1985), the Court expressly overruled National League of Cities, and thereby brought all employees of the states and their political subdivisions within the full coverage of the FLSA.

The final event of importance to this case is the passage in November, 1985 of the Fair Labor Standards Amendments of 1985, Pub.L. No. 99-150, 99 Stat. 787 (1985). Section 2(c)(1) of the 1985 Amendments provided a grace period until April 15, 1986 (one year after the mandate in Garcia ) during which the states and their political subdivisions could not be sued for minimum wage and maximum hours FLSA violations by employees newly brought under the protection of those provisions of the Act by reason of the Supreme Court's decision in Garcia. The relevance and significance of each of these events is addressed in the analysis below.

II

This appeal presents two primary questions. First, we must decide whether the holding of the Supreme Court in Garcia v. San Antonio Metropolitan Transit Authority, supra, should be applied retroactively in this case. Second, we must determine whether Section 2(c)(1) of the Fair Labor Standards Amendments of 1985 bars this suit because it was filed before April 15, 1986.

A. The Retroactive Application of Garcia

As a general rule, courts apply the law in effect at the time they decide a case. Goodman v. Lukens Steel Co., --- U.S. ----, 107 S.Ct. 2617, 2621, 96 L.Ed.2d 572 (1987). See also Equal Employment Opportunity Commission v. Atlanta Gas Light Company, 751 F.2d 1188, 1189 (11th Cir.), cert. denied, 474 U.S. 968, 106 S.Ct. 333, 88 L.Ed.2d 316 (1985); Acoff v. D.E. Abston, 762 F.2d 1543, 1548 (11th Cir.1985); Mineo v. Port Authority of New York and New Jersey, 779 F.2d 939, 943 (3d Cir.1985). However, as we have observed, this "strong presumption" that judicial decisions are to be applied retroactively can, in certain circumstances, be mitigated. Camden I. Condominium Association v. Dunkle, 805 F.2d 1532, 1533-34 (11th Cir.1986).

The test for determining when retroactive application of a judicial decision is not warranted in a civil litigation context is set forth in Chevron Oil Co. v. Huson, 404 U.S. 97, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971). See also United States v. Johnson, 457 U.S. 537, 563, 102 S.Ct. 2579, 2592, 73 L.Ed.2d 202 (1982). Chevron instructs that three separate factors are to be weighed in deciding the nonretroactivity question.

First, the decision to be applied nonretroactively must establish a new principle of law, either by overruling clear past precedent on which litigants may have relied, or by deciding an issue of first impression whose resolution was not clearly foreshadowed. Second, it has been stressed that "we must ... weigh the merits and demerits in each case by looking to the prior history of the rule in question, its purpose and effect, and whether retrospective operation will further or retard its operation." Finally, we have weighed the inequity imposed by retroactive application, for "[w]here a decision of this Court could produce inequitable results if applied retroactively, there is ample basis in our cases for avoiding the 'injustice or hardship' by a holding of nonretroactivity." 404 U.S. at 106-07, 92 S.Ct. at 355 (citations omitted).

In applying the three-factor Chevron test, the party seeking to avoid retroactive application bears the burden of persuasion. Camden I., 805 F.2d at 1534.

During the nine years that National League of Cities was the law, any determination of whether the employees of the Water Utility Department were protected by the minimum wage and overtime compensation provisions of the FLSA would have been controlled by the traditional governmental functions test of National League of Cities. After Garcia was decided, it was absolutely clear that the Department's employees were covered by all provisions of the FLSA, regardless of whether they worked in areas of traditional governmental function. That Garcia was a "clear break" from precedent is apparent. Cf. Acoff, 762 F.2d at 1543 (articulating the "clear break" doctrine in refusing to grant retrospective effect to a judicial decision establishing a rule of criminal procedure that was both unanticipated and in conflict with old standards).

It is true that the ambiguous nature of the traditional governmental functions standard relied on in National League of Cities left the County, and appellants, unable to definitively determine, without adjudication, whether the Department's employees were within the scope of the Act's protection. Nevertheless, that fact does not preclude us from finding that the Court's express overruling of National League of Cities in Garcia signaled "an abrupt and fundamental shift in doctrine" that established "an entirely new rule which in effect replaced an older one." Hanover Shoe, Inc., v. United Shoe Machinery Corp., 392 U.S. 481, 498, 88 S.Ct. 2224, 2232, 20 L.Ed.2d 1231 (1968).

Contrary to appellants' claim, Garcia was not merely an extension or expansion of an existing doctrine. Rather, it was "an avulsive change which caused the current of the law to flow between new banks." Hanover, 392 U.S. at 498, 88 S.Ct. at 2232. Given these facts, and because the Supreme Court's reversal of the National League of Cities doctrine was not clearly foreshadowed by developments in the lower courts or otherwise, we can only conclude that the first factor favoring nonretroactive application of Garcia is satisfied here. See Camden I., 805 F.2d at 1534; Atlanta Gas Light Company, 751 F.2d at 1190.

In applying the second Chevron factor we are directed by the Court to "look[ ] to the prior history of the rule in question, its purpose and effect, and [determine] whether retrospective operation will further or retard its operation." 404 U.S. at 106-07, 92 S.Ct. at 355. The appropriate starting point for this inquiry is an attempt to properly characterize the rule of Garcia and describe its effect.

There are two ways to conceptualize the rule of Garcia and the effect it has. In constitutional terms Garcia establishes that the Commerce Clause gives Congress authority to enforce all provisions of the FLSA against the states and their political subdivisions. See Rhinebarger v. Orr, 839 F.2d 387 (7th Cir.1988). The core of the Court's concern in Garcia was its desire to correct the "depart[ure] from a proper understanding of congressional power under the Commerce Clause" caused by National League of Cities, 471 U.S. at 557, 105 S.Ct. at 1201. It sought to readjust the model of "democratic decision making" identified in National League of Cities in order to insure "due respect for the reach of congressional power within the federal system." Id. In doing so, the Court eliminated what it deemed to be an unworkable and misdirected standard of state and local government immunity from federal law. Brooks v. Village of Lincolnwood, 620 F.Supp. 24, 26 (N.D.Ill.1985).

In terms of substantive FLSA law, the effect of Garcia is to leave all provisions of the FLSA (including the Act's minimum wage and overtime compensation protections) fully applicable to the states and their political subdivisions. Whether this second dimension of the Court's holding is labeled a "rule" or an "effect", careful analysis of the second Chevron factor requires that we also consider whether retroactive application of Garcia would further or retard implementation of the FLSA minimum wage and overtime compensation guarantees in state and local governments.

By expressly reversing National League of Cities and rejecting the traditional governmental function standard upon which its view of the Commerce...