Austin v. City of Bisbee, Ariz.

• Decision Date: 29 August 1988
• Docket Number: No. 87-1595,87-1595
• Citation: 855 F.2d 1429
• Parties: 28 Wage & Hour Cas. (BN 1357, 57 USLW 2156, 110 Lab.Cas. P 35,114 David AUSTIN and Denise Austin, husband and wife; Mary Katherine Gojkovich, a single person, Plaintiffs-Appellants, v. CITY OF BISBEE, ARIZONA, a body politic, Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 1429

855 F.2d 1429

28 Wage & Hour Cas. (BN 1357, 57 USLW 2156,

110 Lab.Cas. P 35,114

David AUSTIN and Denise Austin, husband and wife; Mary Katherine Gojkovich, a single person, Plaintiffs-Appellants, v. CITY OF BISBEE, ARIZONA, a body politic, Defendant-Appellee.

No. 87-1595.

United States Court of Appeals Ninth Circuit.

Argued and Submitted Nov. 13, 1987.

Decided Aug. 29, 1988.

Tony K. Behrens, Desens, Behrens & Hitchcock, Bisbee, Ariz., for plaintiffs-appellants.

Gerald F. Till, Sierra Vista, Ariz., for defendant-appellee.

Appeal from the United States District Court for the District of Arizona.

Before GOODWIN, and FLETCHER, Circuit Judges, and KING, ^* District Judge.

FLETCHER, Circuit Judge:

In November 1985, Mary Katherine Gojkovich and David Austin, police officers for the City of Bisbee, Arizona, sued the city under the Fair Labor Standards Act (FLSA), 29 U.S.C. Sec. 201 et seq., for overtime pay for the hours the officers spent "on-call" while off-duty. ¹ They argue that Garcia v. San Antonio Metropolitan Transit Authority, 469 U.S. 528, 105 S.Ct. 1005, 83 L.Ed.2d 1016 (1985), which extended FLSA protections to all state and local government employees, entitles them to overtime compensation. Because we find that Garcia should not be applied retroactively to public employees engaged in traditional governmental functions, and that Congress did not unconstitutionally take away a property right when it amended the FLSA to postpone liability under Garcia until April 15, 1986, we affirm.

BACKGROUND

Appellant Austin seeks overtime compensation under 29 U.S.C. Secs. 207, 216(b) for 4,340 hours he allegedly spent on call between December 18, 1983 and April 6, 1985. Appellant Gojkovich likewise seeks compensation for 2,910 hours she allegedly was on-call between November 28, 1983 and June 2, 1984. During this period the City's policy was to require, as a condition of employment, that certain police officers remain on "on-call" status during their off-duty hours. The parties jointly stipulated that "being on-call" meant that the officers were required to report a telephone number where they could be reached at all times, and that they be "ready, able, and willing to appear for duty immediately if and when summoned at said telephone number."

Before 1966, the overtime provisions of the FLSA did not apply to federal, state, and local governmental employees. In that year, and again in 1974, Congress amended the FLSA to include coverage for those employees. Fair Labor Standards Amendments of 1966, Sec. 102(a) and (b), 80 Stat. 830, 831; Fair Labor Standards Amendments of 1974, Sec. 6(a)(1) and (6), 88 Stat. 58, 60, 29 U.S.C. Sec. 203(d) and (x). But in National League of Cities v. Usery, 426 U.S. 833, 96 S.Ct. 2465, 49 L.Ed.2d 245 (1976), the Supreme Court held that the Tenth Amendment rendered the application of the FLSA to state and local governments unconstitutional, to the extent the Act interfered with the employment of people for "integral" and "traditional" state and local governmental functions, such as fire fighters, policemen, and school or public health employees. 426 U.S. at 851-52, 96 S.Ct. at 2474. This decision was the law during most of the period for which appellants now seek overtime compensation.

On February 19, 1985 the Supreme Court expressly overruled National League of Cities in Garcia, 469 U.S. at 531, 105 S.Ct. at 1007, thereby eliminating the City of Bisbee's exemption from overtime liability for its police force. But on November 13, 1985, Congress passed amendments to FLSA that delayed until April 15, 1986 state and local governments' liability for failure to comply with Garcia. Act of Nov. 13, 1985, Pub.L. No. 99-150, 99 Stat. 787.

On November 8, 1985, less than a week before Congress took action, plaintiffs filed this complaint. The District Court for the

District of Arizona granted summary judgment for the City of Bisbee on the ground that National League of Cities, not Garcia, controlled during the time period at issue. The court found, furthermore, that even if Garcia did control, the uncontroverted facts did not support the plaintiffs' contention that their "on-call" activities were compensable overtime under the FLSA. Austin and Gojkovich timely appealed. We have jurisdiction under 28 U.S.C. Sec. 1291.

DISCUSSION

This court reviews grants of summary judgment de novo. State of Idaho v. Hodel, 814 F.2d 1288, 1292 (9th Cir.), cert. denied, --- U.S. ----, 108 S.Ct. 159, 98 L.Ed.2d 114 (1987). "Viewing all the evidence in the record in the light most favorable to the non-moving party, we must determine whether there is a genuine issue as to any material fact and, if not, whether the substantive law was correctly applied." Id.; Fed.R.Civ.P. 56(c).

This case presents two questions of law concerning retroactivity: first, whether Garcia 's holding should be applied retroactively to these police officers' claims for overtime between November 1983 and February 19, 1985 (the date the Garcia decision was handed down); and second, whether Garcia should render the City liable for overtime hours Austin worked between February 19th and April 6th, 1985, i.e., whether the November 1985 amendment to the FSLA postponing liability until April 15, 1986 can constitutionally be applied retroactively to deprive public employees of a cause of action conferred by Garcia.

I. Retroactivity of Garcia.

Only a retroactive application of Garcia could make the FLSA provisions applicable to appellants' employment before February 19, 1985, since during that period their work as police officers was plainly exempted by National League of Cities. National League of Cities expressly included "police protection" in a list of examples of traditional governmental functions of the states and their political subdivisions that were exempted from FLSA coverage. ² 426 U.S. at 851, 96 S.Ct. at 2474.

The district court correctly concluded that Garcia should be applied only prospectively. We recognize that "[t]he longstanding common law rule is that a decision reformulating federal civil law will usually be applied retroactively." Kartevold v. Spokane County Fire Protection Dist. No. 9, 625 F.Supp. 1553, 1555 (E.D.Wash.1986); see also Thorpe v. Housing Auth. of the City of Durham, 393 U.S. 268, 281-82, 89 S.Ct. 518, 625-26, 21 L.Ed.2d 474 (1969) ("an appellate court must apply the law in effect at the time it renders its decision"). It is also true, however, that

... at times application of this retroactivity precept produces inequitable results, penalizing parties who ordered their affairs in reasonable reliance on a rule of law that was later invalidated. Such inequity is undesirable, not only because of the harm to the party involved, but also because it discourages adherence to contemporary laws.

Mineo v. Port Auth. of New York and New Jersey, 779 F.2d 939, 943 (3d Cir.1985), reh'g denied, 783 F.2d 42 (3d Cir.1986) (en banc), cert. denied, 478 U.S. 1005, 106 S.Ct. 3297, 92 L.Ed.2d 712 (1986). We agree that retroactive application would be inappropriate in this case.

Decisions that are to be applied only prospectively must satisfy the three-pronged test set forth in Chevron Oil Co. v. Huson, 404 U.S. 97, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971). Under Chevron, the decision to be applied only prospectively must:

1) 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 2) state a rule whose retrospective operation will retard more than further its operation, considering the rule's prior history and its purpose and effect;

whose resolution was not clearly foreshadowed;

3) be a decision whose retroactive application could produce substantial inequitable results, and for which a holding of nonretroactivity would avoid injustice or hardship.

Id. at 106-07, 92 S.Ct. at 355.

We conclude that application of the Chevron factors mandates that Garcia not be applied retroactively. Without question, the first prong weighs against retroactive application. Following in the wake of the 1974 FLSA amendments and National League of Cities, Garcia was anything but an issue of first impression. And while National League of Cities was a vigorously criticized decision, Garcia 's holding cannot be said to have been clearly foreshadowed. See Kartevold, 625 F.Supp. at 1556-57. More important, Garcia overruled clear past precedent. It expressly reversed National League of Cities, which had specified that the FLSA did not apply to police, firefighters, and other traditional function employees.

The second prong presents a less clear answer. It is true that "the FLSA should be read broadly to accomplish its remedial objectives." Kartevold, 625 F.Supp. at 1557 (citing Tony & Susan Alamo Found. v. Secretary of Labor, 471 U.S. 290, 105 S.Ct. 1953, 85 L.Ed.2d 278 (1985)). One might think retroactive application of its protections to all public employees would substantially benefit those the FLSA was intended to help. However, we think it more likely that retroactive application of Garcia here would actually hinder its prospective application because it "would wreak havoc on municipal budgeting and create unanticipated financial liability for already strapped municipalities." Brooks v. Village of Lincolnwood, 620 F.Supp. 24, 26 (N.D.Ill.1985). Our assessment coincides with that of Congress, which amended the FLSA to "defer[ ] application of the FLSA overtime provisions until exactly one year after the mandate in Garcia so that state and local governments may make necessary adjustments in their work practices, staffing patterns, and fiscal priorities." S.Rep. No. 159, 99th Cong., 1st Sess. 15, reprinted in 1985 U.S.Code Cong. & Admin.News 651, 663. Congress's action was a response to municipalities that had "expressed an urgent need for lead-time in which to reorder their budgetary priorities while maintaining fiscal stability." Id. at...