Beaulieu v. Vermont

• Decision Date: 16 September 2015
• Docket Number: No. 13–4198–CV.,13–4198–CV.
• Citation: 807 F.3d 478
• Parties: Elizabeth BEAULIEU, et al., Plaintiff–Appellants, v. State of VERMONT, et al., Defendant–Appellees.
• Court: U.S. Court of Appeals — Second Circuit

807 F.3d 478

Elizabeth BEAULIEU, et al., Plaintiff–Appellants,

v.State of VERMONT, et al., Defendant–Appellees.

No. 13–4198–CV.

United States Court of Appeals, Second Circuit.

Argued: Nov. 5, 2014.

Decided: Sept. 16, 2015.

Thomas H. Somers and Adam P. Bergeron, Bergeron Paradis & Fitzpatrick, LLP, Burlington, VT, for Plaintiff–Appellants.

Jonathan T. Rose and Todd W. Daloz, Assistant Attorneys General for William H. Sorrell, Attorney General, State of Vermont, Montpelier, Vermont.

Before: LEVAL, LYNCH, DRONEY, Circuit Judges.

LEVAL, Circuit Judge:

Plaintiffs, who are 704 current and former employees of the State of Vermont, appeal from the dismissal of the action by the United States District Court for the District of Vermont (Sessions, J. ) by reason of Vermont's sovereign immunity. The complaint alleges violations of the Fair Labor Standards Act of 1938, 29 U.S.C. §§ 201 et seq. ("FLSA"), and seeks declaratory and injunctive relief, damages, and liquidated damages for back pay. Defendants are the State of Vermont, the State of Vermont Agency of Administration, and the Vermont Secretary of Administration, sued in his official capacity ("Defendants"). Plaintiffs contend that, because their weekly pay is reduced for partial-day absences in excess of their accrued leave, they are not paid on a "salary basis" under the FLSA and are thus entitled to overtime pay at one and one-half times their regular rate.

Plaintiffs brought this action in state court. Defendants removed it to the federal district court. Defendants then filed an initial motion to dismiss for failure to state a claim under the FLSA. The district court denied the motion. After further motion practice and discovery, Defendants filed a second motion to dismiss, this time asserting state sovereign immunity from private FLSA suit. Plaintiffs responded that Defendants had waived their immunity by express statutory waiver, by removal, and by other litigation conduct, including assurances given to Plaintiffs that Vermont would not present a sovereign immunity defense. The district court rejected each of these arguments for waiver and granted Defendants' motion to dismiss. We conclude that, while Defendants may, by removing the action, have waived their Eleventh Amendment immunity from suit in a federal forum, Defendants have not expressly waived Vermont's general sovereign immunity from private FLSA suit, and their litigation conduct does not constitute such a waiver.

We affirm the judgment.

BACKGROUND

I. The FLSA Claim

Plaintiffs are current and former members of various non-management, supervisory, judicial, and corrections bargaining units within the Vermont State Employees' Association ("VSEA"). Under their VSEA collective-bargaining agreements, Plaintiffs are guaranteed a "Basic Weekly Salary," based on a 40–hour work week at their relevant salary level, which is computed as an hourly rate. It is undisputed that Vermont "has and continues to offer Plaintiffs a minimum of forty (40) hours of work each week" and does not reduce employees' pay for absences occasioned by the State. Under the VSEA Agreements, Plaintiffs accrue personal leave for time worked, in addition to sick leave. When employees miss work for their own reasons, they must use either personal or sick leave in order to avoid deductions in their pay.

It is undisputed that as employees of a public agency, Plaintiffs are covered by the FLSA. It is disputed whether they are paid on a "salary basis" and therefore "exempt" employees under the FLSA. Exempt employees are not entitled to overtime. See 29 U.S.C. § 213(a)(1) ; 29 C.F.R. § 541.100. The Secretary of Labor has promulgated a "General Rule" and "Exceptions" for determining whether an employee is paid on a salary basis and thus exempt from FLSA's overtime requirements. 29 C.F.R. § 541.602. Plaintiffs contend that, pursuant to this regulation, they are not paid on a salary basis because: 1) the minimum salary they receive varies with the quantity of work they perform, as absences uncovered by personal or sick leave result in a loss of pay; 2) their pay is calculated at an hourly rate; and 3) the State's practice of docking their pay in partial-day increments for partial-day absences not covered by leave is impermissible with regard to salaried employees. Defendants respond that: 1) the salary basis test allows for deductions in pay stemming from absences occasioned by the employee, rather than the employer; 2) according to regulation and judicial precedent, computation and recording of pay at an hourly rate do not vitiate its salary nature; and 3) public employers may make partial-day deductions for employee absences not covered by accrued leave without affecting the salaried, exempt status of employees under 29 C.F.R. § 541.710.

II. Proceedings Below

Plaintiffs brought this action in Vermont Superior Court on January 7, 2010, seeking relief under the FLSA. The complaint asserted that Vermont, by act of its legislature, Vt. Stat. Ann. tit. 21, § 384(b)(7), had expressly waived its sovereign immunity to private suit under the FLSA. Defendants removed the case to the federal district court on February 8, 2010, asserting that court's jurisdiction under 28 U.S.C. § 1331, because Plaintiffs' claim was based on federal law. In their initial Motion to Dismiss, Defendants did not raise a sovereign immunity defense, but argued instead that Plaintiffs had failed to state a claim under the FLSA. In their Opposition to the Motion to Dismiss, Plaintiffs repeated the assertion that the Vermont legislature had expressly waived sovereign immunity to private suits under the FLSA by statute. Defendants did not address the issue in argument on the motion. After the district court denied Defendants' first Motion to Dismiss, Defendants filed an Answer, which did not assert a sovereign immunity defense.

Over a year later, at a conference discussing prospective summary judgment motions, Plaintiffs again raised the possibility of a sovereign immunity defense. Defendants responded that they were not asserting the defense and that it had been waived. Plaintiffs then sent Defendants a set of interrogatories, including "Does the State intend to rely upon the defense of sovereign immunity?", to which Defendants responded: "Defendants removed the claim to federal court. Accordingly, Defendants do not intend to assert 11th Amendment immunity. Defendants do not intend to assert they are otherwise immune from the FLSA in this action." J.A. 285.

Three months after filing this interrogatory response, and more than two years after the beginning of the lawsuit, Defendants amended their response, announcing that they now intended to present a sovereign immunity defense. Defendants specifically asserted immunity from private FLSA suit in both state and federal court, and moved to amend their Answer to that effect. On July 3, 2012, the District Court denied the motion to amend as to sovereign immunity and instead directed the parties to file dispositive motions on the issue after further discovery. On October 24, the court allowed further depositions on the sovereign immunity issue, and on November 26, 2012, Defendants finally filed their motion to dismiss on sovereign immunity grounds. Shortly thereafter, both parties moved for summary judgment on the merits of the FLSA claim, and Plaintiffs moved also for partial summary judgment on the sovereign immunity defense. On September 30, 2013, after hearing argument on the pending motions, the district court granted Defendants' motion to dismiss the suit on sovereign immunity grounds. Coniff v. Vermont, No. 2:10–CV–32, 2013 WL 5429428 (D.Vt. Sept. 30, 2013).

DISCUSSION¹

The concept of state sovereign immunity encompasses different species of immunity. The Eleventh Amendment, as interpreted by the Supreme Court, identifies a single species: immunity of a state's treasury from claims for damages brought by private entities in federal courts. See Seminole Tribe of Fla. v. Florida, 517 U.S. 44, 54, 116 S.Ct. 1114, 134 L.Ed.2d 252 (1996). This immunity protects a state's dignity and fiscal integrity from federal court judgments, Woods v. Rondout Valley Cent. Sch. Dist. Bd. of Educ., 466 F.3d 232, 240 (2d Cir.2006), and acts as a limitation on the federal judiciary's Article III powers. See Alden v. Maine, 527 U.S. 706, 716–21, 119 S.Ct. 2240, 144 L.Ed.2d 636 (1999) ; In re Charter Oak Assocs., 361 F.3d 760, 765 (2d Cir.2004) ("The Eleventh Amendment effectively places suits by private parties against states outside the ambit of Article III of the Constitution."). States also a broader sovereign immunity, which applies against all private suits, whether in state or federal court. See Alden, 527 U.S. at 713, 722, 119 S.Ct. 2240 (noting that states' "immunity from suit is a fundamental aspect of the sovereignty which the States enjoyed before the ratification of the Constitution" and that "the sovereign immunity of the States neither derives from, nor is limited by, the terms of the Eleventh Amendment," since in enacting the Eleventh Amendment "Congress acted not to change but to restore the original constitutional design"). "The Eleventh Amendment ... is but one particular exemplification of that immunity." See Fed. Mar. Comm'n v. S.C. State Ports Auth., 535 U.S. 743, 753, 122 S.Ct. 1864, 152 L.Ed.2d 962 (2002). Accordingly, there are two types of "sovereign immunity" at issue here: (1) a particular species of sovereign immunity—Eleventh Amendment immunity from suit in federal court—and (2) the states' broader general sovereign immunity against all suits.

Neither type of immunity is absolute. States may elect to waive either type of immunity either in federal or state court. Coll. Sav. Bank v. Fla. Postsecondary Educ. Expense Bd., 527 U.S. 666, 675–76, 119 S.Ct. 2219, 144 L.Ed.2d 605 (1999) ; Lapides v. Bd. of Regents, 535 U.S. 613, 618–20, 122 S.Ct. 1640, 152 L.Ed.2d 806 (2002) ; Jacobs v. State Teachers' Ret. Sys. of Vt., 174 Vt. 404, 816 A.2d 517,...