Bester v. Chicago Transit Authority
| Decision Date | 09 December 1987 |
| Docket Number | No. 86 C 1067.,86 C 1067. |
| Citation | 676 F. Supp. 833 |
| Parties | Dorothy BESTER, et al., Plaintiffs, v. CHICAGO TRANSIT AUTHORITY, a public corporation, Defendant. |
| Court | U.S. District Court — Northern District of Illinois |
Donald G. Peterson, Jack L. Watson, Michael A. Storm, Schaffenegger, Watson & Peterson, Ltd., Chicago, Ill., for plaintiffs.
James P. Daley, Jeffrey A. Blevins, David M. Novak, Joseph J. Stevens, Bell, Boyd & Boyd, Chicago, Ill., for defendant.
This lawsuit is brought by employees of the Chicago Transit Authority ("CTA") to require CTA's compliance with the wage and hour rules of the Fair Labor Standards Act ("FLSA"). The CTA claims exemption from these rules prior to April 15, 1986 and compliance with them since that date.
The CTA and its employees are first at issue over the will of Congress in this matter. The employees note that Congress in 1966 enacted amendments to the FLSA1 extending its reach to workers in mass transit which is the business of the CTA.2 In 1974 Congress phased out the 1966 overtime exemption for drivers, operators and conductors engaged in mass transit.3 In 1976, the Supreme Court held that Congress exceeded its constitutional authority by extending the FLSA to state and local government employees engaged in a "traditional and integral government function."4 The Court did not say whether mass transit was such a government function. From 1976 until 1985, several lower courts sought to decide this question. One of these cases reached the Court but the Court did not reach the question. It decided, instead, that it was wrong in 1976 and that Congress should apply the FLSA to state and local employees.5
When the Court overruled its own 1976 decision, state and local governments obviously were concerned about the precise date the newly relevant FLSA would apply to them. Reliance upon the 1976 decision was widespread, and government spending plans cannot be speedily altered without producing effects usually spurned by elected officials. Congress responded to this concern by making some adjustments in the law for governments and by delaying the effective date of the FLSA until April 15, 1986.6
It is crucial to understand what Congress meant to do in 1985 about mass transit systems. This Court finds the Congress meant to do nothing about mass transit systems; its intent was to leave the matter to the courts to decide. Congress, aware of pending cases on the question, declined to decide it, and passed the following statutes:
The statute can be understood only by reference to the Secretary of Labor's policy. In Section 775.2 the Secretary says the Department will not seek to enforce the FLSA against state and local governments without first giving thirty days notice and would not, in any event, seek liquidated damages for past violations. The Secretary recites the 1976 Supreme Court ruling and notes that traditional governmental functions include schools, hospitals, fire, police and sanitation services, public health, parks and recreation. Section 775.4 adds libraries and museums to the list of traditional services. Congress clearly meant these services to be exempt until April 15, 1986.
Section 775.3 adopts the position urged by the CTA employees here, characterizing as "nontraditional functions", among others, local mass transit, local utilities, liquor stores and off-track betting parlors. Here Congressional meaning is less clear. The 1985 Amendments "shall not affect whether a public agency ... is liable" when that agency is covered by Section 775.3. This might mean the April 15, 1986 deferral provisions of the amendments do not apply, but it also may mean that the questions of whether such agencies are liable is not to be affected by the amendments. The legislative history is of some value on this point.
The Report of the Senate Labor and Human Resources Committee on the 1985 Amendments included the following language.
Finally, these amendments do not affect whether employers of state and local governments who are engaged in non-traditional functions as defined by DOL at 29 C.F.R. 775.3—notably local mass transit systems—are covered by FLSA prior to April 15, 1986. The Committee is aware that the question whether transit employees, prior to the decision in Garcia were entitled to FLSA compensation for overtime hours worked is still being litigated in federal court. The amendments are intended to protect the rights of both sides to resolve their differences through litigation, without taking a position in this matter.9
The Court finds Congress neither approved nor disapproved the Secretary's position on mass transit. Congress had expressed since 1966 a policy of inclusion of local mass transit workers under the FLSA. Implementation of that policy was precluded by the Supreme Court from 1976 to 1985. The principal question before the Congress in 1985 was not the general policy of FLSA—a settled question—but rather the narrow issue of what allowance was to be made for nine years of governmental reliance on judicial ruling. It is not surprising that Congress found the reliance entirely justifiable in cases of police and fire services and the like, for these services were clearly within the ambit of the Supreme Court's ruling. The justifiability of reliance by mass transit systems was more difficult to assess. Lower courts had disagreed on whether the Supreme Court had meant to include them. It is reasonable for Congress to decide that the meaning of the Supreme Court was a question best left to lower courts since they are well practiced at the task. The Supreme Court itself might sooner or later state its meaning quite explicitly. Moreover, it is possible that some mass transit systems would be exempt under the 1976 ruling and others not; Congress would then leave individual assessments to the courts.
Congress decided that the 1985 ruling of the Supreme Court restoring application of the FLSA would have no retroactive effect and its prospective effect would be limited until April 15, 1986. Congress determined that governmental reliance on the 1976 court ruling entitled government bodies to exemption from liability under the FLSA for the period the ruling stood as well as several more months to allow them to adjust to changed circumstances. Where correct reliance upon the ruling was undisputed, Congress specifically granted exemption. Where reliance was subject to legal debate, Congress left it to courts to judge the debate. And that is now what this Court must do.
The outcome turns upon whether the CTA conducts "integral operations in areas of traditional governmental functions"10 and the CTA offers its own history in support of its claim.
The historical record is not disputed. In brief, Chicago began with mass transit in 1858 by permitting a company to construct a horse railway. By 1861 there were three such companies. The city set fares and had the right to purchase the companies' assets. At the end of the century many such companies existed with rights to operate street railways each in a specified area of the city. State statute authorized the actions of the city and in 1899 gave the companies the power of eminent domain. But the system of street railways did not work well. A city commission said that either tighter public control of railways or municipal ownership was inevitable. The voters approved municipal ownership in 1902, and a state law to permit this was passed in 1903, but the law was struck down for transgressing state constitutional limits on city debt.11 The city then exercised the other option of strict public controls to achieve unified service with a single fare and universal transfers under the aegis of one company. An ordinance to achieve this was passed in 1913. A parallel development beginning in 1892 was the creation of the elevated railroad by other companies which were unified in a single rapid transit company. The elevated and surface systems already in receivership12 were placed under a single company in 1930.13
The single mass transit company was privately owned but closely regulated. It constructed many projects required by the city. The city, for its part, was to construct a new subway and create a City Transit Fund. The city had created subways before and in 1888 allowed street railways to use them. The single private company was believed to have failed its promise, and in 1945 the CTA was created by state statute. Within days the city adopted an ordinance giving the CTA full and exclusive right to operate mass transit "for the better accommodation of...
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...by public authority for public use and is to be regarded as a public easement and not as private property.”); Bester v. Chicago Transit Auth., 676 F.Supp. 833, 838 (N.D.Ill.1987) (“The toll road case is relatively easy because building and maintaining the roads, and indeed the toll road, ha......
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...judgment and held, as a matter of law, that the operation of mass transit by the CTA was not a traditional government function. 676 F.Supp. 833 (N.D.Ill.1987). Upon the CTA's request and pursuant to 28 U.S.C. Sec. 1292(b), Judge Zagel certified the issue raised in the summary judgment order......