Com. v. Luzik, Record No. 982635.

• Decision Date: 14 January 2000
• Docket Number: Record No. 982635.
• Citation: 259 Va. 198,524 S.E.2d 871
• Parties: COMMONWEALTH of Virginia v. Douglas W. LUZIK, et al.
• Court: Virginia Supreme Court

524 S.E.2d 871

259 Va. 198

COMMONWEALTH of Virginia v. Douglas W. LUZIK, et al.

Record No. 982635.

Supreme Court of Virginia.

January 14, 2000.

Sydney E. Rab, Assistant Attorney General (Mark L. Earley, Attorney General; Judith W. Jagdmann, Deputy Attorney General; Guy W. Horsley, Jr., Senior Assistant Attorney General; Anthony P. Meredith, Assistant Attorney General, on briefs), for appellant.

Michael T. Leibig, Washington, DC (Carla Markim Siegel, Fairfax; Kenneth E. Labowitz, Alexandria; Zwerdling, Paul, Leibig, Kahn, Thompson & Wolly, Fairfax; Dingman, Labowitz, Alexandria, on brief), for appellees.

Present: CARRICO, C.J., COMPTON, LACY, KEENAN, KOONTZ and KINSER, JJ.

KOONTZ, Justice.

In this appeal, we consider whether the Commonwealth has waived its right to assert the bar of sovereign immunity to a suit by state employees in state court for back overtime wages under the federal Fair Labor Standards Act (FLSA), 29 U.S.C. § 201, et seq.

BACKGROUND

On June 25, 1992, Douglas W. Luzik and fifteen other juvenile probation officers (the complainants), who work in various Court Service Units for the Virginia Department of Youth and Family Services (the Department),¹ filed a bill of complaint against the Commonwealth alleging a violation of the FLSA. The complainants asserted that they are "non-exempt" employees under the FLSA and sought to enforce the right provided therein to receive hourly payment of time and one half if and when they work more than 40 hours in a workweek. The complainants sought back overtime wages, enforcement of future overtime pay, and attorney's fees and costs.

The Commonwealth's initial response was to file a plea in bar of sovereign immunity, asserting that it was exempt from being sued in its own courts by its employees for an alleged violation of the FLSA. The Commonwealth asserted that the Eleventh Amendment to the United States Constitution precludes Congress from subjecting a state and its officials to being sued in federal court absent an express intent in a given statute to permit such suits. Contending that there is no abrogation of the sovereign immunity of the states express in the FLSA, the Commonwealth asserted that it cannot be sued for a violation of that law in federal court and, by extension, neither can it be sued in state court. The Commonwealth contended that is so because in the absence of a waiver by the General Assembly, the Commonwealth and her officials have absolute immunity from the award of damages sought by the complainants. The Commonwealth further contended that such immunity also applies to any injunctive relief requiring future payment of overtime pay as the establishment and revision of wages and salaries is discretionary under the laws of the Commonwealth.

After receiving briefs and hearing argument, by letter opinion dated March 11, 1993, the chancellor denied the Commonwealth's plea in bar. The chancellor reasoned that language within the FLSA defining an employer to include a "public agency," 29 U.S.C. § 203(d), which is further defined as "the government of a State" and "any agency of. . . a State," 29 U.S.C. § 203(x), evinces an intent on the part of Congress to subject the states to enforcement of the FLSA in federal courts, thus answering the Commonwealth's assertion that such an action is barred therein by the Eleventh Amendment. The chancellor further reasoned that to bar the suit in state court under a theory of sovereign immunity "would [improperly] allow state law to determine the applicability of federal law."

The Commonwealth noted an appeal of this ruling to this Court. The Commonwealth's petition for appeal was limited to the issue of whether sovereign immunity barred state employees from bringing suit against the state in state court. Finding that there was not yet an appealable order, Code § 8.01-670, we refused the Commonwealth's petition for appeal and its subsequent petition for rehearing.

The complainants then filed an amended bill of complaint joining eighty-seven additional juvenile probation officers as complainants. The Commonwealth filed a demurrer, again asserting the application of the bar of sovereign immunity and the preclusive effect of the Eleventh Amendment. The Commonwealth further asserted that application of the FLSA to the states exceeded congressional authority as limited by the Tenth Amendment. The chancellor took no action with reference to the Commonwealth's demurrer. Thereafter, the Commonwealth filed an answer, which it subsequently amended, and the matter proceeded to an ore tenus hearing before the chancellor.

The principal issues before the chancellor were whether the complainants were salaried employees and, if so, whether their employment requirements and job duties caused them to fall within one of the recognized exemptions within the FLSA as administrative, professional, or executive employees under the "short test" promulgated in the regulations implementing the FLSA for determining the exempt status of salaried employees. The Commonwealth contended that all the complainants are salaried and that ninety-nine of the complainants are subject to administrative or professional exemptions. The Commonwealth contended that the remaining four employees are exempt executive employees.

The complainants contended that they are not salaried because they are subject to a reduction in pay for less than a workweek under a disciplinary policy applicable to all employees of the Department. With the exception of three of the complainants, who conceded that they were "executives," the complainants further contended that their job duties do not qualify for any of the exemptions provided for under the FLSA. One complainant contended that she was neither salaried nor an exempt executive.

On May 5, 1995, the chancellor entered an order awarding judgment to the Commonwealth. In an accompanying opinion letter, the chancellor found that the complainants are salaried employees despite the existence of the disciplinary policy. Applying the "short test" applicable to salaried employees, the chancellor found that the majority of the complainants have job duties that reflect the requirements for either administrative or professional employee status. The chancellor further found that the one "executive" employee who had challenged the application of that exemption to her is an executive employee for purposes of the FLSA.

The complainants appealed the judgment to this Court, assigning error to the chancellor's finding that they are salaried employees and that they are subject to the exemptions of the FLSA. In its brief in opposition, the Commonwealth asserted as an assignment of cross-error the failure of the chancellor to sustain the Tenth Amendment claim raised in its demurrer to the amended bill of compliant.² The Commonwealth did not assign cross-error to the denial of its claim of sovereign immunity. On December 20, 1995, this Court refused the petition for appeal.

The complainants then filed a petition for a writ of certiorari in the United States Supreme Court. The first of the three questions presented in that petition challenged the chancellor's determination that the complainants are salaried employees even though they are subject to potential reductions in pay in amounts less than a full workweek's pay "regardless whether any actual deductions have occurred." On February 24, 1997, the Court granted the petition and by order vacated the judgment and remanded the case "for further consideration in light of Auer v. Robbins, 519 U.S. [452, 117 S.Ct. 905] (1997)."

Auer involved a claim under the FLSA for overtime pay by sergeants and a lieutenant employed by the St. Louis, Missouri Police Department. Id. at 454, 117 S.Ct. 905. In Auer, an opinion of the Secretary of Labor, presented to the Court in the form of an amicus curiae brief, stated the Department of Labor's position that employees "covered by a policy that permits disciplinary or other deductions in pay `as a practical matter'" are not "salaried" employees "if there is either an actual practice of making such deductions or an employment policy that creates a `significant likelihood' of such deductions." Id. at 461, 117 S.Ct. 905. The Court held that the Secretary's opinion was controlling since it constituted an interpretation "of the Secretary's own regulations."³ Id. On July 29, 1997, we remanded the case to the chancellor for further proceedings consistent with the order of the United States Supreme Court. The complainants, first in a letter brief to the chancellor and subsequently by formal brief and argument, contended that the remand was not limited to the issue addressed in Auer but, rather, permitted them to address all aspects of the ease with respect to the possible controlling effect of opinions from the Secretary of Labor.

Agreeing with the complainants' contention on the scope of the mandated reconsideration, the chancellor determined that he was required to reconsider the exempt status of the employees with respect to Department of Labor letter rulings he had previously discounted.⁴ The chancellor confirmed his prior ruling that all the complainants are salaried employees. However, relying on four Department of Labor letter rulings which address the status of juvenile and adult probation officers generally and "child protective investigators," the chancellor found, contrary to his prior ruling, that the complainants are not exempt as administrative or professional employees. With respect to the one complainant who had previously been found to be an exempt executive employee, the chancellor concluded that the Commonwealth "has not met its burden of establishing by clear and convincing evidence that [the complainant's] primary duties relate to supervisory management.... She is not exempt from the overtime provisions of the FLSA."

In an order dated November 25, 1997, the chancellor entered judgment for the complainants and...