Doe v. U.S.

• Decision Date: 22 January 2008
• Docket Number: No. 2007-5107.,2007-5107.
• Citation: 513 F.3d 1348
• Parties: Jane DOE 1, Jane Doe 2, and Jane Doe 3, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants, v. UNITED STATES, Defendant-Appellee.
• Court: U.S. Court of Appeals — Federal Circuit

513 F.3d 1348

Jane DOE 1, Jane Doe 2, and Jane Doe 3, on behalf of themselves and all others similarly situated, Plaintiffs-Appellants, v. UNITED STATES, Defendant-Appellee.

No. 2007-5107.

United States Court of Appeals, Federal Circuit.

January 22, 2008.

Bruce A. Finzen, Robins, Kaplan, Miller & Ciresi L.L.P., of Minneapolis, MN, argued for plaintiffs-appellants. Of counsel was Brent J. Kaplan.

Michael J. Dierberg, Trial Attorney, Commercial Litigation Branch, Civil Division, United States Department of Justice, of Washington, DC, argued for defendant-appellee. With him on the brief were Peter D. Keisler, Assistant Attorney General, Jeanne E. Davidson, Director, and Harold D. Lester, Jr., Assistant Director.

Before LOURIE, BRYSON, and MOORE, Circuit Judges.

BRYSON, Circuit Judge.

I

The appellants in this case are employees of the Social Security Administration ("SSA"). They brought this action in the Court of Federal Claims, alleging that the SSA's practice of granting employees credit hours and compensatory time for overtime work violates the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 201-219, and constitutes a breach of the National Agreement, a collective bargaining agreement between the SSA and the American Federation of Government Employees, AFL-CIO.

The SSA grants its employees credit hours to allow them to work on flexible schedules. The National Agreement defines "credit hours" as "hours worked in excess of an employee's basic work requirement in which an employee on a flexible work schedule elects to work so as to vary the length of a succeeding work day or workweek." An SSA employee receives one credit hour for each hour worked in excess of the employee's basic work requirement. An employee may reserve a balance of up to 24 credit hours; any credit hours earned once an employee has a balance of 24 credit hours must be used before the end of the next two-week pay period. The SSA does not provide monetary compensation for credit hours that are not used. If an employee receives credit hours for work in excess of 40 hours in a workweek, those hours are, by statutory definition, not considered overtime hours. 5 U.S.C. § 6121(6).

The SSA also allows its employees to receive "compensatory time" in lieu of overtime pay. The SSA grants one hour of compensatory time for each hour an employee works in excess of 40 hours in a workweek. If an employee has not used his or her compensatory time after eight pay periods, the employee is paid for the compensatory time at a rate equal to one and one-half times the employee's regular rate of pay.

Because the appellants' positions are classified by the Office of Personnel Management ("OPM") as non-exempt from the FLSA, their employment is covered by both Title 5 and the FLSA. The complaint alleged that the appellants received a combination of credit hours and compensatory time for hours worked in excess of 40 hours in a workweek. They received credit hours and compensatory time at a rate of one hour for each hour of overtime work, and they used their credit hours and compensatory time for time off from work. According to the complaint, the, appellants elected to receive compensatory time instead of overtime payment. They did not allege that they were prevented by the SSA from receiving monetary compensation. Nevertheless, the appellants argue that the National Agreement and the FLSA do not permit the SSA to grant credit hours and compensatory time to non-exempt employees. Alternatively, the appellants argue that, if the SSA has authority to grant credit hours and compensatory time to non-exempt employees, the FLSA requires that non-exempt employees receive one and one-half hours in compensatory time or credit hours for each hour worked in excess of 40 hours in a workweek.

The Court of Federal Claims dismissed the appellants' breach of contract claim for failure to state a claim upon which relief could be granted. The court also dismissed the appellants' FLSA claim pertaining to credit hours on the same ground. With respect to compensatory time, the court requested that the appellants amend their complaint to specify whether their overtime work was irregular or occasional, as opposed to being scheduled in advance, because different legal standards apply to overtime work in those two categories. In response to the court's request, the parties filed a joint stipulation asking the court for a "without prejudice" dismissal of the appellants' FLSA claim as applied to compensatory time granted for overtime hours scheduled in advance. The stipulation characterized the compensatory time claim for irregular overtime hours (i.e., hours not scheduled in advance) as having been dismissed for failure to state a claim. The trial court then entered an order "in accordance with the parties' stipulation" dismissing "the remaining claims without prejudice." The appellants now appeal the trial court's dismissal of (1) their breach of contract claim, (2) their FLSA claim with respect to credit hours, and (3) their FLSA claim with respect to compensatory time for irregular overtime work.

II

As an initial matter, the government argues that we do not have jurisdiction to hear this appeal under 28 U.S.C. § 1295 because there is no appealable final order. The government's argument on this issue requires resolution of two issues.

A

First, the government contends that the appellants' entire compensatory time claim under the FLSA was voluntarily dismissed without prejudice. Although there appears to be some confusion on this issue in light of the wording of the judgment, we do not understand the entire compensatory time claim to have been dismissed without prejudice. The trial court's January 12, 2007, order stated that "[i]t Plaintiffs overtime was irregular, and occasional, it would fall within [the Federal Employees Pay Comparability Act's] authorization permitting comp time in lieu of FLSA pay for such overtime, and Plaintiffs would not be entitled to relief." Because the complaint did not specify whether the appellants' overtime hours were scheduled, or whether they were irregular and occasional, the court invited the appellants to amend their complaint and to seek recovery separately for any overtime hours that were scheduled. The appellants, however, decided not to amend their complaint because the bulk of their overtime hours were irregular and occasional (i.e., not scheduled). Instead, they sought to have their compensatory time claim with respect to scheduled hours dismissed without prejudice in order to have the trial court enter a final judgment in the case without consideration of the claim as applied to any scheduled hours. After a conference on the matter, the government agreed to a joint stipulation treating the January 12, 2007, order as dismissing the claim regarding irregular overtime for failure to state a claim. The stipulation further requested that the trial court dismiss without prejudice any claim that was not dismissed by the January 12, 2007, order. The trial court's judgment states that the "[p]laintiffs' FLSA claim with respect to comp time is dismissed, without prejudice." In light of the parties' joint stipulation, however, we understand the FLSA claim with respect to compensatory time that was granted for unscheduled overtime to have been dismissed for failure to state a claim. To the extent that the trial court's judgment is read as being broader than that, we interpret the appellants' appeal to include an objection to including the unscheduled overtime FLSA claim within the "without prejudice" dismissal. Because the judgment was intended to reflect the parties' stipulation, we hold that the dismissal without prejudice should extend only to the portion of the FLSA claim pertaining to scheduled overtime.

B

Second, the government contends that the judgment is not final because the claims that were not dismissed for failure to state a claim were dismissed voluntarily and without prejudice. In the government's view, the judgment is not final because the claims that were dismissed voluntarily and without prejudice were not adjudicated. In support of its argument, the government relies on cases from the Second, Fifth, Seventh, and Eleventh Circuits that have found jurisdiction lacking when unresolved claims are voluntarily dismissed without prejudice. See Rabbi Jacob Joseph Sch. v. Province of Mendoza, 425 F.3d 207, 210 (2d Cir.2005) ("immediate appeal is unavailable to a plaintiff who seeks review of an adverse decision on some of its claims by voluntarily dismissing the others without prejudice." (emphasis in original)); Marshall v. Kansas City S. Ry. Co., 378 F.3d 495, 499-500 (5th Cir.2004) ("a party cannot use voluntary dismissal without prejudice as an end-run around the final judgment rule" (emphasis in original)); West v. Macht, 197 F.3d 1185, 1189 (7th Cir.1999) ("The recent cases disallowing a sort of manufactured finality like that found in the present lawsuit are consistent with the fundamental policy disfavoring piecemeal appeals. Hence, West's voluntary dismissal without prejudice is under current law insufficient to create a final judgment."); State Treasurer v. Barry, 168 F.3d 8, 11 (11th Cir. 1999) ("appellate jurisdiction over a nonfinal order cannot be created by dismissing the remaining claims without prejudice").

Our court has not adopted that position. In Nystrom v. TREX Co., 339 F.3d 1347 (2003), we addressed a claim of patent infringement that was dismissed on summary judgment of noninfringement. Id. at 1349. The defendant had filed a counterclaim for a declaratory judgment of invalidity and unenforceability, but the district court did not reach those issues. Id. Instead, the court entered judgment for the defendant and stayed the counterclaim pending appeal. Id. Because the counterclaim remained pending, we held that the summary judgment order was not an appealable final judgment. Id. at 1351. We discussed, however, four...