Ferguson v. Neighborhood Housing Services of Cleveland, Inc.
| Citation | 780 F.2d 549 |
| Decision Date | 03 January 1986 |
| Docket Number | No. 84-3678,84-3678 |
| Parties | 39 Fair Empl.Prac.Cas. 1163, 27 Wage & Hour Cas. (BN 789, 39 Empl. Prac. Dec. P 35,828, 54 USLW 2360, 103 Lab.Cas. P 34,730, 3 Fed.R.Serv.3d 1385 Elizabeth L. FERGUSON, Plaintiff-Appellee, v. NEIGHBORHOOD HOUSING SERVICES OF CLEVELAND, INC., Defendant-Appellant. |
| Court | United States Courts of Appeals. United States Court of Appeals (6th Circuit) |
Jack Schulman (argued), Schulman and Schulman, Cleveland, Ohio, Edward Wade, Shaker Heights, Ohio, for defendant-appellant.
Roger D. Heller, Theodore E. Meckler (argued), Cleveland, Ohio, for plaintiff-appellee.
Before ENGEL and KEITH, Circuit Judges, and JOINER, Senior District Judge. *
Defendant/appellant Neighborhood Housing Services of Cleveland, Inc. ("NHS") appeals from the judgment entered against it and in favor of plaintiff/appellee, Elizabeth Ferguson. The issue raised by NHS in this appeal concerns the trial court's subject matter jurisdiction over this case.
The litigation began on January 7, 1981, when Ferguson filed suit against her former employer, NHS. Ferguson alleged that NHS unlawfully paid her less money than it had paid her male predecessors for performing the same work. The alleged sex-based wage discrimination occurred from the beginning of 1979 through May of 1980, when Ferguson worked for NHS as an Assistant Director of Rehabilitation Services. The complaint invoked federal jurisdiction pursuant to the Equal Pay Act, 29 U.S.C. Sec. 206(d)(1), which is part of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. Secs. 206 et seq., and pursuant to the court's power "to hear and decide all pendent state claims."
NHS is a nonprofit Ohio corporation located in Cleveland. It was established to combat housing deterioration in Cuyahoga County. NHS performs this service by helping Cleveland residents secure grants or loans to assist them in physically improving their residences. In addition to helping residents obtain money, NHS employees are available to examine the home, ascertain what work is appropriate or necessary, assist the resident in securing a contractor, and inspect the work to determine whether it has been performed correctly.
Paragraph 3 of Ferguson's complaint asserts that NHS is an employer within the meaning of Sec. 3(d) of the FLSA, 29 U.S.C. Sec. 203(d). NHS admitted p 3 in its answer to Ferguson's complaint, and did not challenge its status as an FLSA employer until shortly before the trial was scheduled to begin. Ferguson had moved for leave to file an amended complaint, attaching a copy of the proposed amended complaint to her motion, on April 26, 1984. NHS then mailed to plaintiff's counsel a proposed second answer denying that the court had subject matter jurisdiction over the case because NHS was not an employer within the meaning of the FLSA. On the morning of trial, plaintiff moved to strike defendant's proposed second answer. Judge Battisti held an in-chambers conference with the parties before he began the trial. At the conference, Judge Battisti denied plaintiff's motion to amend the complaint, and also ruled that defendant could not file its second answer.
The jury trial of Ferguson's Equal Pay Act case thus did not address the issue of the status of NHS as an FLSA employer. The trial began on May 1, and on May 7, 1984, the jury returned a verdict in favor of Ferguson in the amount of $3,441.00. On June 11, 1984, Judge Battisti entered judgment for Ferguson in the amount of $6,882.00, which represents the jury verdict plus an equal amount in liquidated damages. 29 U.S.C. Sec. 216(b). NHS now appeals.
The primary issue presented by this appeal is the significance and effect of NHS' admission in its answer that it is an employer within the meaning of the FLSA. Ferguson argues that NHS voluntarily made a binding judicial admission. She concludes that this admission precludes NHS from asserting that it is not such an employer, the facts from which, among others, the court obtains jurisdiction to act.
Judicial admissions "eliminate the need for evidence on the subject matter of the admission," as admitted facts are no longer at issue. Seven-Up Bottling Co. v. Seven-Up Co., 420 F.Supp. 1246, 1251 (E.D.Mo.1976), aff'd, 561 F.2d 1275 (8th Cir.1977). Once made, the subject matter of the admission should not be reopened in the absence of a showing of exceptional circumstances. New Amsterdam Casualty Co. v. Waller, 323 F.2d 20, 24 (4th Cir.1963), cert. denied, 376 U.S. 963, 84 S.Ct. 1124, 11 L.Ed.2d 981 (1964). This court has observed that "[u]nder federal law, stipulations and admissions in the pleadings are generally binding on the parties and the Court." Brown v. Tennessee Gas Pipeline Co., 623 F.2d 450, 454 (6th Cir.1980) (citations omitted). Not only are such admissions and stipulations binding before the trial court, but they are binding on appeal as well. See, e.g., Glick v. White Motor Co., 458 F.2d 1287, 1291 (3d Cir.1972).
NHS contends that its admission does not preclude it from challenging federal subject matter jurisdiction. It argues that "no action of the parties can confer subject-matter jurisdiction upon a federal court," quoting Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee, 456 U.S. 694, 702, 102 S.Ct. 2099, 2104, 72 L.Ed.2d 492 (1982). While NHS correctly quotes Compagnie des Bauxites, it overlooks the distinction between an admission that federal subject matter jurisdiction exists, and an admission of facts serving in part to establish federal subject matter jurisdiction. As the Supreme Court stated in an early case:
Consent of parties cannot give the courts of the United States jurisdiction, but the parties may admit the existence of facts which show jurisdiction, and the courts may act judicially upon such an admission.
Railway Co. v. Ramsey, 89 U.S. 322, 327, 22 Wall. 322, 22 L.Ed. 823 (1874); United States v. Anderson, 503 F.2d 420, 422 (6th Cir.1974) (quoting Ramsey ). See also Wright v. Olin Corp., 697 F.2d 1172, 1177 n. 2 (4th Cir.1982) ().
Turning to NHS' admission that it is an FLSA employer, this court concludes that NHS has admitted a fact and the establishment of that fact creates federal subject matter jurisdiction. The admission does not constitute NHS' consent to subject matter jurisdiction itself, which no party may validly give, but it does constitute a statement that NHS is a type of employer. Compagnie des Bauxites, supra. The law then gives to the federal courts jurisdiction over cases against that type of employer.
The rule that jurisdictional facts which are admitted by the parties may establish subject matter jurisdiction over a case is a salutory one that promotes speedy and inexpensive litigation. Rule 11 of the Federal Rules of Civil Procedure requires the lawyer to certify that the allegations made in pleadings are grounded in fact, based on reasonable inquiry. The early elimination of litigation over facts forming the basis for the court's jurisdiction should be encouraged. NHS should be bound, and is bound by its admission, as it has made no showing of exceptional circumstances mandating relief from the admission. New Amsterdam Casualty Co., supra. While NHS attempted to withdraw its admission shortly before the trial began by filing a second answer, Judge Battisti clearly acted within his discretion in refusing to allow the second answer. See Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 330-31, 91 S.Ct. 795, 802-01, 28 L.Ed.2d 77 (1971); Troxel Mfg. Co. v. Schwinn Bicycle Co., 489 F.2d 968, 970-71 (6th Cir.1973), cert. denied, 416 U.S. 939, 94 S.Ct. 1942, 40 L.Ed.2d 290 (1974).
As NHS has admitted facts establishing federal subject matter jurisdiction over this case, its appeal is without merit. Moreover, this court would reach the same conclusion even if NHS had not admitted its status as an FLSA employer. The record in this case establishes a variety of NHS activities that make it an "employer" within the meaning of FLSA.
The Equal Pay Act provision of the FLSA forbids sex-based wage discrimination by any "employer having employees subject to any provisions of this section." 29 U.S.C. Sec. 206(d)(1). 1 Section 206(a) describes employees as those "engaged in commerce or in the production of goods for commerce, or ... employed in an enterprise engaged in commerce or in the production of goods for commerce." Ferguson asserts that NHS is an "enterprise engaged in commerce or in the production of goods for commerce." 2 Section 3(s) of the FLSA, 29 U.S.C. Sec. 203(s), establishes a two-part definition for that term. First, the enterprise must have "employees engaged in commerce or in the production of goods for commerce or employees handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce by any person." Second the enterprise must fall within at least one of six categories. 3 Ferguson maintains that NHS falls within the fourth category, as it "is engaged in the business of construction or reconstruction or both."
Ferguson points to a number of factors indicating that NHS has employees engaged in commerce. She first discusses the relationship of NHS with the Neighborhood Reinvestment Corporation ("NRC"), an organization established by Congress with the enactment of the Neighborhood Reinvestment Corporation Act, 42 U.S.C. Secs. 8101 et seq. The NRC was created to establish neighborhood housing service programs, monitor their progress, and provide them with contracts, grants, and technical assistance. 42 U.S.C. Secs. 8105(a)(1) and (c)(2)(A). Congress appropriated federal funds to finance the activities of the NRC. Sec. 8107. The record in this case reveals that the NRC provided personnel to NHS...
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