Frederick County Fruit Growers Ass'n, Inc. v. Martin

• Decision Date: 07 July 1992
• Docket Number: No. 91-5069,91-5069
• Parties: FREDERICK COUNTY FRUIT GROWERS ASSOCIATION, INC., et al., Appellants, v. Lynn MARTIN, Secretary of Labor, et al., Appellees.
• Court: U.S. Court of Appeals — District of Columbia Circuit

Page 1265

968 F.2d 1265

296 U.S.App.D.C. 394

FREDERICK COUNTY FRUIT GROWERS ASSOCIATION, INC., et al., Appellants, v. Lynn MARTIN, Secretary of Labor, et al., Appellees.

No. 91-5069.

United States Court of Appeals, District of Columbia Circuit.

Argued Dec. 9, 1991.

Decided July 7, 1992.

Thomas E. Wilson, with whom Ronald A. Lindsay and Christopher A. Weals were on the brief, for appellants.

Edward J. Tuddenham, with whom Shelley Davis, Susan M. Sacks, and Garry G. Geffert were on the brief, for appellee Cedrick Turner, et al.

Judry L. Subar, Attorney, Dept. of Justice, with whom Stuart M. Gerson, Asst. Atty. Gen., Jay B. Stephens, U.S. Atty., and Michael J. Singer, Atty., DOJ, and Harry L. Sheinfeld, Atty., Dept. of Labor, were on the brief, for federal appellees.

Before MIKVA, Chief Judge, EDWARDS, and D.H. GINSBURG, Circuit Judges.

Opinion for the Court filed by Circuit Judge D.H. GINSBURG.

D.H. GINSBURG, Circuit Judge:

Associations representing fruit growers in several eastern states filed suit, on behalf of themselves and their members, challenging the Secretary of Labor's interpretation of the regulation establishing the minimum wage for foreign agricultural (H-2) workers. A class of such workers intervened and counter-claimed for unpaid wages for the 1983 through 1985 harvests. Relying upon an earlier court decision interpreting the minimum wage regulation (in a case to which the growers were not parties), the district court precluded the growers from relitigating the meaning of the regulation. The district court also granted the workers' claim for unpaid wages for the 1983 and 1985 harvests and denied the workers' claim for the 1984 harvest. Although we follow a line of reasoning different in some respects from that of the district court, we uphold its judgment in all respects.

I. BACKGROUND

The H-2 program enables a U.S. employer to hire foreign agricultural workers for seasonal work. 8 U.S.C. § 1101(a)(15)(H)(ii) (1982) (amended and renamed "H-2A" after the events at issue here, see 8 U.S.C. § 1101(a)(15)(H)(ii)(a)). In order to hire H-2 workers, an employer must submit to the Secretary of Labor a "job clearance order" in which the employer promises to pay its H-2 workers at least the hourly "adverse effect wage rate" (AEWR)--an amount set by the Secretary in order to ensure that the H-2 program does not adversely affect "the wages of similarly employed U.S. workers," 20 C.F.R. § 655.200(b) (1983) (current version at 20 C.F.R. § 655.200(c)). An employer that pays its workers by the piece rather than by the hour must establish a piece rate that allows a worker of average productivity to earn the AEWR. See id. § 655.202(b)(9)(ii) (amended 1987).

When the Secretary increases the AEWR, an employer that pays by the piece has two options: either increase the piece rate or increase the productivity of its average worker. In response to claims that employers were demanding greater output per worker hour, see 43 Fed.Reg. 10306, 10309 (1978), which would have a correspondingly "adverse effect" upon domestic agricultural workers, in 1978 the Secretary promulgated the following regulation:

In any year in which the applicable [AEWR] is increased, employers shall adjust their piece rates upward to avoid requiring a worker to increase his or her productivity over the previous year in order to earn an amount equal to what the worker would earn if the worker were paid at the [AEWR].

Id. at 10317 (codified at 20 C.F.R. § 655.207(c); repealed 1987). In 1981, the Secretary interpreted the 1978 regulation to mean that when the Secretary increases the AEWR, an employer is required to increase its piece rate only if, based upon the previous year's productivity and piece rate, the employer's average worker would not otherwise earn the new AEWR.

When workers challenged this interpretation, Judge Richey held that the "average worker interpretation" was improper and ordered the Secretary to adopt a "proportional increase interpretation" of the 1978 regulation. Under that interpretation, whenever the Secretary increases the AEWR all employers must increase their piece rates by the same proportion. NAACP v. Donovan, 558 F.Supp. 218 (D.D.C.1982) (NAACP I ); NAACP v. Donovan, 566 F.Supp. 1202 (D.D.C.1983) (NAACP II ).

The Secretary did not appeal NAACP II, opting instead to pursue the average worker policy by adopting a new rule to that effect. See 48 Fed.Reg. 33684, 33687 (1983) (notice of proposed rule). Until the Secretary issued a valid new rule, however, he was bound by NAACP II to require that growers pay their H-2 workers the piece rate calculated according to the proportional increase interpretation of the 1978 regulation. The growers, fearing that the Secretary would not promulgate a new rule before the start of the approaching 1983 harvest, sought and obtained a court order compelling him to issue a new rule by September 1 of that year. Kent Barley, Inc. v. Donovan, No. 83-0079 (W.D.Va. Aug. 18, 1983).

On September 2, the Secretary issued a new rule that codified the average worker interpretation of the 1978 regulation. 48 Fed.Reg. 40168, 40175. Representatives of the workers immediately filed suit to challenge the new regulation, and on September 8 Judge Richey preliminarily enjoined its enforcement. NAACP v. Donovan, No. 82-2315 (D.D.C.1983). Thus, throughout the 1983 harvest (except for the week of September 2-8) the Secretary was under court order to require the growers to pay their H-2 workers the piece rate calculated according to the 1978 regulation. The growers nonetheless paid only the lower piece rate calculated according to the 1983 regulation.

On appeal we vacated Judge Richey's preliminary injunction prior to the 1984 harvest, but we did not reach the merits of the workers' challenge to the 1983 regulation. NAACP v. Donovan, 737 F.2d 67 (D.C.Cir.1984) (NAACP III ). During the 1984 harvest, therefore, the Secretary applied the 1983 regulation, and the growers again paid their H-2 workers the piece rate calculated upon that basis.

On July 9, 1985 we did reach the merits of the workers' challenge, and we set aside the 1983 regulation because the Secretary had not adequately explained his reason for adopting it. NAACP v. Donovan, 765 F.2d 1178, 1185 (D.C.Cir.1985) (NAACP IV ). That decision in effect reinstated the 1978 regulation. Accordingly, the Secretary required the growers to include in their job clearance orders for the 1985 harvest a promise to pay their workers the higher piece rate. In addition, he refused to accept job orders in which the growers purported to reserve their right to challenge his calculation of the piece rate. The growers complied but also filed separate letters of protest with the Secretary. In violation of their job clearance orders, moreover, the growers again paid their H-2 workers only the lower piece rate calculated according to the 1983 regulation.

In September 1985 the growers filed the present action challenging the Secretary's court-ordered (i.e. proportional increase) interpretation of the 1978 regulation. The workers counterclaimed for the difference between what they were paid (under the invalid 1983 regulation) and what they claim they are entitled to (under the 1978 regulation) for the harvests from 1983 through 1985.

The district court noted that the meaning of the 1978 regulation had been fully litigated in NAACP II (to which the growers had not been parties) and precluded the growers from relitigating that issue. Frederick County Fruit Growers Ass'n v. McLaughlin, 703 F.Supp. 1021, 1026-28 (D.D.C.1989) (FCFGA I ). The district court granted the workers' claim for backpay for the 1983 harvest (except for the period September 2-8) as a matter of "equitable restitution," id. at 1029, denied the workers' claim for the 1984 harvest because the growers had reasonably relied upon the validity of the 1983 regulation, id., and granted the workers' claim for the 1985 harvest as a matter of contract, id. at 1030-31. The district court subsequently added interest to the backpay awards. Frederick County Fruit Growers Ass'n v. Dole, 709 F.Supp. 242, 247 (1989) (FCFGA II ).

When the Supreme Court held in Martin v. Wilks, 490 U.S. 755, 765, 109 S.Ct. 2180, 2186, 104 L.Ed.2d 835 (1989), that "[j]oinder as a party, rather than knowledge of a lawsuit and an opportunity to intervene, is the method by which potential parties are subjected to the jurisdiction of the court and bound by a judgment or decree," the growers moved for reconsideration of the district court's order precluding them from relitigating the issue decided in their absence in NAACP II. The district court denied reconsideration on two grounds: First, in Martin v. Wilks the plaintiffs challenged a consent decree, whereas in this case the growers challenge a judgment of the court reached after "vigorous litigation"; and second, Martin v. Wilks involved "private rights" whereas this dispute involves "public rights." Frederick County Fruit Growers Ass'n v. Dole, 758 F.Supp. 17, 20 (D.D.C.1991) (FCFGA III ).

The district court also noted in FCFGA III that subsequent events had mooted the growers' prospective challenge to the Secretary's interpretation of the 1978 regulation. Id. at 21 n. 3. In 1987 the Secretary repealed that regulation, 52 Fed.Reg. 11460, 11466, and promulgated a new piece rate regulation, 52 Fed.Reg. 20496, 20521 (codified at 20 C.F.R. § 655.102(b)(9)(ii)), which we upheld in AFL-CIO v. Dole, 884 F.2d 597 (D.C.Cir.1989).

On appeal the growers argue that the district court erred first in awarding the workers backpay for the 1983 and the 1985 harvests and then again in calculating the interest due on those awards. The workers do not cross-appeal the district court's denial of their backpay claim for the 1984 harvest. For ease of exposition, we begin with the 1985 backpay award.

II. THE 1985 HARVEST

Recall that the Secretary required each grower to include in its job clearance...