Hampe v. Butler

• Citation: 364 F.3d 90
• Decision Date: 07 April 2004
• Docket Number: No. 03-1438.,03-1438.
• Parties: Ronald HAMPE; Joshua Jesse; Mark Vanway; Michele Aikens; John Whitcomb, Individually and on behalf of all Similarly Situated Individuals; Mon Valley Unemployed Committee; International Union of Electrical Salaried Machine and Furniture Workers-Communication Workers of America, Appellants v. Johnny J. BUTLER, Secretary, Pennsylvania Department of Labor and Industry; Elaine L. Chao, Secretary, U.S. Department of Labor
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

Page 90

364 F.3d 90

Ronald HAMPE; Joshua Jesse; Mark Vanway; Michele Aikens; John Whitcomb, Individually and on behalf of all Similarly Situated Individuals; Mon Valley Unemployed Committee; International Union of Electrical Salaried Machine and Furniture Workers-Communication Workers of America, Appellants v. Johnny J. BUTLER, Secretary, Pennsylvania Department of Labor and Industry; Elaine L. Chao, Secretary, U.S. Department of Labor

No. 03-1438.

United States Court of Appeals, Third Circuit.

Argued: October 21, 2003.

Opinion Filed: April 7, 2004.

Scott A. Bradley, Esq. [Argued], Deputy Attorney General, Office of Attorney General, Pittsburgh, PA, Counsel for Appellee Butler.

Allen H. Feldman, Esq., Associate Solicitor for Special Appellate and Supreme Court Litigation, Nathaniel I. Spiller, Esq., Deputy Associate Solicitor, Gary K. Stearman, Esq. [Argued], Senior Appellate Attorney, U.S. Department of Labor, Washington, DC, Bonnie R. Schlueter, Esq., Office of the U.S. Attorney, Pittsburgh, PA, Counsel for Appellee Chao.

Evalynn B. Welling, Esq. [Argued], Community Justice Project, John Stember, Esq., Stember Feinstein Krakoff, Pittsburgh, PA, Counsel for Appellants.

Before: ALITO, FUENTES, and ROSENN, Circuit Judges.

FUENTES, Circuit Judge.

The individual plaintiffs in this case are industrial workers who reside and worked in western Pennsylvania. Each lost his or her job as a result of foreign competition or because his or her job had been moved to another country. As a result, the workers enrolled in re-training programs through the federal Trade Adjustment Assistance Program ("TAA") of the Trade Act of 1974. Under the Act, the workers were entitled to reimbursement for training-related travel expenses if they had to travel outside their regular commuting area. However, the Pennsylvania Department of Labor and Industry ("Labor & Industry"), the state agency that administers the federal program, required the workers to sign waivers of the travel expense allowance before they could be approved.

In April 2001, the workers filed suit against both Labor & Industry and the United States Department of Labor ("DOL") seeking, among other things, injunctive relief and a declaration that they were entitled to a retroactive reimbursement. The District Court denied all relief and dismissed the workers' complaint.¹ We conclude that the workers are entitled to an order: (1) declaring that Pennsylvania's waiver policy violated the Trade Act, and (2) directing the Secretary of Labor to order the Pennsylvania Department of Labor & Industry to redetermine the workers' travel expense claims.

I. Facts and Procedural Background

The Trade Act of 1974, 19 U.S.C. § 2291-98 ("Act"), provides unemployment compensation, training, job search, relocation, allowances and other benefits to workers who have lost their jobs as a result of competition from imports. The Act authorizes the Secretary of Labor to contract with state employment agencies to administer the federal benefits program. Dislocated workers can apply to DOL through the state agency for reimbursement of their training costs, including the costs of traveling to their training centers provided that the centers lie outside their normal commuting area. 20 C.F.R. § 617.28(a). Labor & Industry administers the program in Pennsylvania as an agent of DOL. The named plaintiffs, Ronald Hampe, Joshua Jesse, Mark Vanway, Michele Aikens and John Whitcomb ("Plaintiffs") are all dislocated workers under the Act who sought coverage for their training and travel from Labor & Industry.² Plaintiffs, all residing in rural areas, were enrolled in training facilities located more than 50 miles from their homes. They allege that before they could be approved for a training program, the state required anybody commuting more than 50 miles away to sign waivers agreeing to accept only $5 per day for commuting expenses. Pl. Br. at 11. They further claim that Labor & Industry adopted this "negotiated travel allowance" policy as a means of reducing its training costs, and that the policy was approved by DOL. Labor & Industry and DOL, however, allege that Labor & Industry and Plaintiffs negotiated the $5 per day amount based on the mutual recognition that the commuting costs were abnormally high.

Plaintiffs filed suit in the District Court in April 2001. Five months later, DOL issued Training and Employment Guidance Letter ("TEGL") 5-01, which clarified that states could not negotiate travel allowances under the Trade Act. Labor & Industry adopted this clarification, discarded the negotiated travel allowance policy effective November 15, 2001, and began to pay full federal mileage to individuals in training as of November 15. Labor & Industry did not, however, reimburse any of the Plaintiffs for their pre-November 15 commuting costs.

In their complaint, Plaintiffs pressed three claims. First, Plaintiffs demanded retroactive relief from Labor & Industry: namely, reimbursement for pre-November 15 commuting costs above $5 per day. Alternatively, Plaintiffs requested relief from DOL for the pre-November 15 policy on the grounds that DOL endorsed the negotiated travel allowance policy.³ Specifically, Plaintiffs sought a declaration that "DOL's policy of approving negotiated travel allowances prior to September 2001 violated DOL's own regulations and, thus, the dislocated workers are entitled to relief against the Secretary under the Administrative Procedures [sic] Act⁴ for the travel allowances which were withheld from them before November 15, 2001." Pl. Br. at 7. Finally, Plaintiffs sought an injunction against the current, post-November 15 one-half tuition policy, under which Labor & Industry allegedly denies any training program for which travel costs exceed more than half of training tuition and fees.

The District Court dismissed all of Plaintiffs' claims. First, the District Court found that Plaintiffs' claim for reimbursement from Labor & Industry was barred by sovereign immunity. In particular, the District Court rejected Plaintiffs' argument that sovereign immunity was inapplicable simply because only federal funds were at issue. The District Court then dismissed the reimbursement claim against DOL as barred by the Act because, according to the District Court, redeterminations of Act benefits can only be sought in state court. Finally, the District Court concluded that any claims for prospective relief were mooted by the November 15 adoption of TEGL 5-01. Plaintiffs timely appealed.

II. Jurisdiction and Standard of Review

The District Court had subject matter jurisdiction pursuant to 28 U.S.C. § 1331. This Court has jurisdiction over the District Court's final judgment pursuant to 28 U.S.C. § 1291. Our standard of review over the District Court's grant of summary judgment is plenary. Morton Int'l, Inc. v. A.E. Staley Mfg. Co., 343 F.3d 669, 679 (3d Cir.2003).

III. Analysis

A. The Trade Act Does Not Bar Relief Against DOL In This Case

The District Court's dismissal of Plaintiffs' claim against DOL was based on the grounds that the Trade Act confines claims for redeterminations of benefits to state courts. In its decision, the District Court noted that the Act "vested state courts with exclusive jurisdiction over claims challenging a state agency's application of federal guidelines to the benefit claims of individual employees." International Union, United Auto., Aerospace and Agric. Implement Workers of Am. v. Brock, 477 U.S. 274, 285, 106 S.Ct. 2523, 91 L.Ed.2d 228 (1986) (hereinafter "Brock I"). Plaintiffs contend, however, that the federal district court has jurisdiction to hear their claims. They argue that their instant suit against DOL is not for a redetermination of benefits, but for an order declaring that DOL improperly endorsed Labor & Industry's negotiated travel allowance policy, which had been implemented in violation of federal law.

Plaintiffs are correct. In Brock I, the Supreme Court noted that nothing in the Act would prevent a suit against DOL for violation of federal law in federal court: "While the Act vested state courts with exclusive jurisdiction over claims challenging a state agency's application of federal guidelines to the benefit claims of individual employees, there is no indication that Congress intended [the Act] to deprive federal district courts of subject-matter jurisdiction... to hear statutory or constitutional challenges to the federal guidelines themselves." In other words, even though the determination of individuals' benefits may be confined "to state administrative and judicial processes, claims that a program is being operated in contravention of a federal statute or the Constitution can nonetheless be brought in federal court." Id. (internal citations omitted). Specifically, a federal court can hear statutory challenges that will influence the outcomes of redetermination proceedings, although it cannot hear direct requests for redetermination. Id. at 284, 106 S.Ct. 2523. The language from Brock I does not simply allow for suits seeking to invalidate statutes or explicit federal guidelines; rather, it explicitly provides for "claims that a program is being operated in contravention of a federal statute." Id. at 285, 106 S.Ct. 2523 (internal citations omitted) (emphasis added). Thus, in this case, Plaintiffs' claim is not barred by the fact that it is not challenging the official statute or regulations. As the Supreme Court noted in Brock I, "[a]s we find [the Act] to pose no bar to petitioners' claims, we see no jurisdictional impediment to this suit in federal court challenging a federal official's interpretation of a federal statute. In view of the extent to which state agencies are bound to adhere to the Secretary's directives with respect to the administration and interpretation of the Trade Act, such a direct challenge is not only proper, but appropriate." Id. at 285-86, 106 S.Ct. 2523 (internal citation omitted).

DOL offers...