Lewis-Ramsey v. Evangelical Lutheran Good Samaritan Soc'y, 3:16–cv–00026

• Decision Date: 21 September 2016
• Docket Number: 3:16–cv–00026
• Citation: 215 F.Supp.3d 805
• Parties: Lisa LEWIS–RAMSEY and Deborah K. Jones, on behalf of themselves and all others similarly situated, Plaintiffs, v. The EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY, Defendant.
• Court: U.S. District Court — Southern District of Iowa

215 F.Supp.3d 805

Lisa LEWIS–RAMSEY and Deborah K. Jones, on behalf of themselves and all others similarly situated, Plaintiffs,

v.The EVANGELICAL LUTHERAN GOOD SAMARITAN SOCIETY, Defendant.

3:16–cv–00026

United States District Court, S.D. Iowa, Central Division.

Signed September 21, 2016

Anthony James Lazzaro, Chastity Lynn Christy, Lazzaro Law Firm, Cleveland, OH, Harley C. Erbe, Erbe Law Firm, Des Moines, IA, for Plaintiffs.

Catherine A. Cano, Jackson Lewis P.C., Omaha, NE, for Defendant.

ORDER

ROBERT W. PRATT, Judge, U.S. DISTRICT COURT

On June 15, 2016, Lisa Lewis–Ramsey and Deborah K. Jones ("Plaintiffs"), on behalf of themselves and all others similarly situated, filed a Second Amended Complaint against the Evangelical Lutheran Good Samaritan Society ("Defendant"), asserting claims for: (1) failure to pay overtime compensation between January 1, 2015 and October 13, 2015; (2) failure to pay overtime compensation between October 13, 2015 and November 7, 2015; and (3) failure to pay for all hours worked between January 1, 2015 and the present.¹ Clerk's No. 28. On June 16, 2016, Defendant moved to dismiss Plaintiffs' Second Amended Complaint to the extent it seeks payment of wages for the time period between January 1, 2015 and November 12, 2015. Clerk's No. 29. Plaintiffs filed a resistance to Defendant's Motion on June 30, 2016. Clerk's No. 35. Defendant filed a Reply on July 11, 2016. Clerk's No. 38. Plaintiffs filed a Notice of Supplemental Authority in Support of Their Brief in Resistance to Defendant's Partial Motion for Dismissal on July 19, 2016. Clerk's No. 39. The matter is fully submitted.

I. FACTUAL BACKGROUND

In 1974, Congress amended the Fair Labor Standards Act ("FLSA") to include a variety of "domestic service" employees who were not previously encompassed by the statute's minimum wage and maximum hour requirements. Long Island Care at Home, Ltd. v. Coke , 551 U.S. 158, 162, 127 S.Ct. 2339, 168 L.Ed.2d 54 (2007). The 1974 Amendments, however, created an exception to the rule, exempting from FLSA coverage "any employee employed in domestic service employment to provide companionship services for individuals who (because of age or infirmity) are unable to care for themselves." 29 U.S.C. § 213(a)(15). According to DOL interpretations, the so-called "companionship exemption" made the FLSA inapplicable to any companionship worker who is "employed by an employer or agency other than the family or household using their services." 29 C.F.R. § 552.109(a).

In October 2013, the DOL issued a Final Rule amending the companionship exemption "to better reflect Congressional intent given the changes to the home care industry and workforce since [the time of the 1974 Amendments]." See Application of the Fair Labor Standards Act to Domestic Service, 78 Fed. Reg. 60,454, 60,455 (Oct. 1, 2013). Under the Final Rule, which has an effective date of January 1, 2015, third-party employers of home health care workers, such as Defendant, would no longer be permitted to "avail themselves" of the companionship exemption. See id. ; 29 C.F.R. § 552.109(a).

On June 6, 2014, the Homecare Association of America ("HCAOA")² sued the DOL in the United States District Court for the District of Columbia, seeking declaratory and injunctive relief preventing the Final Rule from taking effect. See Home Care Assoc. of Am. v. Weil , 78 F.Supp.3d 123 (D.D.C. 2015). On December 22, 2014, the district court vacated the Final Rule as it applied to third party employers. Id. at 124–25. On January 14, 2015, the district court vacated the remainder of the Final Rule, which rewrote the definition of "companionship services," concluding that the DOL was improperly attempting "to do through regulation what must be done through legislation." Id. at 130. On August 21, 2015, the Court of Appeals for the District of Columbia unanimously found the Final Rule valid and "reversed the district court's vacatur of 29 C.F.R. § 552.109." Home Care Assoc. of Am. v. Weil , 799 F.3d 1084, 1097 (D.C. Cir. 2015). On September 14, 2015, the DOL announced a 30–day "non-enforcement" policy, stating it "will not bring enforcement actions against any employer for violations of FLSA obligations resulting from the amended domestic service regulations for 30 days after the date the Court of Appeals issues a mandate making its opinion effective." 80 Fed. Reg. 55,029 (Sept. 14, 2015). The Court of Appeals issued its mandate on October 13, 2015 and the DOL began implementing certain enforcement mechanisms thirty days later, on November 12, 2015.

II. LAW AND ANALYSIS

Defendant requests that the Court dismiss Plaintiffs' claims to the extent they seek wages for the time period between January 1, 2015—the original effective date of the Final Rule—and November 12, 2015—the date when the DOL commenced enforcement of the Final Rule following the mandate by the Court of Appeals. In particular, Defendant argues that the Final Rule was unenforceable during this period because it had been vacated by the district court pursuant to a valid and effective order. Def.'s Br. at 11–17. According to Defendant, "[a] reviewing court's ability to stay or set aside administrative rules would be severely undermined if the reversal by an appellate cou[rt] would render such action void retroactively and create liability where no[ne] previously existed." Id. at 16. Defendant further argues that the DOL's decision not to bring enforcement actions against employers until 30 days after the Court of Appeals' mandate supports its assertion that the Final Rule should not be deemed retroactively effective. Defendant cites Bangoy v. Total Homecare Solutions, LLC , No. 1:15-cv-573, 2015 WL 12672727, 2015 U.S. Dist. LEXIS 177859 (S.D. Ohio Dec. 21, 2015), in support of its position. In that case, the plaintiffs claimed that the defendant was liable for wage claims dating back to January 1, 2015, because the defendant "had substantial notice that the new rule was going into effect and ... it gambled that the district court's decision vacating the rule would be upheld on appeal and lost." Id. at *2, 2015 U.S. Dist. LEXIS 177859 at *4. The district court rejected plaintiffs' argument and dismissed the plaintiffs' FLSA claim for the period when the Final Rule was vacated:

The district court in the Weil cases vacated the rule that purportedly required THS to pay Plaintiffs overtime wages before it could go into effect. In the Court's view, THS was entitled to rely on that decision in not paying Plaintiffs overtime for the interim period now at issue in this case. Any other conclusion would put THS, and other similarly-situated employers, in an untenable position. THS could have complied with the vacated rule at the risk of paying Plaintiffs overtime wages to which they were not entitled if the Court of Appeals affirmed the district court's judgment. Or, THS could have done what it did here, rely on the vacatur of the rule but then, according to Plaintiffs, be liable to them for FLSA damages if the Court of Appeals reversed the district court's judgment.

Plaintiffs, however, cite no authority for their "heads I win, tails you lose" theory of the case. Certainly those arguments are disfavored by courts. And, as THS persuasively argues, when the district court vacated the rule before its effective date, it became a nullity and unenforceable. Moreover, permitting Plaintiffs to recover for a violation of the rule while the vacatur was in effect would give the rule an impermissible retroactive effect. Finally, the fact that the DOL has indicated that it will not bring enforcement actions for violations that occurred before the Court of Appeals reinstated the rule ... strongly suggests that the rule should not be given retroactive effect in cases between private parties. Indeed, "[g]ood administration of the Act and good judicial administration alike require that the standards of public enforcement and those for determining private rights shall be at variance only where justified by very good reasons."

Id. at *3, 2015 U.S. Dist. LEXIS 177859 at *6–8 (internal citations omitted).

Plaintiffs counter that the effective date of the Final Rule has always been January 1, 2015. Pl.'s Br. at 5. They urge that well-established principles of law provide that while statutes and regulations operate prospectively, judicial decisions are applied retrospectively. Seeid. at 5 (citing United States v. Sec. Indus. Bank , 459 U.S. 70, 79, 103 S.Ct. 407, 74 L.Ed.2d 235 (1982) ( "The principle that statutes operate only prospectively, while judicial decision operate retrospectively is familiar to every law student.")). They further point out that the "effect of a reversal of a judgment is to nullify it completely and to leave the case standing as if such judgment ... had never been rendered." Id. (quoting CGB Occupational Therapy v. RHA Health Servs. Inc. , 499 F.3d 184, 188 n.2 (3d Cir. 2007) ). Thus, according to Plaintiffs, Defendant may not rely upon the "erroneous judgment [of the district court] to escape liability under the valid third-party employer regulation that has an effective date of January 1, 2015," because the Court of Appeals decision reversing the district court made it as if the vacatur of the Final Rule never occurred. Id. at 6. Plaintiffs cite Kinkead v. Humana, Inc. , No. 3:15-cv-01637, 2016 WL 3950737 (D. Conn. July 19, 2016), in support of its position. Considering the same "temporal question" now before this court, Judge Jeffrey Meyer stated:

[P]laintiff contends that defendants may not seek any benefit from the district court's vacatur of the DOL rule because neither plaintiffs nor defendants were parties to the proceedings before the district court in the District of Columbia. I do not agree. The Administrative Procedure Act authorizes a federal court to "set aside" unlawful agency action, such as the agency's promulgation of a rule that is arbitrary or capricious, that exceeds the agency's authority or limitations under a

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