Minn. Living Assistance, Inc. v. Peterson

• Decision Date: 08 August 2018
• Docket Number: No. 17-2658,17-2658
• Citation: Minn. Living Assistance, Inc. v. Peterson, 899 F.3d 548 (8th Cir. 2018)
• Parties: MINNESOTA LIVING ASSISTANCE, INC., doing business as Baywood Home Care, Plaintiff-Appellant v. Ken B. PETERSON, Commissioner, Department of Labor and Industry, State of Minnesota, in his official capacity; John Aiken, Interim Director of Labor Standards, Department of Labor and Industry, State of Minnesota, in his official capacity, Defendants-Appellees
• Court: U.S. Court of Appeals — Eighth Circuit

899 F.3d 548

MINNESOTA LIVING ASSISTANCE, INC., doing business as Baywood Home Care, Plaintiff-Appellant

v.Ken B. PETERSON, Commissioner, Department of Labor and Industry, State of Minnesota, in his official capacity; John Aiken, Interim Director of Labor Standards, Department of Labor and Industry, State of Minnesota, in his official capacity, Defendants-Appellees

No. 17-2658

United States Court of Appeals, Eighth Circuit.

Submitted: June 13, 2018

Filed: August 8, 2018

Rehearing and Rehearing En Banc Denied September 14, 2018

Counsel who presented argument on behalf of the appellant was Bruce Jay Douglas, of Minneapolis, MN.The following attorney(s) appeared on the appellant brief; Stephanie J. Willing, of Minneapolis, MN.

Counsel who presented argument on behalf of the appellee was Jonathan D. Moler, AAG, of Saint Paul, MN.

Before GRUENDER, ERICKSON, and GRASZ, Circuit Judges.

GRUENDER, Circuit Judge.

This case involves two sets of proceedings.In the first, the Minnesota Department of Labor and Industry("DLI") brought an administrative action against Minnesota Living Assistance, Inc.("Baywood") for failing to pay overtime compensation to companionship-services employees in violation of the Minnesota Fair Labor Standards Act("MFLSA").In the second, the one before us today, Baywood sued in federal court the Commissioner and the Director of Labor Standards at the DLI, arguing that the federal Fair Labor Standards Act("FLSA") preempts the MFLSA and that Baywood therefore need not pay state penalties for any MFLSA violation.The district court¹ found that the Younger doctrine required it to abstain while the state proceeding was pending and dismissed the case.Because we find abstention appropriate, we affirm.

I.

Baywood is a Minnesota corporation that employs domestic-service workers who provide companionship services.²The FLSA and the MFLSA both provide requirements regarding the minimum wage and the maximum hours per week that an individual can work before an employer is required to pay overtime compensation.But during the relevant time period, there were two pertinent differences between the statutes: (1) the FLSA standards were generally more protective than the MFLSA, compare29 U.S.C. §§ 206(a)(1)(C),207(a)(1), withMinn. Stat. §§ 177.24, subdiv. 1(b)(2012), 177.25; and (2) the FLSA exempted companionship-services employees from protection, whereas the MFLSA did not, compare29 U.S.C § 213(a)(15), withMinn. Stat. § 177.23, subdiv. 11.

In 2014, a Baywood employee filed a complaint alleging that Baywood violated the MFLSA by failing to pay overtime compensation to companionship-services employees from March 2012 to March 2014.The DLI conducted an investigation into Baywood’s practices and determined that Baywood had not paid its companionship-services employees the wages required by the MFLSA.The DLI issued a compliance order in May 2016.The order assessed a penalty of $1,000 for failure to keep records pursuant to Minn. Stat. § 177.30 and required Baywood to pay back wages of $557,714.44 in addition to liquidated damages of $557,714.44.The order also indicated that Baywood should cease its illegal practices and comply with the MFLSA.

Baywood contested the compliance order, so, in August 2016, the DLI initiated a contested case proceeding before an administrative law judge ("ALJ") at the Minnesota Office of Administrative Hearings.In June 2017, the ALJ issued a report recommending that the DLI Commissioner enforce the compliance order as to backpay and liquidated damages but that he deny it as to the determination that Baywood failed to keep accurate records.

While the proceeding before the ALJ was pending, but before the June recommendation, Baywood filed suit in federal district court seeking (1) a declaration that the FLSA preempts the MFLSA and (2) injunctive relief prohibiting the DLI from further processing, investigating, or adjudicating its claims against Baywood.The DLI moved to dismiss the complaint, arguing that the district court should abstain from exercising jurisdiction under Younger v. Harris , 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669(1971).The district court granted the DLI’s motion to dismiss under Younger.

II.

We review the district court’s decision to abstain under Younger for abuse of discretion.Whether Younger abstention is appropriate is a question of law, and the district court abuses its discretion when it makes an error of law.Geier v. Mo. Ethics Comm’n , 715 F.3d 674, 678(8th Cir.2013)(citingPlouffe v. Ligon , 606 F.3d 890, 894-95(8th Cir.2010)(Colloton, J., concurring) ).Although federal courts have a "virtually unflagging obligation ... to exercise the jurisdiction given them,"Colo. River Water Conservation Dist. v. United States , 424 U.S. 800, 817, 96 S.Ct. 1236, 47 L.Ed.2d 483(1976), exceptions to this obligation exist in limited circumstances.In Younger v. Harris , the Supreme Court held that, consistent with our nation’s commitment to the principles of comity and federalism, a federal court should abstain from exercising jurisdiction in cases where there is a parallel, pending state criminal proceeding, so long as certain conditions are met. 401 U.S. 37, 43-46, 91 S.Ct. 746, 27 L.Ed.2d 669(1971).Since Younger , the Supreme Court has issued a series of decisions that have clarified and expanded the Younger abstention doctrine.SeeSprint Commc’ns, Inc. v. Jacobs , 571 U.S. 69, 134 S.Ct. 584, 187 L.Ed.2d 505(2013);New Orleans Pub. Serv., Inc. v. Council of City of New Orleans (NOPSI) , 491 U.S. 350, 109 S.Ct. 2506, 105 L.Ed.2d 298(1989);Middlesex Cty. Ethics Comm. v. Garden State Bar Ass’n , 457 U.S. 423, 102 S.Ct. 2515, 73 L.Ed.2d 116(1982).

Three lines of inquiry for determining whether Younger abstention is appropriate emerge from these decisions.SeeSirva Relocation, LLC v. Richie , 794 F.3d 185, 192-93(1st Cir.2015)(distilling a three-part taxonomy from the Court’s abstention analyses).First, does the underlying state proceeding fall within one of the three "exceptional circumstances" where Younger abstention is appropriate?SeeSprint , 571 U.S. at 78, 134 S.Ct. 584.Second, if the underlying proceeding fits within a Younger category, does the state proceeding satisfy what are known as the " Middlesex " factors?Seeid. at 81, 134 S.Ct. 584(discussingMiddlesex ).And third, even if the underlying state proceeding satisfies the first two inquiries, is abstention nevertheless inappropriate because an exception to abstention applies?SeeNOPSI , 491 U.S. at 367, 109 S.Ct. 2506.We address these three lines of inquiry in turn.

A.

We begin by determining whether the underlying enforcement proceeding against Baywood fits within one of the three categories where Younger abstention applies.Sprint , 571 U.S. at 72-73, 78, 134 S.Ct. 584.Younger abstention is applicable only where the state proceeding qualifies as (1) a criminal prosecution, (2) a civil enforcement proceeding that is akin to a criminal prosecution, or (3) a proceeding implicating a state’s interest in enforcing the orders and judgments of its courts.Id.

Here, the parties agree that a civil enforcement proceeding resembling a criminal prosecution is the only abstention category into which the DLI proceeding could fit.Sprint identified three important characteristics for recognizing a civil proceeding that resembles a criminal prosecution: (1) the action was initiated by the State in its sovereign capacity; (2) the action involves sanctions against the federal plaintiff for some wrongful act; and (3) the action includes an investigation, often culminating in formal charges.571 U.S. at 79-80, 134 S.Ct. 584.In this case, the underlying proceeding meets all three criteria and thus falls within an applicable Younger category.

The DLI proceeding satisfies both the state-involvement and the investigation criteria because the action was initiated by the State, via the DLI, following an investigation into Baywood’s failure to pay overtime wages to companionship-services employees.Baywood contests this conclusion by arguing that "the case was initiated by an employee complaint about Baywood’s nonpayment of overtime," rather than the State.According to Baywood, because the case was initiated by an employee, the DLI merely "stepped in to settle the dispute between Baywood and its employees about overtime."Indeed, Baywood attempts to analogize the facts here to those in Sprint , where administrative proceedings were triggered by a private complaint.See571 U.S. at 74, 134 S.Ct. 584.But this analogy falls short.

In Sprint , "[a] private corporation ... initiated the action[,][n]o state authority conducted an investigation into Sprint’s activities, and no state actor lodged a formal complaint against Sprint."571 U.S. at 80, 134 S.Ct. 584.Under those circumstances, the Supreme Court concluded that Iowa’s authority was merely "invoked to settle a civil dispute between two private parties," and thus, the proceeding was not a civil proceeding akin to a criminal proceeding for purposes of Younger .Id.By contrast, here, the DLI conducted the investigation, issued the compliance order, and brought the contested case proceeding against Baywood before the ALJ to enforce Minnesota law.The DLI was not merely an arbiter of a private dispute.Thus, even though the investigation was triggered by an employee complaint, the underlying proceeding bears the first and third characteristics of a civil proceeding akin to a criminal prosecution.³

SeeOhio Civil Rights Comm’n v. Dayton Christian Schs., Inc. , 477 U.S. 619, 623-24, 625, 106 S.Ct. 2718, 91 L.Ed.2d 512(1986)(finding abstention appropriate even where the agency investigation was initiated by a private complaint);see alsoSirva , 794 F.3d at 194.

The DLI proceeding also involves "sanctions for wrongful conduct."Baywood argues that the underlying proceeding is merely an administrative wage claim with no criminal analog, yet...