Saraco v. Hallett

• Decision Date: 04 August 1993
• Docket Number: Civ. A. No. 91-5629.
• Citation: 831 F. Supp. 1154
• Parties: Frank SARACO, Howard Marder, Gary Levenson, Charles Dubano, Richard Boles, and Steven Foreman, et al., Plaintiffs, v. Carol Boyd HALLETT, et al., Defendants.
• Court: U.S. District Court — Eastern District of Pennsylvania

831 F. Supp. 1154

Frank SARACO, Howard Marder, Gary Levenson, Charles Dubano, Richard Boles, and Steven Foreman, et al., Plaintiffs, v. Carol Boyd HALLETT, et al., Defendants.

Civ. A. No. 91-5629.

United States District Court, E.D. Pennsylvania.

August 4, 1993.

COPYRIGHT MATERIAL OMITTED

Kristine M. Derewicz, Saul, Ewing, Remick & Saul, Philadelphia, PA, and Gregory O'Duden, Elaine Kaplan, and David F. Klein, Nat. Treasury Employees Union, Washington, DC, for plaintiffs.

Shalom Brilliant, David M. Cohen, U.S. Dept. of Justice, Civ. Div., Commercial Litigation Branch, Washington, DC, and Susan Dein Bricklin, U.S. Attorney's Office, Philadelphia, PA, for defendants.

MEMORANDUM

DUBOIS, District Judge.

Presently before the Court is Defendants' Motion to Dismiss Plaintiffs' Third Amended Complaint and Defendants' Motion to Transfer Count I of Plaintiffs' Third Amended Complaint to the United States Court of Federal Claims (hereinafter "Court of Federal Claims") In the Alternative to Dismissal. For the reasons which follow, Defendants' Motion to Dismiss Plaintiffs' Third Amended Complaint will be denied and Defendants' Motion to Transfer Count I to the Court of Federal Claims will be granted. The Court will also transfer Count II of Plaintiffs' Third Amended Complaint to the Court of Federal Claims.

I. BACKGROUND

This action was commenced by the six named plaintiffs, employees of the United States Customs Service ("Customs Service"), on their own behalf, and on behalf of more than 700 similarly situated employees of the Customs Service who have filed consent forms to participate in this action as "opt-in" plaintiffs, alleging that the Customs Service violated the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 201, et seq., in the calculation of their overtime pay. The defendants are Carol Boyd Hallett, Commissioner of the United States Customs Service, Constance Berry Newman, Director of the Office of Personnel Management ("OPM"), and the United States of America, plaintiffs' employer.¹ plaintiffs are federal employees who are covered by the FLSA. See 29 U.S.C. § 203(e)(2)(A). In general, under the FLSA, employees are entitled to overtime pay at one and a half times their regular hourly rate of pay for hours worked in excess of 40 hours per week. 29 U.S.C. § 207(a)(1). However, "any employee employed in a bona fide ... administrative ... capacity" is exempt from the overtime pay provision of section 207. See 29 U.S.C. § 213(a)(1). Employees who are exempt from the FLSA's overtime provision receive overtime pay at a "capped" rate — one and a half times the rate of a level GS-10, step one employee — pursuant to the Federal Employment Pay Act ("FEPA"). See 5 U.S.C. § 5542(a)(2). Plaintiffs assert that their regular hourly rate is higher than that of a level GS-10, step one employee. (Third Am.Compl. ¶ 15)

Plaintiffs were categorized as administrative employees within the meaning of section 213(a)(1) of the FLSA by the Customs Service pursuant to an OPM regulation which defines the term "administrative employee" and sets forth a primary duty test for determining whether an employee meets the administrative exemption. See 5 C.F.R. § 551.205.² Having been classified as administrative employees, plaintiffs received overtime pay at the capped rate pursuant to FEPA, rather than at their regular hourly rate.

In Count I of their Third Amended Complaint, plaintiffs claim that the Customs Service improperly classified them as administrative employees under the OPM regulation and failed to pay them the proper rate of pay for overtime hours in violation of section 216(b) of the FLSA.³ They contend that they do not meet the primary duty test set forth in the OPM regulation and, therefore, are entitled to overtime pay at one and half times their regular hourly rate, not at the capped rate under FEPA, and liquidated damages equal to the amount of any overtime pay awarded.⁴

In Count II, plaintiffs ask the Court to declare that the OPM regulation which defines administrative employees is invalid. The focus of Count II is on the primary duty test set forth in the OPM regulation upon which the Customs Service relied in determining that plaintiffs are administrative employees. OPM is authorized to administer the FLSA with respect to individuals employed by the federal government. See 29 U.S.C. § 204(f). The Department of Labor ("DOL") administers the FLSA with respect to individuals employed in the private and non-federal public sectors. See generally American Federation of Government Employees v. Office of Personnel Management, 821 F.2d 761, 770 (D.C.Cir.1987).

It is plaintiffs' position that OPM must exercise its rulemaking authority in a manner consistent with the Secretary of Labor's implementation of the FLSA, see American Federation of Government Employees, 821 F.2d at 770, and that, in violation of that requirement, the OPM regulation defining administrative employees is more broad than the comparable DOL regulations. See 29 C.F.R. § 541.2(a) and 541.205.⁵ Continuing, plaintiffs contend they would not meet the primary duty test under DOL regulations, whereas the Customs Service has classified them as administrative employees under the OPM regulations. Accordingly, plaintiffs argue that, because they were classified as administrative employees under the more broad OPM regulation, whereas they would not have been so classified under the DOL regulations, the OPM regulation should be declared invalid.

Defendants move to dismiss plaintiffs' Third Amended Complaint on several grounds. First, defendants assert that the Court lacks jurisdiction to entertain plaintiffs' overtime claims which, when they arose, were subject to the negotiated grievance procedures set forth in the collective bargaining agreement between the Customs Service and Customs Service employees. Second, defendants assert that any overtime claims which are not subject to negotiated grievance procedures are within the exclusive jurisdiction of the Court of Federal Claims pursuant to the Tucker Act because they exceed $10,000.⁶ Third, defendants assert that, with respect to claims which do not exceed $10,000, venue under the Tucker Act does not lie in this district because most of the opt-in plaintiffs do not reside in this district.⁷ It is defendants' position that venue in the district court for such claims lies only in the district in which all plaintiffs reside. Because all plaintiffs do not reside in a single district, defendants argue that the suit should have been brought in the Court of Federal Claims. Thus, defendants ask the court to dismiss the action for improper venue. Finally, defendants assert that plaintiffs lack standing to challenge the OPM overtime regulation, or, alternatively, plaintiffs' allegation that the OPM regulation is invalid fails to state a claim upon which relief can be granted.

Defendants' Motion to Transfer Count I of Plaintiffs' Third Amended Complaint to the Court of Federal Claims in the Alternative to Dismissal asserts that this Court lacks jurisdiction over plaintiffs overtime claims on the ground that the Court of Federal Claims has exclusive jurisdiction over non-tort claims against the United States for money damages in excess of $10,000. Therefore, defendants maintain, if not dismissed, Count I must be transferred to the Court of Federal Claims.

The Court need not address each of defendants' grounds for dismissal as the Court concludes that it lacks jurisdiction over plaintiffs claims for overtime pay and liquidated damages set forth in Count I, and will transfer Count I to the Court of Federal Claims pursuant to 28 U.S.C. § 1631.⁸ Jurisdiction over such claims is defined by the Tucker Act and, under that statute, where such claims exceed $10,000, they must be brought in the Court of Federal Claims.⁹ Furthermore, under the venue provision applicable to Tucker Act claims which do not exceed $10,000, because many of the opt-in plaintiffs reside in other judicial districts, the action may only be brought in the Court of Federal Claims. See 28 U.S.C. §§ 1346 and 1402(a).

With respect to Count II, the Court concludes that plaintiffs have standing to challenge the OPM regulation at issue and have stated a claim upon which relief may be granted. The Court further concludes that the Court of Federal Claims is capable of affording plaintiffs complete relief. Accordingly, Count II will be transferred to that court.

II. DISCUSSION

A. Jurisdiction Over Plaintiffs' Claims in Count I Lies In the Court of Federal Claims.

Analysis of this Court's jurisdiction must begin with the Tucker Act which is codified at 28 U.S.C. §§ 1346 and 1491. The Tucker Act creates no substantive right of recovery; rather it waives sovereign immunity and defines the limits of federal jurisdiction in actions against the United States for non-tort money damages. See United States v. Testan, 424 U.S. 392, 400, 96 S.Ct. 948, 954, 47 L.Ed.2d 114 (1976); Chabal v. Reagan, 822 F.2d 349, 353 (3d Cir.1987). Section 1346, referred to as the Little Tucker Act, states in relevant part:

(a) The district courts shall have original jurisdiction, concurrent with the United States Court of Federal Claims, of: ... (2) Any other civil action or claim against the United States, not exceeding $10,000 in amount, founded either upon the Constitution, or any Act of Congress, or any regulation of an executive department, or upon any express or implied contract with the United States, or for liquidated or unliquidated damages in cases not sounding in tort....

28 U.S.C. § 1346(a). Section 1491, referred to as the Big Tucker Act, states in relevant part:

The United States Court of Federal Claims shall have jurisdiction to render judgment upon any claim against the United States founded either upon the Constitution, or any Act of Congress, or any regulation of an executive department, or upon any express or implied contract with the United States, or for liquidated or

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