Taylor-Callahan-Coleman Counties Dist. Adult Probation Dept. v. Dole, TAYLOR-CALLAHAN-COLEMAN

• Decision Date: 18 December 1991
• Docket Number: TAYLOR-CALLAHAN-COLEMAN,No. 91-1109,91-1109
• Parties: 30 Wage & Hour Cas. (BNA) 1089, 60 USLW 2427, 120 Lab.Cas. P 35,577 COUNTIES DISTRICT ADULT PROBATION DEPARTMENT, Plaintiff-Appellant, v. Elizabeth DOLE, Secretary of Labor, United States Department of Labor, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 953

948 F.2d 953

30 Wage & Hour Cas. (BNA) 1089, 60 USLW 2427,

120 Lab.Cas. P 35,577

TAYLOR-CALLAHAN-COLEMAN COUNTIES DISTRICT ADULT PROBATION DEPARTMENT Plaintiff-Appellant, v. Elizabeth DOLE, Secretary of Labor, United States Department of Labor, Defendant-Appellee.

No. 91-1109.

United States Court of Appeals Fifth Circuit.

Dec. 18, 1991.

Bettye S. Springer, Sheila B. Gladstone, Haynes & Boone, Fort Worth, Tex., for plaintiff-appellant.

Randell P. Means, Asst. U.S. Atty., Marvin Collins, U.S. Atty., Fort Worth, Tex., Nathaniel I. Spiller, Sr. Appellate Atty., U.S. Dept. of Labor, Allen Feldman, Steven J. Mandel, Washington, D.C., for defendant-appellee.

Appeal from the United States District Court for the Northern District of Texas.

Before CLARK, Chief Judge, JONES, Circuit Judge, and PARKER, District Court Judge. ^*

CLARK, Chief Judge:

I.

The district court dismissed for lack of subject matter jurisdiction this action by Taylor-Callahan-Coleman Counties District Adult Probation Department (the District) seeking a declaratory judgment and injunctive relief against the United States Department of Labor (DOL). The District alleged that the DOL violated the Administrative Procedures Act, 5 U.S.C. § 501 et seq. (APA), and the Fifth Amendment to the United States Constitution when it allegedly promulgated rules interpreting the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. § 201 et seq. (FLSA), without first adhering to the notice and comment requirements of the APA or the due process requirements of the United States Constitution. Since the DOL action complained of is not final agency action, we affirm the district court's order dismissing for lack of subject matter jurisdiction.

II.

A. Statutory Background

In 1940, the DOL promulgated regulations, 29 C.F.R. § 541, interpreting the exemptions to the overtime requirements of FLSA, contained in 29 U.S.C. § 213(a)(1). The exemptions applicable to this case are those covering executive, administrative, or professional employees. ¹

At the time the DOL adopted the regulations set out in note 1, they related solely to private sector employers. The FLSA did not apply to public employers. The 1974 amendments to FLSA, which first applied the statute to public employers, was declared unconstitutional by the Supreme Court in 1976. See National League of Cities v. Usery, 426 U.S. 833, 96 S.Ct. 2465, 49 L.Ed.2d 245 (1976). During this two year period of FLSA application to public employers, the Wage and Hour Administrator issued an opinion letter advising the requesting party that the probation officers described in the request were exempt as administrative employees. DOL W.H.Op. Letter No. 1344, Oct. 8, 1974.

In 1985, the Supreme Court reversed its opinion in National League, and declared that FLSA was applicable to public employers. Garcia v. San Antonio Metro. Transit Auth., 469 U.S. 528, 105 S.Ct. 1005, 83 L.Ed.2d 1016 (1985). The District, in reliance on the 1974 opinion letter, treated its probation officers as exempt employees under FLSA.

In 1988, the DOL issued two opinion letters in response to new requests in which the Administrator stated that under the fact circumstances provided by the requesting parties, those probation officers were not exempt as administrative, executive or professional employees. See DOL W.H. Op. Letter (no number assigned), February 16, 1988; DOL W.H.Op. Letter No. 1670, April 12, 1988.

B. The District

In 1988, an investigation by the regional office of the Wage and Hour Division concluded that $51,600 was due to 50 employees of the District for overtime compensation under FLSA. The investigation covered the period from January 1987 to December 1988. A letter from the regional director notified the District that if the District did not come into compliance within thirty days he would refer the case to the regional solicitor for consideration of legal action.

The District refused to pay back overtime assessed for the probation officers and their supervisors [hereinafter probation officers] but agreed to pay back overtime to the other employees. The District also agreed to pay overtime from that time forward to probation officers and all other employees covered by the DOL's letter. However, it reiterated its belief that the probation officers were exempt under FLSA. The DOL responded to this concession by the District in a letter stating:

You advise that your client has come into compliance with respect to all employees involved in the issues in this case.

* * * * * *

We accept your client's offer as a basis for resolving the issues in this case. We will, however, notify the Probation Officers and their supervisors of their rights to a private action.

Letter from Carl H. Bass, Director of Enforcement, Wage Hour Division to Sheila Gladstone, attorney for the District (Feb. 16, 1990).

In compliance with its agreement, the District now treats the probation officers as nonexempt employees, and declares that it will continue to do so until a judicial resolution of this issue.

C. Proceedings

In its First Amended Complaint, the District requested the court to (1) declare that the District does not have to treat its probation officers as nonexempt employees under FLSA, (2) find that the DOL violated the APA and due process by changing its position on the exempt status of probation officers without notice and comment, (3) order the DOL to rescind the 1988 opinion letters stating that probation officers are not exempt employes, and (4) enjoin the DOL from acting in accord with these opinion letters or issuing further opinion letters on this issue prior to a formal rulemaking procedure.

The District alleged that the DOL violated the APA and the Fifth Amendment by promulgating rules and changing its interpretation and enforcement of FLSA without the notice and comment procedures required by the APA. The DOL moved to dismiss the first amended complaint for lack of subject matter jurisdiction, for failure to exhaust administrative remedies, and because the suit was barred by the doctrine of sovereign immunity. The district court granted the DOL's motion to dismiss for lack of subject matter jurisdiction. The District filed a timely notice of appeal.

III.

Federal courts are courts of limited jurisdiction. The right to challenge jurisdiction cannot be waived. Although the district court did not state the reasons for its decision, the issue of subject matter jurisdiction is subject to plenary review by this court. Bender v. Williamsport Area School Dist., 475 U.S. 534, 541, 106 S.Ct. 1326, 1331, 89 L.Ed.2d 501 (1986); Mocklin v. Orleans Levee Dist., 877 F.2d 427, 428 n. 3 (5th Cir.1989).

In its first amended complaint, the District alleged jurisdiction under the Fifth Amendment of the United States Constitution, the APA, 5 U.S.C. §§ 702-03, and FLSA, 29 U.S.C. § 201 et seq. None of these authorities confer jurisdiction. The District's failure to cite a specific jurisdictional grant in its complaint does not defeat jurisdiction. See Hildebrand v. Honeywell, Inc., 622 F.2d 179, 181 (5th Cir.1980). The District here asserts that this action arises under the Fifth Amendment and the APA, and that jurisdiction is conferred by 28 U.S.C. § 1331 which grants district courts jurisdiction of "all civil actions arising under the Constitution, laws, or treaties of the United States."

The District must also establish a waiver of sovereign immunity before relief can be granted. In this case, a waiver must be found in the APA. That Act does not make every agency action subject to judicial review. Heckler v. Chaney, 470 U.S. 821, 828, 105 S.Ct. 1649, 1654, 84 L.Ed.2d 714 (1985) (citing 5 U.S.C. §§ 701-706). Section 704 of that Act limits judicial review to "[a]gency action made reviewable by statute and [to] final agency action for which there is no adequate remedy in a court...." 5 U.S.C. § 704. Our determination that the opinion letters are not final agency action and that the District is not without an adequate remedy affirm there was no jurisdiction in the district court and the defendant was immune.

A. The 1989 Investigation

The District does not allege that the DOL acted improperly in agreeing to settle the 1989 investigation of the District's overtime policy. Although the District contends that the DOL will forgo enforcement only if the District remains in compliance with FLSA, no such threat has been made by DOL. It has only acquiesced in action promised by the District and stated it would advise the probation officers involved that they may act as individuals. This acquiescence and advice is not final agency action contemplated by the APA. The District's agreement to treat probation officers as nonexempt employees for future overtime payment does not make it so.

Rather than focusing on the investigation and settlement, the District asserts the DOL treats its 1988 opinion letters as binding precedent for all parties and that this treatment makes those particular letters final agency action.

B. The Opinion Letters

The crux of the District's argument is that the DOL changed its pre-Garcia position set out in a 1974 opinion letter by issuing the 1988 opinion letters in lieu of conducting a formal rulemaking after following the public notice and comment procedures required by the APA and Fifth Amendment due process. The District contends the 1988 opinion letters are final agency action because the DOL treats them as binding on all probation departments including the District. We disagree.

Precedent requires that we gauge the finality of agency action in a pragmatic way. FTC v. Standard Oil Co., 449 U.S. 232, 239, 101 S.Ct. 488, 493, 66 L.Ed.2d 416 (1980); Texas v. United States Dept. of Energy, 764 F.2d 278, 282 (5th Cir.), cert. denied, 474 U.S. 1008, 106 S.Ct. 531, 88 L.Ed.2d 463 (1985).

We begin by noting the DOL has authoritatively addressed the function and finality which it will place on opinion letters.

Advisory...