Acosta v. Peters et al

Filing 42

MEMORANDUM OPINION. Signed by Judge George Levi Russell, III on 4/28/2021. (ols, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
MARTIN J. WALSH, 1

*

Plaintiff/Counter-Defendant,

*

v.

*

LOIS PETERS, et al.,

Civil Action No. GLR-18-2933

*

Defendants/Counter-Plaintiffs.

*
***
MEMORANDUM OPINION

THIS MATTER is before the Court on the Motion to Dismiss Defendants’
Amended Counterclaim filed by Plaintiff/Counter-Defendant Martin J. Walsh, Secretary
of the U.S. Department of Labor (the “Secretary”) (ECF No. 36). 2 The Motion is ripe for
disposition and no hearing is necessary. See Local Rule 105.6 (D.Md. 2018). For the
reasons outlined below, the Court will grant the Secretary’s Motion.

1

Martin J. Walsh was sworn in as Secretary of Labor on March 23, 2021. See U.S.
Department of Labor, Office of the Secretary, https://www.dol.gov/agencies/osec (last
visited Apr. 20, 2021). Accordingly, the Court will direct the Clerk to substitute Walsh for
Eugene Scalia and Milton Al Stewart. See Fed.R.Civ.P. 25(d).
2
Also pending before the Court are the Secretary’s Motion to Dismiss Defendants’
Counterclaims (ECF No. 34) and the Secretary’s Motion to Begin Discovery on the
Secretary’s Claims (ECF No. 41). The original Motion to Dismiss was rendered moot when
Defendants filed an Amended Counterclaim. (See ECF No. 35). The Court will therefore
deny the Motion as moot. Similarly, because the Court will issue a scheduling order
commencing discovery shortly after the Court grants the instant Motion to Dismiss, the
Court will deny the Secretary’s Motion to Begin Discovery as moot.

I.

BACKGROUND 3

This lawsuit alleges that Defendants/Counter-Plaintiffs International Health Care
Consultants, Inc. (“IHCC”), Ashleigh’s Senior Assisted Living, Inc. (“Ashleigh’s”), Cedar
Lane Senior Assisted Living Facility, Inc. (“Cedar Lane”), Lois Peters, and Frank
Dickerson (collectively, “Defendants”) violated the Fair Labor Standards Act, 29 U.S.C.
§§ 201 et seq. (“FLSA”), by failing to properly compensate their employees and maintain
accurate records of employee hours. (See Compl. ¶¶ 11–17, ECF No. 1). According to the
Complaint, IHCC acts as a sort of parent organization for several group homes that provide
services for the elderly, whereas Cedar Lane and Ashleigh’s are corporations engaged in
the operation of specific group homes within the IHCC umbrella. (Id. ¶¶ 4–6). Peters owns
the group homes, while Dickerson exercises closer oversight over their day-to-day
management. (Id. ¶¶ 2–3, 7–8).
The U.S. Department of Labor (“DOL”) began investigating IHCC in September
2017. (Am. Countercl. ¶ 10, ECF No. 35). According to Defendants, over the course of the
investigation, DOL Investigator Oscar Blanco required IHCC “to go significantly beyond
what is required to comply with the FLSA in order to close the investigation.” (Id. ¶ 11).
Blanco eventually determined that IHCC was violating the FLSA and required it to change
its policies before he would close the DOL investigation. (Id. ¶ 12). In conjunction with a
closing conference on February 14, 2018, DOL issued IHCC a Form WH-56 summary of

3

Unless otherwise noted, the Court takes the following facts from Defendants’
Amended Counterclaim and accepts them as true. See Erickson v. Pardus, 551 U.S. 89, 94
(2007) (citations omitted).
2

unpaid wages stating that Defendants owed their employees “$1,460,900.34 in purportedly
unpaid wages and $1,460,900.34 in purported liquidated damages, for a total of
$2,921,800.68.” (Id. ¶ 13). DOL pressured Defendants to either sign the WH-56 or enter a
tolling agreement, averring that if they declined to do so, DOL would seek civil penalties.
(Id. ¶ 14).
Following the closing conference, DOL provided Defendants a spreadsheet
detailing the basis for the figures presented in the WH-56. (Id. ¶¶ 17–18). The spreadsheet
contained several errors, requiring DOL to rescind the initial WH-56 and issue a new one
seeking “$802,278.78 in back pay and $802,278.78 in liquidated damages for a total of
$1,604,557.56.” (Id. ¶¶ 19–25). The updated figures, however, were rooted in additional
errors. (Id. ¶¶ 27–28). Specifically, Defendants allege that DOL wrongly concluded that
IHCC employees worked twenty-four hours per day. (Id. ¶¶ 29–64). Defendants state that
this position disregarded controlling law and DOL’s own regulations. (Id. ¶¶ 65–81).
On July 26, 2018, DOL sent a letter to Peters notifying her for the first time of a
previous letter—which Defendants had never seen—assessing a civil monetary penalty of
$16,716 on one or more Defendants. (Id. ¶¶ 84–85). In its July 26 letter, DOL notified
Peters that it was withdrawing the penalty, but warned that its decision to do so did not
preclude it from issuing a subsequent penalty. (Id. ¶¶ 86–87). On August 6, 2018, counsel
for Defendants received another letter from DOL indicating that it was assessing a civil
money penalty in the amount of $16,716. (Id. ¶¶ 88–89). In contravention of DOL
regulations, the letter did not set forth the basis for assessing the penalty. (Id. ¶¶ 91–96).
Defendants submitted a response on August 5, 2018, containing exceptions to DOL’s
3

determination and requesting a hearing. (Id. ¶ 98). On August 22, 2018, DOL sent a letter
directly to Peters indicating that it would notify her “as soon as the date, time, and place of
a hearing had been determined.” (Id. ¶ 99). DOL did not send any such notification, nor
did it send any other correspondence to Defendants. (Id. ¶ 100). Instead, DOL filed the
Complaint in this case on September 21, 2018. (Id. ¶ 103).
Defendants moved for dismissal of the Complaint on November 21, 2018. (ECF No.
10). By Memorandum Opinion and Order dated September 30, 2019, this Court denied the
motion to dismiss. (ECF Nos. 20, 21). Defendants moved for reconsideration of the Court’s
Order, and the Court denied that motion on August 14, 2020. (ECF Nos. 22, 29).
On September 4, 2020, Defendants filed an Answer to the Complaint together with
a Counterclaim against the Secretary alleging that DOL violated the Administrative
Procedure Act, 5 U.S.C. §§ 551 et seq. (“APA”), through its actions preceding this lawsuit.
(ECF No. 30). On October 16, 2020, the Secretary moved to dismiss the Counterclaim.
(ECF No. 34). On October 29, 2020, Defendants filed an Amended Counterclaim once
again alleging that DOL’s actions violated the APA. (Am. Countercl. ¶¶ 104–12).
Defendants seek declaratory and injunctive relief and attorneys’ fees. (Id. at 19–20).
On November 12, 2020, the Secretary moved to dismiss the Amended Counterclaim
pursuant to Federal Rules of Civil Procedure 12(b)(1) and 12(b)(6). (ECF No. 36).
Defendants filed an Opposition on December 4, 2020. (ECF No. 39). The Secretary filed a
Reply on December 16, 2020. (ECF No. 40).

4

II.
A.

DISCUSSION

Standard of Review
1.

Rule 12(b)(1)

Federal Rule of Civil Procedure 12(b)(1) governs motions to dismiss for lack of
subject-matter jurisdiction. A defendant challenging a complaint under Rule 12(b)(1) may
advance a “facial challenge, asserting that the allegations in the complaint are insufficient
to establish subject matter jurisdiction, or a factual challenge, asserting ‘that the
jurisdictional allegations of the complaint [are] not true.’” Hasley v. Ward Mfg., LLC, No.
RDB-13-1607, 2014 WL 3368050, at *1 (D.Md. July 8, 2014) (alteration in original)
(quoting Kerns v. United States, 585 F.3d 187, 192 (4th Cir. 2009)).
When a defendant raises a facial challenge, the Court affords the plaintiff “the same
procedural protection as he would receive under a Rule 12(b)(6) consideration.” Kerns,
585 F.3d at 192 (quoting Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982)). As such,
the Court takes the facts alleged in the complaint as true and denies the motion if the
complaint alleges sufficient facts to invoke subject matter jurisdiction.
With a factual challenge, the plaintiff bears the burden of proving the facts
supporting subject matter jurisdiction by a preponderance of the evidence. U.S. ex rel.
Vuyyuru v. Jadhav, 555 F.3d 337, 347 (4th Cir. 2009). In determining whether the plaintiff
has met this burden, the Court “is to regard the pleadings’ allegations as mere evidence on
the issue, and may consider evidence outside the pleadings without converting the
proceeding to one for summary judgment.” Richmond, Fredericksburg & Potomac R. Co.
v. United States, 945 F.2d 765, 768 (4th Cir. 1991) (citing Adams, 697 F.2d at 1219).
5

Nevertheless, the Court applies “the standard applicable to a motion for summary
judgment, under which the nonmoving party must set forth specific facts beyond the
pleadings to show that a genuine issue of material fact exists.” Id. (citing Trentacosta v.
Frontier Pac. Aircraft Indus., Inc., 813 F.2d 1553, 1559 (9th Cir. 1987)). The movant
“should prevail only if the material jurisdictional facts are not in dispute and the [movant]
is entitled to prevail as a matter of law.” Id. (citing Trentacosta, 813 F.2d at 1558). Unlike
under the summary judgment standard, however, the Court is permitted to decide disputed
issues of fact, Kerns v. United States, 585 F.3d 187, 192 (4th Cir. 2009), and weigh the
evidence, Adams, 697 F.2d at 1219.
“Sovereign immunity shields the United States from suit absent a consent to be sued
that is ‘unequivocally expressed.’” United States v. Bormes, 568 U.S. 6, 10 (2012) (quoting
United States v. Nordic Vill., Inc., 503 U.S. 30, 33 (1992)). Sovereign immunity also
applies to agencies and instrumentalities of the government, such as DOL. See Regents of
Univ. of Cal. v. Doe, 519 U.S. 425, 429 (1997). Finding that the government has not
consented to the suit at bar requires a court to dismiss the claim for lack of subject matter
jurisdiction. Matter of Moore, 488 F.Supp.3d 231, 236 (D.Md. 2020) (citing Williams v.
United States, 50 F.3d 299, 304–05 (4th Cir. 1995)).
2.

Rule 12(b)(6)

The purpose of a Rule 12(b)(6) motion is to “test[ ] the sufficiency of a complaint,”
not to “resolve contests surrounding the facts, the merits of a claim, or the applicability of
defenses.” King v. Rubenstein, 825 F.3d 206, 214 (4th Cir. 2016) (quoting Edwards v. City
of Goldsboro, 178 F.3d 231, 243 (4th Cir. 1999) (citation omitted)). A complaint fails to
6

state a claim if it does not contain “a short and plain statement of the claim showing that
the pleader is entitled to relief,” Fed.R.Civ.P. 8(a)(2), or does not “state a claim to relief
that is plausible on its face,” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Bell Atl.
Corp. v. Twombly, 550 U.S. 544, 570 (2007)). A claim is facially plausible “when the
plaintiff pleads factual content that allows the court to draw the reasonable inference that
the defendant is liable for the misconduct alleged.” Id. (citing Twombly, 550 U.S. at 556).
“Threadbare recitals of the elements of a cause of action, supported by mere conclusory
statements, do not suffice.” Id. (citing Twombly, 550 U.S. at 555). Though the plaintiff is
not required to forecast evidence to prove the elements of the claim, the complaint must
allege sufficient facts to establish each element. Goss v. Bank of Am., N.A., 917 F.Supp.2d
445, 449 (D.Md. 2013) (quoting Walters v. McMahen, 684 F.3d 435, 439 (4th Cir. 2012)),
aff’d, 546 F.App’x 165 (4th Cir. 2013).
In considering a Rule 12(b)(6) motion, a court must examine the complaint as a
whole, consider the factual allegations in the complaint as true, and construe the factual
allegations in the light most favorable to the plaintiff. Albright v. Oliver, 510 U.S. 266, 268
(1994); Lambeth v. Bd. of Comm’rs of Davidson Cnty., 407 F.3d 266, 268 (4th Cir. 2005)
(citing Scheuer v. Rhodes, 416 U.S. 232, 236 (1974)). But the court need not accept
unsupported or conclusory factual allegations devoid of any reference to actual events,
United Black Firefighters v. Hirst, 604 F.2d 844, 847 (4th Cir. 1979), or legal conclusions
couched as factual allegations, Iqbal, 556 U.S. at 678.

7

B.

Analysis
The Secretary contends that Defendants’ Amended Counterclaim must be dismissed

for lack of subject matter jurisdiction. “[F]ederal courts must assure themselves that they
have jurisdiction before proceeding to the merits.” City of New York v. U.S. Dep’t of Def.,
913 F.3d 423, 430 (4th Cir. 2019) (citing Steel Co. v. Citizens for a Better Env’t, 523 U.S.
83, 94–95 (1998)).
“Sovereign immunity is jurisdictional in nature” and “absent a waiver . . . shields
the Federal Government and its agencies from suit.” F.D.I.C. v. Meyer, 510 U.S. 471, 475
(1994). The Administrative Procedure Act, 5 U.S.C. §§ 551 et seq. (“APA”), “waives the
federal government’s sovereign immunity for a limited set of suits, brought by ‘a person
suffering legal wrong because of agency action’ to obtain relief ‘other than money
damages.’” City of New York, 913 F.3d at 430 (quoting 5 U.S.C. § 702). Under the APA,
“subject matter jurisdiction is lacking if the plaintiff fails to challenge a particular ‘agency
action’ that is fit for review.” Id. (citing Invention Submission Corp. v. Rogan, 357 F.3d
452, 460 (4th Cir. 2004)).
The following agency actions are subject to judicial review under the APA: (1)
“[a]gency action made reviewable by statute; and (2) “final agency action for which there
is no adequate remedy in a court.” 5 U.S.C. § 704. Neither party argues that the agency
actions at issue here are reviewable by statute. Accordingly, the Court must determine
whether they constitute final agency actions for which there is no adequate remedy in a
court. “[T]wo conditions must be satisfied for agency action to be ‘final’: First, the action
must mark the consummation of the agency’s decisionmaking process. . . . And second, the
8

action must be one by which rights or obligations have been determined, or from which
legal consequences will flow.” Bennett v. Spear, 520 U.S. 154, 177 (1997) (internal
citations and quotation marks omitted).
Defendants identify the following actions as “final agency actions” subject to
judicial review:
1. “issuing the WH-56”;
2. “[issuing] the subsequent letters concerning civil money penalties”; and
3. “issu[ing] . . . its determination that: (1) IHCC and Ms. Peters were in violation of
the FLSA; (2) IHCC must change the way it conducted business by ceasing to pay
employees a legally permissible day rate; and (3) IHCC and Ms. Peters owed
$1,604,557.56 in back wages and liquidated damages.”
(Am. Countercl. ¶ 106). As set forth below, the Court finds that none of these constitute a
final agency action for the purposes of waiving sovereign immunity under the APA and
will therefore dismiss this case for lack of subject matter jurisdiction.
1.

Form WH-56

The Secretary argues that DOL’s issuance of a WH-56 was not a final agency action
because no legal consequences flowed from it “and, in fact, Defendants were free to ignore
it entirely.” (Mem. Supp. Mot. Dismiss Defs.’ Countercl. [“Pl.’s Mem.”] at 7, ECF No. 361). As the Secretary explains, “[b]ecause Defendants did not agree to pay the back wages
and resolve the matter, the Secretary then filed this lawsuit asking this Court to determine
the amount of back wages and liquidated damages Defendants owed to their employees
and seeking other injunctive relief.” (Id.).
9

Defendants argue that, in fact, legal and financial consequences did flow from the
WH-56 in that it exposed them “to penalties for willful and repeated violations,” adding
that “at the closing conference the Department informed IHCC that if it did not sign the
WH-56 or a tolling agreement it would seek civil money penalties.” (Opp’n Mot. Dismiss
[“Opp’n”] at 14, ECF No. 39). Defendants assert that the finality of the WH-56 was
demonstrated by an email from Blanco stating that DOL “stand[s] by the facts and legal
conclusions of the case.” (Id. at 15). Defendants further maintain that they “have exhausted
all avenues of contesting the unlawful WH-56 prior to filing this Counterclaim.” (Id. at 16).
Defendants rely heavily on an unpublished decision by the United States District
Court for the Southern District of Texas, Gate Guard Servs. L.P. v. Solis, No. CIV.A. V10-91, 2011 WL 2784447 (S.D.Tex. July 12, 2011), in support of their position. In that
case, the court found that “DOL’s determination that Gate Guard: (1) is in violation of the
FLSA; (2) owes more than $6 million in back wages to its gate attendants and service
technicians: and (3) must classify and compensate its gate attendants as hourly employees
going forward” were all final agency actions and therefore reviewable under the APA. Id.
at *9. A later decision by that same court, however, held that DOL findings provided during
a closing conference did not constitute a final agency action because DOL’s “internal
process was not complete.” Tiga Logistics, LLC v. Perez, No. CV H-14-480, 2015 WL
12844451, at *3 (S.D.Tex. Mar. 27, 2015). Similarly, here, DOL declined to complete its
internal process—i.e., scheduling and conducting an administrative hearing—prior to filing
this lawsuit. (See Am. Countercl. ¶¶ 98–103).

10

Moreover, neither Gate Guard nor any of the other cases cited by Defendants find
that agency investigative findings are final and reviewable during the pendency of a lawsuit
brought by that agency. Instead, those cases were brought by companies proactively
seeking a judicial determination that the agency’s actions were incorrect or improper. Here,
Defendants will have ample opportunity to make that showing in defending this lawsuit.
See U.S. Army Corps of Eng’rs v. Hawkes Co., 136 S.Ct. 1807, 1815 (2016) (citing 5
U.S.C. § 704) (“[A]n agency action is reviewable under the APA only if there are no
adequate alternatives to APA review in court.”). 4
Other courts have found that Form WH-56 and similar issuances do not constitute
final agency actions. See, e.g., Perez v. Guardian Roofing, No. 3:15-CV-05623-RJB, 2016
WL 2595200, at *2 (W.D.Wash. May 5, 2016) (“Estimating an amount owed is tentative,
not final.”). Indeed, such preliminary determinations of back wages due are frequently the
subject of subsequent deliberations between DOL and the targets of its investigations. See,
e.g., Scalia v. Valley Hotel, Inc., No. 4:17-CV-00113, 2020 WL 263012, at *1 (M.D.Pa.
Jan. 17, 2020); Dep’t of Lab. v. EJ’s Cleaning Servs., Inc., No. 4:19-CV-84-BD, 2020 WL

4

Defendants argue that certain elements of their Amended Counterclaim will not be
resolved through the Secretary’s lawsuit. (See Opp’n at 6). Defendants cite (1) “the
Secretary’s effort in the WH-56 to go beyond its jurisdiction and assess state and local
minimum wages”; (2) unspecified “further actions by the Secretary in violation of law and
his own regulations”; and (3) “harassment of” Defendants into paying unwarranted wages
and penalties. (Id.). Defendants assert they are entitled to an injunction against these
actions. The Court disagrees that these issues will remain open following the disposition
of this lawsuit, as they either describe subparts of the Secretary’s allegations or outgrowths
of DOL’s conclusions of law that this action will necessarily resolve. Accordingly, the
Court concludes this lawsuit presents an “adequate alternative[] to APA review in court.”
See Hawkes, 136 S.Ct. at 1815.
11

1432048, at *2 (E.D.Ark. Mar. 19, 2020). Even in this case, Defendants demonstrated the
preliminary nature of the WH-56 when they identified an error that caused DOL to
significantly revise its findings of back wages owed. (See Am. Countercl. ¶¶ 13–25).
The Court finds that the WH-56 issued in this case did not constitute a final agency
action. As the Secretary writes, “the WH-56 form itself has no legal consequence, and
Defendants are actively contesting their back wage liability in this litigation.” (Reply Supp.
Pl.’s Mot. Dismiss Defs.’ Countercl. [“Reply”] at 9, ECF No. 40). Moreover, Defendants’
concern that they could be subject to additional penalties due to their refusal to comply
with DOL’s findings and directives is too speculative to justify review under the APA. See
City of New York, 913 F.3d at 431 (“It is not enough for plaintiffs to simply identify a
governmental action that ultimately affected them through the independent responses and
choices of third parties, or mere coercive pressures.”) (internal quotation marks and
citations omitted). More fundamentally, the Court finds that there is an adequate remedy
to the agency’s action in court—this very lawsuit. Accordingly, the Court finds that the
Form WH-56 is not subject to review under the APA.
2.

Civil Monetary Penalties

Defendants next argue that the civil monetary penalty (“CMP”) issued by the
Secretary constituted a final agency action. Under DOL regulations, however, CMPs are
not final if the employer files an exception. See 29 U.S.C. § 216(e)(4) (providing that a
CMP “shall be final, unless within 15 days after receipt of notice thereof . . . the person
charged with the violation takes exception to the determination . . ., in which event final
determination of the penalty shall be made . . . after opportunity for hearing”); 29 C.F.R. §
12

580.6(a) (“Any person desiring to take exception to the determination of penalty, or to seek
judicial review, shall request an administrative hearing pursuant to this part.”). Here,
Defendants did file an exception to DOL’s findings and requested an administrative
hearing. (See Am. Countercl. ¶¶ 98–99).
Rather than proceeding with the hearing, the Secretary filed this lawsuit, “apparently
elect[ing] to give the Court and the trier of fact the responsibility to decide whether
[Defendants] violated FLSA.” See Perez, 2016 WL 2595200, at *3. Under these
circumstances, “DOL did not engage in final agency action.” Id.; see also Am. Fin.
Benefits Ctr. v. Fed. Trade Comm’n, No. 17-04817, 2018 WL 3203391, at *7 (N.D.Cal.
May 29, 2018) (finding that agency filing a lawsuit did not constitute final agency action). 5
Because the CMPs were not finalized at the time this lawsuit was filed, have not been
finalized since the filing of this lawsuit, and were not finalized by this lawsuit, they do not
constitute a final agency action. In addition, the Court once again finds that this lawsuit
provides a forum for an “adequate remedy” to the agency’s action in a court. See 5 U.S.C.

5

Defendants argue that the fact the Secretary filed a lawsuit does not negate the
CMP’s status as a final agency action because the Secretary is empowered to recover the
proceeds of a CMP through the courts. See 29 C.F.R. § 580.18(b)(2) (“[T]he amount of the
penalty, finally determined as provided in § 580.5, § 580.12 or § 580.16, may be . . .
[r]ecovered in a civil action brought by the Secretary in any court of competent
jurisdiction[.]”). In other words, Defendants argue, the regulatory regime “does not
undermine the finality of such a decision by the agency; it merely gives the Secretary the
right to enforce his final decision in court.” (Opp’n at 19). This argument is not persuasive,
however, for two reasons. First, in order to recover such a sum, the amount must have been
“finally determined,” which is not the case here. See 29 C.F.R. § 580.18(b). Second, the
Secretary does not seek to recover a CMP through this lawsuit. (See Compl. at 7–8).
13

§ 704. Accordingly, the Court finds that the issuance of the CMP is not reviewable under
the APA.
3.

Issuing Determinations

Defendants finally argue that the Secretary undertook a final agency action by
“issu[ing] . . . its determination that: (1) IHCC and Ms. Peters were in violation of the
FLSA; (2) IHCC must change the way it conducted business by ceasing to pay employees
a legally permissible day rate; and (3) IHCC and Ms. Peters owed $1,604,557.56 in back
wages and liquidated damages.” (Am. Countercl. ¶ 106). Defendants assert that these
conclusions “imposed substantial financial repercussions upon IHCC [and] required
significant changes in IHCC’s business practices with significant penalties attached for
non-compliance.” (Opp’n at 17).
The Court is not persuaded. In order for a government action to be “one by which
rights or obligations have been determined,” see Bennett, 520 U.S. at 177, a plaintiff must
show that it had “an immediate and practical impact or alter[ed] the legal regime in which
it operates.” City of New York, 913 F.3d at 431 (internal quotation marks and citations
omitted). “It is not enough for plaintiffs to simply identify a governmental action that
ultimately affected them through the independent responses and choices of third parties, or
mere coercive pressures.” Id. (internal quotation marks and citations omitted); see also
Solar Turbines Inc. v. Seif, 879 F.2d 1073, 1081 (3d Cir. 1989) (finding that preenforcement review of agency action is not warranted “[e]ven though the wording of the
administrative order is in the imperative and directs immediate compliance . . . and even
though the accompanying letter seems to threaten civil and criminal liability upon
14

noncompliance”); Media Gen. Operations Inc. v. Herman, 152 F.Supp.2d 1368, 1377
(S.D.Ga. 2001) (finding that “the mere potential for future injury (thus injury that isn’t
imminent) in the form of liquidated damages is insufficient to render an issue ripe for
review” and that if it were, “every employer’s failure to comply with a DOL investigator’s
initial finding of non-compliance would support—upon that employer’s reference to the
mere threat of liquidated damages—disruptively intrusive judicial review”); Am. Fin.
Benefits Ctr., 2018 WL 3203391, at *7 (“The challenged FTC actions—its investigation,
decision to file a complaint, and filing of a complaint—are of an ‘interlocutory nature.’”).
As set forth above, the Form WH-56 and CMP did not constitute final agency
actions. Accordingly, the determinations underlying those documents also were not final
agency actions. To the extent Defendants argue that the Secretary’s actions caused them to
change their business practices for fear of future penalties, these are precisely the type of
“coercive pressures” and “independent choices” the Fourth Circuit has found do not
support a finding that an action constituted a final agency action. See City of New York,
913 F.3d at 431.
The Court has considered the decisions from other circuit courts cited by
Defendants, Rhea Lana, Inc. v. Department of Labor, 824 F.3d 1023 (D.C. Cir. 2016), and
West Illinois Home Health Care, Inc. v. Herman, 150 F.3d 659 (7th Cir. 1998). In both
cases, appellate courts found that agency communications directing the plaintiffs to take
certain steps to come into compliance with federal wage and hour laws constituted final
agency actions because they could expose the plaintiffs to willful violation penalties down
the road. See Rhea Lana, 824 F.3d at 1030; W. Ill. Home Health Care, 150 F.3d at 663.
15

Critically, these cases are distinguishable in that they were brought by companies
proactively seeking a judicial determination that the agency’s actions were incorrect or
improper. Here, the Secretary filed this lawsuit seeking a judicial determination that the
conclusions DOL reached during its investigation were lawful and accurate. Defendants
will have ample opportunity to demonstrate that DOL’s conclusions were in error in their
defense of this lawsuit.
In the absence of express guidance from the Fourth Circuit, the Court views the
filing of this lawsuit by the Secretary as solidifying the preliminary nature of DOL’s earlier
determinations. See City of Oakland v. Lynch, 798 F.3d 1159, 1166–67 (9th Cir. 2015)
(“[The Government’s lawsuit] simply makes evident the Government’s intention to
challenge the status quo; any rights, obligations, and legal consequences are to be
determined later by a judge.”). The Court therefore finds that those actions do not constitute
final agency actions and are not reviewable under the APA. Finding that none of the
challenged actions are final agency actions subject to review under the APA, the Court will
dismiss Defendants’ Amended Counterclaim for lack of subject matter jurisdiction. Given
that Defendants already had the opportunity to amend, the Court will dismiss the Amended
Counterclaim with prejudice.
III.

CONCLUSION

For the foregoing reasons, the Court will grant the Secretary’s Motion to Dismiss
Defendants’ Amended Counterclaim (ECF No. 36). A separate Order follows.

16

Entered this 28th day of April, 2021.

/s/
George L. Russell, III
United States District Judge

17