UNITED STATES OF AMERICA v. Bedi et al

Filing 33

MEMORANDUM-DECISION AND ORDER: It is ORDERED that defendants' # 27 MOTION to certify an interlocutory appeal is DENIED. It is futher ORDERED that Defendants' # 30 MOTION to stay proceedings pending appeal is DENIED. It is further ORDERED that Defendants shall file and serve an answer to the complaint on or before February 11, 2019. The Clerk of the Court is directed to terminate the associated motions and to issue a scheduling notification setting defendants' time to answer the complaint accordingly. Motions terminated: 27 MOTION for Leave to Appeal, 29 Letter Motion requesting Oral Argument of Defendant's pending motion to certify an interlocutory appeal and requesting permission for Defendants to file a reply subm, 30 MOTION to Stay Proceedings Pending Appeal, 32 Letter Motion requesting Permission to File a Reply in Further Support of Motion for a Stay. Signed by Judge David N. Hurd on 1/28/2019. (meb)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF NEW YORK
----------------------------------UNITED STATES OF AMERICA,
Plaintiff,
-v-

1:17-CV-1168

VICKRAM BEDI, President,
and DATALINK COMPUTER
PRODUCTS, INC.,
Defendants.
----------------------------------APPEARANCES:

OF COUNSEL:

HON. GRANT C. JAQUITH
United States Attorney for the
Northern District of New York
Attorneys for Plaintiff
100 South Clinton Street, Room 900
Syracuse, NY 13261

MARY E. LANGAN, ESQ.
Ass't United States Attorney

U.S. DEPARTMENT OF LABOR
Office of the Solicitor
Attorneys for Plaintiff
201 Varick Street, Room 983
New York, NY 10014

JASON E. GLICK, ESQ.
Special Ass't United States Attorney

CARTER, LEDYARD LAW FIRM
Attorneys for Defendants
2 Wall Street
New York, NY 10005

ALAN S. LEWIS, ESQ.

DAVID N. HURD
United States District Judge

MEMORANDUM–DECISION and ORDER
I. INTRODUCTION
On October 19, 2017, plaintiff United States of America (the "Government") filed this
civil action against defendants Datalink Computer Products, Inc. ("Datalink"), a computer
sales and services company, and Datalink's President Vickram Bedi ("Bedi"), in an effort to
collect back pay awarded by the U.S. Department of Labor ("DOL") to former Datalink
employee Helga Ingvarsdottir ("Helga").
On January 29, 2018, Datalink and Bedi (collectively "defendants") moved under
Federal Rule of Civil Procedure ("Rule") 12(b)(6) seeking to dismiss the Government's
complaint in its entirety. Defendants raised two arguments in favor of dismissal: first, they
argued the Government's action was premature because the limitations period for seeking
judicial review of the DOL's administrative award of back pay had not yet expired; second,
they argued the Government was not the proper party to collect the back pay award because
it is money owed to Helga, not to the Government.
After the dismissal motion was fully briefed and taken on submit, an attorney from the
DOL's Office of the Solicitor entered an appearance in the case and req uested oral
argument, which was heard on May 16, 2018 in Utica, New York. Shortly thereafter, this
Court denied defendants' motion to dismiss and directed defendants to serve an answer to
the Government's complaint. United States v. Bedi, 318 F. Supp. 3d 561 (N.D.N.Y.
2018) (the "June Order")
But instead of joining issue, on July 12 defendants moved under 28 U.S.C. § 1292(b)
seeking to certify the June Order for interlocutory appeal and for a stay of further
proceedings in this forum pending the outcome of that appeal. The Government has
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opposed both motions, which are fully briefed and will be decided on the basis of the
submissions without oral argument.
II. DISCUSSION
The complete factual and procedural background is recounted in the June Order and
will not be repeated here. Bedi, 318 F. Supp. 3d at 563-64. For current purposes, it is
sufficient to recall that (1) the Government's debt collection effort against defendants is
premised on the Federal Debt Collection Procedures Act of 1990 ("FDCPA"); and (2) the
parties vehemently disagree about whether the FDCPA authorizes the Government to come
after defendants to collect a back wage award that is ultimately owed to a third party. Id. at
565, 566-67.
The June Order tentatively resolved that disagreement in the Government's favor
when it denied defendants' motion to dismiss. Bedi, 318 F. Supp. 3d at 568 ("The
complexities of this case, real or imagined, are better suited for disposition at summary
judgment or trial."). Defendants, of course, think the June Order came out the wrong way on
this question and believe they can convince an appellate panel to agree with them. But they
don't want to wait until the conclusion of proceedings here in trial court; they want to do it
right now.
In federal practice, that is easier said than done. "Unlike civil practice in many state
courts, federal appellate jurisdiction is generally limited to review of only the 'final decisions'
of the district courts." Ward v. Stewart, 284 F. Supp. 3d 223, 227 (N.D.N.Y. 2018).
"This final-judgment rule, now codified in [28 U.S.C. § 1291], preserves the proper
balance between trial and appellate courts, minimizes the harassment and delay that would

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result from repeated interlocutory appeals, and promotes the efficient administration of
justice." Ward, 284 F. Supp.3d at 227 (citations omitted).
"In § 1291 Congress has expressed a preference that some erroneous trial court
rulings go uncorrected until the appeal of a final judgment, rather than having litigation
punctuated by 'piecemeal appellate review of trial court decisions which do not terminate the
litigation.'" Ward, 284 F. Supp. 3d at 227 (quoting Fischer v. N.Y. State Dep't of Law, 812
F.3d 268, 273 (2d Cir. 2016)).
However, "[i]n 1958 Congress created a 'procedure for establishing appellate
jurisdiction to review nonfinal orders in civil actions." Ward, 284 F. Supp. 3d at 228 (citation
and internal quotation marks omitted). As relevant here, the statutory enactment vests a
district court with discretion to certify an order in a civil action for immediate appeal if (1) it
"involves a controlling question of law" (2) "as to which there is substantial ground for
difference of opinion" and (3) "an immediate appeal from the order may materially advance
the ultimate termination of the litigation." 28 U.S.C. § 1292(b).
"[T]he proponents of an interlocutory appeal have the burden of showing that all three
of the substantive criteria are met." Ward, 284 F. Supp. 3d at 228 (quoting In re Facebook,
Inc., IPO Sec. & Derivative Litig., 986 F. Supp. 2d 524, 529 (S.D.N.Y. 2014)). "However,
even where the three legislative criteria of [§ 1292(b)] appear to be met, district courts retain
unfettered discretion to deny certification if other factors counsel against it." Id. "As courts
have repeatedly observed, § 1292(b) was not intended to open the floodgates to a vast
number of appeals from interlocutory orders in ordinary litigation or to be a vehicle to provide
early review of difficult rulings in hard cases." Id.

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Defendants argue they are entitled to skip the ordinary adjudicative process that takes
place here in the trial court because an immediate reversal of the June Order's holding as to
this question (i.e., whether the FDCPA authorizes the Government to collect a back pay
award ultimately owed to a third party) would dispose of this case once and for all.
The June Order considered this question at length. For present purposes, though, it is
enough to say that the FDCPA sweeps broadly. It authorizes the Government to collect a
wide range of "debts" owed, and it includes among other things "an amount that is owing to
the United States on account of a . . . fine, assessment, penalty, restitution, damages,
interest, . . . or other source of indebtedness to the United States." 28 U.S.C. § 3002(3)(B).
The wrinkle here is that the FDCPA explicitly carves out from this definition of "debt"
any amount "owing under the terms of a contract originally entered into by only persons other
than the United States." 28 U.S.C. § 3002(3)(B). As defendants suggested then and now,
the back pay awarded to Helga originated from some kind of employment contract between
her and Datalink. Because the Government was not a party to that agreement back then, the
reasoning goes, it cannot show up and wield its power under the FDCPA to collect wages
due under the agreement now.
The Government's response is threefold: first, it argues that defendants' proposed
issue for interlocutory appeal is actually based on a disputed question of fact, not law (i.e.,
the contract's existence)1; second, it points out that the June Order's answer to the question
of the FDCPA's reach is the result of the appropriate application of controlling Second Circuit
precedent; and third, waiting for a final judgment in the trial court before taking an appeal will

1

For reasons mentioned below, the Government argues that this question of fact is irrelevant for
purposes of this case—the debt owed by defendants results from their violation of a statute, not a contract.
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pose no hardship in this case because it can be decided on the basis of a cold administrative
record with little, if any, delay for discovery.
As it did the last time around, the Government still has the better of this
argument. The precedent from which defendants keep trying to squirm away is Nat'l Labor
Relations Bd. v. E.D.P. Med. Comput. Sys., Inc., 6 F.3d 951, 954 (2d Cir. 1993) ("E.D.P."), a
case in which a split panel of the Second Circuit permitted the National Labor Relations
Board ("NLRB"), a federal agency, to use the FDCPA to satisfy an administrative award
against an employer for back wages owed to its employees.
Defendants grudgingly acknowledge that E.D.P.'s holding is bad news for their
defense. But it is the dissent in E.D.P. that they continue to find more compelling. There,
Judge Walker made the case that the Government could not use the FDCPA to collect
administrative back pay awards because they do not qualify as debts "owing" to the United
States within the meaning of the statute. E.D.P., 6 F.3d at 958 (W alker, J., dissenting). In
Judge Walker's view, the agency's function in the wage dispute "was merely to serve as 'the
vehicle by which the claimants [could] obtain their individual awards' for back wages." Bedi,
318 F. Supp. 3d at 567 (citation and f ootnote omitted).
The June Order noted there was a non-frivolous argument to be made that similar
reasoning could apply to defendants' wage dispute with Helga, since the H-1B program's
regulatory provisions appear to direct the DOL to receive back wages and then distribute
them to aggrieved employees. Bedi, 318 F. Supp. 3d at 567 n.5.
For the record, that is not precisely the argument defendants chose to advance. As
mentioned above, they opted instead for a more straightforward variation on the theme by
suggesting that an as-yet-unseen employment contract exists between Helga and Datalink.
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If only it were so straightforward. Datalink hired Helga through the H-1B visa program,
which permits U.S. employers to hire foreign workers in specialty occupations subject to
certain regulations. Bedi, 318 F.Supp. 3d at 563. Am ong other things, the H-1B program
requires an employer seeking a visa to submit to the DOL a sworn document in which it
promises to pay the foreign worker a specified wage for a specified period of
employment. Id. at 563-64.
The Government explains that this sworn document, known as a Labor Condition
Application ("LCA"), is not an employment contract and, in any event, is not the basis of its
present enforcement action. According to the Government, the back wage award at issue
resulted from the DOL's administrative conclusion that defendants were in violation of certain
H-1B wage rates that are fixed by statute, not some contract or other agreement. The
Government, having now done some additional legwork, points to multiple instances in which
it has pursued administrative back pay awards owed to H-1B visa workers through federal
courts in this Circuit and in others. Gov. Mem., Dkt. No. 28 at 13 n.4. 2
In other words, by all available accounts (except defendants' own, of course), the
Government's position on this rather complex topic is correct. E.D.P., 6 F.3d at 954; Kutty v.
U.S. Dep't of Labor, 2011 WL 3664476, at *9 (E.D. Tenn. Aug. 19, 2011) ("It does not matter
whether the private contacts were inconsistent with the wages listed in the LCAs. The H-1B
[employees] wages were set by statute, not by contract . . . . [r]egardless of the private
contracts, [the employer] had to pay the 'required wage' as set forth in the [Immigration and
Nationality Act].").

2

Pagination corresponds with CM/ECF.
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Even if defendants' version of the contract-based argument were also a non-frivolous
litigating position, it was then and must remain now an unsuccessful one, at least while the
E.D.P. majority opinion remains standing in the way. Presumably, Judge Walker made his
more restrictive view about the proper use of the FDCPA known to his fellow panelists, either
in conference or perhaps when the opinion (and the dissent) were circulated before
publication. For whatever reason(s), his views did not carry the day there. And as a result
they cannot carry the day here.
In sum, then, the controlling law of this Circuit is not fundamentally uncertain but
simply unfavorable to defendants. Cf. Transp. Workers Union of Am., Local 100, AFL–CIO,
358 F. Supp. 2d at 354 ("Certification is to be reserved for the exceptional case in which the
law is fundamentally uncertain."). Accordingly, their motion for § 1292(b) certification must
be denied.3
III. CONCLUSION
To the extent defendants believe their powers of persuasion will induce the Second
Circuit to depart from, or possibly limit the reach of, the majority holding in E.D.P., they
remain free to attempt that feat, and any others, at the appropriate time—"in a unified appeal
at the conclusion of this litigation in the trial court." Ward, 284 F. Supp. 3d at 239.
Therefore, it is
ORDERED that
1. Defendants' motion to certify an interlocutory appeal is DENIED;
2. Defendants' motion to stay proceedings pending appeal is DENIED; and

3

Because this antecedent request will be denied, the motion for a stay will be denied as moot. See,
e.g., Sussman v. I.C. Sys., Inc., 2013 WL 5863664, at *4 (S.D.N.Y. Oct. 30, 2013).
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3. Defendants shall file and serve an answer to the complaint on or before February
11, 2019.
The Clerk of the Court is directed to terminate the associated motions and to issue a
scheduling notification setting defendants' time to answer the complaint accordingly.
IT IS SO ORDERED.

Dated: January 28, 2019
Utica, New York.

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