CSG Workforce Partners et al v. Watson
Filing
19
MEMORANDUM DECISION finding as moot 6 Motion to Consolidate Cases; granting 12 Motion to Dismiss for Lack of Jurisdiction. The hearing currently set in this matter for January 30, 2012 at 3:30 pm is stricken. Signed by Judge Ted Stewart on 01/27/2012. (tls)
IN THE UNITED STATES COURT FOR THE DISTRICT OF UTAH
CENTRAL DIVISION
CSG WORKFORCE PARTNERS LLC, CSG
EXTERIORS LLC, CSG DRYWALL LLC,
CSG FRAMING LLC, CSG INTERIORS
LLC, CSG PAINTING LLC, and CSG
LANDSCAPING LLC,
Plaintiffs,
MEMORANDUM DECISION AND
ORDER GRANTING DEFENDANT’S
MOTION TO DISMISS AND
DENYING PLAINTIFFS’ MOTION
TO CONSOLIDATE
vs.
CYNTHIA C. WATSON, REGIONAL
ADMINISTRATOR OF THE WAGE AND
HOUR DIVISION, UNITED STATES
DEPARTMENT OF LABOR,
Case No. 2:11-CV-834 TS
Defendant.
This matter is before the Court on Defendant’s Motion to Dismiss1 and Plaintiffs’ Motion
to Consolidate.2 For the reasons provided more fully below, the Court will grant Defendant’s
Motion to Dismiss and deny Plaintiffs’ Motion to Consolidate as moot.
1
Docket No. 12.
2
Docket No. 2.
1
I. BACKGROUND
The following statement of the case is taken from Plaintiffs’ Complaint. Plaintiffs
initiated the above-entitled action on September 14, 2011. According to Plaintiffs, this action
arises out of a compliance review initiated by Defendant agency on June 4, 2010. Defendant is
with the agency of the United States charged with, among other things, administration and
enforcement of the Fair Labor Standards Act (“FLSA”).3
Plaintiffs allege that each of the named Plaintiffs is an LLC formed pursuant to the Utah
Revised Limited Liability Company Act. According to Plaintiffs, under Utah Code § 48-2c-103,
members of each of the Plaintiff LLC’s are considered partners within the LLC and, thus, are not
“employees” for purposes of the FLSA. For this reason, Plaintiffs assert that they cannot be
subject to the provisions of the FLSA.
As mentioned previously, Defendant initiated a compliance review to determine
Plaintiffs’ compliance with the FLSA on June 4, 2010. At the outset, Plaintiffs objected to the
appropriateness of the review on the grounds that the FLSA was not applicable. Defendant,
however, continued its review and Plaintiffs allege that they were compliant with all of
Defendant’s requests that related to a determination of whether Plaintiffs’ members are partners
or employees under the FLSA.
On August 31, 2011, Defendant served Plaintiffs with a subpoena duces tecum seeking
information that Plaintiffs allege is not relevant to, or necessary for, a determination of whether
their members are partners or employees for purposes of the FLSA. On September 7, 2011,
Plaintiffs were informed that Defendant had determined that all of Plaintiffs’ members were in
3
See 29 U.S.C. § 201, et. seq.
2
fact employees for purposes of application of the FLSA and that Defendant was seeking
information about Plaintiffs’ clients, customers, and contractors to explore the possible joint
employer status of those customers.
On September 14, 2011, Plaintiffs filed the instant action.4 Plaintiffs assert that
Defendant has misapplied the law in determining that Plaintiffs’ members are employees instead
of partners. Accordingly, Plaintiffs assert that the subpoena served upon Plaintiffs by Defendant
is unlawful and beyond the scope of Defendant’s authority.5 Therefore, Plaintiffs request that
this Court quash the subpoena and establish that their members are bona fide partners and not
subject to the FLSA.
II. STANDARD OF REVIEW
Defendant challenges the sufficiency of Plaintiffs’ Complaint under Federal Rule of Civil
Procedure 12(b)(1). The Defendant’s Rule 12(b)(1) motion constitutes a facial attack on the
allegations of subject matter jurisdiction contained in Plaintiffs’ Complaint. Accordingly, the
Court will presume all of the allegations contained in Plaintiffs’ Complaint are true.6
III. DISCUSSION
Defendant brings its Motion on the grounds that this Court lacks subject matter
jurisdiction because Plaintiffs have failed to allege a claim for which the United States has
4
Shortly thereafter, on September 27, 2011, Defendant filed a separate enforcement action
with this Court, seeking to enforce its subpoena. That action has proceeded separately.
Plaintiffs’ Motion to Consolidate seeks to join Defendant’s enforcement action to this case.
5
Plaintiffs also allege that the subpoena is unlawful because it seeks information not
related to or necessary for a determination of whether Plaintiffs’ members are partners or
employees.
6
See Ruiz v. McDonnel, 299 F.3d 1173, 1180 (10th Cir. 2002).
3
waived sovereign immunity. Plaintiffs concede that the FLSA and the Declaratory Judgment Act
do not provide this Court with jurisdiction in this matter. Further, Plaintiffs acknowledge that
they are not bringing their claims pursuant to the Administrative Procedure Act (“APA”).7
Nonetheless, Plaintiffs assert that they have alleged a basis for jurisdiction pursuant to an
exception to the doctrine of sovereign immunity.
“Sovereign immunity generally shields the United States, its agencies, and officers acting
in their official capacity from suit.”8 “Absent an express waiver of sovereign immunity, federal
courts lack jurisdiction to entertain suits against the United States and its officers acting in their
official capacities—at least when the government raises the issue.”9
Two narrow exceptions to the general bar against suits seeking specific relief from
the United States exist. A court may regard a government officer’s conduct as so
“illegal” as to permit a suit for specific relief against the officer as an individual if
(1) the conduct is not within the officer’s statutory powers or, (2) those powers, or
their exercise in the particular case, are unconstitutional.10
Here, Plaintiffs seek shelter under the first exception. Plaintiffs assert that Defendant’s
complained of conduct is not within its statutory powers because “the fact that all of Plaintiffs’
members are bona fide partners must be taken as a given for purposes of Defendant’s motion.”11
7
In the event Plaintiffs alleged a claim under the APA, such must be dismissed as
anticipatory. See Mobil Exploration & Producing, U.S., Inc. v. Dep’t of Interior, 180 F.3d 1192,
1200 (10th Cir. 1999).
8
Wyoming v. United States, 279 F.3d 1214, 1225 (10th Cir. 2002) (citing Fed. Deposit
Ins. Corp. v. Meyer, 510 U.S. 471, 475 (1994)).
9
Bork v. Carroll, --- Fed. Appx. ---, 2011 WL 5925579, at *1 (10th Cir. Nov. 29, 2011).
10
Wyoming, 279 F.3d at 1225 (citing Larson v. Domestic & Foreign Commerce Corp.,
337 U.S. 682, 702 (1949)).
11
Docket No. 16, at 4.
4
The first exception applies “in a suit for specific relief against the United States where a
government official acted ultra vires or beyond those powers Congress extended.”12 Plaintiffs’
Complaint clearly seeks specific relief in the form of a motion to quash. However, the
“application of the ultra vires exception to the sovereign immunity doctrine rest[s] upon ‘the
officer’s lack of delegated power,’ or more specifically . . . lack of statutory authority”13 and,
“[t]herefore, an official’s erroneous exercise of delegated power is insufficient to invoke the
exception.”14 “Official action is not ultra vires or invalid ‘if based on an incorrect decision as to
law or fact, if the officer making the decision was empowered to do so.’”15
Moreover, the mere allegation that an officer acted wrongfully does not establish
that the officer, in committing the alleged wrong, was not exercising the powers
delegated to him by the sovereign. If the officer is exercising such powers, the
suit is in fact against the sovereign and may not proceed unless the sovereign has
consented. Thus, the question of whether a government official acted ultra vires
is quite different from the question of whether that same official acted erroneously
or incorrectly as a matter of law.16
Plaintiffs recognize that “Defendant is an agency of the United States of America charged
with, among other things, administration and enforcement of the [FLSA].”17 Indeed, Plaintiffs
further acknowledge that the complained of compliance review was initiated by Defendant in this
12
Wyoming, 279 F.3d at 1229 (citing Larson, 337 U.S. at 689).
13
Id. (quoting Larson, 337 U.S. at 690).
14
Id. at 1229 (citing Larson, 337 U.S. at 690).
15
Id. at 1229-30 (quoting Larson, 337 U.S. at 695).
16
Id. at 1230 (quoting United Tribe of Shawnee Indians v. United States, 253 F.3d 543,
548 (10th Cir.2001)).
17
Docket No. 2, at 2.
5
capacity.18 Defendant is authorized under the FLSA to “investigate . . . matters as he may deem
necessary or appropriate to determine whether any persona has violated any provision of this
chapter, or which may aid in the enforcement of the provisions of this chapter.”19 Furthermore,
Defendant is authorized to “require by subpoena the attendance and testimony of witnesses and
the production of all such documentary evidence relating to any matter under investigation.”20
These are the actions taken by Defendant in this case.
Plaintiffs do not dispute that Defendant has been granted the statutory authority to take
actions similar to that taken against them in the course of the compliance review. Rather,
Plaintiffs assert that Defendant has acted ultra vires because Defendant acted erroneously or
incorrectly as a matter of law. This argument is unavailing. As the Tenth Circuit has made clear,
“[o]fficial action is not ultra vires or invalid ‘if based on an incorrect decision as to law or fact, if
the officer making the decision was empowered to do so.’”21
The Court finds that Defendant had the statutory authority under the FLSA to take the
complained of actions. Pursuant to this finding, the Court holds that the first ultra vires
exception to the doctrine of sovereign immunity is inapplicable to this case. For this reason, the
Court is without subject matter jurisdiction to hear this dispute and must dismiss Plaintiffs’
Complaint as a matter of law.
18
Id.
19
29 U.S.C. § 11(a).
20
15 U.S.C. § 49.
21
Wyoming, 279 F.3d at 1229-30 (quoting Larson, 337 U.S. at 695).
6
IV. CONCLUSION
For the foregoing reasons, it is hereby
ORDERED that Defendant’s Motion to Dismiss (Docket No. 12) is GRANTED. It is
further
ORDERED that Plaintiffs’ Motion to Consolidate is DENIED as MOOT. The hearing
currently set in this matter for January 30, 2012, at 3:30 pm is STRICKEN and the Clerk of
Court is instructed to close this case forthwith.
DATED: January 27, 2012.
BY THE COURT:
_________________________________
TED STEWART
United States District Judge
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