While the reasons for keeping wild animals as pets vary, Gary West, an assistant professor of zoological medicine at Kansas State opined that “[p]eople like exotic animals for the ‘wow’ factor.”[3] Mike Tyson has, perhaps, expressed this sentiment best: “I am loaded. This guy on the phone says, ‘You can be driving your Ferrari with your cub in the front seat.’ I thought, ‘Yeah, when I come out, I’m gonna be a cool dude. I’m gonna have a tiger in my car. I’m gonna be a baller.’”[4]
One National Geographic article has expressed the belief that “more exotic animals live in American homes than are cared for in American zoos.”[5] So do exotic pets make good pets? The ASPCA puts it bluntly: “Exotic animals are not good pets.”[6] The South Carolina Department of Parks, Recreation & Tourism says: “Alligators make terrible pets.”[7]
Tragic reports involve such pets as a black bear in Allentown, Pennsylvania, a python in Oxford, Florida, a mountain lion in Odessa, Texas, and a deer in Waskom, Texas, just to list a few.[8] In Zanesville, Ohio, a couple kept a menagerie of exotic animals, including wolves, monkeys, Bengal tigers, leopards, grizzly bears, and lions. However, one of the owners apparently released the animals from the cages. Some animals were shot with tranquilizer darts and sent to the zoo, but sheriff’s deputies were forced to hunt and kill at least 49 animals. [9]
Given the hazards, almost all states have exotic pet laws regulating the private possession of wild animals.[10] For example, former Baltimore Ravens defensive lineman Terrence Cody was recently charged in the Circuit Court for Baltimore County with unlawful possession of an alligator.[11] In November 2012, Anne Arundel County police discovered a 3-foot long alligator inside a home while executing a search warrant.[12]
In Maryland, the General Assembly found possession of such animals to potentially introduce diseases and dangers to human safety.[13] With certain exceptions, the State bans the possession of specific animals, as well as certain large families of animals, including: foxes, skunks, raccoons, bears, caimans, alligators, crocodiles, members of the cat family other than the domestic cat (and hybrids over 30 pounds), members of the dog family other than the domestic dog (including hybrids), nonhuman primates, and certain family groups of poisonous snakes.[14] Local pet ownership laws and regulations may be even more broad or restrictive, often requiring certain permits.[15]
If you want to be a baller and own an exotic pet, be sure to consult federal, state, and local law first – not to mention “common sense and ethics.”[16] Failure to do so can not only lead to civil or criminal charges, the results can be disastrous.
[1] Lisa A. Cutts, Walking on the Wild Side: Classification and Liability for Owners of Wild-Domestic Animal Hybrids, 18 San Joaquin Agric. L. Rev. 71, 97 (2009).
[11] Additional charges included five animal cruelty counts for failing to provide the alligator with proper food, drink, veterinary care, space, and shelter. A copy of the indictment is available here.
[15] Maryland also permits counties and municipalities to enact more restrictive law s. Md. Code Ann., Crim. Law § 10-621(e). For example, Baltimore County also requires a permit for possession of “any animal of a species that in the natural life of the species is wild, dangerous, or ferocious.” Baltimore City requires a permit to keep “any animal normally found in the wild.” Prince George’s County requires a permit for “any animal which is not included in the definition of ‘domesticated animal’” – including hybrids. “Domesticated animal means an animal of a species that has been bred, raised, and is accustomed to live in or about the habitation of man, and is dependent on man for food or shelter.”
Joseph, Greenwald & Laake, P.A. is pleased to announce that it has helped to secure a $400,000 settlement with the U.S. government and a $72,000 finder’s fee for its client, a whistleblower relator, from a False Claims Act case involving prevailing wages for construction workers in Reston, Va.
The firm’s client, an organizer, will receive the finder’s fee as a share of the settlement agreement proceeds for filing a qui tam action in federal court.
The relator alleged that Frederick, Md.-based Cindell Construction Company, a subcontractor hired by Florida-based Lend Lease (US) Construction, Inc., failed to properly supervise lower-level contractors with respect to the payment of prevailing wages to workers who were underpaid while installing drywall at Patriots Park, an office complex housing U.S. intelligence agencies, between September 2011 and June 2013. The project was subject to Davis-Bacon Act and Contract Work Hours and Safety Standards Act requirements because the purpose of the construction work was to make the property compliant with General Services Administration and Department of Defense security regulations and requirements.
The workers who allegedly were denied prevailing wages also were later paid back wages as a result of the complaint and subsequent investigation, according to Brian J. Markovitz, a partner with Joseph, Greenwald & Lake and the attorney for the relator.
“Our client and importantly the workers on this project are very pleased with this outcome,” Markovitz said. “The workers received monies owed to them, the government was paid relative to its civil claims against the construction companies, and our client was appropriately rewarded for coming forward with the qui tam action.”
The agreement also requires Cindell to pay the relator’s expenses and attorney’s fees and costs.
Markovitz stressed that the successful outcome in this case demonstrates the value of the False Claims Act as a tool for unions, individual union members and others to initiate a civil lawsuit to report to the Justice Department any contractor who fraudulently obtained government money.
Markovitz pointed out that other approaches to addressing prevailing wage theft – typically public protest campaigns or complaints with the Department of Labor – often are unsuccessful.
“When a contractor lies to obtain public funds by stating to government officials that it paid workers proper prevailing wages, they violate the False Claims Act,” Markovitz said. “Using the False Claims Act is a good means to try to get workers properly paid, but also a vehicle for unions and others to obtain additional funds by collecting the finder’s fee.”
Markovitz explained that the False Claims Act allows for triple damages plus penalties of $5,500 to $11,000 for each false submission to the government, plus a finder’s fee usually of at least 15 percent and up to 25 percent of the money recovered.
He added that reputable construction companies that have honest business practices also suffer at the hands of the unscrupulous who low-bid them on contracts, and honest companies should come forward and report prevailing wage violations by dishonest competitors through the False Claims Act process.
“The companies that typically violate wage laws usually bid low and win projects from the companies that play by the rules and suffer from others’ dishonest practices,” Markovitz said.
For more than forty years, Joseph Greenwald & Laake has been dedicated to providing high quality legal services to ensure their clients’ long-term success. In recognition of their excellence, the firm has been named to Washington DC’s 2015 U.S. News – Best Lawyers® “Best Law Firms.” The firm’s Family Law and Personal Injury groups received a Tier 1 regional ranking, the Medical Malpractice area was ranked in Tier 2, and the Trusts & Estates practice was ranked in Tier 3.
Each year, U.S. News – Best Lawyers® conducts a thorough evaluation of law firms based on client and lawyer evaluations, peer review from prominent attorneys in their respective field and review of additional information firms provide in the submission process. Ranking eligibility requires a firm to have at least one lawyer included in Best Lawyers for that particular practice area and metropolitan district. JGL had five attorneys named Best Lawyers, qualifying them for the Best Law Firms ranking.
“We are proud to have the opportunity to reward these outstanding attorneys with promotions,” said Burt M. Kahn, managing director. “We are particularly pleased to elect and welcome Joe and Anne as principals. Their dedication to their clients and firm is greatly appreciated, and we look forward to a great future with them.”
Creed is a member of the firm’s Civil Litigation and Labor & Employment groups. He advises and represents individuals and businesses in various civil litigation matters. He is an experienced litigator and appellate attorney, having tried cases and argued appeals in state and federal courts. His practice includes business litigation, professional licensing matters and all aspects of employment law.
Grover, a member of the firm’s Family Law practice, represents clients in a wide range of family law matters, including separation and divorce, child custody disputes, contempt and enforcement proceedings, drafting and negotiating prenuptial agreements, and obtaining protective orders. She has represented clients throughout Maryland, as well as in interstate jurisdictional matters and appeals. Grover is skilled as both a negotiator and a litigator, and brings a sophisticated understanding of financial and tax issues to her analysis of her clients’ needs.
Also a member of the firm’s Family Law practice, Rumer advises clients in family law matters, including child custody and divorce litigation, separation agreements, child support and alimony issues, property distribution issues, domestic violence, and other areas.
McFadden, also a member of the firm’s Family Law practice, represents clients in a wide variety of domestic relations matters, including custody disputes and divorces. She enjoys working closely with her clients to assist them through each phase of their cases, from discovery and depositions through preparation for mediation and trial.
This week in Cunningham v. Feinberg, No. 27 SEPT.TERM 2014, 2015 WL 328991 (Md. Jan. 27, 2015), the Maryland’s Court of Appeals ruled that the Maryland Wage Payment and Collection Law (MWPCL) is a strong public policy for protecting wage earners’ rights. The Court of Appeals relied heavily on the 2011 House Bill 298 that was passed into law, clarifying the MWPCL with an anti-waiver provision that provides that any “agreement to work for less than the wage required under this subtitle is void.” Its inclusion of triple damages and attorneys’ fees demonstrates the serious purpose of the law.
JGL’s employment lawyer, Brian Markovitz, played an influential role in advocating for House Bill 298 and obtaining its passage into law in 2011. Commenting on HB 298 at the time, Markovitz explained, “The intent here is to expressly preclude unscrupulous employers from using employment contracts to circumvent the remedies available in the MWPCL subtitle by applying the laws of other states that provide less protection for their workers and/or by having workers waive these rights.”
HB 298 Made[RETC1] Important Clarification of Maryland Law
HB 298 provided a simple clarification, yet an important one: It clarified that the Wage Payment and Collection Law reflects a strong public policy of the state that was recognized by the high court. The complement to Maryland’s Wage and Hour Law, the Wage Payment and Collection Law, ensures that employees in the state of Maryland are fully paid all wages required (either as minimum wage, overtime wage or by contract) in a regular and timely fashion. Together, these two statutes provide bedrock workplace protections for all employees, ensuring that they are fully paid the required basic minimum wage and overtime wages when due. Further, where an employer wrongfully withholds a wage not as a result of a bona fide dispute, an employee may recover damages of up to three times the wage that was required or due to be paid – an important incentive to ensuring compliance. However, while the Wage and Hour Law contains language prohibiting agreements to violate its provisions, its counterpart, the Wage Payment and Collection Law, did not, prior to 2011. HB 298 simply corrected this oversight and provides the identical language to the complementary wage statute.
For more information on Maryland’s Labor & Employment laws, contact Brian Markovitz at bmarkovitz@jgllaw.com.
In a recent Baltimore Sun article, Timothy Maloney discusses why his client who won an $11.5M verdict against Prince George’s County will only receive $400,000. A 1980s Maryland law caps the amount of money a person can receive when suing a local government. The case is currently before Maryland’s highest court to determine whether the lower court properly applied the state law.
The Washington Post also covered the story and examines how the Maryland civil rights case could have a major affect on how victims are compensated in cases involving police brutality and other civil violations.
The family of a man wrongly shot and killed by a Prince George’s County police officer in 2008 is challenging a state law that limits the amount of damages for which the county can be held liable. The issue in Espina v. Jackson is whether a Maryland law passed in the 1980s can cap how much local governments owe plaintiffs who have successfully sued municipalities.
In finding for the family, the jury in the 2011 case found the county liable for wrongful death and for violating Espina’s due process rights under Article 24 of the Maryland Constitution’s Declaration of Rights.
Earlier this month, Joseph Greenwald & Laake Principal and attorney Timothy F. Maloney argued that a trial judge erred in cutting the jury’s $11.5 million damages award for the widow and son of Manuel de Jesus Espina to only about $400,000. The trial judge said the cap was mandated under the state’s Local Government Tort Claims Act. “The $200,000 cap has not been addressed in 27 years,” said Maloney. “This is a police killing that could have been avoided. Eleven million is not a runaway verdict in this case.”
An intermediate court later upheld the decision. Now, the state’s high court has taken up the matter and is expected to rule by August 2015. No payouts of the award have been made while the case is under appeal.
Mr. Markovitz will be discussing the False Claims Act and its application to prevailing wage laws such as the Davis-Bacon Act and the Service Contract Act that govern the wages and fringe benefits a contractor or subcontractor are required to pay workers on certain public works projects. The federal False Claims Act allows any “person,” including unions or individuals, to initiate a civil lawsuit to report to the Justice Department any contractor who fraudulently obtained government money. Working together, the Prevailing Wage Act and the False Claims Act deliver a one-two punch to bad-guy contractors caught skimming from workers’ wages.
For more information on the presentation or if you have questions concerning prevailing wages or the False Claims Act, Brian can be reached at bmarkovitz@jgllaw.com or at 240-553-1207.
To secure to each labourer the whole product of his labour, or as nearly as possible, is a most worthy object of any good government. Abraham Lincoln, 1847
President Lincoln rightly believed that workers should get paid what they earn. But as many of us know, stealing money from workers on government contracts by underpaying them below the prevailing wage[1] is often the industry standard.
When unions and their members learn of prevailing wage theft, in response, one of two well-intentioned but futile actions usually are taken. They start a very public protest campaign – either in the newspapers or by physically protesting at the jobsite/headquarters of the offending company. Or, they file a complaint with the Department of Labor. Most times, neither action works. Trying to shame a shameless employer who didn’t pay people properly in the first place does not work. And, in this government-shutdown, low-morale, underfunded era, the Department of Labor’s resources are so strapped that it often can’t force the bad actors in to compliance.
Unions, their members, and others need to shift their focus away from repeating failed methods to another one of Lincoln’s great ideas: the False Claims Act, aka Lincoln’s Law. During the Civil War, Lincoln grew tired of soldiers being harmed by contractors who stole money from the public or provided substandard goods.
He came up with the idea that he would incentivize people to report crooks by providing those who reported fraud with a finder’s fee from any fraudulently taken monies the government recovered. And voilà, the False Claims Act was born.
The modern-version of the False Claims Act allows any “person,” including unions or individuals, to initiate a civil lawsuit to report to the Justice Department any contractor who fraudulently obtained government money. So, when a contractor lies to obtain public funds by stating to government officials that it paid workers proper prevailing wages, the False Claims Act kicks in. The False Claims Act also packs a powerful punch – triple damages plus penalties of $5,500.00 to $11,000.00 for each false submission to the government. In this respect, an unscrupulous contractor can pay much more than what it bilked from its workers, a good deterrent from underpaying workers on the next public job and lying to the government again.
Just like Lincoln’s version, the modern statute provides the person who reports the fraud with a finder’s fee usually of at least 15% but up to 25% of the money recovered. So, if the government recovers $1M, the whistleblower gets at least $150k but up to $250k of the money.
Notably, the percentage of the unionized workforce currently is at or near all-time lows. Using the False Claims Act can be one way to help turn around these ever declining numbers by providing unions with a vehicle to obtain additional funding by collecting the finder’s fee. And, as many of us know, unions and their members know who the crooks are – they’ve been trying to organize them or get them to pay people properly for years.
Lincoln once said, “I don’t think much of a man who is not wiser than he was yesterday.” So, stop the insanity of doing the same ole thing on prevailing wage and try something new. File a civil complaint to report the fraud to the Justice Department, really sock it to bad guy contractors by hitting them in their pocketbooks, and get a monetary reward to boot. All unions and their members have to do is be an outside-the-box-thinker like Lincoln, and of course, get a good lawyer who thinks outside the box too!
The views expressed herein are the personal views of the author and do not necessarily represent the views of Joseph, Greenwald, & Laake P.A.
[1] Prevailing wage jobs usually are government work projects subject to the Davis-Bacon Act, Service Contract Act, or state prevailing wage law.
David Bulitt was recently featured in Maryland’s The Daily Record, Family Law magazine discussing divorce and the special-needs child. As a family law attorney, Bulitt not only represents parents in child custody cases, but also acts as a best interest attorney for children in divorce cases.
Discussing the added complexity of divorce cases involving special-needs children, Bulitt explains, “Regardless of their age, these kids have very, very difficult times adjusting to change, and very difficult times moving back and forth. If you don’t really understand or take the time to listen to your clients or do a little research, you’re going to be doing this kid a great disservice.”
In the article, Bulitt highlights the importance of parents coming to an agreement with a solid parenting plan that provides adequate structure for the special-needs child. Before a parenting plan can be determined, parents need to agree on the basic elements of the child’s everyday life. Bulitt also addresses the lawyer’s role in educating a judge about a child’s particular need in the event that the case ends up in court.
Bulitt goes on to address aspects of a successful mediation process and the balance between the divorcing parents’ wishes and the needs of the child.
The full article can be found online. If you would like to contact David Bulitt, he can be reached at dbulitt@jgllaw.com.
Last week, the Supreme Court ruled that federal law does not require that warehouse workers who package goods for Amazon be paid for the time they spend going through mandatory security screenings at the end of their shifts. These warehouse workers are required to go through a screening process—which is intended to prevent theft and can sometimes take as long as 25 minutes—before they are permitted to leave for the day. The Court ruled that the workers are not legally entitled to be paid for that time. Predictably, there has been strong reaction to the ruling, with some calling it a slap in the face to America’s blue-collar workers and others calling on Congress to change the law.
Despite the strong reaction, the Supreme Court’s decision in the Amazon warehouse workers case might have little impact in Maryland and other states with similar labor laws. Although the decision is the final word on the issue under federal law, it does not dictate state law. In Maryland, state law would likely require an employer to pay employees for time spent in mandatory security screenings and other mandatory, onsite tasks. This post will give an overview of the Supreme Court’s decision and look at how Maryland state law differs.
The Amazon warehouse workers case
The case of Integrity Staffing Solutions v. Busk was brought by a group of warehouse workers against their employer, Integrity Staffing Solutions, which provides warehouse staffing nationwide for Amazon.com. The plaintiffs were employed at a warehouse in Nevada, where they processed and packaged goods to be shipped to Amazon customers. The employees claimed that every day they were required to undergo a mandatory security screening procedure before they were permitted to leave the facility at the end of their shifts. The purpose of the screening was to ensure that the employees were not stealing any of the products they were employed to package for Amazon. The employees claimed that they were required to stand in lines, remove items from their persons (such as wallets, watches, etc.), and go through metal detectors. The process could take up to 25 minutes. The employees sued for unpaid wages, arguing that the warehouse was required to pay them for the time spent going through the mandatory security screening and that it had failed to do so.
In a rare unanimous decision, the Supreme Court ruled that the employees are not entitled to compensation for the time spent going through the required screening process. The Court’s decision was based on the Fair Labor Standards Act (FLSA). Generally, the FLSA requires that employers pay at least the federal minimum wage to employees for all hours worked, as well as overtime pay for hours worked in excess of 40 hours in a week. In another federal statute, the Portal-to-Portal Act, Congress limited the wage-payment requirement, legislating that employers are not required to compensate employees for tasks that are “preliminary to or postliminary to [the] principal activity or activities” of the job.
This means that, although employers are required to pay employees for all hours they work, they are generally not required to pay them for preliminary or “postliminary” activities, such as commuting to and from work. The Supreme Court has held that the issue of whether an activity is compensable work or noncompensable preliminary or postliminary activity turns on the question of whether the activity is an “integral and indispensable” part of the job. The question under the FLSA is whether the task is an “intrinsic element” of the “principal activities” of the job “and one with which the employee cannot dispense if he is to perform his principal activities.” By way of example, the Supreme Court has held that a meatpacker’s time spent sharpening knives is “integral and indispensible” to the job. By contrast, a poultry plant employee’s time spent putting on and removing protective gear was held not to be “integral and indispensible” to that job.
In the Amazon warehouse workers case, the Court ruled that the employees’ time spent going through the mandatory security screening process was not “integral and indispensible” to the job. As the Court explained, “Integrity Staffing did not employ its workers to undergo security screenings, but to retrieve products from warehouse shelves and package those products for shipment to Amazon customers.” The Court concluded that the security screenings constitute “postliminary” activities for which the FLSA does not require compensation.
How Maryland law differs
The FLSA is not the only law that governs wage payment. Like many states, Maryland has its own version of the FLSA, known as the Maryland Wage and Hour Law. Like the federal FLSA, Maryland labor law requires employers to pay employees a minimum wage for all hours worked,[1] as well as time-and-a-half for any hours worked over 40 in a week.[2] Unlike the FLSA, which defines compensable work as tasks that are deemed “integral and indispensable” to the “principal activities” of the job, Maryland law defines it more broadly.
The Maryland Department of Labor, Licensing, and Regulation defined “hours of work” under Maryland law to include time during which an employee “is required by the employer to be on the employer’s premises, on duty, or at a prescribed workplace.” Under this standard, if an employer requires an employee to remain at the employer’s premises or at a prescribed workplace for any reason—which would presumably include security screenings—the time is considered “hours of work” that must be compensated under Maryland law.[3]
Although, according to the Supreme Court, the screening process at the Amazon factory is not an “integral and indispensible” part of the job, it is undisputed that the employees were actually required to undergo the screening before they could leave the warehouse for the day. It would appear that, for purposes of the security screening, the employer required the employees to be “on the employer’s premises” and “at a prescribed workplace.” In that case, the screening process would be considered “hours of work” under Maryland law. Any warehouse located in Maryland with a similarly policy would likely be required to pay its workers for the time spent in the mandatory screening process.
Wage and hour law, like employment law generally, is a complex patchwork of federal and state statutes and regulations. Employer policies that are appropriate under federal law might not comport with state law, or vice versa. Prudent employers will consider not only the FLSA, but also state laws regarding wage and hour policies to ensure compliance.
[3] It might be argued that the FLSA preempts state law on this issue. The FLSA contains a “savings clause” that expressly allows for state laws that establish a higher minimum wage or shorter work week. The savings provision does not address the definition of “work” or “hours of work.” However, courts that have considered the issue have concluded that the FLSA established “a national floor with which state law must comply, and that “state laws that provide the same or greater protection than that provided by the FLSA are consistent with the federal statutory scheme and are thus not preempted.” Sarrazin v. Coastal, Inc., 89 A.3d 841, 852 (Conn. 2014).
The firm is proud to announce that 5 attorneys from Joseph Greenwald & Laake have been named to the 2015 Maryland Super Lawyers list and 3 have been included in the list of Rising Stars.
Each year, Super Lawyers evaluates peer nominations and third-party research in their selection process. Only 5 percent of total lawyers in the state are selected for inclusion in Super Lawyers. These outstanding lawyers have achieved a high degree of peer recognition and professional success.
Of the firm’s five Super Lawyers, Timothy Maloney made the Top 100 Super Lawyers list by earning high points in the Maryland nomination, research and blue ribbon review process.
The Rising Stars selection process is similar to Super Lawyers, except candidates must be 40 years old or younger or in practice for 10 years or less. No more than 2.5 percent of Maryland lawyers make the Rising Stars list.
Congratulations to JGL’s 2015 Maryland Super Lawyers:
1. Timothy Maloney
2. Andrew Greenwald
3. David Bulitt
4. Jeff Greenblatt
5. Walter Laake, Jr.
2015 Rising Stars:
1. Veronica Nannis
2. Reza Golesorkhi
3. Matt Bryant
Jay Holland recently authored this article in Thomson Reuters’ Westlaw Journal, Volume 29, Issue 10, December 9, 2014.
The U.S. Supreme Court will be considering the case of Perez v. Mortgage Bankers Association, Nos. 13-1041 and 13-1052, cert. granted (U.S. June 16, 2014), this term.
The case will ultimately decide whether mortgage loan officers should be considered exempt from overtime and minimum-wage requirements of the Fair Labor Standards Act, 29 U.S.C. § 201, as claimed by the Mortgage Bankers Association, or whether they should not be exempt as asserted by the Department of Labor.
The path to answering that question in this case is not just about statutory interpretation of the FLSA, but about whether the DOL was required to abide by the strict dictates of the Administrative Procedure Act when the department’s Wage and Hour Division revisited its “administrative interpretation” of the FLSA from 2006, when it previously concluded that loan officers were exempt, and reissued a new administrative interpretation in 2010 finding that loan officers were not exempt.
The answer to this seemingly mundane administrative-law question could reverberate throughout the mortgage banking industry. Will the court rule that the DOL had to strictly follow the APA, 5 U.S.C. § 551, and relieve the industry of costly overtime and minimum wage requirements or will the loan officers receive the same wage protections as other sales employees?
The impact of this case is not just limited to this rule or just for this industry — which is precisely why the court is interested in this case. Indeed, the government’s view is that imposing a notice-and-comment period on every agency interpretation of regulations will create an extraordinary burden on the operation of government and the administrative process government-wide.
So, if the court decides in favor of the Mortgage Bankers Association, will the administration and interpretation of agency rules grind to a screeching crawl in a bureaucratic bottleneck?
In this case, the MBA sued the labor secretary for violating the APA’s noticeand-comment rulemaking procedure regarding the DOL’s own interpretive rule that mortgage loan officers were not exempt from federal overtime laws. Specifically, the MBA challenged the DOL’s procedure in establishing the rule, since the DOL had initially issued a 2006 opinion letter in which it concluded that mortgage loan officers were exempt from federal overtime laws, only to reverse that decision through a 2010 administrator’s interpretation.
The U.S. District Court for the District of Columbia held that the DOL did not violate the APA, because the MBA failed to demonstrate that the notice-and-comment requirement had been triggered by its “substantial and justified reliance” on the new regulation. The District of Columbia U.S. Circuit Court of Appeals reversed the decision, concluding that “substantial and justified reliance” was not a separate component of the analysis and, therefore, the DOL had violated the APA.
The DOL did not follow the APA’s notice-and comment dictates in the 2006 opinion or in the 2010 opinion.
In 2006, the DOL issued an opinion letter in response to the MBA’s inquiry regarding whether or not its members were required to pay mortgage loan officers overtime under the FLSA. The MBA wanted to know whether the employees who “spent less than 50 percent of their working time on ‘customer-specific persuasive sales activity’” were exempt under the FLSA.
In the opinion letter, the DOL, relying on its 2004 regulations and without notice and comment, said that the exemption applied to the loan officers. At the time, the DOL concluded that the officers had primary duties “other than sales.”
Four years later, the Wage and Hour Division reversed its 2006 interpretation — again without notice and comment, and concluded that loan officers were not exempt. In 2010 the Wage and Hour Division issued an administrator interpretation that addressed whether the loan officers’ responsibilities constituted “office or non-manual work directly related to the management or general business operations of their employer or their employer’s customers.”
The administrator interpretation concluded that the FLSA exemption did not apply because the loan officers’ duties were to “sell[] loans directly to individual customers, one loan at a time.”
The legal issue thus became whether the DOL should have undergone a notice-and comment procedure when it changed its interpretation that loan officers no longer qualified for the exemption. Two District of Columbia Circuit cases have served as the guideposts for when notice and comment is required:
The tandem of Paralyzed Veterans of America v. DC Arena LP, 117 F.3d 579 (DC Cir. 1997) and Alaska Professional Hunters Ass’n v. Federal Aviation Administration, 177 F.3d 1030 (DC Cir. 1999), announced an ostensibly straightforward rule: “When an agency has given its regulation a definitive interpretation, and later significantly revises that interpretation, the agency has in effect amended its rule, something it may not accomplish [under the APA] without notice and comment.” Alaska Hunters, 177 F.3d at 1034.
The District Court ruled in favor of the DOL on summary judgment, concluding that the MBA’s reliance on the 2006 opinion letter was not “substantial and justifiable reliance on a well-established agency interpretation.”
The court added in this “third element” of “substantial and justifiable reliance” to the notice-and-comment test, explaining that in MetWest Inc. v. Secretary of Labor, 560 F.3d 506, 511 (DC Cir. 2009), the District of Columbia Circuit had previously “stressed that a core tenant [sic] of the Alaska Professional Hunters decision was ‘substantial and justifiable reliance on a well-established agency interpretation.’” Mortgage Bankers Ass’n v. Solis, 864 F. Supp. 2d 193, 208 (D.DC June 6, 2012).
On appeal, the District of Columbia Circuit explained that “[t]he only question properly before this three-judge panel is a narrow one: what is the role of reliance in this [Paralyzed Veterans–Alaska Hunters] analysis?” Mortgage Bankers Ass’n v. Harris, 720 F.3d 966, 967 (DC Cir. 2013) (emphasis added).
The appeals court reversed the District Court, explaining that the lower court’s added element of “substantial and justifiable reliance” was merely part of the first prong of the notice-and-comment test (i.e., that the agency had made a definitive interpretation of the rule at issue).
Given that the DOL had conceded at oral argument that the MBA had satisfied the first two elements under District of Columbia Circuit notice-and-comment precedent, the appeals court reversed the District Court’s decision and ordered that the 2010 administrator interpretation be vacated. As a result, the loan officers were considered to be exempt, at least until the DOL complied with the notice-and-comment requirements of the APA.
If this decision were to apply across the board to all agencies, it could surely cause substantial delay and obstruct the implementation of policy. So, what does the government argue to the court to rid itself of these potential odious consequences?
The government proffers that Paralyzed Veterans and Alaska Hunters manufactured a judge-made procedural requirement that is contrary to the text of the APA. The APA “expressly exempts interpretive rules from the act’s notice-and-comment-rulemaking requirement.” See Federal Petitioner’s Brief at 11, Perez v. Mortgage Bankers Ass’n, Nos. 13-1041 and 13-1052 (U.S. Aug. 20, 2014), 2014 WL 4101228. Section 4 of the APA, 5 U.S.C. § 553(b)(A), exempts “interpretive rules” from those requirements.
From the viewpoint of certain textualists on the court, this angle could certainly have appeal. However, the view of certain justices who may be inclined to discredit “lawmaking by bureaucrats” might overcome those textual tendencies and result in a favorable outcome for the MBA.
The MBA, in contrast, argues that the Paralyzed Veterans–Alaska Hunters dichotomy “promotes good government” and that notice-and-comment rulemaking “not only protect[s] the legitimate reliance interests of those regulated by administrative agencies, but also [] vindicate[es] the interest of every citizen in promotion of accountable, transparent government.” See Respondent’s Brief at 28, Perez v. Mortgage Bankers Ass’n, Nos. 13-1041 and 13-1052 (U.S. Oct. 9, 2014), 2014 WL 5202051 .
Further, the MBA raises the concern that if the court were to chip away at the Paralyzed Veterans doctrine, would-be participants in the rulemaking process will have their voices silenced, “with no corresponding gain in government transparency or accountability.” Id. at 33.
Moreover, the MBA argues that it could potentially promote bad behavior by agencies. For example, an agency could deliberately make a vague rule, only to then “interpret” that rule without any contribution from potential participants in the rulemaking process. Finally, the MBA argues that the preservation of notice-and comment rulemaking in this context respects the separation of powers in that agencies already have the power to fill in the gaps of ambiguous statutes and Congress has already granted agencies limited jurisdiction to adjudicate certain claims.
In its reply brief, the government took issue with the MBA’s policy justifications for discarding the Paralyzed Veterans rule, contending that although “greater public involvement” would obviously be a positive component of the rulemaking process, such procedures in “all rulemaking contexts come at a significant cost to agency time and resources and the prompt correction of erroneous interpretations.” See Federal Petitioner’s Reply Brief at 23.
The government made clear, however, that it did not advocate for a widespread limitation on notice-and-comment rulemaking, but rather only for greater agency discretion “to decide on a case-by-case basis in which particular contexts they should dispense with or utilize public procedures.” Id. at 24. Supreme Court precedent on the issue is sparse. The DOL relied partly on the Supreme Court’s decision in Thomas Jefferson University v. Shalala, 512 U.S. 504, 512 (1994), which noted that an interpretation of a regulation may be altered sans the type of notice-and-comment rulemaking used in amending a regulation.
The DOL argued that if the MBA prevails, such a decision would be contrary to Thomas Jefferson University and irreconcilable with Paralyzed Veterans because both the initial 2006 interpretation and the subsequent 2010 opinion were not amendments to the regulation, but rather “interpretations.”
The MBA claimed that Thomas Jefferson University was inapplicable because the conclusion proffered by the DOL was dicta. Nevertheless, in Thomas Jefferson University, the Supreme Court found that where an agency interpretation is neither plainly erroneous nor inconsistent with the regulation, as opposed to a subsequent interpretation, such a construction is valid.
The MBA pointed to another Supreme Court case, Christensen v. Harris County, 529 U.S. 576, 588 (2000), arguing that only “[where] the language of the regulation is ambiguous” is notice-and-comment rulemaking not required for an agency interpretation in an opinion letter.
The MBA further contended that the DOL’s language in the 2006 interpretation was unambiguous, warranting the notice-and comment procedures. The DOL distinguished Christensen, noting that the 2006 opinion was not a regulation, but rather “an agency interpretation of a regulation.” See Federal Petitioner’s Reply Brief at 20.
The Supreme Court has yet to address whether, under Christensen, a subsequent opinion contrary to an unambiguous prior interpretation of a regulation requires procedures for notice-and-comment rulemaking.
Because this specific APA issue is one of first impression, the Supreme Court’s decision in Perez may ultimately turn on whether the opinion of the District of Columbia Circuit is at odds with Vermont Yankee Nuclear Power Corp. v. Natural Resources Defense Council, 435 U.S. 519 (1978).
In Vermont Yankee, the Supreme Court explained that the APA’s notice-and comment requirements “established the maximum procedural requirements which Congress was willing to have the courts impose upon agencies in conducting rulemaking procedures.” Id. at 524.
The Supreme Court further stated that“[a]gencies are free to grant additional procedural rights in the exercise of their discretion, but reviewing courts are generally not free to impose [additional procedural requirements] if the agencies have not chosen to grant them.” Id. (emphasis added). The Supreme Court saw the benefit of permitting administrative agencies flexibility in responding to interested parties.
The MBA claims that the Paralyzed Veterans doctrine is not “imposing new procedural requirements not found in the APA,” but rather “correctly ensures that agencies comply with the APA, thereby keeping faith with Vermont Yankee.” See Respondent’s Brief at 23.
The MBA argues that Paralyzed Veterans is consistent with Vermont Yankee, because it applies only in a narrow set of circumstances. The DOL, however, contends that such extensions of the APA are contrary to the Vermont Yankee finding that a reviewing court may not make such policy-based judgments (i.e., that courts cannot force agencies into procedures outside of the APA’s “maximum [] requirements”). Vermont Yankee, 435 U.S. at 524.
If the latter view prevails, then the government may succeed in its challenge.
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