Free Response to Motion - District Court of Federal Claims - federal

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IN THE UNITED STATES COURT OF FEDERAL CLAIMS ____________________________________ ) ) JORGE A. DELPIN-APONTE, et al., ) ) Plaintiffs, ) ) No. 05-1043C v. ) (Judge Wolski) ) THE UNITED STATES, ) ) Defendant. ) ____________________________________)

DEFENDANT'S RESPONSE TO PLAINTIFFS' AMENDED MOTION FOR LEAVE TO AMEND ITS COMPLAINT Pursuant to Rule 7.2 of the Rules of the Court of Federal Claims ("RCFC"), defendant, the United States, respectfully provides this response in opposition to plaintiffs' amended motion for leave to file a second amended complaint. The Court should deny plaintiffs' motion because permitting plaintiffs to amend the complaint would be futile. It appears that plaintiffs' primary purpose in seeking leave to amend its complaint is to seek a nationwide class action of employees of the United States Postal Service ("USPS") pursuant to RCFC 23. However, as we demonstrated in response to plaintiffs' motion to certify a class for Puerto Rico employees, RCFC 23 is inapplicable to Fair Labor Standards Act ("FLSA") claims. Multi-party FLSA suits may instead be brought only as "collective actions" governed by 29 U.S.C. § 216(b), which are distinct from class actions brought pursuant to Rule 23 of the Federal Rules of Civil Procedure ("FRCP") or RCFC 23.

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Even if RCFC 23 could apply to this action, plaintiffs have not demonstrated that permitting them to amend the complaint at this time would serve any purpose because, even after six years of litigation, plaintiffs are still unable to state the basis for their claims. Although plaintiffs suggest that their amended complaint clarifies their claims, their amended complaint is no clearer regarding the basis for their claims than the first amended complaint. Under these circumstances, permitting plaintiffs to amend the complaint a second time would be futile. Therefore, this Court should deny plaintiffs motion for leave to file a second amended complaint. ARGUMENT I. Standard Applicable To Motion For Leave To Amend Pursuant to RCFC 15, once a responsive pleading has been served, "a party may amend the party's pleading only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires." RCFC 15. The motion for leave to amend may be denied based upon "undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, futility of amendment, etc." Intrepid v. Pollock, 907 F.2d 1125, 1128-29 (Fed. Cir. 1990) (emphasis added). II. Amending The Complaint Would Be Futile Because A Rule 23 Class Action Is Unavailable For FLSA Claims Plaintiff's motion pursuant to RCFC 23 to certify a class should be denied because Rule 23 does not apply to FLSA claims. As one commentator has explained with respect to the analogous FRCP 23: Collective actions under the Fair Labor Standards Act (FLSA) are a unique species of group litigation. Unlike other [suits] that are governed by Rule 23, actions on behalf of individuals claiming that -2-

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employers violated the FLSA are brought as `collective actions' under the statute. Wright & Miller, 7B Fed. Prac. & Proc. Civ.3d § 1807 (comparing FLSA collective actions to class actions pursuant to FRCP 23). The FLSA is unique in that 29 U.S.C. § 216(b) specifically limits the manner in which suits may be brought against employers: An action to recover the liability prescribed in [29 U.S.C. § 207] may be maintained against any employer (including a public agency) in any Federal or State court of competent jurisdiction by any one or more employees for and in behalf of himself or themselves and other employees similarly situated. No employee shall be a party plaintiff to any such action unless he gives his consent in writing to become such a party and such consent is filed in the court in which such action is brought. 29 U.S.C. § 216(b). The legislative history of this section demonstrates that Congress' intent was "to prevent large group actions, with their vast allegations of liability, from being brought on behalf of employees who had no real involvement in, or knowledge of, the lawsuit." United States v. Cook, 795 F.2d 987, 993 (Fed. Cir. 1986) (quoting Arrington v. Nat. Broadcasting Co., 531 F. Supp. 498, 501 (D.D.C. 1982)). In light of section 216(b), this Court's predecessor and other courts have held that Rule 23 is inapplicable to FLSA suits. See, e.g., Canfield v. United States, 14 Cl. Ct. 687, 689 (1988) (stating that an FLSA collective action "is therefore mutually exclusive of the class action remedy in FRCP 23, or RUSCC 23"); see also Cameron-Grant v. Maxim Healthcare Servs., Inc., 347 F.3d 1240, 1249 (11th Cir. 2003) (describing a collective action pursuant to section 216(b) as "a fundamentally different creature than the Rule 23 class action"); LaChapelle v. Ownes-

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Illinois, Inc., 513 F.2d 286, 288 (5th Cir. 1975) ("It is crystal clear that [section 216(b)] precludes pure Rule 23 class actions in FLSA suits."). Plaintiffs have not identified a single decision by this Court or its predecessors certifying a class action pursuant to FRCP or RCFC 23 related to FLSA claims, and we are not aware of any such decision. Moreover, the Supreme Court and this Court have evaluated the rules regarding FLSA collective actions without regard to the requirements of Rule 23. See Hoffmann-La Roche Inc. v. Sperling, 493 U.S. 165, 171 (1989) (analyzing the district court's discretion with respect to notice to potential plaintiffs in a FLSA collective action, with only passing reference to FRCP 23 for the proposition that the trial court has an interest in communications that are mailed for single actions involving multiple parties); Cook, 795 F.2d at 990 (analyzing the trial court's discretion with respect to notice without referring to FRCP or RCFC 23 except to distinguish FRCP 23) Section 216(b) is similar to RCFC 23 in that both require plaintiffs to opt-in, rather than opt-out, in contrast to FRCP 23. Compare 29 U.S.C. § 216(b) (requiring opt-in) and RCFC 23(c)(2)(B) (same) with FRCP 23(c)(2)(B) (requiring opt-out). Furthermore, courts sometimes use the terms collective action and class action interchangeably. See Thiessen v. Gen. Elec. Capital Corp., 267 F.3d 1095, 1102 & n.3 (10th Cir. 2001) (distinguishing collective actions from Rule 23 class actions, but noting that courts often use similar terminology for both). Nevertheless, there are a variety of differences between FLSA collective actions and class actions pursuant to RCFC 23, including the following: 1. Notice. In a class action pursuant to RCFC 23, once a class is certified, the Court "must direct to class members the best notice practicable under the circumstances." RCFC

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23(c)(2)(B). In contrast, in FLSA collective actions, there is no requirement that the Court provide any notice to prospective plaintiffs. See 29 U.S.C. § 216(b). The Supreme Court has concluded that notice of an FLSA action is a matter squarely within the trial court's discretion, Hoffmann-La Roche, 493 U.S. at 171-74, and this Court in some instances has concluded that providing notice is inappropriate. E.g., Briggs v. United States, 54 Fed. Cl. 205, 206-07 (2002) (rejecting plaintiffs' request for notice by the Court, and stating that Hoffman-La Roche "does not hold that a court is required to order the issuance of such notices as plaintiffs request, nor does it raise such a presumption"); Adams v. United States, 21 Cl. Ct. 795, 797 (1990) (rejecting request for notice by the Court, and noting that "there is no presumption that the court ought to facilitate expansion of the plaintiff group"). 2. Similarly Situated. Section 216(b) neither refers to Rule 23, nor adopts the four-part test of Rule 23(a). See RCFC 23(a) (four-part test requiring numerosity, common questions of law or fact, typicality, and that representative parties will fairly and adequately protect the interests of the class); FRCP 23(a) (same). Instead, section 216(b) requires that the plaintiffs in a FLSA collective action must be "similarly situated." 29 U.S.C. § 216(b). Thus, "[m]ost courts have held that Rule 23 certification requirements do not apply in collective actions . . . ." Wright & Miller, 7B Fed. Prac. & Proc. Civ.3d § 1807. 3. Limitations Period. In a class action pursuant to FRCP 23, the statute of limitations for unnamed class members begins to run from the date the class is certified or when an individual opts out. Wright & Miller, 7B Fed. Prac. & Proc. Civ.3d § 1807. In contrast, the limitations period for each additional plaintiff in an FLSA collective action begins to run from the date that the individual files his or her notice of consent. Id. This difference flows, in part,

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from the unambiguous language of 29 U.S.C. § 256, which provides that the action will be deemed to commence for an individual not named in the complaint : in the case of a collective or class action instituted under the Fair Labor Standards Act of 1938 . . . [the individual's action] shall be considered to be commenced in the case of any individual claimant ­ (a) on the date when the complaint is filed, if he is specifically named as a party plaintiff in the complaint and his written consent to become a party plaintiff is filed on such date in the court in which the action is brought; or (b) if such written consent was not so filed or if his name did not so appear-- on the subsequent date on which such written consent is filed in the court in which the action was commenced. 29 U.S.C. § 256; see also Def. Reply. Br. In Supp. Of Mot. To Dis. & Mot. For Sum. Judg. at 8-9 (citing cases holding that limitations period runs from the date each plaintiff files his or her consent).1 Accordingly, the Court should not accept plaintiffs' motion to amend the complaint again because it would be futile. III. Amending The Complaint To Add Unspecified Regulatory Claims Is Inappropriate Plaintiffs' amended motion for leave to amend the complaint should also be denied because plaintiffs, even after more than six years of litigation, are still not able to state the basis for their claims. For example, plaintiffs contended in their original motion for leave to file a second amended complaint ("April 25 motion") that "the Postal Service is not paying overtime

Although plaintiffs have previously relied upon Ewer v. United States, 63 Fed. Cl. 396 (2004), for the proposition that the limitations period can begin to run prior to the filing of a written consent, this decision notably made no reference to 29 U.S.C. § 256. Id. at 400. Instead, that Court noted that the Government did not respond to plaintiffs' arguments regarding relation back pursuant to RCFC 15, and it appears that the Court was unaware of the implications of section 256. Id. -6-

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in accordance with its own regulations." Pl. April 25, 2008 Mot. at 1. In our motion to strike plaintiffs' April 25 motion, we demonstrated that, despite the reference to an alleged violation of "its own regulations," plaintiffs' amended complaint does not cite any USPS regulations. The only regulation cited in the second amended complaint is a Department of Labor regulation, 29 C.F.R. § 778.109, related to the calculation of the regular rate for FLSA purposes. See Prop. 2nd Amend. Compl. ¶ 2, 14. However, in plaintiffs' amended motion, plaintiffs do not challenge the calculation of the regular rate. Further, plaintiffs cite Employee Labor Manual ("ELM") Article 444.10 in their amended motion, but their amended complaint does not allege a violation of this provision. During the June 9, 2008 conference call with the Court, plaintiffs were unable to identify which regulations they believe USPS is violating. Instead, plaintiffs suggest that the Government ought to guess which regulations they believe have been violated based upon the questions they asked during the deposition of Jo Ann Mitchell. However, none of the questions that plaintiffs' counsel asked suggested to the Government that plaintiffs are asserting a violation of any regulation, let alone multiple regulations. Indeed, the first indication that plaintiffs intended to assert a regulatory violation was in plaintiffs' April 25, 2008 motion. For example, our motion to dismiss and partial motion for summary judgment was based upon the premise that plaintiffs, like the plaintiffs in Frank v. McQuigg, 950 F.2d 590 (9th Cir. 1991), alleged that the Department of Labor's interpretation of the FLSA was contrary to statute. See Def. Mot. 24-27; see also Hearing Tr. at 71-72 (attached). This latest motion to further amend the complaint merely continues the ill-defined nature of this suit.

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Moreover, it is not clear whether plaintiffs are asserting arguments that have been considered and rejected virtually since the inception of the FLSA, or whether plaintiffs' challenge is based upon a novel theory not yet considered by the courts. The methodology of calculating FLSA overtime is a not a new issue to either the Department of Labor or the courts. See, e.g., Bay Ridge Operating Co. v. Aaron, 334 U.S. 446, 476-77 & 476 n.34 (1948) (examining DOL's interpretation that an employer complies with the FLSA by paying the regular rate for overtime hours plus an additional ½ times the regular rate); Zumerling v. Devine, 796 F.2d 745, 747 (Fed. Cir. 1985) (recognizing that 1 ½ times the regular rate is equivalent to the regular rate plus ½ times the regular rate, and approving the agency's FLSA overtime calculation for firefighters). As the proposed amended complaint may present issues that have long been rejected, plaintiffs' motion should be denied. It is similarly unclear from plaintiffs' amended complaint whether plaintiffs are asserting a violation related to the payment of FLSA overtime upon the Territorial Cost of Living Adjustment ("TCOLA"). During the June 9, 2008 conference call with the Court, plaintiffs suggested that they may still assert a claim related to TCOLA. However, only a small fraction of USPS employees are entitled to TCOLA, and thus such a claim could only apply to a small fraction of plaintiffs' proposed class, even if such a nationwide class or collective action could be formed. Plaintiffs can hardly claim that USPS employees in Puerto Rico would be similarly situated to USPS employees in Kansas for purposes of a claim related to TCOLA. Plaintiffs apparently hope to decide the nature of their suit and the basis for their suit as the litigation progresses, maintaining flexibility. However, as recently noted by the United States Supreme Court in Bell Atlantic Corp. v. Twomby, 127 S. Ct. 1955 (2007),

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a plaintiff's obligation to provide the `grounds' of his `entitle[ment] to relief' requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do, see Papasan v. Allain, 478 U.S. 265, 286, 106 S. Ct. 2932, 92 L.Ed. 2d 209 (1986) (on a motion to dismiss, courts `are not bound to accept as true a legal conclusion couched as a factual allegation'). Factual allegations must be enough to raise the right to relief above the speculative level, see 5 C. Wright & A. Miller, Federal Practice and Procedure § 1216, pp. 235-236 (3d ed. 2004) (`[T]he pleading must contain something more . . . than . . . statement of facts that merely creates a suspicion [of] a legally cognizable right of action'), on the assumption that all the allegations in the complaint are true (even if doubtful in fact). Bell Atlantic, 127 S. Ct. at 1964-65. Here, plaintiffs have suggested that USPS may have violated certain regulations, without identifying the regulations violated. Because the complaint does not identify what regulations have allegedly been violated and is unclear as to the nature of the claims asserted, it is impossible to determine what facts would be required to establish such a claim or claims, or otherwise respond to the complaint. See id. at 1965 n.3 (noting that the rules require "not only `fair notice' of the nature of the claim, but also `grounds' on which the claim rests"). CONCLUSION For the reasons stated above, we respectfully request that the Court deny plaintiffs' amended motion for leave to file a second amended complaint. Respectfully submitted, JEFFREY S. BUCHOLTZ Acting Assistant Attorney General JEANNE E. DAVIDSON Director

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/s/ Mark A. Melnick MARK A. MELNICK Assistant Director OF COUNSEL: DANIEL GARRY Attorney Law Department United States Postal Service 475 L'Enfant Plaza, SW Washington, D.C. 20260 /s/ Michael Dierberg MICHAEL DIERBERG Trial Attorney Commercial Litigation Branch Civil Division Department of Justice Attn: Class. Unit, 8th Floor 1100 L Street, N.W. Washington, D.C. 20530 Attorneys for defendant

June 20, 2008

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