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Ray v. County of Los Angeles

United States Court of Appeals, Ninth Circuit

August 22, 2019

Trina Ray, individually, and on behalf of others similarly situated, Plaintiff-Appellee,
v.
County of Los Angeles, Defendant-Appellant. Trina Ray; Sasha Walker, individually, and on behalf of all others similarly situated, Plaintiffs-Appellants,
v.
Los Angeles County Department of Public Social Services, Erroneously Sued As County of Los Angeles, Defendant-Appellee.

          Argued and Submitted March 7, 2019 Pasadena, California

          Appeal from the United States District Court, Nos. 2:17-cv-04239-PA-SK, 2:17-cv-04239-PA-SK for the Central District of California Percy Anderson, District Judge, Presiding

          Jennifer Mira Hashmall (argued) and Jeffrey B. White, Miller Barondess LLP, Los Angeles, California, for Defendant-Appellant/Cross-Appellee.

          Matthew C. Helland (argued) and Daniel S. Brome, Nichols Kaster LLP, San Francisco, California; Philip Bohrer, Bohrer Brady LLC, Baton Rouge, Louisiana; for Plaintiff-Appellee/Cross-Appellants.

          Before: Kim McLane Wardlaw and Mark J. Bennett, Circuit Judges, and Kathleen Cardone, [*] District Judge.

         SUMMARY[**]

         Labor Law / Eleventh Amendment Immunity

         The panel affirmed the district court's order denying a defendant county's motion to dismiss, on Eleventh Amendment immunity grounds, a putative collective action under the Fair Labor Standards Act; reversed the district court's order regarding the putative collective period; and remanded.

         Plaintiff homecare providers were employed through California's In-Home Supportive Services program, which is implemented and run by the State and its counties. In October 2013, the Department of Labor promulgated a new rule providing that homecare providers would be entitled to overtime pay under the FLSA. The final rule had an effective date of January 1, 2015. In 2014, the District Court for the District of Columbia vacated the rule. On August 21, 2015, the D.C. Circuit reversed and ordered the district court to enter summary judgment for the Department of Labor. On September 14, 2015, the Department of Labor announced that it would not bring enforcement actions against any employer for violations of the new rule for 30 days after issuance of the mandate of the D.C. Circuit. On October 27, 2015, the Department of Labor said it would not begin enforcing the new rule until November 12, 2015. The State began paying overtime wages on February 1, 2016.

         Affirming in part, the panel held that the County of Los Angeles was not entitled to Eleventh Amendment immunity. The panel assumed without deciding that a county might be entitled to immunity if acting as an arm of the state. The panel held that, under the five-part Mitchell test, the County was not an arm of the State when it administered the IHSS program because the state-treasury factor, which is the most important, and all but one of the other Mitchell factors weighed against immunity. The panel held that a later Supreme Court case, Hess v. Port Auth. Trans-Hudson Corp., 513 U.S. 30 (1994), did not undermine Mitchell such that it should be overruled.

         Reversing in part, the panel held that the effective date of the Department of Labor's rule was January 1, 2015, because the legal effect of the D.C. Circuit's vacatur was to reinstate the original effective date. The panel held that the Department of Labor's choice against enforcing the rule until November 12, 2015, did not eliminate the availability of private rights of action until that date. Accordingly, the beginning of the putative collective period was January 1, 2015.

          OPINION

          BENNETT, CIRCUIT JUDGE.

         This case concerns whether a county is an arm of the state and thus entitled to Eleventh Amendment immunity when it shares responsibility with the state for implementing a state-wide homecare program. We also consider the effective date of regulations that (1) a district court vacated before their original effective date; (2) an appellate court upheld, reversing the district court; and (3) the agency then decided not to enforce until a date after the original effective date. We agree with the district court that the County of Los Angeles is not entitled to Eleventh Amendment immunity but disagree as to the effective date of the regulations, which we hold is the original effective date of January 1, 2015. We thus affirm in part, reverse in part, and remand.

         FACTS

         California's In-Home Supportive Services program ("IHSS program" or "the program") provides in-home supportive services to eligible low-income elderly, blind, or disabled persons. Homecare providers help recipients with daily activities like housework, meal preparation, and personal care. The program serves hundreds of thousands of recipients. In the County of Los Angeles alone there are about 170, 000 homecare providers and more than 200, 000 recipients. California implements the program through regulations promulgated by the California Department of Social Services (CDSS), and the program is administered in part by California counties. Plaintiffs are current or former Los Angeles IHSS homecare providers.

         The State and its counties share responsibility for implementing and running the IHSS program. The CDSS ensures that "in-home supportive services [are] provided in a uniform manner in every county," Cal. Welf. & Inst. Code § 12301(a), and it must "adopt regulations establishing a uniform range of services available to all eligible recipients based upon individual needs," id. § 12301.1(a). The State also procures and implements a "Case Management Information and Payroll System." Id. § 12317(b).

         But counties have some oversight of the IHSS program as well. They, like the State, may terminate homecare providers. See id. § 12300.4(b)(5). And counties evaluate recipients and ensure quality compliance. See id. § 12301.1. Counties also "ensure that services are provided to all eligible recipients." Id. § 12302. Plaintiffs claim that although they receive paychecks from the State, the County is responsible for a "share" of their wages. For example, if a county imposes "any increase in provider wages or benefits [that] is locally negotiated," then "the county shall use county-only funds" to fund that increase. Id. § 12306.1(a). Each county also determines whether its providers may exceed the maximum number of hours set by the CDSS. See id. § 12300.4(d)(3).

         As employers of the homecare providers, the State and County must comply with the Fair Labor Standards Act's (FLSA) overtime wage requirements. See 29 U.S.C. § 207(a)(1). But that wasn't always the case.

         In 1974, Congress created a "companionship exemption" to the FLSA for employees "employed in domestic service employment to provide companionship services for individuals who (because of age or infirmity) are unable to care for themselves." See id. § 213 (a)(15); Fair Labor Standards Amendments of 1974, Pub. L. No. 93-259, 88 Stat. 55. This exemption applied to homecare providers like Plaintiffs.

         In October 2013, however, the Department of Labor (DOL) promulgated a new rule that changed the definition of "companionship services" so that homecare providers like Plaintiffs would be entitled to overtime pay under the FLSA. See Application of the Fair Labor Standards Act to Domestic Service, 78 Fed. Reg. 60, 454, 60, 454 (Oct. 1, 2013) (codified at 29 C.F.R. pt. 552). The final rule had an effective date of January 1, 2015. See id.

         Before the rule's effective date, a group of "trade associations that represent businesses employing workers" subject to the FLSA exemption filed a lawsuit in the District Court for the District of Columbia. See Home Care Ass'n of Am. v. Weil, 76 F.Supp.3d 138, 142 (D.D.C. 2014) (Weil I). The plaintiffs claimed that the rule was arbitrary and capricious and thus sought to enjoin its implementation. Id. at 139. At step one of its Chevron analysis, the district court found that Congress had "clearly spoken" on the issue. Id. at 146. The district court then vacated the rule, id. at 148, and the DOL appealed.

         On August 21, 2015, the D.C. Circuit reversed and ordered the district court to enter summary judgment for the DOL. Home Care Ass'n of Am. v. Weil, 799 F.3d 1084, 1087 (D.C. Cir. 2015) (Weil II). Although the DOL prevailed, on September 14, 2015 it announced that it would "not bring enforcement actions against any employer for violations of FLSA obligations resulting from the amended domestic service regulations for 30 days after the date the mandate issues."[1] Application of the Fair Labor Standards Act to Domestic Service; Announcement of 30-Day Period of Non-Enforcement, 80 Fed. Reg. 55, 029, 55, 029 (Sept. 14, 2015) (codified at 29 C.F.R. pt. 552). The Weil II mandate issued on October 13, 2015.

         On October 27, 2015, the DOL said that it would not begin enforcing the final rule until November 12, 2015.

         And, echoing its September 14, 2015 statement, the DOL again said that

from November 12, 2015 through December 31, 2015, [it would] exercise prosecutorial discretion in determining whether to bring enforcement actions, with particular consideration given to the extent to which States and other entities have made good faith efforts to bring their home care programs into compliance with the FLSA since the promulgation of the Final Rule.

         Application of the Fair Labor Standards Act to Domestic Service; Dates of Previously Announced 30-Day Period of Non-Enforcement, 80 Fed. Reg. 65, 646, 65, 646 (Oct. 27, 2015) (codified at 29 C.F.R. pt. 552).

         Before the Weil I decision, California (through the CDSS) began taking steps to "meet the January 1, 2015, implementation date," including modifying its systems to "process and calculate overtime compensation." But after the Weil I decision, the CDSS decided that it would not implement overtime payments "until further notice." After Weil II, the CDSS again said that it would comply with the overtime requirements-but not until February 1, 2016.

         In June 2017, Ray filed a putative collective action, [2]under Section 216(b) of the FLSA, against the State of California and the County of Los Angeles. Ray's complaint sought relief for herself and the putative collective for unpaid overtime wages between January 1, 2015-the rule's original effective date-and February 1, 2016, the date on which the State began paying overtime wages.

         As relevant here, the County moved to dismiss the complaint on Eleventh Amendment immunity grounds.[3] In the alternative, the County moved to strike all references in the complaint to overtime wages allegedly earned before October 13, 2015-the date on which the mandate issued in Weil II.

         The district court first held that the County had no Eleventh Amendment immunity. The district court noted that the Supreme Court has long refused to grant Eleventh Amendment immunity to counties and that the Court has already held that California counties are not arms of the State. The district court then assumed arguendo that a county could be an arm of the State under the five-factor test that we set out in Mitchell v. Los Angeles Community College District, 861 F.2d 198 (9th Cir. 1988) for determining whether an entity is an arm of the state for purposes of Eleventh Amendment immunity. The district court found that only one of the five factors favored the County, and thus it held that the County enjoyed no Eleventh Amendment immunity.

         The district court then "reject[ed] Plaintiffs' efforts to enforce the FLSA companionship exemption regulations retroactively to January 1, 2015." Instead, it held "that the putative collective period extends from November 12, 2015, through January 31, 2016," and not before. The court said that although the Weil II decision applied retroactively, that decision was merely that the DOL could amend the FLSA and that those amendments were not arbitrary and capricious. This, the district court held, differed from "the retroactive application of the amended regulations themselves." The district court reasoned:

The rule of law announced by the D.C. Circuit is given retroactive effect by allowing DOL to reinstate those regulations without having to begin a new rule-making process. That is not the same thing as reinstating an earlier and judicially vacated effective date and retroactively creating liability for violations of the reinstated regulations as if the District Court's vacation of the regulations had never occurred.

         The district court also found it "compelling" that both the D.C. Circuit and the DOL "intended" that the regulation become effective "no earlier than November 12, 2015." As evidence of this intent, the district court pointed to the DOL's decision not to enforce the new regulations before that date.

         Finally, the district court found that its holding was consistent "with the general rule that a private right of action should ordinarily not exist when the applicable rule could ...


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