Free Cross Motion [Dispositive] - District Court of Federal Claims - federal

Case 1:90-cv-00162-LJB

Document 636

Filed 03/29/2007

Page 1 of 49

No. 90-162C (Judge Bush)

IN THE UNITED STATES COURT OF FEDERAL CLAIMS

STEPHEN S. ADAMS, et al., Plaintiffs, v. THE UNITED STATES, Defendant.

PLAINTIFFS' CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT AND OPPOSITION TO DEFENDANT'S MOTION FOR PARTIAL SUMMARY JUDGMENT WITH RESPECT TO CRIMINAL INVESTIGATORS EMPLOYED BY THE DEPARTMENT OF HEALTH AND HUMAN SERVICES

OF COUNSEL: Linda Lipsett

Jules Bernstein Bernstein & Lipsett, P.C. 1920 L Street, N.W., Suite 303 Washington, D.C. 20036 (202) 296-1798 (202) 296-7220 facsimile Counsel of Record Edgar James Sean Bajkowski James & Hoffman, P.C. 1101 17th Street, N.W., Suite 510 Washington, D.C. 20036 (202) 496-0500 (202) 496-0555 facsimile Of Counsel

Case 1:90-cv-00162-LJB

Document 636

Filed 03/29/2007

Page 2 of 49

TABLE OF CONTENTS TABLE OF AUTHORITIES .......................................................................................................... ii PLAINTIFFS' BRIEF......................................................................................................................1 QUESTION PRESENTED ..............................................................................................................2 STATEMENT OF THE CASE........................................................................................................2 STATEMENT OF FACTS ..............................................................................................................5 STATUTORY AND REGULATORY BACKGROUND ...............................................................5 LEGAL STANDARDS .................................................................................................................11 ARGUMENT.................................................................................................................................13 A. B. INTRODUCTION .................................................................................................13 PLAINTIFFS ARE NON-EXEMPT BECAUSE THEIR PRIMARY DUTY IS TRADITIONAL NON-ADMINISTRATIVE LAW ENFORCEMENT WORK.....................................................................................15 1. 2. Plaintiffs' Primary Duty is Traditional Law Enforcement Work ..............15 Traditional Law Enforcement Work Is Not Administrative Work Under the FLSA....................................................................................................16

C.

THE ADMINISTRATION/PRODUCTION DICHOTOMY SUPPORTS PLAINTIFFS' STATUS AS NON-EXEMPT BECAUSE PLAINTIFFS DO NOT ADMINISTER HHS BUT RATHER EXECUTE ITS DAY-TO-DAY OPERATIONS ............................................................................19 DEFENDANT'S ARGUMENT RESTS ON A MISUNDERSTANDING OF THE NATURE AND PURPOSE OF THE ADMINISTRATION/PRODUCTION DICHOTOMY AND SHOULD BE REJECTED.....................................................................................29 DEFENDANT'S AUTHORITIES ARE INAPPOSITE........................................36

D.

E.

CONCLUSION..............................................................................................................................41

i

Case 1:90-cv-00162-LJB

Document 636

Filed 03/29/2007

Page 3 of 49

TABLE OF AUTHORITIES CASES Abundis v. United States, 18 Cl. Ct. 657 (1989) ...........................................................................12 Adam v. United States, 26 Cl. Ct. 782 (1992) ....................................................................... passim Adams v. United States, 27 Fed. Cl. 5 (1992), rev'd in part and remanded, 178 F.3d 1306, 1998 WL 804552 (Fed. Cir. Sept. 23, 1998) ........................................... passim Adams v. United States, No. 90-162C and Consolidated Cases (Fed. Cl. Dec. 1, 2004) ..... passim Adams v. United States, 65 Fed. Cl. 195 (2005) .........................................................2, 3, 7, 18, 19 Adams v. United States, 44 Fed. Cl. 772 (1999) .............................................................................6 Ahern v. New York, 807 F. Supp. 919 (N.D.N.Y. 1992) ..................................................17, 19, 39 American Federation of Government Employees v. Office of Personnel Management, 821 F.2d 761 (D.C. Cir. 1987) ................................................................................................6, 8 Amos v. United States, 13 Cl. Ct. 442 (1987) ...............................................................................12 Amshey v. United States, 26 Cl. Ct. 582 (1992) ...............................................................12, 28, 39 Arnold v. Ben Kanowsky, Inc., 361 U.S. 388 (1960)....................................................................12 Auer v. Robbins, 65 F.3d 702 (8th Cir. 1995) .........................................................................37, 38 Baker v. California Shipbuilding Co., 73 F. Supp. 322 (S.D. Cal. 1947)......................................41 Berg v. Newman, 982 F.2d 500 (Fed. Cir. 1992) ..........................................................................12 Berg v. United States, 49 Fed. Cl. 459 (2001)....................................................................... passim Billings v. United States, 322 F.3d 1328 (Fed. Cir. 2003) ......................................................5, 6, 8 Bothell v. Phase Metrics, Inc., 299 F.3d 1120 (9th Cir. 2002)....................................27, 29, 30, 31 Bratt v. County of Los Angeles, 912 F.2d 1066 (9th Cir. 1990) ........................................... passim Bull v. United States, No. 2006-5038, 2007 WL 764315 (Fed. Cir. Mar. 15, 2007) ....................13 Clark v. J.M. Benson Co., 789 F.2d 282 (4th Cir. 1986)...............................................................12

ii

Case 1:90-cv-00162-LJB

Document 636

Filed 03/29/2007

Page 4 of 49

Corning Glass Works v. Brennan, 417 U.S. 188 (1974)................................................................12 D'Camera v. District of Columbia, 693 F. Supp. 1208 (D.D.C. 1988) .............................13, 17, 39 Donovan v. United Video, Inc., 725 F.2d 577 (10th Cir. 1984) ....................................................12 Dymond v. United States Postal Service, 670 F.2d 93 (8th Cir. 1982) .........................................40 Elliot v. Flying J., Inc., No. Civ. A. CV205-22, 2006 WL 13082049, 10 (S.D. Ga. May 8, 2006).........................................................................................................9, 10 Grandits v. United States, 66 Fed. Cl. 519 (2005).........................................................................38 Hickman v. United States, 10 Cl. Ct. 550 (1986) ..........................................................................40 Idaho Sheet Metal Works, Inc. v. Wirtz, 383 U.S. 190 (1966) .....................................................13 Jastremski v. Safeco Insurance Cos., 243 F. Supp. 2d 743 (N.D. Ohio 2003) ........................38, 39 Martin v. Cooper Electric Supply Co., 940 F.2d 896 (3d Cir. 1991) ......................................12, 13 Martin v. Indiana Michigan Power Co., 381 F.3d 574 (6th Cir. 2004) ...................................32, 33 Marting v. Crawford & Co., No. 00 C 7132, 2006 WL 681060 (N.D. Ill. March 14, 2006) ........................................................................................................34 Mitchell v. Williams, 420 F.2d 67 (8th Cir. 1969) ........................................................................13 Mulverhill v. New York, No. 87-CV-853, 1994 WL 263594 (N.D.N.Y. May 19, 1994) ................................................................................................. passim Nebblett v. Office of Personnel Management, 237 F.3d 1353 (Fed. Cir. 2001) .............................6 O'Dell v. Alyeska Pipeline Service Co., 856 F.2d 1452 (9th Cir. 1988) ......................................41 Palacio v. Progressive Insurance Co., 244 F. Supp. 2d 1040 (C.D. Cal. 2002).................29, 38, 39 Piscione v. Ernest & Young, 171 F.3d 527 (7th Cir. 1999)...........................................................34 Powell v. U.S. Cartridge Co., 339 U.S. 497 (1950).......................................................................12 Raper v. Iowa, 688 N.W.2d 29 (Iowa 2004)............................................................................37, 38 Reich v. New York, 3 F.3d 581 (2d Cir. 1993) .................................................................16, 19, 39 Robinson-Smith v. GEICO, 323 F. Supp. 2d 12 (D.D.C. 2004)..............................................10, 34

iii

Case 1:90-cv-00162-LJB

Document 636

Filed 03/29/2007

Page 5 of 49

Roney v. United States, 790 F. Supp. 23 (D.D.C. 1992) .............................................12, 13, 17, 27 Schaefer v. Indiana Michigan Power Co., 358 F.3d 394 (6th Cir. 2004) ......................................33 Shaw v. Prentice Hall Computer Publishing, Inc., 151 F.3d 640 (7th Cir. 1998) ...................33, 34 Southland Gasoline Co. v. Bayley, 319 U.S. 44 (1943) ..................................................................5 Sprague v. United States, 677 F.2d 865 (Ct. Cl. 1982) ...........................................................40, 41 Statham v. United States, No. 00-699C, 2002 WL 31292278 (Fed. Cl. Sept. 11, 2002) ...... passim Tennessee Coal, Iron & Railroad Co. v. Muscoda Local 123, 321 U.S. 590 (1944) ..............12, 13 Wirtz v. C & P Shoe Corp., 336 F.2d 21 (5th Cir. 1964) ..............................................................13 Zumerling v. Devine, 769 F.2d 745 (Fed. Cir. 1985) ......................................................................8 STATUTES 5 U.S.C. § 5545(a) ...........................................................................................................................1 29 U.S.C. § 201-219 ....................................................................................................................1, 5 29 U.S.C. § 204(f)............................................................................................................................5 29 U.S.C. § 207(a)(1).......................................................................................................................5 29 U.S.C. § 213(a) .........................................................................................................................11 29 U.S.C. § 213(a)(1).........................................................................................................1, 4, 5, 11 29 U.S.C. § 213(b)(30) ....................................................................................................................1 REGULATIONS Title 5 C.F.R. (2001 edition) 5 C.F.R. § 551.104 ...........................................................................................................7, 8, 27, 36 5 C.F.R. § 551.202(b) ..............................................................................................................12, 13 5 C.F.R. § 551.202(d) ....................................................................................................................13 5 C.F.R. § 551.202(i) .....................................................................................................................20

iv

Case 1:90-cv-00162-LJB

Document 636

Filed 03/29/2007

Page 6 of 49

5 C.F.R. § 551.206 .....................................................................................................................6, 28 5 C.F.R. § 551.206(a)(2)..........................................................................................................31, 36 5 C.F.R. § 551.206(a)(2)(iii)..........................................................................................................39 Title 29 C.F.R. (1994 edition) 29 C.F.R. § 541.2 .......................................................................................................................9, 28 29 C.F.R. § 541.2(a).......................................................................................................................30 29 C.F.R. § 541.201(a)(2)(ii) .........................................................................................................41 29 C.F.R. § 541.205(a).........................................................................................................9, 30, 31 29 C.F.R. § 541.205(b) ........................................................................................................9, 30, 39 29 C.F.R. § 541.205(c)(1)..............................................................................................................36 29 C.F.R. § 541.205(c)(5)..............................................................................................................38 Title 29 C.F.R. (2005 edition) 29 C.F.R. Part 541..........................................................................................................................25 29 C.F.R. § 541.3(a)(1)..................................................................................................................19 29 C.F.R. § 541.3(b) ................................................................................................................11, 39 29 C.F.R. § 541.3(b)(1), (3) ...........................................................................................................18 29 C.F.R. § 541.200 .......................................................................................................................10 29 C.F.R. § 541.201(b) ..................................................................................................................41 Federal Register (April 23, 2004) Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales and Computer Employees, 69 Fed. Reg. 22122 et seq. ....................................25, 29 69 Fed. Reg. 22129 ............................................................................................................11, 18, 25 69 Fed. Reg. 22130 ........................................................................................................................38 69 Fed. Reg. 22141 ........................................................................................................................29

v

Case 1:90-cv-00162-LJB

Document 636

Filed 03/29/2007

Page 7 of 49

69 Fed. Reg. 22193 ........................................................................................................................10 69 Fed. Reg. 22195 ........................................................................................................................10 ADMINISTRATIVE DECISIONS OPM Decision Number F-1810-12-02 (Oct. 16, 2006).............................................................8, 35 Department of Labor Wage & Hour Division Opinion FLSA2002-11 (Nov. 19, 2002).........39, 40 OTHER AUTHORITIES FPM Letter 551-7 (1975) ...........................................................................................................6, 34 FPM Letter 551-13 (1978) ...............................................................................................................6 FPM Sunset Document, OPM Document No. 157-53-8 (Dec. 31, 1993) .......................................6 Pub. L. No. 103-329, 108 Stat. 2382 (1994)....................................................................................1 Pub. L. No. 93-259, 88 Stat. 55 (1974)........................................................................................5, 8

vi

Case 1:90-cv-00162-LJB

Document 636

Filed 03/29/2007

Page 8 of 49

IN THE UNITED STATES COURT OF FEDERAL CLAIMS STEPHEN S. ADAMS, et al., Plaintiffs, v. THE UNITED STATES, Defendant. ) ) ) ) ) ) ) ) )

No. 90-162C and consolidated cases (Judge Bush)

PLAINTIFFS' CROSS-MOTION FOR PARTIAL SUMMARY JUDGMENT AND OPPOSITION TO DEFENDANT'S MOTION FOR PARTIAL SUMMARY JUDGMENT WITH RESPECT TO CRIMINAL INVESTIGATORS EMPLOYED BY THE DEPARTMENT OF HEALTH AND HUMAN SEVICES Pursuant to Rule 56 of the Rules of the United States Court of Federal Claims, Plaintiffs respectfully request that the Court grant partial summary judgment in their favor and declare that those Plaintiffs who were employed by the Department of Health and Human Services ("HHS") as GS-12 and GS-13 non-supervisory criminal investigators were covered by the overtime provisions of the Fair Labor Standards Act, 29 U.S.C. §§ 201-219 ("FLSA"), for the period of time beginning three years prior to the date each such Plaintiff filed his or her claim until September 17, 1995.1 Defendant has filed a motion for partial summary judgment seeking a declaration that these same criminal investigators were exempt from coverage under the overtime provisions of the FLSA as "bona fide . . . administrative" employees pursuant to 29 U.S.C. § 213(a)(1). Plaintiffs respectfully request that Defendant's motion be denied. QUESTION PRESENTED
1

On that date, Plaintiffs were removed from FLSA coverage and the overtime pay system known as Administratively Uncontrollable Overtime ("AUO") and were made subject to the Law Enforcement Availability Pay ("LEAP"), under 5 U.S.C. § 5545(a) (1996). See Pub. L. No. 103-329, 108 Stat. 2382, 2425 (1994); 29 U.S.C. § 213(b)(30). Section 633(e) of Pub. L. No. 103-329 permitted criminal investigators who worked with OIG and received less than the

1

Case 1:90-cv-00162-LJB

Document 636

Filed 03/29/2007

Page 9 of 49

Whether Plaintiffs were, while employed by HHS as OPM Series 1811 GS-12 and GS-13 Criminal Investigators, exempt from the FLSA's overtime provisions as "administrative" employees. STATEMENT OF THE CASE In these consolidated actions, more than 14,000 criminal investigators and employees in related positions at various federal agencies have sued to recover FLSA overtime pay and various other forms of overtime and premium pay.2 This motion concerns the claims of roughly 45 Plaintiffs who are seeking FLSA compensation for overtime they worked while employed as OPM Series 1811 Criminal Investigators in grades GS-12 and GS-13 by the Criminal Investigative Division ("CID") of the Office of Investigations ("OI") of HHS's Office of the Inspector General ("OIG"). Pl. HHS App. at 177.3 Plaintiffs, like criminal investigators in these

maximum percentage of AUO to be converted to LEAP no later than September 30, 1995. 2 As the Court noted in its Opinion of April 17, 2005, this consolidated case has a long history even though these particular criminal investigators have not been subject to prior adjudication. The convention adopted by the Court to refer to these cases is useful, and followed in this brief: Adams v. United States, 27 Fed. Cl. 5 (1992) (Adams I), rev'd in part and remanded, 178 F.3d 1306, 1998 WL 804552 (Fed. Cir. Sept. 23, 1998) (Table and Unpublished Opinion) (Adams II); Adams v. United States, No. 90-162C and Consolidated Cases (Fed. Cl. Dec. 1, 2004) (Unpublished Opinion) (Adams III); Adams v. United States, 65 Fed. Cl. 195 (2005) (Adams IV). Defendant uses a different convention than the one used by the Court and Plaintiffs, because it inexplicably ignores this Court's decision of December 1, 2004. Thus, Defendant refers to Adams IV as "Adams III."
3

Plaintiffs adopt the following convention to clarify and abbreviate their references:

(a) "Pl. HHS App." refers to the Appendix to Plaintiffs' Cross-Motion and Opposition To Defendant's Motion For Partial Summary Judgment for the HHS criminal investigators; (b) "Pl. HHS Statement of Fact" refers to Plaintiffs' Proposed Finding of Uncontroverted Fact to support its Cross-Motion and Opposition To Defendant's Motion for Partial Summary Judgment for the HHS criminal investigators; (c) "Def. HHS Mem." refers to Defendant's Motion for Partial Summary Judgment for the HHS criminal investigators; (d) "Def. HHS App." refers to the Appendix to Defendant's Motion for Partial Summary Judgment for the HHS criminal investigators; and 2

Case 1:90-cv-00162-LJB

Document 636

Filed 03/29/2007

Page 10 of 49

same grades at other federal agencies, were classified by Defendant as exempt from the FLSA based upon the FLSA's administrative exemption. The inapplicability of the administrative exemption to many of these other categories of plaintiffs has already been adjudicated. See Adams I, rev'd in part, Adams II, on remand, Adams III, Adams IV. This Court, numerous other courts, the Department of Labor ("DOL"), and the Office of Personnel Management ("OPM") have been of one voice in holding that criminal investigators whose primary duty is to perform traditional criminal investigative work such as making arrests, serving subpoenas and warrants, conducting surveillance, collecting and reviewing evidence, interviewing witnesses, and interrogating suspects are not exempt from the FLSA as administrative employees. Defendant does not dispute the fact that Plaintiffs' primary duty was to perform such traditional investigative work; indeed, Defendant concedes that Plaintiffs "spent the majority of their time engaged in typical law enforcement duties such as planning investigations, collecting and reviewing evidence, interviewing witnesses and conducting surveillance." Def. HHS Statement of Fact ¶¶ 5, 7, 11, 13, 16. Plaintiffs are therefore nonexempt from the FLSA and entitled to summary judgment in their favor. Defendant rests its case on a rigidly formalistic application of the so-called administration/production dichotomy, an approach which relegates Plaintiffs' actual day-to-day duties to irrelevance. The only relevant fact, in Defendant's view, is that the words "law enforcement" do not appear in HHS's mission, as that mission is platitudinously characterized in the introductory heading of a "Performance and Accountability Report" available in the "Office of Finance Library" section of HHS's website. Def. HHS Mem. at 2, 11 ("The mission of HHS

(e) "Def. HHS Statement of Fact" refers to Defendant's Proposed Findings of Uncontroverted Fact to support its Motion for Partial Summary Judgment for the HHS criminal investigators. 3

Case 1:90-cv-00162-LJB

Document 636

Filed 03/29/2007

Page 11 of 49

is to `enhance the health and well-being of Americans by providing for effective health and human services and by fostering strong, sustained advances in the sciences, underlying medicine, public health and social services."). This, Defendant suggests, proves that Plaintiffs do not perform a "production function" for HHS, a revelation which in turn transforms Plaintiffs into exempt HHS administrators ­ despite the fact that their actual work is indistinguishable from that of any non-exempt criminal investigator and certainly not "administrative" in character. Def. HHS Mem. at 11. This argument is utterly specious. Plaintiffs' primary duty is to carry out one of HHS's many objectives ­ investigating and deterring crimes against HHS programs ­ not to manage or administer HHS itself. These investigations, and the criminal and civil penalties they lead to, deter frauds and other criminals who would subject HHS beneficiaries to dangerous, substandard, or unnecessary medical procedures or steal monetary benefits desperately needed by those beneficiaries, who are often elderly, poor, disabled and/or otherwise vulnerable. Plaintiffs therefore perform one of HHS's production functions and, in any event, cannot plausibly be described as "administrative" employees for purposes of 29 U.S.C. § 213(a)(1) or, indeed, under any imaginable definition of the term. Defendant's appeal to the administration/production dichotomy is simply misguided. Courts, DOL and OPM have explicitly and repeatedly refused to apply that dichotomy in the formalistic manner Defendant proposes. Instead, they have properly focused on a FLSA plaintiff's day-to-day activities when applying the administrative exemption, and the day-to-day law enforcement activities Plaintiffs perform have uniformly been declared non-exempt. STATEMENT OF FACTS The material facts have been set forth in the Plaintiffs' Proposed Findings of

4

Case 1:90-cv-00162-LJB

Document 636

Filed 03/29/2007

Page 12 of 49

Uncontroverted Fact, which was filed concurrently with this Memorandum. The facts are not set forth in full in this Memorandum except where helpful to an understanding of the argument. STATUTORY AND REGULATORY BACKGROUND Congress enacted the FLSA in 1938 to create national minimum wage and overtime pay standards for certain private sector employees. Fair Labor Standards Act, ch. 676, 52 Stat. 1060 (1938) (codified at 29 U.S.C. §§ 201-219 (2001)). In 1974, Congress placed federal, state and local government employees under the FLSA's protections. Fair Labor Standards Act Amendments of 1974, Pub. L. No. 93-259, 88 Stat. 55. In general, the FLSA requires that employees be paid at a premium rate, generally 1.5 times the employee's base rate, for overtime work. 29 U.S.C. § 207(a)(1). The FLSA's overtime provisions were enacted not merely to reward employees for working long hours, but also to make overtime more costly so as to discourage employers from requiring employees to work overtime. This was intended to improve employees' health and well-being and to provide work for more employees. See, e.g., Southland Gasoline Co. v. Bayley, 319 U.S. 44, 48 (1943). A limited class of exempt employees, including "any employee employed in a bona fide executive, administrative, or professional capacity[,]" is denied the right to premium overtime pay under the FLSA. 29 U.S.C. § 213(a)(1). The terms "administrative," "executive," and "professional" (collectively known as the "white collar" exemptions) are not defined by the statute. Instead, Congress delegated that authority to DOL. Id. § 204(f) and § 213(a)(1). While OPM has authority to determine the scope of the exemptions in the federal sector, id. § 204(f), its regulations "must be consistent with" DOL's regulations. Billings v. United States, 322 F.3d 1328, 1331 (Fed. Cir. 2003). Accord Am. Fed'n of Gov't Employees v. OPM, 821 F.2d 761, 769 (D.C. Cir. 1987) ("AFGE v. OPM").

5

Case 1:90-cv-00162-LJB

Document 636

Filed 03/29/2007

Page 13 of 49

The OPM and its predecessor agency, the Civil Service Commission ("CSC"), have promulgated regulations on the application of the FLSA's exemptions to federal employees. The OPM regulation governing the administrative exemption provides: An administrative employee is an advisor or assistant to management, a representative of management, or a specialist in a management or general business function or supporting service and meets all four of the following criteria: (a) Primary duty test. The primary duty test is met if the employee's work-- (1) Significantly affects the formulation or execution of management programs or policies; or (2) Involves management or general business functions or supporting services of substantial importance to the organization serviced; or (3) Involves substantial participation in the executive or administrative functions of a management official. (b) Nonmanual work test. The employee performs office or other predominantly nonmanual work which is-- (1) Intellectual and varied in nature; or (2) Of a specialized or technical nature that requires considerable special training, experience, and knowledge. (c) Discretion and independent judgment test. The employee frequently exercises discretion and independent judgment, under only general supervision, in performing the normal day-to-day work. 5 C.F.R. § 551.206 (bold emphasis added).4 For the limited purpose of the parties' opposing motions for summary judgment regarding HHS criminal investigators, Plaintiffs do not contest
4

These regulations codify the guidelines originally laid out in FPM Letters 551-7 and 55113. The FPM was abolished pursuant to the FPM Sunset Document, OPM Document No. 15753-8 (Dec. 31, 1993), see Nebblett v. Office of Personnel Mgmt, 237 F.3d 1353, 1358 (Fed. Cir. 2001); Adams v. United States, 44 Fed. Cl. 772, 776 (1999), but its exemption guidelines have largely been incorporated into the definitions section of the current regulations. See 5 C.F.R. § 551.104. Moreover, these FPM Letters are routinely cited by the courts. E.g., Adams III at 6-7; Adams IV at 200. 6

Case 1:90-cv-00162-LJB

Document 636

Filed 03/29/2007

Page 14 of 49

Defendant's contention that their work satisfies the nonmanual work test or the discretion and independent judgment test.5 Accordingly, sections (b) and (c) are not addressed in this brief.6 Moreover, because Defendant ­ which bears the burden of proving the exemption ­ has moved only on the theory that Plaintiffs' primary duty is "a support service to management, rather than a production function," subsections (1) and (3) of section (a)'s "primary duty test" are not implicated by the instant motions. Def. HHS Mem. at 8. Accordingly, the only sections of the regulation that are relevant to this case are those emphasized in bold type ­ the general requirement that the exemption applies only to "an advisor or assistant to management, a representative of management, or a specialist in a management or general business function or supporting service" and section (a)(2)'s primary duty test.7 The OPM has issued more detailed guidance on the primary duty test by defining "Management or general business function or supporting service, as distinguished from production functions" as: the work of employees who provide support to line managers. (1) These employees furnish such support by-- (i) Providing expert advice in specialized subject matter

Plaintiffs do not generally concede, either for themselves or for other categories of plaintiffs in Adams, that their work was predominantly nonmanual or that it required the frequent exercise of discretion and independent judgment. Plaintiffs also specifically dispute any implication that GS-11 and lower grade criminal investigators frequently exercise discretion and independent judgment. Pl. HHS App. at 14 (deposition of HHS's law enforcement declarant).
6

5

Nor is subsection (d), which was omitted because it applies only to "General Schedule employees classified at GS-5 or GS-6[.]" See Def. HHS Mem. at 5 n.3.
7

As a general matter, "[a]n employee's primary duty is `that which constitutes the major part (over 50%) of the employee's work.'" Adams IV at 200 (quoting Adams I at 13). Because Defendant has not attempted to prove the applicability of the alternate primary duty test, this general rule governs the pending motions.

7

Case 1:90-cv-00162-LJB

Document 636

Filed 03/29/2007

Page 15 of 49

fields, such as that provided by management consultants or systems analysts; (ii) Assuming facets of the overall management function, such as safety management, personnel management, or budgeting and financial management; (iii) Representing management in such business functions as negotiating and administering contracts, determining acceptability of goods or services, or authorizing payments; or (iv) Providing supporting services such as automated data processing, communications, or procurement and distribution of supplies. 5 C.F.R. § 551.104 (emphasis in original). The DOL, the agency given primary responsibility by Congress to define the meaning of the administrative exemption, has also propounded regulations defining its scope.8 Like the very similar OPM regulations, DOL's require an employer to prove that an employee satisfies a number of factual requirements before that employee may be declared an exempt administrator. One of the requirements an employer must establish is the primary duty test, which DOL defines as follows: The term employee employed in a bona fide *** administrative *** capacity in section 13(a)(1) of the Act shall mean any employee: (a) Whose primary duty consists of . . . : While OPM's regulations directly apply to this case, DOL's regulations are highly significant. As the Federal Circuit held in Billings, 322 F.3d at 1331, "OPM regulations, rather than the Labor Department regulations . . . govern the application of the [FLSA] to [federal employees]. To be valid, however, the OPM regulation must be consistent with the Labor Department regulation." (emphasis added). See also, Fair Labor Standards Amendments of 1974, Pub. L. No. 93-259, 1974 U.S.C.C.A.N. (88 Stat. 55) 2811, 2837; AFGE v. OPM, 821 F.2d at 769; Zumerling v. Devine, 769 F.2d 745, 750 (Fed. Cir. 1985) (OPM guidelines must "harmonize . . . with the Secretary of Labor's regulations."); Adam v. United States, 26 Cl. Ct. 782, 786 (1992) ("the DOL regulations can be used to shed light on the [FLSA]"); FLSA Claim Decision 1810-12-02 (OPM Oct. 16, 2006) (quoting Billings). 8
8

Case 1:90-cv-00162-LJB

Document 636

Filed 03/29/2007

Page 16 of 49

(1) The performance of office or nonmanual work directly related to management policies or general business operations of his employer or his employer's customers. 29 C.F.R. § 541.2 (second emphasis added). Like OPM, DOL has issued additional regulations interpreting the primary duty test: The phrase "directly related to management policies or general business operations of his employer or his employer's customers" describes those types of activities relating to the administrative operations of a business as distinguished from "production" or, in a retail or service establishment, "sales" work. In addition to describing the types of activities, the phrase limits the exemption to persons who perform work of substantial importance to the management or operation of the business of his employer or his employer's customers. 29 C.F.R. § 541.205(a) (emphasis added). The regulation provides further guidance on the meaning of "the administrative operations of the business" explaining, in relevant part: (b) The administrative operations of the business include the work performed by so-called white-collar employees engaged in "servicing" a business as, for, example, advising the management, planning, negotiating, representing the company, purchasing, promoting sales, and business research and control. 29 C.F.R. § 541.205(b). In 2004, DOL issued revised regulations on the scope of the white collar exemptions, including the administrative exemption. Because these new regulations are not retroactive, only the older regulations quoted above are directly applicable to this case.9 See, e.g., Elliot v. Flying J., Inc., No. Civ.A. CV205-22, 2006 WL 1308204, *1 n.1 (S.D. Ga. May 8, 2006). However, DOL has stated that the new regulation defining the administrative exemption "is very similar, if not functionally identical, to the current short duties test when the current interpretive guidelines

To avoid any confusion, throughout this brief citations to the 2004 DOL regulations are cited as "New 29 C.F.R. § xxx.xxx" while citations to DOL's earlier regulations are cited as simply "29 C.F.R. § xxx.xxx." 9

9

Case 1:90-cv-00162-LJB

Document 636

Filed 03/29/2007

Page 17 of 49

are taken into account as appropriate." 69 Fed. Reg. 22193 (Apr. 23, 2004). Accord RobinsonSmith v. GEICO, 323 F. Supp. 2d 12, 18 (D.D.C. 2004) ("The general criteria for employees employed in a bona fide administrative capacity are essentially the same under the August 2004 regulations as under the current regulations."). In fact, DOL explicitly determined that the new regulations do not change the administrative exemption status of law enforcement officers. See 69 Fed. Reg. 22195 (discussing the impact of the new regulations on "police officers, fire fighters, paramedics, EMT's and other first responders," noting that "[t]he Department has no intention of departing from th[e] established case law" holding such workers, including criminal investigators, non-exempt, and concluding that the only impact of the new regulations would be that some first responders who were exempt under the old executive exemption regulations may be non-exempt under the current regulations). The new DOL regulations set forth the primary duty test which is nearly identical to the language of DOL's older regulations and very similar to OPM's language: (a) The term "employee employed in a bona fide administrative capacity" in section 13(a)(1) of the Act shall mean any employee: (2) Whose primary duty is the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer's customers[.] New 29 C.F.R. § 541.200. Unlike the older regulations, the 2004 DOL regulations specifically discuss the exemption status of criminal investigators and other first responders, concluding: (1) The section 13(a)(1) exemptions [including the administrative exemption] and the regulations in this part also do not apply to police officers, detectives, deputy sheriffs, state troopers, highway patrol officers, investigators, inspectors, correctional officers, parole or probation officers, park rangers, fire fighters, paramedics, emergency medical technicians, ambulance personnel, rescue workers, hazardous materials workers and similar employees, regardless of rank or pay level, who perform work such as

10

Case 1:90-cv-00162-LJB

Document 636

Filed 03/29/2007

Page 18 of 49

preventing, controlling or extinguishing fires of any type; rescuing fire, crime or accident victims; preventing or detecting crimes; conducting investigations or inspections for violations of law; performing surveillance; pursuing, restraining and apprehending suspects; detaining or supervising suspected and convicted criminals, including those on probation or parole; interviewing witnesses; interrogating and fingerprinting suspects; preparing investigative reports; or other similar work. ... (3) Such employees do not qualify as exempt administrative employees because their primary duty is not the performance of work directly related to the management or general business operations of the employer or the employers customers as required under Sec. 541.200. New 29 C.F.R. § 541.3(b) (emphasis added). Again, in DOL's view this new regulation does not represent a change in law but merely clarifies what has always been the case ­ workers employed as law enforcement officers are, and always have been, non-exempt so long as their primary duty is traditional investigative work. 69 Fed. Reg. 22129. LEGAL STANDARDS Defendant bears a heavy burden in this case because Plaintiffs, like all workers, are presumed to be entitled to FLSA premium pay for their overtime hours unless their employer demonstrates that they meet the statute's administrative exemption, 29 U.S.C. § 213(a)(1).10 As this Court declared in Adams I, "`the FLSA in effect establishes a presumption for . . . nonexempt status.'. . . This court must therefore assume that plaintiffs are covered by the overtime provisions of FLSA unless defendant proves otherwise." Adams I, 27 Fed. Cl. at 10 (quoting Amshey v. United States, 26 Cl. Ct. 582, 590 (1992)). Accord Adams III at 4; Corning Glass Works v. Brennan, 417 U.S. 188, 196-97 (1974) ("the application of an exemption under
10

In Adams I, the Court stated "the parties . . . indicated and the court agrees that the executive and professional exemptions [of 29 U.S.C. § 213(a)] clearly do not apply" to the plaintiffs. 27 Fed. Cl. at 11 n.3. Defendant's motion for partial summary judgment is likewise limited to the administrative exemption.

11

Case 1:90-cv-00162-LJB

Document 636

Filed 03/29/2007

Page 19 of 49

the Fair Labor Standards Act is a matter of affirmative defense on which the employer has the burden of proof"); Berg v. Newman, 982 F.2d 500, 503 (Fed. Cir. 1992); Berg v. United States, 49 Fed. Cl. 459, 467 (2001). A plaintiff "merely has to show that he or she is an employee covered by the FLSA, and the burden shifts to [the] defendant to justify the exempt status." Abundis v. United States, 18 Cl. Ct. 657, 663 (1989). Moreover, Defendant must satisfy this burden by "clear and affirmative evidence." Donovan v. United Video, Inc., 725 F.2d 577, 581 (10th Cir. 1984). Accord Clark v. J.M. Benson Co., 789 F.2d 282, 286 (4th Cir. 1986); Amos v. United States, 13 Cl. Ct. 442, 445 (1987); Roney v. United States, 790 F. Supp. 23, 26 (D.D.C. 1992) ("the employer's claims must be proved by clear and affirmative evidence or the employee must be given coverage under the Act"). Furthermore, the administrative exemption must be construed narrowly so as to further Congress's remedial goal of providing the FLSA's protections to nearly all American workers.11 As the Supreme Court has recognized, the FLSA is "remedial and humanitarian in purpose" and "must not be interpreted or applied in a narrow, grudging manner." Tenn. Coal, Iron & R.R. v. Muscoda Local 123, 321 U.S. 590, 597 (1944). The Federal Circuit recently emphasized the "expansive nature of FLSA coverage" in Bull v. United States, No. 2006-5038, 2007 WL 764315, *9 (Fed. Cir. Mar. 15, 2007). The OPM regulations require an employer to "prove that the employee `clearly meets the criteria for exemption' for the employee to be found exempt." Statham v. United States, No. 00-699C, 2002 WL 31292278, *5 (Fed. Cl. Sept. 11, 2002) (quoting 5 C.F.R. § 551.202(b)). According to OPM, "[i]f there is a reasonable doubt as to

See, e.g., Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392 (1960); Powell v. U.S. Cartridge Co., 339 U.S. 497 (1950); Martin v. Cooper Elec. Supply Co., 940 F.2d 896, 900 (3d Cir. 1991); 5 C.F.R. § 551.202(b).

11

12

Case 1:90-cv-00162-LJB

Document 636

Filed 03/29/2007

Page 20 of 49

whether an employee meets the criteria for exemption, the employee should be designated FLSA nonexempt." Id. § 551.202(d). In addition, a lack of certainty regarding any single element of an exemption is fatal to a claim that an employee falls within the exemption.12 ARGUMENT A. INTRODUCTION Because Defendant cannot meet its burden to establish that Plaintiffs' primary duty is administrative, Plaintiffs are entitled to summary judgment. It is undisputed that Plaintiffs' primary duty is to perform traditional law enforcement work ­ such tasks as making arrests, serving subpoenas and warrants, conducting surveillance, collecting and reviewing evidence, interviewing witnesses, and interrogating suspects. Def. HHS App. at 68; Pl. HHS App. at 195, 202, 206-07, 213, 235, 241-42, 250-51, 259, 272, 278, 302, 356-57, 375, 381-82, 388, 397, 404, 409. These day-to-day work activities are identical to the day-to-day duties performed by other federal criminal investigators who have already been determined to be FLSA non-exempt by this Court. Def. HHS Mem. at 19; Pl. HHS App. at 9. Moreover, the authorities overwhelmingly make clear that workers who primarily perform this kind of traditional law enforcement work are not exempt from the FLSA. For this reason, Plaintiffs are entitled to summary judgment in their favor. The Court should give no credence to Defendant's attempt to reach a different result through a rigidly formalistic application of the so-called "administration/production dichotomy." On Defendant's view, the dichotomy compels the absurd conclusion that Plaintiffs would be
12

Martin, 940 F.2d at 900 (citing Idaho Sheet Metal Works, Inc. v. Wirtz, 383 U.S. 190, 206 (1966)); Bratt v. County of Los Angeles, 912 F.2d 1066, 1069 (9th Cir. 1990), cert. denied, 498 U.S. 1086 (1991); Mitchell v. Williams, 420 F.2d 67, 69 (8th Cir. 1969); Wirtz v. C & P Shoe Corp., 336 F.2d 21, 27-28 (5th Cir. 1964); Roney v. United States, 790 F. Supp. 23, 26 (D.D.C. 1992); D'Camera v. District of Columbia, 693 F. Supp. 1208, 1213 (D.D.C. 1988). 13

Case 1:90-cv-00162-LJB

Document 636

Filed 03/29/2007

Page 21 of 49

FLSA-exempt even if they spent all their time investigating cases shoulder-to-shoulder with other, non-exempt law enforcement officers doing identical work. This is contrary not only to the letter and spirit of the FLSA, but also to simple common sense. Defendant's reasoning is flawed in at least two broad respects. Defendant's most immediate problem is that its insistence that the administration/production dichotomy is a rigidly formalistic sorting device amenable to a robotic application cannot be squared with the caselaw, which consistently applies the dichotomy in a flexible, judicious manner. Applied properly, the dichotomy clearly supports Plaintiffs' position, and doubly so when Defendant's cramped articulation of HHS's mission is replaced with a more realistic one. Defendant's more fundamental problem is that its entire argument rests on a misunderstanding of the nature and purpose of the dichotomy itself. Defendant fatally confuses the dichotomy ­ one analogy sometimes employed as a conceptual aid by courts in applying the primary duty test ­ with the primary duty test itself. This is simply not so. In the end, Defendant cannot escape the fact that the primary duty test ultimately focuses on the character of an employee's actual primary duties rather than some abstruse conceptual model. Because Plaintiffs' actual primary duties are not administrative, they are not exempt from the FLSA. B. PLAINTIFFS ARE NON-EXEMPT BECAUSE THEIR PRIMARY DUTY IS TRADITIONAL NON-ADMINISTRATIVE LAW ENFORCEMENT WORK 1. Plaintiffs' Primary Duty is Traditional Law Enforcement Work Defendant concedes that "[b]etween and including February 16, 1987 through September 30, 1995 . . . most GS-1811-12 and GS-1811-13 criminal investigators in HHS's OIG spent the majority of their time engaged in typical law enforcement duties such as planning investigations, collecting and reviewing evidence, interviewing witnesses and conducting surveillance." Def.

14

Case 1:90-cv-00162-LJB

Document 636

Filed 03/29/2007

Page 22 of 49

HHS Statement of Fact ¶¶ 5, 7, 11, 13, 16. Indeed, according to Defendant, they spent 85%100% of their time engaged in these traditional law enforcement activities. Def. HHS Statement of Fact ¶¶ 7, 11, 13. Defendant further concedes that "[t]he duties performed by GS-1811-12 and GS-1811-13 criminal investigators in HHS's OIG are similar to the duties performed by GS1811-12 and GS-1811-13 criminal investigators in the agencies at issue in Adams I [the Bureau of Alcohol, Tobacco and Firearms ("BATF"), the Drug Enforcement Agency ("DEA"), the Internal Revenue Service ("IRS"), the Secret Service, and the Customs Service ("Customs")]." Def. HHS Mem. at 19. See also Pl. HHS App. at 8-9 (Dep. of HHS Deputy Inspector General for Investigations) ("our criminal investigative work is essentially the same as work engaged in by other criminal investigators throughout the federal government"). According to Defendant, the typical HHS OI criminal investigator spent 40%-45% of his or her time during the period from February 16, 1987 through September 30, 1995 investigating Medicare and Medicaid fraud and another 40%-45% of his or her time investigating Social Security fraud. Def. HHS Statement of Fact ¶¶ 7, 11.13 These facts are expanded upon in declarations submitted by many of the Plaintiffs detailing their day-to-day activities, which consisted of typical law enforcement duties such as searching for and examining evidence; making arrests; executing warrants; conducting surveillance; interviewing witnesses and subjects; obtaining signed and sworn statements; assisting Federal and State prosecutors in the drafting of indictments, criminal informations, and grand jury and trial subpoenas and serving

The Social Security Administration became an independent agency on March 31, 1995. Def. HHS Statement of Fact ¶ 15. Between March 31, 1995 and September 30, 1995, Defendant estimates that each HHS plaintiff "spent approximately 80%-85% of his or her time investigating Medicare and Medicaid fraud, approximately 10%-15% of his or her time investigating other types of crimes at HHS programs and approximately 3%-5% of his or her time investigating employee misconduct." Id.

13

15

Case 1:90-cv-00162-LJB

Document 636

Filed 03/29/2007

Page 23 of 49

those documents; and testifying as government witnesses in grand jury proceedings as well as criminal and civil trials. See, e.g., Pl. HHS App. at 195, 202, 206-07, 213, 235, 241-42, 250-51, 259, 272, 278, 302, 356-57, 375, 381-82, 388, 397, 404, 409.14 2. Traditional Law Enforcement Work Is Not Administrative Work Under the FLSA Courts applying the FLSA's administrative exemption to criminal investigators and other law enforcement officers have overwhelmingly ruled that employees who, like Plaintiffs, primarily perform traditional law enforcement work are not exempt from the FLSA. See, e.g., Reich v. New York, 3 F.3d 581, 586 (2d Cir. 1993) (police investigators whose primary duties were to investigate crime scenes, gather evidence, interview witnesses, interrogate suspects, make arrests, conduct surveillance, obtain warrants and testify in court are not exempt administrators because their primary duty is conducting investigations, not administering the affairs of the department itself); Bratt v. County of Los Angeles, 912 F.2d 1066, 1068-70 (9th Cir. 1990) (probation officers whose primary duty is to conduct investigations and make sentencing recommendations non-exempt because the "essence" of the primary duty test is to distinguish between "the running of a business" and "the day-to-day carrying out of its affairs"); Mulverhill v. New York, No. 87-CV-853, 1994 WL 263594, *4 (N.D.N.Y. May 19, 1994) (environmental crimes investigators employed by New York's Department of Environmental Conservation non-exempt because they "do not administer the business affairs of the agency"); Roney, 790 F. Supp. at 27 (U.S. Marshal who provided court security non-exempt because his primary duty "does not relate to security policy or operational management but rather to the application of security measures to the day-to-day production process of a working courtroom");
14

Eighteen plaintiffs have submitted declarations regarding their time as HHS criminal investigators, and, for some, their subsequent time at SSA. See Pl. HHS App. at 193-411. Plaintiffs are not moving for summary judgment at this time with respect to any time they

16

Case 1:90-cv-00162-LJB

Document 636

Filed 03/29/2007

Page 24 of 49

D'Camera, 693 F. Supp. at 1211 (denying employer's motion for summary judgment against police sergeants who "spend most of their time on the streets working with police officers, or performing routine administrative duties"); Ahern v. New York, 807 F. Supp. 919, 926 (N.D.N.Y. 1992) (criminal investigators whose "primary duty . . . is to prevent, investigate and detect serious violations of the criminal laws" non-exempt); Adam v. United States, 26 Cl. Ct. 782, 784, 789 (1992) (INS border patrol agents who primarily "perform[] intelligence, prosecutions, anti smuggling and/or other law enforcement work" non-exempt where "objective reading" of OPM regulations reveals an "obvious intent . . . to identify persons performing management or business functions"); Amshey, 26 Cl. Ct. at 608 (sergeants and lieutenants with Secret Service uniformed division non-exempt). Cf. Statham, 2002 WL 31292278 at *8 (employee whose primary duty was to physically protect Secretary of Energy does not satisfy primary duty test because he "did not perform the managerial type functions that Congress intended to exempt from the FLSA"). The earlier decisions in this case are in accord with this long-established rule, having clearly held that law enforcement officers whose primary duty is traditional criminal investigation, as opposed to managerial or other administrative duties tangential to traditional law enforcement activities, are non-exempt. See, e.g., Adams IV at 204 ("Plaintiffs more accurately cite the record for the proposition that `the Court held what it considered to be `pure investigative work' to be non-exempt `production work.'") and 205 (plaintiff's testimony that his primary duty consists of "typical investigative tasks, such as conducting interviews, reviewing documents, preparing paperwork for enforcement actions, and meeting with the Assistant U.S. Attorney" prevents summary judgment for Defendant); Adams I at 18 (BATF agents whose

worked while employed by SSA. 17

Case 1:90-cv-00162-LJB

Document 636

Filed 03/29/2007

Page 25 of 49

"primary duty is pure investigative work" non-exempt) and 20, 21-22, 23, 26 (DEA, IRS, Secret Service and Customs agents whose primary duty is to plan and conduct investigations nonexempt). While DOL's older regulations on the administrative exemption did not explicitly refer to law enforcement activities, DOL noted in its commentary on its revised regulations that "[m]ost of the courts facing this issue [under the old regulations] have held that police officers, fire fighters, paramedics and EMTs and similar employees are not exempt[.]" 69 Fed. Reg. 22129. The new regulations do not change this result, but merely "make clear" this long-established rule. Id. The current regulations explicitly provide that police officers, detectives, . . . investigators, inspectors . . . and similar employees, regardless of rank or pay level, who perform work such as . . . preventing or detecting crimes; conducting investigations . . . for violations of law; performing surveillance; pursuing, restraining and apprehending suspects; . . . interviewing witnesses; interrogating . . . suspects; preparing investigative reports; or other similar work are not exempt administrative employees because "their primary duty is not the performance of work directly related to the management or general business operations of the employer[.]" New 29 C.F.R. § 541.3(b)(1), (3)(emphasis added). Plaintiffs' duties correspond almost perfectly to the work listed in this regulation. Defendant concedes that Plaintiffs' primary duty was to conduct investigations for violations of law. See, e.g., Def. HHS Statement of Fact ¶¶ 4, 5, 16; Def. App. at 66 ¶ 5, and 68 ¶ 11. In conducting those investigations, Plaintiffs performed all or nearly all of the other law enforcement functions listed in New 29 C.F.R. § 541.3(a)(1), including, among other duties, performing surveillance, pursuing, restraining and apprehending suspects, interviewing witnesses, preparing investigative reports, and interrogating suspects. See, e.g., Def. HHS

18

Case 1:90-cv-00162-LJB

Document 636

Filed 03/29/2007

Page 26 of 49

Statement of Fact ¶¶ 16-18. These are the same types of day-to-day activities performed by the federal criminal investigators found to be non-exempt in Adams I, Adams III, and Adams IV, as well as by the state criminal investigators found to be non-exempt in Reich, Bratt, Mulverhill, and Ahern. In short, because it is undisputed that Plaintiffs' primary duties are traditional, nonadministrative law enforcement tasks, Plaintiffs are not exempt from the FLSA. C. THE ADMINISTRATION/PRODUCTION DICHOTOMY SUPPORTS PLAINTIFFS' STATUS AS NON-EXEMPT BECAUSE PLAINTIFFS DO NOT ADMINISTER HHS BUT RATHER EXECUTE ITS DAY-TO-DAY OPERATIONS Faced with these authorities, Defendant resorts to semantics, relying solely on a formalistic interpretation of the administration/production dichotomy to support its position that Plaintiffs satisfy the primary duty test. Def. HHS Mem. at 9-18. Defendant claims that because HHS's mission ­ as summarily characterized in one document on HHS's website ­ does not include the words "law enforcement," Plaintiffs' law enforcement work must, ipso facto, be considered FLSA-exempt "administrative" work. See Def. HHS Mem. at 11 ("The duties of criminal investigators at HHS's OIG consist of performing a support function to HHS . . . rather than a criminal investigator in an agency whose mission is to investigate crimes."). In arguing that an employer's mission is more significant to the application of the primary duty test than an employee's actual day-to-day work, Defendant ignores one of the most basic tenets of the FLSA, that "exempt or nonexempt status `rests on the duties actually performed by the employee[.]'" Berg, 49 Fed. Cl. at 467 (quoting 5 C.F.R. § 551.202(i)); see also, Statham, 2002 WL 31292278 at *5 (exemption determinations "must be based upon the day-to-day duties actually performed by plaintiff"). Nor can Defendant's simplistic application of the administrative/production

19

Case 1:90-cv-00162-LJB

Document 636

Filed 03/29/2007

Page 27 of 49

dichotomy be squared with the authorities or common sense.15 It is important to recognize the consequences of Defendant's position. On this view, even though an OPM series 1811 GS-12 Criminal Investigator with HHS, for example, may do the exact same work on a day-to-day basis as an OPM series 1811 GS-12 Criminal Investigator with, for example, IRS, the IRS agent is entitled to FLSA overtime while the HHS agent is exempt.16 Indeed, the same result obtains even where the IRS agent and the HHS agent spend all their time working shoulder-to-shoulder on the same case, interviewing the same witnesses, reviewing the same documents, arresting the same armed and dangerous criminals, and ultimately ensuring the conviction of those criminals by testifying at the same trial. This surreal result is no mere conjecture ­ Plaintiffs often worked side-by-side with criminal investigators from IRS and other federal and state agencies, many of whom have already been declared nonexempt.17 The FLSA cannot and does not permit, much less compel, compel such an absurd result. Defendant's argument also depends on an abstract and incomplete conception of HHS's
15

Taking Defendant's argument to its natural conclusion, only a very limited class of employees, such as medical researchers and social workers, perform HHS's "production work." All other HHS employees, including not only HHS's law enforcement officers but its janitors, cafeteria workers, and security guards, apparently perform "administrative" work. Defendant concedes that this is true. Pl. HHS App. at 8-9; Def. HHS Mem. at 19 ("The duties performed by [Plaintiffs] are similar to the duties performed by GS-1811-12 and GS1811-13 criminal investigators in the agencies at issue in Adams I[.]"). Plaintiffs' Declarations attest to the fact that they frequently worked with criminal investigators from a wide range of federal agencies as well as state and local police. See, e.g., Pl. HHS App. at 214-15 (FBI, IRS, Secret Service, INS, Border Patrol, Customs, state and local law enforcement), 236 (FBI, IRS, Secret Service, DCIS, state and local law enforcement), 27273 (FBI, IRS, DEA, DCIS, state and local police), 356 (FBI, U.S. Marshals, INS, Secret Service, DCIS, state and local police), 374-75 (FBI, DEA, INS, IRS, Secret Service, state and local police), 396-97 (FBI, INS, IRS, DEA, Secret Service, state and local police), 403 (FBI, INS, IRS, Secret Service, state and local police).
17 16

20

Case 1:90-cv-00162-LJB

Document 636

Filed 03/29/2007

Page 28 of 49

mission. See Def. HHS Mem. at 2, 11 ("The mission of HHS is to `enhance the health and wellbeing of Americans by providing for effective health and human services and by fostering strong, sustained advances in the sciences, underlying medicine, public health and social services."). HHS is, and was during the time period relevant to this litigation, an enormous and multifaceted agency that runs over 300 programs in support of its overarching goals, primarily through insurance and transfer payments. Pl. HHS Statement of Fact ¶ 11. It is, and was, the Nation's largest distributor of health care entitlements and, prior to the creation of the separate Social Security Administration ("SSA") in March of 1995, was the largest provider of Social Security benefits to the disabled and the elderly, among others. Id. During the relevant time period, HHS spent more than one-third of the entire budget of the United States on these and related programs. Id. ¶ 12. Defendant's blithe assertion that the mission of this behemoth agency can be reduced to a simple, unattributed aphorism culled from HHS's website is unwarranted. Further, Plaintiffs' law enforcement work did directly advance HHS's core mission, even under Defendant's cramped characterization of it.18 This is apparent from, among other sources, the projects outlined in the HHS OIG OI Work Plan for 1991 and 1992, which "explains projects

18

As HHS criminal investigators, Plaintiffs had "primary jurisdiction" to enforce a set of criminal and civil statutes peculiar to the mission of HHS. Pl. HHS Statement of Fact ¶ 23. During the relevant time period, Plaintiffs were given a Digest of Applicable Statutes to "help them understand what charges could be brought" that set forth a number of statutes peculiar to the mission of HHS, including 42 U.S.C. § 408, covering Social Security fraud, 42 U.S.C. § 1320a-7a, a civil monetary penalties provision for certain other kinds of fraud, 42 U.S.C. § 1320a-7b, Medicare and Medicaid fraud rules including the anti-kickback provisions, and 42 U.S.C. § 1383a, Supplemental Security Income fraud. Pl. HHS App. at 59-99. The Digest of Applicable Statutes also listed a number of statutes contained in Title 18, the general federal criminal code, including false claims, conspiracy and mail fraud, which frequently would be relevant to Plaintiffs' investigations of crimes against HHS and its programs. Pl. HHS App. at 60-76. A larger collection of criminal and civil statutes peculiar to the mission of HHS that Plaintiffs and other HHS criminal investigators were charged with investigating is set forth in OIG's semi-annual reports to Congress. See, e.g., Pl. HHS App. at 165. 21

Case 1:90-cv-00162-LJB

Document 636

Filed 03/29/2007

Page 29 of 49

and initiatives developed by [OI] for implementation in Fiscal Years (FYs) 1991 and 1992)." Pl. HHS. App. at 308. See, e.g., Pl. HHS App. at 312 ("Some of OI's projects continue to focus on insidious practices which exploit sick and helpless people, such as providing poor-quality medical care or misusing their benefits."), 318 (describing program designed to punish "hospitals and physicians who knowingly deny emergency treatment to individuals (i.e., who improperly transfer a patient who is in active labor or who is medically unstable")), 318 (OI will investigate "allegations of poor medical care and slacking standards made against several hospitals"), 337 (investigation of "payees for [SSI] recipients who are unable to fully care for themselves [who] illegally convert the recipient's checks for their own personal use"). By investigating and deterring criminals willing to exploit the sick and steal benefits from the poor, Plaintiffs directly furthered HHS's mission to provide effective health and social services. Defining the precise contours of HHS's many functions and missions is ultimately unnecessary to resolve this case because Defendant's fundamental legal assumption ­ that the administration/production dichotomy is a robotic sorting device under which all employees who do not directly perform their employer's precisely-defined mission automatically satisfy the primary duty test ­ is simply false. Not only is this view contrary to the remedial nature of the FLSA and the well-established rule that all FLSA exemptions must be construed narrowly, it has been solidly rejected by the Adams I ruling, numerous judicial decisions, and both DOL and OPM. When the actual administration/production dichotomy, rather than Defendant's ossified version of it, is applied to the facts of this case, it is clear that Plaintiffs' law enforcement duties constitute non-exempt production work rather than exempt administrative work under any plausible characterization of HHS's mission. Defendant made a series of similar arguments in Adams I, arguing, for example, that the

22

Case 1:90-cv-00162-LJB

Document 636

Filed 03/29/2007

Page 30 of 49

role of IRS criminal investigators was to perform "supporting services," because "[t]he purpose of the IRS is to collect the proper amount of tax revenues at least cost to the public, and in a manner that warrants the highest degree of public confidence in integrity, efficiency and fairness." Pl. HHS Statement of Fact ¶8.19 IRS criminal investigators were performing exempt "supporting services" by "determin[ing] the extent of compliance and the causes of noncompliance" and "detect[ing] fraud and delinquency" by "conduct[ing] investigations of alleged criminal violations of Federal tax law . . .; mak[ing] recommendations with respect to criminal prosecutions and the assertion of Civil penalties against taxpayers . . . ; and assist[ing] the United States Attorney in the preparation of the case during the trial." Pl. HHS Statement of Fact ¶¶ 8-10. Defendant argued that because IRS criminal investigators were not collecting taxes, they did not do "production" work for IRS (much less the Treasury Department). Id. The Court quickly rejected "Defendant's broad construction" as contrary to the intent of the regulations defining "supporting services." Adams I at 14-16.20 The same should be done here.21

19

Defendant also cited the IRS Manual: "To achieve that purpose, [the IRSA] will: . . . determine the extent of compliance and the causes of noncompliance; do all things needed for the proper administration and enforcement of the tax laws . . . . In order to fulfill this mission, the Service must establish programs and facilities for receiving and processing returns, for detecting fraud and delinquency[.]" Pl. HHS Statement of Fact ¶ 9. Defendan