Marcos Montes v. Janitorial Partners, Inc.

United States Court of Appeals

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued May 15, 2017 Decided June 16, 2017

No. 15–7107

MARCOS MONTES,

APPELLEE/CROSS-APPELLANT

v.

JANITORIAL PARTNERS, INC. AND RAY PARK,

APPELLANTS/CROSS-APPELLEES

GEOFF OGDEN, ET AL.,

CROSS-APPELLEES

Consolidated with 16–7063

Appeals from the United States District Court

for the District of Columbia

(No. 1:13–cv–00410)

Denise M. Clark argued the cause and filed the briefs for

the appellee/cross-appellant.

John A. DiNucci argued the cause and filed the briefs for

the appellants/cross-appellees.

Before: GARLAND, Chief Judge, and HENDERSON and

WILKINS, Circuit Judges.

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Opinion for the Court filed by Circuit Judge HENDERSON.

KAREN LECRAFT HENDERSON, Circuit Judge: Manuel

Montes sued his employer for wage underpayment. When his

employer failed to respond, Montes obtained a default

judgment for himself and two fellow employees. But there

was a problem: the statute he sued under required the fellow

employees to formally “opt in” to the lawsuit. They had not

done so. Reacting to their failure, the district court vacated its

default judgment as to Montes’s two fellow employees,

concluding it had lacked subject matter jurisdiction to enter it.

That was error. The opt-in omission did not oust the court of

subject matter jurisdiction of their claims. Nevertheless, the

judgment may be void for a different reason: two defendants

claim they were never served with the complaint. To decide

the service issue, the district court must hold an evidentiary

hearing on remand.

I. BACKGROUND

Janitorial Partners, Inc. (JPI) is a Virginia corporation that

provides janitorial services throughout the District of Columbia

(D.C.) metropolitan area. For several years, it employed

Montes as a janitor. In March 2013, Montes sued JPI and four

of its officers, including President Ray Park. He asserted

claims under the Fair Labor Standards Act (FLSA), 29 U.S.C.

§§ 201 et seq. and two D.C. statutes,1 alleging the defendants

failed to pay, inter alia, minimum wage or overtime.

Montes styled his lawsuit as an FLSA collective action.

In a collective action, the named plaintiff sues on behalf of

1

The statutes are the D.C. Minimum Wage Revision Act, D.C.

CODE §§ 32-1001 et seq. (2013), and the D.C. Wage Payment and

Collection Law, D.C. CODE §§ 32-1301 et seq. (2013).

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himself and other similarly-situated employees. 29 U.S.C.

§ 216(b). Section 16(b) of the FLSA provides that “[n]o

employee shall be a party plaintiff to [a collective] action

unless he gives his consent in writing . . . and such consent is

filed in the court in which such action is brought.” Id.

Montes alleged that “there [were] 2 similarly-situated persons”

whose “harms suffered . . . were the same as or substantially

similar” to his. Compl. ¶¶ 57, 59, Joint Appendix 19. He

also alleged that collective-action “[c]onsents . . . have [been]

and continue to be executed.” Id. ¶ 10, Joint Appendix 11.

But he did not file the consents with his complaint.

Summonses issued for each defendant. According to

process server Dervin Romero’s two affidavits, service was

effectuated on Park both individually and as JPI’s registered

agent on June 6, 2013, at JPI headquarters.2 This meant JPI

and Park had until June 27 to answer but neither did. The clerk

of court therefore declared them in default on July 2.

Montes’s counsel subsequently moved for entry of default

judgment on behalf of “Plaintiffs Marcos Montes, Victor

Palma, and Sandra Zelaya.” Joint Appendix 52. Although a

supporting memorandum asserted that Palma and Zelaya

“consented to th[e] action,” Joint Appendix 54 n.2, their

consent forms remained unfiled. The district court

nonetheless entered a default judgment for Montes, Palma and

Zelaya. It also awarded costs and attorney’s fees.

The three soon began efforts to collect on their judgment.

But because the judgment caption listed only Montes’s name,

they could not register it in the Virginia courts. Accordingly,

they requested the district court to “issue a new Order and

Judgment with the full caption.” Joint Appendix 89. The

2

The district court docket contains no evidence that Romero

served the other three named defendants and no judgment was

entered against them.

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district court obliged. Several months later, they sought and

obtained an entry of judgment and writ of execution against

PNC Bank, N.A., JPI’s and Park’s garnishee. The bank then

paid Montes, Palma and Zelaya the full amount of the default

judgment.

JPI and Park moved to vacate the default judgment under

Federal Rule of Civil Procedure 60(b). They argued, inter

alia, that the judgment was void because Palma and Zelaya had

not opted in. JPI and Park also claimed they had never been

served and therefore the district court lacked personal

jurisdiction of them. In support, they submitted several

declarations. Park’s declaration asserted that he generally

worked from home, not at JPI headquarters where Romero

allegedly served him. Park also noted that Romero’s affidavit

described him as thirty-five years old when in fact he was over

fifty. According to the declaration of JPI general manager,

Donald Garrett, Romero went to JPI headquarters but did not

serve Park while there. In another declaration, Jeffrey

Lawson, a former JPI business advisor, stated he e-mailed Park

on June 6, 2013 shortly after 3:00 pm. Had Park come in that

day, Lawson said, the two would not have corresponded by e-

mail. In light of this evidence, JPI and Park requested the

district court to conduct a hearing before crediting Romero’s

affidavit.

In September 2015, the district court rejected JPI’s and

Park’s defense without a hearing. It emphasized that

Romero’s “affidavits unequivocally state[d] that . . . Park . . .

was served . . . at 2:24PM on June 6, 2013.” Montes v.

Janitorial Partners, Inc., 128 F. Supp. 3d 188, 192 (D.D.C.

2015). The court did not find Park’s, Garrett’s or Lawson’s

declarations sufficiently credible. Nevertheless, it set aside its

judgment for Palma and Zelaya. Reasoning that the FLSA’s

opt-in requirement was “more than just a procedural

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technicality,” id. at 193, the court concluded it lacked subject

matter jurisdiction because Palma and Zelaya were not party

plaintiffs and vacated the judgment in their favor. It then

referred the case to a magistrate judge for a report and

recommendation regarding Montes’s attorney’s fees award in

light of the partial vacatur.

II. ANALYSIS

Each party challenges one of the district court’s rulings.

Montes principally attacks the substance of the district court’s

vacatur decision, arguing that “the District Court’s judgment in

Ms. Zelaya and Mr. Palma’s favor, while perhaps granted in

error, was not void.” Cross-Appellant Br. 13. JPI and Park

challenge the district court’s failure to hold an evidentiary

hearing before ruling on whether service had been effectuated.3

A. DISTRICT COURT’S PARTIAL VACATUR

We begin with Montes’s argument. Before reviewing its

merits, we address our own jurisdiction. JPI and Park argue

that we lack jurisdiction of Montes’s appeal because it is moot.

The United States Constitution limits our jurisdiction to

“Cases” and “Controversies.” U.S. CONST. art III., § 2, cl. 1.

“A case becomes moot—and therefore no longer a ‘Case’ or

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JPI and Park also argue that the default judgment was void

as to Palma and Zelaya because they had no notice of their claims.

But the complaint itself gave them notice, as it brought a collective

action under the FLSA, asserted that two persons similarly situated

to Montes qualified as Collective Action Members and requested

“unpaid minimum wages and overtime against Defendants in favor

of Plaintiff and all Collective Action Members.” Joint Appendix 24

(emphasis added). Assuming for this argument that JPI and Park

were in fact properly served, they were therefore on notice that any

default judgment could reach employees other than Montes.

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‘Controversy’ for purposes of Article III—when the issues

presented are no longer ‘live’ or the parties lack a legally

cognizable interest in the outcome.” Already, LLC v. Nike,

Inc., 568 U.S. ___, 133 S. Ct. 721, 726 (2013) (some internal

quotation marks omitted). If an intervening circumstance

deprives the plaintiff of a personal stake in the lawsuit’s

outcome, the action must be dismissed as moot. Genesis

Healthcare Corp. v. Symczyk, 569 U.S. ___, 133 S. Ct. 1523,

1528 (2013). Because Montes retains a personal stake in the

controversy regarding whether the judgment in favor of Palma

and Zelaya should be reinstated, however, the action is not

moot. The district court directed a magistrate judge to

recalculate Montes’s attorney’s fees award in light of its having

vacated Palma’s and Zelaya’s judgment. Presumably, the

district court concluded that the attorney’s fees award could

require reduction given Palma’s and Zelaya’s non-plaintiff

status. Cf. 29 U.S.C. § 216(b) (In FLSA collective action,

“[t]he court . . . shall, in addition to any judgment awarded to

the plaintiff . . . , allow a reasonable attorney’s fee to be paid

by the defendant, and costs of the action.”). If so, Montes

might not have been able to recover as great a share of the

litigation costs. He also had an interest in ensuring the

attorney’s fees award was not reduced. Cf. Richards v. Delta

Air Lines, Inc., 453 F.3d 525, 529 (D.C. Cir. 2006) (“So long

as [a class-action] plaintiff retains a personal stake in shifting

to successful class litigants a portion of those fees and expenses

incurred as the purported class representative, the plaintiff has

a sufficient interest to appeal the denial of class certification.”

(brackets and internal quotation marks omitted)).

We proceed to the merits of his argument. Conducting de

novo review, United States v. Philip Morris USA Inc., 840 F.3d

844, 849 (D.C. Cir. 2016) (“[w]e review a district court’s Rule

60(b)(4) decision de novo.”), we believe the district court erred

in vacating the judgment for Palma and Zelaya. Rule 60(b)(4)

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permits a district court “[o]n motion and just terms” to “relieve

a party . . . from a final judgment, order, or proceeding” if “the

judgment is void[.]” FED. R. CIV. P. 60(b). But “[a]

judgment is not void . . . simply because it . . . may have been

erroneous.” United Student Aid Funds, Inc. v. Espinosa, 559

U.S. 260, 270 (2010) (internal quotation marks omitted). On

the contrary, it is void only in limited circumstances—for

example, if entered by a court without subject matter

jurisdiction. See Philip Morris, 840 F.3d at 850. This

principle has an important corollary: Not every “claim of

procedural deficiency” implicates subject matter jurisdiction.

Bell Helicopter Textron, Inc. v. Islamic Republic of Iran, 734

F.3d 1175, 1179 (D.C. Cir. 2013). We therefore must decide

whether section 16(b)’s opt-in requirement is of jurisdictional

significance.4

The distinction between jurisdictional and

nonjurisdictional requirements is important. Jurisdictional

requirements “govern a court’s adjudicatory authority[.]”

Gonzalez v. Thaler, 565 U.S. 134, 141 (2012) (internal

quotation marks omitted). By contrast, a nonjurisdictional

requirement, “even if important and mandatory,” Henderson ex

rel. Henderson v. Shinseki, 562 U.S. 428, 435 (2011), does not.

The United States Supreme Court has prescribed a “readily

administrable bright line” to distinguish the two. Arbaugh v.

4

JPI and Park argue Montes has forfeited any argument that

section 16(b) is procedural by not raising it in district court. We

disagree. In district court, Montes argued that Palma’s and Zelaya’s

judgment was within the Court’s subject matter jurisdiction. He

also contended their failure to file consent forms did not change that.

The district court disagreed. Montes v. Janitorial Partners, Inc.,

128 F. Supp. 3d 188, 193 (D.D.C. 2015). Montes’s current

argument is thus an effort to “refine and clarify [his] analysis in light

of the district court’s ruling.” Teva Pharm., USA, Inc. v. Leavitt,

548 F.3d 103, 105 (D.C. Cir. 2008).

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Y&H Corp., 546 U.S. 500, 516 (2006). If the Congress

“clearly states that a threshold limitation on a statute’s scope

shall count as jurisdictional,” that is the end of the matter. Id.

at 515–16. But if the Congress “does not rank a statutory

limitation on coverage as jurisdictional,” a court must not treat

it as such. Id. at 516. We examine the provision’s “text,

context, and relevant historical treatment,” Reed Elsevier, Inc.

v. Muchnick, 559 U.S. 154, 166 (2010), and ask whether

“traditional tools of statutory construction . . . plainly show

that Congress imbued a procedural bar with jurisdictional

consequences[,]” United States v. Kwai Fun Wong, 575 U.S.

___, 135 S. Ct. 1625, 1632 (2015).

Applying these principles, we readily conclude section

16(b)’s opt-in requirement is nonjurisdictional. Section 16(b)

is a broad provision. See 29 U.S.C. § 216(b). It creates a

right of action against employers for wage and hours violations.

It provides for the recovery of costs and attorney’s fees. And

it sets out the circumstances in which certain action by the

Secretary of Labor affects an employee’s right to sue. But it

does not purport to limit the court’s power. Gonzalez, 565

U.S. at 141. In fact, its sole reference to jurisdiction is the

clause permitting a plaintiff to sue “in any Federal or State

court of competent jurisdiction.” 29 U.S.C. § 216(b). This

language confirms our conclusion in that it assumes a grant of

jurisdiction elsewhere. And, here, there is such a grant. 28

U.S.C. § 1331 assigns the federal district court original

jurisdiction over all civil actions “arising under the . . . laws . . .

of the United States.” Montes’s action arose under the FLSA,

plainly a law of the United States. And “nothing in § [1331]

conditions its jurisdictional grant on compliance with

§ [16(b)’s opt-in requirement].” Musacchio v. United States,

577 U.S. ___, 136 S. Ct. 709, 717 (2016) (internal quotation

marks omitted). The district court therefore had subject

matter jurisdiction. Palma’s and Zelaya’s failure to comply

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with section 16(b) means instead that they failed to establish

their cause of action. See Trudeau v. FTC, 456 F.3d 178, 183–

85 (D.C. Cir. 2006).

B. DISTRICT COURT’S FAILURE TO HOLD

EVIDENTIARY HEARING

Although a district court “[t]ypically . . . enjoys broad

discretion in managing its docket[,]” Grimes v. District of

Columbia, 794 F.3d 83, 90 (D.C. Cir. 2015), that discretion is

not limitless. And in some circumstances, failure to hold an

evidentiary hearing constitutes an abuse of discretion. E.g.,

Cobell v. Norton, 391 F.3d 251, 261–62 (D.C. Cir. 2004). As

we long ago explained, a district court “cannot rest its decision

simply on the paper record” if a factual dispute’s resolution

turns on the parties’ credibility. Prakash v. Am. Univ., 727

F.2d 1174, 1180 (D.C. Cir. 1984). It must instead hold a

hearing to assess credibility. Id.

That principle controls here. The record before the

district court contained contradictory evidence regarding

service of process. Romero swears he served Park. Park,

Garrett and Lawson insist otherwise. Had one of the written

submissions “demonstrate[d] the falsity of [another] with

reasonable certainty,” perhaps the district court could have

avoided assessing credibility. Id. But there was reason to

question whether Romero served Park. Park emphasized that

he was a decade and a half older than Romero believed. And

Lawson’s e-mail to Park may suggest Park was not at JPI

headquarters on June 6. Relying as it did on the declarations

only, the district court’s “opportunity to judge credibility was

nonexistent.” Autera v. Robinson, 419 F.2d 1197, 1202 (D.C.

Cir. 1969). It therefore lacked a sufficient basis to credit one

declaration over another. See Durukan Am., LLC v. Rain

Trading, Inc., 787 F.3d 1161, 1164 (7th Cir. 2015) (“Only a

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live hearing can resolve [a] factual dispute” regarding service

in deciding Rule 60(b)(4) motion.). Under these

circumstances, the district court abused its discretion in failing

to conduct an evidentiary hearing.

For the foregoing reasons, we reverse the district court’s

vacatur of the default judgment for Palma and Zelaya. On

remand, the district court must hold an evidentiary hearing to

determine whether its original judgment was void for lack of

personal jurisdiction based on defective service of process.

So ordered.