Trina Ray v. County of Los Angeles

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

TRINA RAY, individually, and on No. 17-56581

behalf of others similarly situated,

Plaintiff-Appellee, D.C. No.

2:17-cv-04239-

v. PA-SK

COUNTY OF LOS ANGELES,

Defendant-Appellant.

TRINA RAY; SASHA WALKER, No. 18-55276

individually, and on behalf of all

others similarly situated, D.C. No.

Plaintiffs-Appellants, 2:17-cv-04239-

PA-SK

v.

LOS ANGELES COUNTY DEPARTMENT OPINION

OF PUBLIC SOCIAL SERVICES,

Erroneously Sued As County of Los

Angeles,

Defendant-Appellee.

Appeal from the United States District Court

for the Central District of California

Percy Anderson, District Judge, Presiding

2 RAY V. COUNTY OF LOS ANGELES

Argued and Submitted March 7, 2019

Pasadena, California

Filed August 22, 2019

Before: Kim McLane Wardlaw and Mark J. Bennett,

Circuit Judges, and Kathleen Cardone, * District Judge.

Opinion by Judge Bennett

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

*

The Honorable Kathleen Cardone, United States District Judge for

the Western District of Texas, sitting by designation.

**

This summary constitutes no part of the opinion of the court. It

has been prepared by court staff for the convenience of the reader.

RAY V. COUNTY OF LOS ANGELES 3

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.

4 RAY V. COUNTY OF LOS ANGELES

COUNSEL

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.

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

RAY V. COUNTY OF LOS ANGELES 5

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).

6 RAY V. COUNTY OF LOS ANGELES

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.

RAY V. COUNTY OF LOS ANGELES 7

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.

1

The DOL also stated:

This 30-day non-enforcement policy does not replace

or affect the timeline of the Department’s existing

time-limited non-enforcement policy announced in

October 2014. 79 FR 60974. Under that policy,

through December 31, 2015, the Department will

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. The

Department will also continue to provide intensive

technical assistance to the regulated community, as it

has since promulgation of the Final Rule.

Application of the Fair Labor Standards Act to Domestic Service;

Announcement of 30-Day Period of Non-Enforcement, 80 Fed. Reg. at

55,029.

8 RAY V. COUNTY OF LOS ANGELES

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

2

Collective actions are provided for in the FLSA and are different

from class actions, see Campbell v. City of L.A., 903 F.3d 1090, 1101

(9th Cir. 2018), but the differences are not relevant to this appeal.

RAY V. COUNTY OF LOS ANGELES 9

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

3

Early on, Ray voluntarily dismissed the CDSS as a defendant, and

Plaintiffs did not name the State as a defendant in the now-operative

complaint.

10 RAY V. COUNTY OF LOS ANGELES

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

not be enforced by the relevant enforcement agency.”

The County filed an interlocutory appeal as to the denial

of Eleventh Amendment immunity. The district court

granted Plaintiffs’ motion to certify for interlocutory appeal

the district court’s holding that the putative collective period

began on November 12, 2015, and we granted Plaintiffs’

request to appeal that holding.

RAY V. COUNTY OF LOS ANGELES 11

DISCUSSION

We review de novo the denial of Eleventh Amendment

immunity. Cal. ex rel. Lockyer v. Dynegy, Inc., 375 F.3d

831, 843 n.12 (9th Cir. 2004). We construe the motion to

strike as a motion to dismiss in part, and thus we review the

effective date holding de novo because it essentially

dismissed Plaintiffs’ overtime claims for the period between

January 1, 2015 and November 12, 2015. See Yamaguchi v.

U.S. Dep’t of the Air Force, 109 F.3d 1475, 1482 (9th Cir.

1997).

The County is not entitled to Eleventh Amendment

immunity.

Plaintiffs first argue that Eleventh Amendment

immunity is never available to counties. The County argues

that it enjoys Eleventh Amendment immunity when acting

as an “arm of the State.”

Federal courts have long declined to extend Eleventh

Amendment immunity to counties. 4 Indeed, the Supreme

4

See, e.g., Lake Country Estates, Inc. v. Tahoe Reg’l Planning

Agency, 440 U.S. 391, 401 (1979) (“[T]he Court has consistently refused

to construe the Amendment to afford protection to political subdivisions

such as counties and municipalities, even though such entities exercise a

slice of state power.” (internal quotation marks omitted)); Lincoln Cty.

v. Luning, 133 U.S. 529, 530 (1890) (holding that the Eleventh

Amendment does not bar a suit against a county, though the principle

advanced has changed over time); Del Campo v. Kennedy, 517 F.3d

1070, 1075–76 (9th Cir. 2008) (“State sovereign immunity . . . does not

extend to counties and similar municipal corporations, even though they

share some portion of state power.” (internal quotation marks omitted)

(quoting Mt. Healthy City Sch. Dist. Bd. of Educ. v. Doyle, 429 U.S. 274,

280 (1977))).

12 RAY V. COUNTY OF LOS ANGELES

Court once said that Eleventh Amendment immunity does

not extend to municipal corporations. Mt. Healthy, 429 U.S.

at 280. But thirty years later, the Supreme Court suggested

that it was at least possible for a county to receive Eleventh

Amendment immunity. In Northern Insurance Company of

New York v. Chatham County, 547 U.S. 189, 190 (2006),

which involved a county-operated drawbridge, the Court

stated that a county might be entitled to Eleventh

Amendment immunity if it were “acting as an arm of the

State, as delineated by this Court’s precedents, in operating

the drawbridge.” 5

The Court cited several cases for this proposition. First,

Alden v. Maine: “The second important limit to the principle

of sovereign immunity is that it bars suits against States but

not lesser entities. The immunity does not extend to suits

prosecuted against a municipal corporation or other

governmental entity which is not an arm of the State.”

527 U.S. 706, 756 (1999). This sentence means one of two

things: either (1) that Eleventh Amendment immunity does

not extend to municipal corporations because they are not

arms of the state or (2) that Eleventh Amendment immunity

does not extend to a municipal corporation unless it is acting,

in a particular circumstance, as an arm of the state. Alden in

turn cites Mt. Healthy, in which the Court considered

whether “the Mt. Healthy Board of Education is to be treated

as an arm of the State partaking of the State’s Eleventh

5

At least one circuit has relied on this language and held that

counties might be entitled to Eleventh Amendment immunity. See

Fuesting v. Lafayette Par. Bayou Vermilion Dist., 470 F.3d 576, 579 (5th

Cir. 2006) (“[A] municipality can be immune from suit if it was ‘acting

as an arm of the State, as delineated by [the Supreme] Court’s

precedent’” (alteration in original) (quoting Chatham, 547 U.S. at 194)).

But, to our knowledge, no court has ever actually extended Eleventh

Amendment immunity to a county.

RAY V. COUNTY OF LOS ANGELES 13

Amendment immunity, or is instead to be treated as a

municipal corporation or other political subdivision to which

the Eleventh Amendment does not extend.” Mt. Healthy,

429 U.S. at 280. That citation suggests the former reading.

The Chatham Court also cited Lake Country Estates, but

while that case noted that “some agencies exercising state

power have been permitted to invoke the [Eleventh]

Amendment in order to protect the state treasury from

liability that would have had essentially the same practical

consequences as a judgment against the State itself,” it also

stated that “the Court has consistently refused to construe the

Amendment to afford protection to political subdivisions

such as counties and municipalities, even though such

entities exercise a ‘slice of state power.’” Lake Country

Estates, 440 U.S. at 400–01. Although these passages seem

to support Plaintiffs’ argument that counties never enjoy

Eleventh Amendment immunity, it is not for us to clarify

Chatham’s apparently contrary statement.

The Chatham Court ultimately found it dispositive that

the County there had conceded below that it had no Eleventh

Amendment immunity and that the question on which

certiorari was granted assumed that conclusion. Given that

the Supreme Court appears to have left open the possibility

that a county could be entitled to Eleventh Amendment

immunity in some cases, we decline to hold to the contrary.

We therefore assume without deciding that, consistent with

the Court’s language in Chatham, a county might be entitled

to Eleventh Amendment immunity if acting as an arm of the

state.

The County is not an arm of the State here.

In Mitchell, we set out five factors for determining

whether a government entity is an arm of its state for

14 RAY V. COUNTY OF LOS ANGELES

Eleventh Amendment immunity purposes: (1) “whether a

money judgment would be satisfied out of state funds”;

(2) “whether the entity performs central governmental

functions”; (3) “whether the entity may sue or be sued”;

(4) “whether the entity has the power to take property in its

own name or only the name of the state”; and (5) “the

corporate status of the entity.” 861 F.2d at 201. “To

determine these factors, the court looks to the way state law

treats the entity.” Id.

a. First Mitchell factor

“The first Mitchell factor—whether a money judgment

. . . would be satisfied out of state funds—is the most

important.” Sato v. Orange Cty. Dep’t of Educ., 861 F.3d

923, 929 (9th Cir. 2017); see also Beentjes v. Placer Cty. Air

Pollution Control Dist., 397 F.3d 775, 785 (9th Cir. 2005)

(noting that the first Mitchell factor is “the one given the

most weight”). The County conceded, both below and on

appeal, that it cannot show that a money judgment would be

paid directly with State funds. 6 Thus, this factor weighs

against Eleventh Amendment immunity.

b. Second Mitchell factor

As to the second Mitchell factor—whether the County

performs central governmental functions—we must

determine whether the County addresses “a matter of

statewide rather than local or municipal concern, and the

extent to which the state exercises centralized governmental

control over the entity.” Beentjes, 397 F.3d at 782 (internal

6

The parties discuss at length how the County and the State allocate

the costs of the program, but that is not relevant—what matters is who

would be responsible for satisfying a money judgment against the

County, not who pays for the program.

RAY V. COUNTY OF LOS ANGELES 15

quotation marks omitted) (first quoting Belanger v. Madera

Unified Sch. Dist., 963 F.2d 248, 253 (9th Cir. 1992); then

quoting Savage v. Glendale Union High Sch., Dist. No. 205,

Maricopa Cty., 343 F.3d 1036, 1044 (9th Cir. 2003)).

To begin, it is unclear whether the second Mitchell factor

concerns whether the County performs central government

functions in general or whether the County performs central

government functions in carrying out the particular function

at issue—here implementing the IHSS program.

As the district court correctly noted, the closest analogue

in our case law is Streit v. County of Los Angeles, 236 F.3d

552 (9th Cir. 2001). There, the Los Angeles County

Sheriff’s Department (LASD) would check its systems,

before releasing a prisoner, to see if the prisoner was wanted

by another law enforcement agency. Id. at 556. This

extended the period of incarceration one or two days past the

prisoners’ release dates. Id. The plaintiffs alleged that the

County delayed their release during these checks, in

violation of their civil rights. Id. The LASD argued that

because it was an arm of the state, it was not a “person” that

could be liable for damages under § 1983. Id. at 557.

We looked at the LASD’s performance of the particular

function at issue—implementing the pre-release policy—not

the LASD’s general function as a sheriff’s department. See

id. at 567. We held that “conducting the AJIS checks is not

a central government function.” Id. (emphasis added).

Thus, it appears from Streit that we look to whether the

County, in performing the particular function at issue,

performs a central government function. This fits with the

Court’s statement in Chatham that the county there might

have been entitled to Eleventh Amendment immunity if it

were “acting as an arm of the State, as delineated by this

16 RAY V. COUNTY OF LOS ANGELES

Court’s precedents, in operating [a] drawbridge.”

Chatham, 547 U.S. at 194 (emphasis added).

i. A matter of statewide rather than local or

municipal concern

The in-home care of the elderly and disabled is a matter

of both statewide and local concern. Plaintiffs are residents

of California, and the IHSS program is a statewide program

implemented through State legislation that provides care to

hundreds of thousands of California residents. But Plaintiffs

are also, of course, residents of Los Angeles County, and the

County has an interest in the program and the care provided

in Los Angeles.

ii. The extent to which the state exercises

centralized governmental control over the

entity

Here we consider the extent to which the County, in

implementing the program, has “discretionary powers” and

“substantial autonomy in carrying out [its] duties.” Beentjes,

397 F.3d at 783.

The County may negotiate, implement, and pay for pay

raises. See Cal. Welf. & Inst. Code § 12306.1. The County

may also allow its providers to exceed the maximum number

of hours that the CDSS has set. See id. § 12300.4(d)(3).

Thus, the County has discretion to make some important

choices on its own.

But the County contends—and Plaintiffs do not

dispute—that it has no discretion over the action (or

inaction) that subjected it to potential liability here: payment

of overtime wages under the FLSA. In taking the actions

that have subjected it to potential liability, the County had

RAY V. COUNTY OF LOS ANGELES 17

neither “discretionary powers” nor “substantial autonomy”

in carrying out its duties.

We think this clearly tips the scales in the County’s favor

as to this factor. The County had no choice in the matter of

the overtime wages, as the State mandated the payment start

date. We therefore hold that the second Mitchell factor

favors Eleventh Amendment immunity.

c. Third, fourth, and fifth Mitchell factors

The County does not dispute that it can sue and be sued

(third Mitchell factor), that it has the power to take property

in its own name (fourth Mitchell factor), or that it has an

independent corporate status 7 separate from the State (fifth

Mitchell factor). Thus, these three Mitchell factors weigh

against Eleventh Amendment immunity.

* * *

In sum, the first Mitchell factor is the most important,

and it weighs against Eleventh Amendment immunity. So

do the third, fourth, and fifth Mitchell factors. Only the

second factor favors immunity. We therefore hold that,

under Mitchell, the County is not an arm of the State when it

7

The fifth Mitchell factor asks whether the entity has “independent

corporate status,” Holz v. Nenana City Pub. Sch. Dist., 347 F.3d 1176,

1188 (9th Cir. 2003), or is, instead, merely an agency of the state without

an identity that is separate from the state, Beentjes, 397 F.3d at 785. Here

the County does not dispute its independent corporate status, as the

Supreme Court has already held that California counties have

independent corporate status and are not agents of the State of California.

See Moor v. Alameda Cty., 411 U.S. 693, 719 (1973).

18 RAY V. COUNTY OF LOS ANGELES

administers the IHSS program, and thus it has no Eleventh

Amendment immunity barring this action.

The Supreme Court has not overruled or

undermined Mitchell.

The County argues that we should overrule Mitchell

because a later Supreme Court case, Hess v. Port Authority

Trans-Hudson Corporation, 513 U.S. 30 (1994),

undermined it. As a three-judge panel, if we find that

intervening Supreme Court authority is clearly

irreconcilable with our own precedent, we must consider

ourselves bound by the intervening higher authority and

consider our precedent effectively overruled. See Miller v.

Gammie, 335 F.3d 889, 900 (9th Cir. 2003). Because Hess

is not clearly irreconcilable with Mitchell, we reject the

County’s argument.

In Hess, the Court held that a Congressionally approved

bistate entity—the Port Authority Trans-Hudson

Corporation (PATH), created to improve coordination of the

“terminal, transportation and other facilities of commerce in,

about and through the port of New York”—did not have

Eleventh Amendment immunity. 513 U.S at 35, 52–53

(citation omitted). The County argues that Hess established

“indicators of immunity” that undermine the Mitchell test.

We disagree.

The Hess Court noted that “current Eleventh

Amendment jurisprudence emphasizes the integrity retained

by each State in our federal system.” Id. at 39. The Court

then emphasized the difference between PATH and the

States of the Union: “The States, as separate sovereigns, are

the constituent elements of the Union. Bistate entities, in

contrast, typically are creations of three discrete sovereigns:

two States and the Federal Government.” Id. at 40.

RAY V. COUNTY OF LOS ANGELES 19

The Court stated that “[p]ointing away from Eleventh

Amendment immunity, the States lack financial

responsibility” for the bistate entity. Id. at 45. Here,

California similarly lacks financial responsibility for the

County generally, but Plaintiffs allege that although

California writes their checks, the County pays a share of

their wages and sets their hours of work.

In Hess, “indicators of immunity point[ed] in different

directions.” Id. at 47. Perhaps they do here as well. Los

Angeles is not a constituent member of the Union, but it

acted at the direction of the State and had no authority over

the payments at issue. But when faced with a different

dichotomy in Hess, the Court emphasized that the most

important factor was whether judgments against PATH

would be paid by the State: “the vulnerability of the State’s

purse [is] the most salient factor in Eleventh Amendment

determinations.” Id. at 48; see also id. at 48–49 (citing cases

for the “prevailing view” that the state-treasury factor is

“generally accorded . . . dispositive weight”); id. at 51

(stating that “the Eleventh Amendment’s core concern is not

implicated” if the State is not “in fact obligated to bear and

pay the . . . indebtedness of the enterprise”). 8

8

The dissent read the holding even more broadly:

In place of the various factors recognized in Lake

Country Estates, Inc. v. Tahoe Regional Planning

Agency, 440 U.S. 391, 99 S. Ct. 1171, 59 L.Ed.2d 401

(1979), for determining arm-of-the-state status, we

may now substitute a single overriding criterion,

vulnerability of the state treasury. If a State does not

fund judgments against an entity, that entity is not

20 RAY V. COUNTY OF LOS ANGELES

After noting that the bistate entity “was financially self-

sufficient,” generated “its own revenues,” and paid “its own

debts,” the Court held that “[r]equiring the [bistate entity] to

answer in federal court to injured railroad workers who

assert a federal statutory right, under the FELA, to recover

damages does not touch the concerns—the States’ solvency

and dignity—that underpin the Eleventh Amendment.” Id.

at 52. The same is true here. Mitchell and Hess both

emphasize the state-treasury factor. Hess thus fully supports

and does not undermine Mitchell. 9

The County argues that Hess emphasized the amount of

control that a state maintains over an entity, a factor

supposedly not mentioned in Mitchell and one that,

according to the County, favors Eleventh Amendment

immunity here. First, as we mentioned above, the second

Mitchell factor does include a “control” inquiry—it just

doesn’t make that factor dispositive. In addition, Hess

pointed out that “[g]auging actual control . . . can be a

‘perilous inquiry,’ [and] ‘an uncertain and unreliable

exercise.’” 513 U.S. at 47 (quoting Note, 92 Colum. L. Rev.

1243, 1284 (1992)). The Court therefore doubted not only

the efficacy but also the utility of a “control” analysis, and it

within the ambit of the Eleventh Amendment, and

suits in federal court may proceed unimpeded.

Id. at 55 (O’Connor, J., dissenting).

9

Los Angeles makes a legitimate point about the unfairness of the

result here. But that unfairness springs from the State and its

implementing legislation, not the Eleventh Amendment. Los Angeles

must air its grievance, if at all, in Sacramento.

RAY V. COUNTY OF LOS ANGELES 21

did not suggest that control was a favored, much less

dispositive, factor in the Eleventh Amendment analysis. 10

Hess clearly stated that “rendering control dispositive

does not home in on the impetus for the Eleventh

Amendment: the prevention of federal-court judgments that

must be paid out of a State’s treasury.” Id. at 48. And, in

specifically discussing the control factor, the Court noted

that even though “‘political subdivisions exist solely at the

whim and behest of their State,’ . . . cities and counties do

not enjoy Eleventh Amendment immunity.” Id. at 47

(quoting Port Auth. Trans-Hudson Corp. v. Feeney, 495 U.S.

299, 313 (1990)).

Finally, the County insists that Hess compels us to

consider the State’s dignity, a factor not mentioned in

Mitchell. Hess noted that the State’s “solvency and dignity

. . . underpin the Eleventh Amendment.” 513 U.S. at 52.

That is undoubtedly true. But the State is no longer a party

to this action, and it will not be responsible for an adverse

judgment against the County. Allowing this action against

Los Angeles does not injure California’s dignity. 11

10

The control discussed in Hess seems to have gone to overall

control over the entity, not just control within the context of the particular

function at issue: “PATH urges that we find good reason to classify the

Port Authority as a state agency for Eleventh Amendment purposes

based on the control New York and New Jersey wield over the

Authority. . . . But ultimate control of every state-created entity resides

with the State, for the State may destroy or reshape any unit it creates.”

Id. at 47. Thus, looking at the State’s overall control over the County as

a county would not help the County’s position here.

11

And, although it would not have altered our analysis, we note that

California has not sought to file an amicus brief (below or on appeal)

22 RAY V. COUNTY OF LOS ANGELES

The Supreme Court decided Hess about five years after

we decided Mitchell. And although Hess arose in a different

context than Mitchell-Hess addressed a bistate entity, not a

county—nothing in Hess so undermines Mitchell that we

have the power to overrule it. More importantly, even if we

used Hess rather than Mitchell to guide our analysis, we

would reach the same result.

When a non-state entity invokes Eleventh Amendment

immunity, the most important factor for determining

whether the entity is an arm of the state remains the state-

treasury factor—that is, whether the state will be liable for a

money judgment against the non-state entity. That factor,

and all but one of the other Mitchell factors, dictates the

result here. The Eleventh Amendment does not bar

Plaintiffs’ suit against Los Angeles.

The effective date of the rule is January 1, 2015.

We next consider whether the effective date of the rule

is the original effective date of January 1, 2015 or some date

after the D.C. Circuit reversed the district court’s vacatur.

The County argues that the rule cannot have an effective date

that is earlier than the date on which the D.C. Circuit

reversed the district court’s vacatur. Plaintiffs argue that the

legal effect of the vacatur is to reinstate the original January

1, 2015 effective date. We agree with Plaintiffs and hold

that the effective date of the rule is January 1, 2015.

arguing either that the County is entitled to Eleventh Amendment

immunity or that this case threatens California’s dignity.

RAY V. COUNTY OF LOS ANGELES 23

A January 1, 2015 effective date is not

impermissibly retroactive.

The County argues that a January 1, 2015 effective date

is impermissibly retroactive. Plaintiffs argue that the D.C.

Circuit’s decision, not the rule, applies retroactively, because

the D.C. Circuit was “explaining what the law always was,”

and thus reinstating the original effective date is merely a

return to the status quo ante.

When an appellate court applies “a rule of federal law to

the parties before it,” that interpretation “must be given full

retroactive effect in all cases still open on direct review and

as to all events, regardless of whether such events predate or

postdate [the] announcement of the rule.” Harper v. Va.

Dep’t of Taxation, 509 U.S. 86, 97 (1993). That is because

“when a court delivers a ruling, even if it is unforeseen, the

law has not changed. Rather, the court is explaining what

the law always was.” Jones Stevedoring Co. v. Dir., Office

of Workers’ Comp. Programs, 133 F.3d 683, 688 (9th Cir.

1997).

When the D.C. Circuit held that the DOL had the

rulemaking authority to promulgate the new rule and that its

new rule was a reasonable exercise of that authority, see Weil

II, 799 F.3d at 1090, it did not change the law but merely

explained what the law always was—the district court’s

erroneous contrary holding notwithstanding.

Two cases support our holding. In GTE South, Inc. v.

Morrison, 199 F.3d 733, 738, 740 (4th Cir. 1999), the Fourth

Circuit addressed an issue much like the one we face:

determining the effective date of certain pricing rules,

promulgated by the FCC, that the Eighth Circuit stayed and

then vacated before their effective date. The Supreme Court

later reversed the Eighth Circuit. See AT & T Corp. v. Iowa

24 RAY V. COUNTY OF LOS ANGELES

Utilities Bd., 525 U.S. 366, 385 (1999). The Morrison panel

held that “the Supreme Court’s determination that the FCC

has jurisdiction to issue pricing rules would appear to

compel the conclusion that the FCC always had such

jurisdiction and that the rules apply as of the effective date

originally scheduled.” 199 F.3d at 740 (emphasis added).

The Fourth Circuit emphasized that its holding was not

unfair to the parties who argued for a later effective date

because they had “ample notice” of the original effective

date and “surely knew that the FCC’s authority to issue

pricing rules might ultimately be upheld by the Supreme

Court.” Id. at 741.

In US West Communication, Inc. v. Jennings, 304 F.3d

950, 955 (9th Cir. 2002), we considered a similar question:

whether the regulations that the Fourth Circuit considered in

Morrison applied to conduct that occurred during the period

of vacatur. Finding the Fourth Circuit’s reasoning in

Morrison persuasive and applicable, we noted that the

Supreme Court’s determination that the regulations were

valid meant that we should apply them “to all . . . agreements

arbitrated under the Act, including agreements arbitrated

before the rules were reinstated.” Id. at 957 (emphasis

added). Relying on Morrison, we held that applying the

reinstated regulations to conduct that occurred during the

period of vacatur would not give the regulations an

impermissible retroactive effect. Id. at 958.

Morrison and Jennings are analogous to this case

because both involved determining how to apply rules or

regulations that were vacated but ultimately reinstated on

appeal. Indeed, Morrison commented not only on the

retroactivity of the Supreme Court’s reversal but also on the

effective date of the regulations, holding that the intervening

RAY V. COUNTY OF LOS ANGELES 25

vacatur did not alter the original effective date of the pricing

rules. 199 F.3d at 740.

Thus, Morrison and Jennings guide our analysis here.

The D.C. Circuit’s holding that the DOL had the authority to

promulgate the new rule and that the rule was reasonable

applies retroactively. As in Jennings, the regulations apply

as of the original effective date. To hold otherwise could

encourage dilatory appellate litigation. If an erroneously

vacated rule or regulation were not effective until sometime

after the mandate issued in a later appeal, then a party might

drag out the appellate process to avoid compliance for as

long as possible. Put differently, an erroneous vacatur

cannot postpone a rule’s effective date until an appellate

court corrects the error sometime in the future. And, as the

Fourth Circuit noted in Morrison, in a case like this everyone

knows that the lower court decision might be reversed on

appeal.

The State and its counties knew from October 13, 2013,

when the DOL first announced its final rule, that January 1,

2015 was the rule’s effective date. See Application of the

Fair Labor Standards Act to Domestic Service, 78 Fed. Reg.

at 60,454. The State and its counties had a full fifteen

months to comply with the final rule—indeed the State

initially said that it would comply with the original effective

date, but it changed course after the Weil I court vacated the

rule. That decision may have been reasonable, but it created

a monetary risk, as the State and its counties were well aware

that an appellate court might uphold the regulations on

appeal.

The district court held that to apply the Weil II decision

retroactively would be to “reinstate[] an earlier and judicially

vacated effective date and retroactively creat[e] liability for

violations of the reinstated regulations as if the District

26 RAY V. COUNTY OF LOS ANGELES

Court’s vacation of the regulations had never occurred.”

That is exactly correct. And although the district court found

that to be unfair, it would be equally unfair to hold that a

putative collective of homecare providers is not entitled to

nearly a year’s worth of overtime wages just because a single

district court issued an erroneous decision that another court

reversed on appeal. The State gambled that Weil I would be

affirmed. The effect of that gamble might be unfair to the

County, but the County must seek any recourse from the

State. It is not fair for the homecare providers to bear the

financial consequences of the State’s calculated risk.

The DOL’s decision not to enforce a new rule does

not obviate private rights of action.

According to the County, the DOL’s choice against

enforcing the rule until November 12, 2015 eliminated the

availability of private rights of action until that date because

a private right of action cannot precede an agency’s

enforcement of a rule or regulation. We disagree.

“An agency’s informal assurance that it will not pursue

enforcement cannot preclude a citizen’s suit to do so.” Ohio

Valley Envtl. Coal. v. Fola Coal Co., LLC, 845 F.3d 133,

145 (4th Cir. 2017) (emphasis added). Congress created a

private right of action under the FLSA for unpaid overtime:

“Any employer who violates the provisions of section 206

or section 207 of this title shall be liable to the employee or

employees affected in the amount of their . . . unpaid

overtime compensation . . . .” 29 U.S.C. § 216(b). An

agency’s discretionary decision to hold off enforcement does

not and cannot strip private parties of their rights to do so.

See Ohio Valley, 845 F.3d at 145 (“Congress enacted the

citizen suit provision of the Clean Water Act to address

situations, like the one at hand, in which the traditional

enforcement agency declines to act.”).

RAY V. COUNTY OF LOS ANGELES 27

The district court’s hypothesis that the D.C. Circuit and

DOL “intended” that the regulation become effective “no

earlier than November 12, 2015” is tenuous and, in any

event, irrelevant. First, the D.C. Circuit said nothing at all

on the issue. Second, there is nothing in the several

statements of the DOL, which the district court relied on, that

suggest that it intended its discretionary enforcement choices

to preclude private enforcement. Indeed, other than by

amending the rule, the DOL could not have precluded

private enforcement even if it wanted to.

The rule’s original effective date remains January 1,

2015. If the DOL “intended” for the effective date be

something other than January 1, 2015, the DOL could have

sought to change that effective date through the procedures

set out in the Administrative Procedure Act. Were we to

hold to the contrary and impose our view that the DOL’s

exercise of discretion amended the effective date sub

silentio, we would in fact be usurping the rulemaking

authority of the DOL. See Nat. Res. Def. Council, Inc. v.

U.S. E.P.A., 683 F.2d 752, 762 (3d Cir. 1982) (holding that

a final rule’s effective date is an “essential part” of that rule

and is thus subject to the rulemaking procedures of the

APA).

The effective date of the rule is January 1, 2015. 12

12

Although some district courts have reached a different

conclusion—see, e.g., Bangoy v. Total Homecare Solutions, LLC, No.

1:15-CV-573, 2015 WL 12672727, at *3 (S.D. Ohio Dec. 21, 2015)

(holding that the plaintiffs failed to state a claim for a violation of the

FLSA between January 1, 2015 and “late August 2015”)—nearly all of

them have reached the same result we reach here, see, e.g., Kinkead v.

Humana, Inc., 206 F. Supp. 3d 751, 752 (D. Conn. 2016) (holding that

the effective date of the rule is January 1, 2015, “the effective date set

28 RAY V. COUNTY OF LOS ANGELES

CONCLUSION

We AFFIRM the district court’s holding that the County

is not entitled to Eleventh Amendment immunity and

REVERSE the district court’s holding that the putative

collective period began on November 12, 2015, holding

instead that the rule’s effective date—and thus the beginning

of the putative collective period—is January 1, 2015. We

REMAND for proceedings consistent with this opinion.

Costs shall be awarded to Plaintiffs-Appellants.

forth by the agency”); Collins v. DKL Ventures, LLC, 215 F. Supp. 3d

1059 (D. Colo. 2016) (same); Lewis-Ramsey v. Evangelical Lutheran

Good Samaritan Soc’y, 215 F. Supp. 3d 805 (S.D. Iowa 2016) (same).