Opposition Brief — City of Tulsa v. Spradling

—

| | Supreme Court, US.

\e) FILED

No. 96-905 JAN 6 1997

In The CLERK e

Supreme Court of the United States

a

October Term, 1996

THE CITY OF TULSA, OKLAHOMA, a Municipal

Corporation,

Petitioner,

vs.

B.N. SPRADLING, B.C. DOW, J.D. FELLINGER, L.M.

LAMB, ROBERT L. McCLARY, PHILLIP MORGANS,

EDGAR LEON WILSON, F.L. COOK, D.R. GRANT, E.L.

SIMPSON, THOMAS E. HOLLAND, ROBERT E. NANTZ,

BILLY JOE GEIER, KEN LORTON, and BILLY J.

RICHARDSON,

Respondents.

On Petition for Writ of Certiorari to the United States

Court of Appeals for the Tenth Circuit

RESPONDENTS’ BRIEF IN OPPOSITION

ROBERT A. NANCE

Counsel of Record

DONALD M. BINGHAM

RIGGS, ABNEY, NEAL, TURPEN,

ORBISON & LEWIS

Attorneys for Respondents

502 West Sixth Street

Tulsa, Oklahoma 74119

(918) 587-3161

70290

w

(800) 3 APPEAL + (800) 5 APPEAL + (800) BRIEF 21 late

Senices, inc.

QUESTIONS PRESENTED

(According to Respondents)

1. Whether an employee’s pay is “subject to reduction”

within the meaning of the Secretary of Labor’s “salary basis

test,” 29 C.F.R. § 541.118(a), where the employer stipulated

that it has a policy under which the employee’s pay is subject to

being reduced, but where the employer has never reduced the

pay of the employee.

(a) If not, is such an employee’s pay “subject to

reduction” within the meaning of the salary basis test if

the employer, pursuant to its policy, has reduced the pay

of another employee in the same classification?

(b) If the only such pay-reduction occurred prior

to the employer becoming subject to the Fair Labor

Standards Act, would an employee who entered the same

classification after the Act became applicable be non-

salaried?

2. Whether the salary basis test, 29 C.F.R. § 541.118(a),

may be validly applied to employees of a governmental body

whose pay system is not based upon a public accountability law

or principle.

ii

TABLE OF CONTENTS

Se OE I. co ikk bo caw Keke ccnusi hander ii

Reasons for Denying the Writ... . 0... ce csccccccess 1

I. The facts and issues of this case are significantly

different from those of Auer. ..........000055 |

Il. The second question presented by Petitioner is

not before this Court in Auer, ............455; 5

Ill. There is no compelling reason for this Court to

CQuestions Presented 2... ccc nec cccstecccosnonenne i |

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address the second question presented. ....... 6

CORCIRIION oo ccc cctveeassn seupeebewsesseneweses 9

TABLE OF CITATIONS

Cases Cited:

Auer et al. v. Robins, 65 F.3d 710 ............. i eS

Avery v. City of Talladega, Ala., 24 F.3d 1337 (11th Cir.

1994)

iii

Contents

Layne & Bowler Corp. v. Western Well Works, 261 U.S.

387, 43 S. Ct. 422, 67 L. Ed. 712 (1923) .........

McDonnell v. City of Omaha, 999 F.2d 293 (8th Cir.

1993), cert. denied, 510 U.S. 1163, 114 S. Ct. 1188

ME Wea a a bok wed eh oe so oo ecke vkekrc lcs

Mueller v. Reich, 54 F.3d 438 (7th Cir. 1995) ........

Rice v. Sioux City Cemetery, 349 U.S. 70, 75 S. Ct. 614

PR Oe oon be dnd occ ence cus.

Service Employees Int’l. Union, Local 102 y. County of

San Diego, 60 F.3d 1346 (9th Cir. 1994), cert. denied,

— U.S. _, 116 S. Ct. 774, 133 L. Ed. 2d 726 (1996)

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Other Authorities Cited:

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STATEMENT OF JURISDICTION

The jurisdiction of this Court over the second question

presented is properly invoked pursuant to 28 U.S.C. § 1254(1).

As to the two (2) sub-issues of the first question presented,

however, this Court lacks jurisdiction to grant a writ of certiorari,

in that neither was decided by the court of appeals to which the

writ would issue. See Questions Presented (According to

Respondents), supra at i, Nos. l(a) and 1(b).

STATEMENT OF THE CASE

Respondents concur in Petitioner’s statement of the case

except Petitioner’s statement that “the issues presented in the

present case are nearly identical to the issues presented before

this Court in Auer, et al. v. Robbins, et al., No. 95-897.” Petition

for Writ of Certiorari, p. 6. As discussed infra, only the first

question presented by Petitioner (and, arguably, only part of that

question) has been briefed by both sides in Auer.

REASONS FOR DENYING THE WRIT

I.

THE FACTS AND ISSUES OF THIS CASE ARE

SIGNIFICANTLY DIFFERENT FROM THOSE OF AUER.

The only reason offered by Petitioner to support the issuance

of a writ of certiorari is that this case presents issues substantially

similar to those pending in Auer. Because the facts and issues in

Auer are clearly dissimilar to those in the instant record, however,

this Court’s consideration of Auer does not merit the granting of

Peiitioner’s request.

2

In Auer, the Eighth Circuit held that “the mere possibility

of an improper deduction in pay does not defeat an employee’s

salaried status.” Auer, 65 F.3d at 710, citing McDonnell v. City

of Omaha, 999 F.2d 293, 296 (8th Cir. 1993), cert. denied, 510

U.S. 1163, 114 S. Ct. 1188 (1994). The police sergeants in Auer

were able to establish initially that one improper deduction had

been made from the salary of one sergeant. However, the Eighth

Circuit applied the “window of correction” provided in 29 C.F.R.

§ 541.118(a)(6) to nullify the effect which that particular

deduction would have had upon the sergeants’ salaried status.

The court stated, “Under the unique circumstances surrounding

Sergeant Guzy’s disciplinary loss of pay, we believe that the

Department made a one-time deduction, and did not make the

disciplinary deduction from Sergeant Guzy pursuant to an

established policy.” Auer, 65 F.3d at 711 (emphasis added). The

Court also found that “the Guzy disciplinary incident was a one-

time incident that can never reoccur [sic] because the Department

has since changed its policy.” Auer, 65 F. 3d at 711.

In the present case, the Tenth Circuit not only found that

Respondents were subject to reductions in pay for disciplinary

reasons, pursuant to an express policy of Petitioner, Pet. App.

A-19 to A-20, but also cited “uncontroverted evidence that

district chiefs have been disciplined, on more than one occasion,

by a reducticn in pay for a reason other than an infraction of a

safety rule of major significance.” Pet. App. A-23. (internal

quotation marks omitted)

Petitioner argued on appeal that the “window of correction”

provided by 29 C.F.R. § 541.118(a)(6) saved its claimed

exemptions. The Tenth Circuit noted that this argument had not

been raised in the district court and properly held that “issues

raised for the first time on appeal will not be reviewed except

for the most manifest error.” Pet. App. A-24 to A-25. The Tenth

Circuit also held, “Even if we were to consider the City’s

argument, we find no merit to it.” Pet. App. A-25.

3

The Tenth Circuit cited Auer as authority that the “window

of correction” is not available if the employer has a settled policy

of making improper deductions from compensation. Pet. App.

A-25 (citing Auer, 65 F.3d at 711). The court noted that “the

City has at least one settled policy of making improper deductions

from the Plaintiffs’ compensation (i.e., deductions from pay for

disciplinary infractions), and is not entitled to the ‘window of

correction.’” Pet. App. A-25. (emphasis added)

The fact-differences between Auer and the present case are

apparent and material. In Aver, the court found that the public

employer did not have a “settled” policy authorizing pay-

deductions for disciplinary reasons, and found that the public

employer had clarified its unsettled policy to prevent a recurrence

of any improper deduction. Here, the Tenth Circuit found that

Petitioner has a “settled policy of making improper deductions

.. - for disciplinary infractions.” Pet. App. A-25. Petitioner did

not argue on appeal (or assert in its Petition) that it has clarified

or modified that policy.

In Auer, the court nullified, by application of the “window

of correction,” the only pay-deduction which could have entitled

the plaintiffs to status as non-exempt employees, whereas in this

case, the Tenth Circuit found that (a) Petitioner had failed to

raise the “window of correction” argument in the district court,

and (b) even if the issue had been properly preserved for appeal,

Petitioner could not validly invoke the “window of correction”

defense because Petitioner did not maintain that any pay-

deduction for disciplinary reasons had been done on a one-time

basis or unintentionally. Pet. App. A-25.

This Court may affirm Auer by holding that although an

actual deduction from pay pursuant to a settled policy is required

to establish that an employee is non-salaried, the plaintiffs in

Auer showed neither the existence of a settled policy nor any

4

actual deduction based upon such policy. Such a holding by this

Court would not cause a different outcome in the present case

upon remand to the Tenth Circuit: Respondents established by

stipulation the existence of the settled policy of making improper

pay-reductions for disciplinary infractions and the existence of

actual deductions for such infractions.

Petitioner may be asking this Court to grant certiorari upon

a sub-issue of its first question: If one employee in a particular

job-classification has suffered, in accordance with the

employer’s policy, a pay-reduction for a minor disciplinary

infraction, is every person working in that classification “non-

salaried”? This sub-issue was not discussed by the Tenth Circuit,

and it is not clear that Petitioner raised it sufficiently.'

The second sub-issue in Petitioner’s first question is the

Tenth Circuit’s reliance on actual deductions made prior to the

FLSA’s application to public employers. This sub-issue was not

discussed by the Tenth Circuit, and it is not clear that Petitioner

raised it sufficiently.* Petitioner has not offered any independent

reason for this Court to consider either sub-issue.*

1. Nowhere in its opinion does the Tenth Circuit identify this sub-issue

as a matter asserted to be error. In discussing the docking of pay for

disciplinary infractions, the court concludes that Petitioner's complaint about

the disciplinary aspect of the salary basis test is pro forma: “Significantly,

the City has not challenged the court’s factual findings on this issue or the

court’s legal conclusion.” Pet. App. A-23. The district court’s opinion gives

no indication that Petitioner raised this sub-issue.

2. See footnote 1.

3. Although Petitioner asserts that there is a conflict among the circuit

courts of appeal regarding the first question presented, only one circuit has

decided the effect of disciplinary deductions taken from the pay of fewer

(Cont'd)

5

The Tenth Circuit reviewed Auer knowing that certiorari

had been granted by this Court.‘ Contrary to Petitioner’s

argument in footnote 4 of its Petition, the issues in Auer do not

suggest that the Tenth Circuit would reverse itself if this Court

affirms Aver and remands the present case for re-consideration

in light of the affirmance.

Il.

THE SECOND QUESTION PRESENTED BY

PETITIONER IS NOT BEFORE THIS COURT IN AUER.

Again, the only argument offered by Petitioner is that the

issues presented in its Petition concern substantially the same

issues raised in Aver. Although Petitioner’s second question (i.e.,

applicability of the salary basis test to public employees) was

initially presented by the petitioners in Aver, it was not briefed

by both sides.°

(Cont'd)

than all plaintiffs or from the pay of non-plaintiffs. See Avery v. City of

Talladega, Ala., 24 F.3d 1337, 1342 (11th Cir. 1994) (suspension without

pay of one police lieutenant nullified not only his salaried status but that of

other lieutenants as well). No circuit has decided how remote in time actual

deductions may be and still qualify as events that affect the status of an

employee entering the same classification as those employees who suffered

the actual deductions.

4. This Court granted certiorari in Auer on June 24, 1996. The Tenth

Circuit rendered its decision in this case on September 13, 1996. The Tenth

Circuit cited the Eighth Circuit's opinion in Awer, noting this Court’s grant of

certiorari. Pet. App. A-25.

5. The petitioners in Auer preliminarily set forth the question “Does

the Fair Labor Standards Act, 29 U.S.C. § 201 et seq., (“FLSA”) salary basis

test of ‘white collar’ FLSA exemptions apply to public employees?” (petition

(Cont'd)

6

Given that this issue has not been squarely presented in

Auer, Petitioner’s argument that this Court should grant certiorari

on its second question because a similar issue is involved in

Auer must fail. Petitioner has not presented any independent

reason for this Court to grant certiorari on its second question.

Il.

THERE IS NO COMPELLING REASON FOR THIS

COURT TO ADDRESS THE SECOND QUESTION

PRESENTED.

The second question presented by Petitioner involves the

applicability of the salary basis test to public employees.

Petitioner has offered no reason to grant certiorari on this issue

other than Petitioner’s mistaken belief that this Court is

considering the same question in Auer. In the last paragraph of

the Petition, it is contended that there is a conflict among the

circuits regarding whether the salary basis test constitutionally

applies to the public sector. Petition, p. 9. Petitioner, however,

has offered no authority or analysis to support this contention.

All circuits that have considered Petitioner’s second

question have upheld the validity of the current salary test as

applied to public employers. The Tenth Circuit noted that “only

the Seventh and Ninth Circuits have considered similar

challenges to the validity of the salary test.” Pet. App. A-9. The

Seventh Circuit in Mueller v. Reich, 54 F.3d 438 (7th Cir. 1995),

petition for certiorari filed October 10, 1995 (No. 95-586), held

(Cont'd)

for writ of certiorari in Auer, p. i) but did not argue it in the body of their

petition or in their brief on the merits. The respondents in Auer did discuss

this sub-issue in their brief on the merits. The Eighth Circuit in Auer pointed

out that neither side had raised this particular question. 65 F.3d at 710 n.6.

7

that the current salary basis test is rationally related to the

objectives of FLSA and therefore valid. 54 F.3d at 442. The

Tenth Circuit in the present case agreed with the holding in

Mueller. Pet. App. A-11.The Ninth Circuit in Service Employees

Int’l. Union, Local 102 v. County of San Diego, 60 F.3d 1346

(9th Cir. 1994), cert. denied, __ U.S. ___, 116 S. Ct. 774, 133 L.

Ed. 2d 726 (1996), also upheld the validity of the current salary

basis test. Service Employees, 60 F.3d at 1353 (“The 1992

regulation properly amends the salary test as applied to the public

sector, so that the salary test now takes into account long-

standing and reasonable state and local ordinances predicated

on public accountability.”).

The Ninth Circuit did, however, hold in Service Employees

that the salary basis test as it existed prior to September 6, 1991

(the date on which the DOL issued its final interim regulation)

is invalid as applied to public sector employers. The Court opined

that “because virtually all public employers are constrained by

a pay system based on public accountability, most public

employees could not satisfy the salary test as it existed prior to

September 6, 1991.” Service Employees, 60 F. 3d at 1352.

The Tenth Circuit in the present case disagreed with the

Ninth Circuit’s invalidation of the salary basis test as it existed

prior to September 6, 1991, because the Tenth Circuit declined

to adopt the presumption that the pay systems of governmental

bodies are based on public accountability laws or principles.

Pet. App. A-11. The Tenth Circuit specifically noted that

Petitioner had not shown its own system to be predicated on

any public accountability law. Pet. App. A-14. Petitioner’s

second question asks whether the salary-basis test is applicable

to the public sector, but Petitioner failed to lay the evidentiary

foundation necessary to resolve this question in its favor.

Petitioner argued to the Tenth Circuit that application of

8

the salary-basis test to its employees is invalid because a public

employer whose pay system is based upon a public

accountability law or principle is required to make a deduction

whenever an employee is absent for part of a day, yet the

“docking” aspect of the salary-basis test erroneously

presupposes that all public employers have the option not to

make such deductions.

Both in the district court and in the Tenth Circuit, however,

Petitioner failed to present sufficient evidence that its pay system

is based upon a public accountability law or principle. “After

our review of the record, we agree with the district court that

the City failed to satisfy its burden of demonstrating its pay

system is based upon a public accountability law or principle.”

Pet. App. A-14. The Tenth Circuit noted “the uncontroverted

evidence in this case indicates that salary deductions are

discretionary on the part of the City.” Pet. App. A-15. Petitioner

does not qualify as a public employer caught between (1) an

externally-imposed pay system requiring a deduction from pay

for every part-day absence and (2) the salary-basis test which

requires payment of overtime wages if employees are subject to

such deductions.

Some public employers may find themselves in an

anomalous situation where a state or local law mandates the

very deductions which, under the salary basis test, destroy the

exempt status of employees. Petitioner failed, both in the district

court and on appeal, to establish that its own pay system poses

such a dilemma.

ON IG EI en A Ney A NA Fae aE GP RE

9

CONCLUSION

Petitioner has not presented any compelling reason for the

issuance of a writ of certiorari. The present case is not one

“involving principles the settlement of which is of importance

to the public as distinguished from that of the parties . . .” Layne

& Bowler Corp. v. Western Well Works, 261 U.S. 387, 393, 43 S.

Ct. 422, 423, 67 L. Ed. 712, 714 (1923). This Court “does [not]

sit for the benefit of the particular litigants,” and certiorari will

be granted only to reach “a problem beyond the academic or

episodic.” Rice v. Sioux City Cemetery, 349 U.S. 70, 74, 75 S.

Ct. 614, 616, 99 L. Ed. 897, 901 (1955).

Respondents respectfully request that the Petition for Writ

of Certiorari be denied.

Respectfully submitted,

ROBERT A. NANCE

Counsel of Record

DONALD M. BINGHAM

RIGGS, ABNEY, NEAL, TURPEN,

ORBISON & LEWIS

Attorneys for Respondents

502 West Sixth Street

Tulsa, Oklahoma 74119

(918) 587-3161