Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

State v. United States Department of Labor

United States Court of Appeals, Fifth Circuit

July 2, 2019

STATE OF TEXAS Plaintiff - Appellee
v.
UNITED STATES DEPARTMENT OF LABOR Defendant CHIPOTLE MEXICAN GRILL, INCORPORATED; CHIPOTLE SERVICES, L.L.C., Petitioners - Appellees CARMEN ALVAREZ, and her Counsel, Respondent - Appellant

          Appeal from the United States District Court for the Eastern District of Texas

          Before JOLLY, DENNIS, and HIGGINSON, Circuit Judges.

          JAMES L. DENNIS, CIRCUIT JUDGE:

         In November 2016, the United States District Court for the Eastern District of Texas (the Texas federal court) enjoined the Department of Labor's (DOL) proposed Fair Labor Standards Act (FLSA) Overtime Rule[1] and specifically enjoined the DOL from implementing and enforcing that proposed rule, pending further order of that court. The proposed Overtime Rule raised the salary threshold of executive, administrative, or professional employees exempted from the FLSA's requirement that employers provide overtime pay. In June 2017, Carmen Alvarez, a restaurant worker in New Jersey, sued her former employer, Chipotle Mexican Grill, Inc. and Chipotle Services, L.L.C. (Chipotle), in the United States District Court for the District of New Jersey (the New Jersey federal court) for unpaid overtime pay, relying on the proposed Overtime Rule. In her suit, Alvarez contended that, because Texas federal court's injunction did not stay the effective date of the proposed Overtime Rule, the rule and its higher salary level for exempt employees became effective and Alvarez, whose salary was below that level, was entitled to overtime pay as a non-exempt employee.

         One week after filing its answer in the New Jersey federal court, Chipotle moved in the Texas federal court to hold Alvarez and her attorneys in contempt.[2] After a hearing, the Texas federal court held Alvarez and her counsel in contempt, reasoning that they were bound by the November 2016 injunction because they had acted in privity with the DOL and therefore their lawsuit and allegations against Chipotle in the New Jersey federal court were in violation of the injunction. The court also assessed attorneys' fees against them. Alvarez and her attorneys appealed.

         The issue is whether the Texas federal court may hold Carmen Alvarez and her lawyers in contempt for filing the FLSA lawsuit against Chipotle in the New Jersey federal court and contending that she was entitled to overtime pay according to the proposed Overtime Rule. We conclude that Texas federal court did not have the authority under Rule 65(d) of the Federal Rules of Civil Procedure to hold Alvarez and her attorneys in contempt, because Alvarez and her attorneys did not act in privity with, and she was not adequately represented by, the DOL in the injunction case; hence, the Texas federal court lacked personal jurisdiction over Alvarez and her attorneys. Accordingly, we reverse the judgment of the District Court, including the award of attorneys' fees against Alvarez and her lawyers, and we render judgment in their favor.

         I. BACKGROUND

         A. The Nevada v. DOL Injunction

         On November 22, 2016, in Nevada v. United States Dep't of Labor, 218 F.Supp.3d 520, 524-25 (E.D. Tex. 2016), the Texas federal court entered a preliminary injunction against the DOL and its agents in favor of Nevada and twenty other states, [3] enjoining the Overtime Rule and the DOL from enforcing or implementing the rule. Specifically, the Overtime Rule proposed to substantially expand the class of employees entitled to overtime pay by raising the salary threshold by which executive, administrative, and professional employees are exempted from the right to overtime pay under the FLSA.

         B. The Alvarez v. Chipotle Action (The New Jersey Action)

         In June 2017, six months after the district court's preliminary injunction in Nevada v. DOL, Carmen Alvarez, through her lawyers (together with Alvarez, Respondents), filed a lawsuit against Chipotle, her former employer, in New Jersey federal court alleging Chipotle violated the Overtime Rule by classifying Alvarez as exempt despite her weekly salary falling below the revised higher threshold. Alvarez's pleadings acknowledged that the DOL had been enjoined from enforcing or implementing the Overtime Rule, but contended that, because the district court in Nevada v. DOL had not stayed the Overtime Rule's effective date under the Administrative Procedure Act, the rule itself had taken effect on December 1, 2016. Chipotle answered that, in its view, the Nevada v. DOL order prevented the Overtime Rule from ever becoming effective in any way.[4] The New Jersey action has been stayed pending disposition of this appeal.[5]

         C. The Present Contempt Proceeding by Chipotle Against Alvarez and Her Counsel

         On August 1, 2017, Chipotle filed a motion against Respondents in the Texas federal court in the Nevada v. DOL action, asking that court to hold them in contempt for violating the injunction issued in that case.[6] Other than filing an answer in the New Jersey action, Chipotle did not further engage in that litigation.[7] Chipotle contended in its contempt motion that Alvarez was bound by the injunction because the DOL had adequately represented her interests in that litigation, making her its privy, and that the court should hold her and her lawyers in contempt for alleging and invoking the Overtime Rule in the New Jersey action. Respondents argued that the Texas federal court lacked personal jurisdiction over them; that the Nevada v. DOL injunction did not bind them under Rule 65(d) of the Federal Rules of Civil Procedure because they were not in privity with the DOL or otherwise subject to the terms of Rule 65(d); and that the terms of the injunction did not foreclose the filing of private FLSA lawsuits. Respondents submitted uncontradicted declarations attesting that they had not in any way participated, coordinated, or acted in concert with the federal defendants in the Nevada v. DOL case.

         On March 19, 2018, the district court granted Chipotle's motion and held Respondents in contempt. In its opinion, the district court rejected Respondents' argument that it lacked personal jurisdiction over them. It concluded that Alvarez was bound by the injunction in privity with the DOL because the DOL represents the interests of employees like Alvarez; that its injunction was "wholly unambiguous" in proscribing the filing of private lawsuits alleging or invoking the Overtime Rule; and that, although Chipotle's service of process on Respondents was imperfect, Respondents had not proven they were prejudiced thereby. The court ordered that Respondents pay Chipotle's ...


Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.