Long Island at Home, Ltd. v. Coke: Sub-Regulatory Guidance And Pending Litigation

[Note: The following analysis was authored by Eric S. Dreiband, a partner in Akin Gump’s Washington office.]

The Supreme Courts June 11, 2007 decision in Long Island at Home, Ltd. v. Coke, No. 06-593, is significant for several reasons. Most obviously, the Court determined that the Fair Labor Standards Acts wage protections did not extend to Evelyn Cokes work as a domestic employee. To reach its decision, the Court relied on an Advisory Memorandum issued by the Department of Labor more than three years after Ms. Coke sued her employer. The Courts reliance on the Advisory Memorandum may prove to be Cokes most enduring legacy. After Coke, the Labor Department may affect pending litigation by issuing sub-regulatory guidance, like the Advisory Memorandum, that will not be subject to the Administrative Procedure Acts notice-and-comment rulemaking procedures or to the adversarial process that accompanies litigation. And, perhaps even more significantly, Cokes rationale may extend to the entire Executive Branch.

The Labor Departments Private Litigation Disclaimer

Since 1938, when Congress enacted the FLSA, the Administrator of the Departments Wage and Hour Division has issued regulations and sub-regulatory guidance about the FLSA. The latter has included dozens or even hundreds of opinion letters in response to requests by individuals and entities about whether particular practices comply with the FLSA.

Beginning in the early 1990s, the Department began placing the following language in opinion letters:

[T]his opinion is not sought by a party to pending private litigation concerning the issues addressed herein.

This private litigation disclaimer is not required, but it reflects the Departments effort to avoid becoming a sanctuary for litigants who face a hostile judge or adverse case law.

A Conspiracy Of Defendants And Those Associated With Defendants

On March 17, 2003, the Administrator issued an opinion letter opining that FLSA Section 7(i), 29 U.S.C. 207(i), may exempt certain employees from the FLSAs overtime requirements. The letter conflicted with the decisions of three district courts in favor of plaintiff-employees: Wickersham v. Haselwood Buick-Pontiac Co., No. C01-5557FDB, 2002 WL 32152269 (W.D. Wash. Aug. 16, 2002), Gieg v. DDR, Inc., No. Civ. 98-1563-HA, 2003 WL 21087602 (D. Or. Mar. 14, 2003), and Chaloupka v. SLT/TAG, Inc., No. Civ. 02-743-KI, Civ. 02-1053-KI, Civ. 02-65-KI, 2003 WL 23531404 (D. Or. Sept. 30, 2003).

The employers asked the courts to follow the Departments opinion letter, but all declined. The court in Chaloupka explained that the DOL opinion letter appears to have been generated for purposes of this litigation by those associated with defendants. And although the Ninth Circuit later reversed the district court decisions (in a consolidated case), it did not explain whether the solicitation of the letter affected its analysis.

Coke To Litigants: Go see the Labor Department.

The Courts decision in Coke establishes the Labor Departments authority to issue sub-regulatory guidance about matters pending in litigation. It also provides a standard that courts should follow when presented with such guidance.

Evelyn Coke sued her employer in April 2002. The employer claimed that the FLSA did not protect Ms. Coke. The district court agreed and dismissed the case. The Second Circuit reversed, in part because a Labor Department regulation was unenforceable. On December 1, 2005, the Labor Department issued its Advisory Memorandum defending the regulation. The Second Circuit, however, remained unconvinced, and the court again ruled in Ms. Cokes favor.

Yesterday the Supreme Court reversed. It held that the FLSAs protections did not extend to Ms. Coke, and the Court upheld the Departments regulation. Notably, the Court deferred to the Advisory Memorandum because it was the Departments most recent interpretation and reflect[ed] its considered views. And although the Court acknowledged that the Department appears to have written [the Advisory Memorandum] in response to this litigation, it explained that it had no reason . . . to suspect that [this] interpretation is merely a post hoc rationalization[n] of past agency action, or that it does not reflect the agencys fair and considered judgment on the matter in question. The Departments interpretation of its own regulations, the Court continued, is controlling unless plainly erroneous or inconsistent with the regulations being interpreted.

Im in litigation. Help me, Labor Department.

Coke answered the question unanswered by the Ninth Circuit in Wickersham, Gieg, and Chaloupka: litigants may seek and obtain guidance from the Labor Department, place that guidance in front of the court where their case is pending, ask the court to defer to the Departments guidance, cite Coke, and hope for the best. A litigant may, then, avoid the usual consequences of a skeptical judge or adverse case law if it can persuade the Labor Department to issue a favorable opinion letter or other helpful guidance. Whether the Labor Department and other Executive Branch departments and agencies will cooperate with any such efforts remains to be seen.