AMOS L. MAZZANT, UNITED STATES DISTRICT JUDGE.
Before the Court is Non-Party Chipotle Mexican Grill, Inc. and Non-Party Chipotle Services, LLC's (collectively "Chipotle") Motion for Contempt (Dkt. # 89). After reviewing the relevant pleadings and motion, the Court finds that the motion should be granted.
Congress passed the Fair Labor Standards Act ("FLSA") in 1938. The FLSA mandates that employees earn no less than the federal minimum wage for every hour worked. Employees must also earn one and one-half times their regular pay for each hour worked beyond a forty-hour week. When enacted, the FLSA had several exemptions to the overtime requirement. Specifically, anyone employed in a bona fide executive, administrative, or professional capacity was exempt from the minimum wage and overtime requirements. 29 U.S.C. § 213. This is often referred to as the "white collar" or "EAP" exemption.
At passage, Congress did not define "bona fide executive, administrative, or professional capacity." 29 U.S.C. § 213. Rather, the FLSA empowered the Secretary of Labor to define these terms through regulations. The Secretary of Labor further permitted the Department of Labor (the "DOL") to issue regulations interpreting the EAP exemption.
In March 2014, President Obama directed the DOL to revise the FLSA's overtime exemption for "executive, administrative, and professional employees." Memorandum on Updating and Modernizing Overtime Regulations, 2014 DAILY COMP. PRES. DOC. 201400165 (Mar. 13, 2014). The DOL
(Dkt. # 60 at pp. 19-20) (emphasis in original).
(Dkt. # 89, Exhibit 1 at pp. 13-14). This is the second lawsuit in which one of Alvarez's counsel — Swartz — has argued that this Court's Injunction of the Final Rule does not apply to him or to his client. In the United States District Court for the District of Massachusetts, Swartz also ignored this Court's Order
(Dkt. # 89, Exhibit 1 at p. 205). On August 1, 2017, Chipotle filed its Motion for Contempt against Alvarez and the Lawyers (collectively "Respondents") (Dkt. # 89). On August 2, 2017, Chipotle filed a Motion for Judicial Notice regarding its Motion for Contempt (Dkt. # 96). On September 25, 2017, Chipotle filed its Addendum to Motion for Judicial Notice (Dkt. # 112). On September 18, 2017, Respondents filed their Response (Dkt. # 107). On September 25, 2017, Chipotle filed its Reply (Dkt. # 113). On October 9, 2017, Respondents filed their Sur-reply (Dkt. # 118). On November 6, 2017, the Court held a hearing on Chipotle's Motion for Contempt and Motion for Judicial Notice. Respondents filed supplemental briefing on November 8, 2017 (Dkt. # 122) and Chipotle responded to that supplemental briefing on November 10, 2017 (Dkt. # 123). On November 17, 2017, Respondents filed a Motion to Supplement the Record with several affidavits (Dkt. # 125). On November 22, 2017, Chipotle responded in opposition to the Motion to Supplement the Record (Dkt. # 126).
To succeed on a motion for contempt, the movant must show by clear and convincing evidence that: (1) a court order was in effect; (2) the order required or prohibited certain conduct by the respondent; and (3) the respondent did not comply with the court's order. United States v. City of Jackson, 359 F.3d 727, 731 (5th Cir. 2004); Piggly Wiggly Clarksville, Inc. v. Mrs. Baird's Bakeries, 177 F.3d 380, 382 (5th Cir. 1999). "Good faith is not a defense to civil contempt; the question is whether the alleged contemnor complied with the court's order." Chao v. Transocean Offshore, Inc., 276 F.3d 725, 728 (5th Cir. 2002).
Chipotle moves for contempt, contending that Respondents sued to enforce the
Respondents were not parties to the original action giving rise to the Court's Order. Respondents claim that the Court has no jurisdiction over them since (A) they lacked notice of the Court's Order, (B) the first-filed doctrine precludes the Court's jurisdiction, and (C) they did not receive sufficient service and were prejudiced by insufficient process. Conversely, Chipotle claims that the Court has personal jurisdiction over any party with sufficient notice of the Court's Order who subsequently defies the Court's Order. The Court will address each of these arguments separately.
"Nonparties who reside outside the territorial jurisdiction of a district court may be subject to that court's jurisdiction if, with actual notice of the court's order, they actively aid and abet a party in violating that order." Waffenschmidt v. MacKay, 763 F.2d 711, 714 (5th Cir. 1985).
Respondents had notice of the Court's Order. In actions before the District Court for the District of New Jersey and the District Court for the District of Massachusetts, some or all of Respondents recognized the Injunction. When filing suit in the United States District Court for the District of Massachusetts, one of the Respondents — Swartz — acknowledged the Court's Order:
(Dkt. # 89, Exhibit 1 at p. 205). Further, Respondents acknowledged the Court's Order when filing the following in the United States District Court for the District of New Jersey:
(Dkt. # 89, Exhibit 1 at p. 13). These pleadings prove that Respondents had notice of the Court's Order.
Respondents claim that the first-filed doctrine locks this litigation in the District of New Jersey. Chipotle counters that the first-filed doctrine does not apply since the contempt proceeding before the Court is distinct from the lawsuit in New Jersey.
A court must defer to the first-filed action when there is a substantial overlap between that action and the subsequently filed action before it. Save Power Ltd. v. Syntek Fin. Corp., 121 F.3d 947, 951 (5th
Respondents argue that the Court has no jurisdiction over them because Chipotle did not alert them to the contempt proceeding through sufficient process. Chipotle counters that process was sufficient.
"[W]hen it is sought to charge a person with contempt who was not a party to the original action and thus not already within the jurisdiction of the court, that party must be served with process as in any other civil action." 11 CHARLES ALAN WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 2960 at 589 (3d ed. 2017); accord McGuire v. Sigma Coatings, Inc., 48 F.3d 902, 907 (5th Cir. 1995) (vacating a sanction order where the district court never issued "a show cause [order] or similar order or process that would have put [the contemnor] on notice that sanctions were being considered against him personally"); see also Waste Mgmt. of Wash., Inc. v. Kattler, 776 F.3d 336, 340-41 (5th Cir. 2015); Test Masters Educ. Servs., Inc. v. Robin Singh Educ. Servs., Inc., 799 F.3d 437, 456 (5th Cir. 2015).
Under civil process requirements, the moving party must serve a summons on the alleged contemnor. The summons must:
FED. R. CIV. P. 4(a). To satisfy service requirements, the moving party must satisfy several criteria:
FED. R. CIV. P. 4(c). If a movant substantially complies with Rule 4, however, a defendant must show actual prejudice, or the defense of insufficient process is waived. Sanderford v. Prudential Ins. Co. of Am., 902 F.2d 897, 901 (11th Cir. 1990); Warfield v. Byron, 137 F. App'x 651, 656 n.10 (5th Cir. 2005); Pharmerica, Inc. v. DSJ Healthcare, Inc., No. 4:99-CV-242, 2010 WL 4962974, at *3 (E.D. Tex. Oct. 22, 2010), report and recommendation adopted, 2010 WL 4955724 (E.D. Tex. Dec. 1, 2010) ("Defects in the summonses `are not fatal if they do not prejudice the defendant.'") (quoting Warfield, 137 F. App'x at 655).
Though Respondents rely heavily on McGuire, its holding does not fit the facts at bar. In McGuire, the alleged contemnor — an in-house counsel sanctioned for destroying documents allegedly responsive to a discovery request — was sanctioned without receiving any form of process. McGuire, 48 F.3d at 907. There, the alleged contemnor was not a party to the case, an alter ego of a party, an attorney in the case, or a member of the sanctioning district court's bar. Id. The district court also never issued a show cause order or similar order or process that would have put the alleged contemnor on notice that he personally faced sanctions. Id. Here, Chipotle's repeated efforts to serve Respondents starkly diverge from the facts in McGuire, rendering its holding wholly inapposite and utterly unavailing. The history of this proceeding shows that Chipotle substantially complied with process requirements and Respondents were not prejudiced by the imperfect process.
Chipotle filed its Motion for Contempt with the Court on August 1, 2017 (Dkt. # 89). On August 21, 2017, Chipotle attempted to serve Swartz at his office (Dkt. # 113, Exhibit 8 at p. 4). After Swartz allegedly refused to accept service, Chipotle's process server left a copy of the Proposed Order Granting Chipotle's Motion for Contempt, Motion for Judicial Notice, Proposed Order Granting Chipotle's Motion for Judicial Notice, Motion for Contempt, and Exhibits with a security guard of "suitable age and discretion" on the premises (Dkt. # 113, Exhibit 8 at p. 4). Chipotle's process server inferred that Swartz was deliberately fleeing service:
(Dkt. # 113, Exhibit 8 at p. 4). After Chipotle could not serve Respondents with process on August 21, 2017, it emailed Respondents to address the process issue. On August 24, 2017, Chipotle's counsel emailed Respondents informing them that "Chipotle is moving forward with service of the contempt motion, accompanying exhibits and proposed orders, and notice of hearing." (Dkt. # 113, Exhibit 7 at p. 4).
Chipotle also mailed to the Respondents notification of the Motion for Contempt, related filings, and notice of hearing set for August 17, 2017 (Dkt. # 113, Exhibit 7 at pp. 346-48). This notification included a request to waive service of process (Dkt. # 113, Exhibit 7 at pp. 346-48).
Chipotle's attempted notice was effective. Upon learning of the motion for contempt, Sellers deemed it "regrettable" that the company "has mounted a frivolous attack on [Alvarez] and her lawyers" rather than defending the New Jersey lawsuit. Sellers so elaborated in a Law360 article:
(Dkt. # 113, Exhibit 6 at p. 4). Respondents have not shown that they were actually prejudiced by the imperfect service of process. At each and every step of this contempt proceeding, Chipotle sent notice to Respondents of the ensuing developments in the litigation. This notice permitted Respondents to repeatedly contest Chipotle's contempt motion through briefs and in a contempt hearing before the Court. In turn, Respondents enjoyed substantially compliant service and suffered no prejudice. Thus, the Court has jurisdiction over Respondents.
To succeed on a motion for contempt, the movant must show by clear and convincing evidence that: (A) a court order was in effect; (B) the order required or prohibited certain conduct by the respondent; and (C) the respondent did not comply with the court's order. City of Jackson, 359 F.3d at 731; Piggly Wiggly Clarksville, Inc., 177 F.3d at 382.
The Court must first determine whether the Injunction was in effect. City of Jackson, 359 F.3d at 731. It is undisputed that the Court's Order was in effect and forbade enforcement of the Final Rule when Alvarez filed suit in New Jersey. Thus, the first element of the contempt test is met.
In this instance, because Respondents are non-parties to the original injunction proceeding, the Court must decide whether the Injunction applied to and prohibited Respondents' conduct. City of Jackson, 359 F.3d at 731. Respondents claim that since they were not acting in privity with the DOL, the Injunction against the Final Rule did not bind them, and, thus, they were not prohibited from bringing suit in New Jersey. Respondents also claim that the Injunction was ambiguous and did not clearly enjoin the Final Rule's enforcement by non-parties. Chipotle argues that Respondents identified in interest with the DOL by suing to enforce the Final Rule
An injunction binds not only "the parties defendant but also those identified with them in interest, in `privity' with them, represented by them or subject to their control." Regal Knitwear Co. v. N.L.R.B., 324 U.S. 9, 14, 65 S.Ct. 478, 89 S.Ct. 661 (1945).
ADT LLC v. NorthStar Alarm Servs., LLC, 853 F.3d 1348, 1352 (11th Cir. 2017) (quotations omitted). The similar privity requirements to bind a non-party to an injunction and non-party preclusion arise from similar policy concerns. "By preventing relitigation of issues, res judicata conserves judicial time and resources. It also supports several private interests, including avoidance of substantial litigation expenses, protection from harassment or coercion by lawsuit, and avoidance of conflicting rights and duties from inconsistent judgments." Sw. Airlines Co. v. Tex. Int't Airlines, Inc., 546 F.2d 84, 94 (5th Cir. 1977) (footnotes omitted). Indeed, "[i]f courts could second guess another court each time a new litigant, dissatisfied with the previous judgment, filed a new complaint, the respect of the previous parties or of the public toward the courts would inevitably decrease." Id. at 101.
A non-party achieves privity with a party in a prior lawsuit in three situations:
Benson & Ford, Inc. v. Wanda Petrol. Co., 833 F.2d 1172, 1174 (5th Cir. 1987) (quoting Freeman v. Lester Coggins Trucking, Inc., 771 F.2d 860, 864 (5th Cir. 1985)). The first and second situations are inapplicable to this case. However, Respondents "may be bound by a judgment because [they were] adequately represented by someone with the same interests who [wa]s a party to the suit." Taylor v. Sturgell, 553 U.S. 880, 894, 128 S.Ct. 2161, 171 L.Ed.2d 155 (2008) (quotations omitted). Thus, the Court must determine whether the DOL adequately represented Respondents.
"[T]he proposition that governments may represent private interests in litigation, precluding relitigation, is clear." Sw. Airlines Co., 546 F.2d at 98 (finding res judicata applied to private actors seeking to enforce a previously enjoined ordinance because a government entity adequately represented the interests of those private actors to enforce the same ordinance). "`Privity' has come to be `seen as a descriptive term for designating those with a sufficiently close identity of interests' to justify application of nonparty claim preclusion... or the enforcement of an injunction against a nonparty." Nat'l Spiritual Assembly of Baha'is, 628 F.3d at 849 (quoting Tice v. Am. Airlines, Inc., 162 F.3d 966, 971 (7th Cir. 1998)); Warren v. Mort. Elec. Registration Sys., Inc. 616 Fed.Appx. 735, 737 (5th Cir. 2015) (finding privity and noting that "nonparty preclusion may be justified based on a variety of pre-existing substantive legal relationships between the person to be bound and a party to the judgement."). Thus, privity has "come to be used more broadly, as a way to express the conclusion that nonparty preclusion is appropriate on any ground," including being bound by an injunction. Taylor, 553 U.S. at 894 n.8, 128 S.Ct. 2161; see also Sw. Airlines Co., 546 F.2d at 95.
This case presents facts similar to Southwest Airlines Co. v. Texas International Airlines, Inc. ("Southwest Airlines"). In Southwest Airlines, the Civil Aeronautics Board ("CAB") issued an Order in 1964, mandating that the City of Dallas and the City of Fort Worth (the "Cities") designate a single airport for CAB-approved commercial air service in their region. Id. at 87. The Cities agreed to build a new airport midway between them, now known as Dallas/Fort Worth International Airport ("DFW"). Id. To execute this plan, the Cities adopted the 1968 Regional Airport Concurrent Bond Ordinance (the "1968 Ordinance"). Id. The 1968 Ordinance provided for the phasing-out of commercial passenger air travel at Love Field Airport ("Love Field") and the relocation of airlines to DFW. Id.
In 1971, Southwest Airlines ("Southwest") started offering intrastate commercial air service from Love Field under a certificate issued by the Texas Aeronautics Commission ("TAC"). Sw. Airlines Co., 546 F.2d at 96. In 1972, the City of Dallas, the City of Fort Worth, and the DFW Airport Board sought a declaratory judgment of their right to exclude Southwest from Love Field. Id.; see City of Dallas v. Sw. Airlines Co. (Southwest I), 371 F.Supp. 1015, 1019 (N.D. Tex. 1973). Southwest counterclaimed, seeking a declaration of its right under federal and state law to stay at Love Field and an injunction to protect that right. Id. In Southwest I, "[t]he issue concerned the relative authority of the TAC and the City of Dallas to control access to Love Field." Sw. Airlines Co., 546 F.2d at 92.
On May 11, 1973, the court entered an order, declaring that the Cities and the
Next, the CAB-Carriers filed claims to enforce the 1968 Ordinance against Southwest in state court. Sw. Airlines Co. v. Tex. Int'l Airlines, Inc., 396 F.Supp. 678, 679 (N.D. Tex. 1975). Southwest filed another suit in federal court to enjoin the re-litigation in state court to enforce the 1968 Ordinance by the CAB-Carriers; the City of Fort Worth, Texas; the City of Dallas, Texas; and the DFW Airport Board. Id. The court enjoined the re-litigation in state court, holding that the CAB-Carriers were in privity with the Cities and the DFW Airport Board. Id. at 686. The court explained:
Id. On Appeal, the Fifth Circuit explained the issue:
Sw. Airlines Co., 546 F.2d at 94. In resolving the dispute, the Fifth Circuit relied upon Restatement of the Law Second-Judgments's system of preclusion, noting it "establishes a category of cases in which `an agency's authority to maintain or defend litigation ... should be construed as preempting the otherwise available opportunity of the individual or members of the public to prosecute." Id. at 99. The Fifth Circuit noted that:
Id. (quoting Restatement (Second) of Judgments § 85 (Am. Law. Inst. 1975)). The Fifth Circuit reasoned that the facts at bar fit the second category of the Restatement:
Id. The Fifth Circuit found that privity existed because:
Id. at 98. Thus, The Fifth Circuit found that "[i]n their attempt to apply the [1968 Ordinance] to Southwest, [the CAB-Carriers] assume[d] the role of private attorneys-general." Id. at 97.
Relevant to the facts at bar, the Fifth Circuit disagreed with the CAB-Carriers' argument that they were not in privity with the City of Dallas because "the interests of the cities in Southwest I differ[ed] from the pecuniary interests of [the CAB-Carriers]." Id. at 102. Nevertheless, the Fifth Circuit found that the "pecuniary interest of the airlines [was] legally immaterial to the judgment of Southwest I as affirmed by this Court." Id. at 102 (emphasis added). The Fifth Circuit explained that disregarding the CAB-Carriers' pecuniary interest under the Restatement of Law Second-Judgments's approach promoted the policies of res judicata and, thus, of privity:
Id. at 100-01. The Fifth Circuit explained that a court looks to "the congruence of the legal interests of the parties and non-parties not to their financial stake in the litigation." Id. at 102.
The DOL declared that it represented the rights of employees like Alvarez in the original injunction proceeding before the Court. In opposing the Injunction, the DOL warned that enjoining the Final Rule would trample the public interest:
(Dkt. # 37 at p. 56) (emphasis added). The DOL adequately represented the interests of employees like Alvarez when advocating for the validity and enforceability of the Final Rule in the original injunction
The Fifth Circuit distinguished the facts in Southwest Airlines from another case where it found that the federal government did not adequately represent employees' interests in a racial discrimination action against an employer so as to preclude a class action lawsuit for racial discrimination by those employees against the same employer. Rodriguez v. East Tex. Motor Freight, 505 F.2d 40 (5th Cir. 1974) vacated on other grounds, 431 U.S. 395, 97 S.Ct. 1891, 52 L.Ed.2d 453 (1977). In Rodriguez, employees, claiming to have suffered racial discrimination in the workplace, filed a class action lawsuit against their employer and others under Title VII of the Civil Rights Act of 1964 and 42 U.S.C. § 1981 (the "Civil Rights Acts"). Id. at 45. Later, the government filed a "pattern and practice" suit under the Civil Rights Act of 1964 against the employer and two unions based on alleged racial discrimination in the workplace. Id. at 65. The government and defendants entered into a consent decree, "setting some standards for hiring and establishing hiring ratios" and mandating that the employer furnish "back pay compensation for members of the affected class nationwide." Id. Finally, the consent decree gave individual employees who had suffered racial discrimination thirty days to seek individual workplace remedies based on the criteria in the consent decree. Id.
The Fifth Circuit found that the government's and employees' respective lawsuits protected different interests. Id. at 66. "[T]he Government['s] [suit] protect[ed] general economic interests in addition to the rights of minorities [while the] private plaintiffs represent[ed] only the interests of minority group members." Id. at 66. Thus, the consent decree did not preclude litigation of the employees' class action lawsuit. Id. at 65.
In Southwest, the Fifth Circuit found that the CAB-Carriers' situation:
Sw. Airlines Co., 546 F.2d at 99. Unlike the Civil Rights Acts, which concern individual welfare and remedies, the FLSA explicitly concerns the general welfare of employees employed in certain industries engaged in American commerce:
29 U.S.C. § 202 (emphasis added). This legal axiom explains why Alvarez could cite to no other plaintiff who construed the Injunction in the same way that she did. Moreover, the common knowledge among citizens that the DOL and agencies like it represent the public at large explains the dearth of precedent that factually paralleled this proceeding. Indeed, common sense rather than complex legal analysis told other similarly situated, would-be plaintiffs that the DOL already represented their cause of action in the original injunction proceeding. This scarcity of precedent complicated the Court's contempt analysis but it did not change its result.
Finally, an Injunction binds "the following who receive actual notice of it by personal service or otherwise: (A) the parties; (B) the parties' officers, agents, servants, employees, and attorneys; and (C) other persons who are in active concert or participation with anyone described in Rule 65(d)(2)(A) or (B)." FED. R. CIV. P. 65(d)(2)(A)(B)(C). The Injunction bound the Lawyers since they served as Alvarez's attorneys with actual notice of the Injunction. FED. R. CIV. P. 65(d)(2)(B). See supra Part I.A.: "Respondents Had Notice of the Order."
Since the Injunction was binding on Alvarez, the Court must determine whether the Injunction clearly prohibited her actions. Alvarez claims that the Injunction did not clearly enjoin the Final Rule's enforcement by non-parties. Chipotle avers
"A party commits contempt when he violates a definite and specific order of the court requiring him to perform or refrain from performing a particular act or acts with knowledge of the court's order." SEC v. First Fin. Grp. of Tex., 659 F.2d 660, 669 (5th Cir. 1981). Since there is little precedent on interpreting injunctions, the Court looks to bedrock canons of statutory interpretation when reading the Injunction. "Our precedents make clear that the starting point for our analysis is the statutory text. And where, as here, the words of the statute are unambiguous, the `judicial inquiry is complete.'" Desert Palace, Inc. v. Costa, 539 U.S. 90, 98, 123 S.Ct. 2148, 156 L.Ed.2d 84 (2003) (quoting Conn. Nat. Bank v. Germain, 503 U.S. 249, 254, 112 S.Ct. 1146, 117 L.Ed.2d 391 (1992)).
The Court's Order explained that it had "authority to enjoin the Final Rule on a nationwide basis and decides that it is appropriate in this case." (Dkt. # 60 at p. 19). The Court's Order further stated:
(Dkt. # 60 at pp. 19-20). The Court's Order explained that it enjoined the Final Rule on a "nationwide basis." (Dkt. # 60 at p. 19). Given the plain language of the Court's Order, its direct recognition of the Final Rule, and the sheer dearth of parties so confused by the Court's Order,
Finally, the Court must determine whether Respondents did not comply with
"Good faith is not a defense to civil contempt; the question is whether the alleged contemnor complied with the court's order." Chao, 276 F.3d at 728; see also In re Lothian Oil, Inc., 531 F. App'x 428, 445 n.15 (5th Cir. 2013); City of Jackson, 359 F.3d at 735 n.25; Whitfield v. Pennington, 832 F.2d 909, 913 (5th Cir. 1987); Jim Walter Res., Inc. v. Int'l Union, United Mine Workers of Am., 609 F.2d 165, 168 (5th Cir. 1980).
Respondents submitted affidavits to show that they relied on the advice of several academics before suing to enforce the Final Rule (Dkt. # 125, Exhibits A-D). These included Professors David C. Vladeck of Georgetown University Law Center (Dkt. # 125, Exhibit A), Professor Alan B. Morrison of The George Washington University School of Law (Dkt. # 125, Exhibit B), and Professor David Marcus of the University of Arizona Rogers College of Law (Dkt. # 125, Exhibit C) (collectively "the Professors"). In their respective affidavits, the Professors explained that they believed that the Court's Order did not prevent Respondents from suing to enforce the Final Rule (Dkt. # 125, Exhibits A-C). Sellers also submitted an affidavit explaining that he consulted with the Professors before filing suit in New Jersey (Dkt. # 125, Exhibit D at p. 3).
Good faith is irrelevant. Chao, 276 F.3d at 728. The Court's Order enjoined the Final Rule on a nationwide basis (Dkt. # 60 at p. 19). Respondents sued Chipotle to recover overtime wages based on the Final Rule. As previously discussed, the Injunction clearly prohibited Respondents' actions as their lawsuit necessarily required enforcing the Final Rule. Since Respondents did not comply with the Court's Order, contempt is proper.
Since contempt is proper, the Court will address Respondents' third argument — the Court should not hold junior attorneys Nemeth, Stewart, and Savits in contempt. Respondents advance that these attorneys had no decision-making authority in bringing the New Jersey Action. To that end, Sellers submitted an affidavit to the Court, explaining that Nemeth, an associate at his law firm, had no decision-making authority over bringing Alvarez's claim (Dkt. # 125, Exhibit D). Swartz also submitted an affidavit, claiming that Stewart, an associate at his law firm, had no decision-making authority over bringing Alvarez's claim (Dkt. # 125, Exhibit E). Chipotle counters that this argument is untimely, claiming that "Respondents cannot now, at the final hour, raise new arguments attempting to alleviate Nemeth, Stewart, and Savits from responsibility for their actions." (Dkt. # 123 at p. 7). Chipotle also argues that if the Court does not find these lawyers in contempt, it would allow their pursuit of the New Jersey action. Further, Chipotle argues that the facts of this case do not support the notion that these lawyers were just following orders.
All five of the Lawyers — Sellers, Swartz, Nemeth, Stewart, and Savits — appeared on the New Jersey Class Action Complaint as "Attorneys for Plaintiff and the Putative Class and Collective." (Dkt. # 89, Exhibit 1 at p. 5). At that time, Savits had practiced law for thirty-five years. Savits signed the complaint. Nemeth had practiced law for eight years. Nemeth featured
A district court has broad discretion to remedy civil contempt. In re Gen. Motors Corp., 61 F.3d 256, 259 (4th Cir. 1995). Civil contempt can compel compliance with a court's order and compensate an aggrieved party for losses or damages due to the contemnor's noncompliance. Lance v. Plummer, 353 F.2d 585, 592 (5th Cir. 1965). Compensation includes "`the cost of bringing the violation to the attention of the court' ... and such damages may include an award of attorneys' fees" to the party doing so. United States v. City of Jackson, 318 F.Supp.2d 395, 409 (S.D. Miss. 2002) (quoting Cook v. Ochsner Found. Hosp., 559 F.2d 270, 272 (5th Cir. 1977)). These circumstances warrant both compliance and compensation.
The Court will exercise civil contempt to ensure compliance with the Court's Order. Respondents have amply showed that they are ready and willing to violate the Court's Order. In statements to the press, to a New Jersey District Court, to a Massachusetts District Court, and to this Court, Respondents have repeatedly and summarily dismissed the Injunction's bearing on them and on their clients. They have done so despite the Injunction's plain language, clear construction, and self-evident application to their causes of action. The Court's Order enjoined the enforcement of the Final Rule, Respondents were acutely aware of the Court's Order, and Respondents sued to recover wages based on the enforcement of the Final Rule in violation of the Court's Order. Such disobedience mandates coercive action to ensure compliance with the Court's Order. Thus, the Court orders Respondents to withdraw their allegations, both individual and representative, concerning the enforcement of the Final Rule against Chipotle within seven days of this order. Furthermore, the Court affirms that the Court's Order (1) applies to Alvarez and to all proposed plaintiffs similarly situated to her and (2) bars her from enforcing the Final Rule on behalf of herself and on behalf of all others similarly situated to her.
Compensation for Chipotle's fees and expenses in their pursuit of contempt is also appropriate. "Any attorney or other person admitted to conduct cases in any court of the United States or any Territory thereof who so multiplies the proceedings in any case unreasonably and vexatiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably incurred because of such conduct." 28 U.S.C. § 1927 (explaining Counsel's liability for excessive costs). Unreasonable and vexatious behavior requires "evidence of bad faith, improper motive, or reckless disregard of the duty owed to the court." Edwards v. Gen. Motors Corp., 153 F.3d 242, 246 (5th Cir. 1998); see also In re Osborne, 375 B.R. 216, 224-25 (Bankr. M.D. La.
Respondents sued to enforce the Final Rule in direct violation of the Court's Order. In doing so, they recklessly disregarded a duty owed to the Court — the long-standing and elementary duty to obey its orders, including a nationwide injunction. In doing so, they pursued a claim that they should have known was unwarranted in fact or law. As mentioned earlier, Respondents uniquely claim that the Court's Order only enjoined the DOL's enforcement of the Final Rule but not the enforcement of the Final Rule itself. When asked to support this claim with precedent, they could not. Novel readings of law arise from linguistic ambiguities, circuit court splits, and divergent canons of interpretation. Bond v. United States, 572 U.S. 844, 134 S.Ct. 2077, 2089-94, 189 L.Ed.2d 1 (2014). Respondents could find no precedent to support their reading of the Court's Order because none exists. Thus, Chipotle is entitled to compensation for fees and expenses tied to this contempt proceeding.
It is hereby
It is additionally
FED. R. CIV. P. 4(m).
Initially, Respondents simply offered their own highly self-serving interpretation of the Court's Order when arguing that it did not enjoin the Final Rule's enforcement (Dkt. # 107 at p. 6). Only in the late stages of this contempt proceeding, and after the contempt hearing itself, did Respondents offer affidavits from several professors, claiming that they told Respondents that the Court's Order only enjoined the DOL's enforcement of the Final Rule. See Section II.C. at pp. 14-15. The professors' affidavits, however, do not explain how they reached this conclusion. David C. Vladeck said his interpretation of the Injunction was "based on my legal expertise." (Dkt. # 125, Exhibit A at p. 3). Alan B. Morrison said his interpretation of the Injunction was "[b]ased on my knowledge of civil procedure and administrative and constitutional law, and my professional judgment." (Dkt. # 125, Exhibit B at p. 3). Finally, David Marcus said his interpretation of the Injunction was "based on my extensive familiarity with the governing legal authorities." (Dkt. # 125, Exhibit C at p. 3).
Given their lack of supporting case law or even a clear explanation for so construing the Injunction, Respondents fail to show that the Court's Order did not enjoin the Final Rule's enforcement or even how it could be understood not to enjoin the Final Rule's enforcement. Thus, the Court reasonably concludes that the Injunction was unambiguous and Respondents should have known that it applied to them.