Employment Practices Decisions Archive: 1937 - 1995, EMPLOYMENT-PRACTICES 14 EPD ¶7551, W.J. Usery, Jr., United States Secretary of Labor, Plaintiff v. Eastern Kentucky University et al., Defendants., (Jan. 21, 1977), (Jan. 21, 1977)

W.J. Usery, Jr., United States Secretary of Labor, Plaintiff v. Eastern Kentucky University et al., Defendants.

United States District Court, Eastern District of Kentucky, Lexington Division.Civil Action No. 75-15, January 21, 1977

Fair Labor Standards Act

Court Procedures and Practices--State University--Violation of the Act--Jurisdiction.

--Claims by a university that it was not involved in interstate commerce and therefore not jurisdictionally subject to claims brought under the Act must be rejected. Due to the diverse activities associated with operating a university, it is safe to assume that the university has some employees “engaged in commerce.”

Back reference.-- ¶303.019 .

Court Procedures and Practices--State University--Violations of the Act--Unreasonable Delay--Statute of Limitations.

--Complainant’s suit under the Act was not barred by the statute of limitations. Although there is a two-year limit for willful violations it is not now necessary to determine whether the alleged violation was willful. The defense of unreasonable delay must also be rejected as inappropriate.

Back reference.-- ¶303 .

Court Procedures and Practices--State University--Unequal Pay--Sovereign Immunity.

--Sovereign immunity provides no defense to an unequal pay action brought under the Act when it is initiated by the United States itself.

Back reference.-- ¶1105.10 .

Court Procedures and Practices--State University--Unequal Pay Claim--Commerce Clause--Spending Power.

--Even though Congress could have based the Equal Pay Act on the Spending Power of the Fourteenth Amendment, it was based on the Commerce Clause which has been found to be a valid exercise of Congressional authority and any motion for summary judgment based on the contrary assertion must be denied.

Back reference.-- ¶303.12 .

State University--Court Procedures and Practices--Violations of the Act--Interrogatories.

--Motions to compel discovery must be granted in all instances save one.

Back reference.-- ¶2278.10

U.S. Constitution

Court Procedures and Practices--State University--Fair Labor Standards Act Violation--Impairment of Contract Defense.

--Because the state is not a person with the context of the Due Process Clause of the Fifth Amendment to the Constitution, a university charged with violations of the Fair Labor Standards Act cannot claim constitutional protection due to alleged impairment of property rights made between the university and some of its employees.

Back reference.-- ¶220.019 .

Marvin Tincher, Regional Attorney, and Thomas L. Rasnic, Attorney, United States Department of Labor, Nashville, Tennessee, for Plaintiff.

Bert T. Combs and Edwin Hopson (Tarrant, Combs & Bullitt), Louisville, Kentucky, and John W. Palmore, University counsel, Richmond, Kentucky, for Defendants.

I. Motion to Dismiss

Siler, J.: This matter is before the Court on the defendant’s motion to dismiss. The instant proceeding is an action brought by the Secretary of Labor to enjoin the defendants from violating the provisions of §15(a)(2), 29 U.S.C. §215(a)(2) , of the Fair Labor Standards Act (FLSA) of 1938, as amended (29 U.S.C. §201, et seq.), and to restrain the defendants from withholding any unpaid wages which may be due to its employees under the Act. Jurisdiction is based upon 29 U.S.C. §217.

The defendants’ motion is based upon the following assertions:

1. That this action and the statute under which it is brought insofar that they interfere with the financial affairs and employment relations between a state agency and its employees under the guise of the Commerce Clause of the United States Constitution intrude upon state sovereignty as guaranteed by the Ninth, Tenth and Eleventh Amendments to the Constitution.

2. That the defendants’ activities are confined to the boundaries of the Commonwealth of Kentucky and, therefore, do not involve commerce among the States as that term is used in Article I, Section 8 of the United States Constitution.

3. That plaintiff’s position in this action, taken without any prior notice to defendants by way of issuance of rules, regulations, or interpretive bulletins, impairs contracts of employment between Eastern Kentucky University (EKU) and certain of its employees in violation of the due process clause of the Fifth Amendment to the United States Constitution.

4. That this cause of action is barred by the passage of time, or alternatively, that it is barred beyond January 26, 1973, under the statute of limitations, 29 U.S.C. §255 .

Since the defendants’ motion and supporting affidavits raise matters outside the pleadings, the Court will treat this motion as one for summary judgment pursuant to Rule 56, Fed.R.Civ.P.

A. Interstate Commerce. The defendants assert that EKU is not engaged in activities beyond the boundaries of this Commonwealth nor is it involved in the production of goods directly or indirectly for commerce or in the receipt of goods from interstate commerce for resale or manufacture. The jurisdictional reach of the Fair Labor Standards Act is not confined to the activities recited above, but rather its coverage extends to EKU if it is an enterprise, within the meaning of the Act, engaged in the operation of an institution of higher education having employees engaged in commerce or in the production of goods for commerce, or employees handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce by any person. 29 U.S.C. §203(r), (s)(4).

The affidavit of President Martin states “that Eastern Kentucky University receives and uses goods as a consumer which may come from points outside the Commonwealth of Kentucky.” In an analogous case, the Eighth Circuit found coverage under the Act where employees of the enterprise handled goods that had moved in commerce even though such goods were consumed in the employer’s operations. Brennan v. State of Iowa, 494 F.2d 100 (8th Cir. 1974), cert. denied, 421 U.S. 1015 (1975). The central issue was whether the state hospitals and schools were “ultimate consumers,” thereby eliminating them from the jurisdictional coverage of having employees handling goods,” 29 U.S.C. §203(s), as the definition of “goods” does not include goods after their delivery into the actual physical possession of the ultimate consumer thereof other than a producer, manufacturer, or processor thereof. 29 U.S.C. §203(i). Furthermore, this Court could well assume that EKU has some employees “engaged in commerce,” 29 U.S.C. §203(s), because of the diverse activities associated with operating a university. Brennan v. State of Iowa, supra at 103.

B. Impairment of Contracts. This Court has also considered the contention that this action, now taken by the plaintiff without affording the defendant adequate notice of the expanded coverage of the Fair Labor Standards Act, [1] impairs property rights existing in contracts made between EKU and certain of its employees in contravention of the Due Process Clause of the Fifth Amendment to the Constitution. This argument is rejected for the reason that a state is not a “person” within the context of the Due Process Clause. South Carolina v. Katzenbach, 383 U.S. 301, 323 (1971).

C. Statute of Limitations and Laches. The next issue presented is whether the instant cause of action is barred by either the statute of limitations, 29 U.S.C. §255 , or by the doctrine of laches. Sex-based discriminatory wage payments constitute a continuing violation of the Equal Pay Act. Hodgson v. Behrens Drug Co., [5 EPD ¶8452 ] 475 F.2d 1041, 1050 (5th Cir.), cert. denied [6 EPD ¶8861] 414 U.S. 822 (1973). The complaint in the instant case was filed on January 26, 1976. The limitation period prescribed by 29 U.S.C. §255 is two years, unless the cause of action arose out of a “willful” violation. The term “willful” applies in civil actions to violations which are intentional, knowing or voluntary, as distinguished from accidental; it is used to characterize intentional disregard of or plain indifference to statutory requirements. United States v. Illinois Central R.R., 303 U.S. 239 (1938). Substantially, the same test of “willfulness” has been applied in Hodgson v. Cactus Craft of Arizona, 481 F.2d 464 (9th Cir. 1973), and in Brennan v. Heard, 491 F.2d (5th Cir. 1974). The plaintiff’s memorandum in opposition to the motion to dismiss recites that an investigation had been launched into the alleged discriminatory practices at EKU on July 3, 1974, and that by October 25, 1974, officials at EKU had been apprised of the Department of Labor’s findings. For purposes of this opinion, the Court need not now decide whether the defendants’ actions were “willful” within the context of the Act. Notwithstanding a later finding of “willful” conduct, any recovery under this Act is limited by the time parameters prescribed in 29 U.S.C. §266.

This Court has also considered the defense of laches and rejects it as being without merit in light of express Congressional intent to provide remedial relief for violations of the Equal Pay Act through adoption of a federal statute of limitations.

D. Sovereign Immunity. This Court recognizes the immunity provided by the Eleventh Amendment when a state is sued by one of its own citizens. Employees v. Missouri Public Health Dept., 411 U.S. 279 (1973); Parden v. Terminal R.R., 377 U.S. 184 (1941). The instant action, however, is not one brought by a citizen of the Commonwealth of Kentucky, but rather, it is a suit brought by the Secretary of Labor to enforce certain provisions of the Fair Labor Standards Act. Therefore, it is a suit brought by the United States against which the Eleventh Amendment provides no immunity. Employees v. Missouri Public Health Dept., supra; United States v. Mississippi, 380 U.S. 128 (1965).

E. National League of Cities. At the time the defendants’ motion to dismiss was filed, the issues of federal interference, under the Commerce Clause, with the financial affairs and employment relations between a state agency and its employees was controlled by Maryland v. Wirtz, 392 U.S. 183 (1968). The Supreme Court concluded “that a ‘rational basis’ exists for congressional action prescribing minimum labor standards for schools and hospitals. ...” Id. at 195. Wirtz appeared to dispose adequately of the defendants’ argument that the FLSA intruded upon state sovereignty granted by the Ninth and Tenth Amendments to the Constitution.

The Wirtz case was expressly overruled in National League of Cities v. Usery, [12 EPD ¶10,996 ]--U.S.--, 44 U.S.L.W. 4974 (June 24, 1976), which held that Congress lacked authority under the Commerce Clause to enact the 1974 amendments that extended coverage of the Fair Labor Standards Act to almost all non-supervisory state and local government employees insofar as these amendments would significantly alter or displace the states’ ability to structure employer-employee relationships in such areas as fire prevention, police protection, sanitation, public health, and parks and recreation. The Court further stated at 4979:

Our examination of the effect of the 1974 amendments, as sought to be extended to the States and their political subdivisions, satisfies us that both the minimum wage and the maximum hour provisions will impermissibly interfere with the integral governmental functions of these bodies.

Although the employees in question in National League of Cities were police officers and fire fighters, the Court left no doubt but that this holding would likewise apply to other state and local government employees:

While there are obvious differences in the schools and hospitals involved in Wirtz, and the fire and police departments affected here, each provides an integral portion of those governmental services which the States and their political subdivisions have traditionally afforded their citizens.

44 U.S.L.W. 4980.

Were this a suit to enforce either minimum wage or maximum hour provisions against the defendant, there would be no question but that National League of Cities is dispositive and that the complaint would have to be dismissed.

In plaintiff’s Brief in Opposition to the Motion to Dismiss, two basic arguments are expounded: (1) The Equal Pay Act as applied to the states is a constitutional exercise of the Commerce Clause, even in light of National League of Cities; and (2) In any event, there are two independent sources of constitutional power, i.e., the Spending Power and Section 5 of the Fourteenth Amendment, either of which is entirely sufficient to support the questioned legislation. These issues will be discussed in reverse order.

F. Spending Power and Fourteenth Amendment. Although the enacting clause of the Equal Pay Act clearly specifies that the authority for the act is the Commerce Clause (see infra), the Secretary stresses the fact that the legislation which is the basis for this case is the 1972 Amendment removing the professional exemption of the Equal Pay Act. (Educ. Amend. of 1972, Title IX, 92-318, 83 Stat. 235, 375). As the amendment was apparently passed under Congress’ Spending Power and the sponsor of the amendment, Senator Bayh, focused his discussion of the amendments on federal funding, the plaintiff claims that the Spending Power was the source of constitutional power contemplated by Congress.

Furthermore, the Secretary cites Fitzpatrick v. Bitzer, [12 EPD ¶10,999 ]--U.S.--, 44 U.S.L.W. 5120 (June 28, 1976), a unanimous decision handed down just four days after National League of Cities, as authority that state sovereignty is necessarily limited by the enforcement provision of the Fourteenth Amendment. In Section 5, Congress expressly grants authority to enforce, by appropriate legislation, the substantive provisions of the Fourteenth Amendment, which themselves embody significant limitations on state authority.

Fitzpatrick, however, was quite clear that in order to justify such infringement, the “threshold fact of congressional authorization” must be satisfied. 44 U.S.L.W. 5122. The Court specifically found at 5123 that:

We think that Congress may, in determining what is “appropriate legislation” for the purpose of enforcing the provisions of the Fourteenth Amendment, provide for private suits against States or state officials which are constitutionally impermissible in other contexts. (Emphasis added.)

G. Commerce Clause. Although Congress perhaps could have based the Equal Pay Act on either the Spending Power of §5 of [or] the Fourteenth Amendment, the fact remains that the Act states it was based on the Commerce Clause. Section 2 of Pub. L. 88-38 provided that:

(a) The Congress hereby finds that the existence in industries engaged in commerce or in the production of goods for commerce of wage differentials based on sex--

(1) depress[es] wages and living standards for employees necessary for their health and efficiency;

(2) prevents the maximum utilization of the available labor resources;

(3) tends to cause labor disputes thereby burdening, affecting, and obstructing commerce;

(4) burdens commerce and the free flow of goods in commerce; and

(5) constitutes an unfair method of competition.

(b) It is hereby declared to be the policy of this act ..., through exercise by Congress of its power to regulate commerce among the several states and with foreign nations, to correct the conditions above referred to in such industries. (Emphasis added.)

The above leaves no doubt as to the “Congressional Authority” for the Equal Pay Act. The Court cannot speculate as to Congressional intent when it has been so definitely established. However, in Usery v. Allegheny County Institution Dist., [12 EPD ¶11,221 ]--F.2d--(No. 74-1153, 3d Cir. Oct. 28, 1976), the Court implies the Fourteenth Amendment gives Congress the power to pass the Equal Pay Act.

The Secretary urges this Court to uphold the validity of the Equal Pay Act as applied to the States based on provisions Congress could have relied upon but did not do so. The Supreme Court specifically declined to take such action in National League of Cities:

We express no view as to whether different results might obtain if Congress seeks to affect integral operations of state governments by exercising authority granted it under other sections of the Constitution such as the Spending Power, Art. I, §8, cl. 1 or §5 of the Fourteenth Amendment.

44 U.S.L.W. at 4979, n. 17. Certainly if the United States Supreme Court is unwilling to supply congressional intent, this Court must likewise abstain.

The Secretary, nevertheless, strongly asserts that even in light of National League of Cities, the Equal Pay Act, as applied to state and local governments, is a valid congressional exercise of the Commerce Clause. He first points to the fact that the Equal Pay Act, although codified with the FLSA, is in effect a separate law, with a separate legislative history and aimed at a separate evil. To support this position, the plaintiff stresses the fact that the exemptions for executive, administrative, or professional personnel which apply to the minimum wage and maximum hour provisions of the FLSA do not extend to the Equal Pay Act, that is, there is no professional exemption to the Equal Pay Act.

Furthermore, the Secretary asserts, the provisions of the Equal Pay Act are easily severable from the provisions of the FLSA which were struck down in National League of Cities. Section 19 of the FLSA provides:

If any provisions of this Act or the application of such provision to any person or circumstance is held invalid, the remainder of the Act and the application of such provision to other persons or circumstances shall not be affected thereby.

Finally, the Secretary submits, National League of Cities is limited to the minimum pay and maximum hour provisions of the FLSA. While Mr. Justice Rehnquist repeatedly referred to minimum wage and maximum hours and the burden such regulations would impose on the state, nowhere did the Court mention the Equal Pay Act. It must be remembered, however, that the provisions of the FLSA, not those of the Equal Pay Act, were being questioned in National League of Cities. There would have been no reason to discusss the constitutionality of the Equal Pay Act. Moreover the Court noted, the financial burden on the States was not the only factor to be weighed:

Quite apart from the substantial costs imposed on the States and their political subdivisions, the Act displaces state policies regarding the manner in which they will structure delivery of those governmental services which their citizens require.

44 U.S.L.W. at 4978.

The Court also referred to federal infringement on certain employment relationships at 4979:

[The Act] will nonetheless significantly alter or displace the States’ abilities to structure employer-employee relationships in such areas as fire prevention, police protection, sanitation, public health, and parks and recreation.

A footnote indicated that the above list was by no means exhaustive of the activities which are within the area of traditional operation of state and local government. Although state educational institutions were not listed, there is no doubt that they would fall into the area.

The Secretary urges that when reading the majority and concurring opinions together, National League of Cities requires that each case be examined on an individual basis and the states’ interest in retaining sovereignty must be balanced against the federal interest sought to be asserted. Using this approach, the Secretary admits that the State has an interest in making its own fundamental employment decisions such as minimum wages. The State has, however, no legislative interest in discriminating on the basis of sex. Furthermore, the national interest in preventing sex discrimination clearly overrides any relevant state interest.

The majority opinion in National League of Cities in effect adopted a balancing test of its own:

One undoubted attribute of state sovereignty is the states’ power to determine the wages which shall be paid to those whom they employ in order to carry out their governmental functions, what hours these persons will work, and what compensation will be provided where those employees may be called upon to work overtime. The question we must resolve in this case, then, is whether these determinations are “functions essential to separate and independent existence” (citations omitted), so that Congress may not abrogate the States’ otherwise plenary authority to make them.

44 U.S.L.W. at 4977.

It appears that the defendants have no legitimate interest in discriminating on the basis of sex in its employment relationships. Enforcing the provisions of the Equal Pay Act should in no way infringe upon functions essential to separate and independent existence of the state sovereignty. The Equal Pay Act is a valid Congressional exercise of its powers under the Commerce Clause. See Usery v. Allegheny County Institution Dist., supra; Christensen v. Iowa, [12 EPD ¶11,156 ] 45 U.S.L.W. 2086 (N.D. Iowa Aug. 24, 1976).

As earlier noted, this motion has been regarded as one for a summary judgment pursuant to Fed.R.Civ.P. 56. A summary judgment may not be granted unless the moving party is entitled to a judgment as a matter of law and that there is no genuine issue of fact which remains for trial. Rogers v. Peabody Coal Co., 342 F.2d 749 (6th Cir. 1965). From the record, the Court cannot conclude that the defendants have adequately demonstrated a right to a summary judgment and, therefore, their motion will be overruled.

II. Interrogatories

One final matter remains to be determined at this time. On February 17, 1976, defendants propounded written interrogatories to the Secretary under Rule 33 of the Federal Rules of Civil Procedure. On June 8, 1976, the plaintiff filed its answers to those interrogatories, objecting to numbers 2, 3, 4, and 5 on the basis of relevancy and to number 12 on the basis that it was privileged information. The defendants, in their motion to compel discovery, assert that the plaintiff’s objections are untimely or, in the alternative, are totally without merit.

Rule 33(a) specifically requires objections to interrogatories to be made within thirty days after service. In the absence of an extension of time or good cause, failure to object to interrogatories within that period of time constitutes a waiver of any objection, including the objection of privilege. United States v. 58.16 Acres of Land, 66 F.R.D. 570 (E.D. Ill. 1975). Even if the party is in good faith unable to answer because it lacks sufficient information, it should indicate the reasons rather than ignore the inquiry. If an interrogatory is deemed in good faith to be improper, a timely objection should be filed. Pilling v. General Motors Corp., 45 F.R.D. 366, 369 (D. Utah 196).

There should be no problem concerning Interrogatories 2, 3, 4 and 5. In the plaintiff’s response to this motion filed on July 7, 1976, it stated on page 2: “If the defendants insist that the information requested in the interrogatories is essential to the defense of their clients, then the plaintiff will certainly attempt to obtain this information from the defendants.” Obviously, the defendants do consider the information essential, and the plaintiffs will be ordered to answer the interrogatories.

As to Interrogatory No. 12, plaintiff asserts that the information requested is covered by the “informant’s privilege.” This privilege is not an absolute one, but is limited by the underlying purpose of the privilege as balanced against the fundamental requirements of fairness and disclosure in the litigation process. Hodgson v. Charles Martin Inspectors of Petroleum, Inc., 459 F.2d 303, 305 (5th Cir. 1972). Brennan v. Automatic Toll Systems, Inc., 60 F.R.D. 195 (S.D. N.Y. 1973), held that an employer is entitled to have answers to interrogatories concerning which employees had been interviewed concerning the subject matter of the litigation.

However, this Court feels that no useful purpose is served by revealing the gist of conversations between government investigators and EKU’s employees. It could not assist EKU in preparing its defense, as it already knows the identity of those employees alleged to have been discriminated against. Therefore, that motion to compel discovery for Interrogatory 12 will be overruled.