Labor & Employment Law Daily Wrap Up, PROCEDURE—E.D. Pa.: Employer may challenge if DOL attorney committed fraud against court and opposing party, (Oct 6, 2025)

By Ronald Miller, J.D.

Because alleged misrepresentations made by the Labor Secretary’s lead counsel as to his title and authority go directly to the past decisionmakers’ assessment of credibility, the employer’s complaint sufficiently alleged a fraud-on-the-court claim.

An employer found liable for over $22 million in an action alleging it violated the overtime provisions of the FLSA can pursue a separate action alleging the Secretary of Labor’s lead counsel in the underlying suit fraudulently represented to the court, the jury, and opposing counsel that he was the Department of Labor’s “Regional Solicitor,” ruled a federal district court in Pennsylvania. Here, the court concluded that the employer had sufficiently pleaded fraud-on-the-court and fraud against an opposing party claims. Moreover, with respect to a discovery dispute between the parties, the court granted the employer’s motion to compel in part (East Penn Manufacturing Co. v. Chavez-DeRemer, No. 5:24-cv-03077-JLS (E.D. Pa. Oct. 1, 2025)).

Overtime claim. East Penn manufactures and recycles lead-acid batteries. Because the work is hazardous, the employer required hourly employees to don protective gear before clocking in and shower after clocking out. The Secretary of Labor deemed these practices a violation of the FLSA and sued the employer. A jury found in favor of the government and awarded $22,253,087 in back pay. The Third Circuit affirmed.

Now through this independent action, the employer alleged the Secretary procured that underlying judgment through (1) fraud on the court and (2) common-law fraud on the employer.

Unethical conduct. The central thrust of the employer’s complaint was that the Secretary’s lead trial counsel litigated the case “unethically.” The employer’s concerns fell into two general categories. First, it alleged that during the run-up to and throughout the 2023 trial, the Secretary’s lead counsel repeatedly represented to the court, the jury, and opposing counsel that he was the Department of Labor’s cognizant “Regional Solicitor.” However, counsel had been removed from the position of Regional Solicitor in 2022.

Second, the employer cited filings in a discrimination lawsuit’s docket that referenced vague statements by several Department attorneys expressing “ethical concerns” about counsel. The employer contended that the referenced concerns likely addressed conduct bearing directly on the integrity of the 2023 trial.

After the present complaint was filed on July 16, 2024, the government moved both to dismiss and to stay the case pending related Third Circuit proceedings. The district court entered a stay. In January 2025, the district court lifted the stay and directed the parties to commence discovery. Since then, several discovery disputes have arisen, focusing on the discoverability of the Department’s Report of Investigation (ROI) related to the lead counsel’s termination, the government’s obligation to respond to requests for production and interrogatories, and whether the employer may depose several Department of Labor current and former employees.

The court addressed both the Secretary’s motion to dismiss and the employer’s motion to compel discovery.

Motion to dismiss. The government mounted a Rule 12(b)(6) challenge contending that the employer had not pleaded sufficiently particularized facts to sustain a claim for fraud on the court or fraud on a party. In the Third Circuit, district courts resolve such challenges by: (1) identifying the elements of each claim; (2) setting aside conclusory assertions; and (3) evaluating whether the remaining well-pleaded facts, taken as true, plausibly give rise to relief.

Fraud-on-the-court claim. The elements of a fraud-on-the-court claim are as follows: “(1) an intentional fraud; (2) by an officer of the court; (3) which is directed at the court itself; and (4) in fact deceives the court.” In terms of the nature of the fraud, the Third Circuit requires that the misconduct be nothing less than “the most egregious misconduct directed to the court itself,” and that it be shown by “‘clear, unequivocal and convincing evidence.’”

As to the allegation that the lead counsel misrepresented his title as Regional Solicitor to the court, the jury, and opposing counsel, the government contended that such conduct, even if accepted as true, is not sufficiently egregious to constitute fraud on the court. Second, with respect to the more generalized references to “ethical concerns,” the government added that those allegations are impermissibly vague and lack the particularity Rule 9(b) requires.

Here, the court concluded that the employer had sufficiently pleaded a fraud-on-the-court claim. The complaint makes clear that during the pendency of the Department’s overtime enforcement action, the government’s lead trial lawyer repeatedly represented to the court and the jury that he was the Department of Labor’s Regional Solicitor when he was not. Because his alleged misrepresentations as to title and authority go directly to the past decisionmakers’ assessment of credibility and the weight presumptively accorded to counsel’s representations, the complaint sufficiently alleged a fraud-on-the-court claim.

Fraud against opposing party. The court likewise concluded that the employer cleared the 12(b)(6) hurdle with respect to its claim for fraud against an opposing party. The Third Circuit has articulated the elements for such a claim as: “(1) a misrepresentation of fact, (2) fraudulently uttered, (3) with intent to induce reliance, (4) and inducing justifiable reliance, (5) and to the injury of the injured party.”

The employer again alleged specific factual misrepresentations related to the lead counsel’s official title and authority, made knowingly and repeatedly during the underlying litigation, with the intent that both the court and the employer rely on them. The complaint further alleged reliance on those statements and resulting prejudice insofar as the employer’s counsel was prevented from challenging the credibility that lead counsel allegedly gained through the use of a title that he did not hold. Accordingly, the government’s motion to dismiss was denied in full.

Discovery dispute. With respect to discovery disputes between the parties, the court granted the employer’s motion to compel in part. First, as to the employer’s request the government produce unredacted materials responsive to its First Set of Requests for Production of Documents, the court overruled the government’s objection since it had resolved the government’s motion to dismiss.

Depositions. Next, with respect to the depositions of current and former Department of Labor employees, the government argued that all such depositions were improper because the testimony sought was too intertwined with the Department of Labor’s attorney work product and other enforceable privileges. However, the court agreed with the employer that the proper way to protect privileged information is to assert privilege in response to specific questions as they arise. Thus, these depositions could proceed.

Finally, the employer challenged the government’s privilege redactions in the ROI. Noting that the privilege log produced by the government reflected more than 25 categories of redactions, invoking multiple distinct privileges, the court referred this matter to a magistrate judge for a report and recommendation as to how the court should rule.

The case is No. 5:24-cv-03077-JLS.

Judge: Schmehl, J.

Attorneys: Evangeline C. Paschal (Hunton Andrews Kurth) for East Penn Manufacturing Co. Landon Y. Jones, U.S. Attorney’s Office for Lori Chavez-DeRemer.

Companies: East Penn Manufacturing Co.

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