Case Title: Commonwealth v. Luzik

Citation: 

Docket Number: 982635

State: virginia

Court: Virginia Supreme Court

Date: 2000-01-14T00:00:00Z

Document:
Present:  Carrico, C.J., Compton, Lacy, Keenan, Koontz and 
Kinser, JJ. 
 
COMMONWEALTH OF VIRGINIA 
 
OPINION BY 
v.  Record No. 982635 
JUSTICE LAWRENCE L. KOONTZ, JR. 
 
January 14, 2000 
DOUGLAS W. LUZIK, ET AL. 
 
FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND 
Theodore J. Markow, Judge 
 
 
In this appeal, we consider whether the Commonwealth has 
waived its right to assert the bar of sovereign immunity to a 
suit by state employees in state court for back overtime wages 
under the federal Fair Labor Standards Act (FLSA), 29 U.S.C. 
§ 201, et seq. 
BACKGROUND 
On June 25, 1992, Douglas W. Luzik and fifteen other 
juvenile probation officers (the complainants), who work in 
various Court Service Units for the Virginia Department of Youth 
and Family Services (the Department),1 filed a bill of complaint 
against the Commonwealth alleging a violation of the FLSA.  The 
complainants asserted that they are “non-exempt” employees under 
the FLSA and sought to enforce the right provided therein to 
receive hourly payment of time and one half if and when they 
work more than 40 hours in a workweek.  The complainants sought 
                     
1By amendment to Code § 66-1 in 1996, this department became 
the Department of Juvenile Justice. 
back overtime wages, enforcement of future overtime pay, and 
attorney’s fees and costs. 
The Commonwealth’s initial response was to file a plea in 
bar of sovereign immunity, asserting that it was exempt from 
being sued in its own courts by its employees for an alleged 
violation of the FLSA.  The Commonwealth asserted that the 
Eleventh Amendment to the United States Constitution precludes 
Congress from subjecting a state and its officials to being sued 
in federal court absent an express intent in a given statute to 
permit such suits.  Contending that there is no abrogation of 
the sovereign immunity of the states express in the FLSA, the 
Commonwealth asserted that it cannot be sued for a violation of 
that law in federal court and, by extension, neither can it be 
sued in state court.  The Commonwealth contended that is so 
because in the absence of a waiver by the General Assembly, the 
Commonwealth and her officials have absolute immunity from the 
award of damages sought by the complainants.  The Commonwealth 
further contended that such immunity also applies to any 
injunctive relief requiring future payment of overtime pay as 
the establishment and revision of wages and salaries is 
discretionary under the laws of the Commonwealth. 
After receiving briefs and hearing argument, by letter 
opinion dated March 11, 1993, the chancellor denied the 
Commonwealth’s plea in bar.  The chancellor reasoned that 
 
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language within the FLSA defining an employer to include a 
“public agency,” 29 U.S.C. § 203(d), which is further defined as 
“the government of a State” and “any agency of . . . a State,” 
29 U.S.C. § 203(x), evinces an intent on the part of Congress to 
subject the states to enforcement of the FLSA in federal courts, 
thus answering the Commonwealth’s assertion that such an action 
is barred therein by the Eleventh Amendment.  The chancellor 
further reasoned that to bar the suit in state court under a 
theory of sovereign immunity “would [improperly] allow state law 
to determine the applicability of federal law.” 
The Commonwealth noted an appeal of this ruling to this 
Court.  The Commonwealth’s petition for appeal was limited to 
the issue of whether sovereign immunity barred state employees 
from bringing suit against the state in state court.  Finding 
that there was not yet an appealable order, Code § 8.01-670, we 
refused the Commonwealth’s petition for appeal and its 
subsequent petition for rehearing. 
The complainants then filed an amended bill of complaint 
joining eighty-seven additional juvenile probation officers as 
complainants.  The Commonwealth filed a demurrer, again 
asserting the application of the bar of sovereign immunity and 
the preclusive effect of the Eleventh Amendment.  The 
Commonwealth further asserted that application of the FLSA to 
the states exceeded congressional authority as limited by the 
 
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Tenth Amendment.  The chancellor took no action with reference 
to the Commonwealth’s demurrer.  Thereafter, the Commonwealth 
filed an answer, which it subsequently amended, and the matter 
proceeded to an ore tenus hearing before the chancellor. 
The principal issues before the chancellor were whether the 
complainants were salaried employees and, if so, whether their 
employment requirements and job duties caused them to fall 
within one of the recognized exemptions within the FLSA as 
administrative, professional, or executive employees under the 
“short test” promulgated in the regulations implementing the 
FLSA for determining the exempt status of salaried employees.  
The Commonwealth contended that all the complainants are 
salaried and that ninety-nine of the complainants are subject to 
administrative or professional exemptions.  The Commonwealth 
contended that the remaining four employees are exempt executive 
employees. 
The complainants contended that they are not salaried 
because they are subject to a reduction in pay for less than a 
workweek under a disciplinary policy applicable to all employees 
of the Department.  With the exception of three of the 
complainants, who conceded that they were “executives,” the 
complainants further contended that their job duties do not 
qualify for any of the exemptions provided for under the FLSA.  
 
4
One complainant contended that she was neither salaried nor an 
exempt executive. 
On May 5, 1995, the chancellor entered an order awarding 
judgment to the Commonwealth.  In an accompanying opinion 
letter, the chancellor found that the complainants are salaried 
employees despite the existence of the disciplinary policy.  
Applying the “short test” applicable to salaried employees, the 
chancellor found that the majority of the complainants have job 
duties that reflect the requirements for either administrative 
or professional employee status.  The chancellor further found 
that the one “executive” employee who had challenged the 
application of that exemption to her is an executive employee 
for purposes of the FLSA. 
The complainants appealed the judgment to this Court, 
assigning error to the chancellor’s finding that they are 
salaried employees and that they are subject to the exemptions 
of the FLSA.  In its brief in opposition, the Commonwealth 
asserted as an assignment of cross-error the failure of the 
chancellor to sustain the Tenth Amendment claim raised in its 
demurrer to the amended bill of compliant.2  The Commonwealth did 
                     
2There is no merit to this assertion.  Congress has the 
power to extend the coverage of the FLSA to public sector-
employees consistent with the Tenth Amendment.  See Garcia v. 
San Antonio Metropolitan Transit Authority, 469 U.S. 528, 555-57 
(1985). 
 
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not assign cross-error to the denial of its claim of sovereign 
immunity.  On December 20, 1995, this Court refused the petition 
for appeal. 
The complainants then filed a petition for a writ of 
certiorari in the United States Supreme Court.  The first of the 
three questions presented in that petition challenged the 
chancellor’s determination that the complainants are salaried 
employees even though they are subject to potential reductions 
in pay in amounts less than a full workweek’s pay “regardless 
whether any actual deductions have occurred.”  On February 24, 
1997, the Court granted the petition and by order vacated the 
judgment and remanded the case “for further consideration in 
light of Auer v. Robbins, 519 U.S. [452] (1997).” 
Auer involved a claim under the FLSA for overtime pay by 
sergeants and a lieutenant employed by the St. Louis, Missouri 
Police Department.  Id. at 454.  In Auer, an opinion of the 
Secretary of Labor, presented to the Court in the form of an 
amicus curiae brief, stated the Department of Labor’s position 
that employees “covered by a policy that permits disciplinary or 
other deductions in pay ‘as a practical matter’” are not 
“salaried” employees “if there is either an actual practice of 
making such deductions or an employment policy that creates a 
‘significant likelihood’ of such deductions.”  Id. at 461.  The 
Court held that the Secretary’s opinion was controlling since it 
 
6
constituted an interpretation “of the Secretary’s own 
regulations.”3  Id. 
On July 29, 1997, we remanded the case to the chancellor 
for further proceedings consistent with the order of the United 
States Supreme Court.  The complainants, first in a letter brief 
to the chancellor and subsequently by formal brief and argument, 
contended that the remand was not limited to the issue addressed 
in Auer but, rather, permitted them to address all aspects of 
the case with respect to the possible controlling effect of 
opinions from the Secretary of Labor. 
Agreeing with the complainants’ contention on the scope of 
the mandated reconsideration, the chancellor determined that he 
was required to reconsider the exempt status of the employees 
with respect to Department of Labor letter rulings he had 
previously discounted.4  The chancellor confirmed his prior 
                     
3The Court rejected a claim by the Police Department that 
the suit, which originated in federal court, was barred by the 
Eleventh Amendment, because the City of St. Louis was “not an 
‘arm of the state’ for Eleventh Amendment purposes.”  Auer, 519 
U.S. at 456 n.1.  There is no dispute in the present case that 
the Department is an agency of the Commonwealth. 
 
4The chancellor also examined the application of the 
specific holding of Auer with respect to his prior determination 
that the complainants are salaried employees.  He determined 
that Code § 2.1-114.5(11), which authorizes the creation of 
regulations permitting reductions in pay as a disciplinary tool, 
is “nominally applicable” to the entire range of personnel in 
the Department.  As such, the chancellor found that there is not 
a “significant likelihood” that the complainants would be 
 
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ruling that all the complainants are salaried employees.  
However, relying on four Department of Labor letter rulings 
which address the status of juvenile and adult probation 
officers generally and “child protective investigators,” the 
chancellor found, contrary to his prior ruling, that the 
complainants are not exempt as administrative or professional 
employees.  With respect to the one complainant who had 
previously been found to be an exempt executive employee, the 
chancellor concluded that the Commonwealth “has not met its 
burden of establishing by clear and convincing evidence that 
[the complainant’s] primary duties relate to supervisory 
management . . . .  She is not exempt from the overtime 
provisions of the FLSA.” 
In an order dated November 25, 1997, the chancellor entered 
judgment for the complainants and referred the matter to a 
commissioner in chancery for a determination of the back 
overtime wages due them from the Commonwealth.  On December 24, 
1997, the Commonwealth filed a motion reasserting its plea of 
sovereign immunity.  In a terse letter to counsel, the 
chancellor stated that “[a]t best, the Commonwealth is too late; 
                                                                  
subject to such reductions.  Accordingly, the chancellor 
confirmed his prior ruling that all of the complainants are 
salaried employees.  The complainants do not challenge this 
finding in this appeal.  
 
 
8
at worst, it is requesting reconsideration . . . .  There must 
be finality to a case!”  The chancellor stated that he was 
summarily overruling the Commonwealth’s motion; however, no 
order memorializing that action appears in the record. 
After receiving the report of the commissioner in chancery, 
the chancellor entered a final order dated September 21, 1998, 
in which the procedural history of the case from its inception 
is recounted and the interlocutory and final rulings are 
memorialized.  Relevant to this appeal, the order makes express 
mention of the Commonwealth’s original plea in bar and the 
denial of that motion.  The chancellor awarded the complainants 
judgment for back overtime wages in the amounts determined by 
the commissioner in chancery, $254,770.92 in attorney’s fees, 
and $16,638.21 costs. 
The Commonwealth filed a petition for appeal assigning 
error to the chancellor’s failure to sustain its plea in bar and 
to the determination that the complainants are not exempt 
employees under the FLSA.  By order dated April 8, 1999, we 
awarded the Commonwealth this appeal. 
On June 23, 1999, after the Commonwealth had filed its 
opening brief, the United States Supreme Court decided the case 
of Alden v. Maine, ___ U.S. ___, 119 S.Ct. 2240 (1999).  The 
procedural history and factual background of Alden are 
remarkably similar to those of the present case.  Alden involved 
 
9
the claims of juvenile probation officers employed by the State 
of Maine for back overtime wages under the FLSA.  The claims 
raised in Alden had first been asserted in a suit filed in 
federal court, but this suit was dismissed before judgment was 
entered following the determination in Seminole Tribe of Florida 
v. Florida, 517 U.S. 44 (1996), that Congress lacked the 
authority to abrogate the states’ sovereign immunity from suit 
in the federal courts.  An action was then filed in state court 
in Maine, where it was dismissed on the ground that, absent a 
waiver by the state, sovereign immunity barred that suit also.  
The Maine Supreme Judicial Court upheld this ruling and the 
United States Supreme Court granted certiorari. 
In affirming the judgment of the Maine courts, the Court 
held that “the powers delegated to Congress under Article I of 
the United States Constitution do not include the power to 
subject nonconsenting States to private suits for damages in 
state courts.”  Alden, ___ U.S. at ___, 119 S.Ct. at 2246.  The 
Court further found that Maine had not waived its sovereign 
immunity and, thus, had not consented to the suit.  Id.  It is 
important to note that sovereign immunity was the only issue 
addressed in Alden.  Although the opinion states that Maine “has 
altered its conduct so that its compliance with the federal law 
cannot now be questioned,” id. at ___, 119 S.Ct. at 2269, the 
 
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Court did not address whether these particular juvenile 
probation officers were “exempt” or “nonexempt” employees. 
On July 28, 1999, we granted the Commonwealth’s motion to 
file a supplemental brief addressing the application of Alden 
and, thereafter, briefs were filed by both parties. 
DISCUSSION 
Alden clearly establishes that the Commonwealth may not be 
sued by state employees in its own courts for an alleged 
violation of the FLSA without its consent.  That consent in the 
context of an FLSA action brought by state employees must be 
established by a waiver of the Commonwealth’s sovereign 
immunity.  Here, the Commonwealth asserts that it has not 
consented to such suits and, therefore, the trial court’s 
judgment must be reversed.  The complainants contend, however, 
that by its actions and omissions in this case, the Commonwealth 
has waived its claim of sovereign immunity.  We disagree with 
the complainants. 
The complainants’ initial contention is based on the 
established rule of appellate procedure in this Commonwealth 
that if a matter is appealed and a party fails to preserve a 
challenge to an alleged error made by the trial court by 
assignment of error or cross-error, the judgment of the trial 
court becomes final as to that issue, a doctrine commonly 
referred to as the “law of the case,” and precludes further 
 
11
litigation of that issue if the case is remanded to the trial 
court for further proceedings by the appellate court.  See 
Lockheed Information Management Systems v. Maximus, 259 Va. ___, 
___, ___ S.E.2d ___, ___ (2000)(decided today); Searles’ Adm’r 
v. Gordon’s Adm’r, 156 Va. 289, 294-98, 157 S.E. 759, 761-62 
(1931).  Although the Commonwealth has asserted its sovereign 
immunity throughout the proceedings in the trial court, as 
recited above the Commonwealth did not assign cross-error in the 
initial appeal to the trial court’s ruling that the Commonwealth 
was not immune from this suit under the doctrine of sovereign 
immunity.  However, this rule of appellate procedure and the 
resulting finality of judgments are not applicable to the issue 
of sovereign immunity in this case. 
This is so because only the legislature acting in its 
policy-making capacity can abrogate the Commonwealth’s sovereign 
immunity.  In the absence of such action by the legislature, the 
courts of this Commonwealth do not have the necessary 
jurisdictional authority to entertain FLSA actions brought 
against the Commonwealth by its employees.  Thus, the issue of 
wavier of sovereign immunity in this case does not turn upon the 
preservation of arguments about the defense, but upon whether 
the Commonwealth acting through the legislature has acted to 
vest the circuit court with jurisdiction to entertain this 
action.  Accordingly, we initially conclude, contrary to the 
 
12
complainants’ contention, that the actions of an attorney for 
the Commonwealth on a procedural matter are obviously not those 
of the legislature in its policy-making capacity and, therefore, 
those actions cannot constitute the Commonwealth’s waiver of its 
sovereign immunity and consent to the FLSA suit in this case. 
The complainants further contend that even if the 
Commonwealth has not waived its right to assert sovereign 
immunity by its actions in this case, it has done so generally 
by statute.  Citing Code § 8.01-192, which provides in pertinent 
part that “[w]hen the Comptroller or other authorized person 
shall disallow . . . any such claim against the Commonwealth as 
is provided for by [§ 2.1-223.1] . . . the person presenting 
such claim may petition an appropriate circuit court for 
redress,” the complainants contend that their claim for back 
wages should be construed as a claim to recover a debt owed 
under their contracts of employment.  They assert that because 
the chancellor ultimately found that they were non-exempt 
employees entitled to receive overtime pay, their suit 
constitutes a valid “pecuniary claim against the Commonwealth.”  
Code § 2.1-223.1. 
We will assume, without deciding, that a claim for unpaid 
wages by a state employee would be subject to the waiver found 
in Code § 8.01-192.  But see Code § 2.1-116.06(C) (providing 
that the “establishment and revision of wages” is not subject to 
 
13
grievance hearing).  The principal difficulty with the 
complainants’ contract debt theory, however, is that their suit 
was not brought in the style of a contract claim or in the 
manner prescribed for such claims by the statutory scheme and 
case law they cite in support of their position.  Although the 
complainants’ assert on brief that they pursued administrative 
remedies prior to advancing their claims in litigation, the 
record does not support this assertion.  Moreover, even if we 
were to accept this assertion, their suit still would not 
satisfy the requirements for seeking payment of a contract debt 
from the Commonwealth as prescribed by the statute. 
The complainants’ urge, however, that the waiver of 
sovereign immunity for claims against the Commonwealth should be 
broadly construed to act as a general waiver whenever the remedy 
sought might be characterized as a claim for a debt owed under a 
contractual relationship regardless of the nature of the 
proceeding in which the claim is brought or the theory advanced 
to assert that claim.  This proposition ignores the basis 
underpinning the Commonwealth’s assertion of sovereign immunity 
in this case. 
As the Commonwealth notes, the plea in bar was advanced in 
order to exercise the Commonwealth’s prerogative not to be 
subject to suit in her own courts pursuant to an act of 
Congress.  The issue is not one of the avoidance of a just 
 
14
contract debt, but of the preservation of a right reserved to 
the states by the United States Constitution.  We see no reason 
to vitiate that right by a broad and unwarranted interpretation 
of the legislative intent behind the limited waiver of sovereign 
immunity in Code § 8.01-192, and nothing in our cases 
interpreting that statute suggests that it should be applied in 
circumstances other than in claims properly instituted under 
that statute and the scheme provided for pursuing such claims in 
Code §§ 8.01-193 to -195. 
Finally, the complainants contend that due process requires 
that the Commonwealth be barred from asserting its sovereign 
immunity in order to avoid liability for “an unconstitutional 
taking without just compensation.”  In essence, they are 
asserting that the back overtime wages they allege they are owed 
under the FLSA is a property right of which they have been 
unjustly deprived.5  This novel theory rests on the faulty 
premise that the complainants’ entitlement to an award of 
damages as prescribed by the FLSA for the Commonwealth’s alleged 
failure to comply with the Act’s overtime provisions accrues 
                     
5Within the same argument the complainants assert that the 
taking is the result of the Commonwealth not fulfilling its 
obligation to pay overtime under their employment contracts.  
This assertion is merely an attempt to recast the prior 
contention that their suit should be deemed a contract debt 
action. 
 
 
15
independent of the complainants’ ability to maintain and prevail 
in an action for those damages.  Under the complainants’ theory, 
the Commonwealth’s potential liability on any claim would 
require a “due process waiver” of its sovereign immunity since 
the failure to pay the putative damages would, prospectively, 
constitute a governmental taking without just compensation. 
Contrary to the complainants’ assertion, the failure to 
compel the Commonwealth to make this “due process waiver” does 
not unjustly deprive them of a remedy under the FLSA.  As noted 
in Alden, for example, the FLSA provides for a remedy in the 
form of a suit by the federal government on behalf of the 
employees.  Alden, ___ U.S. at ___, 119 S.Ct. at 2269.  
Moreover, even in the absence of an alternative remedy, it is 
self-evident that the doctrine of sovereign immunity cannot be 
overcome simply on the ground that it deprives a claimant of a 
recovery, for that is the very nature of the doctrine when it is 
properly applied. 
For these reasons, we hold that the Commonwealth has not 
waived its sovereign immunity and, thus, has not consented to be 
sued in its own courts by its employees for an alleged violation 
of the FLSA.  Accordingly, applying Alden, we will reverse the 
chancellor’s denial of the Commonwealth’s plea of sovereign 
 
16
immunity and enter final judgment for the Commonwealth with 
respect to those claims.6
Reversed and final judgment. 
                     
6Because we hold that the Commonwealth was not subject to 
being sued by its employees in its own courts, we need not 
consider the Commonwealth’s further assignment of error 
addressing the chancellor’s finding that the complainants were 
non-exempt employees.  Moreover, we reject the complainants’ 
contention that even if the Commonwealth was entitled to assert 
its claim of sovereign immunity, the fact that they “prevailed” 
on the merits after that claim was erroneously denied entitles 
them to recover the attorney’s fees and costs awarded to them by 
the chancellor.  Because of our holding that the Commonwealth 
cannot be sued by its own employees under the FLSA, it cannot be 
required to pay the attorney’s fees and costs of such litigants 
when a suit is allowed improperly to go forward. 
 
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