Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caDC-15-05014/USCOURTS-caDC-15-05014-0/pdf.json

Nature of Suit Code: 899
Nature of Suit: Other Statutes - Administrative Procedure Act/Review or Appeal of Agency Decision
Cause of Action: 

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United States Court of Appeals 

FOR THE DISTRICT OF COLUMBIA CIRCUIT

Argued November 2, 2015 Decided June 3, 2016 

No. 15-5014 

RHEA LANA, INC. AND RHEA LANA’S FRANCHISE SYSTEMS,

INC., 

APPELLANTS

v. 

DEPARTMENT OF LABOR, 

APPELLEE

Appeal from the United States District Court 

for the District of Columbia 

(No. 1:14-cv-00017) 

Stephen S. Schwartz argued the cause for appellants. 

With him on the briefs were Matthew J. MacLean, John F. 

Scalia, Keith Hudolin, and Daniel Z. Epstein. 

Sydney A. Foster, Attorney, U.S. Department of Justice, 

argued the cause for appellee. With her on the brief were 

Benjamin C. Mizer, Principal Deputy Assistant Attorney 

General, Vincent H. Cohen Jr., Acting U.S. Attorney, Mark B. 

Stern, Attorney, U.S. Department of Justice, and Dean A. 

Romhilt, Senior Attorney, U.S. Department of Labor. 

USCA Case #15-5014 Document #1616477 Filed: 06/03/2016 Page 1 of 18
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Before: GARLAND,

⃰

Chief Judge, PILLARD, Circuit Judge, 

and EDWARDS, Senior Circuit Judge. 

PILLARD, Circuit Judge: Plaintiff Rhea Lana’s periodic 

tag sales of used children’s toys, clothing, and furnishings—

staffed principally by mothers and grandmothers as 

salespeople—are reminiscent of many a charitable fundraising 

event. The difference is that Rhea Lana runs and franchises 

its sales for a profit. The Department of Labor has for several 

decades read the Fair Labor Standards Act to prohibit forprofit, private-sector entities from using volunteer workers. 

Consistent with that view, the Department sent Rhea Lana a 

letter informing it that its failure to pay its salespeople 

violates the Act. The letter also bore a warning: the Act 

contains a penalty provision for repeated or willful violations 

and, now that Rhea Lana had official notice of its noncompliance, it would be subject to willfulness penalties for 

any further infractions. Rhea Lana sought pre-enforcement 

declaratory and injunctive relief against the Department’s 

determination that it was out of compliance with the Act. The 

district court viewed the Department’s letter as analogous to 

agency advice letters that this court has held to be 

unreviewable, non-final agency action, and so dismissed the 

suit.

 We conclude that the Department’s letter to Rhea Lana is 

final agency action because it is more than mere agency 

advice. By notifying Rhea Lana that the company was in 

violation of its wage-and-hour obligations, the letter rendered 

knowing any infraction in the face of such notice, and made 

Rhea Lana susceptible to willfulness penalties that would not 

otherwise apply. The letter thus transmitted legally operative 

 

⃰

 Chief Judge Garland was a member of the panel at the time the 

case was argued but did not participate in this opinion. 

USCA Case #15-5014 Document #1616477 Filed: 06/03/2016 Page 2 of 18
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information with a “legal consequence” sufficient to render 

the letter final. We therefore reverse the district court’s 

dismissal. 

I. 

 Plaintiffs Rhea Lana, Inc. and Rhea Lana’s Franchise 

Systems, Inc. (collectively, Rhea Lana) operate, and franchise 

the opportunity to operate, semi-annual consignment sales of 

used children’s toys, clothing, and related items. Rhea Lana 

leases space and handles logistical matters at the events, and 

consignors provide the items for sale. Consignors generally 

receive at least seventy percent of the proceeds from their 

items when sold, and may also help staff the sales. 

Consignors who work at Rhea Lana’s sales—dubbed 

“consignor-volunteers”—receive no pay. However, they are 

allowed to buy items in advance of the general public and to 

help sell their own items and increase their profits by, for 

example, favorably displaying and promoting their goods. 

 In January 2013, the Wage and Hour Division of the 

Department of Labor (DOL or the Department) began 

investigating Rhea Lana’s employment practices. At a 

meeting in May 2013, the agency advised Rhea Lana that 

DOL considered the company’s consignor-volunteers to be 

employees under the Fair Labor Standards Act (FLSA), 

entitled to wages, including back pay. In August of that year, 

the agency reiterated its position in a pair of letters from 

Robert A. Darling, a district director of the Wage and Hour 

Division. The first letter, dated August 6, 2013, went directly 

to Rhea Lana’s consignor-volunteers. It explained that those 

workers “might not have been paid as required by the law” 

and that, although the agency would “take no further action 

on [their] behalf,” the consignor-volunteers could bring suit 

under the FLSA to recover back pay. Letter from Robert A. 

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Darling to Rhea Lana Consignor-Volunteers (Aug. 6, 2013), 

J.A. 21. 

The second letter, sent to Rhea Lana on August 26, 2013, 

explained that “[t]he investigation [had] disclosed violations” 

of the FLSA’s minimum-wage and overtime provisions. 

Letter from Robert A. Darling to Rhea Lana Rhiner (Aug. 26, 

2013), J.A. 23. The letter noted that Rhea Lana had agreed to 

pay back wages to thirty-nine managers it had been treating as 

volunteers, but that the company “refuse[d] to comply” with 

respect to the consignor-volunteers. Id. In a paragraph of 

particular significance for this appeal, the letter continued: 

We would like to direct your attention to section 16(e) 

of the FLSA and Regulations, Part 578. As you will 

note, section 16(e) provides for the assessment of a 

civil money penalty for any repeated or willful 

violations of [the FLSA’s minimum-wage and 

overtime requirements], in an amount not to exceed 

$1,100 for each such violation. No penalty is being 

assessed as a result of this investigation. If at any 

time in the future your firm is found to have violated 

the monetary provisions of the FLSA, it will be 

subject to such penalties. 

Id. 

 As DOL explained in its letter to consignor-volunteers, it 

had decided to conclude the matter by putting the company on 

notice and taking no “further action.” Letter from Robert A. 

Darling to Rhea Lana Consignor-Volunteers (Aug. 6, 2013), 

J.A. 21. Rhea Lana filed suit against DOL under the 

Administrative Procedure Act (APA), 5 U.S.C. § 706(2)(A), 

challenging the agency’s determination that Rhea Lana’s 

consignor-volunteers are employees under the FLSA. Rhea 

Lana sought a declaration that those workers are not 

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employees and an injunction barring DOL from further 

investigations or enforcement proceedings flowing from the 

agency’s determination. 

 The agency moved to dismiss, contending that Rhea Lana 

lacks standing and that the challenged letters are not final 

agency action subject to APA challenge. The district court 

held that the company has standing, but that the challenged 

agency action is non-final. The court reasoned that the letters 

here are indistinguishable from other statements of agency 

legal opinion that this court has found non-final, such that 

“D.C. Circuit precedent forecloses APA review of the DOL 

letters at issue.” Rhea Lana, Inc. v. U.S. Dep’t of Labor, 74 F. 

Supp. 3d 240, 245-46 (D.D.C. 2014); see id. at 244-45 (citing 

AT&T Co. v. EEOC, 270 F.3d 973, 976 (D.C. Cir. 2001); 

Indep. Equip. Dealers Ass’n v. EPA, 372 F.3d 420, 427 (D.C. 

Cir. 2004); Reliable Automatic Sprinkler Co. v. Consumer 

Prod. Safety Comm’n, 324 F.3d 726, 731 (D.C. Cir. 2003)). 

Rhea Lana timely appealed. 

II. 

 We review the district court’s dismissal de novo. 

Reliable Automatic Sprinkler Co., 324 F.3d at 731. Agency 

action is final, as it must be before we may review it here, 5 

U.S.C. § 704, if it satisfies two conditions: “First, the action 

must mark the consummation of the agency’s decisionmaking 

process . . . . And second, the action must be one by which 

rights or obligations have been determined, or from which 

legal consequences will flow.” Bennett v. Spear, 520 U.S. 

154, 177-78 (1997) (internal quotation marks and citations 

omitted). 

 The parties have narrowed the question at issue in two 

ways. First, DOL has conceded the first finality requisite: the 

letters completed the agency’s decisionmaking on the 

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consignor-volunteers’ status as employees. See Mem. in 

Supp. of Mot. to Dismiss 9 n.2, J.A. 65; Oral Arg. Rec. 31:50-

32:04. Second, Rhea Lana has clarified that its finality 

contention is limited to the agency’s August 26 letter to the 

company. See, e.g., Rhea Lana Br. 3, 8-10; Oral Arg. Rec. 

12:38-13:04. Accordingly, the sole question before us is 

whether DOL’s August 26 letter (hereinafter, the Letter) 

satisfies the second finality requisite—that is, whether the 

Letter (a) determines rights or obligations or (b) creates legal 

consequences. 

 Rhea Lana says the Letter both determines obligations 

and creates legal consequences; either would suffice. The law 

in this area is hardly crisp. Our finality precedent lacks many 

“self-implementing, bright-line rule[s],” given the 

“pragmatic” and “flexible” nature of the inquiry as a whole. 

Nat’l Ass’n of Home Builders v. U.S. Army Corps of Eng’rs, 

417 F.3d 1272, 1279 (D.C. Cir. 2005) (internal quotation 

marks omitted); see U.S. Army Corps of Eng’rs v. Hawkes 

Co., No. 15-290, 136 S. Ct. ___, ___, slip op. at 7 (U.S. May 

31, 2016) (noting “the pragmatic approach we have long 

taken to finality” (internal quotation marks omitted)). And 

“rights or obligations” and “legal consequences” may have 

some analytic overlap. See, e.g., Appalachian Power Co. v. 

EPA, 208 F.3d 1015, 1022-23 (D.C. Cir. 2000). We are 

assisted in this case by comparison of Rhea Lana’s 

predicament to that of the plaintiffs in Sackett v. EPA, 132 S. 

Ct. 1367 (2012)—a case that, as we explain, provides helpful 

guideposts in discerning finality. 

The company casts this case as the spitting image of 

Sackett, in which the Supreme Court found the challenged 

agency action to be final. The Court in Sackett considered the 

finality of an Environmental Protection Agency (EPA) 

administrative compliance order issued against the Sacketts, 

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Idaho landowners who had, without seeking a dredge-and-fill 

permit under the Clean Water Act, filled part of their land 

with dirt and rock in preparation for building a house there. 

Id. at 1370. EPA responded with an order explaining that the 

Sacketts’ property contained wetlands under federal law, and 

that the Sacketts’ unpermitted filling activities violated the 

Act. Id. at 1370-71. 

The Court concluded that the EPA order under review 

“ha[d] all of the hallmarks of APA finality.” Id. at 1371. The 

order directed the Sacketts “immediately to undertake 

activities to restore” the property, and to provide EPA with 

access to the site and related records. Id. (internal quotation 

marks, alteration, and citations omitted). It “determined 

rights or obligations” by giving the Sacketts “the legal 

obligation to restore their property . . . and [to] give the EPA 

access to their property and to records and documentation 

related to the conditions at the Site.” Id. (internal quotation 

marks and citation omitted). And, the Court concluded, “legal 

consequences . . . flow[ed]” from the order because, among 

other things, “the order expose[d] the Sacketts to double 

penalties in a future enforcement proceeding”—one set of 

penalties for violation of the Clean Water Act, and one for 

violation of the compliance order itself. Id. at 1370, 1372. 

Tracking Sackett, Rhea Lana contends the Department’s 

Letter is functionally equivalent to the EPA’s order in both 

regards. It casts the Letter as an order to comply that thus 

determined rights and obligations, and it asserts that legal 

consequences flow from the Letter because it renders the 

company vulnerable to future action for civil penalties. We 

agree only with the second contention. 

 

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A. 

 The Letter here, unlike the EPA compliance order in 

Sackett, created no new legal obligations beyond those the 

FLSA already imposed. The EPA compliance order 

commanded action to mitigate the violation the Sacketts 

already had committed, specifying actions the Sacketts 

“shall . . . undertake” in accordance with an attached 

Restoration Work Plan, and dictating deadlines by which they 

must do so. See Sackett Compliance Order ¶¶ 2.1-2.13, 

J.A. 127-29. That order contained formal and detailed 

findings of fact, concluded as a legal matter that the Sacketts 

had violated and were continuing to violate the Clean Water 

Act, and spoke in mandatory terms. Id. ¶¶ 1.1-.13, 2.1-.14, 

J.A. 125-29. EPA’s cover letter likewise emphasized the 

mandatory and immediate requirements of the agency’s order. 

See Letter from Michelle Pirzadeh to Chantell & Michael 

Sackett (Nov. 26, 2007), J.A. 123 (noting that the order 

“requires you to perform specified restoration activities and 

provide certain specified information”). 

Unlike the detailed terms imposed by EPA’s order in 

Sackett, the Labor Department’s Letter to Rhea Lana 

expressed the agency’s “understanding that [Rhea Lana] 

refuse[s] to comply” with the Department’s back-pay 

determination. Letter from Robert A. Darling to Rhea Lana 

Rhiner (Aug. 26, 2013), J.A. 23. The Letter restated directly 

to Rhea Lana the Department’s longstanding view that 

employees of for-profit entities are subject to the FLSA’s 

wage-and-hour provisions, and do not qualify for volunteer 

status. Id.; see J.A. 19-47 (advisory opinions, letters, and 

other agency publications confirming Department’s 

longstanding interpretation of volunteer provisions). The 

Letter thus gave Rhea Lana the opportunity to take 

responsibility for bringing its operations into compliance; it 

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created no new obligation on Rhea Lana that the company did 

not already bear under the FLSA. Without more, the 

Department’s “Letter tread no new ground. It left the world 

just as it found it.” See Indep. Equip. Dealers Ass’n, 372 F.3d 

at 428. 

In that way, the Department’s Letter resembled, not the 

Sackett compliance order, but “the type of workaday advice 

letter that agencies prepare countless times per year in dealing 

with the regulated community.” Id. at 427 (internal quotation 

marks and citation omitted); see Holistic Candlers & 

Consumers Ass’n v. FDA, 664 F.3d 940, 945 n.6 (D.C. Cir. 

2012). Agencies routinely use such letters to warn regulated 

entities of potential violations before saddling them with 

expensive and demanding enforcement actions. Treating such 

reminders of regulated parties’ legal obligations as final and 

judicially reviewable agency action would discourage their 

use, “quickly muzzl[ing] . . . informal communications 

between agencies and their regulated communities . . . that are 

vital to the smooth operation of both government and 

business.” Indep. Equip. Dealers Ass’n, 372 F.3d at 428. For 

purposes of the rights-and-obligations inquiry, the Letter is 

just like other forms of informal agency advice that we have 

time and again treated as unreviewable. 

B. 

 The heart of this case is Rhea Lana’s second argument—

that legal consequences flow from the Letter because it makes 

Rhea Lana eligible for civil penalties in any future 

enforcement action. Among the enforcement mechanisms the 

FLSA authorizes is DOL’s assessment of civil penalties for 

certain “willful” violations of the Act’s minimum-wage or 

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overtime provisions. 29 U.S.C. § 216(e)(2).1

 Rhea Lana 

argues that, as a direct result of the notice provided to it by the 

Letter, the Department may treat its continued nonpayment of 

consignor-volunteers as a willful violation of DOL’s 

regulations, thereby subjecting the company to civil penalties. 

That new exposure to civil penalties, Rhea Lana maintains, 

constitutes a legal consequence that renders the Letter final 

agency action.2

 DOL counters that Rhea Lana misreads the 

agency’s regulation and misunderstands finality. For the 

reasons set forth below, we agree with Rhea Lana. 

 The FLSA provides that employers that willfully violate 

the Act’s minimum-wage or overtime provisions “shall be 

subject to a civil penalty not to exceed $1,100 for each such 

violation.” 29 U.S.C. § 216(e)(2). The Department of Labor 

promulgated 29 C.F.R. § 578.3 to flesh out, among other 

 

1

 The statute provides for civil penalties for repeated as well as for 

willful violations, and Rhea Lana contends that the Letter also 

exposes it to penalties as a repeated violator in future enforcement 

proceedings. As we base our conclusion here on the potential for 

willful-violations penalties, we need not consider the Letter’s 

possible consequences with respect to repeated-violation penalties. 

2

 The focus of this litigation has been the Letter’s implications for 

civil penalty assessment, but a finding of willfulness may 

precipitate additional legal consequences. The statute of limitations 

for a civil action against an employer is generally two years, but a 

civil action challenging a willful violation may be brought within 

three years. See 29 U.S.C. § 255(a). And, because courts have 

discretion to deny liquidated damages only where an employer can 

show its conduct “was in good faith and that [it] had reasonable 

grounds for believing that [its] act or omission was not a [statutory] 

violation,” id. § 260, a court faced with a willful violation may be 

required to award liquidated damages. 

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things, what constitutes a willful violation.3

 See Minimum 

Wage and Overtime Violations; Civil Money Penalties, 57 

Fed. Reg. 49,128 (Oct. 29, 1992). Subsection (c)(1) of that 

regulation dictates that a violation “shall be deemed to be 

‘willful’ . . . where the employer knew that its conduct was 

prohibited by the Act or showed reckless disregard for the 

requirements of the Act.” 29 C.F.R. § 578.3(c)(1). 

Subsection (c)(2), in turn, provides that “conduct shall be 

deemed knowing, among other situations, if the employer 

 

3

 The regulation’s willfulness provision states in full: 

(c) Willful violations. 

(1) An employer’s violation of section 6 or section 7 of 

the Act shall be deemed to be “willful” for purposes of 

this section where the employer knew that its conduct 

was prohibited by the Act or showed reckless disregard 

for the requirements of the Act. All of the facts and 

circumstances surrounding the violation shall be taken 

into account in determining whether a violation was 

willful. 

(2) For purposes of this section, an employer’s conduct 

shall be deemed knowing, among other situations, if the 

employer received advice from a responsible official of 

the Wage and Hour Division to the effect that the 

conduct in question is not lawful. 

(3) For purposes of this section, an employer’s conduct 

shall be deemed to be in reckless disregard of the 

requirements of the Act, among other situations, if the 

employer should have inquired further into whether its 

conduct was in compliance with the Act, and failed to 

make adequate further inquiry. 

29 C.F.R. § 578.3(c). 

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received advice from a responsible official of the Wage and 

Hour Division to the effect that the conduct in question is not 

lawful.” Id. § 578.3(c)(2). 

In its Letter to Rhea Lana, the Department recounted the 

regulation’s provision for repeated or willful violations of 

minimum wage or overtime obligations, advising that, 

although “[n]o penalty is being assessed as a result of this 

investigation,” Rhea Lana “will be subject to [the FLSA’s] 

penalties” if it “at any time in the future . . . is found to have 

violated the monetary provisions of the FLSA.” Letter from 

Robert A. Darling to Rhea Lana Rhiner (Aug. 26, 2013), 

J.A. 23. Thus, if Rhea Lana continued not to pay consignorvolunteers after it received the agency’s Letter, its conduct 

would constitute a willful violation under that regulation, at 

least as the agency interpreted it in the Letter. 

The parties agree that Darling was “a responsible 

official” within the meaning of the regulation. Oral Arg. Rec. 

8:15-24 (Rhea Lana); id. at 17:55-59 (DOL). And there is no 

dispute that the Letter contains “advice” that Rhea Lana’s 

non-payment of consignor-volunteers was “not lawful.” 29 

C.F.R. § 578.3(c)(2). The parties now part ways over the 

meaning of the regulation’s reference to violations that “shall 

be deemed” to be willful. Id. The regulation uses “the 

mandatory ‘shall’ [which] . . . normally creates an obligation 

impervious to judicial discretion.” Shapiro v. McManus, 136 

S. Ct. 450, 454 (2015) (internal quotation marks and citation 

omitted); see Cook v. FDA, 733 F.3d 1, 7 (D.C. Cir. 2013) 

(citing “case law [that] provides ample support” for the 

principle that “the ordinary meaning of ‘shall’ is ‘must’” 

(internal quotation marks omitted)). The regulation’s 

statement that conduct “shall be deemed knowing,” 29 C.F.R. 

§ 578.3(c)(2), and thus willful, id. § 578.3(c)(1), upon a 

showing of unheeded prior advice from a responsible official 

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appears to require a finding of willfulness in a case like this 

one. 

The exposure to willful-violation penalties apparently 

resulting from receipt of such advice would be a legal 

consequence within the meaning of Bennett v. Spear, just as 

exposure to double penalties made EPA’s compliance order 

legally consequential in Sackett. The Supreme Court’s 

decision this week in Hawkes further supports that result. 

There, the Court concluded that jurisdictional determinations 

issued by the Army Corps of Engineers have legal 

consequences under Bennett, because negative jurisdictional 

determinations “limit[] the potential liability a landowner 

faces for discharging pollutants without a permit,” while 

positive determinations “den[y] . . . [a] safe harbor” from 

administrative enforcement proceedings. Hawkes Co., 136 S. 

Ct. at ___, slip. op. at 7. The DOL letter at issue here, like the 

jurisdictional determination in Hawkes, has the kind of “direct 

and appreciable legal consequences” on potential liability that 

count for purposes of finality. Id. at 6 (internal quotation 

marks omitted).

The Department urges a different reading of § 578.3(c), 

however, arguing that subsection (c)(2)’s mandate is tempered 

by subsection (c)(1)’s directive to consider “all facts and 

circumstances,” such that unheeded advice is just one 

circumstance that may be considered in evaluating—but is not 

dispositive of—willfulness. The Department contends—for 

the first time at oral argument—that we owe deference to its 

current reading of the regulation. Oral Arg. Rec. 36:05-12. 

As a general matter, an agency’s interpretation of its own 

regulation is “controlling unless ‘plainly erroneous or 

inconsistent with the regulation.’” Auer v. Robbins, 519 U.S. 

452, 461 (1997) (quoting Robertson v. Methow Valley 

Citizens Council, 490 U.S. 332, 359 (1989)). But “this 

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general rule does not apply in all cases.” Christopher v. 

SmithKline Beecham Corp., 132 S. Ct. 2156, 2166 (2012). 

Such deference is unwarranted “when it appears that the 

interpretation is nothing more than a convenient litigating 

position, or a post hoc rationalization advanced by an agency 

seeking to defend past agency action against attack.” Id. 

(internal quotation marks, alteration, and citations omitted). 

The Department concedes that, before this case, it had not 

taken the position that unheeded advice should be treated as 

merely one piece of evidence in a totality-of-circumstances 

inquiry regarding willfulness. Oral Arg. Rec. 34:34-39, 

35:21-38; see, e.g., 57 Fed. Reg. at 49,129 (“It is the view of 

the Department that where an employer acts contrary to 

advice that the employer has received from the Wage and 

Hour Division, such action cannot be deemed merely 

negligent, but rather constitutes a willful act.”). In this very 

case the Department informed Rhea Lana that its advice 

sufficed to trigger willfulness penalties. See Letter from 

Robert A. Darling to Rhea Lana Rhiner (Aug. 26, 2013), 

J.A. 23. And, despite the First Circuit’s “urg[ing]” that the 

Department alter its regulation to adopt the position it presses 

here, see Baystate Alt. Staffing, Inc. v. Herman, 163 F.3d 668, 

681 n.16 (1st Cir. 1998), the Department has not done so. 

Accordingly, the interpretation the Department presents in 

this litigation does not qualify for Auer deference. 

Contrary to the Department’s position in this appeal, the 

regulation’s “interrelated and closely positioned” provisions 

are most readily harmonized by treating the specific directive 

in subsection (c)(2) as “control[ling] over [the] general 

provision” of subsection (c)(1). HCSC-Laundry v. United 

States, 450 U.S. 1, 6 (1981). While all facts and 

circumstances ordinarily should be considered, the regulation 

specifies that a particular circumstance—an unheeded agency 

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warning—itself reflects willful misconduct. See Davila v. 

Menendez, 717 F.3d 1179, 1185 (11th Cir. 2013) (“An 

employer knowingly violates the Act if he disregards the 

minimum wage laws deliberately or intentionally . . . such as 

by ignoring ‘advice from a responsible official . . . that the 

conduct in question is not lawful.’” (quoting 29 C.F.R. 

§ 578.3(c)(2)) (additional citation omitted)); see also W. Ill. 

Home Health Care, Inc. v. Herman, 150 F.3d 659, 663 (7th 

Cir. 1998). But see Baystate, 163 F.3d at 680-81. 

The Department also argues that treating notice as 

dispositive of willfulness is inconsistent with the Supreme 

Court’s decision in McLaughlin v. Richland Shoe Co., 486 

U.S. 128, 133 (1988). In support, the Department cites an 

“incongruity” the First Circuit identified between Richland 

Shoe’s willfulness standard, and subsection (c), on the ground 

that the latter—at least as Rhea Lana reads it here—

“precludes legitimate disagreement between a party and the 

Wage and Hour Division about whether the party is an 

employer covered by the Act.” Baystate, 163 F.3d at 680. 

Whether the First Circuit’s position ultimately prevails on its 

merits, it is not dictated by Richland Shoe. The Court in 

Richland Shoe rejected a willfulness standard for statute-oflimitations purposes “that merely require[d] that an employer 

knew that the FLSA was in the picture” in favor of a reading 

of “willful” that required “that the employer either knew or 

showed reckless disregard for the matter of whether its 

conduct was prohibited by the statute.” 486 U.S. at 132-33 

(internal quotation marks and citation omitted). But that latter 

standard is precisely the one the Department of Labor appears 

to have adopted in its general definition of willfulness in 

subsection (c)(1), at issue here. An employer who has 

received advice from DOL that its conduct in particular 

violates the FLSA certainly knows more than just that the 

FLSA is “in the picture.” 

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In deciding that the Department’s action is final, 

however, we need not opine definitively on § 578.3(c)’s 

meaning. It suffices for present purposes that the regulation is 

capable of a reading rendering the Letter a stand-alone trigger 

for willfulness penalties and that, notwithstanding its contrary 

position in this appeal, the Department took that view in its 

Letter to Rhea Lana; it gave no indication that other facts and 

circumstances could mitigate the stated effect of the 

company’s receipt of the Letter. See Letter from Robert A. 

Darling to Rhea Lana Rhiner (Aug. 26, 2013), J.A. 23. In 

Sackett, the Court likewise found a legal consequence where 

the Government took the position that the order at issue 

“exposes the Sacketts to double penalties in a future 

enforcement proceeding,” 132 S. Ct. at 1372, without 

“decid[ing] . . . that the Government’s position is correct, but 

assum[ing] the consequences of the order to be what the 

Government asserts,” id. at 1372 n.2. We can take the 

Department at its word to the regulated party that § 578.3(c) 

renders the Letter legally consequential, leaving the parties to 

litigate on remand the merits of the regulation’s import. Cf. 

W. Ill. Home Health Care, Inc., 150 F.3d at 663 (holding 

DOL advice letter final where letter “warned that [companies] 

would be treated either as recidivists or as willful violators if 

they failed in the future to comply with the legal ruling 

contained in the letter, thus subjecting them to penalties”). 

 Finally, the Department suggests that penalties are too 

contingent to constitute the type of legal consequence 

necessary to confer finality. The Letter itself does not assess 

penalties; in order for the agency to do so, it would have to 

(a) bring a civil action against Rhea Lana, and (b) persuade 

the adjudicator that Rhea Lana violated the FLSA. But that is 

the situation the Supreme Court confronted in deeming the 

order at issue in Sackett to have legal consequences: the 

Sacketts “could be subjected to monetary sanctions for 

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violating the order only if (a) EPA commenced [an] 

enforcement action against petitioners, and (b) the court in 

that suit determined that [the] petitioners had violated the 

[Clean Water Act] as well as the order.” Brief for the 

Respondents at 11, Sackett, 132 S. Ct. 1367 (No. 10-1062), 

2011 WL 5908950, at *11. The possibility that the agency 

might not bring an action for penalties or, if it did, might not 

succeed in establishing the underlying violation did not rob 

the administrative order in Sackett of its legal consequences, 

nor does it do so here. See Sackett, 132 S. Ct at 1372. By 

rendering Rhea Lana a candidate for civil penalties, the 

Department’s Letter establishes legal consequences and is, 

accordingly, final agency action. 

 The Seventh Circuit reached the same conclusion in 

reviewing a similar Department of Labor letter, see W. Illinois 

Home Health Care, Inc., 150 F.3d at 663, and that holding is 

consistent with our own finality precedent. To be sure, we 

have repeatedly held that agency action is not final if the 

adverse effects of the action depend “on the contingency of 

future administrative action.” DRG Funding Corp. v. Sec’y of 

Hous. & Urban Dev., 76 F.3d 1212, 1214 (D.C. Cir. 1996) 

(internal quotation marks and citation omitted); see also Am. 

Airlines, Inc. v. Transp. Sec. Admin., 665 F.3d 170, 174 (D.C. 

Cir. 2011); Fund for Animals, Inc. v. U.S. Bureau of Land 

Mgmt., 460 F.3d 13, 22 (D.C. Cir. 2006). None of those 

cases, however, involved a regulation that the agency read to 

invest challenged agency action with legal effect. Even 

without future administrative enforcement, the Letter, 

together with subsection (c)(2), may have already rendered 

Rhea Lana susceptible to civil penalties for violations that, in 

the absence of the Letter, could be treated as non-willful and 

ineligible for any such penalties. 

 

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* * * 

 For the foregoing reasons, we reverse the order of the 

district court and remand for further proceedings. 

So ordered.

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