Opinion ID: 511000
Heading Depth: 2
Heading Rank: 2

Heading: Retroactivity of the 1985 Amendments to FLSA.

Text: 28 The question remains, however, whether Officer Austin is entitled to overtime compensation for his on-call time between February 19, 1985 and April 6, 1985, the last date for which he claims compensation. Our decision hinges on Congress's authority to step into previously-filed litigation and terminate a party's substantive rights. Kartevold, 625 F.Supp. at 1562. 29 Nine months after the Supreme Court decided Garcia, Congress, concerned about the burden states and municipalities would face if suddenly held accountable for overtime under the FLSA, amended the Act to exempt them from compliance until April 15, 1986. 3 Act of Nov. 13, 1985, Pub.L. No. 99-150, 99 Stat. 787, 1985 U.S.Code Cong. & Admin.News 651. The district court found that these amendments disposed of Austin's claim to back pay for time spent on-call during the weeks between Garcia § issuance on February 19 and April 6, 1985. We agree. 30 Because the amendments followed Garcia by nine months, a window of liability exists between February and November 1985 unless the statute's protection from liability may be extended retroactively to Garcia 's date of decision. Congress obviously intended retroactivity. It dated the onset of liability one year from the issuance of Garcia 's mandate on April 15, 1985 (when the petition for rehearing was denied, 471 U.S. 1049). Also, the Senate Report's arguments for protecting states and localities from the hardship of FLSA compliance apply with equal force before and after November 1985. 31 [I]t is essential that the particular needs and circumstances of the States and their political subdivisions be carefully weighed and fairly accommodated. As the Supreme Court stated in Garcia, the States occupy a special position in our constitutional system. Under that system, Congress has the responsibility to ensure that federal legislation does not undermine the States' special position or unduly burden the States. 32 ... [I]n the wake of Garcia, the States and their political subdivisions have identified several respects in which they would be injured by immediate application of the FLSA. This legislation responds to these concerns by adjusting certain FLSA principles with respect to employees of states and their political subdivisions and by deferring the effective date of certain provisions of the FLSA insofar as they apply to the States and their political subdivisions. 33 The Committee recognizes that the financial costs of coming into compliance with the FLSA--particularly the overtime provisions of section 7--are a matter of grave concern to many states and localities.... [T]he Committee concludes that states and localities required to comply with the FLSA will be forced to assume additional financial responsibilities which in at least some instances could be substantial. 34 S.Rep. No. 159 at 7-8, reprinted in 1985 U.S.Code Cong. & Admin.News 651, 655-56 (emphasis added). 35 The retroactive application of a federal statute (other than an ex post facto law or a bill of attainder) is not forbidden under the Constitution so long as due process requirements are met. Matter of Reynolds, 726 F.2d 1420, 1422 (9th Cir.1984). Here, retroactive application is permissible unless Garcia bestowed upon employees engaged in traditional functions a property interest in overtime that the 1985 amendments deprived them of without due process. See O'Quinn v. Chambers County, Texas, 636 F.Supp. 1388, 1390 (S.D.Tex.1986). In the case at bar, the overtime had been performed and suit for its compensation had been commenced by Austin prior to the effective date of the amendments. We nonetheless find that in this instance Austin was not deprived of a right without due process.
36 Austin has two potentially cognizable property interests: overtime compensation and the cause of action he filed on November 6, 1985. A cause of action is a species of property protected by the Fourteenth Amendment's Due Process Clause. In re Consolidated U.S. Atmospheric Testing Litigation, 820 F.2d 982, 988 (9th Cir.1987) (citation omitted), cert. denied sub nom. Konizeski v. Livermore Labs, --- U.S. ----, 108 S.Ct. 1076, 99 L.Ed.2d 235 (1988). However, it is inchoate and affords no definite or enforceable property right until reduced to final judgment. Id. at 989. Thus Austin perfected no right in his cause of action before the amendments were passed. 37 Nor does he possess a vested right to overtime compensation. Property rights to public benefits are defined by the statutes or customs that create the benefits. When, as here, the statute authorizing the benefits is amended or repealed, the property right disappears. Jones v. Reagan, 748 F.2d 1331, 1338-39 (9th Cir.1984) (citation omitted). Here, Congress has amended the FLSA, by which it had conferred overtime rights on public employees, to withhold those rights from employees in traditional jobs until April 15, 1986. 38 Furthermore, the 1985 amendments did not legislatively deprive public employees of longstanding rights or settled expectations. For at least nine years, dating from the National League of Cities decision up until the decision in Garcia, police had no expectation of overtime compensation. Even then, Garcia itself did not create any rights, it merely gave force to rights created by Congress. See Jones v. Reagan, 748 F.2d at 1338; Kartevold, 625 F.Supp. at 1562.
39 Even if Austin had a cognizable property right to overtime compensation his claim fails on due process grounds. 40 The FLSA is one of myriad legislative Acts adjusting the burdens and benefits of economic life. Usery v. Turner Elkhorn Mining Co., 428 U.S. 1, 15, 96 S.Ct. 2882, 2892, 49 L.Ed.2d 752 (1976). Such legislation come[s] to the Court with a presumption of constitutionality, and ... the burden is on one complaining of a due process violation to establish that the legislature has acted in an arbitrary and irrational way. Id. [T]he strong deference accorded legislation in the field of national economic policy is no less applicable when that legislation is applied retroactively. Pension Benefit Guar. Corp. v. R.A. Gray & Co., 467 U.S. 717, 729, 104 S.Ct. 2709, 2717, 81 L.Ed.2d 601 (1984). Retroactive application of economic legislation meets the test of due process simply if retroactive application of the legislation is itself justified by a rational legislative purpose. Id. at 730, 104 S.Ct. at 2718. 41 The rational legislative purpose behind the amendments is manifestly clear in the legislative history quoted above. As the Committee Report explained: The Committee has deferred application of the FLSA overtime provisions until exactly one year after the mandate in Garcia so that state and local governments may make necessary adjustments in their work practices, staffing patterns, and fiscal priorities. S.Rep. No. 159, 99 Cong. 1st Sess. 15, 1985 U.S.Code Cong. & Admin.News at 663. We thus find that Congress did not violate Austin's due process rights. By acting to ease the transition for governments newly obliged to restructure their salary and compensation arrangements in conformance with the FLSA, Congress had a rational and legitimate purpose in enacting the amendments. 42 At least two other courts have found the 1985 Amendments to apply retroactively. Kartevold, 625 F.Supp. at 1559-62; O'Quinn, 636 F.Supp. 1388; see also Wong v. City of New York, Human Resources Admin., 641 F.Supp. 588, 591 n. 2 (S.D.N.Y.1986). But see Thurmond v. City of Union City, Tenn., 628 F.Supp. at 148 (1985 amendments' protection from liability extends only from date amendments were passed until April 15, 1986). We agree with the Kartevold court's conclusion: 43 One might reasonably ask whether the power of Congress, plenary as it is in exercising authority under the Commerce Clause, is adequate to step into previously-filed litigation and terminate a party's substantive rights. Given the unique aspects giving rise to this case, the Court concludes that Congress does have such power. 44 Kartevold, 625 F.Supp. at 1562. Thus we find Austin's claim for overtime compensation between February 19, 1985 and April 6, 1985 is barred by the 1985 amendments to the FLSA. 45 Finally, the district court alternatively found that, even if appellants should prevail on the retroactivity arguments, the uncontroverted facts as to the nature of on-call status did not establish a valid claim for overtime compensation under the FLSA. Because we find appellants' claims precluded by the nonretroactivity of Garcia and the retroactivity of the 1985 FLSA amendments, we need not consider this finding.