Opinion ID: 2234714
Heading Depth: 1
Heading Rank: 1

Heading: The Sovereign-Immunity Issue.

Text: Because both parties have requested that we initially resolve the sovereign-immunity issue raised in the State's appeal, we consider that matter first. The critical question on that issue is whether the State has waived the sovereign immunity to which it is otherwise entitled under the Alden decision. A. The Alden decision. In Alden, probation officers employed by the State of Maine brought a private suit for damages against the state in federal court alleging violation of the overtime provisions of the FLSA. Alden, 527 U.S. at 711-12, 119 S.Ct. at 2246, 144 L.Ed.2d at 652. As in the present case, the federal district court dismissed the plaintiffs' claim after the Supreme Court decided the Seminole Tribe case. The court of appeals affirmed. Mills v. Maine, 118 F.3d 37, 55 (1st Cir. 1997). The Alden plaintiffs then brought the same suit in state court. Maine's appellate court ultimately found that the state was protected from suit under the doctrine of sovereign immunity. Alden v. State, 715 A.2d 172, 176 (Me.1998). The Supreme Court granted certiorari and 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, 527 U.S. at 712, 119 S.Ct. at 2246, 144 L.Ed.2d at 652. In its Alden opinion, the Supreme Court discussed at length the preconstitutional history of the doctrine of sovereign immunity as well as application of the doctrine after the Constitution was adopted and later amended. The court emphasized that the states' immunity from private suits for damages was a fundamental component of the states' sovereignty before the Constitution was adopted and was an integral consideration throughout the ratification process. Id. at 713, 119 S.Ct. at 2246-47, 144 L.Ed.2d at 653-54. The Court concluded that the Tenth Amendment removes [a]ny doubt regarding the constitutional role of the States as sovereign entities ..., as it reserves all powers to the states that are not delegated to the federal government by the Constitution. Alden, 527 U.S. at 713-14, 119 S.Ct. at 2247, 144 L.Ed.2d at 653. Following Alden, at least three state appellate courts have held that states are protected by the sovereign-immunity doctrine from private suits for damages based on the FLSA unless the state waives its immunity. King v. State, 260 Neb. 14, 614 N.W.2d 341, 347 (2000); Allen v. Fauver, 327 N.J.Super. 14, 742 A.2d 594, 598 (App. Div.1999); Commonwealth v. Luzik, 259 Va. 198, 524 S.E.2d 871, 877 (2000). B. Whether a waiver of sovereign immunity has been established. One of the legal theories on which plaintiffs' claims are based in the present litigation involves the Iowa Wage Payment Collection Law, Iowa Code chapter 91A (1995). They urge that in combination the applicable statutes and administrative regulations classify the overtime compensation required by the Fair Labor Standards Act as wages subject to collection by legal action under Iowa Code sections 91A.8 and 91A.10(3). They urge that this statutory scheme is a waiver of the State's sovereign immunity under Alden. 1. The issue-preclusion problem. In considering the consequences of chapter 91A on the State's sovereign immunity, we first encounter a potential issue-preclusion problem. The federal district court in which the plaintiffs first presented their claims rejected their attempt to establish a waiver of the State's sovereign immunity based on chapter 91A. The federal court's ruling on the sovereign-immunity issue was a final judgment on the merits of that jurisdictional issue. The federal court clearly had jurisdiction to determine its own jurisdiction. Although the issue concerning waiver of sovereign immunity under the Eleventh Amendment in the federal litigation was similar to the issue of waiver of sovereign immunity under the Tenth Amendment in the present litigation, a close reading of the federal court ruling discloses reasons why it should not be given preclusive effect on the interpretation of chapter 91A. In rejecting plaintiffs' arguments on waiver of sovereign immunity based on chapter 91A, the federal court stated: As noted by defendants, however, plaintiffs' suit in the present case is brought under the FLSAnot Chapter 91A. Furthermore, there is no indication anywhere in Chapter 91A that a court of competent jurisdiction includes a federal court. [I]n order for a state statute or a constitutional provision to constitute a waiver of Eleventh Amendment immunity, it must specify the State's intention to subject itself to suit in federal court. Raper, 940 F.Supp. at 1426 (citation omitted). This ruling did not consider whether chapter 91A allows plaintiffs to pursue their FLSA overtime claims in an action brought under that chapter in the Iowa courts. 2. The statutory pay plan. For purposes of wage collections under sections 91A.8 and 91A.10(3):  Wages  means compensation owed by an employer for: a. Labor or services rendered by an employee, whether determined on a time, task, piece, commission, or other basis of calculation. b. Vacation, holiday, sick leave, and severance payments which are due an employee under an agreement with the employer or under a policy of the employer. c. Any payments to the employee or to a fund for the benefit of the employee, including but not limited to payments for medical, health, hospital, welfare, pension, or profit-sharing, which are due an employee under an agreement with the employer or under a policy of the employer. The assets of an employee in a fund for the benefit of the employee, whether such assets were originally paid into the fund by an employer or employee, are not wages. d. Expenses incurred and recoverable under a health benefit plan. Iowa Code § 91A.2(7). Section 91A.2(4) defines employer so as to include those identified as persons in Iowa Code chapter 4. Iowa Code section 4.1(20) includes state governmental agencies within the definition of person. The State and its agencies are thus classified as employers subject to the Iowa Wage Payment Collection Law. The State urges that, notwithstanding its liability for wage payments under chapter 91A, such liability only includes payments mandated by state law. Because plaintiffs' claims are based on federal law, the State urges that they do not fall within the chapter 91A collection procedure. We disagree. The critical language in the section 91A.2(7) definition of wages is compensation owed by an employer. Although the impetus for state wage policy involving FLSA overtime pay is the mandate of the federal legislation, the State has acceded to that mandate in a manner that establishes the resulting overtime remuneration as compensation owed by an employer. Iowa Code section 19A.9(2) provides that the director of the department of personnel shall adopt rules providing [f]or pay plans within the purview of an appropriation made by the general assembly and not otherwise provided by law for all employees in the executive branch of state government, excluding employees of the state board of regents, after consultation with the governor and appointing authorities with due regard to the terms of collective bargaining agreements negotiated under chapter 20 and after a public hearing held by the commission.... Each employee in the executive branch, excluding employees of the state board of regents, shall be paid at one of the rates set forth in the pay plan for the class of position in which employed and, unless otherwise designated by the commission, shall begin employment at the first step of the established range for the employee's class. The rules adopted pursuant to this statute speak to the issue of FLSA overtime compensation in two places. First, Iowa Administrative Code rule 581-1.1 provides by way of definition:  Overtime  means those hours that exceed 40 in a workweek for which an employee is entitled to be compensated.  Overtime covered class, employee, or position  means a class, employee, or position determined to be eligible for premium overtime compensation in accordance with the federal Fair Labor Standards Act. Second, Iowa Administrative Code rule 581-4.11(2) provides: Eligible job classes. An employee in a job class designated as overtime eligible shall be paid at a premium rate (one and one-half hours) for every hour in pay status over 40 hours in a workweek. We are convinced that the statutory scheme for deriving pay plans has been implemented in a manner that includes FLSA overtime remuneration as compensation owed by an employer. Sections 91A.8 and 91A.10(3) provide an express consent to sue in the Iowa courts for purposes of recovering any compensation thus owed. [2] We affirm the judgment of the district court rejecting the State's sovereign-immunity claim.