Court Opinion

ID: 9475611
Source: CourtListenerOpinion
Date Created: 2023-08-05 05:32:31.397814+00
Date Added: 2024-06-11T17:44:48.856683
License: Public Domain

GARTH, Circuit Judge,
dissenting:
The Policemen’s Benevolent Association (PBA) represents police employed by the New Jersey Transit Corporation (NJT) who on occasion work overtime by testifying at mandatory court hearings, by receiving special police training, and by attending briefings at roll calls. The PBA argues that 29 U.S.C. § 207, the Fair Labor Standards Act (FLSA), entitles its members who work overtime at these and other tasks to overtime rates of compensation instead of “straight pay.” NJT, on the other hand, claims that it need not pay overtime, because NJT comes within the terms of 29 U.S.C. § 213(b)(2), which exempts certain rail carriers from the operation of § 207.
The majority agrees with NJT and holds that NJT is excluded from paying overtime rates by virtue of a statutory exemption from paying such overtime for “any employee of an employer engaged in the operation of a common carrier by rail and subject to the provisions of Part I of the Interstate Commerce Act ” (ICA). 29 U.S.C. § 213(b)(2) (emphasis added). Part I of the ICA contains the rate regulatory provisions of the Act.
In my view, NJT is not exempt from the overtime rate requirements prescribed by the Fair Labor Standards Act, as it cannot be considered “subject to” the provisions of Part I of the ICA, or the catch-all clause of 49 U.S.C. § 10504(c)(3). Consequently, I am satisfied that NJT must adhere to the requirements of 29 U.S.C. § 207 and pay overtime rates for overtime work. Accordingly, I must dissent.
I.
New Jersey Transit concedes that it was exempted from the fare regulations provided in Part I of the ICA because its fares are subject not to ICA approval but to approval by the Governor of New Jersey. Appellant’s brief at 8; 49 U.S.C. § 10504(b). Because the Commission has no jurisdiction over NJT owing to this circumstance, NJT cannot share in the overtime exemption [29 U.S.C. § 213(b)(2) ] given to those rail carriers who are regulated by ICA. This immunity from ICA fare regulation, and therefore ICA jurisdiction, represents a benefit or privilege granted by Congress to NJT. See brief of Amicus Curiae at 5; see also infra, dis. op., at 458-59.
NJT asserts, however, that an obscure clause found within an ambiguous proviso *457of 49 U.S.C. § 10504(c), which itself is found within a subsidiary provision of that statute—49 U.S.C. § 10504(c)(3) — restores to NJT the overtime exemption which it otherwise would have lost because it was no longer under ICA jurisdiction. 49 U.S.C. § 10504(c) provides in full:
(c) Notwithstanding subsection (b) of this section, a local public body, described in subsection (b), is subject to applicable laws of the United States related to—
(1) safety;
(2) the representation of employees for collective bargaining; and
(3) employment retirement, annuity, and employment systems or other provisions related to dealings between employees and employers.
NJT relies upon so much of the statute as I have underlined above and which reads; “... a local public body, described in subsection (b), is subject to applicable laws related to ... provisions related to dealings between employees and employers.” Thus NJT, to succeed, must first establish that the “applicable law” to which it is subject is the Interstate Commerce Act, Part I, which regulates rates. Secondly, it must establish that the “provision related to dealings between employees and employers” “subjects” NJT to 29 U.S.C. § 213(b)(2), and thus would free NJT from paying overtime rates for overtime work. Without even consideration of the tortured construction of 49 U.S.C. § 10504(c)(3)— which NJT must urge in order to give any semblance to its argument — it is evident that NJT cannot bring itself within the overtime exemption statute because Part I of ICA cannot be an “applicable law” insofar as NJT is concerned.1
NJT and the majority opinion maintain that owing to § 10504(c), NJT has been subjected to the terms of the Railroad Labor Act; subjected to the terms of the Railroad Retirement Act; subjected to the laws of the Pension System; subjected to the Federal Employers Liability Act; and subjected to other Federal laws which regulate the nationwide railroad system. App. at 61-2. They more significantly contend that § 10504(c) “subjects” NJT to the “other provisions related to dealings between employees and employers,” or, in the context of this case, to the exemption from overtime pay that ICC regulated carriers enjoy. Appellant’s Brief at 20.
I cannot agree, for at least four reasons. First, this analysis is contrary to our court’s accepted approach to the interpretation of exemptions from FLSA overtime pay requirements. Second, it cannot be harmonized with the legislative history of Part I of the ICA. Third, this line of reasoning conflicts with the result that would be reached through ordinary principles of statutory construction. Finally, not only does the majority distort the plain language of § 10504(c), but also it errs in attributing to § 10504(c) the obligations to which NJT is subject and which originate in other statutes.
II.
Recognizing a need for a national wage and overtime policy, there has been a congressional trend, recognized by the Supreme Court in Garcia v. San Antonio Metropolitan Transit Authority, 469 U.S. 528, 105 S.Ct. 1005, 83 L.Ed.2d 1016 (1985), to expand, rather than to contract the protections extended to workers through the FLSA overtime provision. In Garcia, the Court observed that Congress has been ever more inclusive in applying FLSA to mass transit authorities:
When the FLSA was enacted in 1938, its wage and overtime provisions did not apply to local mass-transit employees or, indeed, to employees of state and local *458governments. In 1961, Congress extended minimum-wage coverage to employees of any private mass-transit carrier whose annual gross revenue was not less than $1 million. Five years later, Congress extended FLSA coverage to state and local-government employees for the first time by withdrawing the minimum-wage and overtime exemptions from public hospitals, schools, and mass-transit carriers whose rates and services were subject to state regulation. At the same time, Congress eliminated the overtime exemption for all mass-transit employees other than drivers, operators, and con-ductors____ The FLSA obligations of public mass-transit systems like [San Antonio’s] were expanded in 1974 when Congress provided for the progressive repeal of the surviving overtime exemption for mass-transit employees. Congress simultaneously brought the States and their subdivisions further within the ambit of the FLSA by extending FLSA coverage to virtually all state and local-government employees.
Garcia, 105 S.Ct. at 1008-9 (1985) (citations omitted).
Both in this court and elsewhere, exceptions to the overtime requirements of the FLSA are to be read narrowly. “Exemptions from the Fair Labor Standards Act are to be narrowly construed against the employer. The burden of proof is on the employer to establish an exemption.” Guthrie v. Lady Jane Collieries, Inc., 722 F.2d 1141, 1143 (3d Cir.1983). See also Idaho Sheet Metal Works, Inc. v. Wirtz, 383 U.S. 190, 86 S.Ct. 737, 15 L.Ed.2d 694 (1966); Paul v. Petroleum Equipment Tools Co., 708 F.2d 168 (5th Cir.1983); Brennan v. South Davis Community Hospital, 538 F.2d 859 (10th Cir.1976); Brennan v. Southern Productions, Inc., 513 F.2d 740 (6th Cir.1975); Hodgson v. Elk Garden Corp., 482 F.2d 529 (4th Cir.1973).
The record in this case is utterly barren of proof of Congressional intent to exempt carriers such as NJT from paying overtime rates. Indeed, in Part III of this dissent, I call attention to the legislative history of § 10504, which clearly mandates that NJT’s purported exemption from paying overtime rates cannot be revived by any reference to the Interstate Commerce Act as an “applicable law”. Thus, to the extent that NJT must carry the burden to establish an exemption, this record reveals that NJT has failed. And to the extent that the majority opinion construes § 10504(c) in such an overly expansive fashion, so as to provide NJT with an exemption from overtime pay where none has been authorized by Congress, that interpretation runs counter to the views that have been expressed by judicial authorities including the Supreme Court.
III.
The majority maintains that it is implausible to suppose that Congress intended to require carriers such as NJT to pay overtime rates when Congress enacted § 10504, because reference to the Interstate Commerce Act in the Fair Labor Standard Act was “made solely for the purpose of identifying the workers to be covered by the exemption and not because the ICA provided an alternative scheme for regulating overtime compensation.” Maj. Op., at 454. In this way, the majority construes the FLSA provision [29 U.S.C. § 213(b)(2) ] as one which would ensure that all types of railroad workers were included in the FLSA overtime exemption. I cannot agree with this simplistic argument which has no precedent whatsoever for its support.
It should be noted, first, that Keele v. Union Pacific R.R., 78 F.Supp. 678 (1948), upon which the majority relies, maj. op., at 454, holds that the overtime provision [§ 213(b)(2)] is unambiguous, and precise; it “means exactly what it says: ‘The provisions of Section 7 [an earlier codification of the overtime exemption] shall not apply with respect to----(2) any employee of an employer subject to the provisions of Part I [rate regulations] of the Interstate Commerce Act.’ There is no exception and there is no limitation.” 78 F.Supp. at 682-83. Nothing in Keele or any other provision of either statute, or, in the legislative *459history, can bring NJT, which is not under ICA regulations, within the exemption provisions of § 213(b)(2).
Second, while it is true that the unique legislative history of the railroad industry may have fostered a broad overtime exemption from FLSA requirements, it is also true that the peculiar aspects of commuter rail systems led to the limited, experimental deregulatory option which Congress, in 1976, provided only to commuter rail systems, thus permitting such systems to escape Interstate Commerce regulations. New Jersey Transit chose to take advantage of this escape route from its very inception, and by doing so, lost the concom-mitant right to be free from paying overtime rates.
Thus, while ICA fare regulation and exemption from overtime rates was extended to the broad category of rail mass transit, NJT and similar commuter rail lines obtained the possibility of immunity from such fare regulations (a benefit), while suffering whatever burdens (including payment of overtime rates) might ensue. NJT did so in the process of political negotiation that accompanied the passage of the Rail Revitalization and Regulatory Reform Act of 1976, 29 U.S.C. § 10504. See, e.g., 122 Cong. Rec. H35,158 (daily ed. Oct. 1, 1976) (statement of Rep. Skubitz). See also Conference Report, Pub.L. 94-555, 5 U.S.Code Cong. & Adm.News 5837, 5863 (1976).
Contrary to the majority’s view, the legislative history of negotiations that occurred prior to the enactment of the 1976 amendments to the Rail Revitalization and Regulatory Reform Act of 1976 suggests that the purpose of § 10504 was not merely to avoid “redundant rate control mechanisms,” as the majority claims, maj. op., at 454, but rather, it was part of a larger effort to promote substantive regulatory reform. 122 Cong. Rec. H35,158 (daily ed. Oct. 1, 1976); Conference Report, Pub.L. 94-555, 5 U.S.Code Cong. & Adm. News 5863 (1976). Nowhere in the “reform” legislation is it intimated that an exemption from overtime payments was to be retained by intrastate commuter rail carriers while at the same time the same carriers were to receive local rate autonomy. Thus the reference to “applicable law” found in § 10504(c) must be read as a limitation on the degree of freedom from regulation being conferred, not as a preservation by Congress of the pre-1976 amendment status quo, as the majority claims. See Maj.Op., at 453.
Furthermore, the legislative history of § 10504 indicates that the regulatory apparatus of the ICA (Part I, concerned with rates) was not among the “applicable laws” to which § 10504 refers. The predecessor to § 10504(c) stated:
(1)(A) Except as provided in subpara-graph (B) of this paragraph, no local public body which provides mass transportation services by rail, and which is otherwise subject to the Interstate Commerce Act shall, with respect to the provision of such services, be subject to the Interstate Commerce Act or to rules, regulations, and orders promulgated under such Act, if the interstate fares, or the ability to apply to the Interstate Commerce Commission for changes thereto, of such local public body is subject to approval or disapproval by a Governor of any State in which it provides services.
(B) Any local public body described in subparagraph (A) of this paragraph shall continue to be subject to applicable Federal laws pertaining to (i) safety, (ii) the representation of employees for purposes of collective bargaining, and (iii) employment, retirement, annuity, and unemployment systems or any other provision pertaining to dealings between employees and employers.
45 U.S.C. § 744(j)(1) (emphasis added).
The words in 1(A), “Except as provided in subparagraph (B) of this paragraph” were deleted when Congress reenacted these paragraphs as the present § 10504. The historical revision notes to the present § 10504 indicate that these words were omitted “as unnecessary because the Commission does not have jurisdiction over safety, collective bargaining, and employee *460benefit matters, and those matters are covered by other provisions of title 49 related to the Secretary of Transportation.” 49 U.S.C.A. § 10504 (1986 Supp.). While NJT concedes that the jurisdiction of the Interstate Commerce Commission and its rates are not applicable to it because of the express provision of § 10504(b)(2), which exempts carriers from ICC jurisdiction where the governor of the state approves the carrier’s fares, it nevertheless claims that because § 10504(c) refers to employment retirement, annuity, and employment systems or other provisions “related to dealings” between employees and employers — matters collateral to rate regulation — it therefore also should receive all other “benefits” that arise from the Commissioner’s rate regulations contained in Part I. One of those benefits, NJT argues, is the overtime exemption which interstate carriers can claim. In order to reach this conclusion, NJT, as I have earlier noted, must claim to be a carrier “subject to the applicable laws of the United States,” and one of those applicable laws necessarily must be the rate regulation of the ICA found in Part I.
However, the revision of § 10504(c) clearly indicates that while NJT may be subject to provisions relating to employment retirement, annuity, employment systems and the like, these are matters that are not encompassed in the rate regulations of Part I, but rather are found elsewhere in Title 49. If therefore, NJT’s theory that it need not pay overtime rates depends upon NJT being subject to the rate regulations of Part I of the ICA, it is obvious that NJT’s theory is faulty because both under § 10504(b)(2) and under the 1976 amendment to the ICA it is clear that NJT’s rates are not regulated by the Interstate Commerce Commission. Thus, any argument relying on the rate provisions of the ICA (Part I) as constituting an “applicable law” to which NJT is subject, is flawed, and such a contention cannot support any claimed exemption from paying overtime rates.
IV.
It defies ordinary principles of statutory construction to argue that § 10504(c), a general savings clause in one statute [The Interstate Commerce Act], should be construed as negating the effect of a specific provision [for overtime] in another statute [The Fair Labor Standards Act]. Sutherland, Statutory Construction at 47.08 (4th Ed. Sands, 1972) (where there is doubt concerning the extent of the application of a proviso on the scope of another statute’s operation, the proviso must be strictly construed). More specifically, it is awkward, if not contradictory, to conclude that a general clause [49 U.S.C. § 10504] which in essence narrows the scope of NJT’s privilege (immunity from ICC fare regulation) also makes it “subject to” yet another privilege (exemption through 29 U.S.C. § 213(b)(2) from the overtime requirements of 29 U.S.C. § 207). As the district court below aptly wrote, NJT would like to interpret § 10504(c) “to mean that ‘despite (its) exemption from ICC regulation, it is still governed by laws applicable to railroad employment, including the exemption from the FLSA overtime provisions.’ ” App. at 17. As I have shown, however, NJT’s interpretation must be rejected.
The Fair Labor Standards Act, 29 U.S.C. § 207, establishes the obligation of carriers to pay overtime rates unless the carrier is exempt by virtue of 29 U.S.C. § 213(b)(2), and this exemption can be granted only where the carrier is under ICA jurisdiction. NJT, however, is not under ICA jurisdiction. Therefore it is § 207 of the Act to which NJT properly is subject. There is no reason why NJT cannot be “subject to applicable laws ... related to dealings between employees and employers,” and thus subject to FLSA overtime rules, and at the same time be excluded from the FLSA overtime exemption, which applies only to carriers under the Commerce Commission’s jurisdiction.2 The fact that the ICA regula*461tions contain a provision stating that a transit system [NJT] not covered by ICA railroad fare regulations must still comply with other, non-ICA railroad regulations, does not create contradictions or any ambiguity, as NJT has suggested. To the contrary, the legislation should be given its plain meaning, requiring all commuter rail carriers such as NJT to pay overtime if the carrier has taken advantage of not being rate regulated by the Interstate Commerce Commission.
V.
Recognizing that § 10504 absolves NJT from ICA regulation, that provision nevertheless requires that NJT comply with those laws having to do with (i) safety; (ii) collective bargaining; and (iii) employment retirement, annuity, and employment systems, and other provisions. But each of these obligations springs directly from the applicable laws themselves. See, e.g., 45 U.S.C. § 51 (common carrier liability); 29 U.S.C. § 201 et seq. (Fair Labor Standards Act); 45 U.S.C. § 351 (unemployment insurance requirements); and 26 U.S.C. § 3231 (railroad retirement tax requirements). Such obligations are not found in the rate regulatory scheme of Part I of the ICA, as we have pointed out.
Moreover, it adds nothing to the majority’s position to argue that because each of these separate obligations originate under acts which require that the carrier be subject to ICC jurisdiction, my analysis if accepted would require that NJT no longer be subject to the safety, collective bargaining and employment provisions of § 10504(c)(3). The short answer to that argument is that § 10504(c)(3) by its specific terms requires that NJT be subject to the terms of the Railroad Labor Act, Railroad Retirement Act, and Federal Employer’s Liability Act. See Dis. Op., at 457, supra. Section 10504(c)(3), however, does not by its terms provide that NJT shall have the § 213(b)(2) exemption enjoyed by rail carriers under ICC jurisdiction. Thus, the argument made in the majority’s opinion (see maj. op., at 455, n. 2) falls of its own weight when the text of the relevant statute, § 10504(c)(3), is examined and given its plain meaning.
NJT suggests that if the district court’s interpretation, with which I agree, is correct, 29 U.S.C. § 213(b)(2) would “appear to be the only statute which is generally applicable to relationships between railroad employees and employers which would not be applicable to NJ Transit ... [and] these other laws have substantial negative financial and operational impacts on NJ Transit, costing NJ Transit more than twenty million dollars annually and amounting to seventeen percent of its labor costs.” Appellant’s Brief at 22. This calculation of costs, of course, means little without a corresponding calculation of benefits. In particular, it ignores the benefit of freedom from federal fare regulation that NJT now enjoys. More importantly, NJT wrongly implies that this interpretation of § 10504(c), rather than the applicable laws themselves, creates the negative financial burden under which NJT claims to suffer. Under the legislative scheme reflected by 49 U.S.C. § 10504(c), I see nothing unfair in requiring NJT to satisfy its required obligations under the various statutes, including the FLSA. My analysis does no more than refuse to permit NJT to have its cake (be free from ICA rate regulation) and eat it, too (be exempt from overtime payments).
VI.
For these reasons, I would affirm the judgment of the district court. Because *462the majority rules otherwise, I respectfully dissent.

. NJT would have us read § 10504(c) to the effect that it, NJT, is subject to the exemption statute, § 213(b)(2), by virtue of § 10504(b)(3)’s "other provisions related to dealings between employees and employers.” Not only does such a construction strain the plain meaning of the statute, but from the standpoint of sheer grammatical construction, the phrasing of § 10504(c) in terms of "subject to,” is awkward and is obviously not intended to reach the result for which NJT contends.

. The majority suggests, maj. op., at 453, that the ruling of the court below depended upon a narrow reading of the word "dealings” in the last clause of § 10504(c). This is not the case. *461Judge Debevoise based his opinion on an expansive view of § 10504, and concluded that the language used in § 10504(c)(3) was meant to refer to broad statutory schemes such as FLSA as a whole. He explored the meaning of "dealings” only as an implausible alternative. App. at 16. Like Judge Debevoise, I do not believe that the grammatical awkwardness of § 10504(c) justifies concentrating on the single phrase "dealings with employees,” at the expense of the other terms of the statute. App. at 41. Even if "dealings" is taken in the sense that the majority urges however, NJT would still not have been bound by the ICA, because it was not an "applicable law”. See supra, dis. op., at 458-59.