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State of Nevada v. United States Department of Labor

United States District Court, E.D. Texas, Sherman Division

May 1, 2018

STATE OF NEVADA, et al.,
v.
UNITED STATES DEPARTMENT OF LABOR, et al.,

          MEMORANDUM OPINION AND ORDER

          AMOS L. MAZZANT, UNITED STATES DISTRICT JUDGE.

         Pending before the Court is the Emergency Motion of Respondents Carmen Alvarez and her Counsel (“Respondents”) for Stay Pending Appeal (Dkt. #131). After reviewing the relevant pleadings, the Court finds that the motion should be granted.

         BACKGROUND

         On November 22, 2016, the Court issued an injunction (the “Court's Injunction”) against the Department of Labor's (“DOL”) “regulations as amended by 81 Fed. Reg. 32, 391” (the “Final Rule”) and against the DOL's enforcement of the Final Rule (Dkt. #60 at p. 19). Respondents[1]later sued to recover overtime compensation based on criteria in the Final Rule in the United States District Court for the District of New Jersey (the “New Jersey Lawsuit”) (Dkt. #89). Based on Respondents' conduct, on August 1, 2017, Petitioners Chipotle Mexican Grill, Inc. and Chipotle Services, LLC (collectively, “Chipotle”) filed a motion with the Court to hold Respondents in contempt for violating the Court's Injunction (Dkt. #89). On March 19, 2018, the Court entered a Memorandum Opinion and Order, holding Respondents in contempt of the Court's Injunction (the “Contempt Order”) (Dkt. #129). On March 20, 2018, Respondents filed a notice of appeal with the Fifth Circuit regarding the Contempt Order (Dkt. #130) and filed the Emergency Motion of Respondents Carmen Alvarez and Her Counsel for Stay Pending Appeal with the Court (Dkt. #131). On March 23, 2018, Chipotle filed Petitioners Chipotle Mexican Grill, Inc.'s and Chipotle Services, LLC's Opposition to Emergency Motion of Respondents Carmen Alvarez and Her Counsel for Stay Pending Appeal (Dkt. #134). On March 27, 2018, Respondents filed their reply (Dkt. #139).

         LEGAL STANDARD

         District courts have the inherent power to stay proceedings pending before them, but this power is “incidental to the power inherent in every court to control the disposition of the cases on its docket with economy of time and effort for itself, for counsel, and for litigants.” In re M.J. Beebe, No. 95-20244, 1995 WL 337666, at *2 (5th Cir. May 15, 1995) (quoting Landis v. N. Am. Co., 299 U.S. 248, 254 (1936)). Courts determining whether to issue a stay pending appeal may consider factors such as (1) whether the movant is likely to succeed on the merits; (2) whether the movant would suffer irreparable harm absent a stay; (3) whether granting the stay would substantially harm the other parties; and (4) whether granting the stay would serve the public interest. In re First S. Sav. Ass'n, 820 F.2d 700, 704 (5th Cir. 1987). Where “there is even a fair possibility that the stay . . . will work damage to someone else, ” the party seeking a stay “must make out a clear case of hardship or inequity in being required to go forward.” Landis, 299 U.S. at 255; see Ind. State Police Pension Tr. v. Chrysler LLC, 556 U.S. 960, 961 (2009) (citation omitted) (“‘[A] stay is not a matter of right, even if irreparable injury might result otherwise.' It is instead an exercise of judicial discretion, and the ‘party requesting a stay bears the burden of showing that the circumstances justify an exercise of that discretion.'”).

         ANALYSIS

         Respondents ask the Court to enter a stay of the Contempt Order pending their appeal because they can establish all four elements required by law. Chipotle contends that the Court should deny the stay because Chipotle will suffer substantial harm. Further, Chipotle contends that Respondents cannot satisfy the remaining elements necessary to justify the Court issuing a stay.

         In order to stay the Contempt Order, the movant must first demonstrate a likelihood of success on the merits on appeal. See Planned Parenthood of Greater Tex. Surgical Health Servs. v. Abbott, 734 F.3d 406, 410 (5th Cir. 2013). The Fifth Circuit has stated that “the movant need not always show a ‘probability' of success on the merits; instead, the movant need only present a substantial case on the merits when a serious legal question is involved and show that the balance of equities weighs heavily in favor of granting the stay.” Ruiz v. Estelle, 650 F.2d 555, 565-66 (5th Cir. Unit A June 1981) (citing Providence Journal v. Fed. Bureau of Investigation, 595 F.2d 889 (1st Cir. 1979); Hous. Insulation Contractors Ass'n v. Nat'l Labor Relations Bd., 339 F.2d 868, 870 (5th Cir. 1964)). The Fifth Circuit further explained that “if the balance of equities (i.e. consideration of the other three factors) is not heavily tilted in the movant's favor, the movant must then make a more substantial showing of likelihood of success on the merits.” Id. The Court acknowledges that there are serious legal questions involved in the case, and as such, if Respondents demonstrate a substantial case on the merits, then this element is met.

         Respondents argue that there are “substantial arguments” that (1) they were not bound by the Court's Injunction and cannot be held in contempt, (2) the Court's Injunction did not clearly forbid the filing of a private lawsuit by Respondents, and (3) the Court had no personal jurisdiction over Respondents (Dkt. #131 at pp. 9, 14, 16). Chipotle counters that “Respondents' case is meritless” and no precedent exists to bulwark Respondents' interpretation of the Court's Injunction (Dkt. #134 at p. 13). Chipotle claims that Respondents' arguments “amount to nothing more than a complaint that this Court should have reached a different conclusion.” (Dkt. #134 at p. 13). Chipotle asserts that the Court properly applied the facts to the law and the Fifth Circuit will “likely review the Order solely for an abuse of discretion. . . .” (Dkt. #134 at p. 13).

         The Fifth Circuit recognizes that a party presents a substantial case on the merits when there is a lack of precedent to clarify the issues at bar.[2] Given the novelty of this matter, there is a dearth of precedent that factually parallels it. Accordingly, Respondents have made a substantial case on the merits. Since Respondents have established that this proceeding involves a serious legal question presenting a substantial case on the merits, the Court asks whether the balance of equities favors granting a stay. Ruiz, 650 F.2d at 565-66.

         Respondents claim that if Alvarez withdraws her allegations in the New Jersey Lawsuit based on the Final Rule, she will very likely not be able to pursue those same allegations again if the Contempt Order is overturned. Respondents contend that the DOL stayed its appeal of the Court's Injunction pending “new rule-making” and might entirely do away with the Final Rule during the “new rule-making” process. (Dkt. #139 at p. 2). Alvarez's lawyers contend that absent a stay, the Contempt Order will harm their professional opportunities and reputations. Chipotle counters that “Respondents may amend their complaint accordingly” if the Fifth Circuit overturns the Court's Injunction (Dkt. #134 at p. 3). Chipotle asserts that Alvarez's lawyers cannot claim any reputational damage since they continue to comment about the Contempt Order in the press (Dkt. #134 at p. 6). Finally, Chipotle avers that Alvarez's lawyers' claimed professional harm is “speculative, at most.” (Dkt. #134 at p. 8).

         “[A]n ‘injury is “irreparable” only if it cannot be undone through monetary remedies.'” Burgess v. Fed. Deposit Ins. Corp., 871 F.3d 297, 304 (5th Cir. 2017) (quoting Enter. Int'l, Inc. v. Corporacion Estatal Petrolera Ecuatoriana, 762 F.2d 464 F.2d 464, 472 (5th Cir. 1985)) (quoting Deerfield Med. Ctr. v. City of Deerfield Beach, 661 F.2d 328, 338 (5th Cir. Unit B Nov. 1981)). “‘The possibility that adequate compensatory or other corrective relief will be available at a later date, in the ordinary course of litigation, weighs heavily against a claim of irreparable harm.'” Sampson v. Murray, 415 U.S. 61, 90 (1974) (quoting Va. Petrol. Jobbers Ass'n v. Fed. Power Comm'n, 259 F.3d 921, 925 (D.C. Cir. 1958)).

         Alvarez's lawyers' prospective professional harm due to the Contempt Order qualifies as irreparable harm for purposes of this stay analysis. In their supporting affidavits, Alvarez's lawyers explained that citation for contempt will cause “immediate and irreparable harm” to them. ...


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