The Sixth Circuit's recent decision in Torres v. Vitale, which was discussed in a prior post, RICO Claims Can Arise from Wage Theft Scheme, Sixth Circuit Rules, implicated the doctrine of preclusion, a judicially-fabricated doctrine unmoored from and contradictory to the text of the laws involved, the Fair Labor Standards Act (FLSA) and RICO. Preclusion is an example of courts veering out of their lanes to decide policy questions beyond their purview; predictably, the doctrine is invoked to limit the relief available to the plaintiffs, ordinary working people.
Torres arises from unpaid overtime and wage theft. According to the opinion, the restaurant employees were required to maintain two timecards each workweek, one went up to 40 hours and another recorded their overtime hours. For the former they were paid by payroll checks subject to standard withholdings; for the latter they were paid at the straight hourly rate (not the time and a half overtime rate) in cash with no withholding. The plaintiff based a civil RICO claim on the wage theft represented by the failure to pay overtime. The district court, Judge Paul Maloney of the Western District of Michigan, dismissed the claim, and the Sixth Circuit affirmed basing its ruling on the judicially-fabricated doctrine of preclusion.
Preclusion, in this context, raises the question of whether a precisely drawn, detailed statute precludes more general remedies. The Sixth Circuit, in an opinion authored by Judge John K. Bush, discussed two Supreme Court cases to illustrate the preclusion doctrine. In the first, Hinck v. United States, a taxpayer challenged the imposition of interest by the IRS based on a tax payment dispute. The Supreme Court ruled that the only avenue for such a challenge was in tax court, noting that Congress had in a single statutory sentence provided "a forum for adjudication, a limited class of potential plaintiffs, a statute of limitations, a standard of review, and authorization for judicial relief." While acknowledging "Congress's failure explicitly to define the Tax Court's jurisdiction as exclusive," the Court concluded it was "quite plain" that the statute provided the sole avenue of relief. The second case, Block v. North Dakota, was another odd-ball case involving the Quiet Title Act (QTA) of 1972, a law that permits suits against the United States to resolve land title issues; the particular issue was whether the QTA's limitations period applied to suits by states. The Court ruled that the QTA precluded any other avenue of relief, mainly because prior to its enactment there were no other avenues of relief given the sovereign immunity of the federal government.
Both Hinck and Block make sense since the disputes involve the federal government, and the statutes involved were enacted to create and clarify avenues of judicial adjudication that previously did not exist. Neither involves, however, a generally applicable statute enacted after an admittedly more specific and certainly more limited one. The Sixth Circuit's discussion in Torres illustrates how limber and flexible and prone to policy preference of the panel judges the preclusion doctrine can be.
The Sixth Circuit began by asserting that it "must decide whether the FLSA provides the sole remedy for Torres' claims," noting it "is not immediately intuitive that the FLSA could preclude a private cause of action under RICO, a seemingly unrelated statute that was meant to regulate a broad range of conduct not limited to labor and employment." Then the court turned "as always, with the text" of the FLSA, reciting its minimum wage and overtime pay requirements, as well as its civil enforcement mechanisms. The court retreated to the FLSA's savings clause, a provision establishing a floor for overtime and minimum wage laws, stating that the FLSA does not "excuse compliance with any Federal or State law ... establishing a minimum wage higher than ... or a maximum workweek lower than" those of the FLSA. From this floor the court infers also a ceiling asserting that "this text shows that the FLSA is meant to provide the exclusive remedy for federal minimum wage and overtime violations," that the savings clause "shows that Congress knew how to exempt certain laws from the FLSA's reach and allow other laws to operate concurrently with the FLSA." Here is where the argument fails.
First, whatever Congress may know how to do, if we start with "the text" of the FLSA, we see that the statutory text does not state that laws permitting better or greater remedies for employees subjected to wage theft are precluded from use. Instead, the FLSA's savings clause encourages raising of the floor of remedies it establishes. Second, the FLSA's savings clause aims to avoid preemption not preclusion of state and local wage and hour laws by the FLSA. The Sixth Circuit noted in Torres the difference between preemption and preclusion, the former being "a conflict between state and federal law" and the latter "a conflict between two federal statutes." The failing is that there is no conflict between the FLSA and RICO. While RICO would add some additional proof elements, there is no conflict between it and RICO.
Torres illustrates the limberness of the judicially-fabricated preclusion doctrine, as it departs from the FLSA text and invents a conflict between the FLSA and RICO to erect a bar to greater remedies for employees victimized by wage theft.
Robert L. Abell
www.RobertAbellLaw.com
