Commonwealth v. Luzik

Present: Carrico, C.J., Compton, Lacy, Keenan, Koontz and
Kinser, JJ.

COMMONWEALTH OF VIRGINIA
OPINION BY
v. Record No. 982635 JUSTICE LAWRENCE L. KOONTZ, JR.
January 14, 2000
DOUGLAS W. LUZIK, ET AL.

FROM THE CIRCUIT COURT OF THE CITY OF RICHMOND
Theodore J. Markow, Judge

In this appeal, we consider whether the Commonwealth has

waived its right to assert the bar of sovereign immunity to a

suit by state employees in state court for back overtime wages

under the federal Fair Labor Standards Act (FLSA), 29 U.S.C.

§ 201, et seq.

BACKGROUND

On June 25, 1992, Douglas W. Luzik and fifteen other

juvenile probation officers (the complainants), who work in

various Court Service Units for the Virginia Department of Youth

and Family Services (the Department), 1 filed a bill of complaint

against the Commonwealth alleging a violation of the FLSA. The

complainants asserted that they are “non-exempt” employees under

the FLSA and sought to enforce the right provided therein to

receive hourly payment of time and one half if and when they

work more than 40 hours in a workweek. The complainants sought

1
By amendment to Code § 66-1 in 1996, this department became
the Department of Juvenile Justice.
back overtime wages, enforcement of future overtime pay, and

attorney’s fees and costs.

The Commonwealth’s initial response was to file a plea in

bar of sovereign immunity, asserting that it was exempt from

being sued in its own courts by its employees for an alleged

violation of the FLSA. The Commonwealth asserted that the

Eleventh Amendment to the United States Constitution precludes

Congress from subjecting a state and its officials to being sued

in federal court absent an express intent in a given statute to

permit such suits. Contending that there is no abrogation of

the sovereign immunity of the states express in the FLSA, the

Commonwealth asserted that it cannot be sued for a violation of

that law in federal court and, by extension, neither can it be

sued in state court. The Commonwealth contended that is so

because in the absence of a waiver by the General Assembly, the

Commonwealth and her officials have absolute immunity from the

award of damages sought by the complainants. The Commonwealth

further contended that such immunity also applies to any

injunctive relief requiring future payment of overtime pay as

the establishment and revision of wages and salaries is

discretionary under the laws of the Commonwealth.

After receiving briefs and hearing argument, by letter

opinion dated March 11, 1993, the chancellor denied the

Commonwealth’s plea in bar. The chancellor reasoned that

2
language within the FLSA defining an employer to include a

“public agency,” 29 U.S.C. § 203(d), which is further defined as

“the government of a State” and “any agency of . . . a State,”

29 U.S.C. § 203(x), evinces an intent on the part of Congress to

subject the states to enforcement of the FLSA in federal courts,

thus answering the Commonwealth’s assertion that such an action

is barred therein by the Eleventh Amendment. The chancellor

further reasoned that to bar the suit in state court under a

theory of sovereign immunity “would [improperly] allow state law

to determine the applicability of federal law.”

The Commonwealth noted an appeal of this ruling to this

Court. The Commonwealth’s petition for appeal was limited to

the issue of whether sovereign immunity barred state employees

from bringing suit against the state in state court. Finding

that there was not yet an appealable order, Code § 8.01-670, we

refused the Commonwealth’s petition for appeal and its

subsequent petition for rehearing.

The complainants then filed an amended bill of complaint

joining eighty-seven additional juvenile probation officers as

complainants. The Commonwealth filed a demurrer, again

asserting the application of the bar of sovereign immunity and

the preclusive effect of the Eleventh Amendment. The

Commonwealth further asserted that application of the FLSA to

the states exceeded congressional authority as limited by the

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Tenth Amendment. The chancellor took no action with reference

to the Commonwealth’s demurrer. Thereafter, the Commonwealth

filed an answer, which it subsequently amended, and the matter

proceeded to an ore tenus hearing before the chancellor.

The principal issues before the chancellor were whether the

complainants were salaried employees and, if so, whether their

employment requirements and job duties caused them to fall

within one of the recognized exemptions within the FLSA as

administrative, professional, or executive employees under the

“short test” promulgated in the regulations implementing the

FLSA for determining the exempt status of salaried employees.

The Commonwealth contended that all the complainants are

salaried and that ninety-nine of the complainants are subject to

administrative or professional exemptions. The Commonwealth

contended that the remaining four employees are exempt executive

employees.

The complainants contended that they are not salaried

because they are subject to a reduction in pay for less than a

workweek under a disciplinary policy applicable to all employees

of the Department. With the exception of three of the

complainants, who conceded that they were “executives,” the

complainants further contended that their job duties do not

qualify for any of the exemptions provided for under the FLSA.

4
One complainant contended that she was neither salaried nor an

exempt executive.

On May 5, 1995, the chancellor entered an order awarding

judgment to the Commonwealth. In an accompanying opinion

letter, the chancellor found that the complainants are salaried

employees despite the existence of the disciplinary policy.

Applying the “short test” applicable to salaried employees, the

chancellor found that the majority of the complainants have job

duties that reflect the requirements for either administrative

or professional employee status. The chancellor further found

that the one “executive” employee who had challenged the

application of that exemption to her is an executive employee

for purposes of the FLSA.

The complainants appealed the judgment to this Court,

assigning error to the chancellor’s finding that they are

salaried employees and that they are subject to the exemptions

of the FLSA. In its brief in opposition, the Commonwealth

asserted as an assignment of cross-error the failure of the

chancellor to sustain the Tenth Amendment claim raised in its

demurrer to the amended bill of compliant. 2 The Commonwealth did

2
There is no merit to this assertion. Congress has the
power to extend the coverage of the FLSA to public sector-
employees consistent with the Tenth Amendment. See Garcia v.
San Antonio Metropolitan Transit Authority, 469 U.S. 528, 555-57
(1985).
5
not assign cross-error to the denial of its claim of sovereign

immunity. On December 20, 1995, this Court refused the petition

for appeal.

The complainants then filed a petition for a writ of

certiorari in the United States Supreme Court. The first of the

three questions presented in that petition challenged the

chancellor’s determination that the complainants are salaried

employees even though they are subject to potential reductions

in pay in amounts less than a full workweek’s pay “regardless

whether any actual deductions have occurred.” On February 24,

1997, the Court granted the petition and by order vacated the

judgment and remanded the case “for further consideration in

light of Auer v. Robbins, 519 U.S. [452] (1997).”

Auer involved a claim under the FLSA for overtime pay by

sergeants and a lieutenant employed by the St. Louis, Missouri

Police Department. Id. at 454. In Auer, an opinion of the

Secretary of Labor, presented to the Court in the form of an

amicus curiae brief, stated the Department of Labor’s position

that employees “covered by a policy that permits disciplinary or

other deductions in pay ‘as a practical matter’” are not

“salaried” employees “if there is either an actual practice of

making such deductions or an employment policy that creates a

‘significant likelihood’ of such deductions.” Id. at 461. The

Court held that the Secretary’s opinion was controlling since it

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constituted an interpretation “of the Secretary’s own

regulations.” 3 Id.

On July 29, 1997, we remanded the case to the chancellor

for further proceedings consistent with the order of the United

States Supreme Court. The complainants, first in a letter brief

to the chancellor and subsequently by formal brief and argument,

contended that the remand was not limited to the issue addressed

in Auer but, rather, permitted them to address all aspects of

the case with respect to the possible controlling effect of

opinions from the Secretary of Labor.

Agreeing with the complainants’ contention on the scope of

the mandated reconsideration, the chancellor determined that he

was required to reconsider the exempt status of the employees

with respect to Department of Labor letter rulings he had

previously discounted. 4 The chancellor confirmed his prior

3
The Court rejected a claim by the Police Department that
the suit, which originated in federal court, was barred by the
Eleventh Amendment, because the City of St. Louis was “not an
‘arm of the state’ for Eleventh Amendment purposes.” Auer, 519
U.S. at 456 n.1. There is no dispute in the present case that
the Department is an agency of the Commonwealth.
4
The chancellor also examined the application of the
specific holding of Auer with respect to his prior determination
that the complainants are salaried employees. He determined
that Code § 2.1-114.5(11), which authorizes the creation of
regulations permitting reductions in pay as a disciplinary tool,
is “nominally applicable” to the entire range of personnel in
the Department. As such, the chancellor found that there is not
a “significant likelihood” that the complainants would be
7
ruling that all the complainants are salaried employees.

However, relying on four Department of Labor letter rulings

which address the status of juvenile and adult probation

officers generally and “child protective investigators,” the

chancellor found, contrary to his prior ruling, that the

complainants are not exempt as administrative or professional

employees. With respect to the one complainant who had

previously been found to be an exempt executive employee, the

chancellor concluded that the Commonwealth “has not met its

burden of establishing by clear and convincing evidence that

[the complainant’s] primary duties relate to supervisory

management . . . . She is not exempt from the overtime

provisions of the FLSA.”

In an order dated November 25, 1997, the chancellor entered

judgment for the complainants and referred the matter to a

commissioner in chancery for a determination of the back

overtime wages due them from the Commonwealth. On December 24,

1997, the Commonwealth filed a motion reasserting its plea of

sovereign immunity. In a terse letter to counsel, the

chancellor stated that “[a]t best, the Commonwealth is too late;

subject to such reductions. Accordingly, the chancellor
confirmed his prior ruling that all of the complainants are
salaried employees. The complainants do not challenge this
finding in this appeal.

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at worst, it is requesting reconsideration . . . . There must

be finality to a case!” The chancellor stated that he was

summarily overruling the Commonwealth’s motion; however, no

order memorializing that action appears in the record.

After receiving the report of the commissioner in chancery,

the chancellor entered a final order dated September 21, 1998,

in which the procedural history of the case from its inception

is recounted and the interlocutory and final rulings are

memorialized. Relevant to this appeal, the order makes express

mention of the Commonwealth’s original plea in bar and the

denial of that motion. The chancellor awarded the complainants

judgment for back overtime wages in the amounts determined by

the commissioner in chancery, $254,770.92 in attorney’s fees,

and $16,638.21 costs.

The Commonwealth filed a petition for appeal assigning

error to the chancellor’s failure to sustain its plea in bar and

to the determination that the complainants are not exempt

employees under the FLSA. By order dated April 8, 1999, we

awarded the Commonwealth this appeal.

On June 23, 1999, after the Commonwealth had filed its

opening brief, the United States Supreme Court decided the case

of Alden v. Maine, ___ U.S. ___, 119 S.Ct. 2240 (1999). The

procedural history and factual background of Alden are

remarkably similar to those of the present case. Alden involved

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the claims of juvenile probation officers employed by the State

of Maine for back overtime wages under the FLSA. The claims

raised in Alden had first been asserted in a suit filed in

federal court, but this suit was dismissed before judgment was

entered following the determination in Seminole Tribe of Florida

v. Florida, 517 U.S. 44 (1996), that Congress lacked the

authority to abrogate the states’ sovereign immunity from suit

in the federal courts. An action was then filed in state court

in Maine, where it was dismissed on the ground that, absent a

waiver by the state, sovereign immunity barred that suit also.

The Maine Supreme Judicial Court upheld this ruling and the

United States Supreme Court granted certiorari.

In affirming the judgment of the Maine courts, the Court

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, ___ U.S. at ___, 119 S.Ct. at 2246. The

Court further found that Maine had not waived its sovereign

immunity and, thus, had not consented to the suit. Id. It is

important to note that sovereign immunity was the only issue

addressed in Alden. Although the opinion states that Maine “has

altered its conduct so that its compliance with the federal law

cannot now be questioned,” id. at ___, 119 S.Ct. at 2269, the

10
Court did not address whether these particular juvenile

probation officers were “exempt” or “nonexempt” employees.

On July 28, 1999, we granted the Commonwealth’s motion to

file a supplemental brief addressing the application of Alden

and, thereafter, briefs were filed by both parties.

DISCUSSION

Alden clearly establishes that the Commonwealth may not be

sued by state employees in its own courts for an alleged

violation of the FLSA without its consent. That consent in the

context of an FLSA action brought by state employees must be

established by a waiver of the Commonwealth’s sovereign

immunity. Here, the Commonwealth asserts that it has not

consented to such suits and, therefore, the trial court’s

judgment must be reversed. The complainants contend, however,

that by its actions and omissions in this case, the Commonwealth

has waived its claim of sovereign immunity. We disagree with

the complainants.

The complainants’ initial contention is based on the

established rule of appellate procedure in this Commonwealth

that if a matter is appealed and a party fails to preserve a

challenge to an alleged error made by the trial court by

assignment of error or cross-error, the judgment of the trial

court becomes final as to that issue, a doctrine commonly

referred to as the “law of the case,” and precludes further

11
litigation of that issue if the case is remanded to the trial

court for further proceedings by the appellate court. See

Lockheed Information Management Systems v. Maximus, 259 Va. ___,

___, ___ S.E.2d ___, ___ (2000)(decided today); Searles’ Adm’r

v. Gordon’s Adm’r, 156 Va. 289, 294-98, 157 S.E. 759, 761-62

(1931). Although the Commonwealth has asserted its sovereign

immunity throughout the proceedings in the trial court, as

recited above the Commonwealth did not assign cross-error in the

initial appeal to the trial court’s ruling that the Commonwealth

was not immune from this suit under the doctrine of sovereign

immunity. However, this rule of appellate procedure and the

resulting finality of judgments are not applicable to the issue

of sovereign immunity in this case.

This is so because only the legislature acting in its

policy-making capacity can abrogate the Commonwealth’s sovereign

immunity. In the absence of such action by the legislature, the

courts of this Commonwealth do not have the necessary

jurisdictional authority to entertain FLSA actions brought

against the Commonwealth by its employees. Thus, the issue of

wavier of sovereign immunity in this case does not turn upon the

preservation of arguments about the defense, but upon whether

the Commonwealth acting through the legislature has acted to

vest the circuit court with jurisdiction to entertain this

action. Accordingly, we initially conclude, contrary to the

12
complainants’ contention, that the actions of an attorney for

the Commonwealth on a procedural matter are obviously not those

of the legislature in its policy-making capacity and, therefore,

those actions cannot constitute the Commonwealth’s waiver of its

sovereign immunity and consent to the FLSA suit in this case.

The complainants further contend that even if the

Commonwealth has not waived its right to assert sovereign

immunity by its actions in this case, it has done so generally

by statute. Citing Code § 8.01-192, which provides in pertinent

part that “[w]hen the Comptroller or other authorized person

shall disallow . . . any such claim against the Commonwealth as

is provided for by [§ 2.1-223.1] . . . the person presenting

such claim may petition an appropriate circuit court for

redress,” the complainants contend that their claim for back

wages should be construed as a claim to recover a debt owed

under their contracts of employment. They assert that because

the chancellor ultimately found that they were non-exempt

employees entitled to receive overtime pay, their suit

constitutes a valid “pecuniary claim against the Commonwealth.”

Code § 2.1-223.1.

We will assume, without deciding, that a claim for unpaid

wages by a state employee would be subject to the waiver found

in Code § 8.01-192. But see Code § 2.1-116.06(C) (providing

that the “establishment and revision of wages” is not subject to

13
grievance hearing). The principal difficulty with the

complainants’ contract debt theory, however, is that their suit

was not brought in the style of a contract claim or in the

manner prescribed for such claims by the statutory scheme and

case law they cite in support of their position. Although the

complainants’ assert on brief that they pursued administrative

remedies prior to advancing their claims in litigation, the

record does not support this assertion. Moreover, even if we

were to accept this assertion, their suit still would not

satisfy the requirements for seeking payment of a contract debt

from the Commonwealth as prescribed by the statute.

The complainants’ urge, however, that the waiver of

sovereign immunity for claims against the Commonwealth should be

broadly construed to act as a general waiver whenever the remedy

sought might be characterized as a claim for a debt owed under a

contractual relationship regardless of the nature of the

proceeding in which the claim is brought or the theory advanced

to assert that claim. This proposition ignores the basis

underpinning the Commonwealth’s assertion of sovereign immunity

in this case.

As the Commonwealth notes, the plea in bar was advanced in

order to exercise the Commonwealth’s prerogative not to be

subject to suit in her own courts pursuant to an act of

Congress. The issue is not one of the avoidance of a just

14
contract debt, but of the preservation of a right reserved to

the states by the United States Constitution. We see no reason

to vitiate that right by a broad and unwarranted interpretation

of the legislative intent behind the limited waiver of sovereign

immunity in Code § 8.01-192, and nothing in our cases

interpreting that statute suggests that it should be applied in

circumstances other than in claims properly instituted under

that statute and the scheme provided for pursuing such claims in

Code §§ 8.01-193 to -195.

Finally, the complainants contend that due process requires

that the Commonwealth be barred from asserting its sovereign

immunity in order to avoid liability for “an unconstitutional

taking without just compensation.” In essence, they are

asserting that the back overtime wages they allege they are owed

under the FLSA is a property right of which they have been

unjustly deprived. 5 This novel theory rests on the faulty

premise that the complainants’ entitlement to an award of

damages as prescribed by the FLSA for the Commonwealth’s alleged

failure to comply with the Act’s overtime provisions accrues

5
Within the same argument the complainants assert that the
taking is the result of the Commonwealth not fulfilling its
obligation to pay overtime under their employment contracts.
This assertion is merely an attempt to recast the prior
contention that their suit should be deemed a contract debt
action.

15
independent of the complainants’ ability to maintain and prevail

in an action for those damages. Under the complainants’ theory,

the Commonwealth’s potential liability on any claim would

require a “due process waiver” of its sovereign immunity since

the failure to pay the putative damages would, prospectively,

constitute a governmental taking without just compensation.

Contrary to the complainants’ assertion, the failure to

compel the Commonwealth to make this “due process waiver” does

not unjustly deprive them of a remedy under the FLSA. As noted

in Alden, for example, the FLSA provides for a remedy in the

form of a suit by the federal government on behalf of the

employees. Alden, ___ U.S. at ___, 119 S.Ct. at 2269.

Moreover, even in the absence of an alternative remedy, it is

self-evident that the doctrine of sovereign immunity cannot be

overcome simply on the ground that it deprives a claimant of a

recovery, for that is the very nature of the doctrine when it is

properly applied.

For these reasons, we hold that the Commonwealth has not

waived its sovereign immunity and, thus, has not consented to be

sued in its own courts by its employees for an alleged violation

of the FLSA. Accordingly, applying Alden, we will reverse the

chancellor’s denial of the Commonwealth’s plea of sovereign

16
immunity and enter final judgment for the Commonwealth with

respect to those claims. 6

Reversed and final judgment.

6
Because we hold that the Commonwealth was not subject to
being sued by its employees in its own courts, we need not
consider the Commonwealth’s further assignment of error
addressing the chancellor’s finding that the complainants were
non-exempt employees. Moreover, we reject the complainants’
contention that even if the Commonwealth was entitled to assert
its claim of sovereign immunity, the fact that they “prevailed”
on the merits after that claim was erroneously denied entitles
them to recover the attorney’s fees and costs awarded to them by
the chancellor. Because of our holding that the Commonwealth
cannot be sued by its own employees under the FLSA, it cannot be
required to pay the attorney’s fees and costs of such litigants
when a suit is allowed improperly to go forward.
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