By Chad M. Zimlich

The Fourth Circuit handed down a ruling today, in Martin v. Wood, on an interlocutory appeal from a district court decision denying sovereign immunity to two supervisors at Eastern State Hospital, a state-run hospital in Williamsburg, Virginia. The case was based on alleged violations of the Fair Labor Standards Act of 1938.

The Question of the Proper Defendant

The question before the Court was whether the District Court of the Eastern District of Virginia erred in allowing the named defendants, Jack Lee Wood and Milagros Alcala Jones, to be sued in their individual capacities. To answer this question, the Court had to determine what party was the proper party at interest in the case.

An Alleged Unfair Denial of Overtime Pay

Laura Martin, the plaintiff in this case, was a registered nurse and a former employee of the Eastern State Hospital (“Hospital”) in Williamsburg, Virginia. She alleged damages under the Fair Labor Standards Act of 1938 (“FLSA”), 29 U.S.C. § 201-219, against two of her supervisors for an improper refusal to authorize overtime pay for hours that she had worked in excess of 40 hours per week from November 2010 through January 2012. Because she worked on an hourly basis, and because of “transitional duties” that occurred during shift changes, she claimed she worked about 20 minutes before, and 30 to 90 minutes after her shift was over. She also claimed she regularly worked through her 30 minute lunch. Martin also alleges that when she complained to Jones, her coordinator, Jones refused to take action and chalked Martin’s alleged extra time to “inefficiency.” Furthermore, Martin asserts that Jack Wood, the CEO and director of the Hospital, “willfully and deliberately refused to correct,” the denied overtime.

Her supervisors responded with a motion to dismiss for failure to state a claim and lack of subject matter jurisdiction, claiming they had the same sovereign immunity as the Hospital because their conduct involved official duties on the Hospital’s behalf. As a state-run hospital, it was entitled to sovereign immunity as an agency of the Commonwealth of Virginia. They argued that the actions in the complaint were centered on their official authority, and failed to assert that they had acted in an ultra vires manner, or beyond their positions’ specified powers.

The district court denied the motion, relying on Martin’s assertions that Wood and Jones were being sued in their individual capacities due to alleged “intentional misconduct” that was committed. As this was an Eleventh Amendment question, the defendants were entitled to an interlocutory appeal.

The Implications of the Eleventh Amendment

The FLSA provides that “no employer shall employ any of his employees . . . for a workweek longer than forty hours unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed.” 29 U.S.C. § 207(a)(1). The term “employer” is defined to include “any person acting directly or indirectly in the interest of an employer in relation to an employee and includes a public agency.” Id. § 203(d).

The Eleventh Amendment provides that “[t]he judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.” This removes jurisdiction over any suit brought against an unconsenting State in federal court by its own citizens. The Hospital is an agency of Virginia, and Virginia has not waived its sovereign immunity. Additionally, all officers acting in an official capacity have sovereign immunity through extension as agents. And though Congress can revoke this immunity as it did with Fourteenth Amendment claims, it did not do so for the FLSA.

This Suit is Really About the State

Martin contended that sovereign immunity does not extend to suits against state officials sued in their individual capacity, and, for this reason, Martin claimed that the Eleventh Amendment did not apply. However, the Court noted that any suit brought only against state officials, especially when it is a federal suit, begs the question of whether the suit should also be against the State.

The Court then turned to whether the State was truly the “substantial party in interest,” and in doing so examined the substance of Martin’s claims. There were five questions that the Court asked, namely (1) were the actions “tied inextricably” to the officials’ duties; (2) who would have borne the desired relief sought by Martin; (3) would the judgment operate against the State; (4) were the officials’ actions motivated by personal interests; and (5) were those actions ultra vires?

Ultimately, Martin’s complaint undid itself in this respect. It alleged that the Hospital failed to pay her overtime due to Wood and Jones’ refusal, that Wood and Jones were Martin’s supervisors, that their authority was to establish and control her hours of work, and that, in exercising that authority, Wood and Jones failed to include overtime hours. Though the complaint alleged that Wood and Jones “acted directly and indirectly in the interest” of the Hospital, the Court notes that there were no actual alleged ultra vires actions.

Cleverly Drafted Complaints Will Not Mask the State as the Proper Party

The Court concluded that “virtually every factor” indicated Wood and Jones were being sued in their official capacities. Therefore, Virginia was the proper party at interest in the case, and the Eleventh Amendment required the suits’ dismissal.