By Jon Schlotterback

On October 15, 2019, the Fourth Circuit Court of Appeals issued an Order for rehearing one of the lawsuits filed against President Trump for alleged violations of the Emoluments Clauses.[1]  This Order came after the Fourth Circuit had previously reversed a district court decision that held the District of Columbia and State of Maryland had standing to pursue such a claim against the President.[2]  Despite President Trump’s reference to the “phony Emoluments Clause”[3] in response to the reversal of the decision to host the G-7 Summit at his Miami Doral resort,[4] the Clauses are real, and the rehearing presents interesting questions of Constitutional authority over the President.

Most modern Presidents, upon taking office, have put their business interests in a blind trust for the duration of their service.[5]  This was done to address the underlying need for the Emoluments Clauses: to prevent even an appearance of a conflict of interest between the office of the Presidency and personal wealth.[6]  President Trump decided to break with that tradition and transfer the management of his business interests to his sons, Donald Jr. and Eric Trump, while retaining an interest from which he could take disbursements at any time.[7]  In addition to this change from past administrations, the President’s business interests are more visible because of his high-profile eponymous real estate properties.[8]  Emoluments Clause litigation centers around whether the President has impermissibly profited from the office through his business interests.[9]

The U.S. Constitution has three Emoluments Clauses.  First, the Foreign Emoluments Clause entails that “no Person holding any Office of Profit or Trust under them, shall, without the Consent of Congress, accept of any present, Emolument, Office, or Title, of any kind whatever, from any King, Prince, or foreign State.”[10]  This Clause is “concerned with preventing U.S. officials from being corrupted or unduly influenced by gifts or titles from foreign governments.”[11]  Second, the Domestic Emoluments Clause pertains more directly to the actions of the President, stating “The President shall . . . receive for his Services, a Compensation, which shall neither be encreased nor diminished during the Period for which he shall have been elected, and he shall not receive within that Period any other Emolument from the United States, or any of them.”[12]  This Clause is “concerned with ensuring presidential independence and preventing the President from being improperly swayed by the States.”[13]  Third is the Ineligibility Clause, [14]  not at issue in this situation.

After President Trump’s election in 2016, three lawsuits were filed to challenge his alleged violations of the Emoluments Clauses.  First, Citizens for Responsibility & Ethics in Washington v. Trump[15] was filed in the Second Circuit alleging violations of the Domestic and Foreign Emoluments Clauses based upon both the General Services Administration’s lease with Trump International Hotel (the “Hotel”) and payments from foreign government agents to the Hotel.[16]  Second, District of Columbia v. Trump,[17] discussed below, alleged violations of the Domestic and Foreign Emoluments Clauses.[18]  Third, Blumenthal v. Trump[19] was filed by members of Congress alleging violations of the Foreign Emoluments Clause as a result of foreign government payments both at properties owned by the President and in the form of licensing deals for the President’s business entities.[20]  These lawsuits represent some of the first Emoluments Clauses challenges and are testing the waters to see how courts will deal with issues of standing, the limits of the prohibitions, and enforcement of the Clauses.[21]

On February 23, 2018, the District of Columbia and State of Maryland filed their suit against the President in both his individual and official capacity.[22]   The complaint detailed several instances of alleged violations of the Foreign Emoluments Clause, including over $270,000 received from an agent of Saudi Arabia for lodging and meals at the Hotel.[23]  Furthermore, the compliant alleged violations of the Domestic Emoluments Clause through a lease with the General Services Administration, $32 million in tax credits for the Hotel, and advertisements of Trump’s Mar-a-Lago resort on a State Department-managed website.[24]  The arguments are focused on issues of standing and the meaning of the term “emolument.”[25]

On March 28, 2018, the district court filed an opinion addressing one of the primary obstacles to an Emoluments Clause challenge: standing.[26]  Primarily discussing whether the plaintiffs had suffered an injury in fact, the court found that Plaintiffs had suffered injuries based on quasi-sovereign, proprietary, and parens patriae[27] interests with respect to “Trump International Hotel and its appurtenances in Washington, D.C. as well as the operations of the Trump Organization with respect to the same,” but found no standing for any of the other Trump Organization businesses challenged.[28]

Reasoning that states will feel coerced into a dilemma of either giving the Trump Organization sought-after tax breaks (and thus losing revenue) or denying the requests and losing the favor of the President to other states, the court found the Plaintiffs had established injury to quasi-sovereign interests.[29]  Injury to proprietary interests was found to have been successfully pleaded by unfair competition in the form of the District of Columbia’s Washington Convention Center and Maryland’s Bethesda Marriott Conference Center, both highly similar venues to the Hotel.[30]  The Plaintiffs argued their venues lost business to the Hotel as a result of the President’s alleged violations of the Emoluments Clauses.[31]  Finally, the court found the Plaintiffs had sufficiently pled injury to parens patriae interests of the Plaintiffs’ residents through the effect of unfair competition on each Plaintiffs’ hospitality market.[32]  The court deferred ruling on the President’s motion to dismiss based on absolute immunity in his individual capacity.[33]

On July 25, 2018, the district court then issued another opinion upholding the Plaintiffs’ suit and adopting a broad definition of “emolument” to extend “to any profit, gain, or advantage, of more than de minimis value, received by him, directly or indirectly, from foreign, the federal, or domestic governments.”[34]  This definition also included “profits from private transactions, even those involving services given at fair market values,”[35] thereby rejecting one of the President’s arguments that “private transactions unrelated to compensation in exchange for the performance of official duties or personal services” are not emoluments.[36]  After the ruling, the President asked the district court to certify an interlocutory appeal to the Fourth Circuit, but the motion was denied.[37]  The court once more deferred to rule on the issue of absolute immunity but issued an order to begin discovery.  Arguing the discovery order effectively denied him an absolute immunity defense, the President filed a request for a writ of mandamus.[38]

In opposing the President’s request for mandamus, the Plaintiffs argued the district court’s definition of emolument was correct and asserted that dictionaries from the late-eighteenth century frequently gave the term a broad meaning.[39]  Additionally, they emphasized earlier contentions that the President’s violations of the Emoluments Clauses harmed quasi-sovereign, parens patriae, and proprietary interests.[40]  In reply, the President argued that any “fear of retaliation” and subsequent harm to these interests was “self-inflicted” and that other Founding-era dictionaries contained definitions of “emolument” that significantly narrowed the scope to “compensation accepted from a foreign or domestic government for services rendered by an officer in either an official capacity or an employment-type relationship.”[41]  Asserting that the Emoluments Clauses could not have such a broad definition, the President also pointed to the actions of George Washington who, while President and in his private capacity, purchased federal land located in what is now the District of Columbia.[42]  Finally, the President asserted that to accept the district court’s definition would also find unconstitutional the actions of President Obama in his retention of treasury bonds and royalties on foreign book sales.[43]  After granting a stay on the district court’s proceeding, the Fourth Circuit asserted its authority to hear the case.[44] 

In separately filed opinions, the Fourth Circuit reversed the rulings of the district court for claims against the President in both his official and individual capacity.[45]  The court noted that the suit was extraordinary by reason that it “is brought directly under the Constitution without a statutory cause of action, seeking to enforce the Emoluments Clauses which . . . give no rights and provide no remedies,” “seeks an injunction directly against a sitting President” and “no court has ever entertained a claim to enforce [the Emoluments Clauses].”[46]  Finding that the harm inflicted upon the Plaintiffs’ proprietary and parens patriae interests was too attenuated to provide standing, and that the quasi-sovereign interests were merely a “general grievance, insufficient to amount to a case or controversy in the meaning of Article III,” the court found the Plaintiffs lacked standing on all claims.[47] 

Upon petition, the Fourth Circuit has agreed to rehear the case en banc in December, thus reopening the issue.[48]  Because the Second Circuit did find the plaintiffs had standing in Citizens for Responsibility & Ethics in Washington v. Trump,[49] an affirmation of the Fourth Circuit’s original decision could be the circuit split necessary to prompt review from the Supreme Court.  Of course, President Trump could have avoided all of these suits by placing his business interests in a blind trust, as is the modern practice for sitting Presidents.[50]  By declining to create the trust, however, he has provided an opportunity for plaintiffs to wade into the unknown waters of the Emolument Clauses.  Every American, regardless of their political affiliation, should be concerned about whether a sitting President is being influenced by his business interests rather than the interests of the nation.  District of Columbia v. Trump provides an opportunity to ensure the nation’s chief executive officer is acting in the country’s best interests.

[1] Order at 2, District of Columbia v. Trump, 930 F.3d 209 (4th Cir. 2019) (No. 18-2488).

[2] District of Columbia, 930 F.3d at 215; In re Trump, 928 F.3d 360, 379–80 (4th Cir. 2019).

[3] John Haltiwanger, Trump Said Emoluments Clause in US Constitution Is ‘Phony’, Bus. Insider (Oct. 21, 2019),

[4] David Smiley, Michael Wilner, & Francesca Chambers, Pulling G-7 Out of Doral the ‘Right Decision,’ Mulvaney Says, Miami Herald (Oct. 20, 2019),

[5] See Ciara Torres-Spelliscy, A Federal Appeals Court Asserts Its Authority over Trump’s Unconstitutional Profiteering, Brennan Ctr. for Justice (Sept. 16, 2019),

[6] See Brief of Appellees at 2, District of Columbia, 930 F.3d 209 (No. 18-2488).

[7] Amended Complaint at 12–13, District of Columbia v. Trump, 291 F. Supp. 3d 725 (D. Md. 2018) (No. PJM 17-1596).

[8] Joy Blenman, The Companies Owned by Donald Trump, Investopedia, (last updated May 21, 2019).

[9] See generally Amended Complaint, supra note 7.

[10] U.S. Const. art. I, § 9, cl. 8.

[11] In re Trump, 928 F.3d 360, 373 (4th Cir. 2019).

[12] U.S. Const. art. II, § 1, cl. 7.

[13] In re Trump, 928 F.3d at 373.

[14] U.S. Const. art. I, § 6, cl. 2.

[15] 276 F. Supp. 3d 174 (S.D.N.Y. 2017), vacated, No. 18-474, 2019 U.S. App. LEXIS 27634 (2d Cir. Sept. 13, 2019) (finding a group of restaurants and restaurant workers had standing to pursue a claim for violations of the Domestic and Foreign Emoluments Clauses).

[16] Citizens for Responsibility & Ethics in Wash., 2019 U.S. App. LEXIS 27634, at *4–8.

[17] 291 F. Supp. 3d 725 (D. Md. 2018), rev’d, 930 F.3d 209 (4th Cir. 2019).

[18] District of Columbia, 291 F. Supp. 3d at 733–34.

[19] 335 F. Supp. 3d 45 (D.D.C.), appeal docketed, No. 19-5237, filed Sept. 4, 2019 (D.C. Cir.).  The plaintiffs have argued that, because the Foreign Emoluments Clause permits acceptance of foreign emoluments only by consent of Congress, President Trump has denied them an opportunity to vote on acceptance of such emoluments and therefore caused injury.  Blumenthal, 335 F. Supp. 3d at 50.

[20] Id. at 51.

[21] In re Trump, 928 F.3d 360, 368 (4th Cir. 2019).

[22] Amended Complaint at 2, supra note 7.

[23] Id. at 15–16.

[24] Id. at 26–30.

[25] See generally Brief of Appellees, supra note 6.

[26] District of Columbia, 291 F. Supp. 3d at 737.  The court noted that standing could be established when a plaintiff sufficiently alleged facts showing “it has (1) suffered an injury in fact, (2) that is fairly traceable to the challenged conduct of the defendant, and (3) that is likely to be redressed by a favorable judicial decision.”  Id.

[27] Id. at 746 n.14 (“[P]arens patriae refers to the theory of standing by which a State may assert a quasi-sovereign interest, i.e., ‘public or governmental interests that concern the State as a whole,’ on behalf of its citizens.”) (citations omitted).

[28] Id. at 753, 757.

[29] Id. at 740–42.

[30] Id. at 742–43.

[31] Id.

[32] Id. at 746–48.

[33] Id. at 758.

[34] District of Columbia v. Trump, 315 F. Supp. 3d 875, 904 (D. Md. 2018).

[35] Id.

[36] Appellant’s Opening Brief at 37–38, District of Columbia v. Trump, 930 F.3d 209 (4th Cir. 2019) (No. 18-2488).

[37] In re Trump, 928 F.3d 360, 367 (4th Cir. 2019).

[38] Id. at 368.  Mandamus is “[a] writ issued by a court to compel performance of a particular act by a lower court or a governmental officer or body, usu[ally] to correct a prior action or failure to act.”  Mandamus, Black’s Law Dictionary (11th ed. 2019).  “This is a ‘drastic and extraordinary’ remedy ‘reserved for really extraordinary causes,’ therefore it “is one of ‘the most potent weapons in the judicial arsenal.’”  Cheney v. U.S. Dist. Court, 542 U.S. 367, 380 (2004) (quoting Ex parte Fahey, 332 U.S. 258, 259–60 (1947); then quoting Will v. United States, 389 U.S. 90, 107 (1967)).  Mandamus will only be granted when a party can establish that: “(1) no other adequate means [exist] to attain the relief [desired]; (2) the party’s right to issuance of the writ is clear and indisputable; and (3) the writ is appropriate under the circumstances.”  Hollingsworth v. Perry, 558 U.S. 183, 190 (2010) (per curiam) (citations omitted).

[39] Respondents’ Brief in Opposition to Petition for Writ of Mandamus at 40, In re Trump, 928 F.3d 360 (No. 18-2486).

[40] Id. at 56–68.

[41] Reply Brief for Petitioner at 9, 15, In re Trump, 928 F.3d 360 (No. 18-2486) (internal citation omitted).

[42] Appellant’s Opening Brief, supra note 36, at 43–44.

[43] Id. at 45.

[44] District of Columbia v. Trump, 930 F.3d 209, 211 (4th Cir. 2019); In re Trump, 928 F.3d at 364.  Although Plaintiffs attempted to voluntarily dismiss the individual capacity suit, this happened only after the Fourth Circuit took the appeal.  District of Columbia, 930 F.3d at 214.

[45] District of Columbia, 930 F.3d at 215; In re Trump, 928 F.3d at 379–80.

[46] In re Trump, 928 F.3d at 368.

[47] Id. at 376–77, 379.

[48] Order at 2, supra note 1.

[49] No. 18-474, 2019 U.S. App. LEXIS 27634 (2d Cir. Sept. 13, 2019).

[50] See Torres-Spelliscy, supra note 5.

By Kelsey Mellan

On March 17, 2017, the Fourth Circuit issued a published opinion in Mason v. Machine Zone, Inc. a civil appeal of the district court’s dismissal of a Loss Recovery Statute claim. Plaintiff Mia Mason filed a class action complaint against Machine Zone, Inc. (“Machine Zone”), the developer of a mobile game entitled “Game of War: Fire Age” (“Game of War”). Mason alleged that she lost money participating in an unlawful “game device” – a virtual wheel that makes up a substantial part of Game of War. The district court dismissed Mason’s class action under FRCP 12(b)(6) for failure to state a claim. The Fourth Circuit subsequently affirmed the district court’s decision.

Facts & Procedural History

Machine Zone developed and operates Game of War, a popular video game that can be downloaded for free on mobile devices. Game of War is a strategy game in which players build virtual towns and armies, and “battle” each other in a virtual world. While it is free to play the game, players can purchase virtual “gold” at prices ranging from $4.99 to $99.99. Players can use this gold to “improve their virtual towns” and to obtain virtual “chips” for use during the Game of War “casino.”  This virtual casino is a game of chance in which players can use their virtual chips for an opportunity to obtain prices for use within the game by “spinning” a virtual wheel – a completely randomized feature of the game. The first time a player enters Game of War, he or she is entitled to one free spin of the wheel. However, after the player uses this free spin, must use chips to pay for each additional spin. If a player doesn’t have enough chips to spin, the player must use virtual gold to obtain more chips.

Players who spin the wheel have no control over the outcome of the spin and, thus, no skill on the part of the player influence what the outcome will be. Players obtain prizes from spinning the wheel. If a player wins enough prizes he or she may want to sell his or her account on “secondary markets” for real money. However, this sale on secondary markets, such as Amazon, would violate Machine Zone’s terms of service.

Mason started playing Game of War on her cell phone in early 2014. After using her complimentary spin of the virtual wheel, Mason began purchasing virtual gold in order to obtain more chips to continue spinning the wheel to earn prizes. Between early 2014 and January 2015, Mason spent over $100 to participate in the casino.

Mason filed a class action in the District of Maryland under Maryland’s Loss Recovery Statute. She alleged that she lost money playing an unlawful “game device” and sought “full disgorgement and restitution of any money [Machine Zone] has won” from Mason and similarly situated Maryland residents. The district court determined that Mason failed to state a claim under the Loss Recovery Statute because “she did not lose money” in the virtual casino – and thus, the court dismissed Mason’s complaint.

Plaintiff-Appellant’s Claim Under Maryland’s Loss Recovery Statute

Mason argues that the district court erred in dismissing her class action under FRCP Rule 12(b)(6) because she lost money while playing in the virtual casino – which she claims is an unlawful “game device” under the Loss Recovery Statute. The Fourth Circuit reviewed the district court’s dismissal de novo, accepting Mason’s well-plead allegation as true and drawing all reasonable inferences in her favor.

Maryland’s Loss Recovery Statute states “a person who loses money at a [prohibited] gaming device…may recover the money as if it were a common debt.” The statute defines gaming device as “a game or device which money or any other thing or consideration of value is bet, wagered, or gambled,” and includes a “wheel of fortune.” Pursuant to the Maryland state case, F.A.C.E. Trading, Inc. v. Todd, the Fourth Circuit was required to interpret Maryland’s gambling statutes in a manner that “gives validity not only to the word, but to the spirit of the law. For the purposes of this appeal, the Fourth Circuit assumed that the virtual casino was a prohibited “gaming device” and agreed with the district court that Mason did not lose any money when spinning the wheel in the virtual casino. Therefore, she failed to satisfy a required element for stating a claim under the Loss Recovery Statute.

In deciding whether the loss of virtual money fell under the Loss Recovery Statute, the Fourth Circuit looked to Cates v. State, a Maryland case which noted that the predecessor to the Loss Recovery Statute encompassed a public policy “not to help one who loses at gambling, but to discourage illegal gambling by putting the winner on notice that the courts will force him to disgorge his winnings.” In the case of Game of War, Machine Zone did not “win” any money. Rather, Mason participated in the virtual casino by “spinning” the virtual wheel where no money was at stake – only virtual prizes and chips. Thus, Mason could not have lost or won money as a result of her participation in the virtual activity. Moreover, the Fourth Circuit determined that the fact that Mason could sell her account on “secondary markets” was irrelevant – as the entire account would be sold, not just the virtual prizes or chips.  Thus, the Fourth Circuit rejected Mason’s contention that the existence of a secondary market showed that she lost money as a result of her participation in Game of War’s virtual casino.


 Accordingly, the Fourth Circuit affirmed the district court’s conclusion that Mason did not “lose money” within the meaning of the Loss Recovery Statute as a result of her participation in the Game of War casino.


By Paige Topper

On December 23, 2015, in the civil case of Calderon v. GEICO General Insurance Co., a published opinion, the Fourth Circuit affirmed a district court’s decision classifying the employee position of Investigator in an insurance company as non-exempt from the Fair Labor Standards Act’s (“FLSA”) provision regarding overtime pay.

Administrative Exemption Under FLSA

Under the FLSA, employers are generally required to pay overtime to employees for each hour worked in excess of a 40-hour week. However, there are exemptions to this general rule. The exemption at issue in this case is § 213(a)(1), which exempts “any employee employed in a bona fide executive, administrative, or professional capacity.” Here, the plaintiffs argued that they did not fall within this exemption and thus were entitled to overtime pay while the defendant, GEICO, claimed that the employees were in fact exempt from receiving overtime pay because their title of “Investigators” falls under this provision.

GEICO’s Special Investigation Unit

The heart of this case lies in the distinction between GEICO’s Claims Adjusters and its Investigators working in GEICO’s Special Investigations Unit (“SIU”). Claims Adjusters had the primary job of adjusting insurance claims by investigating, assessing, and resolving the claims. This position required the employees to determine how much GEICO will pay on a claim and then negotiate a settlement if necessary.

On the other hand, Investigators within the SIU, while still a part of GEICO’s Claims Department, principally focused on identifying claims that are potentially fraudulent. Investigators had a set list of procedures for determining whether a claim is fraudulent. Among these procedures, Investigators had to submit interim reports and a final report to their Supervisor for review.

GEICO Classified Investigators as Exempt Under the FLSA

GEICO has continuously classified its Investigators as exempt under the FLSA provision requiring the employer to pay overtime. Specifically, the company examined the Investigators’ classification in 2004 in light of a court decision that GEICO had misclassified a different position as exempt. At that time, the Senior Vice President and the Senior Vice President of Human Resources concluded that despite the court’s decision as applied to Auto Damage Adjusters (which was later reversed) the Investigators were still properly exempt. In 2007, GEICO reviewed the applicability of exemptions for its various employee classifications. GEICO again concluded that the Investigators were properly exempt under the administrative exemption of the FLSA.

In 2010 the named plaintiff, Samuel Calderon, filed suit against GEICO alleging that GEICO improperly classified the Investigator position as exempt from overtime pay under the FLSA. The current case is a class action including all individuals who were or had been employed by GEICO as Investigators within three years of the filing of this action. An additional class action claim was added for unpaid overtime pay under New York’s Labor Law.

This was the second time the Fourth Circuit heard this case. Initially, the district court granted plaintiffs’ motion for partial summary judgment and denied GEICO’s motion for summary judgment, finding that as a matter of law GEICO’s classification of Investigators did not fall within the FLSA’s administrative function exemption. Then the parties filed cross-motions for summary judgment on several remedy issues. The district court determined that because GEICO acted in good faith and not willfully the statute of limitations for plaintiffs’ claims was only two years. Furthermore, the district court held that the plaintiffs were not entitled to liquidated damages or prejudgment interest.

Upon appeal, the Fourth Circuit concluded that it lacked jurisdiction because there was no final judgment, as the district court had not found all the facts necessary to compute the amount of damages awarded to the plaintiffs. Therefore, on remand the district court determined the amount of damages entitled to each plaintiff and entered judgment in favor of the plaintiffs. Both parties appealed again raising the same issues as their original appeals.

GEICO’s Classification of Investigators was Incorrect

GEICO argued that the district court erred in finding that Investigators were not exempt from the FLSA. However, the Fourth Circuit indicated that FLSA exemptions are to be narrowly construed against employers. The Fourth Circuit turned to the regulations to identify whether the plaintiffs were covered under the administrative exemption. The regulations indicate that the exemption covers employees (1) who are paid $455 a week or more, (2) whose primary duty is the performance of office work that is directly related to the management of general business operations of the employer, and (3) whose primary duty includes the exercise of discretion and independent judgment with respect to significant matters.

The Court determined that plaintiffs were entitled to summary judgment because their positions as Investigators were not directly related to the management of GEICO’s general business. Specifically, the Fourth Circuit explained that the directly related element is met when an employee performs work directly related to assisting with the running or servicing of the business. Here, the Investigators’ primary responsibility was too far removed from GEICO’s management or general business operations to satisfy the second element. The Investigators had no supervisory responsibility and they did not recommend or develop GEICO’s business policies with regards to the claims under investigation. The Fourth Circuit concluded that although the Investigators work was important to GEICO, the directly related element hinges on the nature of the work and not the outcome of that work.

The Fourth Circuit looked to both FLSA regulations and Department of Labor opinion letters to support its conclusion. Furthermore, the Court found unpersuasive GEICO’s argument that Investigators nevertheless performed some of the same duties that Claims Adjusters perform and were thus exempt. The Court countered this argument by pointing out that the title of Claims Adjuster alone does not warrant an exemption—the directly related element must be determined on a case-by-case basis. Second, while the Court acknowledged that the Investigator position may have duties that support GEICO’s claims-adjusting process, this has to do with the ultimate consequence of the position rather than the nature of the work, which is the true focus for the directly related element.

Plaintiffs’ Arguments over Remedies

Next, the Fourth Circuit addressed the plaintiffs’ various complaints regarding the remedies awarded to them. First, the plaintiffs argued that the district court erred in determining that GEICO did not act willfully under the FLSA. Whether a party acted willfully in violation of the FLSA impacts the statute of limitations. If the violations were not willful then the limitations period is two years, but if the violations were willful then the period is extended to three years. The Fourth Circuit concluded that due to the close and complex nature of the elements at issue in this case, GEICO did not act willfully in deciding to exempt Investigators from overtime pay.

Second, the plaintiffs alleged that the district court erred in its calculation of compensation to be awarded to the plaintiffs. Specifically, the plaintiffs claimed that there was no agreement between them and GEICO to receive straight-time pay for all hours worked in a given workweek. The Fourth Circuit determined that although the plaintiffs did not always work the same number of hours in a day, they received fixed salaries for the many years that the plaintiffs worked for GEICO. Therefore, an agreement for straight-time pay had been established.

Third, the plaintiffs contended that the district court erred in its denial of plaintiffs’ request for liquidated damages. Although the FLSA provides for an award of liquidated damages, a district court may refuse the award if the employer showed that it acted in good faith. The Fourth Circuit found that, again because the issue was very close and GEICO reviewed the classification on multiple occasions, the district court was allowed to refuse to award liquidated damages.

Finally, the plaintiffs argued that the district court abused its discretion in declining to award prejudgment interest. On this final issue, the Fourth Circuit agreed with the plaintiffs, noting that under the FLSA prejudgment interest is typically necessary, in the absence of liquidated damages, in order to make the plaintiff(s) whole.

Fourth Circuit Affirmed in Part and Denied in Part

As a result of statutory interpretation and supporting authorities, such as the opinion letters, the Fourth Circuit concluded that GEICO misclassified Investigators as exempt under the FLSA for overtime pay and thus affirmed the district court’s grant of plaintiffs’ motion for partial summary judgment. The Fourth Circuit further affirmed the district court’s decisions on the statute of limitations, the calculation of compensation, and the denial of liquidated damages. The Court reversed and remanded on the last issue of awarding prejudgment interest to the plaintiffs.