by Luke Baumstark
On July 2, 2015, the Fifth Circuit of the United States Court of Appeals struck a blow against overzealous government prosecutions. The case was Gate Guard Services, L.P., et al. v. Thomas E. Perez, Secretary, Department of Labor, 792, F.3d 554 (5th Cir. 2015). In an opinion authored by Judge Edith H. Jones, the Fifth Circuit found that the Department of Labor (“DOL”) had acted in bad faith in pursuing its case, and ordered it to pay the attorneys’ fees Gate Guard incurred in defending itself. Id at 555.
In the underlying suit, the DOL sought to prove that Gate Guard had misclassified gate attendants as independent contractors rather than employees, in violation of the Fair Labor Standards Act. Id. at 556. The DOL made its first major misstep when, despite knowing that Gate Guard had legal counsel, one of its investigators contacted Gate Guard directly, demanding payroll information from a low-level employee. Id. Its second came when this same investigator destroyed the notes he used to draft formal witness interview statements. Id. Next, during the investigator’s deposition, the DOL’s counsel objected to questions posed by Gate Guard’s counsel over 100 times, and instructed the investigator not to answer on no fewer that 18 occasions, all in approximately 45 minutes. Id. at 558. The government then refused to produce witness statements underlying the prosecution, claiming that they were privileged, despite having filed some of them with the Court as evidence. Id. The list goes on. The DOL continued to pursue its case, even after learning that the federal government’s own Army Corps of Engineers used gate attendants and, like Gate Guard, classified them as independent contractors. Id. The DOL ultimately lost on summary judgment. Id.
After weathering these tactics, Gate Guard moved the District Court to make the government pay its attorneys fees. Id. at 558. The District Court granted the Motion only in part, finding that the government had not acted in bad faith as a matter of law, because its position that gate attendees were employees was “’not entirely frivolous,” meaning that it was not ‘wholly unsupported’ or ‘easily dispatched by a cursory review of the evidence.’” Id. at 560. The Fifth Circuit reviewed the same issue. Id. at 555. It granted Gate Guard’s Motion as a whole, finding that the DOL had proceeded in bad faith, noting that its case lost all merit as it proceeded, and highlighting the misconduct described above. Id. at 562. It suggested strongly that the government had been derelict in its duty to pursue “only clearly meritorious enforcement actions.” Id. at 563.
The Fifth Circuit’s ruling in Gate Guard is a victory against bullying tactics by a government, which, some believe, often threatens individuals and businesses with regulatory, civil, and even criminal penalties based on investigations that are anything but “meritorious.” Whether it is a federal, state, or even local government acting as Goliath, pursuing a conviction for an alleged crime, seeking fines for supposed regulatory violations, or even taking action against a professional’s license, those who are wrongfully cast as David need a slingshot. As we have seen in Gate Guard, that slingshot can come in the form of a legal team who demands that the government meet its burden of proof before making any concessions, and calls the government to task when it fails to do so. Although Goliath’s size was intimidating, David didn’t take his bullying sitting down. You shouldn’t either. If you find yourself threatened with governmental action, be it regulatory, civil, or criminal, contact trial attorneys who are ready to go the distance to protect your rights.