22 F.4th 47
1st Cir.2021Background
- Plaintiffs are former laborers who sued Skinner Services, Inc. and individual owners for wage-law violations (unpaid travel time under a required "Reporting Policy" and involuntary uniform-washing deductions).
- A DOL investigator concluded Skinner likely violated the FLSA and estimated substantial back wages owed; the DOL investigation was later closed because of pending litigation and an EEOC matter.
- After suit was filed, Skinner formed several related entities (one sold for millions); plaintiffs allege these entities were used to dissipate or shelter assets to frustrate recovery.
- The district court had previously held Skinner in contempt for retaliating against a worker who participated in the litigation.
- The district court entered a preliminary injunction under Fed. R. Civ. P. 64 and Massachusetts law restraining asset transfers (subject to limited ordinary-course exceptions), requiring advance notice and an accounting; Skinner appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether federal court could issue an injunction restraining asset transfers pending a money-damages claim (interaction of Grupo Mexicano) | Pineda: state-law prejudgment remedies available under Rule 64 allow the injunction | Skinner: Grupo Mexicano forbids federal courts from issuing such preliminary asset-freeze relief | Held: Grupo Mexicano bars such relief only under Rule 65 federal-equity power; Rule 64 permits state-law remedies, so the district court had authority under Massachusetts law and Rule 64 |
| Whether Rule 64's use of state remedies is limited to diversity cases | Pineda: Rule 64 applies in federal actions regardless of jurisdictional basis | Skinner: Rule 64 should be limited to diversity cases | Held: Rejected; Rule 64's operation does not depend on the basis for federal jurisdiction |
| Whether the district court abused its discretion (factual findings, likelihood of success, irreparable harm, bond) | Pineda: record and prior findings support likelihood of success, risk of dissipation, and tailored relief without a large bond | Skinner: court failed to make required Rule 52 findings, misapplied standards, and abused discretion by waiving or limiting bond | Held: No abuse of discretion; record supports the court's implicit findings, evidence of likely dissipation justified injunction, and bond was within court's discretion |
| Whether the Norris-LaGuardia Act barred the injunction | Pineda: Act does not apply to FLSA wage claims | Skinner: anti-injunction provisions of the Act prevent this relief | Held: Norris-LaGuardia governs "labor dispute" injunctions and does not bar this FLSA unpaid-wages action; Act inapplicable here |
Key Cases Cited
- Grupo Mexicano de Desarrollo, S.A. v. Alliance Bond Fund, Inc., 527 U.S. 308 (1999) (Supreme Court held federal courts lack authority under Rule 65 to issue preliminary injunctions preventing disposition of assets pending a claim for money damages)
- Micro Signal Rsch., Inc. v. Otus, 417 F.3d 28 (1st Cir. 2005) (appellate review principles for preliminary injunctions; Rule 64 may permit state-law remedies in federal court)
- Charlesbank Equity Fund II v. Blinds To Go, Inc., 370 F.3d 151 (1st Cir. 2004) (discusses application of Grupo Mexicano and continued vitality of Rule 64)
- Braintree Laboratories, Inc. v. Citigroup Global Markets, Inc., 622 F.3d 36 (1st Cir. 2010) (use of accounting and scope of mandatory vs. prohibitory injunction analysis)
- Aoude v. Mobil Oil Corp., 862 F.2d 890 (1st Cir. 1988) (Rule 65(c) bond requirement is within district court discretion and not jurisdictional)
- Barrentine v. Arkansas-Best Freight Sys., Inc., 450 U.S. 728 (1981) (FLSA protects statutory rights to wages and is distinct from collective bargaining "labor dispute" context)