322 F. Supp. 3d 951
D. Ariz.2018Background
- DOL sued Austin Electric and its president under the FLSA alleging unpaid overtime and deficient recordkeeping; discovery had closed.
- Defendants hired outside counsel (Pace and Sellers) to conduct a company-wide HR "audit" during the litigation, interviewing employees on work time and giving pre-prepared declarations to sign.
- Two declaration formats existed: (1) retrospective statements under penalty of perjury that employees always recorded hours accurately and had been paid for all hours; and (2) forward-looking promises to record hours going forward. Most timekeeping declarations were retroactive.
- Employees were not told interviews were voluntary, were not offered neutral counsel or copies of signed declarations, and were asked about contacts with the DOL and whether they had provided information to DOL investigators. Some employees reported feeling coerced.
- DOL moved for a TRO/preliminary injunction to stop these interviews/declarations and sought curative relief (notice to employees, striking declarations, prohibiting inquiries into DOL contacts). The Court held a hearing, reviewed sample declarations, and issued a limited injunction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether to enjoin employer interviews/declaration practices as retaliatory under the FLSA | The audit coerced employees into retroactive declarations relevant to the suit, deterred protected activity, and obstructed DOL investigation | The audit was a legitimate, neutral internal HR function and education on policies; injunction not necessary | Granted in part: injunction limited coercive practices; retroactive timekeeping declarations stricken; forward-looking declarations allowed; meetings must be voluntary, employees may leave, be offered neutral witness, get copies; no inquiry into DOL contacts allowed |
| Whether retroactive declarations may be used at trial | Declarations were procured coercively and would prejudice DOL's back-pay claims and deter witness cooperation | Declarations reflect employees' statements; Defendants argued impeachment use or permitted communication | Struck all backward-looking declarations; Defendants may not use them at trial |
| Whether plaintiff's failure to file a reply warrants denial of its motion | N/A — procedural point DOL conceded not dispositive | Failure to file a reply should result in denial, vacatur, and fees | Denied — failure to file a reply is not a basis to deny the motion under local rule |
| Whether to stay injunction ruling or permit briefing on alleged DOL misconduct (Petrilli referral) | DOL had referred a former DOL employee (Petrilli) for criminal prosecution; DOL conduct irrelevant to injunction | Defendants sought stay and leave to brief unclean-hands based on that referral and deposition conduct | Denied: Court refused to stay and denied leave to file that motion; misconduct, if any, should be addressed in the other proceeding |
Key Cases Cited
- Winter v. Natural Resources Defense Council, 555 U.S. 7 (2008) (standard for preliminary injunction)
- Brooks v. City of San Mateo, 229 F.3d 917 (9th Cir. 2000) (employer educational meetings not per se retaliatory)
- Herb Reed Enterprises, LLC v. Florida Entertainment Management, Inc., 736 F.3d 1239 (9th Cir. 2013) (district courts may consider evidence outside strict rules at preliminary-injunction stage)
- Republic of the Philippines v. Marcos, 862 F.2d 1355 (9th Cir. 1988) (hearsay admissible in equitable proceedings for preliminary relief)
- Horizon Air Industries, Inc. v. National Mediation Board, 232 F.3d 1126 (9th Cir. 2000) (employer free-speech rights balanced against employees’ protection from coercion)
- Alliance for the Wild Rockies v. Cottrell, 632 F.3d 1127 (9th Cir. 2011) (articulation of preliminary-injunction framework in Ninth Circuit)
- In re M.L. Stern Overtime Litigation, 250 F.R.D. 492 (S.D. Cal. 2008) (distinguishable; survey/notice expressly disclosed settlement offer and did not present coercion)