Luis VEGA, Plаintiff-Appellant, v. NEW FOREST HOME CEMETERY, LLC, Defendant-Appellee.
No. 16-3119
United States Court of Appeals, Seventh Circuit.
Argued April 18, 2017. Decided May 15, 2017.
854 F.3d 395
Before EASTERBROOK, KANNE, and ROVNER, Circuit Judges.
Nagelvoort argues that by allowing the jury to find a violation if “any part or purpose” of the payments was meant to induce referrals, the statute is unconstitutionally vague. He contends that “every contractual relationship a Hospital has with a doctor” might run afoul of the statute with such an interpretation, and that one could not know in advance whether a particular arrangement might be deemed illegal by a prosecutor. He urges us, therefore, to overturn our precedеnt and adopt an interpretation (also set forth in his proposed jury instruction) that a payment or remuneration violates the Anti-Kickback Statute only if its “primary or substantial purpose” is to induce referrals.
We considered, and rejected, an almost identical theory in United States v. Borrassi, 639 F.3d 774, 781-82 (7th Cir. 2011). In fact, Nagelvoort relies on the same case, United States v. Bay State Ambulance & Hospital Rental Serv., Inc., 874 F.2d 20 (1st Cir. 1989), to support his argument as the defendant in Borrassi did. In Bay State, the First Circuit affirmed convictions after the district court instructed the jury that defendants were guilty only if payments were made “primarily as [rеferral] inducements.” 874 F.2d at 30. That case did not persuade us in Borrassi, and instead, we followed the holdings of the Third, Fifth, Ninth, and Tenth Circuits on this issue. See Borrasi, 639 F.3d at 782 (collecting cases). We held that “if part of the payment compensated past referrals or induced future referrals,” it constitutes a violation of the Anti-Kickback Statute. Id.
We see no reason to overturn Borrassi and alter that interpretation now. We reject Nagelvoort‘s сontention that our interpretation of the statute criminalized his otherwise “innocent, legitimate business arrangements and conduct.” As we said in Borrasi, “nothing in the [Anti-Kickback Statute] implies that only the primary motivation of remuneration is to be considered in assessing” the conduct at issue. Id. We hold, therefore, that the Anti-Kickback Statute is not unconstitutionаlly vague as applied to Nagelvoort‘s case.
III. CONCLUSION
For the foregoing reasons, we affirm the convictions of both Novak and Nagelvoort.
Susan E. Walsh, Attorney, Hennessy & Roach, Chicago, IL, for Defendant-Appellee.
ROVNER, Circuit Judge.
Luis Vega filed this suit alleging that his former employer, New Forest Home Cemetery, LLC (“New Forest“), by failing to pay him for his final two weeks of work, violated his right under the Fair Labor Standards Act of 1938,
I.
For purposes of reviewing the court‘s summary judgment decision, we recite the facts in the light most favorable to Vega. E.g., Thompson v. Holm, 809 F.3d 376, 378 (7th Cir. 2016).
Vega worked for New Fоrest as a seasonal employee from May 2010 to June 2015. His employment was conditioned upon membership in the Service Employees International Union (the “union“), and he was therefore subject to the terms of a collective bargaining agreement between the union‘s local and New Forest. Article VIII of that agreement sеts forth a mandatory four-step procedure culminating in arbitration to resolve employee grievances.1 Section 8.1 of the agreement de-
New Forest terminated Vega from its employ on June 3, 2015. At the time of his discharge, Vega was owed compensation for roughly 54 hours of work in the preceding two weeks. New Forest did not tender a final paycheck to Vega for the wages owed to him, purportedly because it discovered that Vega lacked a valid Social Security number and it did not know how to lawfully make payment to him without such a number.
The parties dispute whether Vega made efforts to initiate a grievance regarding his final paycheck in accordance with the collective bargaining agreement. Vega avers that he did. He has submitted a declaration indicating that he raised the matter with his union steward, Arzaius Lander, who told him to contact Charles Jоnes, a union representative with the local bargaining unit. Vega represents that he attempted to reach Jones by telephone and left messages with his office, but to no avail. Lander and Jones have both submitted affidavits denying that Vega ever sought the union‘s assistance with his unpaid wages.
Vega, having concluded that any further attemрts to pursue the grievance process would be futile, instead filed suit in the district court. Count I of Vega‘s complaint asserts that New Forest, in failing to pay him the wages owed for his last two weeks of work, has violated
New Forest promptly moved to dismiss the suit because Vega had not exhausted the grievance procedure specified in the collective bargaining agreement for any dispute about wages, and the district court ultimately entered summary judgment against Vega on that basis2 as to his FLSA claim. R. 25. Although it recognized that Vega was suing to enforce his rights under the FLSA as opposed to the collective bargaining agreement, the court believed it to be the “generally established” rule that a union member “must follow the [collective bargaining] agreement‘s established grievance procedures before [he] can bring a lawsuit.” R. 25 at 3 (collecting cases). The court was willing to assume, in light of Vega‘s representation that he attempted to reach Jones by telephone on multiple occasions, that he had followed the first step of the grievance process (contaсting the union) as set forth in the collective bargaining agreement. R. 25 at 3. But the court found Vega‘s account insufficient to establish that he had otherwise exhausted his contractual remedies or that his efforts to do so were frustrated by the union. R. 25 at 3. The court entered judgment in favor of New Forest on that basis, and relinquished jurisdiction over Vega‘s state and common law claims. R. 25 at 3-4.
II.
Our review of the district court‘s summary judgment decision is, of course, de novo. E.g., Madison Mut. Ins. Co. v. Diamond State Ins. Co., 851 F.3d 749, 753 (7th Cir. 2017). The question posed is straightforward: Does the collective bar-
The district court‘s determination that Vega‘s failure to exhaust the grievance procedure forecloses him from seeking relief in court presumes that because his complaint is about New Forest‘s failure to pay him, and the collective bargaining agreеment establishes a grievance procedure for a dispute over pay, he is invariably required to use that contractual procedure regardless of whether his claim sounds in contract or in statute. The collective bargaining agreement between the union and New Forest indeed does address the minimum rate of pay owed to seasonal employees like Vega (sections 3.2 and 3.3), sets out a mandatory grievance procedure to resolve disputes with the employer (section 8.2), and defines grievances to include disputes over pay, hours, or working conditions (section 8.1). If Vega‘s claim were one relying on his substantive rights under the collective bargaining agreement, there is no question that he would have to exhaust his contractual remedies by pursuing a grievance or, in the alternative, demonstrate why futility or one of the other recognized exceptions to exhaustion should relieve him of that obligation. E.g., McCoy v. Maytag Corp., 495 F.3d 515, 524-25 (7th Cir. 2007); McLeod v. Arrow Marine Transp., Inc., 258 F.3d 608, 616-17 (7th Cir. 2001).
But Vega has statutory as well as contractual rights, and the district court did not аppreciate the distinction between those categories of rights vis-à-vis his obligation to resort to the grievance procedure. In opposing New Forest‘s motion to dismiss his suit, Vega cited Barrentine v. Arkansas-Best Freight Sys., Inc., 450 U.S. 728, 101 S.Ct. 1437, 67 L.Ed.2d 641 (1981), for the propositions that an employee‘s rights under the FLSA are independent of his rights under a collective bargaining agreement, id. at 737, 745, and that one‘s rights under the FLSA cannot be waived by contract, see id. at 740, 745. R. 23 at 4-5. The former proposition is the one that is relevant here. No one is suggesting that Vega‘s union purported to negotiate away his FLSA rights in the collective bargaining agreement. See Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 628 (1985) (“By agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitral rather than a judicial forum.“). What New Forest argues is that the collective bargaining agreement, by establishing a grievance procedure for disputes over pay, compels Vega to use that grievance procedure to resolve his FLSA claim. Barrentine is neither the Supreme Court‘s most reсent nor most pertinent decision on that question. See Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 34-35 (1991) (noting that Barrentine and similar cases did not resolve question of whether employee may be contractually obligated to arbitrate statutory claims).3 But it does make clear
Later cases have backed away from a reading of Barrentine, its predecessor, Alexander v. Gardner-Denver Co., 415 U.S. 36 (1974), and its successor, McDonald v. City of West Branch, 466 U.S. 284 (1984), suggesting that a collective bargaining agreement can never restrict an employee‘s access to the courts for the purpose of enforcing his statutory rights. That trilogy of cases, the Supreme Court has now made clear, did not resolve the question whether an agreement to arbitrate statutory claims is enforceable against an aggrieved employee who wishes to pursue such claims in court rather than by way of a grievance and arbitration. See 14 Penn Plaza LLC v. Pyett, 556 U.S. 247, 263-64 (2009) (citing Gilmer, 500 U.S. at 35). 14 Penn Plaza answers this question in the affirmative, so long as the collective bargaining agreement explicitly states that an еmployee must resolve his statutory as well as his contractual rights through the grievance procedure delineated in the collective bargaining agreement. Id. at 258-59, 274. The language of the agreement in this regard must be clear and unmistakable in order for it to be enforced against an employee who wishes to bypass the contractual dispute resolution process in favor of a judicial forum. Id. at 274; see Wright v. Universal Maritime Serv. Corp., 525 U.S. 70, 79-82 (1998).
In this case, the district court did not consider whether the collective bargaining agreement requires Vega to resort to the grievance process when he is pursuing rights granted to him by the FLSA rather than the contract itself. Vega did not cite 14 Penn Plaza to the district court, but, as we have noted, he did cite Barrentine in support of an argument that his statutory rights аre distinct from his contractual rights and that the collective bargaining agreement cannot waive his rights under the FLSA. Although Vega‘s argument as framed was incomplete, if not inaccurate—14 Penn Plaza leaves no doubt that a collective bargaining agreement can restrict an employee‘s access to a judicial forum for purposes of resolving his statutory claim so long as it does so in clear and unmistakable terms—the argument was sufficient to alert the court that an employee‘s statutory rights are independent of his contractual rights and must be separately analyzed vis-à-vis the employee‘s obligation to invoke the contractual dispute resolution procеss. The court apparently did not consult Barrentine, which would have led it to 14 Penn Plaza.
In sum, the particular question 14 Penn Plaza requires us to answer is whether the collective bargaining agreement clearly and unmistakably requires Vega to use the grievance and arbitration procedure to resolve his FLSA claim rather than skipping over that process and proceeding directly to court. It does not.
New Forest assumes that because the agreement defines a grievance to include disputes over pay, it necessarily requires statutory claims on the same subject to be submitted to the grievance process. Our decision in Jonites v. Exelon Corp., 522 F.3d 721, 725 (7th Cir. 2008), shows why that assumption is mistaken. Jonites held that language in a collective bargaining agreement to the effect that “any dispute or differencе aris[ing] between the Company and the Union or its members as to the
Here, by contrast, nothing in the language of the collective bargaining agreеment clearly and unmistakably requires an employee to resolve a statutory claim through the grievance procedure. Although section 8.1 of the agreement defines a grievance to include a claim or dispute “concerning pay, hours[,] or working con-
ditions or the interpretation or application of this Agreemеnt,” this could be thought to mean a claim over the requirements of the contract itself rather than one about what the FLSA requires. See Wright, 525 U.S. at 80-81. Indeed, that is the most natural reading of the agreement, given that nowhere in Article VIII or, for that matter, anywhere else in the agreement is there even a reference to the FLSA.4 Under no sense of thе phrase “clear and unmistakable” can the agreement be read to compel an employee to resolve his rights under FLSA through the grievance process.
Consequently, there was no need for Vega to exhaust his contractual remedies. He was free to file suit regardless of whether he first pursued a grievance and did so through each of the four steps delineated by the collective bargaining agreement.
III.
The district court erred in granting summary judgment to New Forest. Absent clear and unmistakable language to the contrary in the collective bargaining agreement, nothing precluded Vega from filing suit to enforce his rights under the Fair Labor Standards Act. The judgment is REVERSED, and the case is REMANDED to the district court for further proceedings.