Melinda Myers; Barbara Stanerson; John Eivins; Liv Kelly-Sellnau; Christopher Taylor; Shuna Tosa, on Behalf of Themselves and Others Similarly Situated v. Iowa Board of Regents
No. 20-2020
United States Court of Appeals For the Eighth Circuit
April 5, 2022
Appeal from United States District Court for the Southern District of Iowa - Eastern
Submitted: September 22, 2021
KOBES, Circuit Judge.
Employees of the University of Iowa Hospitals and Clinics sued the Iowa Board of Regents for alleged violations of the Fair Labor Standards Act‘s overtime pay provisions. The district court denied the Board‘s motion to dismiss, concluding that the Board constructively waived sovereign immunity from private enforcement of the FLSA. We affirm in part, reverse in part, and remand.
The University of Iowa Hospitals and Clinics (“UIHC“) are state medical facilities operated and managed by the Iowa Board of Regents. Plaintiffs, current and former employees of the UIHC system, allege that UIHC violated the FLSA by paying overtime wages late. Although they get overtime pay each month, Plaintiffs claim their overtime wages are not paid with the regular wages earned during a particular pay period. Instead, overtime is paid at least one month later.
Plaintiffs sued the Board in Iowa state court, initially alleging only state law claims. The Board removed the case to federal court after Plaintiffs amended their complaint to include the FLSA claim. The Board filed a Rule 12(b)(1) motion to dismiss, arguing that the court lacked subject matter jurisdiction over the FLSA claim because the Board has state sovereign immunity and has not consented to private suits under the FLSA. The district court denied the motion, concluding that the University of Iowa‘s policies, in the context of Iowa‘s wage payment statutes, are a constructive waiver of sovereign immunity under Iowa law. The Board appeals.
II.
We generally lack appellate jurisdiction to review the denial of a motion to dismiss because it is not a final decision of the district court. See
III.
A.
The Tenth Amendment prohibits Congress from using its Article I authority to “subject nonconsenting States to private suits for damages in state courts.” Alden v. Maine, 527 U.S. 706, 712 (1999). As a state entity, the Board of Regents is immune from private suits under the FLSA unless Iowa has consented to private enforcement of the law. The State can consent to suit by expressly or constructively waiving immunity.
In Anthony v. State, the Iowa Supreme Court held that the State expressly waived its immunity from suits seeking to enforce FLSA overtime provisions. 632 N.W.2d 897, 902 (Iowa 2001). The court found that several sections of the Iowa Wage Payment Collection Law,
The logic of Anthony goes like this: in
Anthony is not dispositive.
B.
Next, we ask whether the Board implicitly consented to suit. Unlike the federal courts’ rejection of implied waiver, Iowa courts retain the doctrine of constructive waiver of sovereign immunity. Compare Coll. Sav. Bank v. Fla. Prepaid Postsecondary Educ. Expense Bd., 527 U.S. 666, 680-82 (1999) (federal rejection of constructive waiver), with Lee v. Polk Cnty. Clerk of Ct., 815 N.W.2d 731, 741-42 (Iowa 2012) (applying constructive waiver doctrine). Constructive waiver is a separate and distinct theory of waiver “based on the public policy that it would be abhorrent to permit the State to enter into contracts with no corresponding obligation to perform its promises under the contract.” Lee, 815 N.W.2d at 741. When the State enters into a contract or otherwise voluntarily assumes legal consequences, courts may find the government constructively waived its immunity from suit. See, e.g., State v. Dvorak, 261 N.W.2d 486, 488-89 (Iowa 1978); Kersten Co., Inc. v. Dep‘t of Soc. Servs., 207 N.W.2d 117, 122 (Iowa 1973). “[P]rovisions contained in state employee handbooks can support constructive waiver of sovereign
Plaintiffs argue that UIHC‘s policies create the legal consequence of accountability to the FLSA. In support they point to several employment materials, including the University Operations Manual, Employee Manual, Employee Handbook, and Human Resources website, that reference or incorporate FLSA overtime standards. The University HR website goes so far as to state that “[e]mployees working in excess of 40 hours per week are required to be paid overtime premium pay, unless they qualify for exemption from the FLSA requirement.” Plaintiffs argue that this shows that the Board has voluntarily accepted the legal consequences of the FLSA. The district court reasoned that “regardless of whether UIHC‘s policies and agreements establish enforceable provisions of a contract, the Board can be presumed to have entered into these employment agreements and drafted its employee policies with knowledge of the condition of Iowa law defining payments made under them as ‘wages’ subject to the IWPCL.” Myers v. Iowa Bd. of Regents, 458 F. Supp. 3d 1075, 1083 (S.D. Iowa 2020) (citation omitted). It then concluded that the Board constructively waived sovereign immunity because the “agreements and policies, placed in context of the IWPCL statutory scheme, reflect[] that [the Board] has ‘acceded to that mandate of the FLSA in a manner that establishes the resulting overtime remuneration as compensation owed by an employer.‘” Id. (quoting Anthony, 632 N.W.2d at 901) (cleaned up). In other words, because the Board was aware of the statutory scheme described in Anthony, the UIHC policies guaranteeing overtime show the Board accepted the legal consequences of the FLSA overtime provisions such that it constructively waived its immunity to suits under the FLSA.
But the district court‘s reasoning assumes that UIHC‘s policies and agreements are attributable to the Board. However, it did not make a specific finding on that issue—that the Board authorized, adopted, or otherwise approved the policies and agreements. The University of Iowa system is subordinate to the Board of Regents. Though the University of Iowa system may benefit from the Board‘s
Because the district court did not address this issue, and it affects our subject matter jurisdiction, we remand for the district court to consider in the first instance whether the legal consequences of UIHC‘s policies and agreements can be imputed to the Board. Cf. Alexis Bailly Vineyard, Inc. v. Harrington, 931 F.3d 774, 780 (8th Cir. 2019) (“Although the issue was briefed before the district court, the district court did not reach it and it is our practice to remand such claims ‘[w]hen it would be beneficial for the district court to consider an . . argument in the first instance.‘“).
IV.
We affirm in part, reverse in part, and remand for further proceedings consistent with this opinion.