[00:00:00] Speaker 01:
I call Case 19-2130, Shea v. United States.

[00:00:06] Speaker 00:
All right, Mr. Rosenthal, now please proceed.

[00:00:10] Speaker 00:
Thank you.

[00:00:10] Speaker 00:
I apologize.

[00:00:12] Speaker 00:
May it please the court?

[00:00:13] Speaker 00:
When an employer violates the FLSA, the statute establishes a strong presumption of double damages.

[00:00:20] Speaker 00:
This appeal presents the question of whether an employer can overcome that presumption when it presents no evidence

[00:00:27] Speaker 00:
of how or why it decided to deny time and a half over time pay prior to the filing of the complaint.

[00:00:36] Speaker 01:
Can I just ask you, this case, we've read the brief, so we appreciate what your argument is, but this case is a little unusual because of the statute of limitations question, because this original decision was made in 2007, right?

[00:00:54] Speaker 00:
Correct.

[00:00:55] Speaker 01:
What is your view in terms of what it was incumbent on the United States to do that it didn't do to establish reasonable ground or good faith?

[00:01:06] Speaker 01:
For example, if there was a memo in the file from 2007 that somebody had kept that had two paragraphs explaining why the government thought that this particular employee

[00:01:23] Speaker 01:
was not covered by the FLSA.

[00:01:26] Speaker 01:
Would that be sufficient?

[00:01:30] Speaker 00:
Yes, Judge Prost.

[00:01:31] Speaker 00:
I think that would be sufficient.

[00:01:32] Speaker 00:
And we know from the record that NCIF actually currently creates a document like that when it classifies a position.

[00:01:42] Speaker 00:
Stacey Cruz testified to that.

[00:01:44] Speaker 00:
So really what the agency would have had to do if it created the document at that time was

[00:01:51] Speaker 00:
keep it somewhere so that when the issue arose in the future, it could establish the basis for its conduct, its decision not to pay time and a half over time to the employer.

[00:02:04] Speaker 01:
But the tricky thing about this case is that let's assume it wasn't their agency practice to retain that kind of documentation for more than five years or something.

[00:02:19] Speaker 01:
I mean, the problem is that under the statute of limitations, your trigger date is that 2014, right?

[00:02:27] Speaker 01:
Which is seven years after the original decision was made.

[00:02:32] Speaker 01:
So isn't that a bit problematic for you all?

[00:02:36] Speaker 01:
I mean, what if the agency could show, for example, that it just didn't retain records, those kinds of records for more than five years?

[00:02:42] Speaker 01:
So we just don't know whether or not there was a record completed.

[00:02:46] Speaker 01:
Why should the government fear the burden

[00:02:50] Speaker 01:
when this time frame well preceded your statute of limitations?

[00:03:00] Speaker 00:
Sure.

[00:03:01] Speaker 00:
Let me make several points about that.

[00:03:03] Speaker 00:
So first of all, we're operating under a statute which creates the default rule of double damages.

[00:03:10] Speaker 00:
So the employer here is trying to basically get an exception or an escape

[00:03:16] Speaker 00:
from that presumption and the statute says that in order to do so it has a burden of what it has to show.

[00:03:23] Speaker 00:
And so the question is when the evidence is missing as you described because the agency failed to keep it, is that going to be held against the employer or should that be held against

[00:03:39] Speaker 00:
the employee who really never had any access to this information in the first place and couldn't be expected to know why the agency had taken this action.

[00:03:50] Speaker 00:
And I think that an agency, another kind of consideration here is this issue is never going to rise so long as an agency actually pays over time appropriately.

[00:04:02] Speaker 00:
It would never get to liquidated damages issue.

[00:04:05] Speaker 00:
But when it doesn't,

[00:04:08] Speaker 00:
it needs to be prepared to explain why it's taking the action that it's taking.

[00:04:13] Speaker 00:
If it's not paying overtime to an employee, it needs to be prepared to explain why that's the case if it's found to be in violation.

[00:04:22] Speaker 00:
And that's what the statute provides and that's what we're asking the court to find here.

[00:04:30] Speaker 01:
On the record, the court below thought that there was a reasonable grounds looking at the position description

[00:04:37] Speaker 01:
for the government to have classified this as not covered by the FLSA?

[00:04:43] Speaker 00:
I don't think the court asked the right question.

[00:04:45] Speaker 00:
It did say that the position description could provide a reasonable grounds, but it did not say that the agency proved that it actually had that grounds prior to when the lawsuit was filed because there was no evidence of that.

[00:05:01] Speaker 01:
Well, I don't know how, why do you need evidence?

[00:05:04] Speaker 01:
They checked the box.

[00:05:05] Speaker 01:
I mean, right?

[00:05:06] Speaker 01:
I mean, they did affirmatively, with regard to the position description, categorize it as not covered by the FLSA, right?

[00:05:17] Speaker 00:
Correct.

[00:05:18] Speaker 00:
But they have... No, I'm sorry.

[00:05:21] Speaker 00:
I hit you off.

[00:05:22] Speaker 01:
No, no, no.

[00:05:23] Speaker 00:
Go ahead.

[00:05:24] Speaker 00:
Okay.

[00:05:25] Speaker 00:
The statute, I mean, they checked the box, sure.

[00:05:28] Speaker 00:
But the statute says they have to have a reasonable basis for that.

[00:05:32] Speaker 00:
They have to prove that they had a reasonable belief that they were complying with the statute.

[00:05:36] Speaker 00:
So simply checking a box doesn't get you anywhere near that showing.

[00:05:40] Speaker 00:
And courts have again and again held employers to that burden and reversed trial courts when an employer tries to escape by without that kind of evidence.

[00:05:52] Speaker 00:
And so ultimately, I don't think it's really all that burdensome.

[00:05:57] Speaker 00:
for an agency to say that, you know, if you are going to end up, if you're taking the risk, but if you are found up, end up finding a violation of the FLSA, you're going to have to explain your conduct and you should keep those memos for more than five years.

[00:06:17] Speaker 00:
If you want to be prepared to,

[00:06:20] Speaker 00:
to defend against the liquidated damages claim.

[00:06:23] Speaker 01:
There's also another approach that I think agencies could take, which is to... Well, we're talking about what the agency should have known and reasonably assumed back in 2007.

[00:06:32] Speaker 01:
Right.

[00:06:34] Speaker 01:
Not today.

[00:06:34] Speaker 00:
Correct.

[00:06:35] Speaker 02:
Okay.

[00:06:36] Speaker 00:
And if the agency was familiar with the... Sorry, can I interrupt?

[00:06:40] Speaker 02:
This is Judge Hughes.

[00:06:41] Speaker 02:
Can I ask you hypothetically, do you think you always need a memo justifying the classification, or if the

[00:06:50] Speaker 02:
Position description is so clear on its face that it's an exempt position.

[00:06:54] Speaker 02:
You can imagine all the language you would need to put it in.

[00:06:58] Speaker 02:
Isn't that position description itself facially enough to show the agency's good faith?

[00:07:06] Speaker 00:
I think under the statute, the agency has to show something about the actual analysis that it applied.

[00:07:15] Speaker 00:
to reach a determination.

[00:07:17] Speaker 02:
So I don't think that's self-evident if it writes a position description and says, this person is a GS-15 supervisor.

[00:07:29] Speaker 02:
Their job is to supervise 100 attorneys, direct policy, blah, blah, blah, do all that kind of stuff.

[00:07:35] Speaker 02:
And accompanying that is the SF form, and it's checked exempt.

[00:07:42] Speaker 02:
Do you think there has to be a separate document that

[00:07:45] Speaker 02:
examines that and explains the analysis, or would that be enough to establish good faith?

[00:07:51] Speaker 02:
And if you think there needs to be a separate document, where would you ground that requirement?

[00:07:58] Speaker 00:
Right.

[00:07:58] Speaker 00:
So the agency only has to establish good faith if it's found to have violated the statute.

[00:08:03] Speaker 00:
So in the example you described where it's so clear cut, this issue is never going to arise because there's never going to be a violation of the statute for someone who supervises 100 employees.

[00:08:15] Speaker 00:
So kind of by design, this would only arise when it's at least somewhat of a closer issue.

[00:08:23] Speaker 00:
And so that's why I think that doesn't.

[00:08:27] Speaker 02:
Well, sure, but that's not necessary.

[00:08:29] Speaker 02:
I mean, some of these things, you know this, some of these classifications are made years ago, if not decades ago.

[00:08:35] Speaker 02:
And at the time, the agency's justification and classification decision may have been correct.

[00:08:42] Speaker 02:
And as court precedent evolves, as it has in this area for 40 years, it may become incorrect.

[00:08:48] Speaker 02:
And so I'm just curious as to why you think there's some kind of requirement for analysis located anywhere in our precedent.

[00:08:58] Speaker 02:
I mean, it's clearly not in the specific terms of that, I'll say.

[00:09:01] Speaker 02:
Is this just your view of what sufficient evidence is to establish good faith?

[00:09:11] Speaker 02:
some kind of statutory requirement.

[00:09:15] Speaker 00:
Our argument's based on the text of 29 U.S.T.

[00:09:17] Speaker 00:
260, which says the employer has to show good faith and reasonable grounds for believing that his after omission was not a violation of the act.

[00:09:25] Speaker 00:
So we think that means that there has to be some evidence to show what the employer thought, you know, what analysis it applied.

[00:09:35] Speaker 00:
I think it could be, and I'd also add that in terms of your reference to changes in the law,

[00:09:41] Speaker 00:
I don't think NCIS is pointing to any relevant changes that took place here.

[00:09:48] Speaker 00:
But, you know, I suppose in a hypothetical case, if it was so clear cut initially and then it became less clear cut, well, I think an agency would have had an obligation to track changes in the law and to update its practice over time.

[00:10:06] Speaker 00:
But, you know, I suppose in,

[00:10:11] Speaker 00:
some, you know, very narrow set of cases that that could be the case, but it's, it's simply, I'll believe my time has expired, so.

[00:10:20] Speaker 01:
Well, why don't you finish the answer to answering Judge Yu's question?

[00:10:25] Speaker 00:
Sure.

[00:10:26] Speaker 00:
We think under the text of the statute, as it's been interpreted by numerous courts, which we've cited, employers are held to the burden of producing some evidence to explain what their basis was for taking the action at issue.

[00:10:41] Speaker 00:
Thank you.

[00:10:42] Speaker 00:
Thank you.

[00:10:43] Speaker 01:
Oh, I'm sorry.

[00:10:45] Speaker 01:
Did Judge Raina, did you have another question?

[00:10:47] Speaker 01:
Did someone have another question?

[00:10:49] Speaker 03:
Yes.

[00:10:49] Speaker 01:
Okay, Mr. Wilson-Tall?

[00:10:52] Speaker 01:
Yes.

[00:10:54] Speaker 01:
Judge Raina has a question.

[00:11:00] Speaker 03:
Yes, for some reason my phone is cutting off again and I couldn't... I guess you all weren't hearing me.

[00:11:08] Speaker 03:
So I have two points here.

[00:11:09] Speaker 03:
Now, Counselor, you're not arguing that the government engaged in bad faith here, correct?

[00:11:14] Speaker 03:
I mean, the good faith part of the standard is not at argument.

[00:11:22] Speaker 00:
Yeah, and I apologize, Judge Ray, and I did not hear you trying to ask a question earlier.

[00:11:30] Speaker 00:
So it's a little counterintuitive.

[00:11:32] Speaker 00:
The way that the, first of all,

[00:11:34] Speaker 00:
The government had the burden to prove its good faith.

[00:11:37] Speaker 00:
So we don't have we didn't have to argue or show bad faith.

[00:11:41] Speaker 00:
But the way the good faith requirements been interpreted by every circuit that looked at it is

[00:11:46] Speaker 00:
It's a little bit more than just requiring good motives.

[00:11:50] Speaker 00:
It actually requires that the employer show that it undertook some specific steps to check to see if it was complying with the statute.

[00:12:00] Speaker 00:
And we do think that in this case, NCIS did not meet its burden to prove that it took those steps prior to the filing of the lawsuit.

[00:12:10] Speaker 00:
So we do have an argument on that prong, which

[00:12:16] Speaker 03:
Okay.

[00:12:18] Speaker 01:
All right.

[00:12:18] Speaker 01:
Well, I'm going to go with that.

[00:12:22] Speaker 01:
Thank you.

[00:12:22] Speaker 01:
Any further questions?

[00:12:24] Speaker 04:
All right.

[00:12:24] Speaker 04:
We'll hear from Mr. Kerr now.

[00:12:27] Speaker 04:
Thank you, Your Honor.

[00:12:29] Speaker 04:
May it please the Court?

[00:12:31] Speaker 04:
The Court of Federal Claims made factual findings that support its decision not to award liquidated damages.

[00:12:39] Speaker 04:
First, the Court of Federal Claims found the NCIS had objectively reasonable grounds for its decision.

[00:12:45] Speaker 04:
Specifically, the duties in the position description appear to be exempt.

[00:12:50] Speaker 04:
As team lead, Mr. Shea directs all aspects of surveillance operations, including the direct... But doesn't it matter?

[00:12:57] Speaker 01:
Isn't your friend correct that it matters not what the court of claims decided after it reviewed the position description, but what the agency thought process and analysis was?

[00:13:15] Speaker 04:
Well, Your Honor, the standard is that the government needs to show that it had a reasonable grounds, a reasonable basis for its decision.

[00:13:23] Speaker 04:
And our position is that that is satisfied by the position description.

[00:13:33] Speaker 04:
So the court's finding is that the position description has duties that appear to be exempt.

[00:13:39] Speaker 04:
And that's the basis for the reasonable grounds

[00:13:43] Speaker 04:
of its decision.

[00:13:46] Speaker 01:
Hypothetically, I understand that's not the case, but what if the other side were able to gig up the person that checked that box back in 2007 and the person that checked that box said, you know, we were never expected to even read the PD.

[00:14:03] Speaker 01:
We were just checking off the box because that's what we were told to do.

[00:14:08] Speaker 01:
That would

[00:14:09] Speaker 01:
It wouldn't matter then whether the CFC thought that the position description was a close call or could have arguably been an exempt position, right?

[00:14:20] Speaker 01:
That's correct, Your Honor.

[00:14:22] Speaker 04:
This decision was made back in 2007, as you pointed out, before the statute of limitations period of this case.

[00:14:30] Speaker 04:
And the government was unable to locate a witness in HR who was involved in this decision.

[00:14:39] Speaker 04:
and it was unable to locate any documents beyond the position description itself.

[00:14:45] Speaker 04:
Our argument is that that position description itself, the document speaks for itself, that that has duties on it that appear to be exempt and that the government's reliance on it was reasonable, that that was a reasonable basis.

[00:15:06] Speaker 04:
Council for Mr. Shea says the government must explain

[00:15:09] Speaker 04:
why it took the action it did, which is it paid Mr. Shea, it capped his overtime at 25% of his base salary.

[00:15:20] Speaker 04:
And that original position description is part of that explanation.

[00:15:24] Speaker 04:
We put on evidence of why NCIS made that decision to pay Mr. Shea a cap of 25% overtime.

[00:15:32] Speaker 04:
Part of that is the position description that gives a reasonable basis

[00:15:37] Speaker 04:
in that it has duties that are exempt.

[00:15:40] Speaker 04:
And then also, as the court found, the NCIS acted in good faith.

[00:15:45] Speaker 04:
It has an automated process to verify that Mr. Shea is in fact doing those duties in the position description.

[00:15:53] Speaker 04:
And the court found that it was accurate, that that process worked.

[00:15:58] Speaker 01:
Mr. Shea argues... But that's not really the question here.

[00:16:01] Speaker 01:
The question isn't whether or not he was doing what he was supposed to be doing under the PD.

[00:16:06] Speaker 01:
The question is whether or not the duties enumerated in the position description satisfies the exemption.

[00:16:14] Speaker 01:
And again, I mean, you do rely on the presumption of regularity, do you not?

[00:16:19] Speaker 04:
Um, we do, Your Honor, although, I mean, that bolsters our position, which has been our position all along, that the document, the position description, speaks for itself.

[00:16:29] Speaker 01:
Well, except the other side, what do you say?

[00:16:31] Speaker 01:
Is the other side correct?

[00:16:33] Speaker 01:
I think.

[00:16:34] Speaker 01:
I may have this confused with another case, but I think the other side thinks the argument that you never raised that below.

[00:16:40] Speaker 04:
Well, below Mr. Shea argued in his post-trial brief that we had no evidence of the who or the why this classification was made.

[00:16:51] Speaker 04:
And our response to that was that we have the position description.

[00:16:55] Speaker 04:
And again, the position description

[00:16:57] Speaker 04:
speaks for itself.

[00:16:58] Speaker 04:
We can read the position description.

[00:17:00] Speaker 04:
The box is ticked for FLSA exemption and it's signed by a supervisor approving that decision.

[00:17:10] Speaker 04:
Now, at the Court of Appeals, Mr. Shea's argument is more pointed.

[00:17:14] Speaker 04:
He's saying now that not only is there no evidence of the who or the why, but that there's no evidence that those duties in the position description were even considered.

[00:17:24] Speaker 04:
And that's when we're bringing in the presumption of regularity that the document was signed.

[00:17:31] Speaker 04:
And they're suggesting that the government employee did not read the document that she was signing.

[00:17:36] Speaker 04:
And that it goes a little farther than to say we have no evidence of the who or the why that original classification was made, which we admit that's correct.

[00:17:47] Speaker 04:
But they're going farther in saying basically the document doesn't speak for itself.

[00:17:53] Speaker 04:
that there's no evidence that NCIS relied on those duties in the document.

[00:17:56] Speaker 04:
And we're responding more to that argument, that more pointed argument, that's come up on appeal.

[00:18:07] Speaker 04:
The court also considered that NCIS has a dedicated staff with training and experience in FLSA as part of the good faith.

[00:18:16] Speaker 04:
finding.

[00:18:18] Speaker 01:
What's relevant is what existed in 2007.

[00:18:22] Speaker 01:
Was the finding that it currently has or in recent years has had a staff to evaluate it or that that was the case in 2007?

[00:18:32] Speaker 04:
Well, Your Honor, is our position in the court properly looked at the totality of the circumstances, which that in 2007 this decision was made to classify this position as exempt.

[00:18:47] Speaker 04:
And then the current situation and sort of just pre-regulation situation is that NCIS has this dedicated staff with training and experience that has a process of reviewing these position descriptions annually, if not more often, to make sure that those are the duties being performed.

[00:19:08] Speaker 01:
And if they're not... Well, they have that process, but there's no indication that this particular position description

[00:19:15] Speaker 01:
was included in the more recently instituted annual review.

[00:19:20] Speaker 01:
Is there?

[00:19:22] Speaker 04:
Well, there is evidence that there's this annual process that applies to all position descriptions, that when there's a review, a performance review, part of the process of reviewing it is to verify that these still reflect the duties that the employee is doing.

[00:19:40] Speaker 04:
And Mr. Shea has these annual reviews, so it was

[00:19:44] Speaker 04:
This particular position description was verified in this process as Mr. Shea performing these duties.

[00:19:53] Speaker 04:
It was also reviewed by Mr. Freeman when he made new hires for the position.

[00:19:57] Speaker 01:
Yes, I see a few different questions.

[00:19:59] Speaker 01:
I guess I'm getting a little confused.

[00:20:01] Speaker 01:
Whether or not he performed the duties outlined in the position description is not the question of whether or not those

[00:20:10] Speaker 01:
those duties were sufficient to establish exemption under the FLSA.

[00:20:15] Speaker 01:
Aren't they two separate and different questions?

[00:20:18] Speaker 04:
They are two separate questions, Your Honor.

[00:20:21] Speaker 04:
We are relying on the original description made back in 2007, which we admit we don't have the who or we don't have a memo, but we're relying on the document itself

[00:20:36] Speaker 04:
and the process that existed then, and that the supervisor, based on her signature, reviewed it and approved it.

[00:20:47] Speaker 04:
We're relying on that from 2007, which is outside the statute of limitations of this case, and then relying for our reasonable basis, and then relying on the process of reviewing that at least annually, if not more, for accuracy, for good faith.

[00:21:05] Speaker 04:
Those are active steps.

[00:21:07] Speaker 04:
You know, Mr. Shea's comment was correct that there could have been more active steps, but the active steps that the government took was that annual review process.

[00:21:16] Speaker 04:
It's a different question than the FLSA exemption, but the combination of those two findings and those two factors satisfied the Court of Federal Claims and it satisfies the statute that the employer must show a reasonable basis and must show good faith.

[00:21:34] Speaker 03:
This is Judge Drayna.

[00:21:36] Speaker 03:
Can you hear me?

[00:21:37] Speaker 04:
Yes, I can, Your Honor.

[00:21:39] Speaker 03:
OK, good.

[00:21:41] Speaker 03:
So in the context of your responses to Judge Pearl's questions, let me point out that the Claims Court concluded that the NCIS acted in good faith because, quote, it demonstrated an intent to comply with the Fair Labor Standards Act by having a formal process to classify positions and review decisions

[00:22:02] Speaker 03:
executed by dedicated staff.

[00:22:05] Speaker 03:
So really what the claims court here found was an intent to comply.

[00:22:09] Speaker 03:
And I think it's agreed by everybody that there's no evidence of the who would have applied here.

[00:22:17] Speaker 03:
And I'm concerned that we're being asked to affirm this particular finding that all you have to show is that you had an intent in order to satisfy the

[00:22:30] Speaker 03:
good faith element of the statute.

[00:22:34] Speaker 03:
Can you respond to that?

[00:22:36] Speaker 04:
Well, yes, Your Honor.

[00:22:38] Speaker 04:
I mean, you are correct.

[00:22:42] Speaker 04:
We have to show an intent to comply with the FLSA, which we've done.

[00:22:46] Speaker 04:
But the court also found that there were active steps to comply.

[00:22:51] Speaker 04:
And these active steps were reading a little further in the court's decision from where you've just read.

[00:22:59] Speaker 04:
was the agency supervisors are required to review annually and verify the position description, verify that those are the duties being performed.

[00:23:10] Speaker 04:
And that's part of the performance evaluation system.

[00:23:14] Speaker 04:
And the court found that, oh, sorry, Your Honor.

[00:23:19] Speaker 03:
That goes to the position that the agency was trying to comply, but not whether it actually complied in this case.

[00:23:30] Speaker 04:
Well, Your Honor, the agency, because we're in the liquidated damages discussion, the agency failed to comply.

[00:23:40] Speaker 04:
I mean, we accept that, that the agency made the wrong call.

[00:23:43] Speaker 04:
What we've shown is a good faith effort to comply with these active steps.

[00:23:48] Speaker 04:
And the FLSA requires the decision to be based on the actual duties that the employer is doing.

[00:23:59] Speaker 04:
And this process that NCIS has in place makes sure that the position description reflects the actual duties that are being performed.

[00:24:11] Speaker 04:
Now, the decision to classify that position as exempt, as we've discussed, was made back over 10 years before this case was filed.

[00:24:21] Speaker 04:
And we can't put on evidence of the who or why.

[00:24:24] Speaker 04:
But when you look at the actual position description, there's a reasonable basis, and the court found this,

[00:24:30] Speaker 04:
It contains duties that could be interpreted as falling into the administrative exemption.

[00:24:35] Speaker 04:
So it's the combination of those two.

[00:24:38] Speaker 04:
And this is a unique case, but it's a combination of those two findings that FLSA took active steps to make sure it followed the FLSA in that its ongoing decision was based on the actual duties being performed and that it also had a reasonable basis upon objective

[00:25:00] Speaker 04:
analysis of the position description.

[00:25:04] Speaker 04:
And I do want to talk about one more thing that the payment of administratively uncontrollable overtime or AUO also shows and helps explain the reason why Mr. Shea was not paid FLSA overtime.

[00:25:21] Speaker 04:
This overtime, AUO, is for employees with discretion to decide when to stay on duty.

[00:25:28] Speaker 04:
So it's not just extra money as Mr. Shea is suggesting.

[00:25:34] Speaker 04:
This is consistent with NCIS's understanding of the position, understanding of the overall character of the position, that Mr. Shea had this discretion, that he had leadership.

[00:25:46] Speaker 04:
He decided when to stay on duty and as team lead, he decided that for the entire team.

[00:25:52] Speaker 04:
NCIS does not allow non-exempt employees to decide how long to stay on duty.

[00:25:57] Speaker 04:
So his payment of 25% of his base salary as AUO overtime is part of the explanation of why NCIS decided to pay him AUO overtime and not FLSA overtime.

[00:26:12] Speaker 04:
So looking at the totality of this case, this case really boils down to a position description with duties that could be objectively reasonable, reasonably interpreted as exempt,

[00:26:26] Speaker 04:
And then a review process to make sure that that position description accurately verifies what the employee is doing.

[00:26:33] Speaker 04:
And this satisfies the statute.

[00:26:35] Speaker 04:
It shows good faith.

[00:26:37] Speaker 04:
It shows reasonable grounds.

[00:26:38] Speaker 04:
And it satisfied the Court of Federal Claims.

[00:26:40] Speaker 04:
So we asked the court to affirm the Court of Federal Claims.

[00:26:48] Speaker 01:
Any further questions from the bench?

[00:26:52] Speaker 01:
No.

[00:26:54] Speaker 01:
OK, thank you.

[00:26:55] Speaker 01:
Thank you, Your Honor.

[00:26:57] Speaker 01:
I think you have some time left on rebuttal.

[00:27:00] Speaker 01:
Mr. Rosenthal, please proceed.

[00:27:02] Speaker 00:
Thank you, Judge Prost.

[00:27:04] Speaker 00:
I'd like to... We've talked a lot about 2007, but let's kind of ignore that for now and just talk about July 1, 2014, which is the first day of the relevant time period here, taking into account the statute of limitations.

[00:27:18] Speaker 00:
The fact is we simply don't know on that date why this agency thought it was appropriate not to pay this employee time and a half overtime pay.

[00:27:27] Speaker 00:
We do not know what steps the agency had taken at that time or for the next couple years before we filed the complaint to check whether it was complying.

[00:27:37] Speaker 00:
And one fact we haven't mentioned yet is we don't even know which of the exemptions to the FLSA the agency thought applied to this position at that time.

[00:27:47] Speaker 00:
And so we think that there's simply not enough evidence to meet that statutory burden.

[00:27:54] Speaker 00:
I'd like to talk a little bit about the position description because there's been a lot of focus on that.

[00:28:01] Speaker 02:
Can I just interrupt a minute?

[00:28:03] Speaker 02:
I just wanted to hone in on that last statement where you said there's just not enough evidence.

[00:28:08] Speaker 02:
Do you agree that this is an evidentiary question that we're reviewing here and whether the record supports the conclusion?

[00:28:17] Speaker 00:
Well, I think it's actually a problem that the trial court didn't apply the right legal test.

[00:28:23] Speaker 00:
It didn't look and focus on what happened.

[00:28:27] Speaker 02:
I'm sorry.

[00:28:28] Speaker 02:
Can I just interrupt again?

[00:28:29] Speaker 02:
It's hard to do this over the phone.

[00:28:31] Speaker 02:
But I know you want to make that argument because you get a better standard of review.

[00:28:36] Speaker 02:
But throughout your presentation, you've been talking about how there's not evidence to show the agency's reasoning and things like that, which sounds to me very much like an evidentiary argument, not a legal argument.

[00:28:49] Speaker 02:
So if you're making the legal argument,

[00:28:52] Speaker 02:
say what the legal error is and point to me specifically in the trial court's opinion where you think it recited an incorrect legal standard.

[00:29:04] Speaker 02:
Sure.

[00:29:05] Speaker 00:
So the legal error is that the court did not apply the requirement that the employer has to show that the after omission giving rise to the action was had a reasonable

[00:29:19] Speaker 00:
grounds and good faith.

[00:29:20] Speaker 00:
I'm sorry.

[00:29:23] Speaker 02:
I don't mean to be argumentative.

[00:29:24] Speaker 02:
That's just parroting the statute.

[00:29:26] Speaker 02:
The trial court parroted the statute, too.

[00:29:29] Speaker 02:
So if we're just talking about reciting the proper statutory language, then I don't see any legal error in the trial court's decision.

[00:29:38] Speaker 02:
If we're then going on and saying whether the trial court applied it correctly and made proper factual findings out of it, then we're in evidence world, aren't we?

[00:29:48] Speaker 00:
Sure.

[00:29:48] Speaker 00:
And I apologize.

[00:29:50] Speaker 00:
You're right.

[00:29:51] Speaker 00:
I hadn't completed the thought, which was that that language has been interpreted to mean that a court has to look, has to apply a retrospective analysis to the pre-litigation conduct.

[00:30:03] Speaker 00:
So if we look at the court's opinion on Appendix 21, and I'm going to focus on the reasonable grounds portion.

[00:30:14] Speaker 00:
The court further finds that NCIS's decision had objectively reasonable grounds.

[00:30:21] Speaker 00:
NCIS relied on Mr. Shea's written position description when classifying his position as exempt.

[00:30:26] Speaker 00:
I think there's two ways to understand what the court is saying there.

[00:30:30] Speaker 00:
One is that the court was actually saying that back in 2007 and up until 2016,

[00:30:36] Speaker 00:
the court relied on the position description to make its decision.

[00:30:41] Speaker 00:
And if that's how you understand the opinion, then I think you're right.

[00:30:44] Speaker 00:
It's simply a factual issue, and that's wrong.

[00:30:47] Speaker 00:
The evidence simply does not support that conclusion.

[00:30:51] Speaker 00:
But the other way to look at it is that what I think the court meant is it was accepting the agency's evidence that it did actually look at the position description after the case was filed to make a determination.

[00:31:05] Speaker 02:
Where does it suggest that it's making a litigation onward look?

[00:31:12] Speaker 02:
It's just talking about the evidence that the agency presented, and it's even citing testimony from Ms.

[00:31:19] Speaker 02:
Cruz, who was testifying about the agency's practices prior pre-litigation.

[00:31:25] Speaker 00:
Well, no, actually.

[00:31:27] Speaker 00:
If you look at that testimony, what she's talking about is she says that after the case was filed, she looked at the position description,

[00:31:34] Speaker 00:
and thought that it supported the exempt decision.

[00:31:38] Speaker 00:
And she explains her basis for that.

[00:31:41] Speaker 02:
And she's very clear.

[00:31:44] Speaker 02:
Well, sure, she did not.

[00:31:45] Speaker 02:
I mean, that's conceded by the government, I think, that she did not specifically look at this position description before the litigation and make a determination.

[00:31:54] Speaker 02:
That wasn't what she was in there for completely.

[00:31:57] Speaker 02:
But didn't she testify about agency practices pre-litigation?

[00:32:04] Speaker 00:
She testified that she did not know whether those practices were applied to this position or whether there was... I'm sorry.

[00:32:12] Speaker 02:
That's not being responsive to my question.

[00:32:14] Speaker 02:
I agree.

[00:32:15] Speaker 02:
I mean, I understand that she did not specifically testify about this position, nor could she.

[00:32:22] Speaker 02:
But didn't she testify about pre-litigation practices?

[00:32:29] Speaker 00:
I think her testimony is a little unclear.

[00:32:31] Speaker 00:
She was asked about how NCIS

[00:32:33] Speaker 02:
uh... applies the act uh... i'd believe the question typically but how did it apply the act today uh... and what do you know i'm part can you point me a specific statement in the in the trial court's and in where it's uh... we are viewing the determination of whether there was a good date from the present time based upon the present understanding rather than at the time the decision was made uh... no i don't think there's that statement i think you have to look at what evidence

[00:33:02] Speaker 00:
it relied on and how it exerts.

[00:33:05] Speaker 02:
Okay.

[00:33:06] Speaker 02:
And then I mean, again, once we start talking about beyond the legal standard, you go back to evidence.

[00:33:12] Speaker 02:
So, you know, I'm not going to make you concede that this is an evidentiary question, but I'm pretty sure I see where it is.

[00:33:21] Speaker 00:
Yeah, like I said, I think there are a couple ways to understand the court's opinion.

[00:33:27] Speaker 00:
Either the court was simply wrong about what the evidence showed in terms of the pre-litigation aspect of it, or the court wasn't looking for pre-litigation evidence, which would be the wrong legal approach.

[00:33:42] Speaker 00:
And I think I agree with you that you could certainly look at it through that first lens.

[00:33:50] Speaker 00:
Um, although I tend to think the court was doing the latter, but I think that either way you look at it, um, the, the, uh, opinion should be reversed.

[00:34:04] Speaker 00:
Thank you.

[00:34:05] Speaker 01:
Uh, we thank both sides and the case is submitted.