[00:00:00] Speaker 03: How do I say your name? [00:00:01] Speaker 03: Is it Cruiser? [00:00:02] Speaker 00: Yes, Cruiser, Your Honor. [00:00:03] Speaker 00: Ms. [00:00:03] Speaker 03: Cruiser, please proceed. [00:00:06] Speaker 00: May it please the court. [00:00:07] Speaker 00: The trial court erred by invalidating the OPM regulation 551.42383, relying on this court's decision in Billings. [00:00:16] Speaker 00: There are several reasons why this decision was an error. [00:00:19] Speaker 00: First, it is unclear that Billings should apply here. [00:00:21] Speaker 00: Second, Billings does not require that OPM regulations be identical to Department of Labor regulations, contrary to the trial court's reasoning. [00:00:30] Speaker 00: Third, there are adequate justifications for any difference between the two regulations. [00:00:35] Speaker 00: Now, contrary to how the trial court and DOE characterized the OPM regulation, it does not exclude all overtime for entry level trainees. [00:00:43] Speaker 02: We are talking about a very... How do you contend that Billings does not apply? [00:00:48] Speaker 00: Because the situation between the regulations in this case and in Billings is not the same. [00:00:54] Speaker 00: In Billings, the Department of Labor regulations were legislative rules that were promulgated pursuant to its regulatory authority. [00:01:02] Speaker 00: But here, the Department of Labor regulation is an interpretive guideline. [00:01:07] Speaker 00: By its own terms, it does not have binding force. [00:01:10] Speaker 00: It's supposed to be a practical guide for employers and employees as to the Department of Labor's [00:01:16] Speaker 00: enforcement positions. [00:01:17] Speaker 03: I have a kind of a dumb question, so bear with me while I catch up. [00:01:23] Speaker 03: The Department of Labor regulation that you're talking about is 785.2 and 785.29? [00:01:31] Speaker 03: Are these are 27? [00:01:38] Speaker 03: Are these the ones that you're talking about? [00:01:41] Speaker 00: Yes, Your Honor. [00:01:42] Speaker 00: 29 CFR 785.2 is where it states that these Department of Labor regulations are a practical guide. [00:01:52] Speaker 00: And then the Department of Labor regulation that DOE asserts can contradict the OPM regulation is 29 CFR 785.27. [00:02:01] Speaker 03: 0.27 and then there's a 0.32, right? [00:02:06] Speaker 00: Yes. [00:02:06] Speaker 00: And then the Department of Labor has [00:02:09] Speaker 00: Two other statements that discuss training. [00:02:14] Speaker 00: 785.31 talks about special situations where attending lectures and training sessions is not counted as hours of work if it's like a program of instruction for courses from an independent institution of learning. [00:02:30] Speaker 03: That's 3.1. [00:02:31] Speaker 03: And then 785.32 is apprenticeship training? [00:02:33] Speaker 00: Yes. [00:02:34] Speaker 00: That one talks about... OK. [00:02:35] Speaker 03: I understand what you're talking about. [00:02:37] Speaker 03: My question to you is, [00:02:38] Speaker 03: Were any of these adopted through notice and comment rulemaking? [00:02:42] Speaker 00: I do not believe so, Your Honor. [00:02:43] Speaker 00: They're part of the Department of Labor's interpretive policy guidelines. [00:02:47] Speaker 00: So it's a different situation than in Billings. [00:02:49] Speaker 03: So 785.32 was not through notice and comment rulemaking. [00:02:54] Speaker 03: It was just an assertion of interpretive power? [00:02:58] Speaker 00: Yes. [00:02:59] Speaker 00: By their own terms, in section 85.2, it states that [00:03:05] Speaker 00: These are meant to, this chapter here is meant to inform the public of the position. [00:03:10] Speaker 03: I'm not asking you what it states. [00:03:12] Speaker 03: I'm asking you what process it was used for it to come into existence. [00:03:16] Speaker 00: It is my understanding it was not notice and comment rulemaking. [00:03:19] Speaker 03: For all of these, the ones at issue, these Department of Labor rules, they did not go through notice and comment rulemaking. [00:03:25] Speaker 00: Yes, that's my understanding, Your Honor. [00:03:27] Speaker 03: Okay. [00:03:27] Speaker 03: And so as such, you're saying what? [00:03:31] Speaker 03: Because your government brief is extremely sparse on this. [00:03:34] Speaker 03: I mean, you have a little more on the gray brief, but you have literally less than a full paragraph in the entire blue brief on this interpretive versus legislative rules. [00:03:43] Speaker 03: And you don't say the single case of any kind. [00:03:45] Speaker 03: So, what is it you would like for me, how am I supposed to understand this argument? [00:03:51] Speaker 03: What is the argument you're making? [00:03:53] Speaker 03: Why does it matter if these are, first of all, you don't even tell me in the blue brief clearly that these regulations [00:04:01] Speaker 03: You point to the word interpretive in the regulation itself. [00:04:05] Speaker 03: But my understanding of interpretive versus legislative rules is it's just about the process, right? [00:04:10] Speaker 03: It's 553. [00:04:10] Speaker 03: It's the APA, correct? [00:04:12] Speaker 03: Yes, Your Honor. [00:04:13] Speaker 03: OK. [00:04:14] Speaker 03: So you don't give me any of that. [00:04:15] Speaker 03: You really don't explore this argument in your blue brief pretty much at all. [00:04:20] Speaker 03: So what is it from the blue brief? [00:04:23] Speaker 03: Tell me what I should have gleaned from your argument. [00:04:25] Speaker 00: Yes, Your Honor. [00:04:26] Speaker 00: Obviously, we're aware that Billings is binding on this panel, but it's our position that Billings creates a test [00:04:33] Speaker 00: for how to decide if an OPM regulation is valid if there is an asserted inconsistency with the Department of Labor regulation. [00:04:42] Speaker 00: So the second part of that is whether any difference between OPM's interpretation and the Department of Labor standard is required to effectuate the consistency of the application between federal and non-federal employees. [00:04:53] Speaker 00: So it would be our position that in Billings, the Department of Labor standard that was being used was a legislative [00:05:00] Speaker 00: rule that had gone through a different process and therefore had more force. [00:05:04] Speaker 00: Whereas here, DOE would have OPM and the trial court have to hew to every single Department of Labor just interpretation of its policy, which is lowering OPM's regulatory authority, which it was given through the Fair Labor Standards Act to administer. [00:05:19] Speaker 01: And DOL itself is saying that doesn't have the force of law. [00:05:23] Speaker 01: It's not binding. [00:05:24] Speaker 00: Yes. [00:05:24] Speaker 00: The Department of Labor is just saying these are our enforcement positions. [00:05:27] Speaker 00: It's not the same as the OPM regulation, which [00:05:30] Speaker 00: went through a more stringent process to become a binding regulation. [00:05:34] Speaker 00: So the trial court's position is having OPM have to mimic and hew to these Department of Labor guidelines, which have a different status of the Department of Labor regulation and billing. [00:05:48] Speaker 00: So billings can be distinguished. [00:05:50] Speaker 00: on that basis. [00:05:51] Speaker 00: We're not saying this panel can overturn or evase billions in some way. [00:05:55] Speaker 00: We're in that universe of this consistency, but the regulations does not have to be given the same. [00:06:02] Speaker 00: The Department of Labor pronouncement here does not have to be treated the same way as it was in billions. [00:06:06] Speaker 03: And just so I understand, is your entire argument on this legislative versus interpretive rule in your blue brief on page 8, that one paragraph on page 8, is it anywhere else in the brief? [00:06:23] Speaker 00: That is correct, Your Honor. [00:06:27] Speaker 01: The billings in this respect relied on language in the House report. [00:06:33] Speaker 01: That's correct, right? [00:06:35] Speaker 00: Yes, Your Honor. [00:06:36] Speaker 01: So how does your argument fit in with the language of the House report? [00:06:40] Speaker 01: The House report does refer to interpretive things, I think. [00:06:49] Speaker 01: Your understanding that to mean binding [00:06:52] Speaker 01: interpretations of the statute? [00:06:55] Speaker 00: Yes, Your Honor. [00:06:55] Speaker 00: The House report discusses consistency with the rulings, regulations, interpretations, and opinions of the Secretary of Labor. [00:07:04] Speaker 00: But that's not a statement that's found in the FLSA itself. [00:07:08] Speaker 00: So when this court created its test in billings, it didn't adopt, wholesale the House report statement. [00:07:16] Speaker 00: created a somewhat different test talking about the standards of the Department of Labor. [00:07:21] Speaker 00: So the House report does not have to be imported wholesale into this trial court's opinion, into Billings. [00:07:30] Speaker 00: It doesn't have to be seen as a one-for-one. [00:07:32] Speaker 00: Everything that's listed in the House report does not have to be what the court in Billings was talking about. [00:07:39] Speaker 00: erred in that respect by, I mean, the trial court discusses how, in a footnote, the trial court would not necessarily consider this legislative history to be useful for interpreting the FLSA. [00:07:50] Speaker 00: Because the FLSA does not talk about OPM and Department of Labor having to be identical. [00:07:55] Speaker 02: But in Billings' test, it seemed as if the decision relied in part on Chevron deference. [00:08:02] Speaker 02: Given Lope-Wright, does that concern you in any way in terms of the application of the Billings' test? [00:08:08] Speaker 00: Your Honor, the Billings tort did discuss Chevron in terms of the first part of its test, which is, is the OPM regulation a reasonable interpretation of the FLSA? [00:08:19] Speaker 00: So now that there's no Chevron deference, it certainly needs to be reformulated in a manner where [00:08:26] Speaker 00: This court would analyze the validity of OPM's regulation without applying Chevron deference, but I don't believe that's relevant to the argument that is on appeal here because the trial court did not [00:08:44] Speaker 00: invalidate OPM's regulation based on existence or a lack of Chevron deference. [00:08:51] Speaker 00: And our argument is not that Chevron deference is necessary for the OPM's regulation to be reasonable. [00:08:57] Speaker 00: It's reasonable as an interpretation of the FLFSA without Chevron deference. [00:09:02] Speaker 03: I think maybe I understood Judge Cunningham's question, I think, a little differently than you might have. [00:09:06] Speaker 03: I understood her question to be, in the Billings case, Billings itself, that case, [00:09:12] Speaker 03: it relied for its outcome on Chevron. [00:09:15] Speaker 03: And I think I understood her question. [00:09:17] Speaker 03: I might be wrong to be asking you, does that give us any room to reject Billings? [00:09:24] Speaker 03: Or maybe I'm saying a little more directly than she did. [00:09:27] Speaker 03: Is it possible that because the Billings decision itself relied on Chevron to get to the outcome it reached, that that would give us some more to chew on now that Chevron's out the door? [00:09:40] Speaker 00: Yes, Your Honor. [00:09:41] Speaker 00: I mean, I would agree with that. [00:09:42] Speaker 00: Because if part of Billions is looking first at the OPM regulation and its reasonableness, if the court now has a different instruction from the Supreme Court on how to do that analysis, then there's obviously space to be reformulating what Billions' test is stating. [00:10:01] Speaker 03: And so did I understand? [00:10:05] Speaker 03: I mean, I think what the government would like, but you know we can't do as a panel, is just kick villains. [00:10:09] Speaker 03: Just gone. [00:10:10] Speaker 03: Done. [00:10:10] Speaker 03: Stupid law. [00:10:11] Speaker 03: Out. [00:10:11] Speaker 03: Right? [00:10:12] Speaker 03: I mean, I think that's kind of what you would most like. [00:10:14] Speaker 03: And I think the trial court judge kind of said that in that footnote, which is why you wanted to bring it up and point it out to us. [00:10:21] Speaker 03: But assuming that we can't do that, because as a panel we certainly can, it would take the in-bank court. [00:10:26] Speaker 03: I'm not sure this case rises to that level of importance. [00:10:31] Speaker 03: But nonetheless, Billings asked this two-part test, right? [00:10:34] Speaker 03: Reasonableness on the first part. [00:10:36] Speaker 03: And then the second part is, how do you understand the second part? [00:10:41] Speaker 03: It's if there is an inconsistency. [00:10:43] Speaker 03: First off, do you agree there's an inconsistency here between the scope of what kind of training will be paid between private sector where it focuses on apprenticeship and public employees, federal employees, where it has both apprenticeship and entry level? [00:11:01] Speaker 03: Do you sort of concede that there is some possible difference in scope? [00:11:06] Speaker 00: Yes, Your Honor. [00:11:07] Speaker 00: There is a difference in scope. [00:11:08] Speaker 00: I wouldn't note. [00:11:09] Speaker 00: I don't believe it's as broad as what Dull and the trial court have cited. [00:11:13] Speaker 00: Fair enough. [00:11:13] Speaker 03: I agree. [00:11:14] Speaker 03: But the question I have for you is the second prong of billings, as I understand it, goes towards, is there a legitimate reason for that difference in scope? [00:11:23] Speaker 03: Does that sound fair? [00:11:24] Speaker 00: Yes, Your Honor. [00:11:25] Speaker 03: And I understood your primary argument in this case to be that the federal government is having to regulate under sort of [00:11:34] Speaker 03: following multiple sets of rules, right? [00:11:36] Speaker 03: There's FLSA, but there's also GETA, the training statute. [00:11:40] Speaker 03: And do I understand your first argument to be that because OPM, unlike the Department of Labor, was very focused on having to meet all the requirements of two different statutes, where the Department of Labor was only focused on FLSA, that that's a place where we should back off and let OPM sort of do what it thinks from a policy standpoint [00:12:02] Speaker 03: is correct under its delegated authority. [00:12:05] Speaker 03: Do I understand correctly your primary argument in your brief for why Billings doesn't apply here? [00:12:10] Speaker 00: Yes, Your Honor, that it satisfies the billing test. [00:12:13] Speaker 00: There's a reason why, to the extent it's significantly different, as Doe puts it, there's a reason why OPM has written its regulation to start out from this position that non-productive after-hours entry-level training time is not hours of work. [00:12:32] Speaker 00: That is more of a carve out than the OPM one, which sort of says, if you're satisfying all of these rules, then you don't have to count it as hours of work. [00:12:41] Speaker 00: Whereas the OPM regulation starts out with this subset of time that we're talking about is not compensable. [00:12:47] Speaker 03: And just so I'm clear, because I think they're going to stand up, you just characterized all of the overtime that they're seeking as non-productive. [00:12:54] Speaker 03: You had a lot of adjectives in there, and I'm betting they're going to disagree with those adjectives. [00:12:58] Speaker 03: But before you sit down, let me just ask you, those are all questions not before this court, right? [00:13:02] Speaker 03: Because this was only on summary judgment. [00:13:04] Speaker 03: regarding this question of law and it wasn't something like an interlocutory kind of scenario, right? [00:13:10] Speaker 03: Like all those questions about the particular hours and which category they fall into, whether they were productive or weren't productive, whether they, you know, that those factual questions were left for possible future resolution if necessary. [00:13:23] Speaker 03: Does that sound right? [00:13:23] Speaker 00: Yes, that's correct. [00:13:24] Speaker 00: The trial court has not made any determination of facts as to whether this would be [00:13:30] Speaker 00: Yes, in what categories of hours this all falls into. [00:13:34] Speaker 00: Although I don't think there's a dispute based on the complaint that we're only talking about after hours preparation and homework type time. [00:13:43] Speaker 00: I don't think it's in dispute. [00:13:45] Speaker 00: The trainees are paid for the time attending the course and scheduled activities that they have after hours that are scheduled in advance. [00:13:53] Speaker 00: I don't think there's a dispute. [00:13:54] Speaker 00: We are talking about homework preparation time that varies for each [00:13:59] Speaker 00: trainee, not the actual courses themselves or the activities that they perform as part of those courses. [00:14:07] Speaker 00: So we are talking about a very small subset of time. [00:14:09] Speaker 00: Now, whether those hours are covered by the FLSA, if this regulation is found invalid, or if it's productive, non-productive, or integral and indispensable, all of that, you're correct, Your Honor. [00:14:20] Speaker 00: The trial court has not made those factual determinations yet and reserved those for later in the case. [00:14:27] Speaker 03: OK, we'll restore your bottle time. [00:14:29] Speaker 03: Thank you, Your Honor. [00:14:36] Speaker 02: Mr. Rosenthal. [00:14:39] Speaker 04: Good morning, Your Honors. [00:14:43] Speaker 04: May it please the Court, Daniel Rosenthal for the plaintiff. [00:14:47] Speaker 04: As my opposing counsel conceded, there is a difference between the DOL and OPM regulations. [00:14:53] Speaker 04: OPM has created an exclusion to overtime pay. [00:14:56] Speaker 04: which does not have an analog in DOL regulations and does not have a basis in the statute. [00:15:01] Speaker 04: If a private sector employee were sent to a 12-week training, on-site intensive training. [00:15:06] Speaker 01: Does not have a basis in the statute? [00:15:08] Speaker 01: Are you contending that the LPM regulation is invalid under the statute? [00:15:15] Speaker 04: Yes. [00:15:15] Speaker 04: So we made arguments under both prongs of billings. [00:15:18] Speaker 04: So we argued that. [00:15:21] Speaker 04: There was a deviation from the Department of Labor regulations. [00:15:24] Speaker 04: But we also argued that the regulation wasn't a reasonable interpretation of the emphasis. [00:15:27] Speaker 01: Is that issue before us? [00:15:30] Speaker 04: I think it would be within the discretion of the court. [00:15:33] Speaker 04: The trial court resolved it solely on the prong of billings relating to deviations between the Department of Labor and OPM. [00:15:41] Speaker 01: How is it that the OPM regulations contrary to the statute? [00:15:46] Speaker 04: So we don't think there's any base in the statute to treat entry-level training [00:15:51] Speaker 04: as a distinct category. [00:15:53] Speaker 04: In Walling's Supreme Court case, the court noted that in the statute, section 214, it states that apprenticeships, a person attending an apprenticeship can receive less than minimum wage if they're granted a special certificate from the Department of Labor. [00:16:11] Speaker 04: And the Supreme Court said that the implication of that is in any other situation [00:16:15] Speaker 04: a trainee who is an employee is entitled to overtime pay. [00:16:20] Speaker 04: And we would also add to that if the training meets the definition of work under the FLSA, which under Tennessee COLE is physical or mental exertion under the control of the employer primarily for the employer's benefit. [00:16:34] Speaker 04: So I think the question is, is it fair to say that all entry-level trainings are going to be [00:16:41] Speaker 04: uh... not treated as work under that definition of work from from the list of what opium says it's not all entry-level they have created a blanket rule that applies to all entry-level training saying that uh... during an entry-level training anything outside of your regular working hours so the regular working hours are compensative compensable so we're talking primarily here about overtime work isn't in your forty hour work week [00:17:09] Speaker 02: Can you clarify whether or not there's no dispute regarding the type of hours we're looking at? [00:17:15] Speaker 02: Opposing counsel indicated it was really homework-like training that was in dispute. [00:17:20] Speaker 02: Is that all that's in dispute here? [00:17:22] Speaker 04: No, we don't agree with that. [00:17:24] Speaker 04: So our claim applies, certainly doesn't apply to the regular 40-hour work week because our client was paid for that. [00:17:32] Speaker 04: But we do allege that there were activities outside of that [00:17:35] Speaker 04: other than scheduled activities, more structured activities, in addition to homework and prep time. [00:17:42] Speaker 04: And that's covered by our claim as well. [00:17:45] Speaker 02: Structured activities, can you give me a little bit more on what you mean by that? [00:17:50] Speaker 04: Sure. [00:17:51] Speaker 04: So the course, and we're a little bit hampered because this is before discovery. [00:17:56] Speaker 04: There are also some sort of sensitivities about law enforcement. [00:17:59] Speaker 04: So we don't have a full record on this, to be quite frank. [00:18:01] Speaker 04: But our understanding is that, [00:18:04] Speaker 04: the course involves structured exercises. [00:18:08] Speaker 04: So it might be a practical exercise where the employee is given a scenario and needs to do some work on that. [00:18:19] Speaker 04: And it's not really homework in that it's occurring at a specific time, like in a structured setting. [00:18:27] Speaker 04: And so those are one of the types of activities that we understand may be at issue as well. [00:18:34] Speaker 04: homework and study I take to be sort of more along the lines of the employee can just decide when to do it, maybe decide how much to do of it. [00:18:42] Speaker 04: And not everything falls into that category here. [00:18:49] Speaker 04: So I'd like to talk about the colloquy about billings and whether it applies. [00:18:56] Speaker 04: And I think Chief Judge, [00:18:59] Speaker 04: Moore was correct. [00:19:00] Speaker 04: There's not a lot in the government's brief on this. [00:19:02] Speaker 04: And there was also nothing at all in the trial court on it. [00:19:05] Speaker 04: This argument wasn't raised there. [00:19:08] Speaker 04: But I don't think the difference between an interpretive rule and a notice and comment rule matters in this context. [00:19:13] Speaker 04: And we're not talking about the deal regulations directly having force of law as applied to federal government employees. [00:19:20] Speaker 04: That's not what this is about. [00:19:22] Speaker 04: This is about this court's holding in Billings interpreting the FLSA [00:19:29] Speaker 04: require OPM to maintain a certain consistency. [00:19:31] Speaker 01: But in Billings, there was a conflict in formal regulations adopted by Notice of Comment rulemaking, right? [00:19:38] Speaker 01: In Billings? [00:19:38] Speaker 01: Yes, there was. [00:19:40] Speaker 01: So this is different from Billings. [00:19:43] Speaker 04: It is different, but our contention is that that difference doesn't matter to the resultant. [00:19:46] Speaker 01: It seems kind of odd that a DOL non-binding policy statement would invalidate an OPM regulation that was adopted by Notice of Comment rulemaking pursuant [00:19:59] Speaker 01: to a statutory provision giving OPM the authority to adopt such regulations? [00:20:06] Speaker 04: We understand what the court said in Billings was that provision that you mentioned that gives OPM authority, 29 USC 204F, the court interpreted that to impose a limit on OPM's authority. [00:20:17] Speaker 04: And that limit was, OPM has a lot of leeway, but it needs to maintain a level of consistency, unless there's a good reason. [00:20:26] Speaker 04: to depart from what they refer to as the DOL standard. [00:20:30] Speaker 04: And so that when we're talking about regulation. [00:20:32] Speaker 02: I don't think you've answered Judge Dyck's question. [00:20:36] Speaker 04: Yeah, I think I was trying to get there. [00:20:38] Speaker 04: I apologize. [00:20:39] Speaker 04: So I think that what matters, the DOL regulation that we're talking about here is not a notice of comment. [00:20:46] Speaker 01: My question is, why would Congress want a non-binding policy statement by DOL to trump a formal regulation adopted by OPM? [00:20:56] Speaker 01: Consistency. [00:20:57] Speaker 04: The court said that Congress was concerned with consistency. [00:21:01] Speaker 04: So I think the question is whether the DOL rule at issue is something that's sort of governing the private workforce such that if it were not followed in the federal government, there would be an inconsistency. [00:21:12] Speaker 04: And I think that these regulations at issue here, even though they're not notice and comment rules, they are frequently applied by courts. [00:21:21] Speaker 04: They've been around for a long time. [00:21:23] Speaker 02: They're entitled to deference. [00:21:24] Speaker 02: If we disagree in this context that billings applies, what's your best argument for why you should win? [00:21:31] Speaker 04: Well, I think that if billing doesn't apply at all, you may need to remand since the lower court did apply billings. [00:21:39] Speaker 04: We would primarily be arguing that, and I think we would cite Loper-Brite, that the court should look at these regulations without deference. [00:21:51] Speaker 04: and determine whether they represent the best interpretation of the statute. [00:21:54] Speaker 03: And we don't think that they do. [00:21:58] Speaker 03: I don't see how the OPM regulation is an interpretation of the statute so much as delegated authority to gap fill. [00:22:07] Speaker 03: Loper addresses interpretations when statutes are ambiguous. [00:22:12] Speaker 03: Loper quite clearly carved out delegated authority. [00:22:16] Speaker 03: And there, your only challenge to me seems to be under the APA. [00:22:20] Speaker 03: I don't see how we do a reasonableness assessment, and if it's not ambiguity, [00:22:25] Speaker 03: but rather OPM gap-filling pursuant to expressly delegated authority from Congress. [00:22:31] Speaker 03: Can you please address that for me? [00:22:33] Speaker 04: Sure. [00:22:33] Speaker 04: So two points. [00:22:34] Speaker 04: So first of all, I don't think there's a gap. [00:22:39] Speaker 04: I think the FOCA requires payment for work. [00:22:42] Speaker 04: So the question is, is this work or not? [00:22:44] Speaker 04: And that's an interpretive question. [00:22:46] Speaker 01: But that was Congress expressly delegated to OPM the authority to interpret what is work, right? [00:22:54] Speaker 04: Not using the word interpret. [00:22:56] Speaker 04: They delegated to OPM the ability to administer the statute. [00:22:59] Speaker 04: And I think that matters under Lope or Bright, because the court there said that where there is an expressed delegation of interpretive authority to interpret a term, that's going to receive a certain level of deference. [00:23:10] Speaker 04: And I don't think we have that here. [00:23:11] Speaker 04: What we have is 204F, which is OPM may administer the FLSA. [00:23:18] Speaker 04: And we have this court's ruling in Billings interpreting what that section 204F means. [00:23:24] Speaker 04: and specifically that it places a limit on OKM's authority. [00:23:29] Speaker 04: I'm happy to talk more about our argument that this sort of does not [00:23:37] Speaker 04: match with the FOSA at all. [00:23:39] Speaker 03: I'm trying to understand if, for example, if I was leaning towards a conclusion that OPM justifiably has adopted a notice and comment [00:23:56] Speaker 03: rule in this situation that differs from the DOL interpretive rule, whether it's because I don't see a problem under the second prong of billings or whether it's because there's a difference between interpretive and legislative rules. [00:24:12] Speaker 03: It doesn't matter which one, right? [00:24:13] Speaker 03: Let's put that to the side. [00:24:14] Speaker 03: What's left? [00:24:15] Speaker 03: You're saying [00:24:16] Speaker 03: I think I understand you're saying Billings has two factors. [00:24:20] Speaker 03: One, it has to be reasonable. [00:24:21] Speaker 03: And second, it has to meet this other thing. [00:24:23] Speaker 03: So what is your argument then about reasonableness? [00:24:26] Speaker 03: And is it correct that the trial court didn't address that? [00:24:30] Speaker 04: That is correct, yes. [00:24:32] Speaker 04: So I think one option would be to remand on that. [00:24:36] Speaker 04: I think we lay out a relatively extended argument in our brief that this is not a reasonable interpretation. [00:24:43] Speaker 03: I think it's on page 32 to 33 of your brief. [00:24:46] Speaker 03: So go ahead. [00:24:47] Speaker 03: Why is it not a reasonable interpretation? [00:24:51] Speaker 04: I think it covers a few more pages than that. [00:24:54] Speaker 04: So we cite the Supreme Court cases that I mentioned earlier. [00:24:57] Speaker 04: Walling, which is a case that says that the FLSA does cover training if the trainee is an employee. [00:25:03] Speaker 04: And then Tennessee Cole, which talks about what does work mean under the FLSA. [00:25:08] Speaker 04: And we've also cited a bunch of cases from a number of circuits, [00:25:12] Speaker 04: around the country that say that applying those principles, training often is compensable. [00:25:17] Speaker 04: Employees often have to be paid for training. [00:25:21] Speaker 04: And there isn't really any precedent or any basis in the statute to say that entry-level training, specifically, is going to be treated differently and is going to be less... Can you help me understand your Wallings argument? [00:25:33] Speaker 03: Because didn't the Supreme Court and Wallings come out against paying? [00:25:37] Speaker 03: Yes. [00:25:39] Speaker 03: You're using a case that comes out the other way, but saying somehow, nonetheless, it supports your position? [00:25:44] Speaker 03: How so? [00:25:45] Speaker 03: Correct. [00:25:45] Speaker 04: I think there are two principal parts of walling. [00:25:48] Speaker 04: So the part that ultimately resolved the case is that the court said that the trainees in question were not employees at the time of the training. [00:25:56] Speaker 04: They simply weren't. [00:25:57] Speaker 04: They were applicants, but they weren't employed at all by the employer. [00:26:00] Speaker 04: And that's why the court says that there was no compensation there. [00:26:04] Speaker 04: But along the way, in getting to that result, the court talks about the language of the FLSA [00:26:09] Speaker 04: that implies that if a person is an employee, then they will be compensated for training. [00:26:16] Speaker 04: And that's the part I mentioned that says that in certain narrow circumstances, an apprentice need not be compensated. [00:26:22] Speaker 04: So the only reason to include that sort of carve out for apprentices with a special certificate is if the general rule is that trainees who are employees are entitled to compensation. [00:26:32] Speaker 03: And the apprentices carve out, you believe, has a grounding in the FLSA itself. [00:26:37] Speaker 03: Is that correct? [00:26:38] Speaker 04: It's 29 USC 214. [00:26:40] Speaker 04: It states that apprentices in certain cases may be paid less than minimum wage. [00:26:47] Speaker 04: So yeah, we rely mainly on Walling and Tennessee Cole and the lower circuit court cases interpreting them. [00:26:57] Speaker 04: We have also cited some cases that are clearly entry-level training. [00:27:02] Speaker 04: Those would be Harbor and McLaughlin. [00:27:04] Speaker 04: which are both Fourth Circuit cases, where the courts ruled for the plaintiffs in those cases, saying that that training did meet the definition of work under the FLSA. [00:27:14] Speaker 01: What is the language in billings that you're relying on that suggests that it should be extended to a non-binding policy statement? [00:27:24] Speaker 04: So I think the operative language, and my opposing counsel read it correctly, talked about consistency between OPM's interpretation and the Labor Department's standard. [00:27:33] Speaker 01: What page of Billings is this? [00:27:37] Speaker 04: I think it might be 1334, but I'm not 100% sure. [00:27:47] Speaker 04: So we think there is a Department of Labor standard here. [00:27:49] Speaker 03: Can I just ask? [00:27:50] Speaker 03: I'm sorry. [00:27:52] Speaker 03: I want to give you a chance to ask the next question, but I'm still back on this whole reasonableness thing. [00:27:56] Speaker 03: If I don't agree with you on Prom 2 of Billings, why do I even have to address reasonableness? [00:28:02] Speaker 03: We have delegated authority. [00:28:04] Speaker 03: If you want to challenge [00:28:07] Speaker 03: the validity of this regulation. [00:28:09] Speaker 03: Don't you have to formulate a 553? [00:28:12] Speaker 03: The OPM Reg is a legislative rule. [00:28:15] Speaker 03: Isn't your challenge an APA challenge? [00:28:19] Speaker 03: I don't know why I need to send this back for an assessment of reasonableness. [00:28:23] Speaker 03: If the government satisfied Prom 2, [00:28:29] Speaker 03: then there's no, for either reason, or it was interpreted versus legislative rule. [00:28:34] Speaker 03: I just don't, I don't understand how Billings applies anymore at that point and why I would send it back for reasonableness. [00:28:39] Speaker 03: You said I have to vacate, send it back for reasonableness. [00:28:41] Speaker 03: But if we say Billings doesn't apply for whichever reason, then isn't your only challenge an APA challenge to a legislative rule by OPM? [00:28:53] Speaker 04: I don't think so, your honor. [00:28:55] Speaker 04: So the defendant raised this regulation as part of its defense of the case. [00:28:59] Speaker 04: And I think we're entitled to say, whether it's under billings or another standard, that regulation isn't valid. [00:29:05] Speaker 04: And I would point the court to a Supreme Court case, Long Island Care versus Koch, 551 US 158. [00:29:12] Speaker 04: It was another FLSA case where the defendant invoked a regulation as part of its defense. [00:29:18] Speaker 04: In that case, it was a DOL regulation. [00:29:20] Speaker 04: And the court did consider the merits of that challenge within the context of the FLSA lawsuit, not an APA suit. [00:29:27] Speaker 04: So I think that we're entitled to challenge the regulation through our suit. [00:29:36] Speaker 03: Sorry, I really want you to get back to Judge Dyck's question. [00:29:38] Speaker 03: Sure. [00:29:40] Speaker 01: Go ahead. [00:29:41] Speaker 01: I'm looking for what the governing language is in Billings that tells us that it would apply to a non-binding policy statement. [00:29:50] Speaker 04: So I would point you to two things. [00:29:53] Speaker 04: So it's the language that I quoted. [00:29:56] Speaker 04: is at 1333 or 1334, the DOL standard language. [00:30:07] Speaker 04: And then the other thing I would point you to is the language. [00:30:10] Speaker 01: I'm sorry? [00:30:11] Speaker 01: What's the specific language? [00:30:12] Speaker 04: Oh, that there should be consistency between. [00:30:14] Speaker 04: The question is whether any difference is between OPM's interpretation and the Labor Department's standard is required to effectuate the consistency of application. [00:30:24] Speaker 04: So our submission here is that. [00:30:26] Speaker 01: That's kind of ambiguous as to whether it's talking about formal regulations or whether it was encompassing non-binding policy statements. [00:30:36] Speaker 04: I suppose you could find that inconsistency. [00:30:39] Speaker 04: Then I would look to the other thing that you mentioned earlier, which is the basis of the court's holding, which was the committee report, which says that Congress has instructed OPM to administer the FLSA in such a manner to ensure consistency with the meeting [00:30:55] Speaker 04: scope and application established by the rulings, regulations, interpretations, and opinions of the Secretary of Labor. [00:31:00] Speaker 04: I just don't think there's anything in Billings that suggests that the notice and comment status is relevant at all. [00:31:07] Speaker 04: I agree it's a distinction, but I don't see any base to say that it actually matters. [00:31:12] Speaker 01: But don't you think it's kind of odd that a non-binding policy statement by one agency would trump a formal regulation adopted by another? [00:31:22] Speaker 04: I think that Congress was concerned with consistency. [00:31:25] Speaker 04: So whether it's binding or non-binding, if the private sector is being governed by a particular standard, they wanted the federal government to generally also be governed by that same standard. [00:31:37] Speaker 04: I believe my time has expired. [00:31:41] Speaker 03: Happy to answer any further questions. [00:31:42] Speaker 03: Let me just ask. [00:31:42] Speaker 03: Judge Cunningham asked the government whether Loper has any impact on this case. [00:31:48] Speaker 03: I mean, what if any impact does the fact that Chevron deference doesn't exist anymore have on this case? [00:31:59] Speaker 04: Sure. [00:32:00] Speaker 04: So I think that I agree with a lot of what my opposing counsel said about that, which was that it doesn't affect the prong of billings that we've been talking about focusing on, the consistency prong, because that was this court interpreting 204F [00:32:17] Speaker 04: which is the provision granting authority to OPM, and interpreting it to place a limit on OPM's authority. [00:32:24] Speaker 04: And I don't think that that interpretation has been disturbed in any way by Loper-Brite. [00:32:28] Speaker 02: Well, what about the first prong? [00:32:29] Speaker 02: Just looking at billings itself, and the fact that it does have at least some reliance on the Chevron standard, do you feel like this has any impact on whether or not we should be applying billings in this case given Loper-Brite? [00:32:44] Speaker 04: Sure. [00:32:44] Speaker 04: So I think that if the court doesn't [00:32:48] Speaker 04: So yeah, I understand billings have two parts. [00:32:50] Speaker 04: So the consistency part, which we've mainly been talking about, and then the reasonableness part. [00:32:54] Speaker 04: And I do think Loper-Brite affects the reasonableness part. [00:32:56] Speaker 04: And it heightens the burden on the government, because they no longer get the deference of being able to have any reasonable interpretation under Loper-Brite. [00:33:05] Speaker 04: So I certainly don't think it helps the government anyway. [00:33:07] Speaker 04: It's a ruling that heightens the burden under that part of billings, in my view. [00:33:14] Speaker 04: But as I said, I don't think it affects the consistency part of billings, [00:33:18] Speaker 04: is the one that our primary focus is on. [00:33:21] Speaker 03: So are you saying that the fact that Chevron has been jettisoned means that maybe the first prong of Billings, the reasonableness assessment, isn't the right standard any longer because the Billings decision just kind of imported that from the Chevron rubric? [00:33:38] Speaker 03: Is that what you're arguing? [00:33:39] Speaker 02: Correct. [00:33:40] Speaker 03: Correct. [00:33:41] Speaker 03: And so what is it that you think the standard is that we use for assessing the OPM regulation if it's not reasonableness? [00:33:48] Speaker 04: So I think under that prong, the question would be, I think it would be a similar inquiry, but it wouldn't be, you wouldn't be applying deference to OPM in doing that. [00:33:59] Speaker 04: So you'd look at the regulation and say, does this represent a, you know, correct interpretation of the statute, but without kind of deferring to the agency's view on that question. [00:34:11] Speaker 03: Okay, so back, interpretation of the statute. [00:34:13] Speaker 03: This is the part I'm still struggling with. [00:34:16] Speaker 03: Is the government's [00:34:18] Speaker 03: OPM regulation in this case, an interpretation of something or part of its delegated authority to administer the statute? [00:34:30] Speaker 04: Well, I think I would say that it's both. [00:34:32] Speaker 04: I think it's exercising its authority under 204F to administer the statute. [00:34:40] Speaker 04: But in doing so, I think it's interpreting what work means under the FLSA and how that applies to training. [00:34:45] Speaker 04: That's my understanding. [00:34:48] Speaker 04: And as I said earlier, I don't think that the language granting that authority to OPM is of the type that Loper-Brite said would give rise to deference, because it does not say in there that OPM shall have authority to interpret the statute. [00:35:02] Speaker 04: It does say administer. [00:35:04] Speaker 04: I think that makes a difference under Loper-Brite. [00:35:08] Speaker 03: Thank you. [00:35:09] Speaker 03: Restore the government's five minutes. [00:35:22] Speaker 00: Your Honors, there's a few things I just wanted to run through here that I would like to rebut. [00:35:27] Speaker 00: The first is the question of what types of training activities we're talking about. [00:35:33] Speaker 00: I'm looking at appendix page 17. [00:35:35] Speaker 00: There's a footnote in the trial court's decision that says plaintiff does not claim that the BFTC overtime involved, quote, productive work or that the allegedly uncompensated overtime activities occurred during regular working hours. [00:35:49] Speaker 00: Perhaps there's some factual question later as to what timing was actually happening or what they were doing. [00:35:55] Speaker 00: But the trial court was relying on that footnote stated in the trial court that I don't believe there's a [00:36:01] Speaker 00: a very forceful claim that this was all productive work or it was part of actual training events. [00:36:08] Speaker 00: But putting that aside, I would like to discuss the argument made by Doe that OPM's regulation is contradicting the FLSA in some way or is not reasonable under the FLSA. [00:36:20] Speaker 00: And as Your Honors noted, it's not a question of a statutory ambiguity. [00:36:27] Speaker 00: OPM has been delegated. [00:36:29] Speaker 01: Is that issue really before us at this point? [00:36:31] Speaker 00: Well, no, Your Honor, and I was going to note that as well, that that was really not part of this appeal. [00:36:36] Speaker 00: The trial court simply stated OPM's interpretation could be reasonable in the abstract and then moved on from it. [00:36:42] Speaker 00: The entire basis for the trial court invalidating this regulation was its over-reading of billings, I would say, and requiring a level of identicalness and consistency that billings actually rejects. [00:36:54] Speaker 03: Billings in sites that- So if we were to agree with you on this point that you're making, then is [00:37:01] Speaker 03: the result that we would vacate and remand to the trial court to assess whether it's reasonable to assess whether this is gap-filling, interpretive, whatever. [00:37:10] Speaker 03: Is that what you're saying the next step would be? [00:37:13] Speaker 00: No, Your Honor. [00:37:14] Speaker 00: This court should reverse the trial court because the trial court committed a legal error in invalidating the regulation. [00:37:22] Speaker 03: Well, vacating also achieves that. [00:37:27] Speaker 03: But you just said the trial court said OPMs could be reasonable but didn't decide the question of reasonableness. [00:37:35] Speaker 03: So don't we have to send it back for the trial court to assess that in the first instance? [00:37:42] Speaker 00: If OPM's regulation is [00:37:46] Speaker 00: valid than it would apply. [00:37:47] Speaker 03: The trial court determined it wasn't valid for one reason. [00:37:52] Speaker 03: You just admitted there's two independent reasons it could be invalid for, right? [00:37:56] Speaker 03: This is not both. [00:37:57] Speaker 03: It's not all or nothing. [00:37:59] Speaker 03: Your regulation is going to be deemed invalid if either of those two reasons exist. [00:38:03] Speaker 03: And you're saying the trial court only addressed one of the two reasons. [00:38:06] Speaker 03: They argued that they argued below the other reason as well. [00:38:09] Speaker 03: And you just said the trial court didn't decide it. [00:38:12] Speaker 03: So what do we [00:38:13] Speaker 03: What do we do? [00:38:14] Speaker 03: Don't we have to send it back and say, now go look at reasonableness? [00:38:20] Speaker 01: It's part of the confusion that this is a 1292B appeal and that the, if I recall correctly, the only issue that was certified under the 1292B appeal was the conflict issue. [00:38:33] Speaker 00: Yes, Your Honor, I think that's causing my difficulty here. [00:38:36] Speaker 01: That seems to me that your position, if I understand it, is that we should reverse on that one issue. [00:38:44] Speaker 01: But the other issue, as Chief Judge Moore said, is still open for the proceedings in the Court of Federal Claims, right? [00:38:55] Speaker 00: Yes, Your Honor, this is the government's interlocutory appeal on that issue. [00:39:00] Speaker 00: However, [00:39:02] Speaker 00: The trial court did not find it unreasonable. [00:39:06] Speaker 01: It doesn't address the issue. [00:39:09] Speaker 00: Yes, unfortunately the trial court didn't. [00:39:13] Speaker 00: Judge Schwartz just moved on to the second prong of billings. [00:39:15] Speaker 00: That was the entire basis for invalidating it. [00:39:18] Speaker 00: I would say that if that is an error. [00:39:20] Speaker 03: So you're not going to get everything you want, right? [00:39:23] Speaker 03: You have this Christmas list, and Santa's saying, pick one thing from the list. [00:39:27] Speaker 03: You can't get all of them. [00:39:29] Speaker 03: So if that's the case, then you've got to figure out. [00:39:32] Speaker 03: I guess I just want to ask you now, this reasonableness prong, I'm trying to figure out post-loper. [00:39:38] Speaker 03: Because the one thing I think Billings really did was pull in Chevron, and that's where it came up with the reasonableness concept. [00:39:46] Speaker 03: You're interpreting the word executive or whatever. [00:39:49] Speaker 03: Um, I don't know what you're doing here. [00:39:52] Speaker 03: Are you interpreting? [00:39:53] Speaker 03: Are you gap filling? [00:39:55] Speaker 03: I'm trying to understand what you're doing because I'm trying to understand the impact of the elimination of Chevron on this case. [00:40:05] Speaker 00: Yes, your honor. [00:40:05] Speaker 00: It's when, I mean, our position would be that it's the OPM regulation does not conflict with the FLSA in some way. [00:40:15] Speaker 00: It's not. [00:40:16] Speaker 00: against what the FLSA said. [00:40:17] Speaker 00: Again, if you're calling it an interpretation, is that the FLSA simply does not discuss trainees. [00:40:23] Speaker 00: It talks about employees. [00:40:25] Speaker 00: And that's where the walling case comes in. [00:40:26] Speaker 03: But the problem is it addresses work, right? [00:40:30] Speaker 03: And I guess the claim is this is an interpretation of what constitutes work. [00:40:34] Speaker 03: Is that accurate? [00:40:37] Speaker 03: I mean, I have no idea. [00:40:38] Speaker 00: I would agree that if the trainees are [00:40:44] Speaker 00: Obviously, the FLSA requires to be paid for overtime work. [00:40:48] Speaker 00: But it only covers that for employees. [00:40:50] Speaker 00: And the regulations are, I mean, the Department of Labor regulation is written from the idea that they are employees. [00:40:55] Speaker 00: So then I think there's just simply the FLSA does not address this topic. [00:40:59] Speaker 00: And OPM has been given the authority to. [00:41:01] Speaker 03: But you can't say entry levels are not employees. [00:41:03] Speaker 03: Entry levels are employees, right? [00:41:05] Speaker 00: Well, in this case, they may be legally employees of the federal government, but for FLSA purposes, they should be paid over time in the status of an employee. [00:41:15] Speaker 00: And I believe Walling distinguishes entry-level trainees who are in the position of students who are working for their own benefit and trainees who are doing work that is benefiting the employer. [00:41:29] Speaker 03: Here's what I'm struggling with and I need help before you sit down. [00:41:32] Speaker 03: I need to I need to figure out I know if we're vacating remanding I don't know I I don't want to leave the trial court without any sort of clue of what he or she is supposed to do next You know what I mean, and that's kind of where I'm at. [00:41:46] Speaker 03: I don't know Is is the next thing go back and think about reasonableness it what is the next thing and nobody decided reasonableness is reasonableness the right test anymore and [00:41:56] Speaker 03: I don't know. [00:41:57] Speaker 03: I don't. [00:41:58] Speaker 00: I think Your Honor was correct when just attempting to invalidate the regulation in general is more of an APA type problem. [00:42:07] Speaker 01: But that issue can be raised in this case, right? [00:42:11] Speaker 01: You don't have to bring a separate APA case. [00:42:15] Speaker 00: My understanding would be if this tort [00:42:18] Speaker 00: finds that the trial court erroneously invalidated the regulation based on the second part of Billings, then it would send it back to the trial court. [00:42:29] Speaker 00: And if the regulation is valid, then it would be developing all the factual issues. [00:42:34] Speaker 03: We're not saying the regulation is valid. [00:42:35] Speaker 03: We can't say the regulation is valid, because there's two ways to invalidate it. [00:42:38] Speaker 03: They allege both of them, and only one of them was decided below. [00:42:41] Speaker 03: And we only, as Judge Steick correctly pointed out, have interlocutory appeal authority over that one decided issue. [00:42:48] Speaker 03: We don't have the authority to go beyond that in this appeal. [00:42:52] Speaker 01: I'm puzzled as to why you're fighting the notion that the validity of the regulation on this other theory doesn't remain an appropriate subject for the trial court to resolve in further proceedings. [00:43:05] Speaker 00: All right, Your Honor. [00:43:06] Speaker 00: No, I do not disagree that the trial court would then be [00:43:10] Speaker 00: have to consider. [00:43:13] Speaker 00: But it's all part of the Billings test, is where I'm getting hung up. [00:43:18] Speaker 00: The trial court seemed to believe it. [00:43:21] Speaker 00: I think it's a favorable statement that it passed the first test of Billings in some way since he then moved on to the second part of Billings. [00:43:28] Speaker 00: So I'm not willing to say that the trial court just didn't consider it. [00:43:32] Speaker 03: So when there are a lot, you're not going to like this question. [00:43:35] Speaker 03: This is a hospital question, not a friendly one. [00:43:37] Speaker 03: So when there is a multi-part test, and it's really clear that you don't meet part three, I'm supposed to assume fact findings on part one and part two in favor of the government, even though the trial court didn't address them. [00:43:49] Speaker 00: I mean, I'm not going to dig a hole here where I'm not persuasive here. [00:43:58] Speaker 00: I don't want to go down an unpersuasive path here. [00:44:01] Speaker 00: So then I would say that what the court should do here is reverse on the second element of Billings. [00:44:08] Speaker 00: And we can discuss walling and the meaning of an employee and everything at the lower court. [00:44:14] Speaker 03: Then we'll likely see you back here again. [00:44:16] Speaker 00: You may see us again. [00:44:19] Speaker 00: In any event, the trial court erred. [00:44:22] Speaker 00: Following the trial court would make the Department of Labor essentially regulating over federal employees when billings does not require that result. [00:44:29] Speaker 00: Thank you. [00:44:30] Speaker 03: Absolutely. [00:44:31] Speaker 03: Thank both counsels. [00:44:32] Speaker 03: Casey, take it under submission.