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BRUSSTAR v. SEPTA

June 23, 1986

CHARLES BRUSSTAR, on his own behalf and on behalf of all others similarly situated
v.
SOUTHEASTERN PENNSYLVANIA TRANSPORTATION AUTHORITY



The opinion of the court was delivered by: LUONGO

 This is an action by employees *fn1" of the Southeastern Pennsylvania Transportation Authority (SEPTA) to recover unpaid overtime wages allegedly due under § 7(a) of the Fair Labor Standards Act (FLSA), 29 U.S.C. § 207(a). Plaintiffs have moved for partial summary judgment on the issue of liability, contending that SEPTA, a political subdivision of the Commonwealth of Pennsylvania, is obligated to comply with the FLSA. For the reasons stated below, I will grant plaintiffs' motion.

 Under the FLSA, employees must be paid for time worked in excess of 40 hours per week at a rate of one and one-half times their normal pay rate. 29 U.S.C. § 207(a)(1). The statutory work week includes all time spent performing activities which "are an integral and indispensable part of the principal activities for which covered workmen are employed." Steiner v. Mitchell, 350 U.S. 247, 256, 100 L. Ed. 267, 76 S. Ct. 330 (1956).

 When the FLSA was passed in 1938, it specifically excluded states and their political subdivisions from its coverage. Since 1961, however, Congress has gradually broadened the FLSA's coverage. As amended in 1974, the FLSA imposes minimum wage and maximum hour requirements upon most public employers, specifically including states and their political subdivisions. See National League of Cities v. Usery, 426 U.S. 833, 836-39, 49 L. Ed. 2d 245, 96 S. Ct. 2465 (1976).

 In National League of Cities v. Usery, the Supreme Court decided that the Tenth Amendment prohibits application of the FLSA's wage and hour provisions to state employees engaged in traditional governmental functions. After a series of decisions narrowly construing this holding, e.g., Hodel v. Virginia Surface Mining & Reclamation Association, 452 U.S. 264, 69 L. Ed. 2d 1, 101 S. Ct. 2352 (1981); United Transportation Union v. Long Island Rail Road Co., 455 U.S. 678, 71 L. Ed. 2d 547, 102 S. Ct. 1349 (1982); EEOC v. Wyoming, 460 U.S. 226, 75 L. Ed. 2d 18, 103 S. Ct. 1054 (1983), the Supreme Court overruled National League of Cities in Garcia v. San Antonio Metropolitan Transit Authority, 469 U.S. 528, 53 U.S.L.W. 4135, 83 L. Ed. 2d 1016, 105 S. Ct. 1005 (1985). The majority opinion, in which five Justices joined, stated that "the attempt to draw the boundaries of state regulatory immunity in terms of 'traditional governmental function' is not only unworkable but is inconsistent with established principles of federalism." Id. at 4136.

 The pre-Garcia agreement between SEPTA and its employees provided for overtime compensation only after 45 hours of work. Certain hours spent performing work-related activities were not included in the computation of overtime. SEPTA recognizes that Garcia requires it to modify its compensation practices in accordance with the FLSA. The dispute between the parties concerns SEPTA's pre-Garcia liability. Plaintiffs contend that even before Garcia was decided the Third Circuit had held that operation of a local mass transit system was not a traditional state or local government function, and that a publicly owned transit authority was therefore subject to the FLSA. See Kramer v. New Castle Area Transit Authority, 677 F.2d 308 (3d Cir. 1982), cert. denied, 459 U.S. 1146, 74 L. Ed. 2d 993, 103 S. Ct. 786 (1983). Accordingly, plaintiffs claim they are entitled to unpaid overtime wages as of April 30, 1982, the date of the Kramer decision. They have moved for partial summary judgment on the ground that Kramer controls the question of SEPTA's liability. SEPTA, in opposing plaintiffs' motion, contends that Kramer was wrongly decided. SEPTA also argues that much of the Kramer opinion is dictum, and that the case is distinguishable.

 I note first that, contrary to SEPTA's apparent desire that I do so, I am not free to reconsider or reject the Third Circuit's holding in Kramer. Kramer remains the law of this circuit unless or until it is overruled. *fn2" I will therefore confine myself to the question of whether Kramer, as a matter of law, precludes SEPTA from arguing that it was exempt from the FLSA until the Supreme Court decided Garcia.

 In Kramer, the Third Circuit concluded that "the operation of mass transit systems 'is not among the functions traditionally performed by state and local governments.'" Kramer, 677 F.2d at 310 (quoting United Transportation Union v. Long Island Rail Road Co., 455 U.S. at 686). The court emphasized that local mass transit systems have historically been privately owned and operated. State involvement became common only after Congress passed the Urban Mass Transportation Act of 1964, 49 U.S.C. § 1601 et seq., which provided for federal assistance to state and local governments operating transportation systems. According to the Third Circuit, "the whole move away from private transit systems and into public systems was started and effected by the federal government which provided the financial support to allow the change-over to public transportation companies." Kramer, 677 F.2d at 310. Moreover, the federal government is actively involved, both financially and otherwise, in local mass transportation. The Third Circuit thus held that "the states are precluded from claiming, at this late date, that mass transit is a service which they traditionally provide." Id.

 SEPTA claims that the Third Circuit's broad language is dictum, and that Kramer stands only for the proposition that the New Castle Area Transit Authority was not performing traditional governmental functions. Thus, SEPTA contends, it must be given the opportunity to demonstrate that its role is different.

 I disagree with SEPTA's characterization of Kramer. The Third Circuit's holding was based on a broad perception of history, not merely on an analysis of the specific role and background of the New Castle Area Transit Authority. The whole concept of a "traditional governmental function" requires that a court not focus exclusively on the specific state entity but consider whether the activity is one in which states have historically been involved. According to the Supreme Court, the test of whether a federal regulatory scheme directly impairs the states' ability to perform integral functions depends upon a "generalized inquiry, essentially legal rather than factual." EEOC v. Wyoming, 460 U.S. at 240. See also United Transportation Union v. Long Island Rail Road Co., 455 U.S. at 685-90 (using a broad historical analysis as a basis for determining that operation of an interstate railroad is not a traditional state activity). The Third Circuit's general conclusions concerning state involvement in local mass transportation are not dicta, but essential elements of its decision.

 In light of Kramer's expansive language, I believe that a fact-specific inquiry into SEPTA's background is inappropriate. In order to complete the record, however, the parties have at my suggestion submitted stipulations of fact concerning the history of SEPTA and of local mass transportation in southeastern Pennsylvania. *fn3" I have reviewed those stipulations and conclude that, even if details concerning a specific state instrumentality were relevant, SEPTA has not presented evidence which would distinguish this case from Kramer. According to the parties' stipulations, local mass transit systems in southeastern Pennsylvania were privately owned and operated until 1968, when SEPTA acquired the Pennsylvania Transportation Company. The parties agree, however, that Pennsylvania state and local governments have been involved in local mass transportation since the mid-nineteenth century, through construction of facilities and provision of subsidies, equipment and planning assistance. The federal government has contributed between 19 and 38% of SEPTA's yearly operating subsidies since 1975, and has granted SEPTA approximately $865 million in capital funds since 1964. See Stipulation of Uncontested Facts Submitted by the Plaintiff, paras. 7-11.

 SEPTA claims its scope of operations and its long history of local government involvement distinguish it from the New Castle Area Transit Authority. In addition, SEPTA stresses that the federal government's only role in southeastern Pennsylvania's local mass transportation systems has been as a limited funding source.

 As plaintiffs contend, however, similar evidence and arguments were before the Third Circuit when it decided Kramer. In support of their position, plaintiffs have submitted two affidavits which were filed in Kramer. The affidavit of John A. Christofer, General Manager of the New Castle Area Transit Authority, stated that the Authority was created by the municipality of New Castle in 1958 and received no federal funding until 1979-80. The affidavit of Herbert J. Scheuer, Executive Director-Administration of the American Public Transit Association, set forth a detailed history of state and local government involvement in mass transportation, beginning in the early 1900s. The Third Circuit cited the Scheuer affidavit as authority for several factual assertions. Kramer, 677 F.2d at 309-10. Nevertheless, the court held that "the state involvement in local transit systems, increasing with more systems coming under state control in recent years, does not alter the 'historical reality' that the operation of mass transit systems" is not a traditional governmental function. Id. at 310.

 This statement, in my view, disposes of SEPTA's factual arguments and mandates entry of partial summary judgment in favor of plaintiffs. *fn4"

 Section 1292(b) provides, in pertinent part:

 
When a district judge, in making in a civil action an order not otherwise appealable under this section, shall be of the opinion that such order involves a controlling question of law as to which there is substantial ground for difference of opinion and that an immediate appeal from the order may materially advance the ultimate termination of the litigation, he shall so state in writing in such order.

 Although the question of Kramer's effect upon this case is a controlling question of law, I cannot conclude that there is substantial ground for difference of opinion. Clearly, opinions may and do differ as to whether the holding in Kramer is desirable as a matter of social policy. I can perceive little ground, however, for questioning either that Kramer governs this case or that it is consistent with Supreme Court precedent. See United Transportation Union v. Long Island Rail Road Co., 455 U.S. 678, 71 L. Ed. 2d 547, 102 S. Ct. 1349 (1982) (operation of a railroad in interstate commerce is not a traditional governmental function). See also Garcia, 53 U.S.L.W. at 4142; Dove v. Chattanooga Area Regional Transportation Authority, 701 F.2d 50 (6th Cir. 1983); Alewine v. City Council, 699 F.2d 1060 (11th Cir. 1983) (relying on Kramer in holding that public mass transit is not a traditional governmental function), cert. denied, 470 U.S. 1027, 105 S. Ct. 1391, 84 L. Ed. 2d 781 (1985); Joiner v. City of Macon, 627 F. Supp. 1532, 1536 (M.D.Ga. 1986) ("even after the Supreme Court's decision in National League, the federal appellate courts . . . and the U.S. Department of Labor regulations . . . consistently applied FLSA to publicly owned mass transit systems."). Accordingly, I will deny SEPTA's request for certification under § 1292(b).

 ORDER

 This 23rd day of June, 1986, it is

 ORDERED that:

 1. Plaintiffs' Motion for Partial Summary Judgment is GRANTED;

 2. Defendant's Request for Certification of this Order as immediately appealable under 28 U.S.C. § 1292(b) is DENIED.

 APPENDIX A

 STIPULATION OF FACTS

 The Plaintiffs and the Defendant, Southeastern Pennsylvania Transportation Authority ("SEPTA" or the "Authority"), by their undersigned attorneys, stipulate and agree, for purposes of this litigation only, to the following facts ...


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