Credit: Northfoto/Shutterstock.com

An appellate team representing three plaintiff firms is calling “radical and profoundly troubling” a Texas federal judge's contempt order against those firms for allegedly violating a nationwide injunction against the Obama-era overtime rule by filing a suit in New Jersey federal court a year ago.

Jenner & Block partner Matthew Hellman, co-chair of the firm's Supreme Court and appellate practice, on Tuesday asked the U.S. Court of Appeals for the Fifth Circuit to review the contempt order by U.S. District Judge Amos Mazzant of the Eastern District of Texas. Mazzant in March imposed the sanction on lawyers at Cohen Milstein Sellers & Toll, Outten & Golden, and Green Savits of Florham Park, as well as on their client, Carmen Alvarez.

“This appeal concerns the district court's extraordinary and concededly unprecedented use of the contempt power to dictate the legal arguments that a stranger to that court may advance in another federal court,” Hellman wrote in the opening brief.

The plaintiffs firms' appeal comes at a time when U.S. Attorney General Jeff Sessions and other Justice Department officials are railing against trial judges' use of nationwide injunctions and have argued that courts should limit injunctions to the parties to the action before them. U.S. Solicitor General Noel Francisco recently made the same argument to the U.S. Supreme Court in the government's defense of the Trump administration's travel ban in Trump v. Hawaii.

In November 2016, Mazzant granted a preliminary injunction sought by Nevada and a group of states that alleged that the Labor Department's overtime rule was unlawful. The judge determined that a nationwide injunction was appropriate and enjoined the Labor Department form implementing and enforcing the rule.

The plaintiff firms, on behalf of Alvarez and similarly situated individuals, last year sued Chipotle Mexican Grill in U.S. District Court for the District of New Jersey. The complaint sought compensation for unpaid overtime under the Fair Labor Standards Act provision for private damages suits. Alvarez alleged she met the requirements for compensation under the Obama-era overtime rule, which had a Dec. 1, 2016, effective date.

In their lawsuit, the lawyers acknowledged the Texas injunction but argued that, because Mazzant had not vacated the overtime regulations or stayed their effective date, the rule had taken effect and Chipotle was required to comply with it.

Chipotle, represented by Sheppard, Mullin, Richter & Hampton, Messner Reeves and Cantey Hanger, initiated a contempt action before Mazzant for alleged violation of the injunction. On March 19, the judge issued the contempt order and directed the law firms to pay Chipotle's attorney fees. He put his order on hold on May 1 pending the appeal to the Fifth Circuit.

The plaintiffs firms, Mazzant wrote, “sued to enforce the final rule in direct violation of the court's order. In doing so, they recklessly disregarded a duty owed to the court—the long-standing and elementary duty to obey its orders, including a nationwide injunction. In doing so, they pursued a claim that they should have known was unwarranted in fact or law.”

Mazzant found the plaintiffs firms “acted in privity” with the Labor Department, because the agency's legal arguments aligned with those of Alvarez, the Chipotle worker who sued in New Jersey.

Hellman called “extraordinary” the judge's “notion that the federal government is somehow in 'privity' with tens of millions of Americans—such that each could be held in contempt by the court below.”

“Under the district court's logic, every nationwide injunction against the federal government would apparently be binding, in personam, against each of the tens or even hundreds of millions of Americans that the relevant arm of the government purports to serve,” Hellman wrote. “All of those individuals would automatically be subject to the personal jurisdiction of the issuing court, such that each could be held in contempt and disciplined for perceived noncompliance.”

The three plaintiffs firms, Hellman told the Fifth Circuit, were “plainly entitled to make arguments in one court about the effect of a foreign court's order without fear of being punished or subjected to coercive mandates by that foreign court.”

Read more: