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Ninth Circuit takes up Geo Group appeal over underpaid detainees

Private prison provider GEO Group tried to persuade a skeptical Ninth Circuit panel that paying immigrant detainees more than $1 a day to work would violate federal law.

SEATTLE (CN) — Can a for-profit prison pay immigrant detainees a dollar a day to do work it's obligated to perform under federal contract? A Ninth Circuit panel took up the issue Thursday, as GEO Group fought verdicts in two lawsuits totaling $23.2 million.

Florida-based GEO Group has operated the Northwest Detention Center in Tacoma, Washington, since 2005. But immigrant detainees hit the company with two lawsuits claiming it violates Washington state’s minimum wage laws by paying detained immigrant workers $1 a day for cleaning and cooking services that GEO is required to perform under its contract with ICE.

One of the lawsuits ended in October 2021 with a federal jury awarding a class of 10,000 detainees $17.3 million in back pay. Days later, a federal judge ordered GEO to pay $5.9 million for its use of detainee labor since 2005. Together, the decisions capped a four-year legal battle — until GEO Group appealed.

“This multibillion-dollar corporation illegally exploited the people it detains to line its own pockets,” Washington state Attorney General Bob Ferguson, who led the second lawsuit on unjust enrichment, said on Twitter. “Today’s victory sends a clear message: Washington will not tolerate corporations that get rich violating the rights of the people.”

On appeal Thursday, GEO attorney Michael Kirk questioned whether a federal detainee can be considered an employee based on precedent. Kirk told the panel that under Morgan v. McDonald, detainees who participate in a work program on a site operated by a detention center are not employees.

But U.S. Circuit Judge William Fletcher, a Bill Clinton appointee, noted that if the Ninth Circuit certified the question of whether GEO violated Washington state’s minimum wage law, the panel would be obligated to also certify the state's claim of unjust enrichment.

Undeterred, Kirk pointed to a recent en banc decision in Geo v. Newsom, which reversed California’s ban on for-profit detentions facilities because it would force the federal government to dramatically change its business of handling immigrants.

"The court made clear that whenever you have a situation involving inherently federal relations, the presumption against preemption does not apply,” Kirk said. “This is a federal detention facility that only the federal government can authorize. The relationship between GEO and the government is a federal contract. The relationship between GEO and the detainees is a quintessential federal relationship. GEO would have no relationship with the detainees but for the federal government.”

But arguing for Washington state, attorney Marsha Chien used the same case to undercut Kirk's argument.

“GEO is a for-profit company, and the general wage act is a general applicable law,” Chien said. “After the en banc decision in Newsom, those plain facts are dispositive of GEO’s statutory and constitutional arguments. On its very first page it states that federal contractors do not stand on the same footing as the federal government. In other words, GEO is not the federal government.”

Kirk also noted that in 1978 Congress set the pay rate of federal detainees at $1 per day and said two circuits have upheld the rates. “Holding any rate other than a $1.00 a day as permissible would create a circuit split here,” Kirk said.

Fletcher pointed out GEO's detainee work contract with the detention center allows the facility to pay more than a dollar a day. “And you’re saying that the contract then violates the statute?” Fletcher asked.

Kirk said, "It does," leading Fletcher to later say "I’m afraid, for me, that’s a loser of an argument."

Chief U.S. Circuit Judge Mary Murguia, a Barack Obama appointee pointed out GEO increased its wages after detainees held a hunger strike. Kirk answered that ICE had allowed the raise but added: "I would acknowledge that to the extent they paid more than $1 a day, it was inconsistent with what the statute clearly says.”

Arguing for the class, attorney Jennifer Bennett had a different take on the matter.

“GEO’s only argument on preemption is an argument of conflict preemption, but GEO is missing the fundamental ingredient of conflict preemptions, which is a conflict between state and federal law,” Bennett said. “Neither of the statues that GEO cites says anything at all about what a private contractor must pay its workers, detained or otherwise.”

“It turns out GEO is not violating federal law after all?” Fletcher asked.

“I believe there may be a strong argument that GEO is violating federal law and that it’s violating the Fair Labor Standards Act,” Bennett said. “But I do not think it is violating the laws that GEO has cited because those laws don’t apply.”

But Kirk’s final argument homed in on the legalities of hiring undocumented immigrants.

“Federal criminal law and GEO’s contract both prohibit GEO from employing undocumented immigrants as employees,” Kirk said. “So as a direct result of this case, the entire program has been suspended. And if that’s not an interference with federal operations, I don’t know what is.”

After noting some detainees have authorizations to work in the United States, Murguia, Fletcher and U.S. Circuit Judge Mark Bennett, a Donald Trump appointee, took the matter under submission.

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