source: Caselaw Access Project

author: LOHIER, Circuit Judge:

license: Public Domain

text:
    Kathleen MAKINEN, Jamie Nardini, Plaintiffs-Appellees-Cross-Appellants, v. CITY OF NEW YORK, Raymond W. Kelly, as Police Commissioner of the City of New York, Daniel J. Sweeney, individually and in his official capacity, Defendants-Appellants-Cross-Apppellees.

    Docket Nos. 16-973-cv(L), 16-1080-cv(XAP)
    August Term, 2016
    United States Court of Appeals, Second Circuit.
    Argued: March 9, 2017
    Decided: May 22, 2017

      Lisa F. Joslin, Gleason, Dunn, Walsh & O’Shea, Albany, NY, for Plaintiffs-Appel-lees-Cross-Appellants.
    Kathy Chang Park (Richard Dearing and Devin Slack, on the brief), for Zachary W. Carter, Corporation Counsel of the City of New York, New York, NY, for Defendants-Appellants-Cross-Appellees.
    Before: SACK, LIVINGSTON, and LOHIER, Circuit Judges.

       The Clerk of Court is directed to amend the caption as set forth above.

   LOHIER, Circuit Judge:

In this disability discrimination case we consider a provision of the New York City Human Rights Law (“NYCHRL”) that, as relevant to this appeal, defines the term “disability” in a' way that excludes alcoholics who are not “recovered” or “recovering” from the protection of the statute. See N.Y.C. Admin. Code § 8-102(16)(c). Plaintiffs Kathleen Makinen and Jamie Nardini brought suit under the NYCHRL and its New York State and federal counterparts alleging discrimination based on a mistaken perception that they were alcoholics. The City of New York and the individual defendants, former Commissioner Raymond W. Kelly of the New York City Police Department (“NYPD”) and NYPD Sergeant Daniel J. Sweeney, argued principally that the plaintiffs’ claims were barred by the plain text of the NYCHRL because the plaintiffs were not (and were not perceived to be) recovered or recovering alcoholics. On summary judgment and again on a post-trial motion after a jury verdict partly in favor of the plaintiffs, the United States District Court for the Southern District of New York (Carter, J.) held that individuals regarded as untreated alcoholics may state a claim under the NYCHRL because analogous claims are available under both the New York State Human Rights Law (“NYSHRL”), N.Y. Exec. Law § 290 et seq., and the Americans with Disabilities Act (“ADA”), 42 U.S.C. § 12101 et seq. The defendants appealed, urging certification of the question to the New York Court of Appeals.

In the absence of authority from New York courts, we cannot predict with confidence how the New York Court of Appeals would reconcile the broad, remedial purpose of the NYCHRL with the specific language of section 8-102(16)(c). Accordingly, we defer decision on this appeal and cross-appeal in order to certify the following question: “Do sections 8-102(16)(c) and 8-107(l)(a) of the New York City Administrative Code preclude a plaintiff from bringing a disability discrimination claim based solely on a perception of untreated alcoholism?”

BACKGROUND

Makinen and Nardini served as NYPD officers for several years, during which each was referred to the NYPD’s Counseling Services Unit (“CSU”). CSU offers treatment and rehabilitation for officers, struggling with substance abuse. Orice an officer is referred to CSU with alleged alcohol-related problems, a trained counselor conducts an intake interview and contacts references to gather information regarding the officer’s reported alcohol use. If an officer is diagnosed with an alcohol-related condition, CSU staff develop a personal treatment plan, potentially consisting of educational videos, counseling, Alcoholics Anonymous meetings, outpatient treatment, or inpatient treatment. An officer who refuses treatment is referred to the NYPD’s Medical Division, which may direct the officer to undergo treatment. That direction constitutes an order with which the officer must comply or face disciplinary action. The officer is entitled to challenge the disciplinary action in administrative proceedings by filing a grievance with the agency that oversees CSU or through an Article 78 proceeding. Otherwise, once an officer is diagnosed with an alcohol-related problem, receipt by CSU of subsequent evidence of alcohol consumption triggers a mandatory reassessment and, potentially, further treatment.

Officers Makinen and Nardini were referred to CSU by an ex-husband and an ex-boyfriend, respectively. Each received an alcohol-related diagnosis and was directed to undergo treatment. As it turned out, the parties agree, Makinen and Nardi-ni were not actually alcoholics. They filed suit in New York Supreme Court, claiming primarily that the defendants mistakenly perceived that they were alcoholics and discriminated against them on the basis of that perceived disability, in violation of the NYCHRL, NYSHRL, and ADA. The defendants removed the case to federal court and moved for summary judgment. The District Court granted partial summary-judgment in their favor, leaving for a jury trial 'both plaintiffs’ NYCHRL claims as well as Makinen’s NYSHRL and ADA claims. Makinen v. City of New York, 53 F.Supp.3d 676 (S.D.N.Y. 2014). A jury rejected Makineris State and federal claims, but rendered a verdict in favor of both Makinen and Nardini on their NYCHRL claims, awarding compensatory and punitive damages.

The defendants moved for a new trial and for judgment as a matter of law, arguing that the NYCHRL does not extend to untreated alcoholism. The District Court denied the motions in relevant part, Makinen v. City of New York, 167 F.Supp.3d 472 (S.D.N.Y. 2016), and the defendants appealed, arguing that (1) the NYCHRL does not protect an employee who is perceived to be an untreated alcoholic, (2) the District Court applied an incorrect adverse employment action standard, and (3) the evidence did not support Commissioner Kelly’s individual liability or the imposition of punitive damages against Sergeant Sweeney. In this opinion, we address only the first issue relating to untreated alcoholism, on which the plaintiffs’ NYCHRL claims depend.

DISCUSSION

Section 8-107(l)(a) of the NYCHRL prohibits employment discrimination based on an “actual or perceived ... disability.” N.Y.C. Admin. Code § 8-107(l)(a). The statute defines “disability” as “any physical, medical, mental or psychological impairment, or a history or record of such impairment.” Id. § 8-102(16)(a). “In the case of alcoholism,” however, the NYCHRL narrows the definition of “disability” so that it “shall only apply to a person who (1) is recovering or has recovered and (2) currently is free of such abuse.” Id. § 8-102(16)(c).

In view of section 8-102(16)(c), we consider whether a plaintiff may state a claim under section 8-107(l)(a) if she is perceived to be an untreated alcoholic. The defendants urge that the plain text of section 8-102(16)(c) forecloses such a claim, as only recovered or recovering alcoholics are defined as having a disability. Makinen and Nardini argue that the limitation in section 8-102(16)(c) applies only “in the case of alcoholism”—that is, only when a plaintiff in fact suffers from alcoholism, not when she is mistakenly perceived to be an alcoholic.

The original 1981 Committee Report accompanying the passage of what would become section 8-102(16)(c) explains that “only an individual who ‘is recovering and currently free of abuse’ ” is “entitled to the law’s protection.” 1981 N.Y.C. Legis. Ann. at 28. Under this description, an employer may take appropriate action under section 8-107(l)(a) against an employee it believes, rightly or wrongly, suffers from alcoholism but is neither recovered nor recovering (or is not “currently free of abuse”).

But this construction seems in tension with the New York City Council’s stated intention of affording plaintiffs who sue under the NYCHRL all of the protection guaranteed by comparable provisions of State and federal law. The City Council passed the Local Civil Rights Restoration Act of 2005 out of a concern that the NYCHRL had been “construed too narrowly to ensure protection of the civil rights of all persons covered by the law.” Local Civil Rights Restoration Act of 2005, N.Y.C. Local Law No. 85, at § 1 (Oct. 3, 2005) (“Restoration Act”). The City Council therefore provided as follows:

Interpretations of New York state or federal statutes with similar wording may be used to aid in interpretation of the New York City Human Rights Law, viewing similarly worded provisions of federal and state civil rights laws as a floor below which the City’s Human Rights law cannot fall, rather than a ceiling above which the local law cannot rise.

Id. The City Council also amended Administrative Code section 8-130 to emphasize the NYCHRL’s “uniquely broad and remedial purposes,” id. § 7, and more recently amended the section again to clarify its intent to foster jurisprudence “maximally protective of civil rights in all circumstances,” N.Y.C. Local Law No. 35, at § 1 (Mar. 28, 2016). We have understood the Restoration Act to create a “one-way ratchet” that requires us to construe the NYCHRL “more liberally” than its State and federal counterparts. Loeffler v. Staten Island Univ. Hosp., 582 F.3d 268, 278 (2d Cir. 2009) (quotation marks omitted); see also Albunio v. City of New York, 16 N.Y.3d 472, 477-78, 922 N.Y.S.2d 244, 947 N.E.2d 135 (2011) (requiring that the NYCHRL be construed “broadly in favor of discrimination plaintiffs, to the extent that such a construction is reasonably possible”).

The relevant State and federal counterparts in this case—the NYSHRL and ADA—treat alcoholism as an impairment that can form the basis of a disability discrimination suit. See McEniry v. Landi, 84 N.Y.2d 554, 558-59, 620 N.Y.S.2d 328, 644 N.E.2d 1019 (1994) (NYSHRL); Reg’l Econ. Cmty. Action Program, Inc. v. City of Middletown, 294 F.3d 35, 46 (2d Cir. 2002) (ADA), superseded by statute on other grounds, ADA Amendments of 2008, Pub. L. No. 110-325, 122 Stat. 3553. Both statutes also prohibit discrimination on the basis of a perceived impairment. See N.Y. Exec. Law § 292(21)(c); 42 U.S.C. § 12102(1)(C), (3)(A). But neither statute is limited to recovering or recovered alcoholics. See N.Y. Exec. Law §§'292(21)(a), 296(l)(a); 42 U.S.C. §§ 12102,12114.

On the one hand, as the plaintiffs argue, because the NYSHRL and ADA prescribe a floor below which employee protections may not fall, the NYCHRL should not be interpreted to exclude untreated alcoholics. On the other hand, we recognize that neither the NYSHRL nor the ADA contains a “similarly worded provision[ ],” Restoration Act § 1, comparable to the NYCHRL’s limitation on the definition of disability in the form of alcoholism. Insofar as the text of section 8-102(16)(c) specifically differs from that of its State and federal counterparts, we are arguably constrained by the text, since the “one-way ratchet,” Loeffler, 582 F.3d at 278, operates only “to the extent that such a construction is reasonably possible,” Albunio, 16 N.Y.3d at 477-78, 922 N.Y.S.2d 244, 947 N.E.2d 135. The defendants point us to Zakrzewska v. New School, where the New York Court of Appeals construed the “unambiguous” text of section 8-107 of the NYCHRL “to give effect to its plain meaning” even though the City law did not “match up” with State law. 14 N.Y.3d 469, 479, 902 N.Y.S.2d 838, 928 N.E.2d 1035 (2010) (quotation marks omitted). But Za-krzewska is somewhat inapposite, as it held that the NYCHRL’s plain language foreclosed an employer’s affirmative defense rather than a plaintiffs cause of action. See id. The decision therefore comported with the City Council’s support of employees under the “uniquely broad and remédial” NYCHRL. See Restoration Act § 7. No New York court decision of which we are aware, however, addresses either the specific question here or an analogous provision of the NYCHRL that on its face provides narrower protection for employees than is required under State or federal law.

CERTIFICATION

Second Circuit Local Rule 27.2 permits us to certify to the New York Court of Appeals “determinative questions of New York law [that] are involved in a case pending before [us] for which no controlling precedent of the Court of Appeals exists.” N.Y. Comp. Codes R. & Regs. tit. 22, § 500.27(a); see also N.Y. Const, art. VI, § 3(b)(9). “In deciding whether to certify a question, we consider: (1) the absence of authoritative state court interpretations of [the law in question]; (2) the importance of the issue to the state, and whether the question implicates issues of state public policy; and (3) the capacity of certification to resolve the litigation.” Georgitsi Realty, LLC v. Penn-Star Ins. Co., 702 F.3d 152, 158 (2d Cir. 2012) (quotation marks omitted). Here, each factor favors certification.

First, as we have explained, no State court has addressed whether sections 8-102(16)(c) and 8-107(l)(a) permit a plaintiff to bring a disability discrimination claim based solely on a perception that the plaintiff suffered from untreated alcoholism. This factor weighs heavily in favor of certification: “New York has a strong interest in deciding the issue certified rather than having the only precedent on point be that of the federal court, which may be mistaken.” Carney v. Philippone, 332 F.3d 163, 172 (2d Cir. 2003) (quoting Great N. Ins. Co. v. Mount Vernon Fire Ins. Co., 143 F.3d 659, 662 (2d Cir. 1998)).

Second, “the question identified for certification presents important issues of New York law and policy.” Doe v. Guthrie Clinic, Ltd., 710 F.3d 492, 497-98 (2d Cir. 2013) (quotation marks omitted). Both section 8-102(16)(c) and the Restoration Act reflect careful policy judgments. The former arguably seeks to protect only recovering alcoholics, while the latter seeks to ensure that employees with disabilities do not receive less protection under City law than they receive under State and federal law. A New York court should determine in the first instance which of these judgments ought to prevail in the event they conflict. See Chauca v. Abraham, 841 F.3d 86, 94 (2d Cir. 2016). The question presented also broadly affects the viability of employer-sponsored rehabilitation programs in New York, has practical ramifications for the NYPD in particular, and is likely to recur, see MacShane v. City of New York, No. 06-CV-06024, 2015 WL 1298423, at *22 (E.D.N.Y. Mar. 23, 2015).

Finally, if on certification the New York Court of Appeals determines that the plaintiffs cannot state a claim for relief based on a perception of untreated alcoholism, that decision would entitle the defendants to judgment as a matter of law and render moot the remaining issues in the defendants’ appeal.

CONCLUSION

For the foregoing reasons, we certify the following question to the New York Court of Appeals:

Do sections 8-102(16)(c) and 8-107(l)(a) of the New York City Administrative Code preclude a plaintiff from bringing a disability discrimination claim based solely on a perception of untreated alcoholism?

In certifying this question, we understand that the New York Court of Appeals may reformulate or expand the certified question as it deems apprdpriate.

It is hereby ORDERED that the Clerk of this Court transmit to the Clerk of the New York Court of Appeals a certificate in the form attached, together with a copy of this opinion and a complete set of briefs, appendices, and the record filed by the parties in this Court. This panel will retain jurisdiction to decide the case once we have had the benefit of the views of the New York Court of Appeals or once that court declines to accept certification. Finally, recognizing that the defendants have indicated their willingness to expedite proceedings before the New York Court of Appeals, see N.Y. Comp. Codes R. & Regs. tit. 22, § 500.17(b), we order the parties to bear equally any fees and costs that may be requested by the New York Court of Appeals. Decision is RESERVED.

CERTIFICATE

The foregoing is hereby certified to the Court of Appeals of the State of New York pursuant to Second Circuit Local Rule 27.2 and New York Codes, Rules, and Regulations title 22, § 500.27(a), as ordered by the United States Court of Appeals for the Second Circuit.

      . The jury necessarily rejected the defendants’ affirmative defense that the plaintiffs were alcoholics and therefore unable to perform the essential duties of their jobs. See N.Y.C. Admin. Code § 8-107(15)(b).

      . The plaintiffs cross-appeal the partial dismissal of their State and federal claims, including Makinen’s claim under the Fair Labor Standards Act, 29 U.S.C. § 201 et seq. We reserve decision on the issues that are the subject of the cross-appeal pending any response from the New York Court of Appeals on the certified issue.

      . We recognize that both the NYSHRL and the ADA require a plaintiff to demonstrate as an element of her claim that she was able to perform the essential duties of her job with or without a reasonable accommodation. See Jacobsen v. N.Y.C. Health & Hosps. Corp., 22 N.Y.3d 824, 834, 988 N.Y.S.2d 86, 11 N.E.3d 159 (2014) (NYSHRL); McMillan v. City of New York, 711 F.3d 120, 125 (2d Cir. 2013) (ADA). But under the NYCHRL, whether an employee can perform the “essential duties” of her job arises only as an affirmative defense available to the employer. Jacobsen, 22 N.Y.3d at 835, 988 N.Y.S.2d 86, 11 N.E.3d 159. Accordingly, the question here is whether a plaintiff who sues under the NYCHRL can establish a prima facie case of discrimination based only on a perception of untreated alcoholism and an employment action causally linked to that perception.


author: McKEE, Chief Judge.

text:
    UNITED STATES of America EX REL. Andre PETRAS, Appellant v. SIMPAREL, INC., David Roth, Ron Grilli, Log Logistics, Monterp Enterprises, a Canadian Corporation f/k/a Ron Cacchione LLC
    No. 15-4020
    United States Court of Appeals, Third Circuit.
    Submitted Pursuant to Third Circuit L.A.R. 34.1(a) September 20, 2016 .
    (Opinion Filed: May 18, 2017)

      ROSS BEGELMAN, MARC M. OR-LOW, Begelman, Orlow & Melletz, 411 Route 70 East, Suite 245, Cherry Hill, N.J. 08034, Counsel for Appellant
    DIANE KREBS, Gordon Rees Scully Mansukhani, LLP, One Battery Park Plaza, 28th Floor, New York, New York 10004, Counsel for Appellee Simparel, Inc.
    PAUL H. SHUR, MARK SKOLNICK, Platzer, Swergold, Levine, Goldberg, Katz & Jaslow, LLP, 475 Park Avenue South, 18th Floor, New York, New York 10016, Counsel for Appellees David Roth and Ron Grilli
    Before: McKEE, Chief Judge, HARDIMAN and RENDELL, Circuit Judges.

      . Judge McKee concluded his term as Chief of the U.S. Court of Appeals for the Third Circuit on September 30, 2016.

   OPINION OF THE COURT

McKEE, Chief Judge.

Andre Petras appeals the District Court’s dismissal of his reverse False Claims Act suit against his former employer, Simparel, Inc.; David Roth, Simparel’s founder and Chief Technology Officer; and Ron Grilli, Simparel’s Chief Executive Officer (collectively, “the Simparel defendants”).

Petras initially alleged a reverse FCA claim and retaliation claim under the False Claims Act against the Simparel defendants, as well as a conspiracy claim against all of the defendants. The District Court dismissed the reverse FCA claim without prejudice, but the remaining conspiracy and retaliation claims were dismissed with prejudice. Petras reasserted the reverse FCA claim against the Simpar-el defendants in a Second Amended Complaint, which the District Court again dismissed.

On appeal, Petras challenges the District Court’s dismissal of both Complaints. For the reasons that follow, we will affirm.

I.

A. Background

Simparel sells proprietary software to apparel manufacturing companies. Simpar-el’s original investor was L Capital, a venture capital firm licensed by the Small Business Administration, a federal agency. The SBA provided over $90 million to L Capital through the purchase of certain securities, over $4 million of which was invested in Simparel. In return, L Capital received preferred shares of Simparel representing 50.1% of that entity. That amount was later reduced to 37.88% after the firm sold some shares.

The Amended and Restated Certificate of Incorporation (“the Certificate”) specified two conditions that would require Sim-parel to pay preferred shareholders, such as L Capital, accrued dividends. The Certificate provided for such payments if Sim-parel’s Board exercised its discretion to pay the dividends or if Simparel underwent an involuntary or voluntary liquidation, dissolution, or windup.

From 2007 to 2012, Petras was Simpar-el’s Chief Financial Officer, David Roth was CTO, and Ron Grilli was its CEO. The SBA was appointed as receiver of L Capital in 2012 after Simparel failed to comply with its SBA funding agreement. Petras contends that this failure resulted in the SBA becoming a preferred shareholder in Simparel, thus triggering the Certificate’s provisions and entitling the SBA to accrued dividends as a direct shareholder.

Petras does not allege that the Simpar-el Board ever declared that dividends would be paid, or that Simparel underwent liquidation, dissolution, or windup. He instead claims that the Simparel defendants engaged in certain fraudulent conduct—to which he objected—in order to avoid paying the SBA these contingent dividends. For example, he contends that the Simparel defendants engaged in tactics such as hiding Simparel’s deteriorating financial condition from the SBA, failing to hold board meetings to review quarterly results, and neglecting to send Simparel’s financial statements to the SBA, as well as other tactics. According to Petras, the Simparel defendants did this to prevent the SBA from placing Sim-parel into involuntary liquidation, which would have triggered the accrued dividends payment. Petras also alleged that the Simparel defendants avoided dividend payments by diverting customers and technology from Simparel to Log Logistics, which is a company Roth had formed, and MontERP, a Canadian consulting company formed to provide computer programming services to aid Simparel’s software development.

After Petras was terminated from employment with Simparel, he filed this suit under the FCA in District Court.

B. The District Court’s Dismissal Orders

Generally, an FCA action under 31 U.S.C. § 3729(a)(1) targets fraudulent efforts to obtain money from the United States Government. A “reverse” FCA suit under § 3729(a)(1)(G), however, arises from fraudulent efforts to reduce or avoid an obligation to pay the Government. More specifically, § 3729(a)(1)(G) imposes liability on anyone who “knowingly conceals or knowingly and improperly avoids or decreases an obligation to pay ... money ... to the Government.”

The District Court first dismissed with prejudice all of the claims against the Sim-parel defendants and former defendants (Log Logistics and MontERP) except for the reverse FCA claim, which the District Court dismissed without prejudice. The court held that Petras had not adequately pled that the Simparel defendants had an obligation to pay money to the Government because the “obligations” Petras identified in his First Amended Complaint were “outside the scope of the FCA’s definition of an obligation.” The dismissal of those substantive claims resulted in dismissal of Petras’s conspiracy claim. The District Court also dismissed the retaliation claim, concluding that Petras could not establish the required causal nexus between the alleged retaliatory conduct and his FCA claim because he had not pled that the defendants knew of his claim or the related conduct.

Petras responded by filing a Second Amended Complaint in which he reasserted a reverse FCA claim against the Sim-parel defendants and attempted to support it with additional allegations. The attempt was unsuccessful, as the District Court again dismissed the FCA claim against the Simparel defendants. The Dis-triet Court concluded that the alleged obligation to pay the Government that was the basis of the FCA claim was too “speculative” to give rise to an obligation under the FCA.

Petras now appeals the District Court’s dismissal of both his First Amended Complaint and his Second Amended Complaint.

II.

A. Legal Standards

Our review of the District Court’s dismissal is plenary. We have previously explained that a private individual, known as a “relator,” may bring a civil action in the name of the United States to enforce the FCA. Nevertheless, a relator’s action survives a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure only if the factual allegations “raise a right to relief above the speculative level.” Thus, the complaint must state a “plausible claim for relief.”

Beyond this general standard, we have also explained that FCA claims in particular must be pled with particularity under Rule 9(b). Under Rule 9(b), “the circumstances constituting fraud or mistake shall be stated with particularity,” and a party must plead his claim with enough particularity to place defendants on notice of the “precise misconduct with which they are charged.”

With these standards in mind, we will proceed to evaluate the District Court’s dismissal of each of Petras’s claims.

B. Petras’s Reverse FCA Claim

Petras’s reverse FCA claim alleges that the Simparel defendants knowingly and improperly avoided a contingent obligation to pay the accrued dividends to L Capital after L Capital had been placed into receivership and was being operated by the SBA. On appeal, Petras argues that the District Court ignored the plain meaning of the FCA!s definition of “obligation” and that the court’s ruling contravenes Congress’s intent to broadly construe that term, as evidenced by recent amendments to the FCA. Petras also challenges the District Court’s finding that the obligation he alleged was too “speculative.” On that specific issue, according to Petras, the standard is not whether it is “possible that the triggering events for payment of accrued dividends may never occur,” but rather simply whether it is “plausible” under his Second Amended Complaint’s well-pleaded facts that the contingencies “could reasonably occur.”

We begin our analysis with the relevant statutory text. For Petras to assert a viable reverse FCA claim, he must show that the Simparel defendants “knowingly and improperly avoid[ed] or decreasefd] an obligation to pay or transmit money or property to the Government” The Sim-parel defendants reiterate their argument on appeal that Petras’s reverse FCA claim fails because the SBA was not the “Government” when it was acting as the receiver for L Capital, a private entity. The District Court did not address this issue. However, since it is an issue of first impression before this court, we will take this opportunity to address it.

We conclude that the SBA, when acting as a receiver under the circumstances here, was not acting as the Government. In the absence of controlling precedent, we find the decisions of our sister circuit courts of appeal helpful. In United, States v. Beszbom, for example, the Court of Appeals for the Fifth Circuit held that the Resolution Trust Corporation, an entity the Federal Government created to handle failed financial institutions’ affairs, was not a Government actor when operating as receiver of a failed bank. As receiver, the RTC sued the former officers and directors of the failed bank and obtained a judgment that included punitive penalties. When the Government later criminally charged the officers and directors for the same conduct, the Fifth Circuit rejected the defendants’ double jeopardy defense. The Fifth Circuit concluded that the RTC, as receiver, was not a Government entity because it had merely stood in the failed bank’s shoes.

More recently in United States ex rel. Adams v. Aurora Loan Servs., Inc., the Court of Appeals for the Ninth Circuit applied a similar principle under the FCA. There, relators brought a traditional FCA suit against lenders and loan servi-cers, alleging that they had submitted false certifications to the mortgage entities, the Federal National Mortgage Association (“Fannie Mae”) and the Federal Home Loan Mortgage Corporation (“Freddie Mac”), by selling loans to those companies. The relators argued that the false certifications to Fannie Mae and Freddie Mac constituted “claims” under the FCA because they were requests for payment “‘presented to an officer, employee, or agent of the United States.’ ” The court rejected the relators’ argument, concluding that the mere fact of the Federal Housing Finance Agency’s conservatorship of Fannie Mae and Freddie Mac did not mean those companies had become “federal in-strumentalities.” The Ninth Circuit explained that the Federal Housing Finance Agency, as conservator, assumed all of Fannie Mae’s and Freddie Mac’s rights, titles, powers, and privileges, “placfing] [the] FHFA in the shoes of Fannie Mae and Freddie Mac, and givfing] the FHFA their rights and duties, not the other way around.”

The same logic applies here. As a general matter, when a federally chartered— but private—entity is placed into receivership, the relevant federal agency, acting as receiver, “takes over the day-to-day operations and assumes the powers of shareholders, board of directors, and management.” In other words, the agency usually “steps into the private status of the entity” and does not retain any federal authority.

A governmental entity acting in its capacity as receiver thus does not necessarily qualify as the “Government” for purposes of the FCA. Here, the SBA, as the receiver of L Capital, an indisputably private entity, assumed “all powers, authorities, rights and privileges heretofore possessed by the general partner, managers, officers, directors, investment advisors and other agents of L Capital.” The SBA did so “for the purpose of marshalling and liquidating in an orderly manner all of L Capital’s assets and satisfying the claims of creditors thereof in the order of priority as determined by [the] Court.” The SBA thus temporarily “stepped into” L Capital’s private shoes for the sole purpose of winding up the firm. The authority for doing so was purely contractual in nature. Accordingly, the SBA did not qualify as the Government for purposes of the FCA.

We realize, of course, that the Ninth Circuit’s decision in Adams concerned the FDIC and a traditional FCA claim. However, that is a distinction without a difference. We see no reasoned basis for reaching a different result for the reverse FCA action before us. Indeed, the SBA’s own internal operating procedures support the conclusion that the SBA was not acting as a governmental actor for purposes of Pe-tras’s reverse FCA claim;

After SBA is appointed as Receiver (SBA-Receiver), SBA is a fiduciary, responsible to the court and to all creditors, including SBA-Creditor, and parties in the interest of the proper operation and/or liquidation of the debtor. The Receiver is a separate legal entity and, as such, its funds, records, claims, assets, and liabilities are not the funds, records, claims, assets, and liabilities of SBA or the Government. SBA-Receiver’s decisions must be made for the benefit of the entire Receivership estate.

Accordingly, Petras’s reverse FCA’ claim must fail at the outset.

Moreover, even if the SBA could qualify as the Government, Petras’s reverse FCA claim would nevertheless fail for the reasons set forth by the District Court.

The FCA defines “obligation” as “an established duty, whether or not fixed, arising from an express or implied contractual, grantor-grantee, or licensor-licensee relationship, from a fee-based or similar relationship, from statute or regulation, or from the retention of any overpayment.” Petras argues that the Simparel defendants’ obligation to pay accrued dividends, while contingent on either the Board’s declaration of dividends or the company’s liquidation, nonetheless satisfies the FCA’s definition of an “obligation.” To support his argument that this FCA definition includes contingent obligations, Petras asks us to focus on “an established duty, whether or not fixed.” According to Petras, such qualifying language demonstrates that the term, “obligation,” includes instances in which a legal duty did not exist at the time of the FCA-prohibited conduct.

The FCA provision does not define “established duty;” nor does it explain the meaning of the phrase, “whether or not fixed.” Given the statute’s ambiguity, we will address the parties’ arguments regarding legislative history

That legislative history confirms the District Court’s conclusion that the contingent nature of the “obligations” at issue here precludes a finding that they are sufficiently definite to be included within the provisions of the FCA. The current definition of “obligation” for reverse FCA claims resulted from the 2009 amendments to the FCA that were part of the Fraud Enforcement and Recovery Act of 2009 (“FERA”). The FERA Senate Report states that the new definition of “obligation” was intended to address “confusion among courts that have developed conflicting definitions.” The legislative history, as discussed below, reveals that an “established duty” more likely refers to one owed at the time that the alleged improper conduct under the FCA occurred. Contrary to Petras’s argument, the term does not include a duty that is dependent on a future discretionary act.

As originally proposed by United States Senators Leahy and Grassley, the FCA provision defined obligation as “a fixed duty, or a contingent duty arising from an express or implied contractual ... or similar relationship.” Senator Kyi suggested revising the definitional language, “a fixed duty, or a contingent duty,” to instead state: “an established duty, whether or not fixed.” Senator Kyi was concerned that under the original language Senators Le-ahy and Grassley had proposed, relators would feel emboldened to sue to enforce fines before the Government had “formally established” the duty to pay them. For example, if a corporation had falsely claimed compliance with a regulation, a relator could then bring a reverse FCA suit based on this conduct and assert that the corporation was improperly avoiding an obligation to pay discretionary fines that the Government might levy for this conduct. Senator Kyi proposed his revision to prevent relators from bringing such speculative FCA claims, and his proposal for the alternative language was ultimately adopted.

Again, although the factual circumstances here are different, the difference is without a distinction. The same basic principle animating Senator Kyi’s concern applies. Petras should not be able bring a reverse FCA claim alleging that the Sim-parel defendants improperly avoided an obligation to pay the Government because the obligation did not exist when the defendants’ alleged misconduct occurred. Even if we assume Petras’s allegations that the Simparel defendants withheld financial information from the SBA and diverted resources to other entities are true, the allegations do not make out an FCA claim under the circumstances here. The two events that would trigger an actual obligation to pay dividends—either the Board’s declaration of the dividends or Simparel’s liquidation—had not yet materialized, and Petras does not allege that they had or that he even knew when they would have materialized. Indeed, the obligation technically would never materialize if the Board never exercised its discretion to declare the dividends or if,Simparel never liquidated.

Moreover, the legislative history of the statute’s other relevant language—“whether or not fixed”—suggests a reference to “whether or not the amount owed” was fixed at the time of the violation, not “whether an obligation to pay was fixed.” In discussing the meaning of “obligation,” the Senate Judiciary Report explained that an “obligation arises across the spectrum of possibilities from the fixed amount debt obligation ... to the instance where there is a relationship between the Government and a person that results in a duty to pay the Government money, whether or not the amount owed is yet fixed.” This understanding of the phrase conflicts with Petras’s argument that the “whether-or-not-fixed” phrase refers to the contingent obligation in this case—that is, the obligation to pay accrued dividends that arises when the Board declares dividends, or if Simparel is liquidated.

We conclude then that for a reverse FCA claim, the definition of an “obligation” refers to one existing at the time of the improper conduct to pay the Government funds, the amount of which may not be fixed at the time of the improper conduct. Our rationale accords with other appellate courts’ similar conclusions in other contexts.

In sum, under the FCA provision’s plain language, the Simparel defendants could not have “knowingly and improperly avoid[ed] or deerease[d] an obligation” to pay the accrued dividends at the time of their alleged misconduct because the obligation did not yet exist. Accordingly, even if the SBA qualified as the Government for purposes of Petras’s FCA action, we would still affirm the District Court’s dismissal of Petras’s reverse FCA claim.

C. Petras’s Conspiracy and Retaliation Claims

Petras’s remaining claims are (1) that Log Logistics, MontERP, and the Simpar-el defendants all conspired to violate the reverse FCA provision; and (2) that the Simparel defendants unlawfully retaliated against him by terminating him after they became aware that he might file a FCA suit. Our explanation of why the District Court was correct in dismissing the FCA claim applies with equal force to the dismissal of Petras’s conspiracy claim.

The District Court dismissed Pe-tras’s FCA retaliation claim because Pe-tras had failed to sufficiently plead that the Simparel defendants knew that he would file an FCA claim before they terminated him. In order to properly plead a FCA retaliation cause of action, Petras needed to show that “(1) he engaged in ‘protected conduct,’ (i.e., acts done in furtherance of an action under [31 U.S.C.] § 3730) and (2) that he was discriminated against because of his ‘protected conduct.’ ” Petras also was required to show that the Simparel defendants were “on notice of the ‘distinct possibility’ of False Claims Act litigation and retaliated against him because of his ‘protected conduct.’ ” Petras claims that the District Court erroneously concluded that he had not made clear that he had alerted the Simparel defendants of his intention to file an FCA action.

Even if Petras had sufficiently alleged such notice—an issue we do not address here—“the whistleblower protections apply only to actions taken in furtherance of a viable False Claims Act case,” though it need not be a “winning FCA case.” Here, for the reasons already explained, Petras’s reverse FCA action is not viable. Therefore, Petras’s retaliation claim fails as well.

III.

For the reasons set forth above, we will affirm the District Court’s dismissal of Pe-tras’s complaint.

      . In his First Amended Complaint, Petras also sued Log Logistics, another company Roth founded; and MontERP Enterprises, ifk/a Ron Cacchione LLC, a Canadian consulting company.

      . 31 U.S.C. § 3729(a)(1)(G).

      . Id. § 3730(h).

      . Id. § 3729(a)(1)(C).

      . See Hutchins v. Wilentz, Goldman & Spitzer, 253 F.3d 176, 182 (3d Cir. 2001) (stating that a plaintiff must show that: "(1) the defendant presented or caused to be presented to an agent of the United States a claim for payment; (2) the claim was false or fraudulent; and (3) the defendant knew the claim was false or fraudulent”); United States ex rel. Customs Fraud Investigations, LLC. v. Victaulic Co., 839 F.3d 242, 247 (3d Cir. 2016) (observing that FCA actions "[t]ypically ... allege that a person or company submitted a bill to the government for work that was not performed or was performed improperly, resulting in an undeserved payment flowing to that person or company”).

      . See United States ex rel. Atkinson v. Pa. Shipbuilding Co., 473 F.3d 506, 514 n.12 (3d Cir. 2007) (explaining that a reverse FCA claim is “centered around an alleged fraudulent effort to reduce a liability owed to the government rather than to get a false or fraudulent claim allowed or paid”).

      . J.A., 0024.

      . The District Court also declined to find that Roth or Grilli were "de facto employers” of Petras to hold them liable for Petras’s retaliation claim. J.A., 0031.
      In dismissing the claims against former defendants Log Logistics and MontERP, the District Court first observed that Petras withdrew his reverse FCA claim against the two parties and accordingly dismissed that claim. The District Court determined that with no underlying FCA claim, Petras’s conspiracy claim could not stand. It also separately concluded that it lacked personal jurisdiction over Mon-tERP anyway. Moreover, 'Petras’s conspiracy claim, according to the District Court, did not meet Fed. R. Civ. P. 9(b)’s pleading requirements.

      . In his Second Amended Complaint, Petras did not reassert claims against Log Logistics and MontERP.

      . J.A., 0049 -50. The District Court specifically rejected Petras's three central allegations as to how Appellees prevented the dividend payout. The District Court, for example, noted that Petras had not alleged that Sim-parel was unable to pay the full value of accrued dividends if they ever came due, or that had the shareholders known the information about which he speculated, they would have dissolved Simparel. It also observed that the shareholders had not sought dissolution even after Petras’s allegations came to light by way of this lawsuit. Finally, the District Court cited the lack of factual allegations to support a conclusion that had the Board meetings occurred, dividends would have been declared. The District Court therefore concluded that Petras did not state a claim under the FCA.

      . Petras does not appeal the dismissal of his retaliation claims as against Roth and Grilli, individually, and we therefore do not consider them. While Petras did not reassert claims against Log Logistics and MontERP in his Second Amended Complaint, he nonetheless now attempts to revive the conspiracy claim against Log Logistics and MontERP that he pled in his First Amended Complaint.

      . Customs Fraud Investigations, 839 F.3d 242 at 248 ("We review a District Court’s judgment of dismissal pursuant to Federal Rule of Civil Procedure 12(b)(6) de novo.” (citing Bronowicz v. Allegheny Cnty., 804 F.3d 338, 344 (3d Cir. 2015))).

      . U.S. ex rel. Wilkins v. United Health Grp., Inc., 659 F.3d 295, 305 (3d Cir. 2011) (citing 31 U.S.C. § 3730(b) & (d)).

      . Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007).

      . Ashcroft v. Iqbal, 556 U.S. 662, 679, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009).

      . Customs Fraud Investigations, 839 F.3d at 258 (assessing the sufficiency of a reverse FCA claim using Fed. R. Civ. P. 9(b)); United States ex rel. Schmidt v. Zimmer, Inc., 386 F.3d 235, 242 n.9 (3d Cir. 2004).

      . In re Rockefeller Ctr. Props., Inc. Sec. Litig., 311 F.3d 198, 216 (3d Cir. 2002) (quoting Fed. R. Civ. P. 9(b)).

      . Lum v. Bank of Am., 361 F.3d 217, 223-24 (3d Cir. 2004), abrogated in part on other grounds by Twombly, 550 U.S. at 557, 127 S.Ct. 1955.

      . The District Court had jurisdiction over Petras’s FCA claims under 31 U.S.C. § 3732(a) and 28 U.S.C. § 1331. We have jurisdiction to review the District Court’s final order under 28 U.S.C. § 1291.

      . Appellant's Br., at 28-29.

      . Id. at 29.

      . Id.

      . 31 U.S.C. § 3729(a)(1)(G) (emphasis added).

      . 21 F.3d 62, 68 (5th Cir. 1994).

      . Id. at 67.

      . Id. at 67-68.

      . Id. at 68. See also Herron v. Fannie Mae, 857 F.Supp.2d 87, 94-95 (D.D.C. 2012) (dismissing the plaintiffs claim under Bivens v. Six Unknown Named Agents of Fed. Bureau of Narcotics, 403 U.S. 388, 91 S.Ct. 1999, 29 L.Ed.2d 619 (1971) against the Federal National Mortgage Association (“Fannie Mae”) and emphasizing that it “was not converted into a government entity when it was placed into conservatorship; instead, [the Federal Housing Finance Agency] stepped into the shoes of Fannie Mae”).

      . 813 F.3d 1259, 1260 (9th Cir. 2016).

      . Id.

      . Id. (quoting 31 U.S.C. § 3729(b)(2)(A)©).

      . Id. at 1260-61.

      . Id. at 1261-62 (affirming the district court's dismissal of the relators' FCA claim).

      . Herron, 857 F.Supp.2d at 93; see also, e.g., United States ex rel. Todd v. Fid. Nat’l Fin., Inc., No. 1:12-CV-666-REB-CBS, 2014 WL 4636394, at *9 (D. Colo. Sept. 16, 2014).

      . Herron, 857 F.Supp.2d at 94; see also O’Melveny & Myers v. FDIC, 512 U.S. 79, 86, 114 S.Ct. 2048, 129 L.Ed.2d 67 (1994) ("[T]he FDIC as receiver 'steps into the shoes’ of the failed [financial institution].”); Beszbom, 21 F.3d at 68 ("The RTC as receiver of an insolvent financial institution stands in the shoes of the bank assuming all debts of the bank.”).

      . J.A. 0210.

      . J.A. 0209.

      . SBA, SBIC Liquidation SOP 10 071, at 52, available at https://www.sba.gov/sites/default/ files/sops/serv_tools_sops_l 007_l_0.pdf (first and third emphases in original and remaining emphases added).

      . Despite Petras's suggestion, our conclusion does not conflict with dicta we provided in Hutchins, 253 F.3d 176. In Hutchins, a paralegal notified the United States Trustee that his law firm employer was submitting fraudulent billing statements to the United States Bankruptcy Court for payment from the U.S. Treasury. As Petras notes, we stated in Hutch-ins—with no additional analysis—that it was "undisputed that the United States Trustee and the United States Bankruptcy Courts are government agents for purposes of the False Claims Act.” Id. at 182. The U.S. Trustee and U.S. Bankruptcy Courts were not implicated as receivers in that case, and neither party otherwise challenged whether those entities were governmental actors. Thus, this Court's statement in Hutchins regarding those entities is of little guidance on the specific issues here.

      . § 3729(b)(3).

      . Id.

      . See United States v. Kouevi, 698 F.3d 126, 133 (3d Cir. 2012) ("Legislative history is only an appropriate aid to statutory interpretation when the disputed statute is ambiguous.”).

      . Pub. L. No. 111-21, 123 Stat. 1617 (2009).

      . S. Rep. 111-10, at 14 (2009).

      . 155 Cong. Rec. S. 4539 (2009) (daily ed. Apr. 22, 2009) (statement of Sen. Kyi).

      . Id.

      . Id.

      . See United States ex rel. Boise v. Cephalon, Inc., No. 08-287, 2015 WL 4461793, at *1 n.1 (E.D. Pa. July 21, 2015) (internal quotation marks omitted) (quoting 1 John T. Boese, Civil False Claims and Qui Tam Actions § 2.01[L], 2-83 (2014)).

      . S. Rep. No. 111-10, at 14 (2009) (emphases added) (citations omitted) (internal quotation marks omitted).

      . In our recent consideration of whether a failure to pay marking duties on imported products could give rise to a reverse FCA claim, we consulted the history of the 2009 FERA amendments and observed that the amendments’ new definition of obligation "favor[ed] a more broadly inclusive definition” of the FCA’s reverse-false claim provision. See Customs Fraud Investigations, 839 F.3d at 254. In that case, the plaintiff had alleged that the defendant company, Victaulic, neglected to notify the United States Bureau of Customs and Border Protection (CBP) of its pipe fittings’ non-conforming status. This failure to notify resulted in the pipe fittings being released into the stream of commerce in the United States and, consequently, owed marking duties not being paid. Id. at 254-55. The district court concluded that Victaulic's conduct was not grounds for false claims liability because such duties “were too attenuated and contingent to qualify as the types of obligations to pay money to the government covered by the FCA.” Id. at 248. We rejected the district court’s rationale. We explained that because the duty accrued at the time of importation, "without exception,”—which the plaintiff alleges Victaulic knew—all the plaintiff had to prove to hold Victaulic liable under the FCA was that Victaulic knew of its obligation under federal law to properly mark its goods (or otherwise notify the CBP) and that Victaulic failed to do so before its goods cleared customs. Id. at 254-55 (observing that the 2009 United States Senate Report “discussed customs duties for mismarldng country of origin, and how such duties would be covered by the amended reverse false claims provision” (internal quotation marks and citation omitted)).
      Here, by contrast, the District Court’s concern about the accrued dividends being too "speculative” to implicate FCA liability is justified. For one, Petras has not alleged either of the two conditions under which the Sim-parel defendants' obligations would have arisen. Petras never alleges that the Board declared the dividends or had an inclination to do so; nor had Simparel entered into liquidation, and Petras does not allege as much. The District Court did not, as Petras suggests, conflate the terms "contingent” and "speculative.” Instead, the District Court properly concluded that regardless of the proper definition of "contingent,” the scenarios Petras advanced were so speculative that they could not be considered a contingent obligation. J.A., 0047. We agree with that conclusion.

      . In United States ex rel. Simoneaux v. E.I. duPont de Nemours & Co., for example, a relator sued his former employer under a reverse FCA action, alleging that his employer had failed to report chemical leaks to the EPA, as the Toxic Substances Control Act requires. 843 F.3d 1033, 1034 (5th Cir. 2016). The plaintiff claimed that the employer's failure to do so allowed it to avoid government penalties, which, under the TSCA, the EPA has the discretion to assess. Id. at 1040. The plaintiff argued that after the 2009 FCA amendments, the definition of "obligation” covered "contingent” penalties. But the Fifth Circuit clarified that the “new definition resolved uncertainty regarding whether the amount of an obligation needs to be fixed” and "did not upset the widely accepted holding that contingent penalties are not obligations." Id. at 1036.

      . 31 U.S.C. § 3729(a)(1)(G).

      . See Pencheng Si v. Ldogai Research Found., 71 F.Supp.3d 73, 89 (D.D.C. 2014) (“[Tjhere can be no liability for conspiracy where there is no underlying violation of the FCA.”).

      . Hutchins, 253 F.3d at 186.

      . Id. at 191.

      . Dookeran v. Mercy Hosp. of Pittsburgh, 281 F.3d 105, 107-08 (3d Cir. 2002) (explaining that "courts ... require that there at least be a distinct possibility that a viable FCA action could be filed.... If there is no way that [a plaintiff’s] conduct of informing [his employer] about the allegedly fraudulent application could reasonably lead to a viable FCA action, then the whistleblower provision provides him no protection.”); see also Hutchins, 253 F.3d at 188.


author: FUENTES, Circuit Judge. AMBRO, Circuit Judge,

text:
    Tymeco JONES, Iesha Bullock, and Teairra Pizarro, on behalf of themselves and those similarly situated v. John DOES 1-10; SCO Silver Care Operations LLC d/b/a Alaris Health at Cherry Hill, Appellant
    No. 16-1101
    United States Court of Appeals, Third Circuit.
    Argued: November 16, 2016
    (Opinion filed: May 18, 2017)

      Stuart A. Weinberger, Esq. [Argued], Goldberg & Weinberger, 630 Third Avenue, 18th Floor, New York, NY 10017, Counsel for Appellant
    Matthew D. Miller, Esq. [Argued], Justin L. Swidler, Esq., Swartz Swidler, 1101 Kings Highway North, Suite 402, Cherry Hill, NJ 08034, Counsel for Appellee
    Before: AMBRO, CHAGARES, and FUENTES, Circuit Judges
   OPINION OF THE COURT

FUENTES, Circuit Judge.

Plaintiffs, Tymeco Jones, Iesha Bullock, and Teairra Pizarro, are certified nursing assistants who bring this action against their employer, SCO Silver Care Operations (“Silver Care”) for violations of the Fair Labor Standards Act (“FLSA”) and related New Jersey state wage and hour laws. The plaintiffs claim that Silver Care underpaid them for overtime in two ways. First, Silver Care failed to include certain hourly wage differentials in the calculation of the plaintiffs’ regular rate of pay, resulting in illegally low overtime rates. Second, Silver Care deducted plaintiffs’ half-hour meal breaks from their total hours worked, even though they often worked through those breaks. A year after the plaintiffs filed their lawsuit, but before any discovery took place, Silver Care moved to dismiss or to stay the proceedings pending arbitration, citing the arbitration clause in the governing collective bargaining agreement (“CBA”). The District Court denied the motion to dismiss or to stay pending arbitration. Defendant Silver Care appeals, contending that both overtime claims must first be submitted to arbitration to resolve disputed interpretation of the CBA, including the definition of the wage differentials and policies concerning the meal breaks. For the reasons set out below, we will affirm the decision of the District Court.

I. Background

The plaintiffs are employed, at an assisted living facility, which was bought by Silver Care in 2007. The terms of their employment are governed by a CBA, negotiated by the nurses’ union at the time of the purchase in 2007. This agreement lays out, among other things, wages, raises, breaks, and a grievance procedure that directs all disputes and complaints arising under the CBA to arbitration. Together, the three plaintiffs bring underpayment of overtime claims on their own behalf and on behalf of a class of nursing assistants who have worked at the nursing home at any time between December 31, 2010 and December 31, 2013. Their allegations are twofold: First, though plaintiffs are paid wage differentials, an additional $1.25 an hour to $3.00 an hour to account for shift premiums and raises, these differentials are not included in their regular rate of pay when overtime pay is calculated. Second, plaintiffs’ 30-minute meal breaks are automatically deducted from total time worked even though they often need to work through those breaks during night shifts. Briefly summarized below are the facts relevant to each of these two claims, followed by the procedural history.

A. Exclusion of Wage Differentials in Overtime Calculation

Nursing assistants are paid a base rate of $10 to $14 an hour. In addition to these base rates, they may also be paid some or all three types of differentials: (1) “shift differentials”—an additional $2.50 an hour or $3.00 an hour, depending on the time and day of the shift; (2) “raise differentials”—an additional $1.25 an hour to those who received a certain type of raise; and (3) “frills differentials”—an additional $1.00 an hour or $1.60 an hour for nursing assistants who elected to forgo certain benefits. Whereas nursing assistants are compensated for overtime at one and a half times their base rate plus frills differential, plaintiffs here allege, and have submitted paystubs to demonstrate, that the shift differentials and raise differentials are not included. Consequently, the plaintiffs contend that they are undercompen-sated for overtime, which should be at one and a half times their all-in hourly rate during the regular work period.

B. Uncompensated 30-Minute Meal Breaks

Under the CBA, nursing assistants who are scheduled for eight-hour shifts are entitled to two paid 15-minute breaks and one unpaid 30-minute meal break per shift. The plaintiffs allege that nursing assistants who work during the night shifts “rarely, if ever” took an uninterrupted meal break because those shifts are chronically understaffed. For example, whereas each nursing assistant is typically responsible for twelve to seventeen patients during the day and evening shifts, a nursing assistant on a night shift would be responsible for around thirty patients. In fact, the plaintiffs allege that, due to the staff shortage, the night shift supervisors do not schedule meal breaks for the night shift nursing assistants, and that when they do eat, they do so at the nurse’s station, rath-' er than in the break room, in order to hear the call bell alerting them to patients requiring care. Despite the frequent interruptions and restrictions, the plaintiffs allege that the 30-minute meal breaks are automatically deducted from their total hours worked. Consequently, the plaintiffs allege that they are not being paid for all the hours worked, including overtime for those weeks in which they worked more than forty hours.

C. Procedural History

The plaintiffs filed suit in December 2013. Silver Care moved to dismiss the complaint, which motion was denied when the plaintiffs filed an amended complaint. Silver Care subsequently moved to dismiss the amended complaint, which was granted as to the plaintiffs’ claims seeking injunc-tive relief, but denied as to the claims seeking monetary damages. Thereafter, the plaintiffs moved to conditionally certify their suit as a collective action. Silver Care opposed the motion for conditional certification and moved to dismiss or to stay the proceedings pending arbitration. The District Court granted conditional certification and denied Silver Care’s motion to dismiss or stay proceedings pending arbitration, holding that the plaintiffs’ FLSA claims do not arise out of or implicate the CBA. Silver Care subsequently moved for reconsideration, which was also denied. Silver Care appealed.

II. Discussion

The main issue on appeal is the applicability of the arbitration clause in the CBA to each of the plaintiffs’ FLSA overtime claims. We begin by examining the relevant legal framework before turning to the plaintiffs’ two claims.

A. Legal Framework

Whether and when a plaintiff’s FLSA claims can be covered by an arbitration clause in a CBA is subject to a two-prong test. A court may compel arbitration of a plaintiffs federal statutory claim when (1) the arbitration provision clearly and unmistakably waives the employee’s'ability to vindicate his or her federal statutory right in court; and (2) the federal statute does not exclude arbitration as an appropriate forum. Even if no clear or unmistakable waiver exists, however, we have held that arbitration may still be compelled if the plaintiffs FLSA claim “depends on the disputed interpretation of a CBA provision,” which dispute must “first go to arbitration—through the representative union—before [the employee may] vindicate] his or her rights in federal court under the FLSA.” We established this narrow rule to prevent a plaintiff from circumventing applicable statutes of limitations and contractually binding grievance procedures set out in a CBA. Tellingly, we have applied it to dismiss a plaintiffs FLSA claim in only one case, Vadino v. A Valey Engineers.

In Vadino, the plaintiff-employee brought two claims. First, the plaintiff alleged that the employer breached the CBA by paying him less than the wages due to a journeyman under the CBA. Second, he alleged that the employer breached the overtime provision of the FLSA because he was not paid for overtime hours at one and a half times the journeyman rate to which he claimed that he was entitled under the CBA. In short, both claims centered on his argument that the CBA promised him higher wages than what he actually received. Consequently, because his FLSA claim was “inevitably intertwined with the interpretation or application of [the] collective bargaining agreement,” we held that he must first resolve his contractual dispute according to the internal grievance procedure set out in the CBA. He could vindicate his federal statutory right in court only after resolution of his CBA claim.

By contrast, we held more recently in Bell v. Southeastern Pennsylvania Transportation Authority that the plaintiffs were not required to resolve any contractual disputes through arbitration before bringing their FLSA claim in federal court because their FLSA claim was completely independent of any interpretation of the CBA. In that case, the plaintiffs, who worked as bus drivers and trolley operators, claimed that they should have been compensated for time spent performing ve-hide inspections before the start of their daily trips. The defendant argued that this FLSA claim depended on “whether the provisions of the CBA governing compensation for reporting time prior to the start of daily schedules include payment for pre-trip inspections.” That argument failed, however, because the employees did not claim that “they are entitled to additional payment under a CBA.” Rather, “resolution of the FLSA claim requires a factual determination of the amount of time Operators are required to work prior to their scheduled start, and a legal determination regarding whether this time is (1) compensable and (2) subject to the overtime provisions of the FLSA.”

In summary, to the extent that an employee may be compelled to arbitrate his or her FLSA claims at all, the arbitration clause in the CBA must clearly and unmistakably state so. However, even where an arbitration clause does not contain a clear and unmistakable waiver of a plaintiffs right to a judicial forum, a plaintiff may nonetheless be compelled to arbitrate disputes over interpretations of the CBA, if the FLSA claims depend on such contractual disputes.

Here, Silver Care does not dispute that the arbitration provision lacks a clear and unmistakable waiver of the employees’ right to vindicate their FLSA claims in federal court. Instead, Silver Care argues that this case must be stayed pending arbitration because both of the plaintiffs’ FLSA claims depend on disputed interpretations of the CBA. For the following reasons, we disagree.

B. Miscalculation of Overtime Rate Claim

Silver Care argues that the plaintiffs’ FLSA claim alleging miscalculation of the overtime rate rests upon a dispute over an implicit term of the CBA regarding whether the differentials already include a payment for overtime. Silver Care claims that during the collective bargaining process, when it negotiated to grandfather in some of the differentials, it also came to an agreement with the nurses’ union that the additional differential amounts would already include overtime. For example, Silver Care asserts that what appears to be a “$3.00 per hour weekend differential is a gross amount comprised of the $2.00 per hour differential and an extra $1.00 per hour in overtime premium ... regardless of whether [the weekend shift] was worked in excess of 40 hours per week.” This, Silver Care posits, constitutes a dispute over an implicit term of the CBA that must first be sent to arbitration before a court can decide whether the plaintiffs have a claim under the FLSA.

Silver Care’s argument fails because the plaintiffs’ overtime claim is governed by the FLSA. Unlike the dissent, we believe that the statute requires us to bypass how the CBA breaks down the pay differentials, and look only to whether these pay differentials fit into the statutory definition of remuneration that must be included in the calculation of an employee’s regular hourly rate of pay.

The FLSA requires qualifying employers to pay “at a rate not less than one and one-half times the regular rate” to employees for hours worked in excess of forty hours a week. The regular rate of pay is defined as “all remuneration for employment paid to, or on behalf of, the employee,” and the statute explicitly sets out a limited list of eight exceptions to this rule of “all remuneration.” We have held that these statutory exclusions are exclusive. “[A]ll remuneration for employment paid which does not fall within one of these seven exclusionary clauses must be added into the total compensation received by the employee before his regular hourly rate of pay is [to be] determined.” Furthermore, these statutory exclusions “are narrowly construed, and the employer bears the burden of establishing [that] an exemption [applies].”

In other words, whether the wage differentials should be included in the regular rate of pay depends not on any labels assigned to them by the CBA, but on whether they fit into one of the statutory exclusions. An employee’s “regular rate is a readily definable mathematical caleulation that is explicitly controlled by the FLSA.” As the Supreme Court puts it, the regular rate “is not an arbitrary label chosen by the parties; it is an actml fact.” Once amount of wages actually paid is known, “the determination of the regular rate becomes a matter of mathematical computation, the result of which is unaffected by any designation of a contrary ‘regular rate’ in the wage contracts.” Therefore, whether the CBA designates $2.00 of the $3.00 shift premium for working on Sunday as “regular pay” and $1.00 as “overtime” is completely irrelevant to a court’s analysis of the proper overtime payment owed to the plaintiffs. A court determines the regular hourly rate of pay “by dividing [the employee’s] total remuneration for employment (except statutory exclusions) in any workweek by the total number of hours actually worked by him in that workweek for which such compensation was paid.” This calculation can be done simply by looking at a paystub.

In conclusion, the plaintiffs’ miscalculation of overtime rate claim does not depend on any disputed term of the CBA, and, therefore, need not be sent to arbitration.

C. Lack of Mealtime Compensation Claim

Silver Care argues that the plaintiffs’ second FLSA claim—that their meal breaks should be credited towards hours worked—depends on disputed practices under the CBA, which must first be resolved by an arbitrator. Because we find that the alleged disputed practices enumerated by Silver Care are simply factual disputes, we hold that arbitration of the plaintiffs’ second claim is also not necessary.

The FLSA itself does not define what are compensable work hours. Instead, the Wage and the Hour Division of the Department of Labor issued a number of regulations providing employers and employees alike guidance on how it would implement and enforce the law. One such regulation provides that employers need not compensate employees for bona fide meal periods because those are not considered to be compensable worktime. The regulation defines a bona fide meal period as rest periods during which “[t]he employee must be completely relieved from duty for the purpose of eating regular meals,” but “[t]he employee is not relieved if he is required to perform any duties, whether active or inactive, while eating.”

As the dissent alludes, this regulation does not have the force of law, however, and merely “constitute[s] a body of experience and informed judgment to which courts and litigants may properly resort for guidance.” And we were so guided by it in Babcock v. Butler County, in which case we recognized that the FLSA does require employees to be compensated for meal periods if they are “primarily engaged in work-related duties during” those times, adopting the so-called predominant benefit test. We explained that the “predominant benefit test is necessarily a fact-intensive inquiry,” where the “essential consideration ... is whether the employees are in fact relieved from work for the purpose of eating a regularly scheduled meal.” Furthermore, one of the factors we look to, as part of this predominant benefit test, is the characterization of the mealtime break in the CBA. In short, Silver Care is subject to a statutory obligation to compensate the plaintiffs for time spent during meal periods if the plaintiffs, as they allege, are primarily engaged in work-related duties during these breaks.

Silver Care does not argue that the plaintiffs’ mealtime compensation claim is a contractual dispute, as the dissent posits. It recognizes that the plaintiffs’ mealtime compensation claim is based on the FLSA and how compensable work time is defined under that statute. Instead, it relies on our consideration of the characterization of the meal break in the CBA in Babcock to support its contention that “[i]n order to determine ... to whom the benefit of the meal break inures, there must be an interpretation of the CBA.” Among the disputed “interpretations” that Silver Care seeks to arbitrate are: (1) the actual length of the meal breaks—Silver Care alleges that different sections within the nursing home sometimes combine the unpaid meal break with the paid breaks, extending meal breaks to 45 minutes or an hour, for which only 30 minutes are unpaid; (2) “the practices, customs and usages of the parties with respect to what happens if an employee allegedly is interrupted during a meal break”—whether the interrupted time is normally “considered part of the paid portion of the break or the unpaid portion of the break?;” and (3) practices under the CBA regarding the types of restrictions, if any, placed upon the employees during their meal breaks, “what are considered interruptions of the meal breaks, and how interruptions are handled during the meal breaks.”

All of these so-called disputed “interpretations” of the CBA, however, are factual questions—length of meal breaks, types of interruptions, how they were handled, and whether the plaintiffs ever received compensation due to these interruptions. Silver Care cannot rely on Babcock to transform these factual disputes inherent to any FLSA claim into disputes over provisions of the CBA subject to arbitration.

In Babcock, we determined that the meal period át issue there inured primarily to the benefit of the employees by looking at both the facts and the CBA. First, we found that though the plaintiffs faced some restrictions during their meal breaks, “on balance, these restrictions did not predominantly benefit the employer,” particularly because the plaintiffs could “request authorization to leave [the workplace] for their meal period and could eat lunch away from their desks.” Second, we separately considered the CBA, which we thought was favorable for the employer’s position, because the CBA “provide[d] corrections officers with the benefit of a partially-compensated mealtime and mandatory overtime pay if the mealtime is interrupted by work.”

Notably, our consideration of the CBA was limited to reading the text. We did not collapse the factual inquiry and the consideration of the CBA into one. Nor could we. To characterize an essentially factual inquiry as a dispute of practices or custom under the CBA such that arbitration is necessary would be to circumvent Supreme Court precedent that a plaintiff cannot be compelled to arbitrate his or her federal statutory claims without a clear and unmistakable waiver.

Here, Silver Care has not pointed to any disputes over the text of the CBA, which provides that “meal periods and breaks shall be free and uninterrupted, and employees shall not be on call. However, in emergencies, employees are expected to respond.” Instead, Silver Care raises only disputes about what actually happens during these meal breaks. Thus, Silver Care’s reliance on Babcock, to transform its factual disputes into contractual ones subject to the arbitration clause, is misplaced.

In sum, neither of the plaintiffs’ FLSA claims depend on disputed interpretations of CBA provisions such that arbitration is necessary.

III. Conclusion

For the foregoing reasons, we will affirm the District Court’s denial of Silver Care’s motion to dismiss or to stay the proceedings pending arbitration.

AMBRO, Circuit Judge,

dissenting

As I read the Majority’s opinion, it considers plaintiffs’ two claims brought under the Fair Labor Standards Act (“FLSA”) (a pay-differentials claim and a meal-break claim) as independent from the applicable collective bargaining agreement (“CBA”). Because I believe both of those claims rest on terms covered by the CBA, and because I believe our holding in Vadino v. A Valey Engineers, 903 F.2d 258 (3d Cir. 1990), controls, they should first be arbitrated as the parties had agreed.

Vadino involved a union member challenging his pay rate and overtime compensation under the FLSA. The relevant CBA between the union and Vadino’s employer set out various pay grades given the worker’s title and job qualifications. Using that pay scale, Vadino argued that he was entitled to receive a higher wage and thus should have received overtime commensurate with it. The CBA also provided for a grievance process that culminated in arbitration.

Although Vadino’s claim for overtime implicated the FLSA, we held that when a dispute arises “as ,to the correct wage rate under a [CBA] ” that also involves a “claim under the overtime provision of the FLSA, the procedure we envision is to decide the contract interpretation issue through the grievance procedure to arbitration.” Id. at 266. “Concurrent with that, the employee may bring a FLSA claim, but the FLSA overtime claim would be dependent upon the resolution ... of the contract interpretation issue.” Id. That holding applies to the case before us.

First, a central dispute between the parties involves the “correct wage rate” under the CBA: the pay differentials. Plaintiffs assert that the periodic increase in their weekly wages from the pay differentials was not reflected in their regular rate of pay for the purposes of calculating overtime. Silver Care, however, contends that overtime for those pay differentials was reflected in the pay differentials themselves (for example, under the implied terms of the CBA plaintiffs were not given the $3 per hour increase they received but rather a $2 per hour increase, and the extra dollar they received in wages was built-in overtime payment). The parties clearly disagree as to what comprised those pay differentials and what was the correct pay-differential wage. I part ways with my colleagues that this dispute is “completely irrelevant to a court’s analysis of the proper overtime payment owed to the plaintiffs.” If anything, what overtime is owed to plaintiffs depends on interpreting what the parties agreed regarding the breakdown of the pay differentials and what component of them is considered compensable wages for calculating overtime. Under Vadino, that interpretation first should be made by an arbitrator per the arbitration provision in the CBA. Because these claims involve disputed interpretations of the CBA, this ease is not like Bell v. Southeastern Pennsylvania Transportation Authority, 733 F.3d 490 (3d Cir. 2013), in which we held that FLSA claims need not be arbitrated so long as they are completely independent of any interpretation of the applicable CBA.

Second, plaintiffs’ claim that they should be compensated for work performed during unpaid meal breaks also falls within the CBA. The FLSA makes no mention of meal breaks. Instead, the right to uninterrupted meal breaks is created by the CBA, providing that “meal periods and breaks shall be free and uninterrupted, and employees shall not be on call. However, in emergencies,, employees are expected to respond.” Plaintiffs argue that the unpaid, uninterrupted breaks to which they were entitled in the CBA were in fact interrupted and they should be compensated for the work performed during that time. But their FLSA claim for compensation depends entirely on a breach-of-contract claim. If Silver Care did not violate the terms of the CBA by interrupting their guaranteed unpaid breaks, there would be no cause of action for relief. Thus the alleged breach of the CBA is a claim the parties agreed to arbitrate.

Furthermore, the text of the CBA is unclear as to what constitutes an interruption. Would being understaffed, as plaintiffs allege, be an emergency under the CBA? And if interrupted, could plaintiffs count that as one of their two interrupted breaks and take an uninterrupted break later? These questions go to the heart of what the parties intended when entering into the CBA. Because this FLSA claim is predicated on a breach-of-contract claim that also warrants interpretation of the CBA, the parties’ arbitration agreement should be honored and the issue resolved by an arbitrator.

As the claims before us require in my view an interpretation of the CBA before proceeding to the alleged FLSA violations, and CBA interpretations require arbitration here, I respectfully dissent.

      . A 116.

      . The District Court had jurisdiction under 28 U.S.C. § 1331 to adjudicate the FLSA claims and under 28 U.S.C. § 1367 to consider the associated state law claims. The District Court’s order denying Silver Care’s motion to dismiss or to stay pending arbitration under 9 U.S.C. § 3 is immediately appealable under 9 U.S.C. § 16(a)(1). Arthur Andersen LLP v. Car-lisle, 556 U.S. 624, 628, 129 S.Ct. 1896, 173 L.Ed.2d 832 (2009). Our review of the arbitra-bility of the plaintiffs’ claims is plenary. See Edwards v. HOVENSA, LLC, 497 F.3d 355, 362-63 (3d Cir. 2007) (citing Harris v. Green Tree Fin. Corp., 183 F.3d 173, 176 (3d Cir. 1999)). We review the District Court's denial of the motion for reconsideration for abuse of discretion. Chesapeake Appalachia, LLC v.

        Scout Petroleum, LLC, 809 F.3d 746, 753 (3d Cir. 2016).

      . 14 Penn Plaza v. Pyett, 556 U.S. 247, 260, 129 S.Ct. 1456, 173 L.Ed.2d 398 (2009).

      . Bell v. Se. Pa. Transp. Auth., 733 F.3d 490, 494 (3d Cir. 2013).

      . 903 F.2d 253 (3d Cir. 1990).

      . Id. at 255.

      . Id. at 257.

      . Id.

      . Bell, 733 F.3d at 494 (describing Vadino).

      . Vadino, 903 F.2d at 266.

      . Id.

      . Bell, 733 F.3dat491.

      . Id.

      . Id. at 495 (internal quotation marks omitted).

      . Id.

      . Id.

      . In fact, the arbitration clause defines a grievance "as a dispute or complaint arising between the Union and the Employer under this CBA or the interpretation, application, performance or any alleged breach thereof.” A 189. It does explicitly provide that "[a]ll claims that an employee has been discriminated against ... in violation of applicable federal, state or local law shall be subject to the grievance and arbitration procedure as the sole and exclusive remedy for violations.” A 191. But there is no similar provision for FLSA disputes.

      . Appellant’s Br. at 44.

      . Id. at 41.

      . Id. at 41-42.

      . 29 U.S.C. § 207(a)(1).

      . 29 U.S.C. § 207(e).

      . Smiley v. E.I. Dupont De Nemours & Co., 839 F.3d 325, 330 (3d Cir. 2016) (quoting 29 C.F.R. § 778.200(c)).

      . Id. (quoting Minizza v. Stone Container Corp. Corrugated Container Div. E. Plant, 842 F.2d 1456, 1459 (3d Cir. 1988) (internal citations omitted)).

      . Id. (citing Walling v. Youngerman-Reynolds Hardwood Co., 325 U.S. 419, 424-45, 65 S.Ct. 1242, 89 L.Ed. 1705 (1945)).

      . Walling, 325 U.S. at 424, 65 S.Ct. 1242 (emphasis added).

      . Id. at 425, 65 S.Ct. 1242.

      . 29 C.F.R. § 778.109. '

      .Contrary to the dissent’s characterization, the plaintiffs clearly state that their "claim for overtime wages due to unlawful meal break deductions is based only on their statutory rights under the FLSA.” Appellees’ Br. at 17. They emphasized that they "do not claim that [Silver Care] breached a contractual right provided by the CBA but instead violated the FLSA and DOL regulations, which require employers to pay employees 1.5 times their regular rates for all hours worked in excess of 40 hours including meal breaks that are not bona fide." Id. (citing 29 U.S.C. § 207; 29 C.F.R. § 785.18) (emphasis in original).

      . 29 C.F.R. § 785.19(a).

      . Id.

      . Babcock v. Butler Cty., 806 F.3d 153, 157 n.7 (3d Cir. 2015) (quoting Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S.Ct. 161, 89 L.Ed. 124 (1944)).

      . Id. at 156.

      . Id. at 157.

      . Id. at 158.

      . Appellant's Br. at 48.

      . Id.

      . Id. at 49

      . Id.

      . Id. at 50.

      . Silver Care's attempt to distinguish these inquiries from factual disputes is unpersuasive. In its reply brief, Silver Care states that "making simple factual determinations of whether the meal break was interrupted and whether the employee worked during the meal break” is not sufficient, because "there first has to be a determination made, whether, if there is an interruption, the interruption is considered part of the paid portion of the break or the unpaid portion of the meal break.” Appellant's Reply Brief at 11. Silver Care never makes clear why it matters to an FLSA claim how the CBA would categorize the meal time interruptions. Either the plaintiffs received compensation for interruptions during their meal time, or they did not. The plaintiffs’ claim is based on the FLSA rather than the CBA.

      . Babcock, 806 F.3d at 158.

      . Id. at 157.

      . Id.

      . Pyett, 556 U.S. at 260, 129 S.Ct. 1456.

      . A 171.

      . The plaintiffs also raised some threshold questions regarding whether the arbitration clause in the CBA is enforceable at all. We need not address these questions because, even assuming the arbitration clause is enforceable, arbitration is inappropriate in this case where the plaintiffs' FLSA claims do not depend upon any disputed interpretation of the CBA.