By Daniel Wiessner
Aug 13 (Reuters) - Private prison operator GEO Group must pay more than $23 million to the state of Washington and hundreds of immigrant detainees who were paid $1 a day to participate in a work program, a U.S. appeals court ruled on Wednesday.
The full 9th U.S. Circuit Court of Appeals in San Francisco declined to reconsider a three-judge panel's January ruling that said GEO does not enjoy the same immunity from state minimum wage laws afforded to the federal government even though it operates a Tacoma, Washington, detention centre under a contract with the U.S. Immigration and Customs Enforcement.
The ruling was the latest blow for GEO in a pair of consolidated lawsuits first filed in 2017.
Six judges dissented, saying the ruling misread U.S. Supreme Court precedent extending government immunity to contractors and would interfere with federal immigration enforcement.
"Under this court’s decision, any State can impair any federal policy — no matter how central to the federal government — so long as the State regulates federal contractors rather than the federal government itself," wrote Circuit Judge Patrick Bumatay, an appointee of President Donald Trump. All of the judges who dissented are appointees of Republican presidents.
GEO Group in a statement said it would ask the U.S. Supreme Court to take up the case.
“Today’s decision clearly violates the Supremacy Clause [of the U.S. Constitution] and contravenes established law regarding intergovernmental immunity and federal preemption," the company said.
GEO is appealing a $17.3 million jury verdict for detainees who were paid $1 a day to cook, clean, perform repairs, and staff a barber shop and library at the Tacoma detention centre, and a separate $6 million award for the state.
The Washington Supreme Court, in response to certified questions from the 9th Circuit, ruled in 2023 that the detainees were GEO's employees under state law and had to be paid the minimum wage.
That left the federal court to consider GEO's claim that because it was operating a government detention centre, it was shielded from state wage laws just like the federal government.
The 9th Circuit panel in January had said the government did not dictate the wages GEO must pay to detainees or require it to operate the work program, and also rejected the company's claim that the state minimum wage was preempted by federal immigration law.
On Wednesday, Circuit Judge Mary Murguia wrote for the 9th Circuit that the panel decision was well reasoned, and pushed back against Bumatay's claim that the court had set a dangerous precedent.
"Adoption of his position would allow any government contractor to refuse to pay state-mandated minimum wage to its employees," wrote Murguia, an appointee of President Barack Obama, a Democrat. "No one in this case, not even GEO, has suggested that this is the law."
The case is Nwauzor v. GEO Group Inc, 9th U.S. Circuit Court of Appeals, No. 21-36024.
For the plaintiffs: Jennifer Bennett of Gupta Wessler
For the state: Marsha Chien of the Washington Attorney General's Office
For GEO Group: Michael Kirk of Cooper & Kirk
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