GEO Group Fights for Immunity From $1-a-Day Detainee Labor Suit

GEO Group Inc., faced with allegations that making immigrant detainees labor in the company’s civil detention centers constitutes human trafficking, will attempt to convince the Tenth Circuit on Monday to revive its defense of derivative sovereign immunity.

The private prison corporation’s contracts with the federal government set the daily minimum pay for its voluntary work program and require that detainees keep their own living quarters clean or face discipline, so GEO is entitled to assert its claim of derivative sovereign immunity, shielding it from liability, according to a brief the company filed with the US Court of Appeals for the Tenth Circuit.

A federal court in Denver threw out the defense last year.

If the appellate court agrees with GEO’s immunity argument, “it may encourage other private prison companies to try this defense in other cases nationwide,” Eunice Cho, a senior staff attorney with the ACLU’s National Prison Project, told Bloomberg Law.

But there’s “lengthy and well-established doctrine that federal contractors do not share the government’s unqualified immunity from liability and litigation,” she added. The ACLU filed a brief in support of GEO detainees in a Ninth Circuit case, but hasn’t appeared as an amicus in this one.

To be able to use derivative sovereign immunity as a shield in litigation, companies must essentially show that the federal agency they contracted with “provided explicit instructions” and that they “followed those instructions,” Kate Sablosky Elengold, a professor at the University of North Carolina School of Law, told Bloomberg Law.

Unjust Enrichment, Trafficking

GEO, one of the largest private prison corporations in the US, contracts with US Immigration and Customs Enforcement to run immigrant detention centers. Its estimated 2022 revenues were nearly $2.4 billion, approximately 44% of which came from ICE contracts.

A group of people currently and formerly detained in a GEO facility in Colorado while awaiting immigration proceeding outcomes sued the Boca Raton, Fla.-based company in 2014.

The company forced them to perform janitorial work or risk solitary confinement, according to the detainees. GEO also operates a voluntary work program in which detainees perform tasks such as food preparation and laundry for just $1 per day, their brief opposing resurrection of the immunity defense said.

GEO previously asked the Tenth Circuit to undo the Colorado federal court’s decision to certify two classes—consisting of approximately 60,000 people—on unjust enrichment and Trafficking Victims Protection Act claims. The appellate court affirmed the detainees’ win on the issue in 2018, and the US Supreme Court later that year declined to review the decision.

After the case went back to the trial court, the district judge granted summary judgment to the detainees on the question of whether GEO was immune from the suit, prompting this second appeal.

Derivative Sovereign Immunity?

GEO argues that the lower court used the wrong standard when it concluded that the company’s discretion in how to comply with the ICE contract meant it wasn’t performing as the government directed and doomed its immunity bid. Interpreting government direction to exclude discretion “would make DSI illusory for private actors who perform essential government work,” the company’s brief said.

But “GEO alone chose to use forced labor, and GEO alone chose to unjustly enrich itself at the expense of its detained workers,” so the district judge’s decision on immunity should stand, the detainees said. They also argued that the Tenth Circuit lacks jurisdiction to hear the company’s appeal because the lower court ruling was interlocutory.

Although courts have taken different approaches in applying the derivative sovereign immunity doctrine, there are five factors they typically examine in weighing whether a “sovereign shield” defense—the broader category under which DSI falls—apply, Elengold said.

Courts look at “congressional intent, character of the contracted institution and its contract, discretion of the contractor, whether the contractor exceeded its authority under the contract, and the effect on federal policymaking and decision making,” she said.

Elengold heads her school’s Economic Justice Clinic and co-authored a law review article on sovereign shield defenses.

The Ninth Circuit in March asked the Washington Supreme Court to weigh in on whether the state’s minimum wage law applies to a different detainee group’s suit over GEO’s $1 per day pay program. That suit—in which GEO also argued that its ICE contracts set the daily pay rate—resulted in a $23.2 million federal jury verdict for those detainees, which the company seeks to overturn.

If these detainees win at the Tenth Circuit and go on to win at trial, there could be “serious implications” for private prison operators that have built “free or ultra-cheap labor like that performed by detained immigrants into their business model,” Cho said. Further, the Trafficking Victims Protection Act “includes serious consequences for government contractors who are found to have violated the statute,” such as contract termination, she added.

Gupta Wessler LLP, Towards Justice, and Outten & Golden LLP represent the detainees. Jennifer Bennett of Gupta Wessler, an attorney for the detainees declined to comment.

Greenberg Traurig LLP represents GEO. The company and its counsel didn’t respond to a request for comment.

The case is Menocal v. GEO Grp. Inc., 10th Cir., No. 22-01409, oral arguments 9/18/23.