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ASSELTA v. 149 MADISON AVE. CORP.

February 27, 1951

ASSELTA et al.
v.
149 MADISON AVE. CORP. et al.



The opinion of the court was delivered by: KAUFMAN

This action was commenced on December 10, 1943. Plaintiffs were building service employees, seeking to recover overtime compensation, liquidated damages, and reasonable attorneys' fees under the provisions of Secs. 7 and 16(b) of the Fair Labor Standards Act, 29 U.S.C.A. §§ 207 and 216(b).

The case came for trial before Judge Bondy in November 1944. On March 8, 1946 a judgment was granted in favor of plaintiffs for $ 2,098.90 for overtime compensation due them from April 20, 1942 to December 10, 1943, together with an allowance of $ 524.70 for attorneys' fees and $ 29.48 costs. D.C. 65 F.Supp. 385. This judgment was affirmed by the Court of Appeals in June 1946. 2 Cir., 156 F.2d 139. The Supreme Court of the United States granted certiorari, 329 U.S. 817, 67 S. Ct. 353, 91 L. Ed. 696, and affirmed the judgment on May 5, 1947, 331 U.S. 199, 67 S. Ct. 1178, 91 L. Ed. 1432. Before issuing its mandate the Supreme Court, 331 U.S. 795, 67 S. Ct. 1726, 91 L. Ed. 1822, modified its judgment and remanded the case to the District Court to permit defendants to plead any defenses available to them under the Portal-to-Portal Act which was enacted on May 14, 1947.

In a trial before Judge Rifkind in November 1949, defenses under Secs. 9 and 11 of the Portal-to-Portal Act, 29 U.S.C.A. §§ 258 and 260, were pleaded by defendants. Judge Rifkind found that the defense under Sec. 9 (reliance on a past administrative ruling) was partially established and, therefore, that plaintiffs were not entitled to overtime pay for the period of employment succeeding September 5, 1942. The defense under Sec. 11 (good faith) was upheld and, accordingly, liquidated damages were denied plaintiffs for the employment period for which defendants remained liable, April 20, 1942 to September 5, 1942.

 On May 20, 1950 an order was entered D.C., 90 F.Supp. 442 in which Judge Rifkind modified and reduced Judge Bondy's judgment, 79 F.Supp. 413, and awarded plaintiffs overtime compensation for the period from April 21, 1942 to September 5, 1942. The order reserved two issues:

 '(1) Whether and to what extent interest should be allowed upon the amount of the recovery.

 '(2) To what extent, if at all, the award of attorneys' fees and costs allowed plaintiffs in the said judgment of March 8, 1946 should be increased or decreased, including whether attorneys' fees and costs should be awarded plaintiffs for legal services rendered in this action since the entry of said prior judgment of March 8, 1946, and if so, in what amount.'

 These are the issues which have now been tried.

 I. Interest

 Plaintiffs claim they are entitled to interest on the overtime compensation awarded them.

 First, it is necessary to dispose of plaintiffs' contention that the question of interest is one of local law. The Supreme Court has held expressly to the contrary in Brooklyn Savings Bank v. O'Neil, 324 U.S. 697, 715, 65 S. Ct. 895, 89 L. Ed. 1296.

 The problem is a novel one and its solution is dependent upon the interpretation of the effect of Sec. 11 of the Portal-to-Portal Act of 1947, 29 U.S.C.A. § 260, on Sec. 16(b) of the Fair Labor Standards Act, 29 U.S.C.A. § 216(b). Under Sec. 16(b) of the Fair Labor Standards Act, the assessment of liquidated damages for a violation was mandatory. Overnight Motor Transport Co. v. Missel, 316 U.S. 572, 62 S. Ct. 1216, 86 L. Ed. 1682. Because of the mandatory provision for liquidated damages, it was held that interest was not recoverable under Sec. 16(b), since the award of liquidated damages plus interest 'would have the effect of giving an employee double compensation for damages arising from delay in the payment of the basic minimum wages'. Brooklyn Savings Bank v. O'Neil, supra, 324 U.S.at page 715, 65 S. Ct.at page 906, 89 L. Ed. 1296.

 Under the Portal-to-Portal Act, the awarding of liquidated damages in actions under the Fair Labor Standards Act is no longer mandatory, but is placed by Sec. 11 within the sound discretion of the court. Clearly, interest on an award in which no liquidated damages were granted, such as in the present case, would not be barred by the holding in Brooklyn Savings Bank v. O'Neil. An analysis of the opinion in the O'Neil case indicates that the Court regarded the provision for liquidated damages as a substitute for interest, which, the 'court said, 'is customarily allowed as compensation for delay in payment'. 324 U.S.at page 715, 65 S. Ct.at page 906.

 There being no bar to the granting of interest, the question whether or not it should be awarded remains to be answered. Though a statute creating an obligation be silent as to interest, silence is not to be taken as an unequivocal manifestation of intent that the obligation shall bear no interest. Rodgers v. United States, 332 U.S. 371, 373, 68 S. Ct. 5, 92 L. Ed. 3. It is a general principle 'that one for whose financial advantage an obligation was assumed or imposed, and who has suffered actual money damages by another's breach of that obligation, should be fairly compensated for the loss thereby sustained.' Rodgers v. United States, supra, 332 U.S.at page 373, 68 S. Ct.at page 7.

 In the present case, Judge Rifkind held, in substance, that there was a breach by defendants of an obligation imposed upon them by statute, which resulted in monetary loss to plaintiffs. The equities of the situation require that plaintiffs be fully compensated for their loss by the granting of interest on the overtime compensation to which they were ...


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