Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Addison v. Huron Stevedoring Corp.

March 20, 1953


Author: Swan

Before SWAN, Chief Judge, LEARNED HAND and FRANK, Circuit Judges.

Separate actions, consolidated for trial to recover excess statutory compensation under the Fair Labor Standards Act of 1938, 29 U.S.C.A. § 216(b). From adverse judgments, 96 F.Supp. 142, the plaintiffs appeal. Reversed in part and remanded.

SWAN, Ch. J.: These two actions brought under the Fair Labor Standards Act of 1938, 29 U.S.C.A. § 216(b), involve the claims of longshoremen for unpaid overtime compensation, liquidated damages, attorney's fees and costs, because of the alleged failure of the defendants to pay overtime compensation in accordance with section 7(a) of the Act, 29 U.S.C.A. § 207(a). The period of employment involved is from October 15, 1943 to September 30, 1945.*fn1 The actions were commenced on October 4, 1945 and the subsequent history of this protracted litigation, which has already once gone to the Supreme Court, is well stated in Judge Leibell's careful and elaborate opinion.*fn2 He also made very detailed findings of fact, familiarity with which will be assumed. His decision awarded small recoveries to four plaintiffs in the Huron action and to two in the Bay Ridge action, and dismissed on the merits the claims of the others.*fn3 All twenty-three plaintiffs have appealed, those who had a recovery contending that the sums warded them were too small.

The plaintiffs were employed under a collective bargaining contract between their employers and longshoremen's union which provided "straight time hourly rates" for work done within prescribed hours and "overtime hourly rates" for work done outside the straight time hours, with no differential for work in excess of 40 hours per week. The longshoremen worked a varying and irregular number of hours throughout a given workweek, and the same man's workweek might consist of work done partly at "straight time hourly rates" and partly at "overtime hourly rates." The problem of determining the "regular rate" of pay upon which the excess statutory compensation required by section 7(a) of the Fair Labor Standards Act of 1938 is based, was settled by the Supreme Court in June 1948 in the Bay Ridge case.*fn4 It was there held that what the collective bargaining contract called "overtime hourly rates" was really a "shift differential"; and that the "regular rate" was to be found by dividing the weekly compensation by the hours worked, unless the compensation paid contains some amount that represents an "overtime premium" which was defined as "extra pay for work because of previous work for a specified number of hours in the workweek or workday"*fn5 in that event any overtime premium paid may be credited against the obligation to pay statutory excess compensation. The trial now before us for review was had under the mandate of the Supreme Court permitting the District Court to consider any defense which the employers may have under the Portal to Portal Act and to allow any amendments to the complaint or answer or any further evidence that the court may consider just. During the course of the trial defenses based on further amendment of the Fair Labor Standards Act were allowed to be pleaded.

Judge Leibell sustained defenses under sections 9 and 11 of the Portal Act, 29 U.S.C.A.§§ 258, 260, and under the 1949 amendments of the Fair Labor Standards Act, namely, P.L 177 and P.L. 393 of the 81st Congress, 1st session, which appear as 29 U.S.C.A. § 207(d)(5), (d)(6), (d)(7), and (g). This resulted, as already stated, in dismissal of most of the claims which were tried.

Part I of the appellants' brief is devoted to an attack upon the constitutionality of the statutes creating these defenses. This Court has already sustained the constitutionality of the Portal Act,*fn6 and the appellants do not ask us to reconsider those decisions but make their point merely to preserve it because the Supreme Court has not yet expressly ruled upon it. In considering the attack upon P.L. 177 and P.L. 393 is will suffice for present purposes to confine attention to 29 U.S.C.A. § 207(d)(7). This in effect provides that there shall be excluded from the "regular rate" at which an employee is employed "extra compensation provided by a premium rate" paid pursuant to a collective bargaining agreement for work outside the hours established in good faith as the "basic" workday or workweek (not exceeding 8 hours or 40 hours respectively) "where such premium rate is not less than one and one-half times the rate established in good faith by the contract or agreement for like work performed during such workday or workweek." The appellants' challenge to this provision is based upon the theory (1) that it was a denial of due process of law to deprive them of their "vested right" to overtime computed in accordance with the Supreme Court's ruling in the Bay Ridge case, and (2) that after the Supreme Court had so decided Congress could not overrule its judgment by declaring in effect that the rights so adjudicated the Act had not given. With respect to point (2) we agree that Congress was incompetent to declare that the Supreme Court had misconstrued the Act or that the Act did not confer the rights which the Court declared that it did. But the amendments should not be interpreted as attempting to do that.What they undertook to do was to deprive the longshoremen of those rights which the Act, as construed by the Supreme Court, had given. If that was beyond Congressional competence, it was not because the Congress encroached upon the constitutional independence of the Court but because the Fifth Amendment forbade such action. Hence the appellant's challenge of constitutionality must stand or fall on the first objection, the denial of due process. The same arguments now advanced with respect to the Fifth Amendment were rejected by this Court in upholding the constitutionality of the Portal Act.*fn7 With respect to P.L. 177 and P.L. 393 the writer of the present opinion is content to rest on what was there said.*fn8

The appellants further contend that the amendatory statutes cannot be constitutionally applied to deprive counsel of reasonable fees for services already performed and money expended in reliance upon the Act prior to amendment. This matter is discussed in Judge Leibell's opinion, 96 F.Supp. 142 at 177. He rejected the contention for reasons with which we agree. Furthermore the judgments under review specifically reserve "to plaintiffs' counsel the right to apply for an allowance of counsel fees after the completion of any appeals which may be taken in order to review the judgment in the higher courts." Hence the claim that counsel have already been unconstitutionally deprived of reasonable fees appears to be premature.

Part II of the appellants' brief attacks the findings and conclusions of the district court in sustaining defenses under sections 9 and 11 of the Portal Act. Pages 154 to 166 of 96 F.Supp. deal with the section 9 defense. Under section 9, 29 U.S.C.A. § 258, the question is whether the defendants' failure to pay overtime in exact conformity with section 7 of the Act "was in good faith in conformity with and in reliance on any administrative regulation, order, ruling, approval or interpretation, of any agency of the United States * * *" Judge Leibell held that section 9 was a bar to the plaintiffs' action except with respect to overtime claims for certain weeks in which a plaintiff was employed as header, gangwayman or assistant foreman and as such received a "skill differential" of 5 cents of 15 cents per hour.*fn9 In discussing the meaning of "good faith," 96 F.Supp. at 155, he expressed the view that it requires more than honest belief and must meet an "objective test," that is, the employer must act "as a reasonably prudent man would have acted under the same circumstances." Although the question may not be of importance in the case at bar since the trial court found that the defendants' reliance upon agency rulings and interpretations was in fact reasonable as well as honest, we feel constrained to express disagreement with the view that "good faith" must meet an objective standard of reasonableness. If the interpretation which an employer says he put upon an agency ruling is unreasonable, this may indeed cast doubt upon the honesty of his belief in the interpretation he asserts, but we think it is not otherwise relevant. The "good faith" of the statute requires, we think, only an honest intention to ascertain what the Fair Labor Standards Act requires and to act in accordance with it.This is confirmed by comparing the language of section 11, 29 U.S.C.A. 260, with that of section 9. Section 11 requires the employer's "act or omission" to have been taken not only "in good faith" but also with "reasonable grounds for believing that his act or omission was not a violation of the Fair Labor Standards Act." Obviously in section 11 the objective standard of reasonableness is a requirement additional to that of "good faith." It would be unwarranted to construe "good faith" in section 9 to have a meaning different from the same phrase in section 11. Furthermore, we think it clear that Congress must have intended to adopt this meaning.Section 9 presupposes that different governmental agencies may have made ambiguous or even conflicting rulings, interpretations, etc., of the Act. From such rulings the employer must choose the one he honestly believes to be correct, must conform with it and must act in reliance upon it. If he has done this his past conduct is to be excused, even if the ruling he has relied upon is later determined by judicial authority to have been erroneous. For future conduct, however, he may rely only on some written regulation, ruling, etc., of the Administrator of the Wage and Hour Division of the Department of Labor.*fn10 The appellants argue that there could not be good faith reliance on a ruling of another agency, such as the War Shipping Administration, after the employers knew that the agency primarily charged with enforcement of the Act, the Wages and Hours Division, had expressed a different view, as it did in the Walling letter of October 15, 1943. We cannot agree. Section 9 authorizes good faith reliance on the ruling of "any" agency.

Turning from the legal interpretation of section 9 to the application of it to the facts, as found by Judge Leibell in great detail, we see no occasion to add to his opinion. It will suffice to say that we have examined the findings and do not think the appellants have shown any of them to be clearly erroneous. We agree with the conclusion that the defense was proven, except as to claims involving the skill differentials.

The other Portal Act defense which was sustained relates to liquidated damages. Section 16(b) of the Fair Labor Standards Act provides for recovery of liquidated damages in an amount equal to the unpaid wages owed pursuant to sections 6 and 7. Consequently, unless the plaintiffs recover for overtime under section 7, they are entitled to no liquidated damages under section 16(b), and do not need the defense provided by section 11 of the Portal Act, except as to the small claims involving "skill differentials" and "cargo differentials." Judge Leibell discusses the section 11 defense and his reasons for awarding no liquidated damages at pages 166 to 168 of 96 F.Supp. For the reasons there stated we think his discretion was properly exercised.

Part III of the appellants' brief deals with several miscellaneous contentions, chief of which is the assertion that the trial court erred in allowing the defendants to credit contract "overtime" payments after eight daily or forty weekly "straight time" hours against the obligation to pay the statutory overtime compensation. This ruling is expressed in number V of the Conclusions of Law and is limited to plaintiffs who performed work as a gangwayman, header or assistant foreman, thus involving the skill differentials.*fn11 The appellees' brief points out, correctly we think, that this ruling is immaterial except as to contract overtime rate of less than 150% of contract straight time rates, because 150% overtime rates fall under sections 7(d) 6, 7(d) 7 and 7(g) of P.L. 393, 29 U.S.C.A. § 207(d)(6), 207(d)(7) and 207(g). Contract overtime rates of less than 150% fall outside sections 7(d) 6 and 7(d) 7 but may come under section 7(d)(5) if they were paid because the employee had worked in excess of eight hours in a day or forty hours in a workweek; and, if they do fall under section 7(d) 5, they are creditable under section 7(g).*fn12 Judge Leibell stated in his opinion (page 172 of 96 F.Supp.):

"If an overtime premium of less than full time and a half was paid to a plaintiff because the work was performed at a time outside the clock pattern of the basic workday as fixed by the employment contract but not because the employee had previously worked eight hours in that day, the premium would not be a true overtime payment under the Supreme Court ruling in this case. But where an employee, who had already worked eight contract straight time hours in a day, thereafter received for additional hours in the day a premium payment slightly less than time and one half the contract straight time rate, the inference is warranted that the premium rate actually paid during the additional hours in that day was paid because of the hours previously worked, and the Supreme Court's ruling that it is true overtime would therefore be applicable."

With the first sentence of the above quotation we are in complete accord. The basis for "the inference" stated in the second sentence is not apparent to us.Nor is it, we think, consistent with what the Supreme Court held on the prior appeal. That opinion repeatedly emphasized that what the collective bargaining contract called "overtime hourly rates" was a shift differential paid to the employees who worked during less desirable hours than those described in the "straight time hourly rates."*fn13 Consequently we agree with the appellants' contention that the "inference" that contract overtime hourly rates were paid "because of the hours previously worked" is not justified. But it by no means follows, in our opinion, that the trial judge erred in excluding the "contract overtime" premiums in computing the regular rate of pay where these premiums did not amount to fifty percent of the straight time rate because of the presence of a skill differential. For, while the amended provisions in § 7(d)(5) do not authorize this exclusion, it is our opinion that § 9 of the Portal to Portal Act does. Suppose one of the plaintiffs worked ten hours on a given day as an assistant foreman, receiving a straight time rate for eight hours and contract overtime for two; for mathematical convenience let it be assumed that the straight time hourly rate was $1.00, plus 15 cents, the skill differential, and that the contract overtime hourly rate was $1.50, plus the fifteen cents. Since the additional fifteen cents an hour received for two hours was not true overtime pay - paid because of work previously done in the day*fn14 - in the absence of any exculpatory legislation, his regular rate of pay for that day would have been $12.50 (8 X $1.15 plus 2 X $1.65) divided by 10, or $1.25 an hour; hence he would be entitled to an additional $1.25 (2 X 62 1/2 cents) for overtime work. But we have already held that where no skill differential was concerned, the 50 cent contract overtime premium met the statutory overtime requirement by virtue of § 9 of the Portal to Portal Act. Where the employer, without reliance on any administrative decision, has failed to pay a part of the overtime required by the Fair Labor Standards Act, it may be argued that he could not have in good faith supposed himself to be complying with the Act, and that the Portal Act's exoneration should therefore be denied him absolutely. We do not believe this to have been the intention of Congress; to so interpret the law would not only deny credit for the premium, but would increase the employer's liability by reason of a payment which in the absence of a skill differential would satisfy the statute. We therefore find that in the computation of the regular rate in the example given above, the 50 cent contract-overtime premium should be excluded; thus the regular rate would be 8 X $1.15 plus 2 X ($1.65 - .50) divided by 10, or $1.15. Thus the employer would be liable for the difference between 8 X $1.15 plus 2 X $1.72 1/2, or $12.65, and the $12.50 already paid. If we correctly understand Judge Leibell's opinion, the credit he allowed for contract overtime payments results in a computation conforming to this rule.

In Conclusion XIV (B) the trial court ruled: "If the amount recoverable by any plaintiff for any week is less than $1.00 the doctrine of de minimis non curat lex is applicable." In holding this doctrine applicable the trial judge relied (page 179 of 96 F.Supp.) upon Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 692 where Mr. Justice Murphy said, "When the matter in issue concerns only a few seconds or minutes of work beyond the scheduled working hours, such trifles may be disregarded." We do not think this justifies a disregard in the case at bar of all awards of less than a dollar for any one week. The impediment to prompt decision of the action is in computing what is the amount due a plaintiff for each of his workweeks. Once that has been done, all that remains is to add up all the awards. To disregard workweeks for which less than a dollar is due will produce capricious and unfair results. Thus A must be paid the $50 owed him for one week's work, but B may be refused payment of a like sum due ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.