The opinion of the court was delivered by: MISHLER
Memorandum of Decision and Order
This is an action brought by the Government pursuant to Section 2 of the Walsh-Healey Public Contracts Act (41 U.S.C. § 36).
Jurisdiction is founded on 28 U.S.C. § 1345.
Defendant corporation was awarded eleven (11) contracts by Government agencies for the manufacture of marking guns and other material, supplies and equipment for the armed services, each contract exceeding $10,000 in amount. Defendant Anita Castorina signed the contracts as president on behalf of the defendant corporation.
On May 20, 1969, the Under Secretary of Labor issued a complaint against the defendants charging that employees of defendant corporation employed in the performance of the contracts worked in excess of 8 hours per day and 40 hours per week without recovering time and a half pay as required by the contract, by Sections 1 and 6 of the Act (41 U.S.C. §§ 35 and 40) and by the regulations promulgated by the Secretary of Labor (41 C.F.R. part 50-201 section 201.103). It charged the individual defendants Anita Castorina and Luigino Castorina with exercising control over wages paid and hours worked in their respective capacities as president and manager.
On June 12, 1969 the instant action was commenced by the filing of a complaint. Thereafter and on October 9, 1969 the administrative complaint was amended to include an additional contract and an additional violation for failing to maintain and make available adequate and accurate payroll records of employees engaged in the performance of the aforementioned contracts. Defendants denied the material allegations of the administrative complaint. Defendant Luigino Castorina also denied that he served in any managerial capacity.
Pre-hearing conferences were held before the hearing examiner on June 3, 1969, August 12, 1969, October 1, 1969 and November 20, 1969. The hearing was conducted on March 9, 1970, June 10, 1970 and June 11, 1970. Defendants were represented by counsel at all the pre-hearing conferences and the hearing except the initial pre-hearing conference. The hearing examiner's findings of fact and conclusions of law were made on December 16, 1970 and filed in the office of the Secretary of Labor on December 22, 1970. He determined that defendants were liable to the Government in the amount of $4,094.15 and ordered defendants to pay said sum to the Government ". . . as liquidated damages for unpaid overtime compensation . . ." and that defendants should be placed on the ineligible list of contractors as provided under Section 3 of the Act (41 U.S.C. § 37). Defendants petitioned the Administrator of the Wage and Hour Public Contracts Division of the Department of Labor for review, which petition was dismissed on February 8, 1971.
The Government moved for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. Defendants' brief claims that the hearing examiner's decision is not supported by a preponderance of the evidence.
The hearing examiner made an exhaustive analysis of the testimony in support of his findings. He found that during the term of the performance of the Government contracts in question, the defendant corporation paid overtime at the required rate for ten (10) hours but beyond that paid only straight time. It did this by designating employees as vendors (or independent contractors) for the period of time in excess of 50 hours per week.
Employees were paid straight time for overtime in excess of 50 hours. The hearing examiner found the following employees were entitled to overtime for such work in the following amounts:
The hearing examiner further found that Anita Castorina and Luigino Castorina were president and general manager respectively of the defendant corporation and exercised control over wages paid, hours worked and other conditions of employment maintained by the defendant corporation.
The scope of judicial review in this action is set out in Section 5 of the Act (41 U.S.C. § 39). It provides that ". . . findings . . . if supported by the preponderance of the evidence, shall be conclusive in any court of the United States . . . ." The language of the act is ". . . too clear for doubt that where the findings comply with the requirements of the Act and are supported by a preponderance of the evidence, they shall be conclusive in a case of this kind." Harp v. United States, 173 F.2d 761, 764 (10 Cir. 1949) cert. denied 338 U.S. 816, 70 S. Ct. 56, 94 L. Ed. 494 (1949). See United States v. Southland Manufacturing Corp., 264 F. Supp. 174 (D. Puerto Rico 1967).
Guy Morone, a compliance officer of the Wage, Hour and Public Contracts Division of the Department of Labor, testified that he visited the defendants' place of business at 145 Toledo Street, Farmingdale, New York on March 3, 1969. He met with the individual defendants. He requested and received the payroll records and time cards then current for 1969 and the records for the years 1968 and 1967. Defendant Luigino Castorina advised Mr. Morone of his "vendor set up with his employees." Vendor slips were available for the payroll period showing time that employees were working on public contracts as independent contractors in excess of 50 hours per week. Mr. Morone transcribed the information for the period from the week ending January 1, 1969 to February 23, 1969 though records were available for the two-year period prior to January 1, 1969. Mr. Morone spot-checked the payroll records, time cards and "vendor slips" for 1968 and 1967.
Mr. Morone testified that he advised Mr. Castorina of the violations he found in failing to pay overtime beyond 50 hours per week. Mr. Castorina admitted the violations but refused to make restitution. Defendants produced revised payroll records at the hearing. Mr. Castorina testified that the information on the time cards and time sheets is ...