UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK
May 23, 1975
Peter J. Brennan, Secretary of Labor, United States Department of Labor, Plaintiff
Emerald Renovators, Inc. at al., Defendants
The opinion of the court was delivered by: CONNER
Memorandum and Order
This action was commenced on June 28, 1974 by the Secretary of Labor (the Secretary) pursuant to the provisions of the Fair Labor Standards Act of 1938, 29 U.S.C. § 201, et seq. (the Act), as amended by Section 6 of the Equal Pay Act of 1963, 29 U.S.C. § 206 (the Equal Pay Act). Defendant is charged with having violated Section 6(d)(1) of the Equal Pay Act, 29 U.S.C. § 206(d)(1),
when it allegedly discriminated between employees on the basis of sex by paying higher wages to certain male employees than it pays to female employees although the tasks performed by both require equal skill, effort and responsibility under similar working conditions.
The Secretary seeks a judgment pursuant to Section 17 of the Act, 29 U.S.C. § 217,
restraining defendant from violating the Act and ordering the payment of any back wages found by the Court to be due to the employees affected by defendant's prior violations. After serving its answer, defendant impleaded the Service Employees International Union, Local 200, AFL-CIO, and a number of its agents (the Union) claiming that any violation of Section 6(d)(1) by it was the result of pressure by the Union in violation of Section 6(d)(2) of the Equal Pay Act, 29 U.S.C. § 206(d)(2).
It is defendant's position that any judgment against it recovered or recoverable by the Secretary should ultimately be satisfied by the Union.
Presently before the Court are motions by the Secretary and the Union pursuant to Rule 12(b), F.R. Civ. P., to dismiss the third-party complaint. The issues raised by both motions are substantially the same so that the motions may be treated together.
The question presented is whether an employer sued for violating Section 6(d)(1) can seek contribution or indemnity from a labor organization which has violated Section 6(d)(2). A review of the language and structure of the Act leads to the inescapable conclusion that it affords no legal basis for recovery by the employer against a labor organization or its principals in a private action for contribution or otherwise.
Defendant concedes that there exists no statutory authority in the Act or its legislative history, see 1963 U.S. Code Cong. & Admin. News, p. 687, et seq. ; see also, Love v. Temple University, 366 F. Supp. 835, 837 (E.D. Pa. 1973), which specifically provides for a civil cause of action enabling an employer to recover damages against a labor organization. It contends, however, that employers are members of the class intended to be protected by Section 6(d)(2), which places a specific duty upon a labor organization not to cause an employer to violate Section 6(d)(1), and therefore the Court, either through common law tort or general equitable principles should fashion a remedy to enforce what defendant views as its federally protected right not to be coerced into executing illegal collective bargaining agreements.
It is beyond peradventure that, even in the absence of a specific statutory provision, where federally protected rights have been invaded, the courts may use any available remedy to make good the wrong done. Bell v. Hood, 327 U.S. 678, 684, 66 S. Ct. 773, 90 L. Ed. 939 (1946). This includes inferring a cause of action against an individual whose conduct has been proscribed by legislation where (1) the party seeking to recover is a member of the class for whose protection and benefit the statute was promulgated, Restatement of Torts, Second § 286 (1965); see Gomez v. Florida State Employment Service, 417 F.2d 569 (5th Cir. 1969), and (2) damages are necessary to effectuate the congressional policy underpinning the substantive provisions of the statute. Bivens v. Six Unknown Federal Narcotics Agents, 403 U.S. 388, 402, 29 L. Ed. 2d 619, 91 S. Ct. 1999 (1970) (Harlan, J., concurring); J. I. Case Co. v. Borak, 377 U.S. 426, 433, 12 L. Ed. 2d 423, 84 S. Ct. 1555 (1964). Defendant's purported claim over against the Union does not satisfy either of these requirements.
Although Section 6(d)(2) prohibits a union from seeking to force an employer to discriminate against employees on the basis of sex, it is the employees, the victims of the discrimination, and not the employer, who comprise the class intended to be protected. Nothing in Section 6(d)(2) creates any rights in favor of a discriminatory employer. Rather, it provides the basis for an equitable action under Section 17 by the Secretary to obtain civil redress against an offending union. To infer a remedy on behalf of employers would allow them to accede to the illegal demands of a labor organization with complete impunity. If the Secretary brings an action, the employer (who has violated Section 6(d)(1)) would be indemnified by the offending union, whose treasury is funded by the affected employees' union dues. This is hardly conducive to enforcement of the Act.
On the other hand, if the employer is aware that it and it alone must bear the economic consequences for any violation of the Act, there would be an added incentive to resist the type of economic pressure the Union allegedly placed on defendant in this case. Moreover, if in fact a labor organization attempts to coerce an employer to agree to illegal and discriminatory wage practices, the employer has a readily available remedy before the National Labor Relations Board (the NLRB).
Section 8(b)(3) of the National Labor Relations Act, 29 U.S.C. § 158(b)(3), (the NLRA) makes it an unfair labor practice for a labor organization or its agents to refuse to bargain collectively with an employer. Section 8(d) of the NLRA, 29 U.S.C. § 158(d), requires the parties to collective bargaining to meet and confer in good faith. Either party's insistence upon the inclusion of illegal contract provisions within the collective bargaining agreement amounts to a refusal to bargain collectively in good faith within the meaning of Sections 8(b)(3) and (d). Associated General Contractors of America, Evansville Chapter, Inc. v. NLRB, 465 F.2d 327, 334 (7th Cir. 1972), cert. denied, 409 U.S. 1108, 93 S. Ct. 907, 34 L. Ed. 2d 689 (1973); NLRB v. Amalgamated Lithographers of America, 309 F.2d 31, 42 (9th Cir. 1962), cert. denied, 372 U.S. 943, 9 L. Ed. 2d 968, 83 S. Ct. 936 (1963); In re Maritime Union, 78 NLRB 971, enforced, 175 F.2d 686 (2d Cir. 1949), cert. denied, 338 U.S. 954, 70 S. Ct. 492, 94 L. Ed. 589 (1950); see International Typographical Union, Local 38 v. NLRB, 278 F.2d 6, 12 (1st Cir. 1960), rev'd in part and aff'd in part, 365 U.S. 705, 81 S. Ct. 855, 6 L. Ed. 2d 36 (1961) (reversal on question of legality of contract provision involved).
Therefore, since the alleged conduct of the Union was arguably an unfair labor practice under Section 8 of the NLRA, defendant's proper and exclusive remedy was to have petitioned the NLRB to enjoin the Union's illegal activities. See San Diego Building Trades Council v. Garmon, 359 U.S. 236, 3 L. Ed. 2d 775, 79 S. Ct. 773 (1959).
Furthermore, if the sole purpose of the Act was to recover unpaid wages for the benefit of employees protected by the statute, it might make little difference from whom the withheld wages were recovered. However, that is not the case. The Act's restitution provisions are, in the words of then Senator John F. Kennedy, to
"serve as a source of protection to employers who pay a decent wage and who must compete with employers who pay a substandard wage." U.S. Code Cong. & Ad. News, 87th Cong., 1st Sess. 1961, Vol. 2 at p. 1621.
Thus, employers violating the provisions of the Act may be required to disgorge wages which were wrongfully withheld and deposit them in the Treasury of the United States even when the affected employees cannot be located. Hodgson v. Wheaton Glass Co., 446 F.2d 527, 535 (3d Cir. 1971); Wirtz v. Jones, 340 F.2d 901, 904-5 (5th Cir. 1965); Love v. Temple University, supra, and cases cited therein. Therefore, to allow discriminating employers to shift their financial responsibility to a labor organization would not effectuate but subvert the congressional policies sought to be advanced.
The maintainability of an implied third-party action against a union by an employer alleging violations of Section 6(d)(2) was first considered in Wirtz v. Hayes, 9 Fair Empl. Prac. Cas. (BNA) 493, 58 CCH Labor Cases, P 32,085 at 43,556 (N.D. Ohio 1968). Although refusing to rule out the possibility of recovery on a common law basis, or upon "the evolving body of federal labor law being fashioned by the federal courts," the Court concluded that civil liability on the part of a union is unavailable in private actions under the Act, and observed:
"A reading of the statute and its legislative history does not disclose a purpose to make the union jointly liable in damages, but rather to give the Secretary of Labor power to enjoin violations of the Fair Labor Standards Act where a union is responsible, as well as power to enjoin employers from future violations and require payment for past ones. 29 U.S.C. § 215(a)(2) makes it unlawful for any person to violate any of the provisions of Section 206, and 29 U.S.C. § 217 gives the District Courts jurisdiction to restrain violations of section 215(a)(2) where there has been a withholding of payments found by the court to be due to employees under the chapter. If the courts are given the express power to restrain the withholding of payments due employees by reason of past sex discrimination in violation of the Act it is impliedly only given that power against the employer, for the union would not be 'withholding * * * payment of minimum wages * * *'. Therefore, the only power given the District Courts against unions by this Act would be an injunction under section 217 to restrain the conduct prohibited in section 206(d)(2)." Supra at 43,557-43,558.
The only case in which damages were assessed against a union for violation of Section 6(d)(2) was Hodgson v. Sagner Inc., 326 F. Supp. 371 (D. Md. 1971), aff'd sub nom. Hodgson v. Baltimore Regional Joint Board, 462 F.2d 180 (4th Cir. 1972). In that case the Secretary had initially sought only injunctive relief against the union pursuant to Section 17. However, during the course of the proceedings it was revealed that the employer had agreed to cease violating the Act and to make restitution of previously withheld wages. On the other hand, the union, although fully aware of its obligations under Section 6(d)(2) sought to cause the employer to pay seventy-five percent of the wages which had been withheld from the eligible employees to employees who were not entitled to receive these sums. In addition, the union attempted to secure "waivers" of the wages from the employees lawfully entitled to them. The Court, ruling that its equity powers under Section 17 were sufficient to support such an order, granted a motion by the Secretary to amend his complaint and seek damages as well as injunctive relief against the union. Under these circumstances, the fact that the Secretary, under Section 11(a) of the Act, 29 U.S.C. § 211(a), was permitted to seek restitution from the union, is irrelevant to the issue of whether the employer herein has standing to request such an order when it is opposed by the Secretary.
Finally, a Section 17 action ousts jurisdiction from all persons other than the Secretary, and defendant cannot, by means of a third-party action, arrogate to itself power delegated by Congress solely to the Secretary. See Equal Employment Opportunity Commission v. A.T.T., 365 F. Supp. 1105, 1122, 1128 (E.D. Pa. 1973). Where a statute vests in a particular party exclusive power to enforce a statute, impleader should not be permitted to expand the class of persons with standing to enforce it.
Professor Moore in his discussion of Rule 14 points out that the Rule "creates no substantive rights", and "does not 'abridge, enlarge, nor modify the substantive rights of any litigant' ". He specifically states that "The Rule does not establish a right of reimbursement, indemnity nor contribution. * * *" 3 Moore's Federal Practice, P 14.03 at 153 (2d Ed. 1974). This was the result in Tuma v. American Can Co., 367 F. Supp. 1178 (D.N.J. 1973), where Judge Lacey, citing Hayes, ruled that even employees and union members could not maintain a private action for damages against the union under the provisions of Section 6(d)(2) but specifically recognized that a federal court might possess equitable power to assess damages against a union in a suit for injunction instituted by the Secretary pursuant to Section 17.
Similarly, in Bowe v. Judson C. Burns, 137 F.2d 37 (3d Cir. 1943), the Court noted that the Act
"is carefully drawn and every term is used as a term of art. Legislative intent must be drawn from the Act as a whole. Those portions of the Act (Sections 6 and 7, 29 U.S.C.A. §§ 206 and 207) relating to wages and hours do apply only to employers." 137 F.2d at 38.
The Fair Labor Standards Act of 1938 provides for its enforcement through both civil and criminal actions by specified parties. Under the circumstances of this case, there seems no need to supplement the statute with an additional remedy which Congress did not see fit to provide.
The motion is granted.