time-and-a-half for overtime hours. Tr. 1070-71.
In Exhibit 35, in addition to the information from the Waldbaum payroll, plaintiff lists the total actual hours worked and the basis for that work. Tr. 1066. These are the only figures that cause controversy, for the remaining numbers are generated by simple calculations to determine the amount due, based on an employees' hourly rate, after accounting for hours already paid.
The actual hours worked were calculated either by statements from the employees, by within-store averaging, or by across-store averaging. Tr. 1067. The statements were from deposition testimony and statements collected by the Labor Department.
Within-store averaging is a technique by which the actual hours worked for all employees within the same store from whom statements were obtained are averaged. Tr. 1072. Included in these averages are statements by employees that they were paid for all of the hours worked. Tr. 1073. For positions in certain stores where there was insufficient data to perform within-store averaging, the plaintiff performed cross-store averaging. Cross-store averaging takes the average of all hours worked by all employees in the same position in all stores. Tr. 1075. Again, in these calculations, statements of no violations were included with statements of violations. Id. In both within-store and cross-store calculations, different job categories were never mixed. Tr. 1076.
On its face, the court finds that overall method of calculation to be reasonable. Where possible, the claims are made on the basis of specific sworn testimony. If sworn testimony is unavailable, statements are used from the employee on whose behalf the claim is made. Within-store averaging, which is the secondary means of calculation, compares only similarly situated employees within the same store. Although factors effecting work times vary from day to day and from shift to shift, the court finds this type of averaging, over the course of two years, to be sound. There is sufficient commonality of conditions and type of work to satisfy a reasonableness standard. See McLaughlin v. DialAmerica Marketing, Inc., 716 F. Supp. 812, 825 (D.N.J. 1989) (average hours derived from trial and deposition testimony of 43 employees was sufficient to award back wages to 300 employees with whom commonality was shown); Kaszycki & Sons Contractors, 599 F. Supp. at 868 (testimony of 29 non-union employees involved in demolition sufficient to compensate in excess of 200). As to cross-store averaging, the defendant contends that conditions from store to store vary significantly enough to raise concern that some employees will be overcompensated under this method. However, because data from all twenty subject stores is used, the base is broad enough to mitigate against extreme claims. Indeed, of the more than 140 claims made on this basis, only six are in excess of $ 10,000. Defendant must also remember that this is an averaging technique, one used as the least preferred method. Just as some employees are overcompensated by the calculations, others are undercompensated. Although not ideal, the method is reasonable. Id.; Beliz v. W.H. McLeod & Sons Packing Co., 765 F.2d 1317, 1330-31 (5th Cir. 1985); see Leonard v. Carmichael Prop. & Management Corp., 614 F. Supp. 1182, 1186 (S.D. Fla. 1985) (where employer fails to keep records, employees who demonstrate some work performed have a right to recovery, even where damages are uncertain and difficult to calculate, thereby allowing approximation).
The defendant attacks this methodology on a number of grounds. Waldbaum raises complaints as to the credibility of the trial testimony, depositions, and statements as the underlying basis of the calculations. The court has already determined that it found the testimony of the witnesses credible. As to the depositions, this court adhered to the prior ruling of Judge John E. Sprizzo of this court on March 24, 1992 ordering that the depositions of witnesses would be used in place of live trial testimony except to the extent that a party which questions a witness' credibility wishes to conduct live cross-examination. This court allowed defendant limited cross-examination. Nothing revealed in the courtroom casts doubt on the validity of the sworn depositions taken by the defendant.
The same cannot be said, however, of the written statements. The court admitted two sets of documents into evidence that were statements made to the government by employees and former employees of Waldbaum. The court admitted the first group of documents as admissible under both Fed. R. Evid. 801(d)(2)(D) and 803(8) as an admission of a party-opponent and as a public record. The second set of documents was also admitted, but only under Fed. R. Evid. 803(8). The court stands by this ruling. However, the mere fact of admission does not govern the weight that the court gives these statements. The court gives these statements weight in verifying the conclusion that Waldbaum employees were not paid for all of the time that they worked. The sheer magnitude of the statements, each attesting to unpaid work hours, when taken with the trial testimony discussed above, is persuasive in establishing that violations of the FLSA took place.
The court cannot give weight, though, to the specific hours claimed to have been worked by those who gave statements. First, the accuracy of the method of collection is poor. Some are mail surveys and questionnaires and others are interviews. Compare Pl. Exh. 51 with Pl. Exh. 53 and Pl. Exh. 54. The thoroughness of the responses varies significantly. Unlike a deposition or trial testimony, there is no affirmation of truthfulness, nor any necessity for accuracy. Trial testimony also indicated that a number of employees were untruthful with the government on the statements or did not fill out the forms accurately. Tr. 511 (Kallman); Tr. 648 (Leon); Tr. 813 (Schaentler); Tr. 161 (Phillips). The court therefore concludes that these statements are sufficiently inaccurate that they should not form the basis of the back wage calculations.
This conclusion has an impact on the plaintiff's claims. By the defendant's estimation, claims based on trial or deposition testimony total $ 835,704.33 of the back wages due, or slightly more than 56% of the total claimed. Other than for corrections consistent with this opinion, Waldbaum has made no challenge that would upset those claims.
Other claims are made on the basis of the statements, however, totaling $ 203,258.31. The remaining $ 449,161.48 is based on the averaging techniques already described. Discounting the statements will mean that these claims must now be recalculated using the averaging techniques.
Waldbaum makes two additional challenges to the calculations. At trial, a number of witnesses testified that they took breaks and ate meals while at work. Waldbaum faults the calculations because they do not take into account these breaks which it claims are not compensable under the FLSA. 29 C.F.R. § 785.18 suggests that rest periods running between 5 and 20 minutes are compensable; additional time, however, need not be. 29 C.F.R. § 785.19 provides that bona fide meal times are not compensable. Waldbaum cites Hill v. United States, 751 F.2d 810 (6th Cir. 1984), for the proposition that bona fide meals are not compensable under the FLSA. Defendant's reliance on Hill is misplaced. In Hill, the court concluded that the U.S. Postal Service did not violate the FLSA by refusing to compensate letter carriers for half hour lunch periods. Waldbaum asserts that it too has a policy which requires employees to punch out at lunchtime so as not to be compensated. Here, however, there is no challenge to the policy; rather, the policy seemed to go unenforced, as did most of the Waldbaum policies regarding punching time cards. Thus, the plaintiff should not be held responsible for enforcing Waldbaum's policies after the fact by crediting time for these breaks, when there is insufficient evidence that Waldbaum itself enforced these policies.
B. Liquidated Damages
According to § 16(c) of the FLSA, "the Secretary may bring an action . . . to recover the amount of unpaid minimum wages or overtime compensation and an equal amount of liquidated damages." 29 U.S.C. § 216(c). § 11 of the Portal Act permits a good faith defense to the liquidated damages provision:
if the employer shows to the satisfaction of the court that the act or omission giving rise to such action was in good faith and that he had reasonable grounds for believing that his act or omission was not a violation of the Fair Labor Standards Act of 1938, as amended, the court may, in its sound discretion award no liquidated damages or award any amount thereof not to exceed the amount specified in § 216 of this title.
29 U.S.C. § 260. The burden of the good faith defense is on the employer who must show "plain and substantial evidence of at least an intention to ascertain what the Act requires and to comply with it." Brock v. Wilamowsky, 833 F.2d 11, 19 (2d Cir. 1987). However, this burden is a heavy one, because "double damages are the norm, single damages the exception. . . ." Id. (quoting Walton v. United Consumers Club, Inc., 786 F.2d 303, 310 (7th Cir. 1986)).
As this court stated previously, in order to prevail on a good faith defense under § 11 of the Portal Act, "the employer must show (1) subjective good faith and (2) objectively reasonable grounds for believing that he was in compliance with the provisions of the FLSA." Soler v. G & U. Inc., 628 F. Supp. 720, 725 (S.D.N.Y. 1986), rev'd on other grounds 833 F.2d 1104 (2d Cir. 1987), cert. denied 488 U.S. 832, 102 L. Ed. 2d 64, 109 S. Ct. 88 (1988). The court has already concluded that the grounds for Waldbaum's argument that its employees were bona fide executives were unreasonable. See supra at 20-24. The court in its sound discretion therefore awards liquidated damages up to the full amount of the wages withheld, once finally determined. Such an award is merited in light of the extent of the violations, the repeated investigations by and discussions with the plaintiff, and the lack of evidence of good faith, other than in construing the law applicable to bona fide executives.
C. Injunctive Relief
Plaintiff has sought two forms of injunctive relief: a restitutionary injunction restraining continued withholding of unpaid backwages and a prospective injunction restraining future violations of the Act. In support of the former, plaintiff relies upon Donovan V. Grantham, 690 F.2d 453, (5th Cir. 1982). There the circuit court reversed a district court's refusal to issue a restitutionary injunction on the basis of the defendant's good faith in withholding certain wages due employees. The circuit court held that the district court had severely limited discretion to deny a restitutionary injunction which should only be exercised in compliance with the purposes of the Act. Id. at 456. "Those purposes are first, the compensation of the employees for their losses and second, the correction of a continuing offense against the public interest by increasing the effectiveness of the Act's enforcement." Id. This latter purpose was said to be met by forcing the violator to relinquish any unfair competitive advantage gained by the violations over complying employers.
However, a restitutionary injunction is unnecessary in this case. Plaintiff has brought an action under both §§ 16 and 17 of the Act. The court has already concluded that the Secretary should recover the amounts in question, as allowed under § 16. Plaintiff will have a judgment, and that judgment will be fully enforceable against Waldbaum for the appropriate amount of back wages. The representative employees will be compensated and defendant's competitive advantage will be erased. A restitutionary injunction serves no additional purpose. See Wilamowsky, 833 F.2d at 20 (2d Cir. 1987) ("The compensatory purpose of the Act generally will be as well served by a judgment for money damages as it will be by a restitutionary injunction in the same amount").
Donovan is not applicable, because the Secretary there brought only a § 17 action. Here, the Secretary's goal of forcing disgorgement of back wages has already been met.
The court reaches a different conclusion as to a prospective injunction. As the Sixth Circuit has recently stated with regard to prospective injunctions under the FLSA:
The purpose of issuing an injunction against future violation is to effectuate general compliance with the Congressional policy of abolishing substandard labor conditions by preventing recurring future violations. Prospective injunctions are essential because the cost of noncompliance is placed on the employer, which lessens the responsibility of the Wage and Hour Division in investigating instances of noncompliance. The imposition of an injunction is not punitive, nor does it impose a hardship on the employer "since it requires him to do 'what the Act requires anyway -- to comply with the law.'
Martin v. Funtime, Inc., 963 F.2d 110, 113-14 (6th Cir. 1992); see McLaughlin v. DialAmerica Marketing, Inc., 716 F. Supp. 812, 826-27 (D.N.J. 1989) (injunctions are issued because of public interest and to relieve Secretary of burden of administration of enforcement); Hodgson v. Parke, 324 F. Supp. 1297, 1300 (S.D. TX. 1971) (primary function of injunction is to shift responsibility for monitoring compliance from the Labor Department). Among the factors to consider in issuing the injunction are the previous conduct of the employer, the dependability of his promises of future compliance, and evidence of current compliance, although current behavior alone is not a reason for denying entry of an injunction. Funtime, 963 F.2d at 114.
The court concludes that an injunction should issue here. The long history between the parties, with eight previous investigations undertaken by the Secretary over the last thirty years, suggests that an injunction would help foreclose the need for additional, extensive investigations. There is also no evidence on behalf of Waldbaum of "substantial cooperation," Wilamowsky, 833 F.2d at 20, or of "extraordinary efforts to prevent recurrence," Brock v. Big Bear Market No. 3, 825 F.2d 1381, 1383 (9th Cir. 1987). Indeed, Waldbaum did not address the issue of an injunction in its post-trial submissions. The only evidence of cooperation is Waldbaum's lack of retaliation, which is hardly evidence of the likelihood of future compliance. Furthermore, at least one Waldbaum employee testified that he had worked hours for which he had not been paid one week before the trial began. Tr. 719 (Cedano). He also testified that after the beginning of the suit, "There may have been some changes and they might have followed up on them for a few weeks. Then they went back to the same routine. The job has to get done." Tr. 721. The court concludes that it should enjoin future violations of the Act by Waldbaum.
For the foregoing reasons, the court concludes that Waldbaum violated §§ 7 and 11(c) of the FLSA, and is liable for the amount of back wages withheld. Plaintiff is directed to submit new calculations with regard to damages in conformity with this opinion. Because the court concludes the violations were not willful, the appropriate period of recovery is two years. Liquidated damages are granted equaling the full amount of wages withheld, therefore eliminating any award of prejudgment interest. No restitutionary injunction will issue. However, a permanent injunction is issued henceforth restraining the defendant, its officers, agents, servants, employees, and those persons in active concert or participation with Waldbaum, Inc. from prospectively violating the provisions of §§ 7, 11(c), 15(a)(2), and 15(a)(5) of the FLSA.
Plaintiff to submit a judgment in conformity herewith. This Opinion shall constitute the findings of fact and conclusions of law as required by Federal Rule of Civil Procedure 52.
Dated: New York, New York
September 30, 1993
CHARLES H. TENNEY, U.S.D.J.