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September 9, 1998

ALEXIS M. HERMAN, Secretary of Labor, United States Department of Labor, Plaintiff,

The opinion of the court was delivered by: SCULLIN



 This action arises from a Consent Judgment and Order issued by this Court on July 16, 1979 enjoining the Defendants from violating the overtime pay and record-keeping provisions set forth in the Fair Labor Standards Act of 1938 ("FLSA"). See 29 U.S.C. §§ 207, 211(c) and 215(a)(2), (5). Subsequent to that Order, the Department of Labor's ("DOL") investigations revealed that the Defendants were violating the provisions of the Court's Order. Thereafter, the DOL initiated civil contempt proceedings. On May 22, 1989, the Court issued an Order finding the Defendants in contempt of the Court's previous Order and ordered further proceedings to determine the amount of compensatory fines, interest, and attorney's fees. For reasons not relevant to this decision, this matter lay dormant until August 16, 1995 when the Court appointed Richard J. Bartlett, Esq., as a special master, to make proposed findings of fact and conclusions of law as to: (1) whether there was a pattern or practice of violations of the FLSA as alleged in the petition for contempt; (2) whether all the workers alleged to be employees were "employees" within the meaning of the FLSA; (3) what amount of back wages was owed to the employees for FLSA violations during the relevant period of civil contempt; (4) whether back wages should include prejudgment interest; and (5) whether the Plaintiff should be awarded costs and attorney's fees.

 The Special Master's Findings

 The special master held 30 days of hearings on these issues which included considering live testimony from 37 witnesses, deposition testimony from another 25 witnesses, and voluminous documentary evidence. Special Master Bartlett issued his proposed findings on November 25, 1997. His report found: (1) that the evidence established that the Defendants' conduct constituted a pattern and practice of conduct violative of the FLSA and the Court's previous Order; (2) that Defendants' workers classified as "independent contractors" during the relevant period, were actually "employees" within the meaning of the FLSA; (3) that the Defendants should be assessed a fine of $ 1,318,648.93; (4) that the Defendants should also pay prejudgment interest based on the adjusted prime rate pursuant to 26 U.S.C. § 6621(c); (6) that Defendant Burton Fisher should be held jointly and severally liable with the other Defendants; and (6) that the Plaintiff should be awarded reasonable costs, but not attorney's fees.

 The Defendants' Objections

 Defendants have filed timely objections to the report of the special master. They contend: (1) that the special master erred by finding a pattern and practice of FLSA violations; (2) that the special master erred in finding that 285 workers of the Defendants were "employees" rather than "independent contractors"; (3) that the special master erred by admitting exhibits 1 and 1A into evidence; (4) that the special master erred by awarding damages to 105 unidentified individuals; and (5) that the special master erred by awarding prejudgment interest for the entire period because significant delays were attributable to the Plaintiff.

 Plaintiff's Objections

 Additionally, Plaintiff has filed objections to the special master's report. Plaintiff contends; (1) that the special master erred in computing the prejudgment interest by not applying daily compounding; (2) that the special master erred by not awarding the Plaintiff attorney's fees; and (3) that the special master exceeded his authority by ordering the submission of payment schedules.


 The Court will accept the findings and conclusions of the special master unless the objecting parties demonstrate that they are clearly erroneous or contrary to law. See Fed R. Civ. P. 53(e)(2). A factual finding is clearly erroneous where although there is evidence to support it, the reviewing court on the entire evidence is left with the definite and firm conviction that a mistake has been committed. See United States v. United States Gypsum Co., 333 U.S. 364, 395, 92 L. Ed. 746, 68 S. Ct. 525 (1948). The Court will evaluate each of the parties' objections pursuant to this standard of review.


 In his report, Special Master Bartlett found that the Plaintiff proved by a preponderance of the evidence that 956 of the Defendants' employees performed overtime work for which they were not properly compensated under the FLSA. In making this finding, the special master relied on the testimony of 40 witnesses, as well as documentary evidence of 365 separate instances of conduct which he concluded demonstrated a pattern and practice by the Defendants of consistently failing to pay overtime compensation and intentionally concealing their actions.

 Defendants argue that the special master made several legal errors in making his findings. Defendants argue first that the special master erred, as a matter of law, by relying on representative evidence to infer uniform conduct with respect to a variety of positions at different job sites. Defendants cite to testimony in the record where witnesses identify certain job sites at which they did properly receive overtime compensation. Notwithstanding the Defendants' attempt to couch their objections in the form of "legal" objections, the Defendants are actually objecting to the factual findings of the special master, and not to mistakes of law. As such, the Court will review the special master's findings for clear error.

 The special master found that the Defendants consistently failed to pay their employees; that this "practice" was common knowledge among the employees, regardless of their position or job site; and that the Defendants used no fewer than nine different schemes to cover up their noncompliance with their overtime compensation obligations. The report of the special ...

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