Atlantic Co. v. Broughton

• Decision Date: 05 January 1945
• Docket Number: 11077.,No. 11076,11076
• Citation: 146 F.2d 480
• Parties: ATLANTIC CO. v. BROUGHTON et al., and three other cases.
• Court: U.S. Court of Appeals — Fifth Circuit

146 F.2d 480 (1944)

ATLANTIC CO. v. BROUGHTON et al., and three other cases.

Nos. 11076, 11077.

Circuit Court of Appeals, Fifth Circuit.

December 4, 1944.

Rehearing Denied January 5, 1945.

W. K. Meadow and Robert B. Troutman, both of Atlanta, Ga., for Atlantic Co.

Homer C. Denton and Richard E. Cotton, both of Atlanta, Ga., for A. Broughton and Emanuel Carthan et al.

Douglas B. Maggs, Solicitor, U. S. Dept. of Labor, and Bessie Margolin, Asst. Solicitor, U. S. Dept. of Labor, both of Washington, D. C., for amicus curiae.

Before HOLMES, WALLER, and LEE, Circuit Judges.

HOLMES, Circuit Judge.

These appeals are from separate judgments in favor of employees of appellant in suits brought by them to recover minimum wages and overtime compensation, with liquidated damages and attorney's fees, alleged to be due and owing under the Fair Labor Standards Act.¹

Upon direct appeal in each case, the issue is whether or not a contract of accord and satisfaction relating to the indebtedness was legally effective to extinguish the alleged cause of action. The appellees in each case (by cross-appeal) assert that they were entitled to statutory liquidated damages, not only upon the total of the wages and overtime compensation remaining due after crediting the sums paid pursuant to the settlements, but also upon the amounts received thereunder.

The evidence as to whether a bona fide dispute existed between the parties, upon the question of what wages remained due and unpaid to each employee with whom the settlements were made, and as to whether such settlements were accepted in final and complete adjustment of that dispute, was conflicting. These issues of fact were submitted to the jury, but the jury was unable to agree upon a verdict, and was discharged. The judgments appealed from were entered upon a renewed motion for a directed verdict under Rule 50 of the Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c. Therefore, these questions of fact remain unanswered in the record before us.

This is immaterial in so far as our decision upon the direct appeals is concerned; for we think that, whether or not there was a settlement in good faith of a bona fide dispute, each employee thereafter was entitled to be paid whatever difference then remained between the total of the wages paid and the total due him under the Act, plus liquidated damages thereon and attorney's fees.

It is undisputed that an ascertained balance remained due as wages to each appellee after crediting the amounts paid pursuant to the settlements. In the Fair Labor Standards Act, Congress intended "to achieve a uniform national policy of guaranteeing compensation for all work or employment engaged in by employees covered by the Act. Any custom or contract falling short of that basic policy, like an agreement to pay less than the minimum wage requirements, cannot be utilized to deprive employees of their statutory rights."² Sections 6 and 7 of the Act effectuate that policy by providing in mandatory language that every employer shall pay the wages prescribed, and Sections 15 and 16 provide criminal punishment for any failure to comply therewith.³ Though settlements in accord and satisfaction are favored in law, they may not be sanctioned and enforced when they contravene and tend to nullify the letter and spirit of an Act of Congress.⁴

The narrow issue raised by the cross-appeals involves that part of Section 16(b) of the Act which provides that any employer who violates the provisions of Section 6 or 7 of the Act shall be liable to the employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount as liquidated damages.⁵ Under this section, if an employer on any regular payment date fails to pay the full amount of the minimum wages and overtime compensation due an employee, there immediately arises an obligation upon the employer to pay the employee the difference between the wages paid and the wages due, plus an equal additional amount as liquidated damages; and the payment thereafter of the balance due as wages, even though made prior to suit, does not release the accrued liability for liquidated damages.⁶ Such damages are not inflicted as a penalty, but are allowed as compensation for detention of a workman's pay.⁷

This issue, due to important differences between the nature of the obligation to pay wages and of the obligation to pay liquidated damages, is controlled by principles other than those decisive of the issue on direct appeal. Failure to comply with the former obligation is a criminal offense, but the Act places upon the employer only a civil liability to pay liquidated damages, and the failure to pay such damages is not a crime or misdemeanor. Though created by statute, the liability to pay liquidated damages is no different from any other ordinary obligation to pay a sum of money. It is in the nature of a Congressional estimate of the damages resulting to an employee from a wrongful withholding of any part of his wages or overtime compensation. As such, it is a proper subject of accord and satisfaction.

If, as cross-appellees contend, the payments in settlement were made under such circumstances as would create an agreement of accord and satisfaction, the claim for liquidated damages upon the amounts given in settlement was extinguished. If not, such claims continue to be valid obligations enforceable in this proceeding. Since the disputed question of fact upon which this issue turns was not decided in the court below, the cause must be remanded with instructions that these questions be submitted to a jury for determination.

On direct appeal, the judgment in each case is affirmed; on cross-appeal, the judgment in each case is reversed and the cause is remanded to the District Court for further proceedings not inconsistent with this opinion.

WALLER, Circuit Judge (dissenting).

It is against the intent and command of the Fair Labor Standards Act for a covered employer to pay less than the minimum wages provided by the Act. Secs. 206 and 216, 29 U.S.C.A. It is also contrary to the law's policy for the employer to work such an employee longer than the prescribed hours without paying time and one-half for all overtime. Secs. 207 and 216, 29 U.S.C.A. The Act is definitely a part of the public policy of the land as relates to the duties of the employer to an employee engaged in interstate commerce. No contract to hire and pay eligible employees less than the minimum wage prescribed by the Act would be binding, but we are not here considering the legal effect of a contract of employment to operate in the future,¹ or to avoid the statute, but we are considering the legal effect of a contract for the settlement of a dispute as to hours worked and wages due, and whether the Act, by implication, takes away from an employee the right to settle, in good faith, a bona fide controversy with his employer as to the amount of compensation, if any, which may have become due to such employee from such employer. There seems to be a difference between the making of a contract for future dealings contrary to the statute, and the settlement of an actual and bona fide controversy over transactions that have already occurred.² For instance, one cannot make a lawful contract to commit an assault, but one can make an enforceable contract to settle the damages caused by his unlawful assault, and such latter contract is not illegal, but on the contrary has the law's favor. 11 Amer.Jur. p. 256, par. 9.

From ancient times the law has encouraged,³ and the Holy Writ has urged,⁴ the amicable settlement of controversies. The right, or duty, amicably to adjust differences is grounded in good morals and common honesty.

The Act should be considered in its public as well as its individual, or private, aspects or relationships. Unquestionably it announces the public policy of the United States toward the employer in the matter of wages and hours of employees engaged in interstate commerce, but it also confers personal rights and privileges upon the individual employee.

The Act commits enforcement of the rights of the general public to the Administrator and to the criminal courts, while the enforcement of the personal, or individual, rights of the employee to receive the prescribed wage is committed to the employee. A right of action is created and he is afforded the option, or privilege, of bringing suit in the courts. The language of the statute is that action to recover the liability may be maintained by an employee. He is encouraged to sue by the inducement of the allowance of attorney's fee and liquidated damages, but he is not required to sue. He may refuse to sue his employer for any, or no, reason and the law cannot compel him to do so. If he sues, he, and not the Government, has full control of the lawsuit. The basis for the amount of the wages and hours claimed by him lies wholly within the realm of his conscience as influenced by his records or recollection. He chooses his own lawyer and his lawyer usually chooses his own ad damnum. The employee is not made an enforcer of the Act. He is neither required, nor expected, to be a crusader for its enforcement. That responsibility is committed to the Administrator and the Department of Justice on whom Congress has placed the duty to protect the Act from those who would evade or disregard it. It is neither expressed nor implied in the Act that the employee must sue or that he cannot settle a bona fide controversy for fewer hours than he has worked in interstate commerce or for less money than he actually believes that he should have under the law in the event that he does sue, for his acts neither affect nor offend the public policy.

The criminal provisions of the Act are unilateral in that they apply only to the employer and not to the employee. As to an employee, no...