500 F.2d 836 (4th Cir. 1974), 73-1153, Hales v. Winn-Dixie Stores, Inc.

Docket Nº:73-1153.
Citation:500 F.2d 836
Party Name:Joseph W. HALES et al., Appellants, v. WINN-DIXIE STORES, INC., Appellee.
Case Date:May 08, 1974
Court:United States Courts of Appeals, Court of Appeals for the Fourth Circuit

Page 836

500 F.2d 836 (4th Cir. 1974)

Joseph W. HALES et al., Appellants,



No. 73-1153.

United States Court of Appeals, Fourth Circuit.

May 8, 1974

Argued June 6, 1973.

Page 837

[Copyrighted Material Omitted]

Page 838

L. Philip Covington, Garner, N.C., for appellants.

James L. Newsom, Durham, N.C. (Newsom, Graham, Strayhorn, Hedrick, Murray & Bryson, Durham, N.C., on brief), for appellee.

Before WINTER and WIDENER, Circuit Judges, and KAUFMAN, District judge.

FRANK A. KAUFMAN, District Judge.

In an unverified two-count complaint, four former employees of a subsidiary of Winn-Dixie Stores, Inc. (Winn-Dixie) seek under Count I damages 1 against

Page 839

Winn-Dixie for failure to make payments to them allegedly due under the 'Employers Profit Sharing Program of Winn-Dixie Stores, Inc.' (Program) and under Count II recovery under 29 U.S.C. § 308(b) for Winn-Dixie's alleged failure to provide statutorily required information concerning that Program. 29 U.S.C. 308(b), a section of the Welfare and Pension Plans Disclosure Act (Act), 29 U.S.C. §§ 301-309, provides:

(b) Any administrator of a plan who fails or refuses, upon the written request of a participant or beneficiary covered by such plan, to make publication to him within thirty days of such request, in accordance with the provisions of section 307 of this title, of a description of the plan or an annual report containing the information required by sections 305 and 306 of this title, may in the court's discretion become liable to any such participant or beneficiary making such request in the amount of $50 a day from the date of such failure or refusal.

Plaintiffs invoke federal jurisdiction under Count I pursuant to 28 U.S.C.§ 1332(a)(1), 2 and under Count II pursuant to 28 U.S.C. § 1355 and 29 U.S.C. § 308(c). 3 The District Court entered summary judgment for Winn-Dixie on both counts, holding: (1) that, as to Count I, the undisputed record shows that no one of the four employees has more than $10,000 in controversy and thus diversity jurisdiction is lacking with regard thereto; and (2) that, as to Count II, Winn-Dixie is not an 'administrator' of the Program as that term is defined in 29 U.S.C. § 304(b)(1) and thus is not liable for failing to provide information concerning that Program under 29 U.S.C. § 308(b).


It is first incumbent upon us to discuss herein the basis for jurisdiction as to Count II. 28 U.S.C. § 1355 provides:

The district courts shall have original jurisdiction, exclusive of the courts of the States, of any action or proceeding for the recovery or enforcement of any fine, penalty, or forfeiture, pecuniary or otherwise, incurred under any Act of Congress.

No jurisdictional amount requirement exists with regard to Section 1355. See Woods v. Kern, 87 F.Supp. 383, 384 (E.D.Pa.1949); Sampson v. Thomas, 76 F.Supp. 691, 693 (E.D.Mich.1948); Powell v. Rhine, 71 F.Supp. 953, 954 (M.D.Pa.1947). See also Daniel v. First National Bank, 227 F.2d 353, 354, reh. denied, 228 F.2d 803 (5th Cir. 1956), citing at 227 F.2d 354 n. 2, First National Bank v. Morgan, 132 U.S. 141, 144, 10 S.Ct. 37, 33 L.Ed. 282 (1889). However, in order for jurisdiction in this case to exist under Section 1355, 29 U.S.C. § 308(b) must permit a 'fine, penalty, or forfeiture' as those words are used in Section 1355. No case known to this Court holds that Section 1355 jurisdiction exists with regard to any Section 308(b) claim on the ground that that latter section permits the imposition of a 'fine, penalty or forfeiture' within the meaning of Section 1355. [3A] Rather clearly, Section 308(b) does not call for any 'fine' or 'forfeiture'. It may appear at first blush to relate to the imposition of a 'penalty'. But the case law

Page 840

raises grave doubts with regard thereto. Section 308(c) permits actions relating to Section (b) to be brought in 'any court of competent jurisdiction'. Those words, as they appear in Section 216 of the Fair Labor Standards Act, 29 U.S.C. § 201 et seq., providing for liquidated damages, have been construed to vest concurrent jurisdiction in state as well as federal courts, Mid-Continent Pipe Line Co. v. Hargrave, 129 F.2d 655, 659 (10th Cir. 1942); Keen v. Mid-Continent Petroleum Corp., 58 F.Supp. 915, 919 (N.D.Iowa 1945), aff'd, 157 F.2d 310 (8th Cir. 1946), and also as providing for 'compensation, not a penalty'. Overnight Motor Transp. Co. v. Missel, 316 U.S. 572, 583, 62 S.Ct. 1216, 86 L.Ed. 1682 (1942). Further, it is to be noted that in Currie v. Flack, 190 F.2d 549, 550 n. 1 (1st Cir. 1951), Judge Magruder, citing in support (at 553) Judge Maris' opinion in Fields v. Washington, 173 F.2d 701 (3d Cir. 1949), and dealing with a provision for liquidated damages in the Housing and Rent Act of 1947, wrote:

* * * Appellant quite properly does not rely upon this section (28 U.S.C. § 1355). The tenant's action for damages by way of compensation for the injury suffered by him individually is not a proceeding for the recovery of a 'penalty' within the meaning of 28 U.S.C. § 1355. Fields v. Washington, 3 Cir., 1949, 173 F.2d 701, 703. It if were so regarded, then consistently with § 1355, the federal district courts would have jurisdiction exclusive of the courts of the states. But under § 205 of the Housing and Rent Act, the tenant may sue 'in any Federal, State, or Territorial court of competent jurisdiction'.

The tests for determining whether a statute authorizes the imposition of a 'penalty' are set forth in Huntington v. Attrill, 146 U.S. 657, 13 S.Ct. 224, 36 L.Ed. 1123 (1892), and have been subsequently discussed in other cases including Porter v. Montgomery, 163 F.2d 211 (3d Cir. 1947); McCrae v. Johnson, 84 F.Supp. 220 (D.Md.1949) (Chesnut, J.). 'The test whether a law is penal, in the strict and primary sense, is whether the wrong sought to be redressed is a wrong to the public or a wrong to the individual.' Huntington v. Attrill, supra at 668. In Fields v. Washington, supra at 703, the importance of who sues and who collects and retains any judgment is stressed. And in Porter v. Montgomery, supra at 215, a distinction is drawn between damages which 'must flow out of the wrong and be its natural and proximate consequence' and a 'penalty (which) need have no causal connection with the wrong inflicted'.

In this case, it is not necessary to determine whether Section 308(b) authorizes the imposition of a penalty. This is so because although not asserted by plaintiffs, jurisdiction exists as to Count II under 28 U.S.C. § 1337. That section provides:

The district courts shall have original jurisdiction of any civil action or proceeding arising under any Act of Congress regulating commerce or protecting trade and commerce against restraints and monopolies.

No jurisdictional amount requirement exists as to Section 1337. 1 Barron & Holtzoff, Federal Practice & Procedure § 38, pp. 200-03 (Wright ed. 1961); 7B J. Moore, Federal Practice J.C. 518 (1966), and cases cited thereat. The Welfare and Pension Plans Disclosure Act, 29 U.S.C. §§ 301-309, imposes a duty upon the administrator of a plan subject to that Act. The imposition of that duty in favor of a person employed by another engaged in commerce or whose activities affect commerce was enacted by the Congress pursuant to the commerce clause of the Federal Constitution. In 29 U.S.C. § 301(a) the Congress stated its finding that pension plans have become 'an important factor in commerce', and that it is in the interest of the 'free flow of commerce' that disclosure of the terms of such plans be made. In 29 U.S.C. § 301(b) the Congress declared that it is the policy of the Act 'to protect interstate commerce'. The imposition of duties running in favor

Page 841

of such persons has been held, in connection with other statutes, to constitute an 'Act of Congress regulating commerce' within the meaning of Section 1337. In Imm v. Union R. Co., 289 F.2d 858, 860 (3d Cir.), cert. denied, 368 U.S. 833, 82 S.Ct. 55, 7 L.Ed.2d 35 (1961), Judge Goodrich, in holding that the Federal Employees' Liability Act was an act 'regulating commerce' within the meaning of 28 U.S.C. § 1337, quoted from and adopted Professor Charles Bunn's view that "acts regulating commerce' (as that phrase is used in Section 1337) are coming rapidly to mean all acts whose constitutional basis is the commerce clause'. See also Ballard v. Moore-McCormack Lines, Inc., 285 F.Supp. 290 (S.D.N.Y.1968), holding similarly as to the Jones Act. Lieberman v. Cook, 343 F.Supp. 558 (W.D.Pa.1972), and Moyer v. Kirkpatrick, 265 F.Supp. 348 (E.D.Pa.1967), aff'd per curiam, 387 F.2d 955 (3d Cir. 1968), are not to the contrary. Those cases hold only that the Welfare and Pension Plans Disclosure Act does not itself give rise to any cause of action other than one challenging the administrator's exercise of his disclosure duties. Thus, any failure to comply with the provisions of the Program, as alleged in Count I in this case, does not present, under 28 U.S.C. § 1331, claims 'arising under' that Act. McCorkle v. First Pennsylvania Banking and Trust Co., 459 F.2d 243 (4th Cir. 1972); Barlow v. Marriott Corporation, 328 F.Supp. 624 (D.Md.1971). However, claims, such as those stated in Count II, which relate to a duty of disclosure to an employee, do arise under the Welfare and Pension Plans Disclosure Act, and constitute assertions of federally created rights which have been created for the purpose of 'regulating commerce' as those words are used in Section 1337. Thus, regardless of the absence of the jurisdictional amount under Section 1331(a), or whether or not jurisdiction exists under Section 1355, jurisdiction as to Count II is present pursuant to Section 1337. Upon remand the District Court shall afford to plaintiffs...

To continue reading