689 F.2d 869 (9th Cir. 1982), 81-4305, Donovan v. Crisostomo

Docket Nº:81-4305.
Citation:689 F.2d 869
Party Name:Raymond J. DONOVAN, Secretary of Labor, United States Department of Labor, Plaintiff-Appellee, v. Luis CRISOSTOMO, Individually and d/b/a L & T Builders, and Teresita Crisostomo, Individually, Defendants-Appellants.
Case Date:October 07, 1982
Court:United States Courts of Appeals, Court of Appeals for the Ninth Circuit

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689 F.2d 869 (9th Cir. 1982)

Raymond J. DONOVAN, Secretary of Labor, United States

Department of Labor, Plaintiff-Appellee,


Luis CRISOSTOMO, Individually and d/b/a L & T Builders, and

Teresita Crisostomo, Individually, Defendants-Appellants.

No. 81-4305.

United States Court of Appeals, Ninth Circuit

October 7, 1982

Argued and Submitted July 13, 1982.

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[Copyrighted Material Omitted]

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Mark E. Cowan, Arriola & Cowan, Agana, Guam, for defendants-appellants.

Sandra Lord, Washington, D. C., argued for plaintiff-appellee; T. Timothy Ryan, Jr., Sol. of Labor, Beate Bloch, Asst. Sol., Mary-Helen Mautner, Washington, D. C., on brief.

On Appeal from the United States District Court for the Eastern District of Guam.

Before WISDOM [*] and MERRILL, Senior Circuit Judges, and NORRIS, Circuit Judge.

WISDOM, Circuit Judge:

In this case arising under the Fair Labor Standard Act ("FLSA"), 29 U.S.C. § 201 et seq. (1978), the Secretary of Labor sued the defendants/appellants Luis and Teresita Crisostomo, individually and doing business as L & T Builders ("employers"). The Secretary asked the court to enjoin the employers from violating the overtime and recordkeeping provisions of the FLSA and to award back wages for overtime compensation due 24 L & T employees. The district court granted judgment in favor of the Secretary. We affirm in part and reverse in part.


Luis Crisostomo and Teresita Crisostomo were each actively involved in the management and control of L & T Builders, a residential construction company on Guam, from about October 1973 to November 1978. They hired residents of the Philippines as construction workers. These employees were classified for immigration purposes as "H-2" workers-aliens allowed to work in particular occupations in the United States for a specified employer for a limited period. 1 The workers initially lived in dilapidated quonset huts and later moved into newly constructed barracks. The employers deducted $32 a week for board and lodging from the employees' wages.

In 1975, the Wage-Hour Division of the United States Department of Labor investigated the employers for compliance with the FLSA. 2 The investigators found that the employers had paid straight time to employees who had worked over 40 hours a week and asked the employers to make

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back wage payments. L & T made the back wage payments and Luis Crisostomo promised to comply with the Act in the future.

The Department of Labor again investigated L & T for the period from the Spring of 1976 to March 25, 1978, and again found that the employees were not being paid for overtime hours worked. As a result of that investigation, the Secretary filed this suit on June 26, 1979.

After a hearing, the district court found that 24 of the employees worked 8 hours a day, six days a week, from Monday through Saturday. The court found that L & T neither recorded the eight hours worked on Saturday by the employees nor compensated them for the work. In addition, the court determined that employees were required to "kickback" part of their wages. The employers deducted a cash payment from each employee's payroll check, which resulted in each receiving an hourly rate that was $.38 an hour less than that shown on the firm's payroll and agreed upon in the employment contract.

The court held that the defendants violated §§ 11(c) and 15(a)(5) of the FLSA by failing to maintain records of the hours worked by their employees and violated §§ 7 and 15(a)(2) by failing to compensate their employees at a rate of at least one and one half times the employees' regular hourly rate for all hours worked over 40 in each workweek. The court also held the defendants liable for the additional unpaid overtime compensation resulting from the "kickback" taken from the employees straight time wages during overtime weeks. 3 The court granted the requested injunction and awarded $58,519.39 in actual damages 4 and an equal amount in liquidated damages. 5 In determining damages, the court applied the three year statute of limitations rather than the two year statute of Section 6 of the Portal to Portal Act, 29 U.S.C. § 255 (1975), because the court held that the violation of the overtime provision was willful. 6

On appeal defendants/appellants argue, first, that 29 U.S.C. § 216 required the district court to treat the action as having commenced on March 21, 1981, when the pre-trial order named the 24 prejudiced employees, rather than on June 26, 1979, when the Secretary filed the complaint without naming any prejudiced employees. The employees contend, therefore, that the court awarded damages barred in part by

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the statute of limitation, because the action was considered as having commenced on a date earlier than the correct date under 29 U.S.C. § 216. Second, the employees contend that the Secretary lacked authority under the FLSA to sue for restitution of the kickbacks taken from the employees' wages and that the district court lacked jurisdiction to award damages for underpayment of straight time wages under the FLSA. Third, they contend that the court erred in excluding evidence of admissions made by certain employees to government officials of Guam to the effect that they did not work over 40 hours a week. Finally, the employers contend that the evidence fails to support the findings that overtime compensation is due for Rodolfo Dizon, Amando Duya, and Baltazar Frias.


The appellants' first contention concerns the commencement of this action for purposes of the statute of limitation. 29 U.S.C. § 255 (1975) provides that an action must be commenced under the Act within two years after the cause of action accrues or within three years after accrual if a willful violation is involved. The employers argue that this action commenced on March 21, 1980, when the pre-trial order named as claimants the particular aggrieved workers and not on June 26, 1979, when the complaint was filed. The relevant statute, 29 U.S.C. § 216(c) (Supp.1982), is free of subtleties:

In determining when an action is commenced by the Secretary of Labor under this subsection for the purposes of the statutes of limitations provided in section 255(a) of this title, it shall be considered to be commenced in the case of any individual claimant on the date when the complaint is filed if he is specifically named as a party plaintiff in the complaint, or if his name did not so appear, on the subsequent date on which his name is added as a party plaintiff in such action.

The Secretary does not disagree with the employers' interpretation of 29 U.S.C. § 216(c), but argues that the damages award should not be modified, because the employers failed to assert that interpretation in the district court. The Secretary relies on the principle that contentions not asserted in the district court will not be adjudicated on appeal unless necessary to avoid injustice. In U. S. Financial, Inc. v. Pacific Telephone and Telegraph Co., 594 F.2d 1275 (9th Cir. 1979), this Court rejected procedural objections raised for the first time on appeal and stated, "Except in the case of jurisdictional questions or when particular circumstances indicate that injustice might otherwise result or where public policy requires, this Court declines to consider arguments for reversal not presented to the district court." 594 F.2d at 1282. See Roberts v. Hollandsworth, 582 F.2d 496, 499-500 (9th Cir. 1978); Diamond Door Co. v. Lane-Stanton Lumber Co., 505 F.2d 1199, 1206 (9th Cir. 1974); Hodgson v. Humphries, 454 F.2d 1279 (10 Cir. 1972).

The Secretary further contends that he will be prejudiced if the action is not recognized as having commenced on the filing of the complaint. If the employers had asserted early in the litigation that this aspect of § 16(c) would be argued, the Secretary would have named the claimants sooner and not have subjected the employees to losing part of...

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