Adair v. Traco Division

• Decision Date: 17 April 1941
• Docket Number: 13625.
• Citation: 14 S.E.2d 466,192 Ga. 59
• Parties: ADAIR v. TRACO DIVISION.
• Court: Georgia Supreme Court

14 S.E.2d 466

192 Ga. 59

ADAIR v. TRACO DIVISION.

No. 13625.

Supreme Court of Georgia

April 17, 1941

Syllabus by the Court.

Jurisdiction of a suit by an employee to recover unpaid minimum wages and overtime compensation, and an additional equal amount as 'liquidated damages,' and attorney's fees, under the fair labor standards act of 1938, 29 U.S. C.A. § 216, is not vested exclusively in the courts of the United States but may be heard and determined in any State court of competent jurisdiction.

The Court of Appeals (in Case No. 28435) certified to this court questions as follows:

'1. In the wage and hour act of the United States, 29 U.S. C.A. § 201 et seq., which provides for the payment of a minimum wage and for overtime compensation to employees coming under the act, is the provision therein for a recovery of an additional sum as 'liquidated damages,' or of reasonable attorney's fees for prosecuting the action, 29 U.S. C.A. § 216, one for the recovery of a 'penalty and forfeiture' in the sense of the provisions of section 256 of U.S. Judicial Code, 28 U.S. C.A. § 371, that jurisdiction vests exclusively in the courts of the United States, to the exclusion of the courts of the several States, in all cases and proceedings to recover 'penalties and forfeitures' incurred under the laws of the United States?

'2. If the above question is answered in the affirmative, is a suit in the State court, as a suit in the civil court of Fulton County, in which the plaintiff therein seeks to recover, not only unpaid wages due him under the above referred to wage and hour act, but in addition thereto an amount as a penalty and forfeiture incurred under the laws of the United States, a suit of which the State court has not jurisdiction?

'3. If question No. 1 is answered in the affirmative, can the plaintiff in a suit in the State court, as a suit in the civil court of Fulton County, in which the plaintiff seeks to recover, not only unpaid wages due him under the above referred to wage and hour act, but in addition thereto, an amount as a penalty and forfeiture incurred under the laws of the United States, maintain the suit, notwithstanding he also sues therein for such penalty which he cannot recover in a State court, and recover therein the unpaid amount due him as wages?'

G Eugene Ivey and Irving S. Nathan, both of Atlanta, for plaintiff in error.

Gerard D. Reilly and Irving J. Levy, both of Washington, D. C., and Geo. A. Downing and James H. Shelton, both of Atlanta, for party at interest, not party to record.

Hirsch, Smith & Kilpatrick and Julian E. Gortatowsky, all of Atlanta, for defendant in error.

BELL Justice.

Under the United States Judicial Code, § 256, as amended, U.S. C.A. title 28, § 371, the Federal courts have exclusive jurisdiction 'of all suits for penalties and forfeitures incurred under the laws of the United States.' This statute was in force on June 25, 1938, when Congress passed the wage and hour act, sometimes referred to as the 'fair labor standards act.' Section 16(a) of the latter act made violation of designated provisions a penal offense, and prescribed certain penalties. In this connection no court was mentioned. Section 16(b) provided that any person violating the provisions as to minimum wages or as to overtime compensation should be liable for the unpaid minimum wages or overtime compensation, as the case may be, and an additional equal amount 'as liquidated damages'; and that 'action to recover such liability may be maintained in any court of compentent jurisdiction,' which in case of recovery may 'allow a reasonable attorney's fee to be paid by the defendant.' In Section 17 of the same act it was declared that the district courts of the United States should have jurisdiction to restrain violations. U.S. C.A. title 29, §§ 216(a), 216(b), 217.

The first question propounded by the Court of Appeals calls for determination of whether the foregoing provision as to recovery of an 'additional equal amount as liquidated damages' (§ 16(b) is a provision for recovery of a penalty or forfeiture within the meaning of the previously quoted section of the United States Judicial Code, whereby jurisdiction to recover penalties and forfeitures is vested exclusively in courts of the United States. It is insisted by counsel for the defendant that the term 'liquidated damages,' as used in section 16(b), is a misnomer, that the additional amount to be recovered is in truth and in fact a penalty, and that the phrase 'in any court of competent jurisdiction' means a United States court only. On the other side, it is contended that the fact that Congress has itself denominated the extra compensation for which the employer is liable as liquidated damages is decisive, that the term 'penalties and forfeitures' as used in the former statute has acquired a definite, narrow, and technical meaning, that actions under section 16(b) are not suits for penalties within the meaning of such statute, and that State courts are courts of 'competent jurisdiction' within the meaning of section 16(b). If the contention last referred to be sound, to wit, that State courts are courts of competent jurisdiction within the meaning of section 16(b) of the fair labor standards act, then it becomes immaterial whether or not an action brought against an employer under this section is a suit for such a penalty as is contemplated by the former statute. It was, or would have been, competent for Congress in passing the act of 1938 to provide that an action to recover the liability created thereby might be brought in a State court, even though such be a penalty incurred under the laws of the United States, because it could repeal its own former statute either in whole or in part, and could do so either expressly or by implication. But we need not and do not rest our conclusion upon any theory of repeal. There are other and more convincing considerations.

It seems to be a principle frequently applied by the Supreme Court of the United States that, unless Congress specifically restricts jurisdiction to the Federal courts, the State courts, where competent under the State laws, have concurrent jurisdiction of suits of a civil nature arising under Federal laws. Claflin v. Houseman, 93 U.S. 130, 136, 137, 23 L.Ed. 833; Robb v. Connolly, 111 U.S. 624, 635-637, 4 S.Ct. 544, 28 L.Ed. 542; Second Employers' Liability Cases, 223 U.S. 1, 56, 57, 32 S.Ct. 169, 56 L.Ed. 327, 38 L.R.A.,N.S., 44; Minneapolis & St. Louis R. Co. v. Bombolis, 241 U.S. 211, 221-223, 36 S.Ct. 595, 60 L.Ed. 961; Grubb v. Public Utilities Commission, 281 U.S. 470, 50 S.Ct. 374, 74 L.Ed. 972.

It may be signficant that the Congress, in declaring what courts shall have jurisdiction to restrain violations of the act stated that 'The district courts of the United States and United States courts of the Territories and possessions shall have jurisdiction,' while in the previous section of the same act, in making violation a criminal offense (§ 16(a), it mentioned no court, and in dealing with suits for unpaid minimum wages or compensation and an additional equal amount as 'liquidated damages' (§ 16(b), it declared that 'Action to recover such liability may be maintained in any court of competent jurisdiction.' It is argued, however, that since it is a penalty that is sued for, and Congress had already enacted that suits for penalties and forfeitures incurred under the laws of the United States should be brought only in the courts of the United States, the words 'any court of competent jurisdiction' must mean a Federal court only. We cannot assent to either branch of this contention. First, as to courts. Before the passage of the act referred to as the fair labor standards act of 1938, the courts had ascribed to the words 'any court of competent jurisdiction' a definite meaning, as including within its purview any State or Federal court having jurisdiction of the parties and of the subject matter. The 420 Mining Co. v. Bullion Mining Co., 9 Nev. 240; Burke v. McDonald, 2 Idaho, Hasb., 339, 13 P. 351, 360; Ex parte Justis, 3 Okl.Cr. 111, 104 P. 933, 25 L.R.A.,N.S., 483; National Sash & Door Co. v. Continental Casualty Co., 5 Cir., 37 F.2d 342. It is fair to assume that in knowledge of this and of the further fact that it had often been determined that it was competent for State courts to entertain suits based on a right given under a Federal law, the Congress, by the use of the expression 'any court of competent jurisdiction,' intended to include State courts. 59 C.J. 1038, § 616. Next, as to penalty. The act designates the additional equal liability as 'liquidated damages.' While similar provisions in a contract might, under the laws of this State, be construed as a penalty (Floding v. Floding, 137 Ga. 531(3), 73 S.E. 729; Tounsel v. State Highway Department, 50 Ga.App. 520, 179 S.E. 167; Kothe v. R. C. Taylor Trust, 280 U.S. 224, 50 S.Ct. 142, 74 L.Ed. 382), it must not be forgotten that we are here considering a statute; and the controlling question is, What was the intention of the lawmaking body? As was said by the Supreme Court of Alabama in Forsyth v. Central Foundry Co., 198 So. 706, 710: 'It may be that this right of recovery is no more in the nature of liquidated damages than the right to recover twice the amount of illegally paid interest to a national bank. It may also be that Congress cannot by declaration change the nature of a claim to one for liquidated damages when it is but a penalty. But when Congress does that very thing, though it is but a penalty, Congress manifests an unmistakable purpose to exclude it from the operation of a statute which applies to...