Addison v. Huron Stevedoring Corp., No. 11-12

• Court: U.S. Court of Appeals — Second Circuit
• Writing for the Court: SWAN, , and L. HAND and FRANK, Circuit
• Citation: 204 F.2d 88
• Parties: ADDISON et al. v. HURON STEVEDORING CORP. AARON et al. v. BAY RIDGE OPERATING CO., Inc.
• Docket Number: Dockets 22276,22277.,No. 11-12
• Decision Date: 20 March 1953

204 F.2d 88 (1953)

ADDISON et al.
v.
HURON STEVEDORING CORP.
AARON et al.
v.
BAY RIDGE OPERATING CO., Inc.

Nos. 11-12, Dockets 22276, 22277.

United States Court of Appeals Second Circuit.

Argued November 5, 1952.

Decided March 20, 1953.

204 F.2d 89

COPYRIGHT MATERIAL OMITTED

204 F.2d 90

Max R. Simon and Goldwater & Flynn, New York City, Monroe Goldwater, Max R. Simon, James L. Goldwater and Robert Conrad, New York City, of counsel for appellants

Holmes Baldridge, Asst. Atty. Gen., Myles J. Lane, U. S. Atty., New York City, and Marvin C. Taylor, Attorney, Department of Justice, Washington D. C., for appellees.

Before SWAN, Chief Judge, and L. HAND and FRANK, Circuit Judges.

SWAN, Chief Judge.

These two actions brought under the Fair Labor Standards Act of 1938, 29 U.S. C.A. § 216(b), involve the claims of longshoremen for unpaid overtime compensation, liquidated damages, attorney's fees and costs, because of the alleged failure of the defendants to pay overtime compensation in accordance with section 7(a) of the Act, 29 U.S.C.A. § 207(a). The period of employment involved is from October 15, 1943 to September 30, 1945.¹ The actions were commenced on October 4, 1945 and the subsequent history of this protracted litigation, which has already once gone to the Supreme Court, is well stated in Judge Leibell's careful and elaborate opinion.² He also made very detailed findings of fact, familiarity with which will be assumed.

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His decision awarded small recoveries to four plaintiffs in the Huron action and to two in the Bay Ridge action, and dismissed on the merits the claims of the others.³ All twenty-three plaintiffs have appealed, those who had a recovery contending that the sums awarded them were too small

The plaintiffs were employed under a collective bargaining contract between their employers and a longshoremen's union which provided "straight time hourly rates" for work done within prescribed hours and "overtime hourly rates" for work done outside the straight time hours, with no differential for work in excess of 40 hours per week. The longshoremen worked a varying and irregular number of hours throughout a given workweek, and the same man's workweek might consist of work done partly at "straight time hourly rates" and partly at "overtime hourly rates." The problem of determining the "regular rate" of pay upon which the excess statutory compensation required by section 7(a) of the Fair Labor Standards Act of 1938 is based, was settled by the Supreme Court in June 1948 in the Bay Ridge case.⁴ It was there held that what the collective bargaining contract called "overtime hourly rates" was really a "shift differential"; and that the "regular rate" was to be found by dividing the weekly compensation by the hours worked, unless the compensation paid contains some amount that represents an "overtime premium" which was defined as "extra pay for work because of previous work for a specified number of hours in the workweek or workday" (italics added);⁵ in that event any overtime premium paid may be credited against the obligation to pay statutory excess compensation. The trial now before us for review was had under the mandate of the Supreme Court permitting the District Court to consider any defense which the employers may have under the Portal to Portal Act and to allow any amendments to the complaint or answer or any further evidence that the court may consider just. During the course of the trial defenses based on further amendment of the Fair Labor Standards Act were allowed to be pleaded.

Judge Leibell sustained defenses under sections 9 and 11 of the Portal Act, 29 U.S.C.A. §§ 258, 260, and under the 1949 amendments of the Fair Labor Standards Act, namely, P.L. 177 and P.L. 393 of the 81st Congress, 1st session, which appear as 29 U.S.C.A. § 207(d)(5), (d)(6), (d)(7), and (g). This resulted, as already stated, in dismissal of most of the claims which were tried.

Part I of the appellants' brief is devoted to an attack upon the constitutionality of the statutes creating these defenses. This court has already sustained the constitutionality of the Portal Act,⁶ and the appellants do not ask us to reconsider those decisions but make their point merely to preserve it because the Supreme Court has not yet expressly ruled upon it. In considering the attack upon P.L. 177 and P.L. 393 it will suffice for present purposes to confine attention to 29 U.S.C.A. § 207(d) (7). This in effect provides that there shall be excluded from the "regular rate" at which an employee is employed "extra compensation provided by a premium rate" paid pursuant to a collective bargaining agreement for work outside the hours established in good faith as the "basic" workday or workweek (not exceeding 8 hours

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or 40 hours respectively) "where such premium rate is not less than one and one-half times the rate established in good faith by the contract or agreement for like work performed during such workday or workweek." The appellants' challenge to this provision is based upon the theory (1) that it was a denial of due process of law to deprive them of their "vested right" to overtime computed in accordance with the Supreme Court's ruling in the Bay Ridge case, and (2) that after the Supreme Court had so decided Congress could not overrule its judgment by declaring in effect that the rights so adjudicated the Act had not given. With respect to point (2) we agree that Congress was incompetent to declare that the Supreme Court had misconstrued the Act or that the Act did not confer the rights which the Court declared that it did. But the amendments should not be interpreted as attempting to do that. What they undertook to do was to deprive the longshoremen of those rights which the Act, as construed by the Supreme Court, had given. If that was beyond Congressional competence, it was not because the Congress encroached upon the constitutional independence of the Court but because the Fifth Amendment forbade such action. Hence the appellants' challenge of constitutionality must stand or fall on the first objection, the denial of due process. The same arguments now advanced with respect to the Fifth Amendment were rejected by this court in upholding the constitutionality of the Portal Act.⁷ With respect to P.L. 177 and P.L. 393 the writer of the present opinion is content to rest on what was there said.⁸

The appellants further contend that the amendatory statutes cannot be constitutionally applied to deprive counsel of reasonable fees for services already performed and money expended in reliance upon the Act prior to amendment. This matter is discussed in Judge Leibell's opinion, 96 F.Supp. 142 at page 177. He rejected the contention for reasons with which we agree. Furthermore the judgments under review specifically reserve "to plaintiffs' counsel the right to apply for an allowance of counsel fees after the completion of any appeals which may be taken in order to review the judgment in the higher courts." Hence the claim that counsel have already been unconstitutionally deprived of reasonable fees appears to be premature.

Part II of the appellants' brief attacks the findings and conclusions of the district court in sustaining defenses under sections 9 and 11 of the Portal Act. Pages 154 to 166 of 96 F.Supp. deal with the section 9 defense. Under section 9, 29 U.S.C.A. § 258, the question is whether the defendants' failure to pay overtime in exact conformity with section 7a of the Act "was in good faith in conformity with and in reliance on any administrative regulation, order, ruling, approval, or interpretation, of any agency of the United States * * *." Judge Leibell held that section 9 was a bar to the plaintiffs' actions except with respect to overtime claims for certain weeks in which a plaintiff was employed as header, gangwayman or assistant foreman and as such received a "skill differential" of 5 cents or 15 cents per hour.⁹ In discussing the meaning of "good faith," 96 F.Supp. at page 155, he expressed the view that it requires more than honest belief and must meet an "objective test," that is, the employer must act "as a reasonably prudent man would have acted under the same circumstances." Although the question may not be of importance in the case at bar since the trial court found that the defendants' reliance upon agency rulings and interpretations was in fact reasonable as well as honest, we feel constrained to express disagreement with

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the view that "good faith" must meet an objective standard of reasonableness. If the interpretation which an employer says he put upon an agency ruling is unreasonable, this may indeed cast doubt upon the honesty of his belief in the interpretation he asserts, but we think it is not otherwise relevant. The "good faith" of the statute requires, we think, only an honest intention to ascertain what the Fair Labor Standards Act requires and to act in accordance with it. This is confirmed by comparing the language of section 11, 29 U.S.C.A. § 260, with that of section 9. Section 11 requires the employer's "act or omission" to have been taken not only "in good faith" but also with "reasonable grounds for believing that his act or omission was not a violation of the Fair Labor Standards Act". Obviously in section 11 the objective standard of reasonableness is a requirement additional to that of "good faith." It would be unwarranted to construe "good faith" in section 9 to have a meaning different from the same phrase in section 11. Furthermore, we think it clear that Congress must have intended to adopt this meaning. Section 9 presupposes that different governmental agencies may have made ambiguous or even conflicting rulings, interpretations, etc., of the Act. From such rulings the employer must choose the one he honestly believes to be correct, must conform with it and must act in reliance upon it. If he has done this his past conduct is to be...