AMALGAMATED WKRS. UNION OF VI v. Hess Oil VI Corp.

• Citation: 478 F.2d 540
• Decision Date: 23 April 1973
• Docket Number: No. 72-1653.,72-1653.
• Parties: AMALGAMATED WORKERS UNION OF the VIRGIN ISLANDS et al., Appellants, v. HESS OIL VIRGIN ISLANDS CORP.
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

478 F.2d 540 (1973)

AMALGAMATED WORKERS UNION OF the VIRGIN ISLANDS et al., Appellants, v. HESS OIL VIRGIN ISLANDS CORP.

No. 72-1653.

United States Court of Appeals, Third Circuit.

Argued January 31, 1973.

Decided April 23, 1973.

John M. O'Quinn, Brown, Kronzer, Abraham, Watkins & Steely, Houston, Tex., J. Michael Spencer, St. Croix, Virgin Islands, for appellants.

Alexander A. Farrelly, Birch, de-Jongh & Farrelly, Charlotte, Amalie, St. Thomas, V.I., for appellee.

Before VAN DUSEN, ROSENN, and HUNTER, Circuit Judges.

OPINION OF THE COURT

ROSENN, Circuit Judge.

Plaintiffs (appellants) in this case are the Amalgamated Workers Union of the Virgin Islands and four of its members, suing on behalf of all members of the union who have worked a "rotating shift" for defendant Hess Oil Virgin Islands Corporation. Plaintiffs instituted this suit as a class action in the District Court for the Virgin Islands in January 1972 alleging that Hess was violating the Virgin Islands Fair Labor Standards Act by requiring employees to work the "rotating shift" without overtime compensation. Defendant moved to dismiss the suit as a class action because there were superior procedures available to plaintiffs before the Commissioner of Labor. On May 22, 1972, the district court entered an order remanding the case "to the Department of Labor for determination on the merits."¹ Plaintiffs appeal that decision. For the reasons stated below we reverse.

The rights allegedly violated are conferred by 24 V.I.C. § 20, which establishes that overtime at the rate of at least one and one-half times the employee's regular rate must be paid any employee who works more than five consecutive days or longer than forty hours in a work week. The available remedies derive from 24 V.I.C. § 17. Section 17(a) provides that an employer who pays any employee less than the applicable rate shall be liable to the employee for the full amount of the applicable rate, for any costs, and reasonable attorney's fees allowed by the court. Subsection (b), upon which the district court apparently relied, authorizes the Commissioner of Labor to sue on behalf of an employee. It provides:

(b) At the written request of any employee paid less than the wage to which he is entitled under or by virtue of this chapter, the Commissioner may take an assignment of such wage claim in trust for the assigning employee and may bring any legal action necessary to collect such claim, and the employer shall be required to pay the costs and such reasonable attorney\'s fees as may be allowed by the court.

One can read the district court's dismissal of the action to have been predicated on any of three different, independent theories: (1) The Department of Labor has the expertise and personnel to make a superior adjudication and thus must be preferred under the requirements of F.R.Civ.P. 23(b)(3); or, (2) Application must be first made to the Department of Labor and its administrative remedies exhausted before court adjudication; or, (3) All wage litigation must be channelled through the Department.² We find no merit in any of these theories.

The district court's first possible theory constitutes a misapplication of the "superiority requirement" of Rule 23(b) (3). Rule 23(b)(3) provides one of three alternative prerequisites for a class action, in addition to the requirements of subsection (a). It provides that a class action may be maintained if "the court finds that the questions of law or fact common to the members of the class predominate over any questions affecting only individual members, and that a class action is superior to other available methods for the fair and efficient adjudication of the controversy." (Emphasis added.) It then delineates factors pertinent to this question:

(A) the interest of members of the class in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already commenced by or against members of the class; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; (D) the difficulties likely to be encountered in the management of a class action.

As we view it, it would appear that the rule was not intended to weigh the superiority of a class action against possible administrative relief. The "superiority requirement" was intended to refer to the preferability of adjudicating claims of multiple-parties in one judicial proceeding and in one forum, rather than forcing each plaintiff to proceed by separate suit, and possibly requiring a defendant to answer suits growing out of one incident in geographically separated courts.

That possible administrative remedies were not intended to be considered as "other available methods" in deciding whether the class action is maintainable under Rule 23 is suggested by several considerations. Initially, the "superiority requirement" is stated in the same sentence that requires that the questions of law and fact common to the class members predominate over any questions affecting only individual members. Secondly, the factors stated to be pertinent to the two findings all relate to the desirability of having one suit instead of multiple suits. Finally, and perhaps most importantly, the advisory committee notes on the requirement focus on the question whether one suit is preferable to several. F.R.C.P. 23, Notes of Advisory Committee on Rules. We find no suggestion in the language of Rule 23, or in the committee notes, that the value of a class suit as a superior form of action was to be weighed against the advantages of an administrative remedy. We leave this question, however, for disposition in an appropriate case.

We are unable to perceive any reason why the "remedy" in section 17(b) of the Virgin Islands Fair Labor Standards Act, if cognizable under Rule 23, would be superior to the class action. The expertise of the Commissioner is immaterial, since the ultimate decision on the merits must be by the district court. The Commissioner is not authorized to make any preliminary findings. He is authorized only to bring a suit on behalf of the employee in the district court. Moreover, the deterrent value of a suit for judicial vindication of statutory rights under the Virgin Islands Fair Labor Standards Act would, in all likelihood, be diminished by precluding a class action and thereby requiring each individual employee to file his complaint with the Commissioner. On the other hand, an appropriate class action for multiple claims based on violations of "wage and hour laws" may very well serve a prophylactic function. For these reasons, we think the district court relied on improper factors and abused its discretion in determining that subsection (b)(3) does not justify this class action.

We also note that the requirements of Rule 23(b)(3) need not be met if the requirements of one of the other subsections of Rule 23 are met. Subsection (b) also provides that a class action may be maintained if the prerequisites of subsection (a) are satisfied, and in addition:

(1) the prosecution of separate actions by or against individual members of the class would create a risk of

(A) inconsistent or varying adjudications with respect to individual members of the class which would establish incompatible standards of conduct for the party opposing the class, or

(B) adjudications with respect to individual members of the class which would as a practical matter be dispositive of the interests of the other members not parties to the adjudications or substantially impair or impede their ability to protect their interests; or

(2) the party opposing the class has acted or refused to act on grounds generally applicable to the class, thereby making appropriate final injunctive relief or corresponding declaratory relief with respect to the class as a whole; ....

We think subsections (b)(1) and (2) might well apply to this suit because wage and hour litigants in the Virgin Islands would in the future, under the decision of the district court, have to press claims with the Commissioner of Labor, and any adjudication on the merits would establish a precedent applicable to all. Therefore, on remand, the district court should consider the applicability of subsections (b)(1), (2), and (3).

The district court's second possible theory, the doctrine of exhaustion of administrative remedies, does not depend on the class nature of the suit. If applicable, it would require named plaintiffs, as well as any class they represent, first to take their complaints to the Commissioner of Labor. This doctrine, however, is inapplicable to this case because the administrative agency does not have authority to grant the relief requested. See American Federation of Government Employees v. Resor, 442 F. 2d 993, 995 (3d Cir.1971). None of the actions the Commissioner is empowered to take would provide relief for the plaintiffs.³ He cannot impose penalties, and his investigatory powers, although they might be helpful in litigation, would not result in an award of back pay to plaintiffs.⁴

For this reason, the argument that plaintiffs are required to press the suit through the Commissioner is not really an argument...