Barnhart v. Compugraphic Corp.

Decision Date06 February 1991
Docket NumberNo. 90-1698,90-1698
Citation936 F.2d 131
Parties30 Wage & Hour Cas. (BN 580, 120 Lab.Cas. P 56,744 Matthew BARNHART and Donald McLean, Appellants, v. COMPUGRAPHIC CORPORATION, Appellee. . Submitted Pursuant to Rule 12(6)
CourtU.S. Court of Appeals — Third Circuit

Howard G. Silverman, Kane & Silverman, P.C., Philadelphia, Pa., for appellants.

Craig E. Zeigler, Montgomery, McCracken, Walker & Rhodes, Philadelphia, Pa., for appellee.

Before MANSMANN, SCIRICA and HIGGINBOTHAM, Circuit Judges.

OPINION OF THE COURT

A. LEON HIGGINBOTHAM, Jr., Senior Circuit Judge.

This case presents the appeal of the district court's order and judgment dated July 23, 1990 which denied appellants' motion for an award of reasonable attorney's fees and costs. The questions for decision before us are 1) whether the finding of a good faith dispute under the Pennsylvania Wage Payment and Collection Law ("WPCL"), 43 Pa.Stat.Ann. tit. 43, Secs. 260.9, 260.10 et seq. (Purdon 1964 & Supp.1990), precludes a debtor from collecting attorney's fees when that debtor has been awarded damages for past due wages; and 2) whether appellants have complied with Fed.R.Civ.P. 52(a) and 59(e) and Rule 20(c) of the Local Rules of Civil Procedure for the United States District Court for the Eastern District of Pennsylvania. Because we believe that the district court improperly interpreted the Pennsylvania Wage Payment and Collection Law ("WPCL") on the issue of attorney's fees and costs, and because we believe that the plaintiffs below complied with the applicable procedural rules, we will reverse.

I.

Plaintiffs-appellants, Matthew Barnhart and Donald McLean, were employed as sales representatives by defendant-appellee, Compugraphic Corporation ("Compugraphic") until the fall of 1988. 1 On August 5, 1988, the appellants were laid off from the company. Both parties agree that the plaintiffs were laid off due to "poor business conditions and lack of cash flow" at Compugraphic, and not because of the plaintiffs' deficient performance. On November 2, 1988, the plaintiffs filed a complaint against Compugraphic, and sought recovery of commissions for sales which they made prior to their layoffs, but which were not shipped until after their lay offs.

The district court granted a judgment in favor of the employees for past due wages on November 2, 1989. The district court reasoned that since plaintiffs "did most of the work associated with these orders," they were entitled to a percentage of the commissions received. App. at 8. The court also found "that there was a good faith dispute between Compugraphic and the plaintiffs on the issues litigated...." Pursuant to this finding, the court made no award for liquidated damages under the WPCL. 2 The district court did not address the attorney's fees petition, but indicated that plaintiffs could file for attorney's fees at the completion of the appellate process. In a Judgment Order dated June 5, 1990, this court affirmed the judgment of the district court. App. at 38-39.

Thereafter, on July 9, 1990, plaintiffs filed a supplemental petition for attorney's fees and costs pursuant to the WPCL. This petition incorporated the original petition which had been filed with the district court prior to its decision issued on November 2, 1989. On July 23, 1990, the district court denied plaintiffs' petition for reasonable attorney's fees and costs, which was based upon the WPCL, on the ground that the existence of a good faith dispute between the plaintiffs and Compugraphic barred plaintiffs' cause of action under the WPCL.

On August 1, 1990, the plaintiff-appellants filed a motion to alter or amend the district court's judgment. The district court denied the motion on September 7, 1990. On the same day, the appellants filed a second motion to alter or amend the judgment. This motion was also denied on September 18, 1990. Subsequently, the plaintiffs filed this appeal. 3

Jurisdiction was proper in the district court pursuant to 28 U.S.C. Sec. 1332. We have jurisdiction over this matter pursuant to 28 U.S.C. Sec. 1291.

II.

There are two issues before this court on appeal. We must decide whether a finding of a good faith dispute between an employee and employer precludes an award of reasonable attorney's fees and costs under the WPCL for an employee who has already prevailed on a claim for past due wages. This is an issue of first impression in the federal court, and we have been cited to only one Common Pleas Court decision in the Pennsylvania courts. See Gingrich v. City of Lebanon, 9 Lebanon Co. Legal Journal, 335, 339-340 (C.P. Lebanon Co.1963). 4 Since this issue has not been decided by the Supreme Court of Pennsylvania, we are obligated to predict how that court would decide this issue. Erie Castings Co. v. Grinding Supply, Inc., 736 F.2d 99, 100 (3d Cir.1984).

We must also determine whether the plaintiffs properly pled their case in accordance with the applicable rules of procedure.

We will exercise plenary review of the district court's interpretation of the WPCL, and of its decision regarding the plaintiffs-appellants' compliance with the procedural rules.

Generally, the prevailing plaintiff is not entitled per se to attorney's fees and costs from a defendant. Alyeska Pipeline Service Co. v. Wilderness Society, 421 U.S. 240, 247-250, 95 S.Ct. 1612, 1616-1618, 44 L.Ed.2d 141 (1975). However, if a statute authorizes recovery, a prevailing party may recover attorney's fees. Id. at 247, 95 S.Ct. at 1616. The court below held in favor of Compugraphic and determined that the Pennsylvania WPCL does not authorize a prevailing employee whose employer has, in good faith, denied plaintiff wages to seek attorney's fees. The appellee, Compugraphic, argues that the liquidated damages statute, 43 Pa.Stat.Ann. Sec. 260.10, intended to provide some guidance on the issue of attorney's fees despite the fact that it does not explicitly mention attorney's fees. According to Compugraphic, since the statute requires payment of wages and damages if the employer does not have a good faith reason for not paying previously, it indicates that a showing of bad faith is necessary before a plaintiff can file a claim for attorney's fees and costs. However, a careful analysis of the WPCL indicates that a finding of a good faith dispute between an employer and an employee should not preclude a plaintiff from filing a claim for attorney's fees and costs. 43 Pa.Stat.Ann. Sec. 260.9a(f) expressly authorizes the payment of reasonable attorney's fees and costs for any action brought pursuant to the statute. Conversely, the liquidated damages statute, Sec. 260.10, does not mention attorney's fees at all. The liquidated damages statute is essentially a penalty provision aimed at deterring employers who, in bad faith, withhold legitimate payment to its employees--it is not applicable to the issue of attorney's fees. The good faith/bad faith issue relates to the liquidated damages provisions under Sec. 260.10 which stands separately from the issue of attorney's fees and costs. Generally, the purpose underlying the WPCL is to protect employees, and to remove some of the obstacles to litigation facing many employees. Pa.Stat.Ann. tit. 43 Sec. 260.1. Compare, Todora v. Jones, 304 Pa.Super. 213 at 215, 450 A.2d 647 at 649 (1982) (Pennsylvania WPCL is not the sole basis of recovery for an employee who has not been paid wages due). 5 Regardless of whether or not an employer exercised good faith in impermissibly withholding wages, an employee may be deterred from filing suit because of exorbitant legal costs. Therefore, the good faith/bad faith inquiry is not relevant to the issue of attorney's fees in cases involving the award of compensatory damages. Although we do not compel trial courts to grant aggrieved plaintiffs, who are entitled to past due wages under the WPCL, attorney's fees and costs, we hold that a finding of good faith on behalf of the employer does not preclude the plaintiffs from seeking an award of attorney's fees.

There are a few cases which provide guidance regarding the award of attorney's fees under the WPCL, though we have found no case which is directly on point.

As noted previously, we must be primarily guided by state law when interpreting the WPCL. The Lebanon County Court of Common Pleas is the only Pennsylvania court to consider the award of attorney's fees under this statute. Gingrich v. City of Lebanon, 9 Lebanon Co. Legal Journal, at 335. In Gingrich, the court awarded attorney's fees to a plaintiff who had prevailed on a claim for wages, but had not prevailed on a claim for liquidated damages. Id. at 339-40.

In the absence of additional guidance from the state courts, it is helpful to consider other relevant federal cases from our circuit. This court's opinion in Carpenters Health and Welfare Fund of Philadelphia and Vicinity v. Kenneth R. Ambrose, Inc., 727 F.2d 279 (3d Cir.1983), is particularly instructive. In Carpenters, this court considered the defendant's appeal from a district court judgment finding their company liable for delinquent fringe benefit contributions under Sec. 301 of the Labor Management Relations Act of 1947 ("LMRA") and under Sec. 260.10 of the Pennsylvania WPCL. The district court in Carpenters acknowledged the defendant's good faith in failing to pay the required contributions. The court noted the following:

... [T]he defendants' failure to pay the required contributions into the union welfare fund was not, in any sense, a deliberate and intentional "refusal to honor their promises to pay" or "contemptuous disregard of an obligation," as plaintiffs now contend. Rather, they failed to pay for the best of all possible reasons: They did not have the money. More importantly still, the reason the defendants were unable to pay was because the firms with which they contracted ... were financially irresponsible and failed to pay the defendants.

Carpenters, 727 F.2d at 285....

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