Ferrer v. Waterman SS Corporation

• Decision Date: 09 May 1949
• Docket Number: 4035.,4034,Civ. No. 3741
• Citation: 84 F. Supp. 680
• Parties: FERRER et al. v. WATERMAN S. S. CORPORATION. TORRES et al. v. WATERMAN S. S. CORPORATION. ALGARIN et al. v. WATERMAN S. S. CORPORATION.
• Court: U.S. District Court — District of Puerto Rico

84 F. Supp. 680

FERRER et al. v. WATERMAN S. S. CORPORATION.

TORRES et al. v. WATERMAN S. S. CORPORATION.

ALGARIN et al. v. WATERMAN S. S. CORPORATION.

Civ. Nos. 3741, 4034, 4035.

United States District Court D. Puerto Rico. San Juan Division.

May 9, 1949.

COPYRIGHT MATERIAL OMITTED

Arturo Ortiz Toro, San Juan, Puerto Rico, for plaintiffs.

J. R. Beverley, San Juan, Puerto Rico, for third-party plaintiff.

C. R. Hartzell, United States Attorney, San Juan. Puerto Rico, for defendant.

CHAVEZ, District Judge.

Plaintiffs Guadalupe Barbosa Ferrer and others filed suit to recover unpaid overtime compensation, liquidated damages and attorneys fees under the Fair Labor Standards Act of 1938, 29 U.S.C.A. § 201 et seq. Judgment for overtime compensation and liquidated damages was rendered for plaintiffs in the total sum of $36,958.88. Ferrer v. Waterman Steamship Corporation, D.C., 70 F.Supp. 1. Thereafter, pursuant to a ruling by this Court, 76 F.Supp. 601, the defendant set up two special defenses under Sections 9 and 11 of the Portal-to-Portal Act approved May 14, 1947, 29 U.S.C.A. 258, 260, and the only question before the Court is upon said two special defenses.

Plaintiffs were employed as longshoremen under yearly collective bargaining agreements between their union and the defendant company. The collective bargaining agreement provided for different rates of pay according to the hours worked and the cargo handled and such rates were paid by the company. The contract set up the following scale of compensation:

"The hours of work and the wages for working days, extraordinary hours and holidays, according to the cargo to be handled, shall be as follows:

                                         General Cargo
                From              To       Work Days         Holidays
                 7 a.m.          12 M.D.     $0.55             $0.77
                12 M.D.           1 p.m.      0.90              1.00
                 1 p.m.           4 p.m.      0.55              0.77
                 4 p.m.           6 p.m.      0.77              0.84
                 6 p.m.           7 p.m.      0.90              1.20
                 7 p.m.          11 p.m.      0.77              0.84
                11 p.m.          12 M.N.      0.90              1.25
                12 M.N.           6 a.m.      0.84              1.02
                 6 a.m.           7 a.m.      1.30              1.40
                                   Special Cargo
                            Cement, Fertilizer, Creosoted Lumber, Scrap Iron
                              Suchal, Calcium, Raw Sugar in San Juan and
                                                Mayaguez
                From         To       Ashore      Aboard      Ashore     Aboard
                 7 a.m.    12 M.D.    $0.60       $0.66       $0.88      $0.93
                12 M.D.     1 p.m.     1.00        1.10        1.10       1.30
                 1 p.m.     4 p.m.     0.60        0.66        0.88       0.93
                 4 p.m.     6 p.m.     0.80        0.85        1.02       1.03
                 6 p.m.     7 p.m.     1.10        1.30        1.65       1.90
                 7 p.m.    11 p.m.     0.80        0.85        1.02       1.03
                11 p.m.    12 M.N.     1.10        1.30        1.65       1.90
                12 M.N.     6 a.m.     1.02        1.08        1.08       1.08
                 6 a.m.     7 a.m.     1.25        1.50        1.45       1.70"
                

In the original trial of this case and at the present time the defendant company and the intervenor take the position that rates after 4 p. m. and on Sundays and holidays, were true overtime rates and entitled to be considered as such in all calculations and that the regular rate of pay was from 7 a. m. to 12 noon and from 1 p. m. to 4 p. m., as set out in the collective bargaining agreement regardless of whether the rates were for general cargo or for special cargo. The defendant argues that a true example of the incentive pay was the difference in rates during regular hours between general cargo and special cargo and that night work and Sundays and holidays worked at extra rate were entitled to be counted as overtime pay.

The Court adopted the report of the Special Master who rejected the theory of the defendant and made his findings and calculations as to regular rate of pay by taking the total pay of each plaintiff each week and dividing it by the number of hours worked during said week. This regular rate was then used as the basis for the computation of time and a half after forty hours work per week.

Since the Court has already held that the varying rates of pay received by the plaintiffs under their contract were regular rates and not overtime and approved the Special Master's computation of the amounts due, the question arises under the two special defenses whether the actions or omissions of the defendant were:

(a) 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, or any administrative practice or enforcement policy of any such agency, or

(b) in good faith and "with reasonable grounds for believing" that it was not a violation of the Fair Labor Standards Act of 1938.

The statutes and sections of Interpretative Bulletin No. 4, pertinent to this care, are as follows:

Section 9, Title 29 U.S.C.A. § 258:

"In any action or proceeding commenced prior to or on or after May 14, 1947 based on any act or omission prior to May 14, 1947, no employer shall be subject to any liability or punishment for or on account of the failure of the employer to pay minimum wages or overtime compensation under the Fair Labor Standards Act of 1938, as amended, the Walsh-Healey Act, or the Bacon-Davis Act, if he pleads and proves that the act or omission complained of 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, or any administrative practice or enforcement policy of any such agency with respect to the class of employers to which he belonged. Such a defense, if established, shall be a bar to the action or proceeding, notwithstanding that after such act or omission, such administrative regulation, order, ruling, approval, interpretation, practice, or enforcement policy is modified or rescinded or is determined by judicial authority to be invalid or of no legal effect. May 14, 1947, c. 52, § 9, 61 Stat. 88."

Section 11, Title 29 U.S.C.A. § 260:

"In any action commenced prior to or on or after May 14, 1947 to recover unpaid minimum wages, unpaid overtime compensation, or liquidated damages, under the Fair Labor Standards Act of 1938, as amended, if the employer shows to the satisfaction of the court that the act or omission giving rise to such action was in good faith and that he had reasonable grounds for believing that his act or omission was not a violation of the Fair Labor Standards Act of 1938, as amended, the court may, in its sound discretion, award no liquidated damages or award any amount thereof not to exceed the amount specified in section 216(b) of this title. May 14, 1947, c. 52 § 11, 61 Stat. 89."

Sections 13 and 14 of Interpretative Bulletin No. 4 as originally released (1938) and sections 69, 70 and 71 of Interpretative Bulletin No. 4 as amended (1940) and examples 3, 5, 6(a), 6(b) of Section 70, are as follows:

"Section 13 — Extra Compensation for Overtime Not included in Determining Regular Rate of Pay.

"Extra compensation paid for overtime work need not be included in determining the employee's regular hourly rate of pay. Thus, if an employee earns $19.50 for a regular 39-hour workweek and time and a half or 75 cents is paid for all hours in excess of 39, the regular hourly rate of pay is still 50 cents an hour and, if the employee worked 46 hours one week he would be entitled to $24.75 (39 hours × 50 cents) plus (7 hours 75 cents) or (46 hours × 50 cents) plus (7 overtime hours × 25 cents). The same principle applies to a pieceworker or hourly rate employee where time and a half is given for overtime work."

"Sec. 14. Employees Paid at Two Rates of Pay in Single Workweek.

"If an employee, during a single workweek, is paid at two different rates of pay, his regular hourly rate of pay, on which time and one-half must be paid, is the average hourly rate for the week, computed by dividing the weekly earnings at both rates by the total number of hours worked in the week. For his overtime work the employee is entitled to a sum, in addition to such earnings, equivalent to one-half the hourly rate of pay, arrived at as indicated, multiplied by the number of hours worked in excess of 40. Thus, suppose an employee works 30 hours a week at an occupation paying 40 cents an hour, and 20 hours in the same week at an occupation paying 50 cents an hour. The employee's hourly rate of pay is 44 cents an hour — $22 (30 hours × 40 cents) plus (20 hours × 50 cents) divided by 50 hours) and he is entitled to be paid a total wage of $24.20 (30 hours × 40 cents) plus (20 hours × 50 cents) plus (10 overtime hours × 22 cents). In other words, the employee is entitled to be paid an amount equivalent to 44 cents an hour for 40 hours and 66 cents an hour for 10 hours. The regular hourly rate of pay will be computed in the same way where a pieceworker is employed at two different piece rates during the week or in any other case where an employee works at two different rates during a week."

Sec. 69 of Interpretative Bulletin:

"The question has been asked as to what are the requirements of Section 7 in cases where a union agreement or other agreement between an employer and his employees calls for the payment of overtime or other special compensation which is not required to be paid by the act. Extra compensation paid for overtime work, even if required to be paid by a union agreement or other agreement between the employer and his employees need not be included in determining the employee's regular hourly rate of pay (see par. 13 of this Bulletin.) Furthermore, in determining whether he has met the overtime requirements of section 7 the employer may properly consider as overtime compensation paid by him for the purpose of satisfying these requirements, only the extra...