Johnson Waste Materials v. Marshall
| Decision Date | 11 February 1980 |
| Docket Number | No. 77-2556,77-2556 |
| Citation | 611 F.2d 593 |
| Parties | 24 Wage & Hour Cas. (BN 554, 53 A.L.R.Fed. 544, 87 Lab.Cas. P 33,879 JOHNSON WASTE MATERIALS et al., Plaintiffs-Appellants, v. F. Ray MARSHALL, Secretary of Labor, United States Department of Labor, Defendant-Appellee. |
| Court | U.S. Court of Appeals — Fifth Circuit |
O. C. Hamilton, Jr., Neil E. Norquest, McAllen, Tex., for plaintiffs-appellants.
James R. Gough, U. S. Atty., Thomas J. Allen, Atty., Dept. of Labor, Washington, D. C., for defendant-appellee.
Appeal from the United States District Court for the Southern District of Texas.
Before THORNBERRY, GEE and HATCHETT, Circuit Judges.
In this case we are called upon to decide whether a judgment debtor can prevail in an independent action to reform a judgment under Fed.R.Civ.P. 60(b) 1 based on evidence that he had previously paid a portion of the obligation from which the judgment arose, if he has failed to demonstrate that he exercised due diligence to secure that evidence at the time of trial. We hold that in the exceptional circumstance where the evidence of payment is virtually conclusive, mere negligence on the part of the judgment debtor does not preclude reformation of the judgment in a Rule 60(b) independent action. Accordingly, we find it necessary to reverse the trial court's grant of summary judgment for the Secretary of Labor and to remand for further factual findings concerning the employers' efforts to secure the evidence at the time of trial.
The facts of this case are relatively simple, though its procedural history is rather complex. In 1973 the Secretary of Labor (Secretary) brought suit to enjoin appellants 2 and Jose S. Fernandez 3 (hereinafter collectively referred to as "defendants") from violating the minimum wage, overtime, and recordkeeping provisions of the Fair Labor Standards Act of 1938, 29 U.S.C. § 201 Et seq. (1976), and to restrain them from continuing to withhold unpaid wages due under the Act. On July 3, 1975, the trial court entered a judgment against all the defendants, enjoining them from violating the Act and from withholding compensation due 23 of their employees in the total amount of $104,204.
In computing the amount of the judgment, the trial court had before it no records that showed the number of hours actually worked by the employees or the amount of wages that they had in fact been paid. Defendants were apparently unable to locate the cancelled checks by which the employees had been paid. 4 In calculating the amount of money due the defendants' employees, the trial court, therefore, was forced to rely on the testimony of the employees and the answers of defendant Fernandez to the Secretary's written interrogatories. Despite testimony that some employees worked more than 40 hours in some work weeks, the trial court found that all employees worked "at least 40 hours a week at every location." Moreover, although the employees did not testify as to the precise times that their wages were changed from one amount to another, the trial court found it clear from their testimony that they "were paid variously a weekly wage of $18, $24, $30, $40, $50, $60 and during the latter part of 1974, $70.00." To fix specific dollar amounts, the trial court looked to the wage schedule set out in Fernandez' answers to the Secretary's interrogatories. 5 Based on all of this evidence the trial court computed the amount owed each employee for a given work week by multiplying the minimum wage obligation of $1.60 per hour by 40 hours and subtracting from that total "the greater amount that defendant Fernandez claims to have paid them, i. e., $18, $36, and $42 a week" for the particular week in question. In this fashion, the trial court ascertained that the defendants owed a total of $104,204 to their employees. We affirmed the trial court's findings of fact and conclusions of law in an unpublished per curiam opinion. Usery v. Johnson Waste Materials, Inc., No. 75-3215 (5th Cir. Apr. 23, 1976).
Slightly more than one year after the entry of judgment against defendants, on August 18, 1976, defendants moved to stay the execution or enforcement of the judgment against them. On the following day they filed an independent action in equity to set aside or reform the judgment under Fed.R.Civ.P. 60(b), alleging accident, mutual mistake, newly discovered evidence, and a possible fraud upon the court. The Chief Judge of the Southern District of Texas ordered that a hearing be conducted to determine the propriety of staying the original judgment pending the determination of the action in equity. He specifically noted that the parties would be allowed at the hearing to adduce evidence on whether defendants' claim of newly discovered evidence was "meritorious or simply dilatory." 6
On March 4, 1977, a hearing was held before the original trial judge. Defendants presented the testimony of two witnesses, Mr. Fernandez and Carl S. Chilton, Jr., a certified public accountant. Fernandez testified that in June 1976, over a year after the trial, in the course of an IRS audit, he had found bank statements and cancelled checks of the Acapulco Company. 7 These indicated how much each employee had received weekly by check during the years in question. Mr. Chilton testified that by using these records and by assuming a 40-hour work week, he calculated that the defendants owed their employees only $50,644, not $104,204, the amount of the judgment. Defendants also sought to have ten employees testify at the hearing, but the court refused to hear their testimony. 8
On March 7, 1977, the court granted defendants' motion to stay the July 3, 1975, judgment until the disposition of defendants' independent action. In the same order, however, the court denied a "motion to reform or set aside the judgment entered in this cause on July 3, 1975," on the ground that Fernandez' testimony did not constitute "newly discovered evidence . . . but on the contrary, (was) merely newly produced evidence." Such a motion, however, was not properly before him.
On the following day, the Chief Judge consolidated defendants' independent action with the original cause of action against defendants and assigned the consolidated case to the judge who presided at the hearing. Defendants subsequently filed a motion to rescind the consolidation order, which was denied.
On June 21, 1977, the trial judge granted the Secretary's motion for summary judgment based on his conclusion that the evidence presented at the March 4 hearing "is, as a matter of law, not newly discovered but merely newly produced evidence." He concluded that to deny the motion for summary judgment in this case
would not only be a violation of the newly discovered evidence rule, but might well encourage litigants to withhold pertinent documents in one trial and when ruled against, seek to reopen it at a later date by then producing the evidence, thus presenting each alternative defense in a separate action.
All of the defendants, with the exception of Jose Fernandez, appeal from this adverse judgment.
Defendants allege four grounds of error, which they submit require reversal. They contend that: (1) the bank statements and cancelled checks should have been admitted into evidence because they constituted "newly discovered evidence" within the meaning of Fed.R.Civ.P. 60(b)(2); (2) the checks should have been admitted on equitable grounds pursuant to Fed.R.Civ.P. 60(b)(5) as evidence that the judgment beneficiaries had already been paid over half of the amount of the judgment; (3) the defendants should have been afforded a hearing on the merits of their independent action; and (4) the cases should not have been consolidated and assigned to the judge who presided over the March 4 hearing. Because we conclude that defendants' second contention is dispositive of this appeal, we do not reach issues (3) and (4).
Under Fed.R.Civ.P. 60(b)(2), the court may relieve a party from a final judgment because of "newly discovered evidence which by Due diligence could not have been discovered in time to move for a new trial under Rule 59(b)." (emphasis added). The rule further provides that a Motion based on newly discovered evidence shall be made "not more than one year after the judgment . . . was entered . . . ." Rule 60(b) does not limit, however, "the power of a court to entertain an Independent action to relieve a party from a judgment . . . ." (emphasis added). Thus, we may properly consider defendants' independent action for reformation on the ground of newly discovered evidence, even though such action was brought more than one year after judgment.
To prevail on a motion for a new trial based on newly discovered evidence under Rule 60(b)(2), the movant must show that the evidence was discovered following the trial, that he used due diligence to discover the evidence at the time of the trial, that the evidence is not merely cumulative or impeaching, that it is material, and that a new trial in which the evidence was introduced would probably produce a different result. Ag Pro, Inc. v. Sakraida, 512 F.2d 141, 143 (5th Cir. 1975), Rev'd on other grounds, 425 U.S. 273, 96 S.Ct. 1532, 47 L.Ed.2d 784 (1976); Ledet v. United States, 297 F.2d 737, 739 (5th Cir. 1962). We have characterized such a motion as "an extraordinary motion" and have demanded that the requirements of the rule set forth above be strictly met. Ag Pro, supra at 143. An independent action to reform or set aside a judgment because of newly discovered evidence is not less extraordinary than a Rule 60(b)(2) motion. See Carr v. District of Columbia, 177 U.S.App.D.C. 432, 442, 543 F.2d 917, 927 (D.C.Cir.1976) (). It may even be more so. See 7 Moore's Federal Practice P 60.37(1), at 623 (2d ed. 1979) ("Under circumstances which render it Manifestly unconscionable that a...
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