Lassiter v. Guy F. Atkinson Co.

• Decision Date: 24 August 1949
• Docket Number: 11983,11984,11985,12018.,No. 12017,11986,12017
• Citation: 176 F.2d 984
• Parties: LASSITER et al. v. GUY F. ATKINSON CO. et al. and five other cases.
• Court: U.S. Court of Appeals — Ninth Circuit

176 F.2d 984 (1949)

LASSITER et al.

v.

GUY F. ATKINSON CO. et al. and five other cases.

Nos. 12017, 11983, 11985, 11984, 11986, 12018.

United States Court of Appeals Ninth Circuit.

August 24, 1949.

Oscar A. Zabel and Frederick Paul, Seattle, Wash., for appellant Naylor.

Wettrick, Flood & O'Brien, Seattle, Wash., for appellant Tyler.

McMicken, Rupp & Schweppe, Mary Ellen Krug, Seattle, Wash., for appellants Kohl and Sessing.

Frederick Paul, Seattle, Wash., for appellants Lassiter, Morrison and McNally.

Maurice R. McMicken, Seattle, Wash., for appellee West Const. Co.

Allen, Hilen, Froude & DeGarmo, Gerald DeGarmo, Seattle, Wash., for appellees S. Birch & Sons and Morrison Knudsen Co.

Bogle, Bogle & Gates, Robert W. Graham, Seattle, Wash., for appellee Guy F. Atkinson Co.

Tom C. Clark, Atty. Gen. of U. S., H. G. Morison, Asst. Atty. Gen., J. Charles Dennis, U. S. Atty., Seattle, Wash., Enoch E. Ellison, Sp. Asst. to Atty. Gen., Johanna M. D'Amico, Atty. Dept. of Justice, Washington, D. C., Frank A. Pellegrini, Asst. U. S. Atty., Seattle, Wash., for U. S. A. as intervenor.

Before HEALY, BONE and POPE, Circuit Judges.

POPE, Circuit Judge.

These are consolidated cases in which certain employees of the appellee construction companies brought suit against their employers for overtime wages, liquidated damages, and attorneys' fees, pursuant to section 16(b) of the Fair Labor Standards Act, 29 U.S.C.A. § 216(b). The work for which claims were made was performed in 1944 and 1945. Judgments were entered in favor of the claimants by the District Court of the United States for the Western District of Washington, Northern Division, whereupon the employers appealed to this court. After argument, but before decision (except in one case),¹ we remanded the causes to the district court, on the employers' motion, in order to permit the employers to proffer pleadings under the then recently passed Portal-to-Portal Act of 1947, 29 U.S.C.A. §§ 251-262. On March 2, 1948, after a trial, the district court made findings and dismissed the actions on the ground that the employers had pleaded and proved defenses under Sections 9 and 11 of the Portal-to-Portal Act.

Appellants assert that Sections 9 and 11, as applied to them, are unconstitutional. The constitutionality of the Act has been upheld by the Courts of Appeals of seven circuits, including this one. See Thomas v. Carnegie-Illinois Steel Corp., 3 Cir., 174 F.2d 711, and cases cited. Two of the cases there cited dealt specifically with Sections 9 and 11. Rogers Cartage Co. v. Reynolds, 6 Cir., 166 F.2d 317; Darr v. Mutual Life Ins. Co., 2 Cir., 169 F.2d 262, certiorari denied 335 U.S. 871, 69 S.Ct. 166. These sections are valid.

These appeals present the question whether the district court was justified in finding that the employers did plead and prove, as provided by Section 9, that their failure to pay overtime was (1) in good faith in conformity with and in reliance on (2) any administrative regulation, order, ruling, approval or interpretation (3) of any agency of the United States.²

Consideration of the evidence is greatly simplified by the stipulation made by all parties that all evidence, documentary or oral, relating to any one of the defendants should be deemed to relate to all defendants, and that all information, knowledge, beliefs and actions of any of the defendants should be deemed to be that of all other defendants.

The claimants worked for their employers in the construction of certain Aleutian Island air bases during the war. The employers, as cost-plus-fixed fee contractors, had been engaged by the United States. One of the employers, the Guy F. Atkinson Company, referred to here as Atkinson, began the performance of construction work in Alaska under contract with the War Department, in August 1942. In the performance of this contract no overtime was paid for work up to 44 hours in a work-week in Seattle or up to 48 hours in a work-week in Alaska. By the Wage Stabilization Act, 50 U.S.C.A.Appendix, § 961 et seq., and Executive Order 9250, 50 U.S. C.A.Appendix, § 901 note, the wages and salaries of employees were frozen as of October 3, 1942. In September, 1943, Atkinson entered into a new contract for other similar work with the War Department. While it was being negotiated, Atkinson was advised that it would be expected and required to follow the provisions of certain circular letters from the Office of the Chief of Engineers, War Department. These circular letters concerned the wage policy for non-manual employees. All of the claimants were in this category, and all were classified by the War Department as "Group `B'" employees, a classification explained by the following excerpt from one of the circular letters, which was dated January 9, 1943:

"5. Requirements as to hours of work, overtime and leave allowances for non-manual employees of cost-plus-a-fixed-fee principal and subcontractors:

* * * * * *

b. For this purpose, non-manual employees will be classified in the following groups:

* * * * * *

"(2) Group `B'. Employees whose base salaries are between $50.00 and $90.00 per week, inclusive, except those included in groups `D' and `E'.

* * * * * *

"C. The base salaries of all employees of Groups `A', `B', and `C' will be established on the basis of a minimum work week of 48 hours.

* * * * * *

"e. Group B employees will be expected to work any reasonable number of hours six (6) days per week, without payment of additional compensation. They will be paid at the rate of two times straight time (the weekly salary divided by 48) for all work which they are required to perform on the seventh consecutive day."

Attached to the employers' contracts with the War Department were copies of the uniform employment contracts which the government required them to use in employment of personnel. Provisions in these contracts relating to hours of work and overtime compensation were the same as required by the circular letter quoted above. The employers' contracts relating to the work in Alaska provided: "It is contemplated that work at the site will be carried out on the basis of two 10 hour shifts a day, 7 days a week." It is conceded by all parties that the employers and the War Department officials never deviated from the terms of these contracts, or from the directions of these circular letters in their policies concerning overtime payment.

The requirement of a work-week of seven ten hour days for non-manual employees, with overtime compensation to be paid only for work on the seventh day, and the freezing of wages, created a disparity between the gross earnings of such workers and manual employees who were allowed more overtime compensation. The resultant dissatisfaction created a serious personnel problem for the employers. Much of the subsequent correspondence should be read with this in mind.

The Corps of Engineers maintained a close control over all phases of the employers' operations. The officer whom that organization delegated to represent it with the employers was known as the Contracting Officer. Before entering upon the instant contract, Atkinson had received a letter from the Chief of the Personnel Branch of the Corps of Engineers bearing on its relation to the Contracting Officer. That letter stated in part:

"1.a. Problems frequently arise under cost-plus-fixed fee contracts as to the applicability or interpretation of laws or Executive Orders affecting the labor costs of the contractor.

"b. Such problems have in the main been submitted for determination through the Contracting Officer in the case of private plants operating under cost-plus contracts or through the Commanding Officer of Government-owned, privately-operated plants. However, some contractors have submitted such problems direct to civilian agencies without clearance through the War Department "c. Since the War Department is responsible for the reimbursement of proper labor costs under these contracts, all such problems will be submitted through the Contracting or Commanding Officer. Such procedure should govern problems under Executive Orders Nos. 9240, 9250, and 9301; Fair Labor Standards Act; Walsh-Healey Act; Davis-Bacon Act; Copeland Act; 8 Hour Law; and other laws or orders past or future affecting labor costs.

"2.a. If a ruling is required from a civilian agency it will be obtained by or through the War Department.

Shortly after the contract was signed, Atkinson prepared organization charts and wage schedules which included regulations relating to overtime pay and submitted them to the Contracting Officer for approval. These contained the job descriptions of the claimants and were submitted for wage stabilization purposes. These job descriptions were concise; one of claimants was an assistant accountant and his job was described thus: "Under the direction of the accountant, supervises one or more of the functions of the accounting department." However, it was shown on the earlier trial of this case that the work actually performed by the claimants differed from the job descriptions to such an extent that if the Fair Labor Standards Act applied to the work generally, they would be brought under the Act rather than within the exemption extended to administrative employees.

In submitting these schedules Atkinson called attention to the disparity in pay mentioned above, and which was reflected in the schedules, and suggested the necessity of obtaining adjusted schedules that would permit it to secure and retain necessary administrative and supervisory personnel.

In November, 1943, these organizational charts and schedules and pay policies were approved by the Contracting Officer and as a result of suggestions contained in the letter of approval Atkinson undertook to present to the War Labor Board and the Salary Stabilization Unit requests for wage and salary increases and adjustments. With the approval of the Contracting Officer Atkinson employed counsel...