Marshall v. Quik-Trip Corp., QUIK-TRIP

• Decision Date: 12 March 1982
• Docket Number: No. 79-1843,QUIK-TRIP,79-1843
• Citation: 672 F.2d 801
• Parties: 25 Wage & Hour Cas. (BN 408, 93 Lab.Cas. P 34,153 Ray MARSHALL, Secretary of Labor United States Department of Labor, Plaintiff-Appellant, v.CORPORATION, a Corporation, and William Bell, and John Cly, and John Scott, and Richard Slivocka, and Dennis R. Wilcox, Defendants-Appellees.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 801

672 F.2d 801

25 Wage & Hour Cas. (BN 408, 93 Lab.Cas. P 34,153

Ray MARSHALL, Secretary of Labor United States Department of Labor, Plaintiff-Appellant, v. QUIK-TRIP CORPORATION, a Corporation, and William Bell, and John Cly, and John Scott, and Richard Slivocka and Dennis R. Wilcox, Defendants-Appellees.

No. 79-1843.

United States Court of Appeals Tenth Circuit.

March 12, 1982.

Peter B. Dolan, Atty., U. S. Dept. of Labor, Washington, D. C. (Carin Ann Clauss, Sol. of Labor, Donald S. Shire, Associate Sol., Mary Helen Mautner, Atty., U. S. Dept. of Labor, Washington, D. C., and Tedrick A. Housh, Jr., Regional Sol., Kansas City, Mo., were also on the brief), for plaintiff-appellant.

Richard Barnes, Tulsa, Okl. (Kothe, Nichols & Wolfe, Inc., Tulsa, Okl., were on the brief), for defendants-appellees.

Before HOLLOWAY, BARRETT and LOGAN, Circuit Judges.

HOLLOWAY, Circuit Judge.

The Secretary of Labor brought this action under §§ 16(c) and 17 of the Fair Labor Standards Act ("FLSA"), 29 U.S.C. §§ 216(c) and 217, seeking to enjoin defendants from violating overtime compensation provisions of the FLSA and to recover back wages and liquidated damages for the employees affected. The Secretary alleged that defendants Quik-Trip and William Bell had filed with the Department of Labor "reports of retroactive payment of overtime compensation" which defendants Quik-Trip and Bell knew to be materially false, in violation of 29 U.S.C. §§ 211(c) and 215(a)(5), and 29 CFR § 516.2(b)(2), (Complaint § X, I R. 4); that the defendants had violated the child-labor provisions of the FLSA, 29 U.S.C. § 212(c) and 29 CFR 570.35; and that the defendants, in violation of 29 U.S.C. § 215(a)(3), had discharged and threatened to discharge employees who complained of or testified concerning violations of the FLSA.

The district court found that defendants had violated the Act's overtime provisions and that they had failed to make, keep, and preserve adequate records. The court awarded back wages and liquidated damages to 14 named employees, and enjoined defendants from further violations of the FLSA. (I R. 38-40). The child-labor claim was dismissed for want of evidence, (I R. 34), and the court found that there had been no retaliatory discharges in violation of 29 U.S.C. § 215(a)(3). (I R. 38).

The court did not, however, grant any relief concerning back wage and overtime payments to six other employees who either tore up or did not cash checks covering such payments given to these employees pursuant to a settlement agreement with the Secretary.

Concerning these six employees, the Secretary challenges on appeal the court's Finding of Fact No. 9 (I R. 38) that defendants Quik-Trip and Bell did not file materially false reports of retroactive payment of overtime compensation in violation of 29 U.S.C. §§ 211(c) and 215(a)(5), and 29 CFR § 516.2(b)(2), and appeals from the court's denial of relief for this alleged violation. (Brief for the Secretary of Labor at 2 & n.2). The court found:

9. Defendants Quik-Trip Corporation and William Bell did not file with a representative of the plaintiff (reports) of retroactive payment of overtime compensation which were false in a material respect. There was no evidence that any employee who signed a receipt for payment of back wages had not received a payment check before signing.

(I R. 38). ¹

I

Quik-Trip Corporation operates a chain of retail convenience stores in Wichita, Kansas and other cities. Defendant William Bell was at all relevant times a division manager for Quik-Trip (I R. 10); defendants John Cly, John Scott, Richard Slivocka, and Dennis R. Wilcox were at all relevant times managers or district supervisors for Quik-Trip. (I R. 10-11).

As a result of an investigation of Quik-Trip's wage practices by the Department of Labor's Wage and Hour Division, in March, 1975 Quik-Trip distributed some back wages for overtime work, apparently pursuant to a settlement agreement. ² (II R. 29-31, 141-42, 170-71, 173, 180-81). Defendant Bell was in charge of distributing the back wages. (II R. 148, 170-71). Mr. Bell testified that checks for back wages were sent to former employees by mail, along with a note which

said that we felt that the Quik-Trip Corporation was not liable for these funds and that Quik-Trip felt that they had not violated any of the wage and hour laws, but we had decided to settle so we could bring the case to a close and get back to business.

(II R. 170; see II R. 180-81).

Current employees were required to claim their back wages in person from Division Manager Bell in his office. (II R. 30, 83-84, 148, 170-71). In some cases the individual employee and Mr. Bell were alone in Bell's office when the check was handed to the employee. (II R. 30, 142). In one instance, District Supervisor Richard Slivocka and possibly Personnel Manager John Cly were also present. (II R. 84). The employee was required to sign a receipt which was later filed with the Wage and Hour Division. ³ (II R. 32, 142, 150-53, 170-71). One employee testified that he was required to sign the receipt before Mr. Bell handed the check to him, (II R. 32; see also II R. 150.9), but there is dispute as to whether this order of events was typical. (See II R. 142-43, 152, 171).

In any event, it is uncontested that six employees for whom Quik-Trip filed receipts indicating payment of back wages never cashed their checks. ⁴ (II R. 151, 153; Brief for Quik-Trip Corporation et al. at 2). Four of the employees tore up their checks either in Mr. Bell's presence or in the hall after leaving his office. (II R. 31, 33, 142-43, 149-50, 152). Bell testified that he knew at the time that the four employees had torn up their checks and that he notified Quik-Trip's attorneys that "5 or 6 of the people, did not cash their checks." (II R. 150, 149-53).

There is a dispute over what transpired when Mr. Bell handed the checks over and asked the employees to sign the receipts. Bell testified that in explaining the settlement to the current employees he used the contents of the note, paraphrased above, which he sent to former employees, (II R. 170-71):

This is what I told each employee when they came in and I handed them their check, asked them if they would sign the receipt showing that they had been given the check, and all of them did that.

Some of the employees said they wouldn't take the check. But I informed them that they were instructed that they had to take the check and would they please take the check and sign the receipt showing that we had offered to pay them.

(II R. 171). Ms. Monroe testified that Bell "told me it was my prerogative, I could take the check if I wanted to." (I R. 142). She then tore up the check and gave it back to Bell. (Ibid.).

Kenneth Karsk, one of the employees who cashed his check, testified that Bell or someone else told him he could either keep the check or throw it in the trash. (II R. 84). Karsk also testified that after he left Bell's office District Supervisor Slivocka told Karsk that he could keep his check because of his financial difficulties, but that he should keep quiet. (II R. 84-85). Stephen McLaren, another employee who accepted his check, testified that before handing over the check Bell

was trying to tell me the company's position on this investigation of the Federal Wage and Hour Board and he used some expletives, foul words, in relation to his attitude towards the government investigation and the government in general and it was his attitude that the government was meddling in business that was not theirs to meddle in....

Bill Bell pulled out a manila envelope and said 'Jim Anshutz and Terry Cushman have been in front of you and they have torn their checks up.' And he said 'It is our opinion that you don't deserve this money, that you didn't work all these extra hours, and these people have torn up their checks.'

(II R. 31). McLaren testified that the manila envelope contained at least one torn check, with Jim Anschutz's name on it. (II R. 32-33). Later, his District Supervisor, Dennis R. Wilcox, told McLaren he had made a mistake by taking the check. (II R. 33).

As noted, there was a claim of retaliation against employees who cooperated with the Wage and Hour Division in its investigation or who accepted back wage checks. The district court, however, concluded that the discharged employees were dismissed for cause, (I R. 38), and the Secretary does not challenge this finding, (Brief for the Secretary of Labor at 2 n.2).

On appeal, the Secretary argues that, even assuming that the six employees who tore up their checks or failed to cash them did so voluntarily, Quik-Trip had not satisfied its statutory obligation to pay back wages for FLSA violations where it knowingly retained those back wages and where it filed with the Secretary receipts which it therefore knew to be false (Brief for the Secretary of Labor at 2, 6, 10-11); that this first argument need not be addressed since the evidence clearly shows that the employees' actions were not voluntary and therefore amounted to illegal kickbacks (Brief for the Secretary of Labor at 11-17); that an employer may not retain back wages which employees refuse or are unable to collect (Brief for the Secretary of Labor at 17-19); and that such refused back wages must be paid to the Secretary, subject only to the employees' claims (Brief for the Secretary of Labor at 17; Reply Brief for the Secretary of Labor at 7 n.7).

Defendants argue that the Secretary is seeking on appeal relief not sought from the district court (Brief for Quik-Trip Corporation, et al. at 2); that the Secretary is seeking relief under both § 16(c) and § 17 of the FLSA, 29 U.S.C. § 216(c) and § 217, which are mutually exclusive and subject to the doctrine of election of remedies (Brief for Quik-Trip Corporation, et al. at 2-3); and that the district court had discretion as to whether to order payment of unclaimed back wages to the Treasury, which...