Reid v. Solar Corporation

• Decision Date: 22 November 1946
• Docket Number: No. 280.,280.
• Parties: REID v. SOLAR CORPORATION.
• Court: U.S. District Court — Northern District of Iowa

69 F. Supp. 626

REID v. SOLAR CORPORATION.

No. 280.

District Court, N. D. Iowa, C. D.

November 22, 1946.

COPYRIGHT MATERIAL OMITTED

Joseph G. Page of Janesville, Wis., for plaintiff.

W. P. Berghuis of Minneapolis, Minn., for defendant.

William S. Tyson, Sol., Jeter S. Ray, Assoc. Sol., and John J. Babe, Asst. Sol., all of Washington, D. C., Reid Williams, Regional Atty., and Thomas O. Moxcey, Assoc. Atty. for Adm'r of Wage & Hour Div. U. S. Dept. of Labor, both of Kansas City, Mo., amicus curiae.

GRAVEN, District Judge.

Case involving statute of limitations in a case under the Fair Labor Standards Act, 29 U.S.C.A. § 201 et seq.

The plaintiff in this action was employed by the defendant from June 21, 1944, until August 4, 1945, in its manufacturing plant at Webster City, Iowa, with the title of production manager at a salary of $275 per month plus bonus. The plaintiff voluntarily left the employment of the defendant on August 4, 1945.

On April 11, 1946, the plaintiff commenced this action, claiming of the defendant, overtime compensation, liquidated damages and attorney fees under the Fair Labor Standards Act of 1938, 29 U.S.C.A. § 201 et seq. It is undisputed that the defendant was engaged in the production of goods for interstate commerce and that the plaintiff's employment had to do with such production. It is the claim of the plaintiff that during the period of his employment he worked a large number of hours in excess of forty hours per week. The plaintiff was paid at the regular rate during his period of employment, but it is his claim that he has not received overtime compensation for the excess hours worked. As to the entire claim, the defendant asserts that the plaintiff was under the administrative exemption. 29 U.S.C.A. § 213 (a) (1). The question of administrative exemption is not for determination at this time. The defendant further asserts that the greater portion of the plaintiff's claim is barred by the statute of limitation contained in Chapter 222 of the Acts of the 51st General Assembly of Iowa, 1945. The parties submitted their evidence on the issue of the statute of limitations and that issue is for determination by the Court in advance of the other issues in the case.

It was stipulated by the parties that the regular pay days for the plaintiff and all other employees of the defendant at the plant in question were the 5th and 20th of each month for the preceding half of the month. The regular pay day for the plaintiff for the half month proceeding June 30, 1945 was July 5, 1945. Overtime compensation due an employee under the Fair Labor Standards Act is due and payable at the next regular pay day following the period in which the overtime services were rendered, and an employee's claim for overtime compensation accrues on each such pay day. Mid-Continent Petroleum Corporation v. Keen, 8 Cir., Sept. 18, 1946, 157 F. 2d 310. The defendant's plea of the statute of limitations is asserted only as to that part of the overtime compensation claimed which accrued prior to July 4, 1945, and is not asserted as to the claimed overtime compensation which accrued thereafter.

Since the Fair Labor Standards Act has not prescribed any period of limitations for actions thereunder they are governed by the valid and applicable state statutes of limitation. Republic Pictures Corporation v. Kappler, 8 Cir., 1945, 151 F.2d 543, 545, 546, 162 A.L.R. 228. See notes 157 A.L.R. 545 and 162 A.L.R. 237.

In the instant case there are a number of Iowa Statutes of Limitation to be considered. Subsection 3 of Section 11007 of the 1939 Code of Iowa, Section 614.1 of the 1946 Code of Iowa, provides a two year statute of limitation for actions brought for a statute penalty. It is settled that the liquidated damages provided for in the Fair Labor Standards Act do not constitute a penalty. Overnight Motor Trans. Co. v. Missel, 1942, 316 U.S. 572, 62 S.Ct. 1216, 86 L.Ed. 1682; Culver v. Bell & Loffland, 9 Cir., 1944, 146 F.2d 29; McNeal v. Central Greyhound Lines, Inc., D.C.Ohio 1945, 66 F.Supp. 581. Therefore, subsection 3, referred to, relating to actions brought for a statute penalty, is not applicable to actions brought under the Fair Labor Standards Act.

Section 11011 of the Code of Iowa 1939, Section 614.5 of the 1946 Code of Iowa, provides as follows: "When there is a continuous, open, current account, the cause of action shall be deemed to have accrued on the date of the last item therein, as proved on the trial." It is now settled that a claim for overtime compensation does not constitute a continuous, open, current account under this statute. Mid-Continent Petroleum Corporation v. Keen, 8 Cir., Sept. 18, 1946, 157 F.2d 310, 316.

The matter of the application of statutes of limitation to actions brought under the Fair Labor Standards Act has been a matter of frequent judicial consideration. See notes 157 A.L.R. 545 and 162 A.L.R. 237. See also Wright et al. v. United States Rubber Co., D.C. S.D. Iowa Sept. 27, 1946, 69 Fed.Supp. 621. See also Swick v. Glenn L. Martin Co., D.C. Md. Oct. 23, 1946, 68 F.Supp. 863 where a Maryland statute of limitation relating to actions under the Fair Labor Standards Act was held valid.

On March 19, 1943, the Iowa Legislature passed Chapter 267 of the Laws of the 50th General Assembly, which read as follows: "Section 1. In all cases wherein a claim or cause of action has arisen or may arise pursuant to the provisions of any Federal Statute wherein no period of limitation is prescribed, the holder of such claim or cause of action may commence action thereon within but not after a period of six months after March 1, 1943, if such claim or cause of action arose prior to March 1, 1943, or within but not later than six months after the accrual of such claim or cause of action if such claim or cause of action arose after March 1, 1943."

The Act contained a publication clause and became effective March 23, 1943. On February 8, 1945, the United States District Court for the Southern District of Iowa in the case of Kappler v. Republic Pictures Corporation, 59 F.Supp. 112, held Chapter 267 invalid as to actions brought under the Fair Labor Standards Act. On appeal the Eighth Circuit Court of Appeals (Republic Pictures Corporation v. Kappler, 151 F.2d 543, 162 A.L.R. 228) held Chapter 267 invalid as a discrimination against rights granted under Federal statutes. Certiorari was granted by the United States Supreme Court and on February 4, 1946 that Court (Republic Pictures Corporation v. Keppler, 66 S.Ct. 523, rehearing denied, 66 S.Ct. 804, affirmed the case with a per curiam opinion which reads as follows: "The motion to affirm is granted and the judgment is affirmed. McKnott v. St. Louis & San Francisco Railway Co., 292 U.S. 230, 233, 234, 54 S.Ct. 690, 691, 692, 78 L.Ed. 1227; Pufahl v. Estate of Parks, 299 U. S. 217, 227, 57 S.Ct. 151, 157, 81 L.Ed. 133; Miles v. Illinois Central Railroad Co., 315 U. S. 698, 704, 62 S.Ct. 827, 830, 86 L.Ed. 1129, 146 A.L.R. 1104."

The Iowa Legislature convened in regular session on January 8, 1945, as the 51st General Assembly. That Legislature at that session enacted Chapter 222 of the Laws of the 51st General Assembly which provides as follows:

"Section 1. That Chapter 267, Laws of the Fiftieth General Assembly be and the same is hereby repealed.

"Section 2. Subsection five (5) of Section eleven thousand seven (11007) is amended by striking the period (.) following the word "years" in line seven (7) and adding the following: "except as provided by subsection nine (9).

"Section 3. Section eleven thousand seven (11007) is further amended by adding a new subsection as follows: "9. Those founded on claims for wages or for a liability or penalty for failure to pay wages, within two years. Any present existing causes of action must be commenced in any court of competent jurisdiction within six (6) months after the effective date of this act."

The act was approved by the Governor on March 29, 1945. Under the Iowa Constitution (Article III, Section 26) all laws passed at a regular session not containing a publication clause become effective July 4th following. Under that provision Chapter 222 not containing a publication clause became effective July 4, 1945.

Section 11007 of the Code of Iowa 1939, referred to in the act, was and is a section which prescribes the period of limitation for a large number of actions and is frequently referred to as the general statute of limitations in contrast to a number of sections which follow it, which are frequently referred to as special statutes of limitations. Prior to enactment of Chapter 222 there were eight subsections to Section 11007. Prior to enactment of Chapter 222 the pertinent provision of subsection 5 of Section 11007 read as follows: "Those founded on unwritten contracts * * * within five years." Section 3 of Chapter 222 was added as a new subsection to Section 11007 and was designated as subsection 9.

Prior to enactment of Chapter 222 there was no Iowa Statute of Limitation relating specifically to actions for the recovery of wages. Prior thereto, actions for the recovery of wages were governed either by subsection 5 of Section 11007 of the Code of Iowa 1939 providing a five-year period of limitation for actions upon unwritten contracts or by subsection 6 of the same section providing a ten-year period of limitations for actions upon written contracts. See Mid-Continent Petroleum Corporation v. Keen, 8 Cir., 1946, 157 F.2d 310, 316. The overtime compensation provided for by the Fair Labor Standards Act constitutes wages and the liquidated damages provided for in that Act constitute a liability for failure to pay such wages. Overnight Motor Trans. Co. v. Missel, supra. The United States Government requires that an employer withhold the same taxes from judgments for overtime compensation that are withheld from regular wages. See regulation set forth in full in Keen v. Mid-Continent...