Urbino v. Puerto Rico Ry. Light & Power Co.

• Decision Date: 07 November 1947
• Docket Number: No. 4237.,4237.
• Citation: 164 F.2d 12
• Parties: URBINO et al. v. PUERTO RICO RY. LIGHT & POWER CO.
• Court: U.S. Court of Appeals — First Circuit

164 F.2d 12 (1947)

URBINO et al. v. PUERTO RICO RY. LIGHT & POWER CO.

No. 4237.

Circuit Court of Appeals, First Circuit.

November 7, 1947.

Benigno Pacheco, of San Juan, Puerto Rico, for appellants.

E. Cordova Diaz, of San Juan, Puerto Rico (Henri Brown, of San Juan, Puerto Rico, of counsel), for appellee.

Before MAGRUDER, MAHONEY, and WOODBURY, Circuit Judges.

WOODBURY, Circuit Judge.

The plaintiffs-appellants, one hundred and thirty-four in number, have taken this appeal from a judgment dismissing their complaint in an action brought on June 29, 1945, for liquidated damages under § 16(b) of the Fair Labor Standards Act of 1938, 52 Stat. 1069, 29 U.S.C.A. § 216(b), on the ground that a certain consent decree entered on December 28, 1942, in a previous suit brought by the plaintiffs and others against the defendant-appellee on the same cause of action, "is binding and conclusive upon the parties and therefore is an absolute bar to the present cause of action." The facts are stipulated. For present purposes they can be stated as follows:

All of the present plaintiffs are former employees of the defendant who worked for it in one capacity or another in, or in connection with, either the production or the transmission of electrical energy used exclusively in Puerto Rico, only about 5% of which was used by persons or concerns engaged in interstate commerce or the production of goods for such commerce. Cf. New Mexico Public Service Co. v. Engel, 10 Cir., 145 F.2d 636. Some of the plaintiffs were employed by the defendant all, and others part, of the time from October 24, 1938, the effective date of §§ 6 and 7 of the Fair Labor Standards Act, to July 20, 1942, when all the property owned and used by the defendant in its business was taken by the United States by virtue of a judgment entered by the court below upon a declaration of taking in a condemnation proceeding. On December 9, 1942, all the plaintiffs herein, with many of their fellow employees, brought suit in the court below under § 16(b) supra for minimum wages, overtime compensation and liquidated damages, plus costs, disbursements, attorneys' fees and interest. In that action, before answer, it was stipulated by opposing counsel (1) that a certain statement or report attached thereto made on December 21, 1942, by a named firm of public accountants gives "the true and exact amount of wages and overtime," but not the liquidated damages, to which the respective plaintiffs would be entitled under the Fair Labor Standards Act "assuming that their employment was covered by said Act and that the collection of no part of said wages and overtime is barred by the statute of limitations"; (2) that the defendant "had substantial bona fide grounds to contest the claim made by plaintiffs that they are covered" by the Fair Labor Standards Act, and in addition that it had a "well founded" partial defense on the ground that a substantial part of the plaintiffs' claims was barred by prescription under Puerto Rican law, and (3) that "In this litigation¹ and in view of the existence of reasonable doubt as to the applicability of the federal statute in this case, the parties plaintiffs have agreed to accept and the defendant corporation has agreed to pay the amounts set out and stated" opposite the plaintiffs' names in the accountants' report referred to above "in complete and total satisfaction of all claims, demands and causes of action for wages, overtime and liquidated damages of whatsoever nature under the Fair Labor Standards Act of 1938." The court below approved this stipulation on the day it was filed and on the same day by request of counsel on both sides entered a consent decree in accordance with its terms.

In the case at bar the court below found as a fact that the defendant had paid each of the plaintiffs the amount adjudicated to be due him by the consent decree in the previous action and that each of the plaintiffs had given the defendant a receipt therefor. In the present case it also found that when it entered the consent decree in the former action it considered the settlement proposed in the stipulation "fair and equitable", and that the ends of justice would be served by entering a decree embodying its terms.

The question presented by this appeal, therefore, is whether a consent decree entered in an action brought under § 16(b) of the Fair Labor Standards Act, in which action its was stipulated that there existed a bona fide dispute both as to coverage and as to amount due, whereby the plaintiffs, in accordance with their agreement with the defendant, were awarded unpaid minimum wages and overtime, but not liquidated damages, constitutes an effective bar to a subsequent action between the same parties for liquidated damages only. The court below has answered this question in the affirmative and we agree.

The appellants rest their argument primarily upon the decisions of the Supreme Court in Brooklyn Savings Bank v. O'Neil, 324 U.S. 697, 65 S.Ct. 895, 89 L.Ed. 1296, and D. A. Schulte, Inc., v. Gangi, 328 U.S. 108, 66 S.Ct. 925, 90 L.Ed. 1114, 167 A.L.R. 208. They say that the reasoning of these decisions is such as to indicate clearly that because of the basic policy underlying the Fair Labor Standards Act the consent judgment in their former action, whereby they were awarded full wages and overtime compensation, does not operate to estop them from subsequently recovering liquidated damages. We think the plaintiffs' reliance upon these cases is misplaced.

In the Brooklyn Savings Bank case the Supreme Court, resolving a conflict between circuits, held, three justices dissenting, that in the absence of a bona fide dispute as to an employer's liability to an employee under the Fair Labor Standards Act, a mere written waiver by the latter of his right to liquidate damages under § 16(b) of the Act does not bar him from subsequently maintaining an action to recover such damages. In that case not only was there no question of the effect of a judgment, by consent or otherwise, awarding wages and overtime upon a subsequent suit between the same parties for liquidated damages, but the court also at page 714 of 324 U.S., at page 905 of 65 S.Ct., 89 L.Ed. 1296, expressly declined to consider the question of ...