Wirtz v. Malthor, Inc.

• Decision Date: 18 April 1968
• Docket Number: No. 21322.,21322.
• Citation: 391 F.2d 1
• Parties: W. Willard WIRTZ, Secretary of Labor, United States Department of Labor, Appellant, v. MALTHOR, INC., a corporation, doing business as Purity French Bakery, and Antonio Malfa, Individually and as President of Malthor, Inc., Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

391 F.2d 1 (1968)

W. Willard WIRTZ, Secretary of Labor, United States Department of Labor, Appellant, v. MALTHOR, INC., a corporation, doing business as Purity French Bakery, and Antonio Malfa, Individually and as President of Malthor, Inc., Appellees.

No. 21322.

United States Court of Appeals Ninth Circuit.

March 7, 1968.

Rehearing Denied April 18, 1968.

Bessie Margolin, Associate Solicitor (argued), Charles Donahue, Solicitor of Labor, Robert E. Nagle, William Fauver, Attorneys, U. S. Department of Labor, Washington, D. C., Altero D'Agostini, Regional Attorney, U. S. Department of Labor, San Francisco, Cal., for appellant.

Samuel B. Francovich (argued), Melvin Schaengold, Reno, Nev., for appellee.

Before MADDEN, Judge of the United States Court of Claims, and JERTBERG and DUNIWAY, Circuit Judges.

JERTBERG, Circuit Judge:

The Secretary of Labor brought this action under § 17 of the Fair Labor Standards Act (Act of June 25, 1938, c. 676, 52 Stat. 1060, as amended, 29 U.S.C. § 201 et seq., 29 U.S.C. § 217)¹ to enjoin appellees from violating the Act's monetary, record-keeping and shipping requirements, and from withholding unpaid minimum wages and overtime compensation due certain of their employees. The district court below found that the appellees were subject to the Act, that they had repeatedly violated it, and that their wage violations had resulted in underpayments of $5,576.73 due 66 of their present and former employees. The district court issued an injunction against future violations, but refused to order payment of the back wages and overtime compensation. Appellant appeals from that refusal.

The district court in its opinion explained the refusal to order payment of the back wages and overtime compensation:

"The equitable considerations which influence the Court in this case are the facts that defendants acted in good faith in the belief that the Purity French Bakery business did not come within the coverage of the Fair Labor Standards Act. A relatively minor (although legally substantial) portion (three and six-tenths) of defendants\' gross production moved in interstate commerce, and the commencement of the interstate movements, i. e., the sales to the distributors, were purely local transactions completed by defendants in Reno, Nevada. Defendants had reasonable cause to believe that the business as conducted did not come within the Act, and defendants\' violations of the Act were not wilful." Wirtz v. Malthor, 254 F.Supp. 475, 477 (D.Nev.1966).

The court then concluded that:

"The public interest does not require it an order requiring payment of the back wages, and such an order would constitute nothing more than an unwarranted penalty against the employer." Id. at 478.

Appellant moved the district court to reconsider its refusal. The court did so, but still refused to order payment. In a supplemental opinion, the district court said that because the appellees' violations were not wilful, because the business was small so ordering payment of the back wages might prove a hardship for it, and because the public interest was well enough protected by the injunction against future violations, payment of the back wages was not required.

The Secretary's appeal is well taken. We find the district court's reasons for refusing to issue the requested restraint inadequate. In regard to good faith, the district court itself found that the appellees "should have known that a substantial portion of their bakery products was being transported in interstate commerce." In any event, any lack of wilfulness on the part of these appellees does not justify freeing them from having to make restitution. Burk Builders, Inc. v. Wirtz, 355 F.2d 451 (5th Cir. 1966), affirming Wirtz v. Burk Builders, Inc., 17 WH Cases 109, 52 Labor Cases #31,726 (S.D.Fla.1964); Wirtz v. Miller, 226 F.Supp. 15 (E.D.N.C.1964); Wirtz v. Hartleys, Inc., 245 F.Supp. 101 (S.D. Fla.1965); See Wirtz v. English, 17 WH Cases, 52 Labor Cases #31,716 (D.Kan. 1965). Likewise, the small size of appellees' business and the possible hardship caused them by having to pay the withheld wages and compensation do not warrant refusing the restraint. Fortuna Broom Co. v. Wirtz, 379 F.2d 327 (5th Cir. 1967) affirming Wirtz v. Fortuna Broom Co., 17 WH Cases 293, 53 Labor Cases #31,785 (S.D.Tex.1966).

It must be remembered that restraining appellees from withholding the minimum wages and overtime compensation is meant to vindicate a public, rather than a private, right, and that the withholding of the money due is considered a "continuing public offense." Wirtz v. Jones, 340 F.2d 901 (5th Cir. 1965); Burk Builders, Inc. v. Wirtz, supra; Wirtz v. English, supra. The 1961 amendment of Section 17 (29 U.S.C. § 217) authorizing the restraint that the Secretary requests here had at least two purposes. First, the restraint was meant to increase the effectiveness of the enforcement of the Act by depriving a violator of any gains accruing to him through his violation. Second, the amendment...