Petition for Writ of Certiorari — James E. Bachman, et al., Petitioners v. John Q. Bachman, et al.

No. _________

================================================================================================================

In The

Supreme Court of the United States

---------------------------------♦--------------------------------JAMES E. BACHMAN, et al.,

Petitioners,

v.

JOHN Q. BACHMAN;

LEAF SUPREME PRODUCTS, LLC,

A Nebraska Limited Liability Co.,

Respondents.

---------------------------------♦--------------------------------On Petition For Writ Of Certiorari

To The United States Court Of Appeals

For The Eighth Circuit

---------------------------------♦--------------------------------PETITION FOR WRIT OF CERTIORARI

---------------------------------♦--------------------------------JAMES E. BACHMAN

663 N. 132nd Street

Omaha, NE 68154

Phone: 402-350-5149

Email: jim@bachman.law

Petitioner and Counsel of

Record for Remaining

Petitioners

================================================================================================================

i

QUESTIONS PRESENTED

1)

Whether a case can be dismissed for plaintiffs’ refusal to answer questions related to past and current employers in a deposition related to a wage

and hour complaint where the employees pleaded

retaliation. The Plaintiffs had been fired within 24

hours of the employer being notified of a Department of Labor complaint, in conflict with CentenoBernuy v. Becker Farm, 219 F.R.D. 59, 61-62

(W.D.N.Y. 2003) and numerous other District

Court decisions.

2)

Whether an Employer who directs that wages will

not be paid, files several years of tax returns stating no wages were paid and retaliates is entitled

to equitable defenses. Plaintiffs assert that equitable defenses are not permitted in conflict with

the 11th Circuit Decision in Bailey v. Titlemax of

Georgia, 776 F.3d 797, 805-806 (11th Cir. 2015)

3)

Whether an Employer who directs that wages will

not be paid, retaliates, and does not treat or document the Employees’ withdrawals as wages can

plead affirmative defenses and counterclaims including fraud in conflict with the Fifth Circuit Decision in Gagnon v. United TechniSource Inc., 607

F.3d 1036, 1045 (5th Cir. 2010) and whether the

FLSA is correctly enforced when willful violation

of the Act can be defended with these arguments.

ii

PARTIES TO THE PROCEEDING

Petitioners James Bachman, Adella Bachman,

Eric Bachman, Andrew Bachman, Rachel Bachman,

and Matthew Bachman were the Plaintiffs in the

district court proceedings and the Appellants in the

Eighth Circuit Court of Appeals proceedings. Respondents Leaf Supreme Products, LLC and John Q.

Bachman were the defendants in the District Court

proceedings and Appellees in the Court of Appeals proceedings.

STATEMENT OF RELATED CASES

James E. Bachman, et. al., v. John Q. Bachman, et. al.

Eighth Circuit Court of Appeals Doc. No. 1638, Motion

for Rehearing and Rehearing en Banc denied August

4, 2023

James E. Bachman, et. al., v. John Q. Bachman, et. al.

Eighth Circuit Court of Appeals Doc. No. 1638, District

Court Judgment Affirmed June 30, 2023

James E. Bachman et. al., v. John Q. Bachman, United

States District Court for the District of Nebraska, Case

No. 8:19-cv-00276-BCB-CRZ Case dismissed with prejudice December 9, 2023

iii

TABLE OF CONTENTS

Page

Questions Presented ............................................

i

Parties to the Proceeding .....................................

ii

Statement of Related Cases .................................

ii

Table of Authorities ................................................

vi

Opinions Below .......................................................

1

Jurisdiction ...........................................................

1

Statutory Provisions Involved...............................

1

Introduction and Statement of the Case ...............

3

Reasons for Granting the Petition ....................... 11

A.

The Eighth Circuit Court of Appeals Erred

as a Matter of Law When it Affirmed a

District Court Ruling Dismissing the Appellants’ Case with Prejudice when the

Dismissal was Predicated Upon Permitting an Employer that had Knowingly

Committed Wage Theft and had Retaliated

to Plead Equitable Defenses and Counterclaims ........................................................... 11

B.

The District Court’s Rulings are Contrary

to Numerous Other Federal Circuits as Well

as Contrary to Their Own Rulings .............. 25

C.

The District Court’s Decision and the Affirmation by the Eighth Circuit Court Of

Appeals Pose a Direct Threat to the Enforcement Scheme of the Fair Labor Standards

Act .............................................................. 26

Conclusion............................................................ 28

iv

TABLE OF CONTENTS – Continued

Page

APPENDIX

United States Court of Appeals for the Eighth

Circuit, Opinion, June 30, 2023 ....................... App. 1

United States District Court for the District of

Nebraska, Order, September 19, 2019............. App. 4

United States District Court for the District of

Nebraska, Order, October 18, 2020 ................. App. 6

United States District Court for the District of

Nebraska, Memorandum and Order, December 9, 2019 ...................................................... App. 10

United States District Court for the District of

Nebraska, Memorandum and Order, August

7, 2020 ............................................................ App. 13

United States District Court for the District of

Nebraska, Memorandum and Order, November 18, 2020 .................................................... App. 31

United States District Court for the District of

Nebraska, Memorandum and Order, January

7, 2021 ............................................................ App. 52

United States District Court for the District of

Nebraska, Memorandum and Order, October

12, 2021 .......................................................... App. 60

United States District Court for the District of

Nebraska, Memorandum and Order, November 17, 2021 .................................................... App. 71

United States District Court for the District of

Nebraska, Findings and Recommendation,

November 23, 2021......................................... App. 80

v

TABLE OF CONTENTS – Continued

Page

United States District Court for the District of

Nebraska, Amended Findings and Recommendation, November 23, 2021 ..................... App. 82

United States District Court for the District of

Nebraska, Memorandum and Order, December 1, 2021 ...................................................... App. 84

United States District Court for the District of

Nebraska, Memorandum and Order, December 9, 2021 ...................................................... App. 88

United States District Court for the District of

Nebraska, Memorandum and Order, March

24, 2022 ........................................................ App. 112

United States District Court for the District of

Nebraska, Order, April 26, 2022 .................. App. 143

United States Court of Appeals for the Eighth

Circuit, Order Denying Petition for Rehearing, August 4, 2023 ....................................... App. 145

vi

TABLE OF AUTHORITIES

Page

CASES

Acosta v. Foreclosure Connection, Inc., 903 F.3d

1132 (10th Cir. 2018) ......................................... 10, 26

Bailey v. Titlemax of Georgia, 776 F.3d 797 (11th

Cir. 2015) ..................................5, 9, 12, 13, 16, 17, 26

Barrentine v. Arkansas-Best Freight Sys., Inc.,

450 U.S. 728, 101 S.Ct. 1437, 67 L.Ed. 641

(1981) .......................................................................12

Bateman Eichler, Hill Richards, Inc. v. Berner,

472 U.S. 299, 105 S.Ct. 2622, 86 L.Ed.2d 215

(1985) .......................................................................18

Bowe v. Judson C. Burns, Inc., 137 F.2d 37 (3d

Cir. 1943) ........................................................... 10, 26

Brennan v. Heard, 491 F.2d 1 (5th Cir. 1974) ..............6

Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697, 65

S.Ct. 895, 89 L.Ed. 1296 (1945) ..............................26

Buffum v. Chase Nat’l Bank, 192 F.2d 58 (7th

Cir. 1951) .................................................................24

Centeno-Bernuy v. Becker Farm, 219 F.R.D. 59

(W.D.N.Y. 2003)..........................................................6

Coffin v. Blessey Marine Services, Inc., 771 F.3d

276 (5th Cir. 2014) ............................................... 6, 20

Davila v. Menendez, 717 F.3d 1179 (11th Cr.

2013) ........................................................................16

Donovan v. Pointon, 717 F.2d 1320 (10th Cir.

1983) ........................................................................25

vii

TABLE OF AUTHORITIES – Continued

Page

Gagnon v. United TechniSource Inc., 607 F.3d

1036 (5th Cir. 2010) ............................... 10, 20, 21, 26

Grey v. City of Oak Grove, 396 F.3d 1031 (8th Cir.

2005) ........................................................................14

Hawaiian Airlines, Inc. v. United States (In Re

HAL, Inc.), 122 F.3d 851 (9th Cir. 1997) .................23

International Tel. & Tel. Corp. v. General Tel. &

Elec. Corp., 518 F.2d 913 (9th Cir. 1975) .......... 10, 17

Johnson v. Ergon W. Va., Inc., 205 U.S. Dist.

LEXIS 120759 .........................................................26

Lamonica v. Safe Hurricane Shutters, Inc., 711

F.3d 1299 (11th Cir. 2013) ........................... 10, 17, 26

LeCompte v. Chrysler Credit Corp., 780 F.2d

1260 (5th Cir. 1986) .................................................21

Lopez v. Autoserve, LLC, No. 05 C 3554, 2005

U.S. Dist. LEXIS 29161, 2005 WL 3116053

(N.D. Ill. Nov. 17, 2005) ...........................................18

Lyle v. Food Lion, Inc., 954 F.2d 984 (4th Cir.

1992) ........................................................................21

Martin v. Pepsiamericas, Inc., 628 F.3d 738 (5th

Cir. 2010) ........................................... 5, 10, 19, 23, 26

Meek v. United States, 367 F.2d 549 (5th Cir.

1966) .................................................................. 10, 26

Miller v. Maxwell’s Intern. Inc., 991 F.2d 583

(9th Cir. 1993)..........................................................17

M. S. v. Wermers, 557 F.2d 170 (8th Cir. 1977) ...........17

viii

TABLE OF AUTHORITIES – Continued

Page

Sapperstein v. Hager, 188 F.3d 852 (7th Cir.

1999) .................................................................. 10, 26

Smith, et al. v. World Insurance Group, 38 F.3d

1456 (8th Cir. 1994)..................................... 14, 16, 17

STATUTES

26 U.S.C. § 3101 ..........................................................26

28 U.S.C. § 1254(1) ........................................................1

1

PETITION FOR A WRIT OF CERTIORARI

OPINIONS BELOW

The opinion of the Court of Appeals denying Appellants’ Motion for Rehearing and Rehearing En Banc

is reported at 2023 U.S. LEXIS 20244 (8th Cir.), the

original opinion denying Appellants’ Appeal 2023 U.S.

App. LEXIS 16576 (8th Cir. 2023) and the District

Court Dismissal, 2021 U.S. Dist. LEXIS 221583 (D.

Neb. 2021).

---------------------------------♦---------------------------------

JURISDICTION

The judgment of the Court of Appeals was entered

on June 30, 2023. A timely Motion for Rehearing and

Rehearing En Banc was timely filed and denied on

August 4, 2023. This Court’s jurisdiction rests on 28

U.S.C. § 1254(1).

---------------------------------♦---------------------------------

STATUTORY PROVISIONS INVOLVED

Section 215, Title 29 of the U.S. Code provides:

After the expiration of one hundred and

twenty days from June 25, 1938,

it shall be unlawful for any person –

3) to discharge or in any other manner discriminate against any employee

because such employee has filed any

complaint or instituted or caused to

2

be instituted any proceeding under

or related to this chapter, or has testified or is about to testify in any such

proceeding, or has served or is about

to serve on an industry committee;

Section 216, Title 29 of the U.S. Code provides:

Damages; right of action; attorney’s fees

and costs; termination of right of action

(B) Any employer who violates the provisions of section 206 or section 207 of this title

shall be liable to the employee or employees

affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an

additional equal amount as liquidated damages. Any employer who violates the provisions of section 215(a)(3) or 218d of this title

shall be liable for such legal or equitable relief

as may be appropriate to effectuate the purposes of section 215(a)(3) or 218d of this title,

including without limitation employment, reinstatement, promotion, and the payment of

wages lost and an additional equal amount as

liquidated damages. Any employer who violates section 203(m)(2)(B) of this title shall be

liable to the employee or employees affected

in the amount of the sum of any tip credit

taken by the employer and all such tips unlawfully kept by the employer, and in an additional equal amount as liquidated damages.

An action to recover the liability prescribed in

the preceding sentences may be maintained

against any employer (including a public

3

agency) in any Federal or State court of competent jurisdiction by any one or more employees for and on behalf of himself or themselves

and other employees similarly situated. No

employee shall be a party plaintiff to any such

action unless he gives his consent in writing

to become such a party and such consent is

filed in the court in which such action is

brought. The court in such action shall, in addition to any judgment awarded to the plaintiff or plaintiffs, allow a reasonable attorney’s

fee to be paid by the defendant, and costs of

the action. The right provided by this subsection to bring an action by or on behalf of any

employee, and the right of any employee to become a party plaintiff to any such action, shall

terminate upon the filing of a complaint by

the Secretary of Labor in an action under section 217 of this title in which (1) restraint is

sought of any further delay in the payment of

unpaid minimum wages, or the amount of unpaid overtime compensation, as the case may

be, owing to such employee under section 206

or section 207 of this title by an employer liable therefor under the provisions of this subsection or (2) legal or equitable relief is sought

as a result of alleged violations of section

215(a)(3) or 218d of this title.

---------------------------------♦---------------------------------

INTRODUCTION AND

STATEMENT OF THE CASE

Leaf Supreme Products, LLC is a Nebraska Limited Liability Company. For all times relevant herein,

4

John Bachman was the 66 and 2/3% owner of Leaf Supreme Products, LLC. Because of the familial relationship, the Plaintiffs assumed substantial debt on behalf

of the company at its inception. On August 30, 2016,

John Q. Bachman sent an email to the Appellants stating that no wages would be paid until cash flow improved and a later email affirmed that no wages would

be paid. From October 1, 2016, until April 4, 2019, the

Appellants were paid nothing for their work at Leaf

Supreme Products, LLC. During this period, Plaintiffs

advanced a minimum of $324,821.64 to pay necessary

company expenses. The Defendants’ First Counterclaim alleges that the Plaintiffs withdrew in excess of

$100,000. The Plaintiffs considered this partial reimbursement for the funds they had advanced. Each

transaction appeared in the bank statements to which

the Defendants had continuous access. These repayments were not accurately recorded in the books because the Defendants had ordered that there would be

no reimbursement for funds advanced to the company.

John Bachman wrote, “The reimbursements to Andrew

must stop. He works at LSP and no salaries are paid.

The IRS will look at this as employment compensation

and I am ultimately responsible for any unpaid employment taxes . . . ”

In a letter dated March 29, 2019, the Department

of Labor informed Leaf Supreme Products, LLC that it

was investigating. The following day after receiving this

notice, John Q. Bachman fired the Appellants. A Department of Labor investigation found Leaf Supreme

5

Products, LLC was subject to the FLSA and owed the

Appellants $256,214.50 for 2 years’ work.

Despite the employer’s unclean hands, the District

Court permitted the Appellees to plead equitable and

affirmative defenses as well as to plead counterclaims

that were not related to wages paid. This ruling is in

direct violation of Bailey v. Titlemax of Georgia, 776

F.3d 797, 805-806 (11th Cir. 2015) which requires an

employer to have clean hands before it can raise equitable defenses and Martin v. Pepsiamericas, Inc., 628

F.3d 738 (5th Cir. 2010) which limits employer counterclaims to wages paid. By affirming the District Court’s

decision, the Eighth Circuit has created a split in the

circuits.

At the depositions, the Appellants refused to answer some questions unrelated to hours worked and

wages paid. Additionally, at the depositions, two of the

Appellants were asked to name their past and present

employers. As a result of their refusal to answer these

questions, which were clearly barred by precedent

FLSA rulings, the Appellants’ case was dismissed with

prejudice.

In M. S. v. Wermers, 557 F.2d 170 (8th Cir. 1977)

the 8th Circuit held, “A district court has power to dismiss an action for failure of the plaintiff to comply with

any order of court.” Fed.R.Civ.P. 41(b) . . . In reviewing

such an order, we consider whether in the exercise of

its power the district court has exceeded the permissible range of its discretion. . . . Another legitimate inquiry is whether dismissal was bottomed upon the

6

plaintiff ’s refusal to obey an invalid or improper order.” In this case, requiring an employee to answer

questions about their past and present employment

which are unrelated to hours worked and wages paid

violates the FLSA. Brennan v. Heard, 491 F.2d 1, 4 (5th

Cir. 1974). In Brennan, the Fifth Circuit Court of Appeals held:

The only economic feud contemplated by the

FLSA involves the employer’s obedience to

minimum wage and overtime standard. To

clutter these proceedings with the minutia of

other employer-employee relationships would

be antithetical to the purpose of the Act.

Id. at 4.

Additionally, questions regarding past and present employers are prohibited if there has been retaliation. “The very purpose for which defendants seek

this information, to wit, to enable them to discuss

plaintiffs’ allegations of illegal treatment by their former landlords/employers with plaintiffs’ current landlords/employers, is inherently intimidating.” CentenoBernuy v. Becker Farm, 219 F.R.D. 59, 61-62 (W.D.N.Y.

2003).

The Appellees filed a motion to compel and for

sanctions because the Appellants’ refusal to answer

questions related to the equitable and affirmative defenses as well as the counterclaims. The Magistrate

Judge granted the Appellees’ motion to compel and

held: “Essentially, Plaintiffs’ argument is premised

on their legal contention that Defendants’ affirmative

7

defenses and counterclaim are improperly asserted.”

(App. 62).

It is correct that the Appellants asserted that equitable and affirmative defenses and counterclaims

were prohibited in this case since the Defendants

clearly had unclean hands. To contest this erroneous

ruling, the Appellants appealed to the District Court.

The District Court affirmed the ruling and ordered the

Appellants to inform the Court within five days that

they would attend the rescheduled depositions. At no

point in these proceedings had the Plaintiffs failed to

appear for any scheduled appearances. The Plaintiffs’

counsel underwent a medical procedure on November

17, 2021, for which he required opioid pain medication.

This was the same day the 5-day requirement was

issued by the Magistrate. Unfortunately, the undersigned counsel misread the docket entry and did not

inform the Court within five days that the Appellants

would attend the depositions which were scheduled in

December. The Magistrate Judge recommended the

case be dismissed with prejudice on November 23, 2021,

and the District Court agreed. In its dismissal order,

the District Court held:

Furthermore, Plaintiffs have repeatedly

litigated the issue whether Defendants may

assert affirmative defense. Magistrate Judge

Zwart settled this issue on September 19,

2019 Filing 43 (audio file), Filing 44, yet over

two years later Plaintiffs continued to contest

this issue. See Filing 217 (October 12, 2021).

Plaintiffs have behaved similarly with respect

8

to Defendants’ counterclaims. See Filing 145

(finding that Defendants could conduct discovery on their counterclaims). Plaintiffs have

simply ignored the Court’s rulings and used

their belief that affirmative defenses and

counterclaims in this case are unwarranted as

a basis to refuse to answer questions in depositions and to generally resist discovery.

(App. 99-100).

The subsequent dismissal was grounded not only

upon an erroneous ruling as a matter of law since employers that knowingly fail to pay wages and retaliate

are not permitted to plead equitable defenses. Additionally, the counterclaims did not involve wages as required and discussed later in this petition. Accordingly,

the District Court also erred when it dismissed the

case and the Eighth Circuit Court of Appeals erred

when it affirmed the District Court’s ruling.

In its ruling the Eighth Circuit held that the

Appellants had filed frivolous motions related to the

initial preliminary injunctions filed when John Q.

Bachman was attempting to close the business which

he eventually succeeded in doing, costing the Plaintiffs

a substantial investment as well as their labor. 28

U.S.C. § 216(b) specifically provides for injunctive relief, however there are other requirements as well. Due

to the threat of foreclosure and the lack of time, mistakes were made, but despite this allegedly serious infraction, the District Court entered no sanctions.

As far as the other motions, with one exception,

all were related to allowing the Appellees to wrongly

9

plead equitable and affirmative defenses, as well as

counterclaims which are barred in other Federal Circuits who have ruled on this. Additionally, the District

Court initially did not enter sanctions for these infractions.

The ex parte phone call related to the undersigned

counsel informing the Court’s staff that a mistake had

been made in a filing. Again, no disciplinary action was

taken, and this was never mentioned until the dismissal.

The undersigned counsel was contacted by a third

party regarding a subpoena he had received in this

proceeding that gave him only 5 days’ notice in violation of the local 7-days’ notice rule. Because the subpoena failed to comply with the rules, the party’s

attendance should not have been required, although he

did appear on his own volition. Again, no disciplinary

action was taken by the Court.

This litigation continued for more than two years.

Due to this length, it is understandable that mistakes

were made. The gravity of these errors was magnified

in order to justify a dismissal. But these mistakes were

minor in comparison to District Court rulings that

were contrary to the following circuit courts of appeals’

rulings:

1)

Permitting an employer with unclean

hands to plead equitable defenses and

counterclaims. Bailey v. Titlemax of Georgia, 776 F.3d 797, 805-806 (11th Cir.

2015).

10

2)

Permitting laches to be pleaded when

there is a statute of limitations. International Tel. & Tel. Corp. v. General Tel. &

Elec. Corp., 518 F.2d 913, 926 (9th Cir. 1975).

3)

Permitting in pari delicto to be pleaded

when the employer directed that wages

would not be paid. Lamonica v. Safe Hurricane Shutters, Inc., 711 F.3d 1299, 1309

(11th Cir. 2013).

4)

Permitting a set-off to be pleaded when

the set-off does not involve wages. Martin

v. Pepsiamericas, Inc., 628 F.3d 738 (5th

Cir. 2010).

5)

Permitting a counterclaim for fraud to be

pleaded Gagnon v. United TechniSource,

Inc., 607 F.3d 1036, 1045 (5th Cir. 2010).

6)

Permitting more than 6 months for a jurisdictional challenge when retaliation

has been pleaded. Sapperstein v. Hager,

188 F.3d 852, 856-857 (7th Cir. 1999),

Bowe v. Judson C. Burns, Inc., 137 F.2d 37,

38 (3d Cir. 1943), Meek v. United, supra,

and Acosta v. Foreclosure Connection, Inc.,

903 F.3d 1132, 1135-1136 (10th Cir. 2018).

By affirming the District Court’s rulings, the

Eighth Circuit has created numerous splits in the circuit courts. More importantly, allowing more than 6

months to challenge jurisdiction, permitting an employer with unclean hands to plead equitable and affirmative defenses as well as bring counterclaims,

11

threatens to delay the proceedings, which is a direct

threat to the enforcement scheme of the FLSA.

---------------------------------♦---------------------------------

REASONS FOR GRANTING THE PETITION

A. The Eighth Circuit Court of Appeals Erred

as a Matter of Law When it Affirmed a District Court Ruling Dismissing the Appellants’

Case with Prejudice when the Dismissal

was Predicated Upon Allowing an Employer

that had Knowingly Committed Wage Theft

and had Retaliated to Plead Equitable Defenses and Counterclaims

As grounds for dismissal in its ruling the District

Court held:

Furthermore, Plaintiffs have repeatedly

litigated the issue whether Defendants may

assert affirmative defense. Magistrate Judge

Zwart settled this issue on September 19,

2019 Filing 43 (audio file), Filing 44, yet over

two years later Plaintiffs continued to contest

this issue. See Filing 217 (October 12, 2021).

Plaintiffs have behaved similarly with respect

to Defendants’ counterclaims. See Filing 145

(finding that Defendants could conduct discovery on their counterclaims). Plaintiffs have

simply ignored the Court’s rulings and used

their belief that affirmative defenses and

counterclaims in this case are unwarranted as

a basis to refuse to answer questions in depositions and to generally resist discovery.

(App. 99-100).

12

This ruling was based upon the initial ruling by

the original District Court. In her ruling she held:

Plaintiffs argue that the FLSA prevents Defendants’ equitable defenses of estoppel, laches,

and unclean hands. It is true “that FLSA

rights cannot be abridged by contract or otherwise waived because this would ‘nullify the

purposes’ of the statute and thwart the legislative policies it was designed to effectuate.”

Barrentine v. Arkansas-Best Freight Sys., Inc.,

450 U.S. 728, 740, 101 S.Ct. 1437, 67 L.Ed. 641

(1981). Accordingly, if Defendants argue that

Plaintiffs waived rights under the FLSA to

which they were otherwise entitled, such a defense would be invalid. However, in certain

circumstances, courts have allowed defendants to assert equitable defenses in FLSA actions. See Bailey v. Titlemax of Georgia, Inc.,

776 F.3d 797, 804 (11th Cir. 2015). Absent discovery on these issues, the Court cannot determine whether such defenses are applicable.

(App. 29).

The ruling by the District Court is based upon an

incomplete reading of Bailey that could not have included the language stating that knowing of ongoing

FLSA violations bars an employer from invoking equitable defenses.

At the time of the first ruling, the original District

Court was aware John Q. Bachman had directed that

the wages not be paid, knew wages had not been paid,

knew FICA taxes had not been paid on the Appellants’

13

withdrawals/reimbursements (this prevented them

from being classified as wages which is discussed in

greater detail later in this Petition), knew their corporate returns from 2017-2019 stated that zero wages

were paid, and knew that the Defendants had retaliated. The foregoing, unrefuted facts are controlling and

show that the Defendants did not have the necessary

clean hands required to raise equitable defenses according to Bailey v. Titlemax.

The initial reference to Bailey by the original District Court referred only to the first part of the ruling

and, because of this, is erroneous as a matter of law.

In Bailey v. Titlemax of Georgia, 776 F.3d 797, 805806 (11th Cir. 2015), the 11th Circuit held:

(I)f an employer knew its employee underreported his hours, can it still assert equitable

defenses based on the employee’s own conduct

in underreporting as a total bar to the employee’s FLSA claim? . . . Our answer is no.

Id. at 799.

The Court continued:

Where, as here, an employer knew or had

reason to know that its employee underreported his hours, it cannot invoke equitable

defenses.

Id. at 805.

The failure to consider the language directly

above in the first District Court ruling resulted in

14

the subsequent rulings that were made as though that

language was absent.

The foregoing is consistent with rulings in the

Eighth Circuit. In Smith, et al. v. World Insurance

Group, 38 F.3d 1456, 1462-1463 (8th Cir. 1994), the

Eighth Circuit held: “(b)efore we can apply an equitable doctrine, we must determine “whether he who

seeks equity has done equity.”

In Grey v. City of Oak Grove, 396 F.3d 1031, 1034

(8th Cir. 2005), the Eighth Circuit held that to establish a prima facia case of retaliation, the employee

must show: “(t)o establish a prima facie case of retaliation, appellant had to show that he participated in

statutorily protected activity, that appellees took an

adverse employment action against him, and that

there was a causal connection between them. Id. at

1034-1035.

In the case at hand, the Appellants were terminated the following day after John Bachman was informed of the Department of Labor complaint. This

meets the definition of retaliation pursuant to 29

U.S.C. § 215(a)(3). In Johnson v. Ergon W. Va., Inc., 205

U.S. Dist. LEXIS 120759, at *21, the District Court

held: Any willful act concerning the cause of action

which can be said to transgress equitable standards of

conduct is sufficient” to invoke the clean hands doctrine. Retaliation is an intentional act and is prohibited by statute. Therefore, based upon his willful nonpayment of wages and retaliation, John Q. Bachman

could not plead equitable defenses and when the

15

District Court held that he could, the ruling was erroneous as a matter of law.

Unfortunately, permitting the Appellees to raise

equitable defenses was not the only ruling that was

contrary to the law in the other circuits. However, the

first errant ruling provided the basis for most of the

other problematic rulings. The District Court also

erred as a matter of law and accordingly abused its discretion when it permitted the Appellees to plead a setoff as a counterclaim and to plead affirmative defenses.

In the case at hand, the Appellees filed an amended

complaint and pleaded a counterclaim based upon a

setoff. The Appellants filed a motion to strike which the

Judge Magistrate and the District Court overruled.

(App. 31-51, App. 52-59).

The following is a summary of the affirmative defenses the Appellees were permitted to plead.

Contradiction

of Precedent

“Plaintiffs were not

The District Court held

employees of Defendant.” that Appellees qualified

for individual coverage

under the FLSA.

“Defendants acted in good John Bachman sent the

faith and had reasonable following via email, “no

grounds for believing their wages will be paid until

actions were in compliance cash flow improves” (App.

with the FLSA, the

9, R. Doc. 13-2, p. 1) (App.

Nebraska Wage Payment 45, R. Doc. 26-10). As a liand Collection Act and

censed Nebraska Attorney

the Texas Payday Act.”

John Bachman knew or

Affirmative Defenses

16

“Plaintiffs are estopped

from claiming payment

in this matter.”

“Plaintiffs are barred by

the doctrines of waiver,

estoppel and laches.”

should have known of

minimum wage laws. John

Bachman cannot meet this

standard as a matter of

law because he knew of

the violation. Davila v.

Menendez, 717 F.3d 1179,

1189 (11th Cir. 2013).

Estoppel is a defense that

invokes equity. Smith,

et al. v. World Insurance

Group, 38 F.3d 1456, 14621463 (8th Cir. 1994), parties with unclean hands

may not invoke equitable

defenses. John Bachman

ordered that wages not be

paid and fired employees

in retaliation for making

a complaint. As such

Appellees are barred

from equitable defenses.

Waiver, estoppel, and

laches all are defenses

that invoke equity, as the

Appellees do not have

clean hands they are

barred from these defenses in accordance with

Smith, et al. v. World Insurance Group, 38 F.3d

1456, 1462-1463 (8th Cir.

1994), Bailey v. Titlemax

of Georgia, 776 F.3d 797,

805-806 (11th Cir. 2015),

17

“Plaintiffs’ claims are

barred by the doctrine

of unclean hands.”

“Plaintiffs’ claims are

barred by the doctrine

of in pari delicto.”

Miller v. Maxwell’s Intern.

Inc., 991 F.2d 583 (9th Cir.

1993) the Ninth Circuit

held, “doctrine of laches is

inapplicable when Congress has provided a statute of limitations to

govern the action. See, e.g.,

International Tel. & Tel.

Corp. v. General Tel. &

Elec. Corp., 518 F.2d 913,

926 (9th Cir. 1975).” The

FLSA has a well-established statute of limitations, thus the defense of

laches does not apply.

The Appellees do not have

clean hands and cannot

raise clean hands as a

defense. Smith, et al. v.

World Insurance Group,

38 F.3d 1456, 1462-1463

(8th Cir. 1994), Bailey v.

Titlemax of Georgia, 776

F.3d 797, 805-806 (11th

Cir. 2015).

In Lamonica v. Safe Hurricane Shutters, Inc., 711

F.3d 1299 (11th Cir. 2013),

the 11th Circuit held “The

in pari delicto defense may

be applied to bar recovery

under a federal statute only

where (1) the plaintiff bears

at least substantially equal

18

responsibility for the violations he seeks to redress,

and (2) preclusion of the

suit would not substantially interfere with the

statute’s policy goals. See

Bateman Eichler, Hill

Richards, Inc. v. Berner,

472 U.S. 299, 310-11, 105

S.Ct. 2622, 86 L.Ed.2d 215

(1985); Edwards, 437 F.3d

at 1154-55.”

In the case at hand the

Appellees, ordered that

no wages be paid. For all

times relevant, the Appellees were the majority

owner of the company, the

employees had no ownership. In Coffin v. Blessey

Marine Services, Inc., 771

F.3d 276 (5th Cir. 2014),

the Fifth Circuit affirmed

a District Court opinion

that held, “there is no duty

to mitigate damages under

the FLSA, nor a duty to

provide notice as to any

alleged unlawful pay practice); Lopez v. Autoserve,

LLC, No. 05 C 3554, 2005

U.S. Dist. LEXIS 29161,

2005 WL 3116053, at *2

(N.D. Ill. Nov. 17, 2005).”

In pari delecto requires

19

plaintiffs to bear substantially equal responsibility.

“If it is determined that

In Martin v. Pepsiamericas,

Plaintiffs were mischarac- Inc., 628 F.3d 738, 743 (5th

terized as nonexempt em- Cir. 2010), the Fifth Circuit

ployees under the FLSA, held: Pepsi is not entitled

they were paid in excess to set-off those damages here

of any minimum wage

because unlike Singer, the

and or overtime by the

money and benefits Pepsi

executive team (Plaintiffs) paid to Martin were not

of Defendant Leaf Su“wage payments, advance

preme. Plaintiffs’ did

or otherwise.” Id. at 743.

not treat such compensa- Leaf Supreme Products

tion as wages.”

never paid FICA taxes

which are required on all

wage payments. Accordingly,

since the Appellees violated

Federal law when they

failed to pay the FICA

taxes, they have waived

their right to consider

these payments as wages.

The Appellees listed three counterclaims in their

motion to compel for which they claimed they were entitled to conduct discovery, which is a clear departure

from established precedent in other circuits.

“Defendants, in their counterclaim, allege three

theories”:

20

Counterclaims

Contradiction

of Precedent

“In their First Cause of

In Gagnon v. United Tech

Action, Defendants allege niSource Inc., 607 F.3d

that James Bachman,

1036, 1045 (5th Cir. 2010),

Adella and Eric Bachman the Fifth Circuit stated,

were in control of Defend- “contract and fraud claims

ant Leaf Supreme and

cannot be brought as counwere responsible for the terclaims in a FLSA acfailure to pay wages. In- tion.” As such claims of

stead, Plaintiffs-Counter fraud are not permitted.

Defendants, paid themAdditionally, the Appelselves in other ways. For lants in this case were at

example, they paid all of all times employees with

their car leases (equaling no ownership interest. Apalmost $2,000 a month) as pellees owned the bank acwell as their home leases count referenced and had

(equaling $3,600 a month) continuous access to the

using Leaf Supreme’s

account records. Per Coffin

bank account. There were the Appellants were under

also a number of personal no obligation to pay themselves wages, and these

expenses paid on their

behalf during the time

withdrawals were reimthey were in control of

bursement for liabilities

the company owed to the

Leaf Supreme.”

Appellants for advances of

cash which to date exceed

any withdrawn or reimbursed funds.

“In their Second Cause of In Gagnon v. United TechAction, Defendants allege niSource Inc., 607 F.3d

Fraud in that the Plaintiffs- 1036, 1045 (5th Cir. 2010),

Counter Defendants, who the Fifth Circuit stated,

controlled Leaf Supreme, “contract and fraud claims

paid themselves

cannot be brought as

21

compensation for personal counterclaims in a FLSA

expenses while failing to action.” As such claims of

pay themselves wages as fraud are not permitted.

required by the Fair Labor

Standards Act. They concealed such expenditures

from Defendant John

Bachman.”

“In their Third Cause of In Lyle v. Food Lion, Inc.,

Action, Defendants allege 954 F.2d 984 (4th Cir.

that if Plaintiffs-Counter 1992), the Fourth Circuit

Defendants and the rest upheld a district court’s

of the Plaintiffs are

dismissal of numerous

deemed employees Plain- counterclaims and breach

tiffs-Counter-Defendants’ fiduciary duty citing, As

breached their fiduciary the Fifth Circuit has noted,

duty to Defendants by

“[t]o engraft an indemnity

failing to pay wages when action upon this otherwise

there were funds available comprehensive federal

to pay wages. Further,

statute would run afoul

Plaintiffs-Counter

of the Supremacy Clause

Defendants failed to

of the Constitution” and

ensure compliance with

“would undermine employthe FLSA. Any liability

ers’ incentives to abide by

that Defendants may

the Act.” LeCompte v. Chryshave must be assessed

ler Credit Corp., 780 F.2d

to Plaintiff-Counter

1260, 1264. In accordance

Defendants.”

with this ruling this is not

the proper forum for claims

of breach of fiduciary duty.

22

In its ruling to permit these counterclaims, the

District Court held:

Though couched in different theories, Defendants’ counterclaims are directly related to

the amount of wages owed to Plaintiffs. Defendants’ first counterclaim is that Plaintiffs

assumed control of Leaf Supreme and paid

themselves in excess of $100,000 toward personal expenses without categorizing these

payments as wages. Filing 128 at 7-8. Defendants’ second counterclaim alleges that Plaintiffs fraudulently paid themselves money for

personal expenses without characterizing these

payments as wages. Filing 128 at 8. Defendants’ third counterclaim alleges that Plaintiffs

breached a fiduciary duty to Leaf Supreme by

failing to treat payments for Plaintiffs’ personal expenses as wages for work performed.

Filing 128 at 9. Without addressing the merits

of each of these counterclaims, each alleges

that Plaintiffs received payments from Leaf

Supreme that should have been categorized

as wages. If successful on these counterclaims,

any setoff would not cause Plaintiffs to receive

less payment than they were entitled to under

the FLSA but would account for wages Plaintiffs had already been paid.

(App. 57-58).

The Court does not conclude at this stage

that Defendants’ counterclaims have merit.

23

Discovery is necessary to determine whether

the evidence supports Defendants’ position.

(App. 58).

First, a setoff is an equitable remedy. Hawaiian

Airlines, Inc. v. United States (In Re HAL, Inc.), 122

F.3d 851, 854 (9th Cir. 1997). As previously discussed,

the Appellees do not have clean hands and are accordingly prohibited from using equitable remedies, including setoffs. More importantly, only a counterclaim

involving the payment of wages is permitted in every

other Federal Circuit Court of Appeals that has considered this issue.

More importantly, in Martin v. Pepsiamericas, Inc.,

628 F.3d 738, 743 (5th Cir. 2010), Pepsi attempted to

use a set off against Martin’s wage claim for a breach

of a severance agreement. The Fifth Circuit held: Pepsi

is not entitled to set off those damages here because

unlike Singer, the money and benefits Pepsi paid to

Martin were not “wage payments, advance or otherwise.” Id. at 743.

The Federal Insurance Contribution Act (hereinafter FICA) (26 U.S.C. § 3101) mandates that all employers pay FICA taxes on their employees’ wages. In

the case at hand, Leaf Supreme Products never paid

any FICA taxes on the withdrawals it claimed the Appellants made instead of paying wages.

24

In Buffum v. Chase Nat’l Bank, 192 F.2d 58, 60-61

(7th Cir. 1951), the Court held:

Waiver is a voluntary and intentional relinquishment or abandonment of a known existing right or privilege, which, except for such

waiver would have been enjoyed . . . It may be

expressed formally, or it may be implied as a

necessary consequence.

Obviously, the failure to pay FICA taxes which

must be paid on all wages by an employer prohibits the

Appellees from claiming the alleged withdrawals by

the Appellants are wages. Additionally, the Defendants’ tax returns for 2017-2019 state wages paid as

zero. If this Court rules otherwise, it is allowing a company to flout its obligations under the Internal Revenue Code and is suborning tax fraud.

Once again, the District Court was informed that

the Appellees failed to pay the FICA taxes not only

prior to the Appellants’ motion to strike the affirmative

defenses and counterclaims, but prior to the Plaintiffs’ motion for summary judgment. (Emphasis

added). The Appellees failed violated Federal law when

the Appellees failed to pay FICA taxes on the Appellants’ withdrawals as required by law if they were indeed wages. They repeatedly filed tax returns, signed

under penalties of perjury, reporting no wages had

been paid. Therefore, they have waived their rights to

consider these payments as wages. As a result, the District Court’s decision to permit the Appellees to file a

counterclaim is erroneous as a matter of law because

it is direct conflict with Pepsiamericas.

25

In Donovan v. Pointon, 717 F.2d 1320 (10th Cir.

1983), the Secretary of Labor brought an action under

the Fair Labor Standards Act. The employer counterclaimed for moneys he had advanced to the employees

as well as damages for sabotage. The District Court

dismissed the counterclaims and the employer appealed. The Tenth Circuit held:

As indicated, the purpose of the present

action is to bring Pointon into compliance

with the Act by enforcing a public right. To

permit him in such a proceeding to try his private claims, real or imagined, against his employees would delay and even subvert the

whole process. Pointon is free to sue his employees in state court, as we are advised he is

doing, for any sum which he feels is due and

owing him.

Id. at 1323.

By permitting the Appellees to pursue their real

or imagined claims in an FLSA proceeding, the District

Court erred as a matter of law. When the Eighth Circuit Court of Appeals affirmed this erroneous ruling,

they also erred as a matter of law.

B. The District Court’s Rulings are Contrary

to Numerous Other Federal Circuits as Well

as Contrary to Their Own Rulings

The following Federal Circuit Court of Appeals

rulings are contrary to the Eighth Circuit Court of Appeals ruling:

26

1)

Permitting an employer with unclean

hands to plead equitable defenses and

counterclaims. Bailey v. Titlemax of Georgia, supra.

2)

Permitting laches to be pleaded when

there is a statute of limitations. International Tel. & Tel. Corp. v. General Tel. &

Elec., supra.

3)

Permitting in pari delicto to be pleaded

when the employer directed that wages

not be paid. Lamonica v. Safe Hurricane

Shutters, Inc., supra.

4)

Permitting a set-off to be pleaded when

the set-off does not involve wages. Martin

v. Pepsiamericas, Inc., supra.

5)

Permitting a counterclaim for fraud to be

pleaded. Gagnon v. United TechniSource,

Inc., supra.

6)

Permitting a jurisdictional challenge

when retaliation has been pleaded. Sapperstein v. Hager, supra, Bowe v. Judson

C. Burns, Inc., supra, Meek v. United States,

supra, and Acosta v. Foreclosure Connection, Inc., supra.

C. The District Court’s Decision and the Affirmation by the Eighth Circuit Court of Appeals

Pose a Direct Threat to the Enforcement

Scheme of the Fair Labor Standards Act

In Brooklyn Sav. Bank v. O’Neil, 324 U.S. 697, 706707, 65 S.Ct. 895, 89 L.Ed. 1296 (1945), this Court held

27

that the FLSA recognized the fact that there was an

“unequal bargaining power between employer and

employee.”

The case at hand is a prime example of unequal

bargaining positions and the danger that is created

when courts do not follow clear legal precedent. The

Appellants worked for two and one-half years without

pay and the District Court delayed their repayment

further by failing to follow prior decisions.

First, the District Court permitted a six-month

discovery delay that violated the law. (App. 6-9). Second, they allowed defenses and causes of action that

clearly violated the precedent of the other circuits,

thereby creating a split in the circuits which this Court

must address.

Unfortunately, the District Court did not stop

there. It imposed punitive sanctions on an attorney

that was repeatedly attempting to invoke applicable

precedent.

If this ruling is allowed to stand, allowing employers with unclean hands will soon be permitted to raise

real or imagined claims which will delay and even

subvert the entire process. Not only will employees be

denied the wages that the Department of Labor investigation found they were owed, but employees will also

be sanctioned for seeking to apply legitimate legal

precedent.

---------------------------------♦---------------------------------

28

CONCLUSION

If the FLSA is to truly have “remedial and humanitarian” purposes, it should be enforced according both

to the provisions of the Act and in accordance with

precedent. Although unrefuted evidence of the Employers’ direction and knowledge of an ongoing scheme

of FLSA violation was presented, the prior adjudicators showed concern only for the right of this Employer

to utilize equitable and affirmative defenses to justify

his willful actions. An early errant ruling became the

foundation of an entire structure of erroneous rulings

that created splits in authority with several other Circuits. Accordingly, certiorari should be granted in this

case both to resolve these splits and to preserve the integrity and authority of the FLSA. Although the FLSA

has a long history, the need to enforce and maintain its

provisions still exists both for today and for the future.

Respectfully submitted,

JAMES E. BACHMAN

663 N. 132nd Street

Omaha, NE 68154

Phone: 402-350-5149

Email: jim@bachman.law

Petitioner and Counsel of

Record for Remaining

Petitioners