Petition for Writ of Certiorari — Ho Fat Seto v. McLaughlin

ra ¥ | Tuereave Court, U.S,

88-519 FILED

StP 26 1988

No.

IN THE

Supreme Court of the United States

OCTOBER TERM, 1988

HO FAT SETO, etc.,

Petitioner,

VS.

ANN McLAUGHLIN, Secretary of Labor,

Respondent.

ON PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

PETITION FOR WRIT OF CERTIORARI

GERALD GOLDFARB EDWIN M. ROSEBERG

Counsel of Record A Law Corporation

Suite 1418 Suite 2010

3550 Wilshire Boulevard 3435 Wilshire Boulevard

Los Angeles, California 90010 Los Angeles, California 90010

(213) 381-2462 (213) 389-1131

Attorneys for Petitioner

HO FAT SETO 7

Lawyers Brief Service / Legal Publishers / (213) 383-4457 / (714) 720-1510

pe

QUESTION PRESENTED

Should the Fair Labor Standards Act be construed to allow

recovery by the Secretary of Labor on account of non-

testifying former employees as to whom there is no substantial

evidence of overtime work?

PARTIES TO

THE PROCEEDINGS BELOW

Petitioner in this Court, and defendant-appellant in the

proceedings below, is Ho Fat Seto, individually, and doing

business as Ho Fat of California.

Respondent in this Court, and plaintiff-appellee in the

proceedings below, is Ann McLaughlin, U.S. Secretary of

Labor. Prior to her tenure, Secretaries of Labor Raymond J.

Donovan and William E. Brock, III, were named plaintiffs.

my

TABLE OF CONTENTS

Page

QUESTION PRESENTED... .s:scon5505eeek ease eeees i

PARTIES TO THE PROCEEDINGS BELOW.......... i

TABLE OF AUTHORITIES... <sv0cunsceeere ee teaee iv

PETITION . oo onde 5 sana ee eee es 1

JURISDICTIONAL STATERERIS 65554555545 e000 045 1

STATUTORY PROVISIONS INVOLVED .........005. 2

STATEMENT OF THE. (Ade. caesar ene ees 2

REASON FOR GRANTING THE WRIT.............. 7

THE STANDARD OF PROOF REQUIRED OF

THE SECRETARY OF LABOR IN FAIR LA-

BOR STANDARDS ACT CASES IS SO AT-

TENUATED THAT THE ADJUDICATION OF

OVERTIME PAY CLAIMS VIOLATES AC-

CEPTED PROCEDURAL NORMS AND IS

UNFAIR TO EMPLOYER-DEFENDANTS........ 7

CONCLUSION. .. 064455555 65 ene 15

- ili -

Page

APPENDIX A

Opinion of the United States Court of Appeals

for the Ninth Circuit, Filed June 28, 1988........ A-1

APPENDIX B

First Amended Complaint to Enjoin Fair

Labor Standards Act Violations and

Recover Amounts Due. U:S. Dist. Court,

Central Dist. of Calif., Lodged June 1, 1984 ...... B-1

APPENDIX C

Ee ee eee ee ee ee C-1

APPENDIX D

Second Amended Findings of Fact and

i i es Sh a ee ce eend he es D-1

= 49 «

TABLE OF AUTHORITIES

Page

Cases

Addington v. Texas

441 U.S. 418 99 S.Ct. 1804 (1979) 12

Anderson v. Mt. Clemens Pottery Co.

328 U.S. 680, 66 S.Ct. 1187 (1946) 5-14

Bay Ridge Operating Co. v. Aaron

334 U.S. 446, 68 S.Ct. 1186 (1948) 7

Block v. Bell

63 F.Supp. 863 (W.D.Ky. 1945), aff d,

152 F 2d 964 (6th Cir. 1946) 7

Brennan v. Parnham

366 F.Supp. 1014 (W.D.Pa. 1973) 11

Brock v. Seto

790 F.2d 1446 (9th Cir. 1986) 13,14

Castillo v. Givens

704 F.2d 181 (Sth Cir. 1983) 9

Commissioner of Internal Revenue v.

Bain Peanut Co. :

_ 134 F.2d 853 (Sth Cir. 1943) 13

Donovan v. Bel-Loc Diner, Inc.

780 F.2d 1113 (9th Cir. 1985) 8

Donovan v. New Floridian Hotel, Inc.

676 F 2d 468 (11th Cir. 1982)

Gilbert v. Old Ben Cold Corp.

407 N.E. 2d 170 (Ill. App. 1980)

Marshall v. Brunner

500 F. Sup. 116 (W.D.Pa. 1980)

Marshall v. RR & M Erectors, Inc.

429 F.Supp. 771 (D.C.Del. 1977)

Marshall v. Van Matre

634 F.2d 1115 (8th Cir. 1980)

Mornford v. Andrews

151 F.2d 511 (Sth Cir. 1945)

Santosky v. Kramer

455 U.S. 745, 102 S.Ct. 1388 (1982)

Wirtz v. Dix Box Co.

322 F.2d 490 (9th Cir. 1963)

Federal Statutes

28 U.S.C. Sec. 1254

29 U.S.C. Sec. 216

Page

10

11,12

12

5,8

- Vi -

State Statute

California Evidence Code Sec. 115

Texts

Foster, Jurisdiction, Rights, and Remedies for

Group Wrongs Under the Fair Labor

Standards Act: Special Federal Questions,

1975 Wis. Rev. 295

Gerber & Galfand, Employees’ Suits Under

the Fair Labor Standards Act,

95 U.Pa.L.Rev. 505 (1947)

Miscellaneous

U.S. Department of Labor, Minimum Wage and

Maximum Hour Standards Under the FLSA,

1986 Annual Report to Congress

Page

12

11

No. 88-

In The

SUPREME COURT OF THE UNITED STATES

October Term, 1988

HO FAT SETO, etc.,

Petitioner,

vs.

ANN McLAUGHLIN, Secretary of Labor,

Respondent.

PETITION FOR WRIT OF CERTIORARI

Petitioner Ho Fat Seto prays that a Writ of Certiorari

issue to review the judgment and opinion of United

States Court of Appeals for the Ninth Circuit, per Tang,

J., published in the official reports at 850 F.2d 586 (9th

Cir. 1988). A copy of that opinion is reprinted as Ap-

pendix A hereto.

JURISDICTION

Jurisdiction of the Court is invoked pursuant to 28

U.S.C. Sec. 1254. The Court of Appeals opinion was

filed June 28, 1988.

x

STATUTORY PROVISIONS INVOLVED

Fair Labor Standards Act. 29 U.S.C. Sec. 216(c):

... The Secretary may bring an action in

any court of competent jurisdiction to

recover the amount of unpaid minimum

wages or overtime compensation and an

equal amount as liquidated damages.

STATEMENT OF THE CASE

Petitioner-defendant operates a clothing manufactur-

ing business in Los Angeles, California. In 1984, the

Secretary of Labor filed an action against him in the

U.S. District Court for the Central District of California.

(Appendix B). The action sought to enjoin FLSA viola-

tions and recover unpaid overtime. (Appendix B). The

Secretary’s complaint specified 28 employees of SETO

as having been underpaid. (Appendix B-6).

The case proceeded to trial on August 12-15, 1986,

before the Hon. Terry J. Hatter, Jr. The Secretary

presented six witnesses; five former employees of

defendant and the Department of Labor compliance

officer. (RT 1-246). SETO presented five employee

witnesses in rebuttal. (RT 247-376). Compliance

officer Rolene Otero, during her testimony, explained

how the testimony of five former employees was ex-

trapolated to cover 28 claimants.

Q. [By defendant’s counsel]. Now, when

you do a computation for a group of

employees and you do not actually speak

to each employee, do you still go ahead

and make a computation for the em-

ployee that you do not speak to who you

O >

0 >

«3s

think might have had a violation commit-

ted against them?

If the employee’s statements indicate

that, yes. In other words, if one em-

ployee tells me that, “I worked on a

single needle machine and so did Joanne

Smith and so did Donna,” then I will —

and they all worked on Saturday, then I

will compute the same Saturday hours

for all the employees in that area.

And do you take into account that

perhaps Joanne Smith might have only

worked Tuesday, Wednesday, Thursday

and Friday and did not work Monday

that week?

If my information is that, yes.

But if you do not speak to this Joanne

Smith that you are using as an example,

then isn’t it true that you are basing your

computation on what somebody else told

you about this Joanne Smith; isn’t~that

true?

That’s true... . (RT 237:4-23).

This is just a presumption on your part,

but you don’t have anything directly

from that employee as to whether or not

that employee worked 40 hours plus

overtime or whether that employee

worked a total of 22 hours for the whole

week, including a Saturday. You really

don’t know other than this presumption

that you have in your mind?

I don’t have direct information. If I

don’t have direct information from that

employee, you are correct. I am making

.4-

that presumption on the basis of other

people’s statements .... (RT 238:10-

19).

Q. How many employees did you actually

interview in this case face to face?

A. Approximately six. No. That’s not true

because then later on, after the com-

plaint was filed, I interviewed probably

ten more. So probably 16 altogether. _

(RT 240:19-25).

The District Court found for plaintiff, awarded judg-

ment against SETO for $36,863.75 back wages plus

$36,863.75 liquidated damages, a total of $73,727.50,

and enjoined SETO from further violations. (Appendix

C). Findings of fact and conclusions of law issued.

(Appendix D). An exhibit to the judgment listed 28

individuals to whom the recovery was due. (Exhibit

D-13).

In pertinent part, the findings and conclusions stated:

Finding of Fact No. 7

Plaintiff presented the testimony of

five named employees during his case-

in-chief. The testimony of these five

employees was generally consistent and

established a pattern of employment

conditions applicable to all employees of

defendant during the relevant period.

The five testifying employees were

representative of all employees em-

ployed by defendant during the relevant

period. (Appendix D-2). |

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Conclusion of Law No. 8

Where an employer fails to maintain

complete and accurate payroll records,

plaintiff need only show that the employ-

ees performed work for which they were

not paid the compensation required

under the Act and the extent of such

work “as a matter of just and reasonable

inference.” Anderson v. Mt. Clemens

Pottery Co. 328 U.S. 680, 687, 66 S.Ct.

1187 (1946). This burden may be met

by employee testimony. Wirtz v. Dix

Box Co., 322 F.2d 490 (9th Cir. 1963);

Marshall v. Van Matre, 634 F.2d 1115,

1119 (8th Cir. 1980). Plaintiff has met

his burden in this case by representative

employee testimony establishing that

employees worked more than 40 hours

per week but were only paid at their

regular piece-rate basis for all work

performed. This pay practice violated

the Act because the employees were not

paid a premium rate for overtime hours

worked and in some instances were not

paid minimum wage for all hours

worked. The amount of back wages due

has been established as a matter of just

and reasonable inference to equal the

amounts set forth in the Appendix

attached hereto. (Appendix D-8).

Conclusion of Law No. 9

Testimony or evidence of repre-

sentative employees can establish prima

ae ‘i

facie proof of a pattern or practice of

violations of the Act. Representative

employee testimony’ established a

pattern of violations .... (Appendix

D-9).

The Court of Appeals affirmed. (Appendix A). The

appellate court reviewed the “district court’s application

of the burden of proof in a claim for unpaid overtime

under the FLSA ... [as] ... a question of law, reviewed

de novo.” (Appendix A-4). The court stated, in reliance

on Anderson v. Mt. Clemens Pottery Co., supra, that “an

employee carries his burden under the FLSA if he shows

he performed work for which he was improperly com-

pensated and produces some evidence to show the

amount and extent of that work ‘as a matter of just and

reasonable inference.’ ” ([bid.) The court then

continued:

We hold that the Mt. Clemens Pottery

standard allows district courts to award

back wages under the FLSA to non-

testifying employees based upon the

fairly representative testimony of other

employees. (Appendix A-4).

Defendant SETO now seeks review of that holding by

this Petition for Writ of Certiorari.

het. ¥y

. -

REASON FOR GRANTING THE WRIT

THE STANDARD OF PROOF REQUIRED OF

THE SECRETARY OF LABOR IN FAIR

LABOR STANDARDS ACT CASES IS SO

ATTENUATED THAT THE ADJUDICATION

OF OVERTIME PAY CLAIMS VIOLATES

ACCEPTED PROCEDURAL NORMS AND IS

UNFAIR TO EMPLOYER-DEFENDANTS.

One key purpose of the FLSA is to assure that work-

ers will receive premium pay for overtime and weekend

work. Bay Ridge Operating Co. v. Aaron, 334 U.S. 446,

68 S.Ct. 1186 (1948). Thus, the Secretary of Labor is

empowered by 29 U.S.C. Sec. 216 to bring an enforce-

ment action on behalf of underpaid workers.

In the early years of FLSA, the Secretary often had

great difficulty proving his (or her) affirmative case.

See generally Gerber & Galfand, Employees’ Suits

Under the Fair Labor Standards Act, 95 U.Pa.L.Rev.

505, 526 (1947); e.g., Mornford v. Andrews, 151 F.2d

511 (Sth Cir. 1945); Block v. Bell, 63 F.Supp. 863

(W.D.Ky. 1945), aff'd, 152 F 2d 964 (6th Cir. 1946); see

Note, 43 Col.L.Rev. 355 (1943). Traditional common

law standards of proof were difficult to meet. Employ-

ees generally did not keep record of hours worked and

could only approximate. /bid.

In response to the enforcement problem, this Court

eased employees’ burden of proof. Anderson v. Mt.

Clemens Pottery Co., supra. The Court, per Murphy, J.,

said:

An employee who brings suit .. . has the

burden of proving that he performed

work for which he was not properly

compensated .... when the employer

has kept proper and accurate records the

«%. j

employee may easily discharge his

burden by securing the production of

those records. But where the employer’s

records are inaccurate or inadequate and

the employee cannot offer convincing

substitutes a more difficult problem A

arises. The solution, however, is not to

penalize the employee by denying him ;

any recovery on the ground that he is :

unable to prove the precise extent of i

uncompensated work. Such a result

would place a premium on an employ-

er’s failure to keep proper records in

conformity with his statutory duty; it

would allow the employer to keep the

benefits of an employee’s labors without ,

paying due compensation as_ con-

templated by the Fair Labor Standards i

Act. In such a situation, we hold that an

employee has carried out his burden if

he proves that he has in fact performed

work for which he was improperly

compensated and if he produces suffi-

cient evidence to show the amount and

extent of that work as a matter of just

and reasonable inference. 328 U.S. at

pp. 686-687, 66 S.Ct. at p. 1192 (em-

phasis added).

Based on Mt. Clemens Pottery, the federal trial and

appellate courts proceeded to apply an extraordinarily

liberal approach to FLSA burdens of proof. See gener-

ally Foster, Jurisdiction, Rights, and Remedies for

Group Wrongs Under the Fair Labor Standards Act:

Special Federal Questions, 1975 Wis. Rev. 295, 307; see

Donovan v. Bel-Loc Diner, Inc., 780 F.2d 1113, 1116

(9th Cir. 1985); Wirtz v. Dix Box Co., supra. Defendant

believes this trend has gone too far. As illustrated by the

~

instant case, FLSA plaintiffs are now being allowed to

prevail on utterly flimsy evidence which would be

laughed out of court in any other civil proceeding.

Normal adjudication based on a preponderance of

substantial evidence does not exist in this domain.

Instead, the district courts have become rubber stamps

for inflated government claims. For these reasons,

defendant SETO asks that Mt. Clemens Pottery be

re-examined.

Defendant particularly objects to the apparent rule

that awards may be made on behalf of non-testifying

employees. In the instant case, as the Court of Appeals

noted, five witnesses testified they worked unpaid

overtime. Yet the district court assessed compensatory

and liquidated damages on behalf of 28 employees. This

inference was held to be “just and reasonable” under Mt.

Clemens Pottery because the Secretary represented, with

consummate vagueness, that “all of the employees

regularly worked” unpaid overtime. (Appendix A-2).

Compare, e.g., Castillo v. Givens, 704 F.2d 181 (Sth Cir.

1983) (13 out of 39 successful plaintiffs testified);

Donevan v. New Floridian Hotel, Inc., 676 F.2d 468

(11th Cir. 1982) (23 out of 207 successful plaintiffs

testified); Marshall v. Brunner, 500 F. Supp. 116

(W.D.Pa. 1980) (48 out of 93 successful plaintiffs

testified).

This existing approach goes far beyond what Mt.

Clemens Pottery authorized. Mt. Clemens Pottery

applied its looser, “just and reasonable inference”

standard to the amount of overtime work. It did not

apply that standard to the fact of overtime work. On the

contrary, Mt. Clemens Pottery explicitly distinguished

these two factual issues, a distinction the lower courts

now regularly ignore.

Nor is such a result to be condemned by

the rule that precludes the recovery of

« My

uncertain and _ speculative damages.

That rule applies only to situations

where the fact of damage is itself uncer-

tain. But here we are assuming that the

employee has proved that he has per-

formed work and has not been paid in

accordance with the statute. The dam-

age is therefore certain. The uncertainty

lies only in the amount of damages

arising from the statutory violation by

the employer .... It is enough under

these circumstances if there is a basis

for a reasonable inference as to the

extent of the damages.” 328 U.S. at p.

688, 66 S.Ct. at p. 1193 (emphases

added).

In the instant case, for example, there was no reliable,

admissible evidence of the fact of damage, i.e., that any

of the 23 non-testifying employees ever worked more

than 40 hours in a week. The five testifying employees

testified only that “all” employees worked overtime.

Particularly in light of the variable nature of garment

industry piece-work, such testimony is classically vague.

The Secretary sent out questionnaires to SETO’s

employees, but most were returned as undeliverable.

(RT 231:8-14). The compliance officer actually inter-

viewed only 16 claimants. (RT 240:20-25). The

Secretary’s claim on behalf of the 23 non-testifying

employees thus was simply insubstantial, bald hearsay.

(RT 237:19-23, 238:16-19).

Notwithstanding the general tendency to interpret Mr.

Clemens Pottery very broadly, some courts have ac-

knowledged and respected its limitations. In Gilbert v.

Old Ben Cold Corp., 407 N.E. 2d 170 (Ill. App. 1980),

an Illinois appellate court upheld a trial court finding

that plaintiffs had not carried their burden of proving the

a

fact of overtime work. The court recognized that “an

employee may satisfy his burden of proof, enabling the

court to determine approximate damages, if he provides

information ‘such as the reasonable and creditable

estimates of the employees themselves.’ ” 407 N.E. 2d at

p. 175, quoting from Brennan v. Parnham, 366 F.Supp.

1014, 1025 (W.D.Pa. 1973) (emphases added).

However, the court also said: “Mere estimates of hours

of work performed, without more, are not, one may

infer, sufficient evidence to show the amount and extent

of that work as a matter of just and reasonable inference,

as required by Mr. Clemens.” 407 N.E. 2d at p. 175. A

fortiori, in the instant case, since there are no estimates

at all by 23 of the “employees themselves.”

In Marshall v. R & M Erectors, Inc. 429 F.Supp. 771

(D.C.Del. 1977), the defendants acceded to liability re

11 employees who testified, but argued the Secretary

failed to carry his burden of proof re 12 identified,

non-testifying employees and 11 unidentified employees.

The court agreed that the Secretary’s claim on behalf of

the unidentified employees was unacceptable specula-

tion. But the court granted the Secretary judgment re the

12 identified, non-testifying employees. The court

realized that “the proof ... [was] not as powerful as

might normally be expected... .” 429 F.Supp. at p. 778.

Nonetheless, the court concluded: “The Secretary’s

inspection of records and interviews confirmed their

salaries and terms of employment.” (/bid).

In the instant case, however, and in many other

cases,! there are no records or interviews supporting the

| The amount of enforcement activity is significant. Compliance

officer Otero alone has handled about a thousand such cases. (RT

226:15-17). In fiscal year 1985, the Secretary undertook 66,943

FLSA investigations, collected $79.7 million due 268,100 workers

for underpaid overtime, and collected $29.6 million due 166,700

workers for underpaid minimum wages. U.S. Department of Labor,

(continued)

- 12.

fact of overtime work. The Secretary’s records are

summarized in the Explanation Of Computation attached

to the district court’s findings. (Appendix D-12). This

purported “Explanation” is laced with assumptions.

(Appendix D-12, 13, 14). Most importantly, the “Ex-

planation” assumes each employee worked 40-50 hours

per week. Of course, aside from vague testimony and

the Secretary’s representations, there is no evidence to

support that assumption. Indeed, given the itinerant

nature of garment industry piece-work, (as compared to

the regimented union labor present in Mr. Clemens

Pottery), the assumption is quite unlikely.

Nor do interviews support the fact of overtime work.

Compliance officer Otero had no interviews with 12

claimants. (RT 237-239). The claims of at least these

12 non-interviewed, non-testifying employees, are based

on pure speculation. Like the claims of the unidentified

employees in Marshall v. R & M Erectors, their claims

have not been proven by a preponderance of evidence.

Yet the Due Process clause requires “preponderance

of the evidence” as a minimum standard of proof.” See

Santosky v. Kramer, 455 U.S. 745, 754-755, 102 S.Ct.

1388, 1395-1396 (1982); Addington v. Texas 441 U.S.

418, 423-425, 99 S.Ct. 1804, 1808-1809 (1979); see

Calif. Evid. Code Sec. 115. “The function of a standard

of proof, as that concept is embodied in the Due Process

clause and in the realm of factfinding, is to instruct the

factfinder concerning the degree of confidence our

(ftn. continued)

Minimum Wage and Maximum Hour Standards Under the FLSA,

1986 Annual Report to Congress.

2 Defendant did not formally raise a Due Process objection in the

proceedings below and does not seek to do so explicitly here.

Nevertheless, consciousness of that constitutional boundary is

important because Mt. Clemens Pottery must be construed not to

encroach upon it.

ee ne

Se

society thinks he should have in the correctness of

factual conclusions for a particular type of adjudication.”

Addington v. Texas, supra, 441 U.S. p. 423. (emphases

added).

In FLSA cases, there can be no significant “degree of

confidence” in the fact of overtime work when there is

no substantial evidence the alleged overtime worker

worked overtime. Stated another way, it is neither just,

nor reasonable, nor constitutional, to allow a factfinder

to infer that a particular worker worked overtime from

the mere fact that the worker worked for SETO. Cf.

Commissioner of Internal Revenue v. Bain Peanut Co.,

134 F.2d 853, 857 (Sth Cir. 1943), cert. dismissed, 321

U.S. 800, 64 S.Ct. 633.

Prior to its 1974 Amendment, 29 U.S.C. Sec. 216(c)

required that enforcement by the Secretary be initiated

via a written request from an aggrieved employee. The

elimination of this requirement gave the government

enforcer freer rein: The instant case and its numerous

cousins show the government’s minions have even freer

rein. Not only can the Secretary investigate without a

complaint, she can also prevail without substantial

evidence.

The tension between the statute’s remedial purpose

and principles of fair adjudication is well illustrated by

Brock v. Seto,> 790 F.2d 1446 (9th Cir. 1986). In Brock

v. Seto, the Secretary sought back pay for 16 employees

based on the testimony of four employees. The district

court, per Takasugi, J., found by a preponderance of

evidence that there had been FLSA violations and so

issued an injunction. At the same time, the district court

disallowed the employees’ back wage claims as “too

speculative and unspecific.” 790 F.2d at p. 1447. On

3 The defendant in Brock v. Seto is not Ho Fat Seto; it is Some

Seto.

ait.

appeal, however, the Court of Appeals, per Wright, J.,

reversed, holding that Judge Takasugi had not followed

Mt. Clemens Pottery correctly.

This defendant SETO disagrees. The 12 non-

testifying employees in Brock v. Seto, under a proper

reading of Mt. Clemens Pottery, did not prove the fact of

overtime work. The district court approach, not the

Court of Appeals approach, should be the law.

Re-evaluation of Mt. Clemens Pottery, in light of 40

years experience, would not necessitate a return to a

rigid burden of proof in FLSA cases. Instead, a modern-

ized approach could be tailored to accommodate the

remedial purpose of the Act, universally accepted stand-

ards of proof and the substantial evidence rule. For

example, there is no clear reason why claimants, in order

to obtain recovery, should not be required to actually

testify briefly in open court. If a claimant is identifiable

and interested in receiving a monetary award, it would

seem a modest requirement that he attend a trial. Indeed,

since the statute directs the Secretary to pay each em-

ployee his share of the recovery, it seems ludicrous to

allow any recovery for an employee whose whereabouts

are unknown, é.g., the ten “claimants” with whom the

compliance officer had no contact and who made no

claim.

At the minimum, the Secretary could be required to

make some sort of substantive showing that each particu-

lar claimant actually worked overtime. This might be

done by employee declarations instead of court tes-

timony. It might even be done by unsworn question-

naires or other such data. But it should not be done by

the vague “proof” increasingly seen in the reported

cases.

+ $4.

CONCLUSION

For the reasons stated above, petitioner prays the Writ

of Certiorari will be granted.

DATED: September 23, 1988

Respectfully submitted,

GERALD GOLDFARB

Counsel for Petitioner.

APPENDIX A

aiiiemaialliiiidiia es ‘

aK Te

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

NO 87-5515

Ann McLaughlin, Secretary of Labor,

Plaintiff-Appellee,

v.

Ho Fat Seto, dba: Ho Fat of California,

Defendant-Appellant.

Appeal from the United States District Court

for the Central District of California

Terry J. Hatter, Jr., District Judge, Presiding

D.C. No. CV-83-7330-TJH

OPINION

FILED June 28, 1988 -

Before: Thomas Tang, Betty B. Fletcher and

Harry Pregerson, Circuit Judges.

TANG, Circuit Judge:

Ho Fat Seto (Seto) appeals the district court’s award

of back wages and liquidated damages under the Fair

Labor Standards Act (FLSA), 29 U.S. C. §§ 201-219, to

twenty-three non-testifying employees. Seto argues

that the district court erred by determining a class-wide

violation of the Act because the testifying employees

were not “fairly representational” of the remaining

employees. He contends that the testimony was incon-

“Ann McLaughin is substituted for plaintiff William E. Brock, III,

pursuant to Fed.R.App.P. 43(c)(1)

~~ es

sistent and conflicted with the testimony of four rebut-

tal witnesses. We affirm.

Seto owns and operates a garment factory in Los

Angeles. He pays piece-rate wages to employees who

sew or press garments. On weekdays, workers are

regulated by a bell that rings to mark the beginning and

end of the workday and work breaks.

This action was brought under sections 16(c) and 17

of the FLSA. The Secretary sought to enjoin Seto from

violating the FLSA’s minimum wage, overtime and

recordkeeping provisions, from shipping in interstate

commerce goods produced by individuals employed in

violation of the FLSA, and from withholding back

wages due to twenty-eight named employees. The

Secretary also sought liquidated damages in an amount

equal to the back wage award, and requested costs.

Seto admitted FLSA coverage, but denied that any

violation existed.

During her case-in-chief the Secretary presented the

testimony of five named employees. Based upon the

Secretary’s representation that the testimony of the

twenty-three remaining employees would be largely

similar, and that all employees worked the same general

hours and were paid on a piece-rate basis, the district

court permitted only those five to testify on behalf of

the Secretary. All of the Secretary’s employee wit-

nesses testified that they began working around 7:00

a.m. but were not permitted to punch the factory time

clock until the morning bell rang at 7:30 a.m. They all

testified that they worked nearly ever Saturday from

7:30 a.m. to 2:15 p.m., and that they did not punch a

timecard for their Saturday work. Three of the employ-

ees stated that they worked past the quitting bell in the

afternoon but that they punched out, or somebody else

Y ? a

punched out for them, as having ceased work when the

quitting bell rang at 4:30 p.m. The Secretary’s wit-

nesses stated that the hours reflected on their paycheck

stubs always underrepresented the hours they worked

and that they were not paid for the hours they worked

in excess of forty hours per week. Four testified that

Seto misrepresented the hours actually worked in a

given week to artificially comply with the minimum

wage laws.

The Secretary’s Compliance Officer testified that she

calculated wages due by interviewing 16 employees.

She stated that she figured back wages due to some

employees based on interviews with co-workers, on

comparisons of payroll records, check stubs, and time

cards., and on Seto’s representations. She adjusted the

calculations by figuring time off when the factory was

closed, when work was slow, or employees were ill.

Seto presented no case-in-chief, but offered four

rebuttal witnesses. Three of the rebuttal witnesses were

current piecework Seto employees; the fourth was

Seto’s job supervisor. The three current employees

testified that they never worked before or after the

Starting or quitting bells or on Saturdays. On

cross-examination, one of Seto’s rebuttal witnesses,

when confronted with a questionnaire signed with her

name and stating she had worked thirty-five Saturdays,

denied having signed the statement. Seto’s job super-

visor, Lydia Gutierrez, testified that the factory was

open “very rarely” on Saturdays, and if employees did

work on Saturdays, they punched a_ timecard.

Ms. Gutierrez testified that when employees worked

Overtime they were paid overtime; she stated that if

employees claimed they were not making the minimum

wage, she would give them the minimum.

The district court found minimum wage, overtime,

and recordkeeping violations. It ordered back wages in

the amount requested by the Secretary, plus

-A 4-

post-judgment interest, and liquidated damages. The

court also enjoined Seto from future wage and

recordkeeping violations and from shipping in interstate

commerce goods manufactured under practices violat-

ing the FLSA, and ordered costs and attorney’s fees in

favor of the Secretary.

II.

We review the district court’s findings of fact for

clear error. Brock v. Seto, 790 F.2d 1447 (9th Cir.

1986). The district court’s application of the burden of

proof in a claim for unpaid overtime under the FLSA is

a question of law, reviewed de novo. Anderson v. Mt.

Clemens Pottery Co., 328 U.S. 680, 687 (1946); Brock

v. Seto, 790 F.2d at 1447.

ITI.

Seto contends that the district court erred in award-

ing back wages to the non-testifying employees because

the five witnesses presented by the Secretary failed to

establish a pattern of FLSA violations. We disagree.

The district court found that Seto’s payroll records

were false and inaccurate. Seto does not dispute that

finding in this appeal. Where an employer failed to

maintain accurate payroll records an employee carries

his burden under the FLSA if he shows he performed

work for which he was improperly compensated and

produces some evidence to show the amount and extent

of that work “as a matter of just and reasonable in-

ference.” Mt. Clemens Pottery, 328 U.S. at 687; Brock

v. Seto, 790 F.2d at 1448.

We hold that the Mt. Clemens Pottery standard

allows district courts to award back wages under the

FLSA to non-testifying employees based upon the fairly

«& 3.

representative testimony of other employees. See

Donovan v. Bel-Loc Diner, Inc., 780 F.2d 1113, 1116

(4th Cir. 1985)(granting back wages under the FLSA to

non-testifying employees based upon the representative

testimony of a percentage of the employer’s

employees). The burden is not on the employees to

prove the precise extent of uncompensated work. Mt.

Clemens Pottery, 328 U.S. at 687. The testimony of the

Secretary’s five employee witnesses, while inconsistent

in terms of exact days and hours of overtime worked,

established “as a matter of just and reasonable in-

ference,” id., that all of the employees regularly worked

over eight hours on weekdays and over six hours on

many Saturdays. All five of the Secretary’s witnesses

testified that they worked before the 7:30 a.m. bell on

weekdays and that they worked Saturdays. Three

witnesses stated that they worked beyond the 4:30 p.m.

bell weekdays. The testimony directly supports the

district court’s findings that all Seto’s employees

regularly worked over forty hours per week. The

twenty-three non-testifying employees established a

prima facie case that they had worked unreported hours.

See Brock v. Seto, 790 F.2d at 1449; Wirtz v. Dix Box

Co., 322 F.2d 499, 501 (9th Cir. 1963).

Once the employees establish a prima facie case, the

burden shifts to the employer to come forward with

evidence of the precise amount of work performed or

evidence to negate the reasonableness of the inference

to be drawn from the employees’ evidence. Mt.

Clemens Pottery, 328 U.S. at 687-88. Seto presented

four rebuttal witnesses, each of whom testified that

working hours were from 7:30 a.m. to 4:30 p.m.,

Monday through Friday. All of the rebuttal witnesses

were current Seto employees. Seto argues that their

testimony negated the inference that all employees were

Similarly situated. We disagree. The district court

determined that the four witnesses were not credible.

We accord great deference to the trial court’s opportu-

-A 6-

nity to assess the credibility of witnesses. Fed. R. Civ.

P. 52(a); Anderson v. Bessemer City, 470 U.S. 564, 574

(1985). The district court’s credibility determination is

not clearly erroneous. The testimony of Seto’s four

rebuttal witnesses fails to negate the reasonable infer-

ences drawn from the employees’ evidence.

Where an employer fails to meet its burden, the

district court “may then award damages to the

employee, even though the result may be only ap-

proximate.” Mt. Clemens Pottery, 328 U.S. at 688.

Under that standard, the district court’s damages

awards were proper. The court considered the inconsis-

tencies in the testimony of the Secretary’s witnesses

when it formulated the awards. The damages are based

on reasonable inferences drawn from the employees’

testimony. See Brock v. Seto, 790 F.2d at 1449

(remanding the Secretary’s claim for back wages to

permit the district court to approximate an award based

on reasonable inferences from employees’ testimony).

CONCLUSION

The district court properly concluded that the five

witnesses presented by the Secretary fairly represented

the entire class of employees. Seto failed to carry his

burden of establishing the precise amount of work

performed by the employees or negating the reasonable

inferences drawn from the employees’ evidence Mt.

Clemens Pottery, 328 U.S. 687-88. The district court’s

damages award was properly based upon reasonable

inferences from the employees’ testimony. Brock v.

Seto, 790 F.2d at 1448-49.

AFFIRMED

A Tee

APPENDIX B

¥

he . ; . vf i

BPR Platte gee ep he Be gate 8

-B l1-

John C. Nangle

Associate Regional Solicitor

Herbert Jay Klein, Attorney

Office of the Solicitor

United States Department of Labor

Room 3247 Federal Building

300 North Los Angeles Street

Los Angeles, California 90012

Telephone: (213) 688-4981

Attomeys for Plaintiff

LODGED

JUNE 1, 1984

Clerk U.S. District Court

Central District of California

UNITED STATES DISTRICT COURT

FOR THE CENTRAL DISTRICT

OF CALIFORNIA

RAYMOND J. DONOVAN,

SECRETARY OF LABOR, UNITED STATES

DEPARTMENT OF LABOR,

Plaintiff,

v.

HO FAT SETO, Individually and Doing Business as

HO FAT OF CALIFORNIA

Defendant.

CIVIL ACTION FILE

NO. 83-7330-TJH (JRx)

FIRST AMENDED COMPLAINT TO

ENJOIN FAIR LABOR STANDARDS ACT q

VIOLATIONS and RECOVER AMOUNTS DUE

1) Plaintiff, Secretary of Labor, United States

Department of Labor, brings this action to enjoin and

restrain defendant from violating the provisions of

Sections 15 (a)(1), 15 (a)(2) and 15(a)(5) of the Fair

—

-B 2-

Labor Standards Act, as amended (29 U.S.C. 201, et

seq.), hereinafter called the Act, pursuant to Section 17

of the Act, and to recover amounts owing under the Act

to present and former employees together with an

additional equal amount as liquidated damages, pur-

suant to Section 16(c) of the Act.

2) Jurisdiction of this action is conferred upon this

Court by Sections 16(c) and 17 of the Act.

3)(a) Defendant Ho Fat Seto resides within the

jurisdiction of this Court.

(a)(i) Defendant Ho Fa Seto is and at all times

material hereto has been doing business as Hot Fat of

California with a place of business at 1228 So. S. San

Pedro Street, Los Angeles, California 90015, and he is

and at all times material hereto has been engaged in

garment manufacturing.

4) The defendant is and at all times material hereto

have (sic) been employing employees in and about the

aforesaid place of business in producing, handling, or

working on goods a substantial portion of which has

been and is being shipped, delivered, or sold to places

outside the State of California or has been and is being

delivered or sold with knowledge or reason to believe

that shipment, delivery, or sale to places outside of said

State is intended. Said employees, by reason of their \

employment as aforesaid, are and were engaged in

commerce or in the production of goods for commerce

within the meaning of the Act.

5) The business activities of the defendant con-

stitute, and at all times material hereto have constituted,

related activities performed through unified operations

or common control for a common business purpose: and

they are, and at all times material hereto have been, an

“enterprise” as defined in section 3(r) of the Act.

6) Said enterprise has, and at all times material

hereto has had, employees engaged in commerce or in

————

EE ee ee

-B 3-

the production of goods for commerce or in handling,

selling or otherwise working on goods or materials

which have been moved in or produced for commerce

and has, and at all times material hereto has had, an

annual gross volume of sales made or business done

(exclusive of any excise taxes at the retail level which

were separately stated) of not less than $250,000; and

said enterprise constitutes, and at all times material

hereto has constituted, an “enterprise engaged in com-

merce or in the production of goods for commerce” as

defined in Section 3(s) of the Act.

7) The defendant has violated and is violating the

provisions of Sections 6 and 15(a)(2) of the Act by

employing employees engaged in commerce or in the

production of goods for commerce, within the meaning

of the Act, or employed in an enterprise engaged in

commerce or in the production of goods for commerce,

within the meaning of Section 3(s) of the Act as

aforesaid, at wage rates less than $3.10 and (sic) hour

since January 1, 1980, and less than $3.35 an hour since

January 1, 1981.

8) The defendant has violated and is violating the

provisions of Sections 7 and 15(a)(2) of the Act by

employing employees engaged in commerce or in the

production of goods for commerce, within the meaning

of the Act, or employed in an enterprise engaged in

commerce or in the production of goods for commerce,

within the meaning of Section 3(s) of the Act as

aforesaid, for workweeks longer than 40 hours without

compensating said employees for their employment in

excess of 40 hours in such workweeks at rates not less

than one and one-half times the regular rates at which

they were employed.

9) The defendant has violated and is violating the

provisions of Section 15(a)(1) of the Act by transport-

ing, offering for transportation, shipping, delivering, or

selling in commerce, or by shipping, delivering or

-B 4-

selling with knowledge that shipment or delivery or

sale in commerce was intended, goods in the production

of which employees were employed in violation of

Sections 6 and 7 of the Act.

10) The defendant has violated and is violating the

provisions of Sections 11(c) and 15(a)(5) of the Act by

failing to make, keep, and preserve records of employ-

ees and of the wages, hours, and other conditions and

practices of employment maintained, as prescribed by

the regulations duly promulgated pursuant to the

authority granted in the Act and published in the Fed-

eral Register and known as 29 C.F.R. 516.

11)(a) During the period since November 1, 1980,

defendant has violated and is violating the provisions of

the Act.

(b) A judgment which permanently enjoins and

restrains such violations is specifically authorized by

Section 17 of the Act.

(c) A Judgment which grants recovery of unpaid

minimum wage and overtime compensation, plus an

additional equal amount as liquidated damages is

specifically authorized by Section 16(c) of the Act.

WHEREFORE, cause having been shown, plaintiff

prays for judgment, pursuant to Section 17 of the Act,

permanently enjoining and restraining defendant, his

officers, agents, servants, employees and those persons

in active concert or participation with them, from

violating the provisions of Sections 15(a)(1), 15(a)(2)

and 15(a)(5) of the Act and further prays for judgment,

pursuant to Section 16(c) of the Act, against the defen-

dants and in favor for plaintiff, for amounts of such

backwages (sic) which are found by the Court to be due

to (sic) the present and former employees named on the

Attached Exhibit A (and for any person added there to

at a subsequent date) and for an additional equal

amount as liquidated damages.

ys

Plaintiff further prays that he recover his costs of

this action.

FRANCIS X. LILLY

Solicitor of Labor

DANIEL W. TEEHAN

Regional Solicitor

JOHN C. NANGLE

Associate Regional Solicitor

HERBERT JAY KLEIN

Attorney

Attorneys for Plaintiff

U.S. DEPARTMENT OF

LABOR

-B 6-

Exhibit A

Name

Selfia Arranaga Flora Naedy Navarro

Catalina Calderon Pascual Negreros

C. Cauich Mary Ngoon

Dulce Chavez Concepcion Perez

Bertha Estrada Griselda Pineda

Rosalina Fernandez Jose Garcia

Jose Figueroa Maria C. Rivera

Irene Flores Clemente Robles

Angelica Lopez Maria Rodriguez

Guadalupe Madrigal Jose Rojas

Sergio Margalon Arturo Ruiz

Demy Montono Wendy Tsao

Jose Diaz Moreno Arnalia Vasquez

Luis Moreno Luis Ruiz

Page 1 of 1

oe AT ata

APPENDIX C

_

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

WILLIAM E. BROCK, III,

SECRETARY OF LABOR, UNITED STATES

DEPARTMENT OF LABOR, (Successor to

Donovan, Resigned)

Plaintiff

Vv.

HO FAT SETO, Individually and Doing

Business as HO FAT OF CALIFORNIA,

Defendant.

CV 83-7330-TJH (JRx)

AMENDED JUDGMENT

This action came on for trial before the Court,

Honorable Terry J. Hatter, Jr., District Judge, presiding,

and the issues having been duly tried and a decision

having been duly rendered.

IT IS ORDERED AND ADJUDGED

that the defendant, his officers, agents, servants,

employees and those persons in active concert or

participation with them, who receive actual notice of

this order by personal service or otherwise be, and they

hereby are, permanently enjoined and restrained from

violating the provisions of Sections 15(a)(1), 15(a)(2)

and 15(a)(5) of the Fair Labor Standards Act of 1938,

as amended (29 U.S.C.A. 201, et seq.), hereinafter

called the Act, in any of the following manners:

1) The defendant shall not contrary to Section 6 of

the Act, pay any employee who in any workweek is

engaged in commerce or in the production of goods for

commerce, within the meaning of the Act, or employed

Pe =

in an enterprise engaged in commerce or in the produc-

tion of goods for commerce, within the meaning of

Section 3(s) of the Act, wages at a rate less than $3.35

per hour (or at a rate less than such other applicable

minimum rate as may hereafter be established by

amendment to the Act).

2) The defendant shall not, contrary to Section 7 of

the Act, employ any employee, who in any workweek is

engaged in commerce or in the production of goods for

commerce within the meaning of the Act, or employed

in an enterprise engaged in commerce or in the produc-

tion of goods for commerce, within the meaning of

Section 3(s) of the Act, for any workweek longer than

forty (40) hours unless such employee receives com-

pensation for his or her employment in excess of forty

(40) hours in such workweek at a rate not less than one

and one-half times the regular rate at which he or she is

employed.

3) The defendant shall not contrary to Section

15(a)(1) of the Act, transport, offer for transportation,

ship, deliver, or sell in commerce or ship, deliver, or

sell with knowledge or reason to believe that shipment,

delivery, or sale in commerce in intended, goods in the

production of which employees were employed in

violation of Sections 6 and/or 7 of the Act.

4) The defendant shall not fail to make, keep and

preserve records of employees and of the wages, hours

and other conditions and practices of employment

maintained, as prescribed by the regulations issued, and

from time to time amended, pursuant to Section 11(c)

of the Act and found in 29 Code Federal Regulations

516; and it was further

ORDERED AND ADJUDGED that the plaintiff

shall have and recover from the defendant $36,863.75

in unpaid minimum wage and overtime compensation

and $36,863.75 in liquidated damages hereby found to

be due under the Act to 29 employees for the period

PSF NS PR tt) Fe SEN LAY S

a er nT oe ee

~ “ veew Se coe We sbails:

4.

from November 1, 1980, to June 25, 1984, as a result of

their employment by said defendant, as set forth in the

exhibit which is attached hereto, marked “Exhibit A,”

and made a part hereof, showing the name of each of

the employees and listing opposite thereto the gross

amount of back wages and liquidated damages due to

the employee; and it is further

ORDERED that, pursuant to the provisions of the

preceding paragraph hereof, the defendant shall not fail

to deliver to the plaintiff’s authorized representatives at

U.S. Department of Labor (ESA), Wage and Hour

Division, P.O. Box 3646, Dallas, Texas 75285 (or such

other place as may hereafter be designated in writing by

the plaintiff), the following:

a. The employer identification number(s) of the

defendant and a schedule in duplicate showing

the name, last known address, and social

security number for each of the persons named

in Exhibit A attached hereto.

b. A certified or cashier’s check or money order

(with the firm name and civil action file

number (from the caption on page one hereof)

written on each) (sic) payable to the order of

the “Wage & Hour Division U.S. Department

of Labor,” in an amount not less than

$73,727.50 (plus post-Judgment interest, on

the balance outstanding from time to time, at

the rate prescribed by 28 U.S.C. 1961), from

- the date of this Judgment until paid in full).

The plaintiff shall distribute the remittance(s), or the

proceeds thereof,-to the persons named in Exhibit A

attached hereto, or their estates if that be necessary, and

any money not so paid, because of inability to locate

the proper persons or because of their refusal to accept

it, shall be deposited by the plaintiff in a special deposit

account for payment to the proper persons and upon

such inability to so pay within three years shall be

-C 4-

deposited into the United States Treasury as mis-

cellaneous receipts, pursuant to 29 U.S.C. 216(c); and it

is further

ORDERED that the filing, pursuit, and/or settlement

of this action shall not act as or be asserted as a bar to

any action under Section 16 of the Act as to any em-

ployee not named on the attached Exhibit A or any

employee named on said Exhibit for any period of

employment not covered therein; and it is further

ORDERED that plaintiff shall recover of defendant

$1,425.00 in expenses (including attorney’s fees and

costs) incurred by plaintiff in proving the truth of

matters which defendant failed to admit in response to

requests for admission; and it is further

ORDERED that plaintiff shall recover of defendant

the costs of distribution of the back wages and liqui-

dated damages to the employees entitled thereto on

plaintiff’s application subsequent to said distribution.

Dated: , 19

TERRY J. HATTER, JR.

UNITED STATES

DISTRICT JUDGE

Re: Brock v. Ho Fat Seto, etc.

USDC, Central Dist. of Calif., File No. 83-7330

TJH (JRx)

APPENDIX D

BEM ita

Satanic Salted eR

ats

6 RA iat

Pie ty Pee

a 1.

John C. Nangle

Associate Regional Solicitor

LEROY SMITH, Attomey

Office of the Solicitor

United States Department of Labor

Room 3247, Federal Building

300 North Los Angeles Street

Los Angeles, California 90012

Telephone: (213) 894-4983

Attomeys for Plaintiff

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

WILLIAM E. BROCK, III,

SECRETARY OF LABOR, UNITED

STATES DEPARTMENT OF LABOR,

Plaintiff,

Vs

HO FAT SETO, Individualy (sic) and Doing

Business as HO FAT OF CALIFORNIA

Defendant

CIVIL ACTION FILE NO.

83-7330-TJH (JrX)

PLAINTIFF’S SECOND AMENDED FINDINGS

OF FACT AND CONCLUSIONS OF LAW

This matter comes before the Court pursuant to a

complaint filed by the Secretary of Labor, United States

Department of Labor, in the above named and num-

bered cause. Having considered the pleadings, the

pre-trial order, the evidentiary record and the argument

of counsel, the Court, pursuant to Rule 52 of the Fed-

eral Rules of Civil Procedure, makes and issues its

findings of fact and conclusions of law.

-D 2-

FINDINGS OF FACT

1) This is an action filed on November 10,1 983,

under Sections 16(c) and 17 of the Fair Labor Standards

Act of 1938 as amended, 29 U.S.C. § 201, ef seq.,

hereinafter called the Act. Plaintiff seeks to enjoin and

restrain defendant from violating the minimum wage

overtime, shipping, and recordkeeping provisions of the

Act and to recover amounts owing to present and

former employees of defendant, together with an equal

additional amount as liquidated damages.

2) Plaintiff is the duly authorized Secretary of

Labor, United States Department of Labor. Defendant

is Ho Fat Seto, individually and doing business as Ho

Fat of California.

3) Plaintiff’s complaint alleged that defendant

violated the Act at all times since November 1, 1980.

4) Defendant did not assert the affirmative defenses

of the Statute of Limitations, or any other affirmative

defense in his answer to the complaint.

5) The pre-trial order was filed herein on June 25,

1984, in which it was stipulated that defendant was

subject to the Act at all times material hereto.

6) Therefore, the period covered by plaintiff’s

complaint is from November 1, 1980, as alleged in the

complaint, till June 25, 1984, when the pre-trial order

controlling this action was filed.

7) Plaintiff presented the testimony of five named

employees during his case-in-chief. The testimony of

these five employees was generally consistent and

established a pattern of employment conditions applica-

ble to all employees of defendant during the relevant

period. The five testifying employees were repre-

sentative of all employees employed by defendant

during the relevant period.

-D 3-

Plaintiff could have called many more employee

witnesses who would have testified substantially the

same as the five employees who did testify for plaintiff;

however, further testimony would have been cumulative

because it was clear all employees generally worked the

same hours and were paid strictly on a piece-rate basis.

8) The testimony of the five employees who testi-

fied on plaintiff's case-in-chief was credible.

9) Defendant did not call any witnesses in support

of his case-in-chief.

10) Plaintiff produced four rebuttal witnesses, who

generally contradicted plaintiff's witnesses. All of

defendant’s rebuttal witnesses were current employees

of defendant. The testimony of defendant’s rebuttal

witnesses was not credible.

11) At all times material hereto, defendant has

maintained a place of business at 1228 So. San Pedro

Street, Los Angeles, California, within the jurisdiction

of this Court, where defendant has carried on business

aS a garment manufacturer under the name of Ho Fat of

California.

12) At all times material hereto, defendant em-

ployed employees in the production of goods for com-

merce, a substantial portion of which defendant shipped

to places outside the state of California.

13) Defendant Ho Fat Seto is and at all times mate-

rial hereto was responsible for the employment prac-

tices of Ho Fat of California.

14) At all times material hereto, defendant’s busi-

ness operations constituted an enterprise which has

employees engaged in commerce or in the production of

goods for commerce and which has had an annual dollar

valume of not less than $250,000, exclusive of excise

taxes.

-_D 4-

15) Defendant employed each of the persons named

in the Amended Complaint in defendant's -garment

business after November 1, 1980.

16) Defendant paid each person employed in his

garment business at a piece-rate basis, other than

managerial employees.

17) Defendant’s payroll records indicate that since

November 1, 1980, none of the employees named in the

Amended Complaint worked more than forty hours per

week for defendant, except during the three week

period immediately preceding November 6, 1983.

18) Defendant’s payroll records indicate that since

November 1, 1980, defendant’s employees generally

worked Monday through Friday from 7:45 a.m. to 4:30

p.m. daily.

19) Defendant's payroll records indicate that since

November 1, 1980, no employee worked more than

forty hours per week or received overtime compensa-

tion, except during the three week period immediately

preceding November 6, 1983.

20) Defendant’s payroll records do not indicate that

defendant’s employees worked on Saturdays.

21) Defendant’s payroll records are false and

inaccurate.

22) It was defendant’s regular business practice to

remove employee time cards from the workplace on

Friday and not to replace them until Monday.

23) Defendant’s employees regularly worked on

Saturday but were prevented by defendant from record-

ing their hours worked on Saturday by punching a time

card or otherwise.

24) Defendant’s employees regularly worked more

than forty hours per week but were prevented by defen-

dant from recording the total number of hours worked

by punching a time card or otherwise.

-D 5-

25) Defendant’s payroll records falsely record the

relevant data concerning the number of hours worked

by defendant’s employees and the regular hourly rate at

which they were paid.

26) The employees’ regular hourly rates for pur-

poses of computing overtime compensation are calcu-

lated by dividing the total earnings in any given week

by the total number of hours worked in that workweek.

27) Plaintiff's witnesses established that defendant's

employees regularly worked over 40 hours per week.

28) The employees were generally allowed to punch

in their time cards at 7:30 A.M. and punch out their

time cards at 4:30 P.M., each day, Monday through

Friday.

29) However, defendant’s employees actually

worked before 7:30 A.M. and after 4:30 P.M., Monday

through Friday, on a regular basis.

30) Employees received a one-half hour lunch break

and two fifteen minute rest breaks each day, Monday

through Friday. Therefore, even according to defen-

dant’s contention that employees worked from 7:30

A.M. to 4:30 P.M. each weekday, with one-half hour

for lunch and two fifteen minute rest breaks, employees

performed 8.5 hours of compensable work per day, each

day Monday through Friday.

31) Employees regularly worked on Saturdays for

four to six hours per Saturday.

32) The defendant failed to pay all employees

named in the Complaint not less than one and one-half

their regular rates for all hours worked over forty per

workweek.

33) Defendant’s practice of paying piece-rate for all

work performed resulted in employees being paid less

than $3.35 per hour for all hours worked.

34) The voiume of defendant’s business fluctuated

throughout the year during the period covered by the

fre

complaint, causing defendant’s employees to work

more hours during some months than others. Defen-

dant’s slowest business periods were the three months

beginning in December, each year.

35) Defendant’s employees were required to stay at

their work stations during slow times to wait for

pieceworker to be assigned.

36) Even during slow weeks, defendant’s employees

worked at least forty hours per week.

37) Taking into account business fluctuations, I find

defendant’s employees generally worked 40 hours per

week for three months of the year; 42 1/2 hours per

week for 3 months of the year; 46 hours per week for 3

months of the year; and 50 hours per week for 3 months

of the year.

38) Having considered the pleadings, the docu-

mentary evidence, and the testimony adduced at trial, I

find that the computations of the amounts due set out in

the Appendix attached hereto are reasonable and cor-

rect. Column A of the Appendix lists the names of the

employees due back wages; column B of the Appendix

lists the periods for which back wages are due each

employee; and column C lists the total gross amount of

minimum wages and overtime compensation due the

employees.

CONCLUSIONS OF LAW

1) The Court has jurisdiction over the parties and

the subject matter of this cause, 29 U.S.C. § 216(c) and

217 and 28 U.S.C. 1345.

2) Defendant is, and at all times material hereto

was, an employer within the meaning of the Act and as

an employer employed persons who were engaged in

commerce or in the production of goods for commerce

within the meaning of the Act.

>.

3) Defendant’s business activities are, and at all

times material hereto were, an enterprise engaged in

commerce or in the production of goods for commerce,

within the meaning of Section 3(s) of the Act. (29

U.S.C. 203(s)).

4) Defendant violated Sections 11(c) and 15(a)(5) of

the Act by making and maintaining false time cards that

inaccurately recorded the number of hours worked by

his employees.

5) Defendant violated Sections 11(c) and 15(a)(5) of

the Act by falsifying payroll records so as to mis-

represent the employees’ regular hourly rates of pay,

total hours worked each workweek, total weekly

straighttime earnings and total overtime excess compen-

sation. See 20 C.F.R. §516.

6) Defendant violated the provisions of Sections 6

and 15(a)(2) of the Act by failing to pay employees at

least $3.35 per hour for all hours worked. Defendant is

liable for unpaid minimum wages due each employee

not paid at least $3.35 per hour for all hours worked.

7) Defendant violated the provisions of Sections 7

and 15(a)(2) of the Act by failing to pay employees

compensation at not less than one and one-half times

their regular hourly rates for all hours worked in excess

of forty per week. Defendant is liable for overtime

compensation due each employee not paid at least one

and one-half times his or her regular hourly rate.

8) Where an employer fails to maintain complete

and accurate payroll records, plaintiff need only show

that the employees performed work for which they were

not paid the compensation required under the Act and

the extent of such work “as a matter of just and reason-

able inference”. Mt. Clemens Pottery Co., 328 U.S.

680, 687 (1946). This burden may be met by employee

testimony. Wirtz v. Dix Box, 322 F.2d 499 (9th Cir.

1963); Marshall v. Van Matre, 634 F.2d 1115, 1119

(8th Cir. 1980). Plaintiff has met his burden in this

-D 8-

case by representative employee testimony establishing

that employees worked more than forty hours. per week

but were only paid at their regular piece-rate basis for

all work performed. This pay practice violated the Act

because the employees were not paid a premium rate

for overtime hours worked and in some instances were

not paid minimum wage for all hours worked. The

amount of back wages due has been established as a

matter of just and reasonable inference to equal the

amounts set forth in the Appendix attached hereto.

9) Testimony or evidence of representative employ-

ees can establish prima facie proof of a pattern or

practice of violations of the Act. Donovan v. New

Floridian Hotel, Inc., 676 F.2d 468, 472 (11th Cir.

1982). Once a pattern or practice is established the

burden shifts to the employer to rebut the existence of

the violations or prove that individual employees are

excepted from the pattern of practice. Brennan v.

General Motors Acceptance Corp., 482 F.2d 825, 829

(Sth Cir. 1973). Representative employee testimony

established a pattern of violations in that all of defen-

dant’s employees regularly worked more than forty

hours per week but were not compensated at not less

than one and one-half times their regular hourly rates

for all hours worked in excess of forty per week.

Defendant has presented no credible evidence to the

contrary.

10) The time spent by employee waiting for work to

be assigned is compensable under the Act.

11) The two daily fifteen (sic) rest breaks taken by

defendant’s employees was (sic) compensable work

time under the Act.

12) Defendant has not raised the affirmative defense

of the statute of limitations and has thereby waived his

right to claim that any unpaid back wages proved by the

plaintiff are barred by any statute of limitation which

-D 9-

might otherwise be applicable. Martin v. United States,

(C.D. Cal. 1977) 436 F. Supp. 535.

13) Section 16(c) of the Act provides that an em-

ployer who has violated the Act is liable not only for

the amount of unpaid back wages found due, but is also

liable for an additional equal amount as liquidated

damages, — unless the employer pleads and proves that

the violations were committed in good faith and that the

employer had good reason to believe that his actions

were not a violation of the Act.

14) Defendant has not raised this defense and has

thereby waived any defense he might have otherwise

had to the award of liquidated damages. Moreover,

defendant’s conduct demonstrates that he would not in

any event qualify for the defense in that defendant

falsified payroll records and violated the minimum

wage and overtime provisions of the Act after being put

on notice by the United States Department of Labor that

he was subject to the provisions of the Act.

15) Defendant is liable for liquidated damages equal

in amount, and in addition to the back wages found due

to the employees named in the Amended Complaint,

pursuant to Section 16(c) of the Act. Under the provi-

sions of 29 U.S.C. § 260, the Court in the exercise of

its sound discretion may refuse to award the full

amount of the liquidated damages, where the employer

pleads and proves that he acted in good faith and with

reasonable grounds for believing that he as not violat-

ing the Act. Kelly v. Holland, 298 F.Supp. 1301 1309

(S.D. Cal. 1969). Defendant has not pled or proved this

defense; therefore, liquidated damages equal to equal

[sic] and in addition to the total gross unpaid back

wages listed in the Appendix attached hereto must be

awarded.

16) Plaintiff is entitled to an injunction restraining

defendant from further violations of the minimum wage

provisions of Sections 6 and 15(a)(2); the overtime

-D 10-

compensation provisions of Sections 7 and 15(a)(2) of

the Act; the recordkeeping provisions of Sections 11(c)

and 15(a)(5) of the Act; and the shipping provisions of

Section 15(a)(1) of the Act. Marshall v. Chala

Enterprises, Inc., 645 F.2d 799, 803 (9th Cir. 1981).

17) Plaintiff is entitled to have included in the back

wage payment order a provision requiring payment to

plaintiff for distribution of the checks, or the proceeds

thereof, to the employees concerned, or to their estates

if that be necessary, and requiring that any money not

so paid, because of inability to locate the proper person

or because of their refusal to accept it, shall be

deposited by the plaintiff in a special deposit account

for payment to the proper persons and upon such

inability to so pay within three years shall be deposited

into the Treasury of the United States as miscellaneous

receipts, pursuant to 29 U.S.C. 216(c).

18) Claims for unpaid compensation by employees

not named in the amended complaint, or claims by

named employees for back wages arising after June 25

1984, are not barred by this action.

19) Plaintiff is entitled to his costs of suit and a

reasonable attorney’s fee.

Dated: , 1986

UNITED STATES DISTRICT

JUDGE

Presented by:

/s/ Leroy Smith

LEROY SMITH

Attorney for Plaintiff

U.S. Department of Labor

A) NAME

Arranga, Selfia

Calderon, Catalina

Cavich, C.

Chavez, Dulce

Estrada, Bertha

Fernandez, Rosalina

Figuieroa, Jose

Flores, Irene

Garcia, Juan

Lopez, Angelica

Madrigal, Guadelupe

Margalon, Sergio

Montano, Delmy

Moreno, Jose Diaz

Moreno, Luis

Navarro, Flora

Negregros, Pascual

Ngoon, Mary

Perez, Concepcion

Pineda, Griselda

Rivera, Maria C.

Robles, Ciemente

Rodriquez, Maria E.

Rojas, Jose

Ruiz, Arturo

Ruiz, Luis

Tsao, Wendy

Vasquez, Amalia

-D 11-

APPENDIX

(B) PERIOD

COVERED

(C) GROSS

AMOUNTS OF

BACK WAGES DUE

11/1/80 - 6/25/84

7/2/83 - 4/25/84

11/1/80 - 12/15/82

3/9/83 - 6/25/84

12/8/82 - 10/12/83

2/23/83 - 6/25/84

7/20/83 - 11/30/83

10/12/83 - 11/30/83

8/1/83 - 8/31/83

5/6/81 - 12/30/81

11/1/80 - 6/25/84

1/5/83 - 5/11/83

3/11/81 - 6/25/84

3/4/81 - 12/30/81

6 months in 1981

4/1/81 - 7/20/83

9/15/81 - 10/3/82

3/4/81 - 1/11/84

1/82 - 11/83

12-24/80 - 6/25/84

4/8/81 - 5/26/83

11/1/80 - 3/16/83

11/2/83 - 6/6/84

6/9/82 - 11/3/83

6/22/82 - 2/8/84

8/2/83 - 8/24/83

3/30/83 - 11/9/83

3/9/80 - 5/11/83

TOTAL:

$ 2,747.00

737.00

912.50

1,792.50

465.75

1,292.50

960.75

aatte

115.75

553.75

1,617.00

232.75

4,993.00

403.00

132.50

4,975.00

1,254.50

1,479.25

a.363-19

1,485.50

2,390.00

895.50

878.00

181.00

821.50

1,277.75

Lgake te

333.75

$ 36,863.75

-D 12-

EXPLANATION OF COMPUTATIONS

For each employee named in the amended complaint,

Plaintiff transcribed the weeks worked and gross wages paid

from the defendant’s payroll records (Ex. la-d) onto the

wage transcription sheets attached hereto. For four employ-

ees who either did not appear in defendant’s payroll records

(or in the case of Perez) only appeared for one week,

Plaintiff based the computations on the admissions of

defendant (filed herein) regarding the periods worked for

these four employees. The four employees are Perez,

Garcia, Negregros, and Luis Ruiz.

Plaintiff then totalled the gross pay for each year (or part

thereof) for each employee. For example, Arranga was paid

$4,952.50 in the year 1981. To find the minimum wages

due for the employee in any period, the Plaintiff multiplied

$3.35 (minimum wage) by the assumed number of hours

worked per week (40, 42.5, 46 or 50 hours) to determine

minimum weekly wages due. Plaintiff then multiplied the

minimum weekly wage by the number of weeks worked by

the employee in the given year or part thereof, to determine

the minimum yearly wage due the employee. To the extent

the minimum yearly wage was higher than the wages

actually paid the employee, minimum wages are due For

example, for Arranga in 1981: she worked 37 weeks; 37

weeks at 40 hours per week paid at minimum wage equals

$5,701.70. Since Arranga was paid only $4,952.50 in 1981,

she is due $749.20 in minimum wages for 1981 if she

worked 40 hours per week. Naturally, she is due more if

42.5, 46 or 50 hours per week is used.

Plaintiff calculated overtime due by multiplying one-half

of the employees regular hourly wage (but never less than

one-half of $3.35) by the number of overtime hours worked

per week, then multiplied by the number of weeks worked

in that year or other period.

For purposes of computation, Plaintiff assumed that

employees worked weeks not shown on the payroll records

EEA iainenaemia ere

-D 13-

if three or less consecutive weeks were blank, followed by

weeks recorded. Plaintiff based this assumption on em-

ployee testimony that emplyees (sic) were sometimes paid

for two or three weeks work with one paycheck.

Plaintiff’s computations of amounts due are set forth in

the attached computations. The co-:putations are first in

order for each employee, followed by the transcription

sheets taken from defendant’s payroll records (where

employee work was recorded).

The gross amounts due set forth in Appendix A of

Plaintiff's proposed findings were based on the assumption

that employees worked 25% of the time at 40 hours per

week; 25% of the time at 42.5 hours per week; 25% of the

time at 46 hours per week; and 25% of the time at 50 hours

per week. The amounts were actually derived by totalling

the amounts due under all four alternative hour assumptions

(40, 42.5, 46 or 50) and dividing by four.

For convenience of the Court, following is a chart of the

computations contained in the wage transcription and

computation sheets under each hours worked assumption

(minus cents):

NAME 40 hrs. 42.5 hrs 46 hrs 50 hrs

Arranga $ 5.50 $ 1,327 $3,338 $6,318

Calderon 0 346 899 1,703

Cavich 0 552 1,224 1,877

Chavez 793 1,442 2,652 4,039

Estrada 0 279 625 959 .

Fernandez 0 485 1,639 3,046

Figueroa 220 634 1,190 1,799

Flores 72 172 313 474

Garcia 0 62 150 251

Lopez 0 259 717 1,239

Madrigal 0 857 1,900 Re dG |

Margalon 0 88 170 671

Montano 1,694 3,476 5,975 8,830

NAME

J. Moreno

L. Moreno

Navarro

Negregros

Ngoon

Perez

Pineda

Rivera

Robles

Rodriquez

Rojas

A. Ruiz

L. Ruiz

Tsao

Vasquez

-D 14-

40 hrs. 42.5 hrs

0 154

0 80

2,396 3,789

0 677

0 738

0 1,255

0 849

175 1,174

0 541

669 82

0 109

0 496

0 690

585 999

148 248

$6,757 $22,530

46 hrs 50 hrs

523 947

178 272

5,743 7,974

1,628 2,713

1,826 3,353

3,015 5,025

2,010 3,083

3,040 5,171

1,200 1,841

940 1,121

243 372

1,101 1,689

-1,658 2,763

1,580 2,243

389 550

$45,866 $74,034