Petition for Writ of Certiorari — Shirk v. McLaughlin

Supreme Court brief1988

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64° S0T%y

Iu the Supreme

of the United States} poe og sop,

JOSEPH F. SPANIOL, JR.

CLERK

OCTOBER TERM, 1987

FRANK B. and JOANN SHIRK,

Individually and Doing Business as

OREGON MEAT CUTTING SCHOOL,

Petitioner,

WILLIAM E. BROCK,

SECRETARY OF LABOR,

UNITED STATES DEPARTMENT OF LABOR,

Respondent.

ON WRIT OF CERTIORARI TO THE

NINTH CIRCUIT COURT OF APPEALS

PETITION FOR WRIT OF CERTIORARI

EDWARD N. FADELEY

FADELEY & FADELEY

Attorneys at Law

350 Forum Building

777 High Street

Eugene, Oregon 97401

(503) 342-5804

Counsel for Petitioner

STEVENS-NESS LAW PUSLISHING CC PORTLAND, OR. 97204

Questions Presented

Le May a Court

of Appeals in a claim for after hours

overtime not having a complete record

before at because the Appellant

government did not bring up to the

Court of Appeals as a part of the

record on appeal the exhibits’ and

video tape of the time it takes to

perform certain tasks after closing

the business involved, overrule a

trial judge in the District Court

on questions of intention, such as

whether the petitioners for this writ

performed or acted

a) in good faith

b) without willful violation

of the law?

Ri May a Circuit

Court of Appeals overrule a District

Court as a trier of fact where less

than the full record before the

District Court is brought up by the

appellant government agency?

Je May a Circuit

Court of Appeals overrule a District

Court trier of fact notwithstanding

the provisions of rule 52 (a) and

the holding of Icicle Seafoods Inc.

Vv. Worthington (475 US 709, 89 L

Ed 2d 739, 106 S. Ct. 1527 (1986) )

decided by this court that, on

questions of intention, rule 52 (a)

applies and the trier of fact shall

not be overruled unless there is not

substantial evidence to support the

fact found. (Where the government

appellant does not bring before the

Court of Appeals all relevant evidence

received at trial, can one say there

is no substantial evidence?).

‘\

4, May a Circuit

Court of Appeals ignore the application

of the rule and the application of

Icicle Seafoods, supra, to the

intention, that is to say ignore both

the record and the law as announced

by this court in deciding a case where

Icicle has been cited by a party as

its "main cause" in ite cease Gs

applicable?

~ May a Circuit

Court of Appeals nullify the Act of

Congress requiring that a good faith

defense be given effect and requiring

that willfulness by proved for a double

penalty to apply, including ignoring

the provisions of the acts of Congress,

without explaining, in its per curiam

opinion, why these provisions of

statute should be nullified in this

case. (Indeed it is very close I

effect to the Court of Appeals having

decided that the act of Congress was

unconstitutional and therefore would

not be applied.)

EC LAE LIS LIE, PEATE ERLE ARI ae ee

Table of Contents

Opinions Below 2

Jurisdiction 3

Questions Presented:

1. May a Court of Appeals

Overrule a trial judge in

the District Court on

questions of intention 3

2. May a Court of Appeals

overrule a District Court as

a trier of fact 4

3. May a Court of Appeals

overrule a District Court

trier of fact notwithstanding

the provisions of rule 52(a) 4

4. May a Court of Appeals

ignore the application of

the rule and the application

of Icicle Seafoods 5

5. May a Circuit Court of

Appeals nullify the Act of

Congress 6

Statement of Case 7

Reasons for Granting Writ 15

Conclusion 19

ee aa ee re Or mre

aS6

Table of Authorities

Cases:

Icicle Seafoods Inc. v. Worthington

475 U.S. 709, 89 L Ed 2d 739,

106 S Ct. 1527 (1986) 3,4,5,10

Statutes:

28 U.S. Code 1254 3

29 USC 255(a) 7

29 USC 260 7

APPENDIX

Opinion Below 9th Circuit

Court of Appeals A-1

Trial Court Opinion and Order A-14

Journal Entry of Trial

Court Judgment A-48

Mandate of 9th Circuit to

Trial Court A-51

Statutes:

29 USC 255(a) A-53

29 USC 260 A-54

IN THE SUPREME COURT OF THE UNITED STATES

October Term, 1987

No.

FRANK B. and JOANNE SHIRK, Individually

and Doing Business as OREGON

MEAT CUTTING SCHOOL,

Petitioners,

Vv.

WILLIAM E. BROCK, SECRETARY OF LABOR,

UNITED STATES DEPARTMENT OF LABOR,

Respondent.

PETITION FOR A WRIT OF CERTIORARI

TO THE CIRCUIT COURT OF APPEALS

TO THE NINTH CIRCUIT

To the Honorable William

H. Rehnquist, the Chief Justice and

Associate Justices of the Supreme Court

of the United States.

Frank B. and Joann Shirk,

Individually and Doing Business as

Oregon Meat Cutting School, the

petitioners herein, pray that a writ

of certiorari issue tc review the

judgment of the Ninth Circuit Court

of Appeals entered in the above-entitlead

case on the 8th day of December, 1987.

The petition for rehearing was denied

February 17, 1988.

Opinions Below

The Opinion of the Ninth

Circuit Court of Appeals is reported

at F2d (1988) and

is printed in Appendix A, page A-l

The judgment of the District Court

of the District of Oregon is printed

in Appendix A, page Ai4. The Journal

Entry of Judgment of the United States

District Court for the District of

Oregon is printed in Appendix A,

page A-4?.

Jurisdictior

rne udgment of the Ninth

Circuit Court of Appeals Appendix

A, page ) was entered on the 8th

day of December, 1987. A timely

petition for rehearing was denied

February 17, 1988 and mandate was

entered on February 24th, 1988 (Appendix

A, page A-13). The jurisdiction of the

Court is invoked uncer 28 US

Code 1254.

Questions Presented

l. May a Court of Appeals

in a claim for after hours overtime

not having a complete record before

it because the Appellant government

did not bring up to the Court of Appeals

as a part of the record on appeal the

exhibits and videc tape of the time

it takes to perform certain tasks after

closing the business involved, overrule

a trial judge in the District Court

on questions of intention, such as

whether the petitioners for this writ

performed or acted

a) in good faith and

b) without willful

violation of the law?

2. May a Circuit Court

of Appeals overrule a District Court

as a trier of fact where less than

the full record before the District

Court is brought up by the appellant

government agency?

3. May a Circuit Court

of Appeals overrule a District Court

trier of fact notwithstanding the

provisions of rule 52 (a) and the

holding of Icicle Seafoods Inc. V.

Worthington (475 US 709, 89 L Ed 2d

739, 106 S. Ct. 1527(1986)) decided

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Seafoods, supra, a the intention,

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case in its brief on appeal and where

5 May a Circuit Cour

of Appeals nullify the Act of Congress

requiring that a good faith defense

be given effect and requiring that

willfulness by proved for a double

penalty to apply, including ignoring

the provisions of the acts of Congress,

without explaining, 1n its per curiam

Opinion, why these provisions ¢ r Statute

should be nullified in this case.

(Indeed < 1s very close in effect

to the Court of Appeals having decided

that the act of Conaress was

unconstitutional ana therefore would

not be applied).

Statutes Involved

The pertinent parts of

the acts of Congress requiring that

a decision be made whether parties

have acted in good faith or have been

willful, in the premises, are as

follows:

29 USC 255(a) provides the cause

OF -@Ctien "06% Shall be forever

barred unless commenced within

two years... except... a CauSe@...

arising out of a willful violation

may be commenced within three

years...... 29 USC 260 provides

eae if the employer’ shows...

that the act of omission giving

rise tc such action was in good

faith and that he had reasonable

grounds for believing... was

not a violation... the court

MAY... award no liquidated

damages.

These statutes are set

forth in the Appendix at _ page

in more detail.

Statement of Case

Petitioners operated

a meat cutting school. They sold

the meat which was already cut, wrapped

and priced at the school as a product

of the training exercises at retail

at two separate locations. One was

at the location of the school at

Cottage Grove, Oregon. The other

was some 24 miles distant at

Springfield, Oregon and consisted

solely of a retail store staffed by

two and one-half persons.

A long time (over a year)

after the retail store at the remote

location was closed the workers at

that store filed a claim with the

Secretary of Labor. The intitial

Ciaim was for vacation pay, or for

pay for the children of those workers,

but at trial the claim had been changed

to an overtime claim.

The two workers used

a time clock and time cards which

they punched and which the workers

at the remote location themselves

totalled at the end of each week.

The totals showed the number of hours

which each of them asserted were stated

on the time clock punched entries

on the weekly card.

Written instructions

were issued at the time of hiring

that no overtime would be permitted

and the method of carrying out the

work, so that it would be done within

40 hours per week, was stated in

writing. A major portion of the

subsequent controversy was over whether

the tasks of work could be performed

by the staff within that limitation

(one-half hour before opening’ the

store and one-half hour after Hiosing) .

No defendant or manager, other than

one of the two claimants, worked at

the remote location. The time needed

to do the tasks was tested at the

trial level by preparation and receipt

in evidence of a video tape of two

people performing the tasks which

the claimants stated took two to four

hours after 6 p.m. closing of the

store. The video tape showed the

performance of the tasks completed

within about 12 minutes. The trial

court finding of fact stated that

the owners acted in good faith and

were not willful in their violation

of the records and hours’ provisions.

The government, appealing this trial

court finding of fact as to intention

or state of mind failed to bring the

video tape up as a part of the record

on appeal. The Court of Appeals

reversed on the questions of intention

and did so in a way that neither

mentioned rule 52 (a), nor Icicle

Seafoods and its rule as announced

by the court.

A claim by the workers,

in the transcript or deposition was

that frequently, after 7:00 p.m., (The

store closed at 6:00 p.m. and the

work day ended one half hour later,

at 6:30 p.m.) the employees at the

remote location telephoned to the

headquarters and talked to one of

the defendants, Frank Shirk, or else

he called them at 7:00 p.m. The

long distance telephone charge slips

were introduced in evidence but were

not brought forward by the government

as part of the record on appeal. They

showed an absence of calls after 7:00

p.m. and very few calls over a three

year period later than 6:30 p.m.,

either from the remote location to

the headquarters or from the

headquarters' telephone to the remote

location. The long distance records

established as a testimony that the

charge between headquarters and the

Springfield store was a long distance

charge and would be itemized on the

bills received in evidence by the

trier of fact.

During the trial the

owners admitted that the punched weekly

time cards occasionally showed more

than 40 hours. These defendants were

able to prove that occasional payments

were made to these claimants for the

overtime where the time card total

of hours had been recomputed by others

than the claimants. They also admitted

that there were some weeks where the

time card punch-in and punch-out data

showed more than 40 hours during the

applicable period, but where the

payroll bookkeeper had not identified

the error made by the two claimants

in writing in their own hand at the

bottom of the time card snowing the

total of 40 hours and no recomputation

Or payment had been made. Owners

offered to pay what the recomputed

totals of the time card entries would

show.

Owners offered in evidence

a computer print-out summary of the

differences between the 40 hours paid

and the actual in and out time printed

by the clock in Springfield on the

time card, if computed and summed

up properly. This exhibit was not

brought forward by the government

in its appeal. (This computer summary

was not a part of Owners' records at

any time. It was generated off of

their premises’ for preparation for

trial by a contractor to Owner's trial

counsel, )

The Court of Appeals

was well aware of these deficiencies

in the record in the sense that they

knew from the orief, from the

supplement to the record showing that

exhibits were received in evidence

but not brought forward by appellant

as record on appeal, and fron oral

argument tnat they did not nave tne

, 2

The per curiam appellate

opinion makes no reference to this

fact whatever and endeavors to treat

a question of intention as a matter

law and then subjectively decide

that law question.

The petitioners herein

did bring forward the exhibit docket

sheet from the trial court showing

the dockets of exibits offered and

in fact received as a part of their

Supplemental Abstract of Record, as

stated above. This showed the exhibits

referred to in this statement of case,

and other exhibits also such as checks

paying for overtime during the period

in controversy and making that payment

to these claimants during that period.

The trier of fact also

viewed the former Springfield store

building interior during the trial

and could judge how long it would

take to sweep or mop the floor. Trier

of fact saw the witnesses, their body

language and demeanor, and heard their

voices.

Reasons for Granting Writ

Injustice should be

prevented by taking the matter up

to the Supreme Court and applying

the rules of procedure, allowing the

trier of fact who saw the witnesses

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Respectfully submitted,

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Edward N. Fadeley

Counsel for Petitioner

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FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

SiGe

WituiaM E. Brock, Secretary of

Labor, Unitep States DEPARTMENT

OF LABOR,

Plaintiff-Appellant, No. 86-4121

D.C. No.

Joann Sukh, individually and ‘ CV -85-908-E

doing business as OREGON MEAT OPINION

CUTTING SCHOOL; FRANK B. SHIRK,

individually and doing business as

OREGON MEAT CUTTING SCHOOL,

Defendants-Appellees.

Appeal from the United States District Court

for the District of Oregon

James M. Burns, District Judge. Presiding

Argued and Submitted

September 11, 1987—Portland, Oregon

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Filed December 8, 1987

Before: Eugene A. Wright, J. Clifford Wallace and

Harry Pregerson, Circuit Judges.

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Appeal from judgment. Reversed and remanded.

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A-2

Z Brock V. SHIRA

Appellees the Shirks were found guilty of violating the Fair

Labor Standards Act (FLSA) by failing to pay an employee

overtime. Subsequently, a time clock was installed although

employees were told they were on salary. Rules emphasized

that no overtime would be authorized. The district court

found that appellees knew or had reason to know that their

employees were covered by the FLSA and were in fact work-

ing more than 40 hours per week. It concluded that the Shirks

violated the overtime and reporting provisions of the FLSA.

but denied the appellant Secretary of Labor's request for back

pay. for liquidated damages. and for injunctive relief.

[1] At issues is the trial court’s finding that the Shirks’ acts

or omissions were not “willful.” [2] On these facts, the Shirks

“willfully” violated the FLSA. The three-year statute of ]imi-

tation applies. [3] Employers who violate the overtime com-

pensation provisions of the FLSA are liable to their

employees both for unpaid overtime compensation and for

liquidated damages. [4] However, the court may refuse to

award liquidated damages if the employer demonstrates that

it acted reasonably and in good faith. [5] Reviewing the dis-

trict court's findings, the Shirks failed to demonstrate their

good faith. [6] Even assuming that the Shirks subjectively

believed, in good faith, that they were not required to com-

pensate their employees for unauthorized overtime, they

failed utterly to satisfy their burden of proving that this belief

was reasonable. The facts in this case simply cannot support

a finding that the Shirks had objectively reasonable grounds

for believing no violation was taking place. [7] The district

court denied injunctive relief on its finding that the defen-

dants honestly believed they were not violating the FLSA. [8]

Likclihood of future compliance is an important factor. [9j

The court should consider the employer’s previous conduci

and the dependability of its promises for future compliance.

COUNSEL

Claire Brady White, United States Department of Labor,

Washington, D.C., for the plaintiff-appellant.

one

A-3

Brock V. SHIRK 3

Edward N. ulin, Fadeley & Fadeley, ieeax Oregon, for

the defendants-appellees.

OPINION

PER CURIAM:

This is a case about willfulness, good faith and the Fair

Labor Standards Act (“FLSA”). The Secretary of Labor

appeals from the relief. inadequate in his view, that was

granted in litigation against violators of FLSA.

The trial judge found that employers, then before the court

as repeat offenders under FLSA, “knew or had reason to know

that [their] employees were working overtime hours without

compensation.” He also ruled that the employers’ acts and

omissions were not “willful.” and were “in good faith.” He

applied a two-year statute of limitation, denied liquidated

damages, and refused to issue a prospective injunction.

Applying controlling authority, we must reverse and remand.

I. FACTS

The dispositive facts are not contested. Appellees Frank

and Joann Shirk operate the Oregon Meat Cutting School and

two associated retail outlets. In an Oregon state court action

in 1980, they were found guilty of violating the FLSA by fail-

ing to pay an employee time and one-half for overtime hours.

After judgment was entered in that case, the Shirks installed

a time clock in their Springfield work place. They told their

employees that they were on “saiary,” but required ihem to

punch the time clock for pay purposes. The Shirks posted,

and had their employees sign, written rules emphasizing that

no overtime would be authorized. Emplovees actually

worked more than their time cards showed.'

‘The district court found it difficult to credit the Shirks’ assertion that

they seriously intended that their employees stop working at the end of

4 Brock V. SHIRK

Employees complained to the Department of Labor. Fol-

lowing an investigation of the Shirks’ enterprise. the Secre-

tary of Labor filed suit against the Shirks in federal district

court, alleging failure to pay overtime, failure to keep and

maintain proper work records in violation, and use of child

labor. in violation of 29 U.S.C. §§ 207(a). 21 1(c) and 212(c).

The Shirks alleged as affirmative defenses: (1) they acted at

all times in good faith with reasonable grounds for beliey ing

the were not violating the FLSA: (2) they were ignorant of any

child labor at their enterprise: (3) they were ignorant of any

overtime violations. having relied on the employces’ incor-

rectly punched time cards: and (4) the employees actions (in-

cluding submission of time cards they knew to be incorrect

and acceptance of the Shirks’ no overtime policy) estopped

this action under the FLSA.

The district court absolved the Shirks of the child labor

charges. It found. however. that they knew or had reason to

know that their employees were covered by the FLSA and

were in fact working more than 40 hours per week. It con-

cluded that the Shirks violated the overtime and reporting

provisions of the FLSA, but denied the Secretary of Labor's

request for three years back pay, for liquidated damages, and

for injunctive relief. The Secretary of Labor appealed.

ANALYSIS

ll. “WILLFUL” VIOLATION OF SECTION 25:

[1] The Secretary challenges first the trial court's determi-

nation that the employees’ claims were limited by a two-year

their shifts when important tasks (e.g., cleaning the store and packing and

refrigerating perishable meat) remained to be done Findings of fact and

evidence in the record clearly indicate that despite the no overtime “rule,”

the Shirks expected their empioyees to complete the tasks assigned them

even if that required that employees actually work more than forty hours

per week

. A-5

Brock Vv. SHIRK 5

Statute of limitation. The Portal to Portal Act. 29 U.S.C.

§§ 251 et seq., provides that:

Any action... to enforce any cause of action for ..

unpaid overtime compensation, or liquidated dam-

ages. under the Fair Labor Standards Act... may be

commenced within two vears after the cause of

action accrued, . . . eacept that a cause of action aris-

ing out of a willful violation may be commenced

within three years after the cause of action

accrued. ...

29 U.S.C. § 255(a) (“section 255”). At issue here is the trial

court's finding that the Shirks’ acts or omissions were not

“willful” for purposes of that provision.

The meaning of the term “willful” in section 255 is well set-

tled in this Circuit. In Marshall v. Union Pacific Motor Freight

Co., 650 F.2d 1085, 1092 (9th Cir. 1981). this court explicitly

adopted:

the following rule for determining willfulness under

section 255: A violation is willful when the employer

was, or should have been. cognizant of an apprecia-

ble possibility that the employees involved were cov-

ered by the statutory provisions.

See also EEOC v. First Citizens Bank of Billings, 758 F.2d 397

(9th Cir.) (applying the Union Pacific standard). cert. denied

447? U.S. 902 (1985). We apply that standard here.”

We review de nove interpretation of ihe siaturury authori-

*We recognize that other circuits have questioned that definition of will-

ful. and that the Supreme Court wil! likely resolve the existing conflict

among the circuits. See Brock v. Richland Shoe, 799 F.2d 89 (3d Cir. 1986).

cert. granied (U.S. Oct. 5, 1987) (No. 86-1529). First Cinzens is still the law

of this circuit. It controls here.

nol

6 Brock ¥. SHIRK

zation of damages. First Citizens, supra, at 401. See also

United States v. McConney, 728 F.2d 1195, 1202 (9th Cir.)

(application of law to undisputed facts reviewed de nove).

cert. denied, 469 U.S. 824 (1984). We try the matter anew, as

if it had not been heard before and as if no decision had been

previously rendered. Exner v. FBI, 612 F.2d 1202. 1209 (9th

Cir. 1980).

[2] The trial court noted the applicability of First Cirzens

but ruled that despite the Shirks’ knowledge that their

employees were covered by the statutory provisions, and

their knowledge or reason to know that their employees were

working overtime without compensastion, the Shirks did not

necessarily willfully violate the FLSA. We conclude other-

wise. On these facts. for purposes of Section 255, the Shirks

necessarily. as a matter of law. “willfully” violated the FLSA.

The three-vear statute of limitation applies.

Il. LIQUIDATED DAMAGES OR PREJUDGMENT

INTEREST

(3] The Secretary appeals also the district court's denia! of

liquidated damages. Under 29 U.S.C. § 216(b). employers

who violate the overtime compensation provisions of the

FLSA are liable to their employees both for unpaid overtime

compensation and for liquidated damages in an amount

equa! to the back pay liability:

Any employer who violates the provisions of section

266 or section 267 of this Thiie shaii be iiabie to the

employee or employees affected in the amount of

their unpaid... wages... and in an additional equal

amount as liquidated damages.

Section 216(b) is mandatory: violators “shall be liable” for

liquidated damages. First Citizens, 758 F.2d at 403, 29

U.S.C. § 216(b).

(a-7

Brock Vv. SHIRK 7

[4] That section is modified, however, by section 260(b),

providing that the court may, in its sound discretion, refuse

to award liquidated damages if the employer demonstrates

that it acted reasonably and in good faith:

[I]f the employer shows to the satisfaction of the

court that the act or omission giving rise to such

action was in good faith and that he had reasonable

grounds for believing that his act or omission was

not a violation of the Fair Labor Standards Act...

the court may, in its sound discretion. award no liq-

uidated damages or award any amount thereof not

to exceed the amount specified in section 216 of this

Title.

Under section 260(b), the district court may deny liquidated

damages

if, and only if, the employer shows that he acted in

good faith and that he had reasonable grourds for

believing that he was not violating the Act ....

[Bjefore the district court’s discretion may be

invoked, the employer has the plain and substantial

burden of persuading the court by proof that his fail-

ure to obey the statute was both in good faith and

predicated upon such reasonable grounds that it

would be unfair to impose upon him more than a

compensatory verdict.

Marshall v Rrunner 668 F.2d 748, 78% +3rd Cir, 1982) (em-

phasis in original) (citations and footnote omitted).

The district court's determination that the Shirks satisfied

their burden of demonstrating that they acted in good faith

and on reasonable grounds requires the application of legal

principles to established facts. We thus review the district

court's determination de novo. McConney, 728 F 2d at 1202.

a-8 *

) Brock v. Siren

To meet their statutory burden. the Shirks were required to

demonstrate both that “the act or omission giving rise to [the

violation] was in good faith and that [they] had reasonable

grounds for believing that [their] act or omission was not a

violation of the [FLSA].” 29 U.S.C. §260(b) (emphasis

added). This test has both subjective and objective compo-

nents.

{5} To satisfy the subjective “good faith” component, the

Shirks were obligated to prove that they had “an honest inten-

t10n to ascertain what [the FLSA] requires and to act in accor-

dance with it.” First Citizens, 758 F.2d at 403; see also 29

C.F.R. 790.15 (° "Good faith’ requires that the employer have

honesty of intention and no knowledge of circumstances

which ought to put him upon inquiry.”). It is evident from a

review of the district court's findings that the Shirks failed to

demonstrate their good faith in this case

The district court found that the Shirks were repeat offend-

ers who knew both that their employees were covered by the

FLSA and that they were working overtime without compen-

sation. These findings belie the Shirks’ claim that they

believed in good faith that their failure to pay overtime did

not constitute a violation of the FLSA. Their awareness that

their employees were working without compensation pre-

cludes a finding that they had no knowledge of circumstances

which ought to have put them on inquiry. Their knowledge

that their employees were covered by the FLSA demonstrates

that they lacked an honest intention to find out what the

FLSA requires and to act in accordance with its provisions

We are persuaded, therefore, that the district court failed to

annly the correct legal standard in making its section 260/b)

determination of “good faith.”

To satisfy the objective component of the statutory test, the

Shirks were required to prove that “[their] failure to obey the

statute was... predicated upon such reasonable grounds that

it would be unfair to impose upon [them] more than a com-

A-9

Brew a \. Seek me,

pensators verdict.” Brunner, 668 F.2d at 783. The district

court did not indicate that it considered. much less applied.

any such standard when making its section 260(b) determina-

tion.

[6] The district court found that the Shirks knew their

employees were working overtime but that they “honestly

believed” they could avoid liability under the FLSA by telling

their employees that overtime would not be “authorized.”

The district court then based its denial of liquidated damages

on this finding of “honest belief.” Even assuming that the

Shirks subjectively believed. in good faith. that they were not

required to compensate their employees for “unauthorized”

overtime, they failed utterly to satisfy their burden of proving

that this belief was reasonable. The facts in this case simply

cannot support a finding that the Shirks had objectively rea-

sonable grounds for believing no violation was taking place.

The record before us permits only one proper conclusion:

that the Shirks, as a matter of law, failed to satisfy their bur-

den of demonstrating that they reasonably and in good faith

believed that they were not violating the FLSA. Conse-

quently, the district court had no discretion to mitigate the

Shirks’ statutory liability for liquidated damages. Jd. We

reverse the district court's decision on this issue and remand

with instructions to award liquidated damages in accordance

with the requirements of section 216(b).?

741 oral argument, both counsel queried whether the employees were

entitled to hquidated damages, preyudgment interest, or both. We have

deicrmined that hquidated damage. are mandated by Statute. Uni, one

such “make whole” remedy is proper here See Fords Alfaro. 785 F.2d 835

842 (9th Cir 1986). Lindsey » American Cast Iron Pipe Co., 810 F 2d 1094,

1102 (Lith Cir, 1987) Hodgson »¥ Wheaton Glass Co. 446 F.2¢4 $27. $34

(34 Cir. 1971)

= a

Brix Kv. SHIRK

IV. PROSPECTIVE INJUNCTION

Finally, the ‘secretary appeals the district court's denial of

injunctive relief. We review that decision for abuse of discre-

tion er fez application of an erroneous legal principle. Brock

v. Big Bear Market #3, 825 F.2d 1381, 1383 (9th Cir. 1987)

{7} The district court based its decision to deny injunctive

relief in this case largely on its finding that the defendants

honestly believed they were not violating the FLSA. The

court eaplained

[The Shirks’] violation of FLSA was not willful and.

despite the violations, I find they were acting 1n good

faith. I find no reason to believe they are not pres-

ently complying with the Act or that they will fail to

comply with it in the future. Therefore. I do not find

it necessary to issue a prospective injunction against

them at this time

Though the question of whether the trial court thereby abused

its discretion is a close one. examination of our cases ind-

cates that the district court failed to give adequate weight to

relevant factors in reaching its decision

We have emphasized that prospective injunctions under

FLSA serve a remedial not a punitive purpose

The injunction subjects the defendants to no pen-

alty. to no hardship. It requires the defendants to do

what the Act requires anyway—to comply with the

law.... [T]he manifest difficulty of the Govern-

ment’s inspecting. investigating, and litigating every

complaint of a violation weighs heavily in favor of

enforcement by injunction—affer the court has

found an unquestionable violation of the Act

Varsha!ll v Chala Enterprises, Inc, 645 F.2d 799, 804 (9th

Cir. 1981) (Chala) (emphasis in original) (quoting Michell y

Brock +. SHIRK 1]

Pidcock, 299 F.2d 281, 287 (Sth Cir. 1962)). We noted that

“[i}n exercising its discretion, the district court must give sub-

Stantial weight to the fact that the Secretary seeks to vindicate

a public. not a private. mght.” /d. Prospective injunctions

place the cost of noncompliance on the emplover and are

essential to effectuate Congress's policy of abolishing substan-

dard labor conditions by preventing recurring violations. /d..

see also Big Bear, 825 F.2d at 1383. Thus, though the district

court has discretion to deny injunctive relief in appropriate

cases. this discretion is limited by consideration of the impor-

tance of prospective relief as a means of ensuring compliance

wilh the provisions of the FLSA. Cala, 045 F.2d at 804

In determining whether to award injunctive relief against

an employer, the district judge should consider evidence of

current compliance. any record of past violations. and the

likelihood of future compliance. See Big Bear, 825 F.2d at

1383: Wirtz v. Atlas Manufacturing Co.. 377 F.2d 112 (Sth

Cir. 1967) (Wirtz). Current comphance alone is not a sufh-

cient ground for denying injunctive relief. Bie Bear, 825 F.2d

at 1383: Chala, 648 F.2d at 804

|8} The most important factor the district court must weigh

in deciding winether to grant such relief is the likelihood that

the employer will comply with the Act in the future. Big Bear

825 F.2d at 1383 (“a district court must weigh the finding of

violations against factors that indicate a reasonable likeli-

hood that the violations will not recur”), Wirtz. 377 F.2d at

116

{9} In determining likelihood of future compliance. the

court should consider the employer's previous conduct and

the dependability of its promises for future compliance. Big

Bear, 825 F.2d at 1383; Wirtz, 377 F.2d at 116. Our review

of the record convinces us that the district court did not ade-

quatcly consider these factors in reaching its decision

aaa

A-12

Brock Vv, SHIRK

First, the court failed to give adequate weight to the fact

that the Shirks have been guilty of violating the FLSA on at

least one prior occasion by failing to pay their employees

overtime compensation. We stated in Big Bear that previous

violations or bad faith are factors “weighing heavily in favor

of granting a prospective injunction.” 825 F.2d at 1383. The

district court observed that acts of past noncompliance are

“relevant” to a determination of whether injunctive relief is

appropriate. It did not, however, mention the Shirks’ past

violation in reaching its decision.

Second. the court failed to consider adequately the depend-

ability of the Shirks’ promise of future compliance. It stated

that “the extent to which the defendant has made a promise

of future compliance” is a “relevant factor” in determining

whether to grant injunctive relief. This misstates the relevant

test. Mere assurances of future compliance do not provide a

sufficient basis for denying an injunction. Chala, 645 F.2d at

804. Instead. the inquiry must focus on the dependability of

the promise made. Big Rear, 825 F.2d at 1383; Wirtz, 377

F.2d at 116.

The judge's findings and other evidence in the record raise

doubt as to the reliability of the Shirks’ promise. They were

repeat offenders of the Act. The district court found that, in

the case at bar, they had violated the recordkeeping and over-

time provisions of the Act. It found that the Shirks had

knowledge that their employees were working overtime with-

Out compensation, but that they believed they could avoid

liability for overtime under the FLSA by instructing their

employees that overtime would not be authorized. Mr. Shirk

testified in his deposition that he continued the practice of

having employees sign a form that stated that no overtime

would be authorized. Yet, the district court specifically found

“According to the Pretrial Order contained in the Eacerpt of Record, an

Oregon court entered a judgment against the Shirks in !980 for violating

the overtime provisions of the Act.

Brox kV. SHIRK 13

it “hard to believe” that the Shirks “seriously prefer[red]” that

their employees not work overtime given the amount and

nature of the work they had to do

lt thus appears from the record that the Shirks may con-

tinue the same practices that led to their liability in this case:

instructing their employees not to work overtime under cir-

cumstances in which it is likely that their employees will con-

tinue to work overtime rather than leave important tasks

undone. We cannot find in the district court's analysis ade-

quate consideration of the factors weighing in favor of injunc-

tive relief in this case. We therefore remand with instructions

to reexamine this issue in light of our holdings in Big Bear

and Chala

V. CONCLUSION

We REVERSE and REMAND. The parties will bear their

Own costs on this appeal.

A-(4

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF OREGON

WILLIAM BROCK,

Secretary of Labor,

United States Department

of Labor,

Plaintiff, CIVIL No.

83-968

FRANK B. and JOANN SHIRK

individually and doing

business as OREGON MEAT

CUTTING SCHOOL,

OPINION AND

ORDER

Defendants.

me ee ee ee ee ee ee ee ee eet

Plaintiff, Secretary of

the Department of Labor (DOL) brought

this action against Frank and Joann

Shirk, owners of the Oregon Meat Cutting

School.

The DOL alleges the

1/ William Brock has succeeded Raymond

J. Donovan as Secretary of Labor. Pur-

Ssuant to F.R.Civ.P. 25(d)(1), William

Brock should be substituted, therefore,

for Raymond J. Donovan as the plaintiff

in this suit.

A-15

Shirks have violated the overtime record

keeping the child provisions of the

Fair Labor Standards Act (FLSA), 29

U.S.C. §§ 207(a), 211(c) and 212(c).

The DOL seeks a restitutionary injunc-

tion against further withholding of

overtime benefits due two employees

based on a three year statute of limit-

ations, liquidated damages and a pros-

pective injunction against further

violations of the mea”

FACTS

Frank and Joann Shirk

operate the Oregon Meat Cutting School

and its primary retail outlet in Cottage

Grove, Oregon. Until January, 1982

the Shirks also operated a retail outlet

in Springfield, Oregon. Six weeks

after the Springfield store closed

they opened another outlet in Eugene,

Oregon.

Two full-time employees

A-16

occasionally assisted during lunch

hours and vacation eee od Cheryl

Ralph worked as a salesperson/supervisor

at the Springfield store from December

1980 until the Springfield store closed.

Thereafter she helped to prepare the

Eugene store for opening and worked

there from the time it opened iin

February, 1982 until she was laid off

in December, 1982. Rita Poole worked

as a salesperson at the Springfield

store from approximately February,

1980 until she was laid off when the

Springfield store closed.

When Ralph began working

for the Shirks they each signed a

document entitled "Springfield Schedule

and Rules." The document ' specified

that

"All girls will be on Salary! You

are responsible for control of your

hours and we are allowing 2 girls

8 hours a day to do this job, and

there is no reason it can't be done

i A-17

in that time. No time over 40 hours

a week will be Authorized at any

time!"

Both employees testified,

however, that the job often took more

than eight hours per day, particularly

during the first two weeks of every

month. They also testified that they

were paid by the hour and were required

to punch a time clock at the proper

starting and ending tme regardless

of when they arrived of ase Both

claimed that they complied with this

requirement, despite working longer

hours, for fear of losing their jobe”

The parties agree that

the Shirks repeatedly insisted that

no overtime would be authorized at

any time, Ralph and Poole both

testified that Frank Shirk told them

that at 6:30 p.m. (thirty minutes after

closing) they were to drop whatever

they were doing and leave.

haa FR

The Shirks allege that

they had no knowledge that any employee

worked more than 40 hours’ per week

without being compensated. According

to several employees, however, including

Ralph and Poole, the Shirks knew that

the employees worked overtime. Ralph

testified, for example, that one of

her responsibilities was to call Frank

Shirk nightly to report the daily

accounting totals and that, particularly

during the first part of each month,

these calls were well after 6:30 p.m.

She further testified that occasionally

Frank Shirk would call her after 6:30

to question why she had not yet called.

She alleged that during several of

those late night calls she emphasized

to Shirk the need for additional help.

No additional help was provided.

Shirk also | recalled

an occasion when she recorded more

A-19

than 40 hours on her time card. She

alleged that the card was’ returned

to her with instructions that she change

the number of hours to 40.

Another employee at

the Cottage Grove store, where the

Shirks also worked, testified that

at the appropriate starting and ending

times one employee would typically

punch in all the employees' time time

cards, even though the employees were

usually there before the stated starting

times and after the stated ending times.

The same employee testified that every-

one, at one time or another, questioned

the Shirks about the no overtime policy

and the reply was always that no over-

time would be paid and they were free

to quit if they wished.

In addition to her

regular position with the Shirks, Cheryl

Ralph entered into a separate agreement

A-20

with them for cleaning the Springfield

store each Sunday. The compensation

for that job was originally $5 for

each of three jobs (cleaning the parking

lot, meat case and freezer), or $15

total. The pay was later raised to

$6 per job, or $18 total. She was

paid out of the petty cash fund. Other

than Ralph's notations of the expend-

itures on the daily account ledger,

no records were kept of her hours or

pay for that job.

Ralph alleges, however,

that the cleaning agreement was actually

for her two minor children to perform

the cleaning work each Sunday under

her supervision. Rita Poole's minor

daughter also helped occasionally.

Ralph testified that the children each

signed a statement before they began

working there that they would not sue

the Shirks. Cheryl Ralph's daughter

testified that she signed a form but

was unaware of its content. None of

the children ever personally met the

Shirks and there is no evidence of

statements signed by the children of

record.

The DOL became aware

of these FLSA violations when Ralph

inquired about vacation pay due her

after she was laid off. Following

a DOL investigation, the DOL instituted

this action.

DISCUSSION

Fair Labor Standards Act Violations

The DOL initially argues

that the Shirks violated § 207(a) of

the FLSA by failing to pay their

employees overtime compensation.

Under the FLSA an

employer must pay overtime in the amount

of 1% times the regular pay rate of

pay when he "suffers" or "permits"

A-22

employees to work more than 40 hours

per week. 20 U.S.C. § 207(a). “Suffer”

or “permit” has been interpreted to

mean "with the knowledge of the

employer." Lindow v. United States,

738 F.2d 1057 (9th Cir. 1984), citing

Fox v. Summit King Mines, 143 F.2d

92, 93 (9th Cir. 1944). This inter-

pretation was expanded on in Forrester

v. Roth's I1I.G.A. Foodliner, Inc., 646

F.2d 413 (9th Cir. 1981) as follows:

An employee who knows or should

have known that an employee is

or was working overtime must

comply with the provisions of

§ 207. An employer who is armed

with this knowledge cannot stand

idly by and allow an employee

to perform overtime work without

proper compensation.

Id. at 414.

The Shirks instructed

their employees that no overtime was

authorized and testified that they

were unaware that their employees

actually worked uncompensated overtime.

The employees themselves acknowledged

that, after they were specifically

instructed not to, they did not record

any overtime hours they worked.

The Shirks contend that,

even if the employees did work more

than 40 hours per week, the employees

are estopped from asserting that against

the Shirks because they did not record

the overtime on their time sheets.

It is true that where

an employee's actions prevent an

employer from knowing of the alleged

uncompensated overtime hours the

employer had not violated § 207 by

suffering or permitting the overtime.

Forrester v. Roth's I1.G.A., 646 F.2d

at 414. If, in fact, the Shirks'

employees were deliberately concealing

their overtime hours and the Shirks

had no reason to know that they were

being worked, the Shirks would no be

liable under § 207. The facts here,

however, do not support such a con-

clusion.

For example, Ralph's

testimony that she often called Frank

Shirk with the store's accounting totals

after 6:30 (or that he called her after

6:30) evidence his knowledge of the

overtime hours. The Shirks' knowledge

is also evidenced by Ralph's testimony

regarding her time card being returned

to her because it reflected more than

40 hours. Additionally, the Cottage

Grove employees' questioning of the

Shirks regarding the overtime policy

and their presence before and after

their shifts gave the Shirks notice

of the overtime hours worked.

These incidents were

sufficient to put the Shirks on at

least inguiry notice that their

employees were working overtime.

Therefore, the employees are not

estopped from asserting their right

to overtime pay despite their failure

to record the totals.

Either to counter’ the

allegation that the Shirks knew that

their employees were working overtime,

or to resist liability despite that

knowledge, the Shirks rely on their

written rules, signed by the employees,

which specified that no overtime would

be authorized.

However, "liability

under the Act depends not upon formal

Or agreed arrangements between the

employer and the employee limiting

work hours but upon the number of hours

the employee is actually permitted

to work for the employer's benefit."

Mumbower v. Callicot, 526 F.2d 1183

(10th Cir. 1983). Further, as explained

in the regulations pursuant to § 207,

if the Shirks did not wnat any of their

employees to work any overtime, they

had a position duty to enforce that

rule:

§ 785.13 Duty of Management

In all such cases it is the duty

of the management to exercise

its control and see that the work

is not performed it it does not

want it to be performed. It cannot

sit back and accept the benefits

without compensating for them.

The mere promulgation of a rule

against such work is not enough.

Management has the power to enforce

the rule and must make every effort

to do so.

29 C.F.R § 785.13

A statement in the Shirks' internal

regulations was insufficient to insulate

the Shirks from liability for overtime

compensation.

From the testimony of

both Springfield store employees, it

appears that, particularly during the

first two weeks of every month, they

were unable to perform tneir required

duties within 40 hours. There is also

substantial evidence that the Shirks

knew that their employees were working

more than 40 hours per week. There

is also substantial evidence that the

Shirks knew that their employees were

working more than 40 hours per week.

Therefore, I find that the Shirks have

violated § 207 of the FLSA.

The DOL next argues

that the Shirks violated the child

labor provision of the FLSA, § 212(c),

by permitting Ralph's and Poole's to

perform cleaning work under’ Ralph's

Supervision at the Springfield store

On Sundays. The Shirks maintain that

the weekend working agreement was made

Strictly with Cheryl Ralph and that

they had no knowledge that minor

children were actually performing work.

The DOL contends’~ that

the fact that this work was compensated

from the petty cash fund indicates

that the Shirks knew that minors were

working under Ralph. It also relies

on Cheryl Ralph's testimony that the

children signed forms promising not

to sue the Shirks. One child testified

that she signed a form but was unaware

of its content. There is no form signed

by any of the children in evidence

and none of the children ever personally

met the Shirks. Ralph also claimed

that, knowing her chiidren were working

under her, based on her’ age the Shirks

must have known that the children were

minors.

These unsubstantiated

allegations and circumstatial

justifications are not sufficient

evidence on which to base a conclusion

that the Shirks knowingly permitted

minor children to work at the _ store

in violation of § 212(c). I am

compelled to believe that the Shirks

were actually unaware, albeit perhaps

negligently, that minors were performing

the cleaning work at the Springfield

store.

This conclusion, however,

does not leave the Shirks without fault

with respect to this cleaning work.

If the Shirks actually believed they

were paying Ralph to’ perform’ the

cleaning work, they have violated §

2ll(c) by failing to maintain proper

records. they have also further

violated. § 207 by failing to, include

this amount in Ralph's’ earnings,,, for

purposed of calculating overtime due

her. | so dape!

With regard to; +...the

additional overtime violation, Frank

Shirk testified in his depostion that

the amount paid to Ralph from the petty

cash fund was actually 1 time. The

Shirk's attorney noted later that "there

A-30

is no contradiction of it and there

is no rebuttal testimony."

The agreement with Ralph

relative to this cleaning does not

specify that the amount she was to

be paid represented 1% time, and that

is no indication anywhere in the record

that Shirk informed Ralph that’ the

amount she was to be paid for cleaning

represented 1% times her regular pay

rate. Such an agreement between

employer and employee is’ essential

in order to comply the overtime

provisions of the Act. See Brennan

v. Valley Towing, 515 F.2nd 100 (9th

Cix. 1974), citing Hodgson v. Penn

Packing, 335 F. Supp. 1015 (E.D.

Penn. 1971).

Absent a prior agreement,

regardless of whether Shirk's testimony

regarding his calculation of her pay

is unmet of unrebutted, 1+ is Bet

A-31

valid. "It is the ‘actual fact’ of

a stepped-up rate for overtime which

propagates the goals of the Act, and

not the hypothetical retrospective

construction of such a rate structure."

Valley Towing, 515 F.2d at 106.

Therefore, assuming

the after hours cleaning agreement

was solely between the Shirks and Ralph,

the Shirks violated § 297 relative

to this agreement.

The Shirks also violated

§21l(c), the record keeping provision,

relative to this agreement. Section

21l(c) explicitly requires employers

to keep detailed payroll and other

employment records for all employees.

Ralph was paid for her after hours

cleaning work out of the petty cash

fund. Other than Ralph's own notations

on the petty cash ledger sheet of the

payments made for the cleaning, no

A-32

records were kept regarding these

payment. This failure on the Shirks'

part is a clear violation of § 2ll(c).

Damages

The DOL seeks a

restitutionary injunction for the amount

of back overtime pay due Ralph and

Poole in the amount of $13,415 for

Ralph and $1,370 for Poole. These

calculations are based on a three- year

statute of limitations. It also seeks

liquidated damages in addition to the

actual overtime pay due and a

prospective injunction against further

violations of the Act.

Statute of Limitations

The FLSA Carries with

it a two year statute of limitations

unless the violation is “wiiitei",

in which case the statute is extended

to three years. 29 U.S.C. § 255. The

DOL contends that the Shirks' violations

A-33

of FLSA were willful and therefore

argue that a three year statute of

See ee te Fe,

limitations is appropriate in this

case.

In Marshall Vv. Union

Pacific Motor Freight Co., 650 F.2d

1085, (9th cir 1985), The Ninth Circuit

enunciated a rule to determine

willfulness for statute of limitations

purposes. It provides that "[a]

violation is willful when the employer

was, or should have been, cognizant

of an appreciable possibility that

the employees involved were covered

by the statutory provision." Id.

at 1091.

The Shirks knew’ their

employees were covered by the = 4

They also know or had reason to know

that their employees were working

overtime hours without compensation.

These facts, however, do not necessarily

SEES

indicate that they were willfully

violating the Act.

All of the employees

knew that the Shirks would not authorize

any overtime work. Ralph and Poole

signed statements - when they began

working for the Shirks that emphatically

stated that no overtime would be

authorized. Additionally the Shirks

specifically told the employees. not

to work beyond their regular shifts.

These directions do not insulate the

Shirks from liability for violating

§ 207 (and, in fact, it was to the

Shirks' benefit that the employees

did not follow their directions.)

Nonetheless, I am convinced that the

violations were not willful. The Shirks

instituted a policy of no overtime

and reinforced it both orally and in

statements signed by the employees.

I am convinced that they reasonably

A-35

through their obligations under’ the

Act were satisfied by their practice

of enforcing their policy. Accordingly,

I find that the two year statute of

limitations applies in this case.

Liquidation Damages

The FLSA requires that

"lLajny employer who violates the

provisions of Section 206 or 207 of

this Title shall be liable to the

employee or employees affected in the

amount of their unpaid wages

and an additional amount as liquidated

damages." 29 U.S.C §261(b).

Liquidated damages are

mandatory unless the employer proved

his good faith and are intended to

“compensate employees for losses they

might suffer by reason of not receiving

their lawful wages." E.E.O.C. v. First

Citizens BAnk of Billings, 758 F.2d

397, 403 (9th Cir. 1985).

A-36

The good faith exception

provides that

If the employer shows to. the

satisfaction of the court that

the act or omission giving rise

to such action was in good faith

and that he had reasonable grounds

for believing that his act or

omission was not a- violation

of the (FLSA) . . . the court

may, in its sound discretion

award no liquidated damages or

award any amount thereof not

to exceed the amount specified

in Section 261 of this title.

29 U.S.C § 260.

The employer's good

faith depends on “whether the employer,

in acting or omitting to act as he

did, and in relying upon the regulation

. . « acted as a reasonable prudent

man would have acted under similar

circumstances. "Good faith" requires

that the employer have honesty = on

intention and no knowledge of

circumstance which ought to put him

on inquiry." 29 C.F.R. § 790.15.

For the same reasons

I found the Shirks' violations not

wilful, I also find that they were

acting with good faith belief that

they were complying with the FLSA.

I am convinced that the Shirks honestly

believed that by adopting and

reinforcing their no overtime policy,

they were satisfying their obligations

under the Act. Therefore, I find that

the employees are not entitled to

liquidated damages.

Damage Calculations

The DOL seeks damages

of $1,370 for Rita Poole and $13,415

for Cheryl Ralph. These figures do

not represent the exact number of

overtime hours worked by either

employee, but rather were calculated

from estimates prepared by DOL.

The employees's failure

to specify the exact number of hours

worked and amounts due, however, does

not preclude them from recovering

amounts due them. It is the

employer's responsibility to maintain

proper records of hours worked by

employees. The employers failure

to properly maintain records does

not prevent the employees' recovery.

Rather,

The solution . . . is not

to penalize the employee by

denying him any recovery on

the ground that he is unable

to prove the precise extent

of uncompensated work. Such

a result would place a premium

on an employer's failure to

keep proper records in

conformity with his statutory

duty; it would allow the

employer to keep the benfits

of an employee's labors without

paying due compensation as

contemplated by the Friar

Labor Standards 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

sufficient evidence to show

the amount and extent of that

work as a matter of just and

reasonable inference. The

burden then shifts to the

employer to come forward with

evidence to negate the

reasonableness of the inference

to be drawn from the employee's

evidence. If the employer

fails to produce such evidence,

the court may then award

damages to the employee, even

thought the result be only

approximate.

Anderson v. Mt. Clemens Pottery Co.,

328 U.S. 680, 687-88 (1946); Wirtz

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

1963).

The employees have shown

that they were improperly compensated

and have produced estimates of their

overtime hours through calculations

prepared by the DOL. These calculations

are adequate to provide approximations

of the hours’ worked. See Wirtz v.,

Dix Box Co., 322 F.2d at 500-01.

The DOL seek $1,370

on behalf of Rita Poole. This amount

is caiculated based on a three year

statute of limitations. Applying the

two year statute, the total amount

due Poole is approximately $650. The

DOL's estimate of overtime hours Poole

worked appears to be substantiated

in the record. Accordingly, I find

her entitled to back overtime wages

he DOL seeks $13,8i5

on behalf of Cheryl Ralph , again based

on a three year statute of limitations.

Applying a two year statute of

limitations, her estimates would be

approximately $7,200. Some of the

hours estimated, however, are not

adequately substantiated in the record.

For example, the computation sheet

estimate lists a five week period during

which she claims to have worked 32

overtime hours each week. While the

scord does reflect that she worked

a substantial number of overtime hours,

it does not reflect a five week period

of 52 hour weeks, A more accurate

estimate of Cheryl Ralph's overtime

hours would entitle her to approximately

$4,000. I therefore find her entitled

to that amount.

Prospective Injunction

Whether an injunction

should issue against a defendant is

addressed to the sound discretion of

the trial judge. To determine whether

to issue an injunction, some relevant

factors include; i the employer's

previous actions of noncompliance or

litigation; 2 ) the extent to _ which

the defendant has made a promise of

future compliance. See Marshal Vv.

Chala Enterprises, Inc., 645 F.2d 799

(9th Cir. 1981); Wirtz v. Atlas Roofing

Manufacturing Co., 377 F.2d 112 (9th

Cir; 1967).

The Shirks' violation

of the FLSA was not willful and, despite

the violations, I find they were acting

in good faith. I find no reason to

believe that they are not presenting

complying with the Act or that they

will fail to comply with it in the

future. Therefore, I do not find it

necessary to issue a prospective

injunction against them at this time.

CONCLUSION

Defendants Frank and

Joann Shirk have violated §§ 207 and

2l1l(c) of the FLSA by failing to pay

overtime compensation due their

employees and by failing to maintain

proper employment records on behalf

of their employees. They have not,

however, violate the child labor

provisions of the FLSA, § 212(c).

The Shirks' former

employees Cheryl Ralph and Rita er

are entitled to back overtime wages

due the of $4,000 and $650 respectively.

These damages are based on a two year

statute of limitations. The employees

are not, however, entitled to liquidated

damages.

I further find st

unnecessary to impose on the _ Shirks

a prospective injunction for future

violations at this time.

IT SO ORDERED.

DATED this of

May 1986.

f>] James WM Buras

United States District Judge

///

FOOTNOTES

1l/ The complaint alleges damages on

behalf of a third employee who was

employed at the Shirks' Cottage Grove

store. However, after the complaint

was filed that employee was paid back

amounts due him and no evidence was

introduced at trial relative to his

claim against the Shirks.

2/ In defendants' pretrial brief they

asserted that a "part time worker was

provided and other worker assistance

was available." There is no evidence

in the record to indicate that

additional help was ever provided or

that the part time worker assisted

at times other than vacation or lunch

periods of the regular employees.

3/ Neither party suggests that the

employees may have arrived later than

or left earlier than their scheduled

shifts.

4/ During the trial Rita Poole testified

that she stopped punching in the extra

hours she worked approximately one

month after she started working there

after Frank Shirk told her that her

work was to be completed within eight

hours or she would be replaced.

5/ From this testimony it appears that

the Shirks would prefer to allow their

store to go uncleaned and their

perishables uncared for than to pay

their employees to perform the work.

I find it hard to believe that

owners/operators of a meat cutting

school could seriously prefer that

ee a

their meat be left to spoil than to

pay their employees to properly care

for it before leaving for the night.

6/ This rule was derived from the

approaches taken by the Fifth and D.C.

Circuits. The D.C. Circuit test states

that "[t]he employer's noncompliance

is "willful" when he is cognizant of

an appreciable possibility that he

may be subject to the statutory

requirements and fails to take steps

reasonably calculated to resove_ the

doubt." Laffey v. Northwest Airlines,

Inc., 567 F.2a 429, €6i-@2 (8.0, G2ae.

1979). Under the Fifth Circuit test

the employer's actions are willful

"1f he knows or has reason to know,

that his conduct is governed by the

Fair labor Standards Act." Brennan

v. Heard, 491 F.2d 1, 3 (Sth Cie. £974),

Citing Coleman v. Jiffy June Farms,

Inc., 485 .F.2d 1139 (3m €i8. £9¥e) «

The Fifth Circuit added that the

employer's ignorance of his obligations

does not insulate him from liability

in noting that "an ostrich-like

cultivation of ignorance has_ never

violation of the Act." Id.

7/ The defendants were involved in

state court litigation regarding

overtime pay requirements under’ the

Act in 1980. They do not now contest

that their employees are covered by

the Act.

8/ The foregoing findings of fact and

conclusions of law are entered pursuant

_ to Rule 52 of the Federal Rules of

Civil Procedure.

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fully apprised o the facts therein,

based upon the entire record including

the Opinion and Order previously

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IRNEREN AN TWIINeenN A RITN

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IT Is FURTHER ORDERED

that no costs be allowed.

DATED May 29 , 1986.

/s/ James M Burns

JAMES M. BURNS

United States District Judge

presented by:

/s/_ Faye von Wrangel

Faye von Wrangel

U.S. DEPARTMENT OF LABOR

Attorney for Plaintiff

Dated May 22, 1986

A-51

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

P.O. Box 547

San Francisco, California 94104

OFFICE OF THE CLERK

U.S. DISTRICT COURT

102 U.S. COURTHOUSE

211 EAST SEVENTH AVENUE

EUGENE, OR 97401

C.A. NO. D.C. NO. Title

86-4121 CV-83-986-E BROCK

VS. SHIRK

Dear Clerk:

The following

document(s) in the above listed

cause(s) is (are) being sent to you

under cover of this letter.

[ ] Certified copy of the Court

[ ] Judgement of the national

Labor Relations Board

[ ] Certified copy of the Entry

of Dismissal

The record on appeal

will follow under separate cover.

Please acknowledge

receipt on the enclosed copy of the

letter.

Very truly yours

Clerk of Court

s/ Sylvia McCluster

Deputy Clerk

(WITHOUT ENCLOSURE)

§ 255. Statute of limitations

Any action commenced on or after May

14, 1947, to enforce any cause of

action for unpaid minimum wages, unpaid

overtim compensation, or liquidated

damages, under the Fair Labor Standards

Act of 1938, as amended [29 U.S.C.A.

§ 201 et seq.], the Walsh-Healey Act

[41 U.S.C.A § 276a et seq. ]

(a) if the cause of action accrues

on or after May 14, 1947-may _ be

commenced within two years after

the cause of action accrued, and

every such action shall be forever

barred unless commenced within

two years after the cause of action

accrued, except that a cause of

action arising out of a willful

violation may be commenced within

three years after the cause of

action accrued;

(b) if the cause of action accrued

prior to May 14, 1947-may be

commenced within whichever of the

following periods is the _ shorter:

(1) two years after the cause of

action accrued, or (2) the period

a a

§ 260. Liquidated damages

In any action commenced prior to or

On or after May 14, 1947 to recover

unpaid minimum wages, unpaid overtime

compensation, or liquidated damages,

under the Fair Labor Standards Act

of 1938, as amended [29 U.S.C.A §

201 et seq.], if the employer shows

to the satisfaction of the court that

the act or omission giving rise to

such action was in good faith and

that he had reasonable grounds’ for

believing that his act or omission

was not a violation of the Fair Labor

Standards Act of 1938, as amended,

the court may, in its sound discretion,

award no liquidated damages or award

no liquidated damages or award any

amount thereof not to exceed the amount

specified in section 216 of this title.

(May 14, 1947, ¢. 32, § 11,61 Stat.

89; Apr. 8, 1974, Pub.L 93-259, §

6(d)(2)(B), 88 Stat. 62.)

I, Edward N. Fadeley, attorney

for Frank and Joann Shirk, Petitioners

herein, and a member of the Bar of the

Supreme Court of the United States,

hereby certify that, on the 26th of

April, 1988, I servead a copy of the

attached Petition for Certiorari on:

William Brock,

Secretary of Labor,

% his attorney of Record,

Claire Brady White, Esq.

U.S. Department of Labor, Office

of the Solicitor,

200 Constitution Ave. NW,

Room N2716,

Washington D.C. 20210, and

Solicitor General,

Department of Justice,

Washington D.C. 20530,

Attorneys for Respondent.

Two Copies Served

Dated April 26, 1988.

N. Fadeley

Attorney for Petitioners

OSB No. 57027

777 High Street, #350

Eugene, OR 97401

A-56

of the court and none has called for

a vote on that suggestion. En banc

review is denied.

The court notes with disapproval

the intemperate ; and unprofessional

language of the petition. While some

tolerance is permitted for misspelled

words, there is no excuse for insulting

language in papers filed by counsel

with this court.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.