Petition for Writ of Certiorari — Mayhue's Super Liquor Stores, Inc. v. Hodgson

in the Tres:

T 26 1977

Supreme Court”

Anited States

OCTOBER TERM, 1972

No. Z 2-642

MAYHUE’S SUPER LIQUOR STORES, INC., a Florida

corporation, and CARL L. MAYHUE, d/b/a MAYHUE’S

SUPER LIQUOR STORES, INC.

Petitioners,

v8.

JAMES D. HODGSON, Secretary of Labor, United States

Department of Labor,

Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

JAMES v. JOHNSTONE, ESQUIRE

Counsel for the Petitioners

420 Lincoln Road, Suite 244

Miami Beach, Florida 33139

MIAMI REVIEW — 371-4853 — 377-3721

INDEX TO PETITION

Page

Opinion Below 2

Jurisdiction 2

Statutory Provisions and Regulations Involved 2

Statement of the Case 3

Proceedings Below 5

Reasons For Granting the Writ 7

Argument 8

Conclusion sue 21

Certificate of Service 22

II

TABLE OF CASES

Page

Brooklyn Bank vs. O'Neil, .

324 U.S. 697 (1945) 8,14

V

vs. Howell,

401 Fed. Reporter 2nd 752 (10th Circuit Court

of Appeals 1968) , 20

Coppage vs. Kansas,

35 Sup. Ct., 240, 236 U.S. 1 (1915) 7,10

Lavender vs. Kurn,

327 U.S. 645 (1946) 17

Lochner vs. New York,

198 U.S. 45; 49 L.Ed. 985, 25 Sup. Ct., 589 (1906) 7,9

Mugler vs. Kansas, 3 f

128 U.S. 628, 31 L. Ed., 205, 8 S. Ct., 288 (1887). y

Shultz vs. Hinojosa,

482 F.2d 259 (5th Circuit 1970) 8, 14, 15

State Ex rel Fulton vs. Ives,

167 So. 894 (Fla. 1986) 10

in. the

Supreme Court

of the

United States

OCTOBER TERM, 1972

No.

MAYHUE’S SUPER LIQUOR STORES, INC., a Florida

corporation, and CARL L. MAYHUE, d/b/a MAYHUE’S

11 SUPER LIQUOR STORES, INC.

Petitioners,

vs.

JAMES D. HODGSON, Secretary of Labor, United States

Department of Labor,

Respondent.

PETITION FOR WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

THE PETITIONERS, MAYHUE’S SUPER LIQUOR

STORES, INC., a Florida corporation, and CARL L.

MAYHUE, d/b/a MAYHUE’S SUPER LIQUOR

STORES, INC., respectfully request that a Writ of Cer-

tiorari issue to review the judgment of the United States

Court of Appeals for the Fifth Circuit entered in this

proceeding on September 5, 1972.

2

OPINION BELOW

The opinion of the Court of Appeals not yet reported

appears in the Appendix hereto, Page 1. The opinion was

rendered on August 2, 1972.

JURISDICTION

The judgment of the Court of Appeals for the Fifth

Circuit was entered on August 2, 1972, and the Petition

for Re-Hearing was denied on September 5, 1972, and

appears in the Appendix hereto, Page 8. This Court’s

jurisdiction is invoked under 28 USC, 81254 (1). QUES-

TIONS PRESENTED:

1. Whether the District Court properly ruled in

favor of the Petitioner in granting declaratory relief and

holding that Plaintiffs’ proposed agreement with em-

ployees in no way violates the provisions of the Fair Labor

Standards Act.

2. Whether the Court of Appeals for the Fifth Cir-

cuit erred when it reversed the District Court and held

that the proposed agreement with employees is invalid and

violates the Fair Labor Standards Act and remanding to

the District Court for further proceedings in connection

with all matters in which the agreement for repayment of

shortages was involved.

STATUTORY PROVISIONS AND

REGULATIONS INVOLVED

1. Fair Labor Standards Act of 1938; Public Law

#718; Chapter 676; Third Section Statute #2457.

2. 29 Code of Federal Regulations 778.

3

STATEMENT OF THE CASE

Petitioner is an individual doing business as MAY-

HUE’S SUPER LIQUOR STORES, INC., a Florida cor-

poration and is a retail liquor dealer in Broward County,

Florida, who had, at the time of the trial, in the Federal

District Court in and for Miami, Florida, five retail liquor

stores. During investigation of Petitioner by Agents of

the Secretary, the Petitioner made a request of the Agents

of the Secretary that the Petitioner be allowed to enter

into an agreement with employees of the Petitioner where-

by in the event of a cash register shortage the employees

would voluntarily repay missing funds to the Petitioner

within a reasonable period of time so long as the repay-

ment was not deducted from the payroll. The Agents of

the Secretary of Labor refused to allow the Petitioner to

enter into such an agreement and informed the Petitioner

that such an agreement would be in violation of the Fair

Labor Standards Act of 1938 as Amended. Counsel for

the Petitioner wrote, on October 17, 1969, to the Admin-

istrator of the Wage and Hour Division (A.9) and re-

quested a ruling on this Agreement, to-wit:

“The employee agrees to voluntarily repay said

missing funds to the employer within a reason-

able period of time. The employer shall not de-

duct said shortages from the pay check of the

employee. It is understood that said shortages

are considered to be a valid debt owed to the

employer.”

The Administrator of the Wage and Hour Division

answered in a letter dated October 23, 1969 (A.9) and

4

stated that this agreement would be illegal and regardless

of the fact the Attorneys for the Petitioner stated such

repayments would not be involved in payroll deductions,

the Administrator referred to such payment as “deduc-

tions.”

Investigation by the Secretary led the Agents of the

Secretary to believe that there were violations of the Fair

Labor Standards Act being committed by the Petitioner,

particularly in the record keeping provisions and failure

to pay for all time worked. On December 9, 1969, the Pe-

titioner filed a Petition for Declaratory Judgment under

the Fair Labor Standards Act (A. 14) stating that the See-

retary was incorrect in that the Fair Labor Standards Act

(A. 22) stating that the Secretary was incorrect in that

the Fair Lebor Standards Act was inapplicable to the

Petitioner’s right to enter into the agreement with its

employees with regard to repayment of cash shortages.

The Petition also requested that the Secretary be re-

strained and enjoined from interfering with the right of

the Petitionér to carry on its business and to have such an

agreement with its employees. IT WAS NOT ALLEGED

AND NOWHERE DOES IT APPEAR IN THE REC-

ORD THAT THE PETITIONER MADE ANY DEDUC-

TIONS OR RECEIVED ANY REPAYMENTS OF

SHORTAGES PURSUANT TO THE AGREEMENT

PROPOSED TO THE SECRETARY IN TH LETTER

OF OCTOBER 17, 1969 (A. 9).

Following the filing of the Petition, the Secretary

filed an answer denying the right of the Petitioner to

enter into such an agreement. The Secretary also filed a

counterclaim for injunction against the Petitioner alleging

‘

5

that the Petitioner had violated the provisions of §6 and

15A (2) of the Act by paying less than the minimum wage,

by failing to pay overtime for work in excess of 40 hours,

by failing to keep accurate records for wages and hours,

and that Petitioner had repeatedly and willfully violated

and was willfully violating the Act.

It was and is the contention of the Petitioner that

the Declaratory Judgment action and the proposed agree-

ment to be entered into between Petitioner and Peti-

tioner’s employees were and are separate and apart from

any of the allegations and evidence contained in the coun-

terclaim in behalf of the Secretary.

PROCEEDINGS BELOW

The Petitioner brought this action for declaratory

relief under §28: 1331, U.S.C.A.; 28: 2201, U.S. C. A.;

28: 1343, U.S. C. A.; and 29: 201, U.S.C.A., and Rules 23A

and 57 of the Federal Rules of Civil Procedure for the pur-

pose of determining a question of actual controversy be-

tween the parties concerning the interpretation of Title 29

Part 778 of the Code of Federal Regulations under the

Fair Labor Standards Act of 1938 as Amended. The case in

chief on the Petition for Declaratory Judgment had vir-

tually stipulated facts, and that was that the Petitioner

proposed entering into the suggested contract. No evidence

was put on during the case in chief of the Petitioner that

any shortages had been repaid by either direct payment or

indirect payment by the employee or by payroll deduction

pursuant to the suggested agreement (A.9). During the

case on the counterclaim of the Secretary, certain allega-

tions were made and evidence was brought forth that

shortages had been repaid by employees but they had been .

repaid pursuant to another agreement that was in no way

similar to the suggested agreement in the Declaratory

Judgment action. The other agreement, which is found on

Page 341 of the Appendix (A. 14) provided as follows:

It is fully understood that I am responsible for

shortages which occur in the cash register of

which I am in charge, with the understanding

that I am the sole operator of the particular cash

register.

“These are the terms and conditions of my em-

ployment, which are acceptable to me.

“This will authorize you to deduct from any

monies due me the amount of shortages which

may occur.”

Signed

(Signature)

Throughout the trial on the counterclaim the Peti-

tioner maintained that it did not make payroll deductions

for repayment of shortages under this agreement. The

Secretary, through its witnesses, alleged that certain short-

ages were deducted pursuant to this agreement. The Lower

Court ruled that the first proposed agreement as set forth

in Counsel for Petitioner's letter of October 17, 1969

(A.9) in no way violates the provisions of the Act.

7

IT IS UNCONTRADICTED IN THE RECORD,

HOWEVER, THAT THE COUNTERCLAIMS OF THE

SECRETARY CONTAINED NO TESTIMONY CON-

CERNING SHORTGAES OR DEDUCTIONS PUR-

SUANT TO THE AGREEMENT PROPOSED IN THE

ORIGINAL PETITION FOR DECLARATORY RELIEF.

THE FIFTH CIRCUIT COURT OF APPEALS CON-

FUSED THIS ISSUE AND ASSUMED THAT EVI-

DENCE HAD BEEN HEARD CONCERNING THE

FIRST PROPOSED AGREEMENT. IN FACT, THE

FIFTH CIRCUIT COURT OF APPEALS WENT AS

FAR AS REMANDING THE CASE TO THE DISTRICT

COURT FOR FURTHER PROCEEDINGS IN CONNEC-

TION WITH ALL MATTERS IN WHICH THE AGREE-

MENT FOR REPAYMENT OF SHORTAGES WAS IN-

VOLVED. THERE IS NOTHING IN THE RECORD IN

THE COURT BELOW SHOWING REPAYMENT FOR

SHORTAGES UNDER THE AGREEMENT THAT THE

PETITIONER SUGGESTED IN ITS PETITION FOR

DECLARATORY JUDGMENT.

REASONS FOR GRANTING THE WRIT

The Fair Labor Standards Act of 1988 makes no ref-

erence to the suggested agreement that is the subject of

the Petition for Declaratory Relief. Counsel for the Peti-

tioner relied upon the constitutionally protected right to

contract or liberty of contract as set forth in Lechner vs.

New York, 198 U.S. 45; 49 L.Ed. 935, 25 Sup. Ct., 539

(1905) and Coppage vs. Kansas, 35 Sup. Ct., 240, 236 U.S.

1 (1915).

The Fifth Circuit Court of Appeals confused the

counterclaims and the allegations concerning payroll de-

PETITIONER’S LETTER OF OCTOBER 17, 1969 (A. 9).

The Court erroneously relied upon Shultz vs. Hino

Jona, 482 F.2d 258 (5th Circuit 1970) and Brooklyn Bank

vs. O'Neil, 824 U.S. % (1945).

If the decision of the Fifth Circuit Court of Appeals

is allowed to stand, there will be case law settling a

crucial issue where the Court making the law has totally

misinterpreted the evidence in the record in the trial

court below. It is for these reasons that the Writ should

be granted.

ARGUMENT

The Petitioner is not quarreling with the portion of

the decision of the Fifth Circuit Court of Appeals which

affirmed that portion of the Final Judgment of the Fed-

eral District Court that held that the Petitioner had

willfully violated the Act. However, in the trial on the

counterclaim the Petitioner steadfastly maintained that

it had the right to enter into a “proposed” agreement with

its employees. The Petitioner never stated nor did the

Secretary ever state or even allege that the Petitioner had

violated the Act with the use of the proposed agreement.

In fact, the counterclaim for unpaid overtime and for

repayment of shortages through payroll deductions was

clearly separate and apart from the original request for

approval of the Petitioner’s proposed agreement.

The “liberty to contract” is considered both a free-

dom and a property right and is protected against arbi-

trary or unreasonable restraint.

“The right to make legal contracts of all kinds

Law, § 575.

Neither the State nor Federal Government may im-

pose restraint upon this basic freedom and liberty. As

far back as 1887 the Supreme Court of the United States

warned of legislative or governmental limitations of this

freedom. In Mugler vs. Kansas, 123 U.S. 623, 31 L.Ed. 205,

8 S. Ct., 283 (1887), Justice Harlan stated:

“It does not follow that every statute enacted

ostensibly for the promotion of these ends (police

powers), is to be accepted as a legitimate exer-

tion of the police powers of the state . . If,

therefore, a statute purporting to have been

enacted to protect the public health, the public

morals or the safety, has no real or substantial

relations to those objects or is a palpable in-

vasion of rights secured by the fundamental law,

it is the duty of the courts to so adjudge and

thereby to give effect to the Constitution.”

The reasonableness of the legislation in these areas

was tested in Lochner vs. New York, 198 US. 45; 49

10

L.Ed. 935; 25 Sup. Ct. 589 (1905). Here a New York

statute prohibiting employment in a bakery for more

than sixty (60) hours in one week or ten (10) hours in

one day was upheld on the rationale that it protected the

health and welfare of citizens and of labor people. In the

majority opinion of the Court Mr. Justice Peckham

stated:

“The statute necessarily interferes with the

right of contracts between the employer and the

employees concerning the number of hours in

which the latter may labor in the bakery of the

employer. The general right to make a contract

in relation to his business is part of the liberty

of the individual protected by the Fourteenth

Amendment of the Federal Constitution . . The

right to purchase or sell labor is part of the

liberty protected by this amendment unless there

are circumstances which preclude the right . . .”

The Florida Supreme Court has held that the citi-

zen’s right to pursue lawful business is property and the

right to contract for personal service as a means for

the acquisition of property is one of the privileges of a

citizen of the United States of which he cannot be de-

prived without invading his right to liberty. State Ex rel

Fulton vs. Ives, 167 So. 394 (Fla. 1936).

The classic case of Coppage vs. Kansas, 35 Sup.Ct.,

240, 236 U.S. 1 (1915) still stands for the immovable

concept that the right to contract cannot be taken from

an employer without due process of law and without rea-

son. This landmark case held that a Kansas statute of

1908, which would punish an employer for prescribing as

11

a condition of employment that the employee shall agree

not to become a member of a labor organization, was re-

pugnant to the due process clause of the Fourteenth

Amendment and was to be void. Certainly, the law today

precludes such “yellow-dog” contracts, but the verbiage

in the opinion of Justice Pitney and of the dissenting

opinion of Justice Holmes puts great weight at the im-

portance of applying reason and care when depriving one

of the property right to enter into a contract:

“The principle is fundamental and vital. Included

in the right of personal liberty and the right of

private property-partaking of the nature of each

—is the right to make contracts for the acquisi-

tion of property. Chief among such contracts is

that of personal employment, by which labor and

other services are exchanged for money or other

forms of property. If this right be struck down

or arbitrarily interfered with, there is a substan-

tial impairment of liberty in the long established

constitutional sense. The right is as essential to

the laborer as to the capitalist, to the poor as to

the rich; for the vast majority of persons have

no other honest way to begin to acquire property,

save by working for money. An interference

with this liberty so serious as that now under

consideration, and so disturbing of equality of

right, must be deemed to be arbitrary, unless it

be supportable as a reasonable exercise of the

police power of the state.”

“In order to satisfy the constitutional require-

ment of due process, a state or federal statute, or

municipal ordinance creating and defining an of-

12

fense and fixing the punishment therefor must

be a reasonable exercise of power possessed

There is a great void of case law dealing with this

concept of repaying cash shortages voluntarily. Counsel

for the Secretary throughout the trial and in anticipation

of his brief cites cases allegedly on point which deal with

actual payroll deduction fact situations. There is no simi-

larity because, as Judge Fay stated, the reason for his

granting a declaratory judgment is that this is not a pay-

roll deduction, but that this is a voluntary repayment of

a cash shortage and, although the Secretary and hia agents

refuse to recognize the logie of this fact pattern, it is ever

present.

Our American history has seen a great change in

labor-management relations beginning in the 18508 when

trade unionism began its move to better employees’ work-

ing conditions. Indeed the need for such reform was evi-

dent and the culmination of the reforms arrived in the

3078 with the Social Security Act in 1933, the Wagner Act

in 1987 and the Fair Labor Standards Act in 1938.

Throughout the history management reluctantly ac-

quiesced to the fact that the government and the em-

ployees, through their unions, were infringing more and

more upon the rights of management to manage.

18

A new philosophy and concept of democracy, which

added a new dimension to labor-management relations,

brought forth the phenomenon of government's interfer-

ence with management’s right to run its business. Con-

sistent with this social change certain “ground rules”

arose. It became mandatory for employers to closely fol-

low the “ground rules” as interpreted by field investiga-

tors called “compliance officers”, who freely interpret

the law with the help of interpretative bulletins and

without the help of a judge, a jury, or the Congress. Such

an interpretation was requested by Counsel for the Pe-

titioner in his letter to the Wage-and-Hour Division Ad-

ministrator on October 17, 1969, (A.9). The answer to

the letter (A.12) speaks for itself. Judge Fay did no

more than what the Administrator should have done in

October of 1969. Now the blinders have been removed

from the Commissioner and, in accordance with Judge

Fay’s Declaratory Judgment in favor of the Petitioner,

the Commissioner must heed the warnings of the tax pay-

ing entrepreneur.

Throughout the trial of this cause compliance officer

Reid stated the Secretary’s position to be that the Secre-

tary was not objecting to the concept of taking back

moneys from employees at all, but he was applying a

mathematical formula and labeling this act a payroll

deduction and stating that the monies may not be repaid

by the employees in this fashion if it is one day, one week

or one year after the shortage has been discovered.

Judge Fay’s words in Paragraph 7 on Page 8 of the

Findings of Fact and Conclusions of Law (A. 30) leave

no question as to the justice of the position taken by the

Petitioner. Anything less than this position invites these

employees to steal money from the Petitioner.

14

The Fifth Circuit Court of Appeals in its opinion of

August 2, 1972, seemed to hold that Brooklyn Bank vs.

O'Neil, 324, U.S. 697 (1945) and Shultz vs, Hinojosa, 432

F.2d 259 (5th Circuit 1970), are controlling and deal with

the question at bar. This is error. In the Brooklyn Bank

case, an employee named O’Neil had overtime pay due

him from the Bank. The Bank tendered him a check

which did not include liquidated damages and the Bank

also had O’Neil sign a release and waiver in consideration

of having received the check. This is the “waiver” that

the Secretary argued and that the Fifth Circuit Court of

Appeals held is analogous to the so-called “waiver” in the

case at bar. O’Neil waived his right to liquidated damages

without advice of Counsel. In the fact pattern set forth

in the Petition for Declaratory Judgment and the letter

of the Petitioner of October 17, 1969 (A.9) the employee

waives nothing but is simply agreeing to repay cash

shortages to the Petitioner voluntarily within a reason-

able time. The verbiage in the Brooklyn Bank case is also

of interest. The Court says on Page 24:

“The statute was a recognition of the fact that

due to the unequal bargaining power as between

employer and employee certain segments of the

population required federal compulsory legisla-

tion to prevent private contracts on their part

which endangered national health and efficiency

and as a result the free movement of goods in

interstate commerce. To accomplish this purpose

standards of minimum wages and maximum

hours were provided...”

Indeed there is unequal bargaining power but it goes

the other way in the case at bar. The Labor Department

15

provides free legal services for the employees who al-

legedly complained about the Petitioner. Not only does

the Labor Department oppose the Petition for Declara-

tory Relief but through its counterclaims and its parad-

ing of witnesses throughout the trial, the Government

succeeds in confusing the Appellate Court into believing

that the alleged shortage deductions are directly con-

nected with the proposed agreement in the Petition for

Declaratory Relief. There is indeed unequal bargaining

power here and that is that the Secretary has, at its

disposal, free legal talent that it provides for the em-

ployees.

The Court in the Fifth Circuit Court of Appeals holds

that Shultz vs. Hinojosa, 432 F.2d 259 (5th Circuit 1970)

is controlling. The case is far afield and very distinguish-

able from the case at bar. The Hinojosa case deals with

the question of deducting from minimum wages the cost

of furnishing butcher knives and honing steel and speci-

fied articles of clothing as a condition of employment.

Interestingly enough Hinojosa deals with direct deduc-

tions from payroll for these items. The Petitioner’s case

in the Declaratory Judgment action does not deal with

payroll deductions but specifically precludes using the

payroll deduction method. In Judge Fay’s Judgment

(A. 30):

“With regard to plaintiffs’ petition for a declara-

tory judgment against the Secretary, the court

declares and concludes, as a matter of law, that

the plaintiffs’ agreement with its employees en-

trusted with money as set forth in paragraph 9

of the Findings of Fact, in no way violates the

provisions of the Act. To hold otherwise would

16

amount to a “judicial invitation” to such em-

ployees to steal. Certainly the Act is not in-

tended to prevent an employer from protecting

his property, including assets in the form of

cash. Such losses, however, should not be de-

ducted from the employees pay whether wages

are being paid in cash or by check. The agree-

ment being approved by the court contem-

Act.”

The Fifth Cireuit Court of Appeals has usurped the

fact finding right of the trial court. On Page 6 of the

Decision of August 2, 1972, (A.5) the Court states the

following:

—

“The ‘judicial invitation’ to steal argument is

not persuasive. There is no evidence that MAY-

HUE’S shortages were the result of theft on

the part of the cashiers or were in any way

different from the usual losses which are to be

expected where cashier-employees handle a large

number of transactions. The agreement re-

quired repayment regardless of the reason for

the shortages. If the agreement required only

repayment of money that the employee himself

took or misappropriated it obviously would not

collide with the Act. As a matter of law the

employee would owe such amounts to the em-

ployer, and as a matter of fact, the repayment

of monies taken in excess of the money paid to

the employee in wages would not reduce the

17

amount of his wages. This case is distinguishable

from the situation where an employee has taken

some money, has had the use of it, and is re-

quired to return it. In such a case there would

be no violation of the Act because the employee

has taken more than the amount of his wage

and the return could in no way reduce his wage

below the minimum.”

Why does the Court assume that shortages are a

necessary part of cashier operations? What facts in the

record show this to be the case? This is clearly an as-

sumption on the part of the Appellate Court which it

has no right to make. Why would it be correct if the

agreement required only repayment of money that the

employee himself took or misappropriated? Why is this

more correct than the agreement set forth by the Peti-

tioner in its letter of October 17, 1969 (A.9)? There is

no answer for these questions.

The court has gone beyond the powers of the Appellate

Court. In Lavender vs Kurn, 327 U.S. 645 (1946), this

Court held that:

“Only when there is a complete absence of pro-

bative facts to support the conclusion reached

does a reversible error appear. But where, as

here, there is an evidentiary basis for the jury’s

verdict, the jury is free to discard or disbelieve

whatever facts are inconsistent with its conclu-

sion. In the Appellate Court’s function as ex-

hausted when that evidentiary basis becomes

apparent, it being immaterial that the court

might draw a contrary inference or feel that an-

other conclusion is more reasonable.”

18

In the case at bar, the lower court had a non-jury

trial. Therefore, Judge Fay was the Trier of facts as well

as law. In the opinion of Judge Fay the agreement of the

Petitioner as proposed to the Secretary did not violate

the Fair Labor Standards Act. The Fifth Circuit Court

of Appeals has taken it upon themselves to assume facts

not in evidence and that is that the shortage repayments

would include monies that were taken out of the register

by someone other than the employee involved. There is

nothing at all in the record concerning this presumption.

Farther the Court imposes its reasoning and fact-

finding on the Trial Court on page 6 of the Decision of

August 2, 1972 (A. 6), when it says the following:

“The voluntary-involuntary dichotomy is mean-

ingless for two reasons. First, if the intent of

the parties were to make repayment purely vol-

untary on the part of the employee, an agree-

ment would not be necessary. The agreement

would be pointless. Yet the employer requires

the execution of the agreement as a condition of

employment. Second, the provision in the agree-

ment that the shortages are considered to be a

valid debt owed to the employer obviously con-

trols the matter and expresses the intent of the

party. It overrides any argument that the re-

payment is voluntary on the part of the em-

ployee.”

This is an invasion of the facts and of the reasoning

of the trial court. The Appellate Court is here saying

that there can be no such thing as a voluntary agreement

between an employer and an employee! Perhaps if the

19

facts in the record showed that the Petitioner was an

employer applying the standards of employee relation-

ships applied in the 1850’s and in the sweatshops of those

years, there could be reason for this application of arbi-

trary appellate fact finding. There is none in this record

and the Court is compelled to reverse the Fifth Circuit

Court of Appeals.

Finally, the Appellate Court argues on Page 7 of the

Decision of August 2, 1972 (A.6):

“With the employees’ financial picture burdened

with the valid debt of the shortages, he is re-

ceiving less for his services than the wage that

is paid to him. Whether he pays the valid debt

out of his wages or other resources, his effec-

tive rate of pay is reduced by the amount of such

debt, When it is reduced below the required

minimum wage the law is violated.”

There is no logic in this argument as there is no

answer to the question why is the effective rate of pay

reduced? It has been made quite clear since the initial

letter to the Secretary of October 17, 1969, (A. 10) that

the Petitioner has no intention of deducting the shortages

from payroll checks. It was made clear in the record that

there would be, under the proposed agreement, no re-

percussions to the employee if he refused to pay this

“valid debt”. And yet the Fifth Circuit Court of Appeals

arbitrarily says that there can be no voluntary agreement,

that this is a payroll deduction even though the amount

is not deducted from the pay check, and that the actual

monies received by the employee are below the Federal

minimum wage and in violation of the Fair Labor Stand-

ards Act of 1938 as amended.

20

In Chicago Rock Island and Pacific Railway Company

JAMES V. JOHNSTONE, ESQUIRE

Counsel for the Petitioners

420 Lincoln Road; Suite 244

Miami Beach, Florida 33189