# Appendix — Harold Levinson Associates, Inc. v. Chao

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Appendix
- **Published:** January 1, 2005
- **Citation:** 546 U.S. 933

## Text

la

UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT

THIS SUMMARY ORDER WILL NOT BE PUBLISHED
IN THE FEDERAL REPORTER AND MAY NOT BE
CITED AS PRECEDENTIAL AUTHORITY TO THIS OR
ANY OTHER COURT, BUT MAY BE CALLED TO THE
ATTENTION OF THIS OR ANY OTHER COURT IN A
SUBSEQUENT STAGE OF THIS CASE, IN A RELATED
CASE, OR IN ANY CASE FOR PURPOSES OF COL-
LATERAL ESTOPPEL OR RES JUDICATA.

No. 04-0509-CV
Feb. 23, 2005

UPON DUE CONSIDERATION of this appeal from a
judgment of the United States District Court for the East-
ern District of New York, it is hereby ORDERED,
ADJUDGED AND DECREED that the judgment of the
district court is AFFIRMED.

ELAINE L. CHAO,
Plaintiff-Appellee,

V.

HAROLD LEVINSON ASSOCIATES, INC., A Corporation, and
EDWARD BERRO, Individually and as President,

Defendant-Appellants.

2a

ROBERT E. GOLDMAN, New York, N.Y. (Andrew M.
Lankler, Idelle R. Abrams, Lankler & Car-
ragher, LLP, New York, NY, on the brief), for
Appellant.

JOAN BRENNER, Attorney, United States Department
of Labor, Office of the Solicitor, Washington,
DC (Howard M. Radzely, Solicitor of Labor,
Steven J. Mandel, Associate Solicitor, Paul L.
Frieden, Counsel for Appellate Litigation, on
the brief), for Appellee.

PRESENT: SOTOMAYOR, KATZMANN, Circuit Judges,
and CEDARBAUM,* District Judge.

SUMMARY ORDER

Defendant-appellants Harold Levinson Associates and
Edward Bello appeal from a December 31, 2003 judgment
entered in the United States District Court for the Eastern
District of New York (Charles R. Wolle, J., sitting by des-
ignation). We assume the parties’ familiarity with the facts
and procedural history of this case. On this appeal, defen-
dant-appellants Harold Levinson Associates and Edward
Bello raise two issues previously decided by the district
court and this Court. See Harold Levinson Assocs., Inc. y.
Chao, 37 Fed. Appx. 19 (2d Cir. 2002); Herman v. Harold
Levinson Assocs., Inc., No. CV-95-1721 , 2001 WL 34088698
(E.D.N.Y. Apr. 20, 2001). They argue (1) that they are

* Hon. Miriam Goldman Cedarbaum, United States District Judge
for the Southern District of New York, sitting by designation.

3a

entitled to a credit of $529,000 against their liability under
Section 7(h) of the Fair Labor Standards Act, 29 U.S.C.
§ 207(h), and (2) that the formula for computation of dam-
ages specified by this Court on remand does not yield a just
and reasonable approximation of overtime hours worked
because it fails to take into account the growth of defen-
dants’ business over time. We note that the district court
was correct that these issues were decided against defen-
dants in this Court’s prior order and were outside the scope
of our order on remand. We do not reach plaintiff’s argu-
ment that the doctrine of the law of the case bars reconsid-
eration of these issues, however. The district court in its
discretion received new evidence and argument, and we
agree with its determination that defendants’ arguments are
wholly without merit. See F urlong v. Shalala, 238 F.3d 227,
235 n. 4 (2d Cir. 2001) (noting that doctrine of law of the
case is purely discretionary); DiLaura v. Power Auth., 982
F.2d 73, 76 (2d Cir. 1992) (noting that the doctrine is not a
limit on a court’s power to reconsider its decisions).
Defendants fail to establish that the $529,000 in question
was paid for any of the purposes specified at 29 U.S.C.
§ 207(h)(2), and thus their claim that this Court’s prior
denial of a § 207(h) credit was error is baseless.! See
Haroid Levinson Assocs., Inc., 37 Fed.Appx. at 20 (reject-

| Compare 29 U.S.C. § 207(h)(2) (providing, via cross-reference
to 29 U.S.C. § 207(e)(5), that credit is available for, inter alia, “com-
pensation provided by a premium rate for certain hours worked by the
employee” in excess of the maximum applicable workweek) with
Defs.’ Br. at 18 (arguing that pretrial stipulations bind this Court to
find that the funds in question were premium “pay for which no over-
time was worked”). Defendants fail to point to any evidence suggest-
ing that § 207(e)(5), (6) or (7), as incorporated in § 207(h)(2), are
applicable.

4a

ing claim to offset because “this case does not involve pay-
ments that satisfy the requirements of [§ 207(h)]”). As to
the calculation of damages, the district court correctly
found that the evidence adduced by defendants at the sec-
ond trial did not call into question the reasonableness of the
formula this Court previously settled on to determine over-
time hours worked between May of 1992 and October of
1993. See id. at 22. Defendants’ evidence consisted of a
damages calculation which assumed, quite implausibly,
that overtime person-hours grew in direct proportion to
gross sales measured in dollars or sales measured by the
number of cigarette cartons shipped (defendants do not
bother to specify which). There was no evidence to support
the crucial assumption that HLA took no steps to increase
productivity as its business grew; indeed, as the district
court correctly found, there was no direct evidence at all
concerning the impact of this growth on HLA’s personnel to
rebut the credible testimony of employees at the first trial
that their hours remained relatively constant during the
relevant period. See id. The calculations did not include
even the rudimentary step of controlling for change in the
number of employees over time, which would certainly
affect the number of overtime hours worked. This Court’s
instructions in its prior order yield a reasonable estimate of
damages, and the district court did not err in rejecting
defendants’ unreasonable and belatedly proffered alterna-
tive. See Anderson v. Mt. Clemens Pottery Co., 328 U.S.
680, 687-88, 66 S.Ct. 1187, 90 L.Ed. 1515 (1946); Reich v.
Southern New England Telecomm. Corp., 121 F.3d 58, 67
(2d Cir.1997). Defendants assign no other error to the cal-
culation the district court performed pursuant to our
instructions.

Sa

For these reasons, we affirm the judgment of the district
court in all respects.

121 Fed.Appx. 918, 2005 WL 428787 (2nd Cir.(N.Y.))

6a

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK

No. 95 cv 1721 (CRW)
December 30, 2003

ELAINE L. CHAO, Secretary of Labor,
United States Department of Labor,

Plaintiff,
—against—
HAROLD LEVINSON ASSOCIATES, INC., A Corporation, and
EDWARD BERRO, Individually and as President,

Defendants.

FINDINGS OF FACT, CONCLUSIONS OF LAW,
AND JUDGMENT FOR PLAINTIFF ON REMAND

On August 4, 2003, the undersigned visiting Senior
United States District Judge (presiding in this case upon
intercircuit assignment) concluded a bench trial on remand,
then set a briefing schedule requiring final briefs and pro-
posed decisions to be filed by September 2, 2003. With the
case now ready for ruling, the court files this remand deci-
sion containing findings of fact, conclusions of law, and
directions for entry of final judgment. The clerk of court
shall enter judgment for plaintiff and against defendants in
the amount of $831,147.18 for actual damages and liqui-
dated damages allocated to the underpaid employees as set
forth in plaintiff’s exhibits 1 and 2 received in evidence at
trial. Plaintiff is also entitled to the costs of this action.

Ta

Background. In September of 2000, the court held a
bench trial and thereafter filed Findings of Fact, Conclu-
sions of Law, and a Judgment for plaintiff (the “earlier
judgment”), awarding plaintiff total damages of $991,669.16,
for distribution to employees and former employees of the
defendants.

Following appeal, the United States Court of Appeals
for the Second Circuit in an unpublished “summary order”
dated May 22, 2002, affirmed in part and vacated and
remanded in part. Following remand, the undersigned Senior
United States District Judge first held a hearing on plain-
tiff’s motion for recusal, then denied the motion. A one-
day bench trial followed several months later.

With the record now complete, and final briefs sub-
mitted, the court enters this remand decision that rules on
reserved evidentiary questions and decides the issue
remanded by the Court of Appeals. The court also addresses
and decides questions the defendants believe the Court of
Appeals left open.

The parties disagree about what issues the Court of
Appeals remanded. Plaintiff contends this court’s only task
is to recalculate the damages awarded to all but three
employees, and to recalculate for only one of the two rele-
vant time periods, the so-called PCX period from May of
1992 to October of 1993 which preceded defendants’
installation of a time clock. Defendants, in contrast, read
the Court of Appeals decision much differently, arguing
that the court should consider their proffered new expert
opinion testimony, then conclude that defendants may
credit excess overtime payments made during the so-called
ADP period against underpayments of overtime pay during
the earlier PCX period.

8a

The plaintiff proffers the only sound reading of the court

of appeals decision. At page three of the Summary Order,
that court wrote:

“We are unable, however, to accept the importation of
the average weekly hours worked for the ADP period
as the assumed number of hours worked for each
given week during the PCX period. The time-clock
records demonstrate that hours tended to fluctuate
from one week to the next. Given this reality and
given that many of the derived PCX hours are based
on departmental rather than individual averages, we
find that actual hours worked by each individual
employee for each specific PCX week cannot be
derived as a matter of reasonable inference. Because
damages are awarded for weeks during which the
derived hours exceeded the payroll record hours, but
not offset by weeks during which the payroll records
exceed the derived hours, assuming that in each week
of the PCX period each employee worked precisely
the average number of hours worked unfairly penal-
izes the defendants. We therefore remund for compu-
tation of damages (for all employees other than
Steven Hladek, Sylvia Capizzi, and Edward Krulish,
with respect to whom we affirm the damage amounts
for both the ADP period and the PCX period) based
on comparison of the total hours worked by each
employee for the entire PCX period (computed by
multiplying the imported ADP weekly average by total
PCX period weeks worked) against total hours com-
pensated for the PCX period. We leave to the District
Court’s discretion the issue of what pay rate should be
used for computing PCX period damages where an

9a

employee’s pay rate changed during the PCX period.”
[Emphasis supplied. ]

The court of appeals affirmed in explicit language all
other aspects of the court’s findings, conclusions, and the
earlier judgment that defendants had appealed. And the
Summary Order concluded with this final paragraph a;

page 7,

Thus, the sole issue for resolution on remand is calcu-
lation of damages for the PCX period for employees
other than Steven Hladek, Sylvia Capizzi, and Edward
Krulish. In all other respects, we affirm the judgment
of the District Court. The judgment of the District
Court is AFFIRMED in part, and VACATED AND
REMANDED in part.

Remanded Damage Recalculation. During trial on
remand, the court received in evidence the entire record of
the first bench trial, supplemented by exhibits proffered by
the plaintiff and testimony and exhibits proffered by
defendants. Plaintiff’s exhibits included remand exhibits 1
through 6 that accurately set forth the mathematical calcu-
lations called for by the above-quoted portions of the court
of appeals decision. Defendants have not presented any
credible challenge to those calculations. The plaintiff’s
exhibits and underlying payroll data from defendants’
records support the unpaid overtime pay damages and liq-
uidated damages for the PCX period calculated as directed
by the court of appeals: comparison of the total hours
worked by each employee for the entire PCX period (com-
puted by multiplying the ADP weekly average by total
PCX period weeks worked) against total hours compen-
sated for the PCX period.

10a

No recalculation is required for the ADP period when
defendants provided a time clock, nor for the employees
Hladek, Capizzi, and Krulish for either the PCX period or
ADP period. The court of appeals affirmed calculation of
damages sustained by those three employees in the second-
to-last paragraph of its decisicn.

The Previous Bench Decision Revisited. Before con-
cluding this remand decision and judgment, the court
reviewed the entire record, its earlier judgment, and its
detailed findings and conclusions. The court now holds
there is no evidentiary basis for the several contentions
urged by defendants following remand. »

Cases cited by defendant suggest a district court on
remand may in unusual circumstances reopen issues not
explicitly decided by a court of appeals. See U.S. y,
Cerami, 563 F.2d 26, 33 (2d Cir. 1977) (exceptional cir-
cumstances permit defendant to raise new issues before
trial court in second Rule 60(b)(6) proceeding); c.f U.S. v.
Uccio, 940 F.2d 7533, 758 (2d Cir. 1991) (dictum) (court
of appeals addresses reopened issues but adheres to its
previous decision). Contra U.S. v. Fernandez, 506 F.2d
1200, 1202 (2d Cir. 1974) (quoting J. Moore, Federal Prac-
tice, ]0.-404[10], at 571 (2d ed. 1974)):

Where a case has been decided by an appellate court
and remanded, the court to which it is remanded must
proceed in accordance with the mandate and such law
of the case as was established by the appellate court.

Munro v. Post, 102 F.2d 686, 688 (2d Cir. 1939) (district
court has duty to follow ruling made by court of appeals in
earlier stage of case).

lla

Recognizing that the court of appeals, in a second view of
this case, may be persuaded that this is an exceptional case
Tequiring the district court to reopen all issues, this court
during the remand trial permitted defendants to present all
their evidence and arguments, making a plenary trial record.
Rulings were reserved on plaintiff’s objections to admissi-
bility of defendants’ expert witness testimony and exhibits.

Rulings on plaintiff's objections. For the purpose of the
€xpanded review this court has undertaken, the court now
Overrules plaintiff’s objections to the foundation for defen-
dants’ new evidence. The court receives that challenged evi-
dence in order that the court may determine whether all
evidence supports its previous judgment and its findings of
fact and conclusions of law entered after the first trial. So
the defendants’ new evidence is received and considered.
The court finds, however, that the expert testimony is enti-
tled to little weight.

The expert witnesses had no more data to review than the
plaintiff used in its recalculation based on the new formula
prescribed by the court of appeals. The expert witnesses did
not use the above-quoted formula to calculate PCX period
backpay damages. Their attempt to credit alleged PCX
Overpayments against ADP unpaid overtime violates the law
precluding such adjustments in the absence of a valid pre-
payment plan that would comply with 29 U.S.C. section
207(f), such as a so-called Belo plan. The experts’ attempt
to use growth in sales and product carton volume to reduce
PCX period weekly hours was entirely unpersuasive. Defen-
dants failed to establish a correlation between hours ware-
house and driver employees worked, compared to the sales
and product volume they produced. The court reasonably
infers that employees performing assembly, loading, and

12a

delivery tasks may well be able to handle much greater vol-
ume without an increase in their hours at work or the num-
ber of employees performing the tasks. In addition, the
experts incorrectly understood the issues of law decided by
the court of appeals; they assumed payments of alleged
excess overtime and holiday pay in the PDX time period
could be offset against ADP period underpayments.

It is noteworthy that the witness Andrew De Francesco,
defendants’ present CFO, and a CPA, had no persenal knowl-
edge of defendants’ operations in the PCX period before he
held that position with defendants, so his opinions about
business operations during PCX period are suspect. The
court gives little weight to the testing of defendants’ witness
CPA, Alan A. Schachter, because he relied on the De
Francesco testimony and had little understanding of the law
governing required prepayment plans. And the other expert
witnesses Cort and Klebbersmith relied on flawed analyses of
data concerning comparative sales volume, carton count, and
number of employees performing work in the PCX and ACP
periods to support defendants’ claim of overpayments cred-
its from the later to the earlier PCX period. Defendants’ new
evidence presented during the remand trial was not persua-
Sive.

Findings of faci. Because defendant failed to keep accu-
rate records of hours worked and willfully failed to com-
pensate for overtime hours in both the PCX period and ACP
period, the court finds entirely inadequate their present
efforts to reconstruct hours employees worked in the PCX
period, and their claims of basic unfairness of the previous
judgment finding that the plaintiff had proved defendants
liable for underpayments and liquidated damages.

13a

With its present review of the plenary remand record now
complete, the court reaches the same findings of fact and
conclusions of law that were contained in its previous judg-
ment, except for the PDX period damages that are here
recalculated based on the plaintiff’s evidence.

Conclusions of law. This court’s conclusions of law are
those set forth in the previous judgment, as affirmed by the
court of appeals in all respects except for the method of cal-
culating PCX damages for all but three employees.

Judgment on remand. The clerk of court shall enter judg-
ment for plaintiff, requiring defendants Harold Levinson
Associates, Inc. and Edward Berro to pay to plaintiff the
sum of $423,823.59 in unpaid overtime wage compensation
and $407,323.59 in liquidated damages, for a total of
$831,147.18, as set forth in the plaintiff’s exhibits reflecting
the plaintiff’s recalculation of PCX damages, added to the
damages affirmed by the court of appeals.

The defendants are ordered to pay this total amount to the
plaintiff on or before January 28, 2004, by delivering to
plaintiff a certified check for $831,147.18 payable to the
U.S. Department of Labor, Wage and Hour Division, c/o
Bank of America, P.O. Box 845229, Dallas, Texas 75283-
5229. Simultaneously with the delivery of the original
check, defendants shall mail copies of the check and trans-
mittal letter to plaintiff’s counsel of record.

Neither defendants nor anyone on their behalf shall
directly or indirectly solicit or accept the return or refusal of
any sums paid under this judgment. Plaintiff shall distribute
the defendants’ payments to the employees involved, or to
their estates if that is necessary; any sums not distributed to
the employees named herein, or to their personal represen-
tatives because of inability to locate the proper persons or

14
l4a

because of such persons’ refu

be deposited with the Clerk of efusal to accept such sums, shall
such money with the TreasureiK Of this Court, who shall deposit
to 28 U.S.C. § 2041-2042. ‘urer of the United States pursuant

Plaintiff is awarded costs of
This judgment shall be jointS of this action from May 2, 1995.

defendants. oint and several against the two
SO ORDERED.
Dated this 30th day of Decemt
ember, 2003.
Is/_ C

C) CHARLES R. WOLLE

U CHARLES R. WOLLE, JUDGE

Si UNITED STATES DISTRICT COURT

Ez Sitting by designation in the
Eastern District of New York

Ee ee ee ae

lSa

UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT

THIS SUMMARY ORDER WILL NOT BE PUBLISHED
IN THE FEDERAL REPORTER AND MAY NOT BE
CITED AS PRECEDENTIAL AUTHORITY TO THIS OR
ANY OTHER COURT, BUT MAY BE CALLED TO THE
ATTENTION OF THIS OR ANY OTHER COURT IN A
SUBSEQUENT STAGE OF THIS CASE, IN A RELATED
CASE, OR IN ANY CASE FOR PURPOSES OF COL-
LATERAL ESTOPPEL OR RES JUDICATA.

Docket No. 01-6105
May 22, 2002

United States Secretary of Labor brought enforcement
action against employer alleging violation of Fair Labor
Standards Act (FLSA) overtime provisions. Following
bench trial, the United States District Court for the Eastern
District of New York, Wolle, J., entered judgment against
employer and awarded back-pay damages of just under $1
million. Employer appealed. The Court of Appeals held
that: (1) testimony by former employees sustained judg-
ment, but (2) District Court made improper assumption
regarding average weekly hours worked after employer’s
acquisition of time clock.

Affirmed in part and vacated and remanded in part.

|
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hash
Pipa
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l6a

HAROLD LEVINSON ASSOCIATES, INC., a Corporation, and
EDWARD BERRO, Individually and as President,

Defendants-Appellants,

Vv.

ELAINE L. CHAO, Secretary of Labor,
United States Dep’t of Labor,

Plaintiff-Appellee.

Appeal from the United States District Court for the
Eastern District of New York (Wolle, J.).!

Robert E. Goldman, Esq., Goldman & Weintraub, New
York, NY, for Defendants-Appellants.

Joan Brenner, Esq. (Eugene Scalia, Steven J. Mandel,
Paul L. Frieden, on brief), U.S. Dept. of Labor,

Office of the Solicitor, Washington, DC, for
Plaintiff-Appellee.

PRESENT: OAKES, KATZMANN, Circuit Judges, and
J. GARVAN MURTHA,” District Judge.

]

The Honorable Charles R. Wolle of the United States District Court
for the Southern District of Iowa, sitting by designation.

The Honorable J. Garvan Murtha of the United States District
Court for the District of Vermont, sitting by designation.

2

17a
SUMMARY ORDER

ON CONSIDERATION WHEREOF, IT IS HEREBY
ORDERED, ADJUDGED, AND DECREED that the judg-
ment of the District Court be and it hereby is AFFIRMED in
part, and VACATED AND REMANDED in part.

The defendants appeal the decision of the District Court fol-
lowing a bench trial finding the defendants liable for a failure
properly to pay overtime compensation as required by 29
U.S.C. § 207(a), and awarding total damages of $991,669.16
to plaintiff for distribution to employees and to former
employees of the defendants. For the reasons that follow, we
affirm the District Court’s finding of liability, but remand for
partial recalculation of damages.

We review a district court’s bench trial findings of fact for
clear error and its conclusions of law de novo. LeBlanc v.
Cleveland, 198 F.3d 353, 356 (2d Cir. 1999). Factual findings
“will not be set aside unless they are without adequate support
in the record, are against the clear weight of the evidence, or
are the product of an erroneous view of the law.” Ezekwo v.
New York City Health & Hosps. Corp., 940 F.2d 775, 780 (2d
Cir. 1991).

The District Court’s finding that the defendants had failed
properly to record overtime hours and pay proper compensa-
tion for such hours is not clearly erroneous. Several former
employees, all of whom the District Court found “credible,”
testified that they in many weeks worked more hours than they
were paid for, and that the defendants’ time records did not
properly reflect hours worked. The defense offered no wit-
nesses to rebut the testimony of the employees who testified
for the plaintiff. The District Court’s findings about various
irregularities within the defendants’ payroll system—that
employees received steady pay regardless of hours worked
even though no prepayment plan was in effect, that no pay

18a

stubs were provided during part of the period in question, and
that even after pay stubs were distributed, such pay stubs did
not indicate hours worked—were also based on ample evi-
dence and are not clearly erroneous.

A plaintiff need not compute FLSA damages with precision.
The burden is on an employer properly to record hours, and an
employee need only as a prima facie matter present an esti-
mate of damages that is satisfactory as “a matter of just and
reasonable inference.” Anderson v. Mt. Clemens Pottery Co.,
328 U.S. 680, 686-87, 66 S.Ct. 1187, 90 L.Ed. 1515 (1946). It
then falls upon the employer to rebut the employee’s prima
facie case by providing “evidence of the ‘precise amount of
work performed’ or evidence to ‘negative the reasonableness
of the inference to be drawn from the employee’s evidence,’
[and if the employer fails to do so] the court may then ‘award
damages to the employee[s], even though the result be only
approximate.’” Reich v. Southern New England Telecommu-
nications Corp., 121 F.3d 58, 67 (2d Cir. 1997) (quoting Mt.
Clemens, 328 U.S. at 687-88). In this case, the District Court
reasonably chose to discredit the attempts by the employer to
utilize its own records to prove hours worked. Thus, the plain-
tiff needs merely to offer an estimate of damages that is satis-

~~ factory as a matter of reasonable inference.

This burden is not high, and a “representative sample” of
employees can provide a foundation for assumptions about the
overall employee pool, as long as a representative from each
relevant category of employees testifies. See Southern New
England Telecommunications Corp., 121 F.3d at 66-67 (inter-
nal citations omitted) (“it is well-established that the Secretary
may present the testimony of a representative sample of
employees as part of his proof of the prima facie case under
the FLSA. The Secretary’s burden in such cases, while not
overly onerous, is to establish a prima facie case.”’).

19a

The parties stipulated that calculation of hours for the
period during which a time-clock was in place (the “ADP
period”) would be based on such time-clock. The plaintiff
used the wage rates found in the defendants’ payroll records in
order to calculate the damages. We find this calculation
method clearly reasonable, and also find reasonable the deci-
sions of the plaintiff with respect to estimating weekly hours
for the three salaried employees and the employees who were
paid bi-weekly. We therefore affirm the District Court’s award
of $91,758.50 for the ADP period.

The PCX period calculations present more difficult issues.
As a general matter, we find reasonable the plaintiff’s attempt
to use the data derived from the time-clock as a basis for
reconstructing the hours worked during the period (the “PCX
period”) preceding the installation of the time-clock. Repre-
sentatives of each relevant employee category testified that
hours worked had remained steady throughout the PCX and
ADP periods, and the District Court specifically found that
employees generally worked similar hours during these two
periods. The defendants object to the importation of ADP
records by asserting that the company grew by 25% from the
PCX period to the ADP period, and that the ADP interval con-
tained two holiday seasons (rather than the one found during
the PCX period), which were especially busy. For these rea-
sons, the defendants argue that importing the ADP figures into
the PCX period overstates the Paychex hours. This argument
is not without some force. However, it was the defendants’
responsibility accurately to record hours. In the absence of
credible recordkeeping by the defendants, and given the testi-
mony that hours remained stable across the two periods, we
find that reference to the ADP figures provides a reasonable
method of calculating PCX period damages.

We are unable, however, to accept the importation of the
average weekly hours worked for the ADP period as the

20a

assumed number of hours worked for each given week during
the PCX period. The time-clock records demonstrate that
hours tended to fluctuate from one week to the next. Given
this reality and given that many of the derived PCX hours are
based on departmental rather than individual averages, we find
that actual hours worked by each individual employee for each
specific PCX week cannot be derived as a matter of reason-
able inference. Because damages are awarded for weeks dur-
ing which the derived hours exceeded the payroll record
hours, but not offset by weeks during which the payroll
records exceed the derived hours, assuming that in each week
of the PCX period each employee worked precisely the aver-
age number of hours worked unfairly penalizes the defen-
dants. We therefore remand for computation of damages (for
all employees other than Steven Hladek, Sylvia Capizzi, and
Edward Krulish, with respect to whom we affirm the damage
amounts for both the ADP period and the PCX period) based
on comparison of the total hours worked by each employee for
the entire PCX period (computed by multiplying the imported
ADP weekly average by total PCX period weeks worked)
against total hours compensated for the PCX period. We leave
to the District Court’s discretion the issue of what pay rate
should be used for computing PCX period damages where an
employee’s pay rate changed during the PCX period.

We reject the defendants’ argument that their purported
“overpayments” of overtime in certain weeks should offset
their liability for other weeks. The District Court found (cor-
rectly, in our view) that the defendants did not have a valid
prepayment plan complying with 29 U.S.C. § 207(f) or with
the guidance set forth in Wage and Hour Division Interpretive
Bulletin No. 4, 9953-67. While there is a difference of author-
ity with respect to whether premium pay which is creditable
pursuant to 29 U.S.C. § 207(h) may be credited across pay
periods, compare Howard v. City of Springfield, 274 F.3d

2ia

1141, 1149 (7th Cir. 2001) (“Because the statute contemplates
that overtime will be paid and calculated on a pay period basis,
it is consistent with that language to calculate and apply cred-
its in the same manner”) with Abbey v. City of Jackson, 883
F.Supp. 181, 186-87 (E.D. Mich. 1995) (not allowing a credit
across pay periods would result in a “windfall and the pur-
poses and goals of the statute would not be served”), this case
does not involve payments that satisfy the requirements of that
provision. The purported “overpayments” are largely based on
nothing more than assumptions that were stipulated for trial,
and provide no basis for a credit.

We also agree with the District Court that the defen-
dants’ violations were “willful” within the meaning of 29
U.S.C. § 255(a), and that the defendants do not satisfy the
good faith reasonable belief exception to liquidated dam-
ages provided by 29 U.S.C. § 260. A FLSA violation is
willful when “the employer either knew or showed reck-
less disregard for the matter of whether its conduct was pro-
hibited by the statute.” Herman v. RSR Security Services
Ltd., 172 F.3d 132, 141 (2d Cir. 1999) (quoting McLaughlin
v. Richland Shoe Co., 486 U.S. 128, 133, 108 S.Ct. 1677, 100
L.Ed.2d 115 (1988)). “The employer bears the burden of prov-
ing good faith and reasonableness, but the burden is a difficult
one, with double damages being the norm and single damages
the exception. To establish good faith, the employer must take

3 Our decision in this regard is not inconsistent with our decision to
remand. Our decision to remand effectively gives the defendants the ben-
efit of a credit for the PCX period, but does so not because as a matter of
law the defendants are entitled to credit one week’s overpayment against
another week’s liability, but because of the lack of foundation for the plain-
tiff’s actual computations of weekly hours for the PCX period. For the
ADP period (where the estimated hours are based directly on the time-
clock), we decline to award any credits or to order a comparison of aggre-
gate figures for the entire period.

22a

active steps to ascertain the dictates of the FLSA and then act
to comply with them.” RSR Security Services, 172 F.3d at 141-
42. The defendants’ attempt to subvert an earlier settlement
with the plaintiff, and the defendants’ utter failure to imple-
ment proper recordkeeping even after the investigation giving
rise to such settlement, support the finding that the defendants’
violations were willful and not rooted in a good faith reason-
able belief that its practices complied with FLSA.

Finally, we affirm the District Court’s holding that employ-
ees Steven Hladek, Sylvia Capizzi, and Edward Krulish were
not exempt from the overtime requirements of the FLSA. All
three employees performed some managerial functions, but
lacked the discretionary role in the organization required to
- Satisfy the “bona fide executive, administrative, or profes-
sionai capacity” exception provided in 29 U.S.C. § 213(a)(1).
It appears that the District Court declined to award liquidated
damages to Edward Krulish, presumably because of the close-
ness of the exemption issue. We affirm this decision.

Thus, the sole issue for resolution on remand is calculation
of damages for the PCX period for employees other than
Steven Hladek, Sylvia Capizzi, and Edward Krulish. In all
other respects, we affirm the judgment of the District Court.
The judgment of the District Court is AFFIRMED in part, and
VACATED and REMANDED in part.

37 Fed.Appx. 19, 2002 WL 1032708 (2nd Cir.(N.Y.))

23a

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK

No. Civ. A. CV-95-1721.
April 20, 2001

ALEXIS M. HERMAN, Secretary of Labor,
United States Department of Labor,
Plaintiff,

Vv.

HAROLD LEVINSON ASSOCIATES, INC., A Corporation, and
EDWARD BERRO, Individually and as President,

Defendants.

FINDINGS OF FACT, CONCLUSIONS OF LAW,
AND JUDGMENT FOR PLAINTIFF

WOLLE, J.

The undersigned United States District Judge, sitting by
intercircuit assignment, was assigned this case for final
pretrial proceedings and a bench trial. The trial was held
on several days in August and September of 2000, with
submission following closing arguments on September 27,
2000, and a schedule of final written proposed decisions
and briefs, the last brief filed on November 9.!

' I regret that five months have elapsed between filing of the last
briefs and filing of this decision. I have had to read, compare, and analyze
a large number of exhibits and testimony of many witnesses, including
expert witnesses. I have had difficulty comparing some witnesses testimo-
ny with the records of the defendant company. The company records did
not accurately capture the time employees actually worked during most
pay periods at issue in this lawsuit.

24a

Plaintiff has proved all of its claims; defendants have
not proved any defense to the claims. The clerk of court
shall enter judgment in favor of plaintiff and against defen-
dants for actual damages, liquidated damages, and costs of
this action, in accordance with the following findings and
conclusions.

FINDINGS OF FACT

For a better understanding of this court’s findings on
disputed questions of fact, the court precedes its fact-find-
ings with the parties’ stipulated facts contained within the
pretrial order approved by U.S. Magistrate Judge Viktor V.
Pohorelsky on June 28, 1999.

1. Defendant Harold Levinson Associates, Inc. is, and at
all times hereinafter mentioned, was a corporation duly
organized under the laws of the State of New York having
its principal office and place of business at 100 Commer-
cial Street, Plainview, New York, during the first portion
of the investigation period. Subsequently the defendant
moved to One Enterprise Place, Hicksville, New York
11801, where it is still doing business. Both places of busi-
ness are within the jurisdiction of this court and defendant
continues to be engaged in the business of wholesale dis-
tribution of candy, Cigarettes, tobacco, and related activi-
ties.

2. Defendant corporation, at all times material to this
action, regulated the employment of all persons employed
by said corporation, acted directly and indirectly in the
corporation’s interest in relation to said employees, and
was thus an employer of said employees within the mean-
ing of section 3(d) of the Act.

25a

3. Defendant Edward Berro, who resides at 9 Roseann
Drive, Woodbury, New York 11797, and who has main-
tained a place of business at One Enterprise Street,
Hicksville, New York 11801 is, and at all times hereinafter
mentioned was, President of the aforesaid corporation, in
active control and management of said defendant corpora-
tion, and was thus an employer of said employees within
the meaning of section 3(d) of the Act.

4. The business activities of the defendants, as described
herein, are related and performed through unified opera-
tion or common control for a common business purpose
and constitute an enterprise within the meaning of section
3(r) of the Act.

5. At all times hereinafter mentioned, defendants have
employed and are employing employees in and about their
place of business in the activities of said enterprise
engaged in commerce, or in the production of goods for
commerce, including employees handling, selling, or oth-
erwise working on goods or materials that have been
moved in or produced for commerce. Said enterprise, at all
times hereinafter mentioned, has had an annual gross vol-
ume of sales made or business done in an amount not less
than $500,000.00. Therefore, the said employees are
employed in an enterprise engaged in commerce or in the
production of goods for commerce within the meaning of
section (3)(s)(1)(A) of the Act.

6. Defendants admit that plaintiff’s transcriptions of the
defendants’ payroll records, as reflected in the “Levinson
Back Wage Computations—Detail Report” prepared by
William Devins and produced to defendants on or about
December 9, 1997, accurately reflect the names of defen-
dants’ employees, with some exceptions.

26a

7. Defendants admit that plaintiff’s transcriptions of the
defendants’ payroll records, as reflected in the “Levinson
Back Wage Computations—Detail Report” prepared by
William Devins and produced to defendants on or about
December 9, 1997, accurately reflect the pay period end
dates of the employees during their employment, except
for certain listed exceptions as reflected in Defendants’
Responses to Plaintiff’s Request to Admit, attached.

8. Defendants admit that plaintiff’s transcriptions of the
defendants’ payroll records, as reflected in the “Levinson
Back Wage Computations—Detail Report” prepared by
William Devins and produced to defendants on or about
December 9, 1997, accurately reflect the gross wages paid,
except for certain listed exceptions as reflected in Defen-
dants’ Responses to Plaintiff’s Request to Admit, attached.

9. Defendants admit that plaintiff’s transcriptions of the
defendants’ payroll records, as reflected in the “Levinson
Back Wage Computations—Detail Report” prepared by
William Devins and produced to defendants on or about
December 9, 1997, accurately reflect the “punch detail
report hours” for the time periods stated as reflected in
Defendants’ Responses to Plaintiff’s Request to Admit,
attached.

10. The plaintiff’s transcriptions of the defendants’ pay-
roll records, as reflected in the reports produced to defen-
dants on February 12, 1999, accurately reflect the
following data:

(a) the names and social security numbers of defen-
dants’ employees;

(b) the pay period end dates during their employment;
(c) the gross wages actually paid;

27a

(d) the “punch detail report hours”, for the time periods
stated;

(e) the hourly rates paid to employees.

11. The plaintiff’s computations of back wages due
accurately reflect the identities of defendants’ employees,
their periods of employment, their wages paid, and during
the ADP period their weekly hours actually worked.

12. The wages computed by plaintiff as due each week
in the ADP PERIOD REPORT for weeks in which over-
time hours were worked were obtained by multiplying
each employee’s regular rate times 40, plus time and one-
half that regular rate for each hour worked over 40 each
week as reflected on the “punch detail report hours” for
each employee, each week.

13. The collective bargaining agreement in force at defen-
dants’ company from May, 1992 through December, 1994
required all hourly employees to be paid time and one-half
for all hours worked in excess of 40 in a workweek.

[In addition to these thirteen paragraphs of stipulated
facts, the court finds the following facts established by a
preponderance of the evidence in this record. ]

14. This case concerns defendants’ payment of employ-
ees during the payroll periods from (1) May of 1992 to
October of 1993 (hereafter “Paychex”) when the Paychex
payroll company prepared payment records, and (2) Octo-
ber 1993 to December 1994 when the ADP payroll compa-
ny prepared pay records. In October 1993, defendants
installed a computerized time clock that produced records
of hours worked thereafter.

4

28a

15. Beginning in 1990, an FLSA investigator determined
that defendants had been violating the record-keeping and
overtime requirements of federal law by failing to record
and maintain actual hours employees worked and by fail-
ing to pay premium pay for hours worked in excess of
40 each week. Defendants agreed with the FLSA investi-
gator to make full restitution of $79,436 to 43 employees
adversely affected by the violations. The next year defen-
dants provided the investigator signed statements from the
employees whom defendants purported to pay the amounts
defendants had agreed to pay. But defendant Berro and the
defendant company’s representatives, working at Berro’s
direction, used threats of adverse employment action to
persuade most employees to sign the checks and receipts,
then return to the defendant company the money paid to
them in restitution. Defendants’ conduct in forcing
employees to return the moneys owed them for violations
of federal law persuasively proves that defendants have
not only ignored FLSA requirements then and more recent-
ly but have intentionally flaunted FLSA principles of law.
Subsequent actions by defendants in the pay periods here
in question confirm that Berro and the defendant company
have continually, willfully evaded and violated known
requirements of the FLSA.

16. The many employees that plaintiff presented to tes-
tify at trial provided credible testimony, without exception.
The court finds the employees’ testimony consistent with
the plaintiff’s contention that in the time periods May 1992
through October 1993 and October 1993 to December
1994, defendants made no sincere effort to have records
accurately reflect the lengthy hours that employees really
worked. Even when the time clock was installed in Octo-
ber 1993, the time clock included a generic program to

29a

deduct a lunch break that many employees did not take.
From May 1992 to October 1993, the payrolls were pre-
pared based on general schedules of hours for each
employee, and the employees almost always worked more
time than shown on the schedules. And the schedules did
not accurately reflect the employees’ time working at the
facility or on the road.

17. Throughout the period October 1993 to December
1994, the company did not accurately pay for hours actu-
ally worked. Hours on the ADP payroll were created not
from time actually worked but from schedules prepared to
have the gross pay defendants determined an employee
should earn match the salaries sent to ADP.

18. Throughout both time periods, employees routinely
worked Saturdays, were paid cash for their work, and
worked longer hours than shown on defendants’ records.

19. Throughout the time periods in question, employees
were hired by defendant Berro or his designees, with a net
take-home salary negotiated. They did not advise employ-
ees that they would be paid overtime compensation nor a
particular hourly rate. Warehouse employees were routine-
ly paid $80 to $120 in cash for weekend work regardless of
the number of hours actually worked. Warehouse employ-
ees credibly testified that they worked the number of hours
each week reflected on the plaintiff's summary exhibits.
Most warehouse workers worked about the same number
of hours each week, but with variations from one-fourth
hour to several hours. Many rode to and from work togeth-
er and worked from the time they arrived until the time
they left. Employees who were drivers credibly testified
they delivered to customers during many more hours than
the records reflected, as shown in the plaintiff’s summary

30a

exhibits. Drivers testified credibly that other drivers who
did not testify worked essentially the same number of
hours as the witnesses, including many overtime hours for
which no overtime was paid. Drivers continued to work
through lunch breaks even though the company excluded
break time from their payroll time.

20. Clerical employees credibly testified that all clerical
employees worked many hours for which they were not
compensated, and overtime for which they were not com-
pensated at one and one-half times their rate, as reflected
accurately on the plaintiff’s summary exhibits.

21. The warehouse employees, driver employees, and
clerical employees worked about the same number of
hours each week from October 1993 to December 1994 as
in the previous payroll periods before the company
installed a computerized time clock.

22. Notwithstanding testimony of defendants’ chief
financial officer Andrew DeFrancesco and the expert wit-
ness Alan A. Schachter, the court finds that the company
had no agreed plan to pay any employee in accordance
with a lawful prepayment plan; no such plan was in writ-
ing or pre-approved.

23. Although the collective bargaining agreement
between the defendant company and the union that repre-
sented its employees provided that employees would be
paid at a regular hourly rate plus one and one-half times
the rate for overtime hours in excess of 40 in a work
week, the company ignored those provisions in the collec-
tive bargaining agreement and the union did not protest or
seek to correct the record-keeping and overtime pay viola-
tions.

3la

24. The employees Hladek, Krulish, and Cappizzi per-
formed some supervisory and administrative duties, but
their principal tasks were ordinary non-exempt work, and
they spent most of their work time at non-exempt work.
Those employees were not exempt from the requirements
of overtime pay under the FLSA.

25. Only after January of 1995 did defendants begin
paying employees for actual hours worked, based on the
time clock installed during the ADP period. But even then,
defendants allowed employees to work longer heurs than
the time clock registered.

26. The plaintiff’s exhibits reflect as accurately as pos-
sible the actual time defendants’ employees worked and
the actual pay they received. The plaintiff properly ignored
those Paychex payroll records and time clock records that
did not square with the time employees said they actually
worked. The plaintiff’s summary exhibits provide reason-
ably accurate approximations of the hours employees
worked in each payroll period and overtime pay unpaid,
based on credible testimony of the employee witnesses.
Plaintiff’s witnesses properly used averaging to determine
the amount* defendants should have paid the employees,
because the defendants failed in their duty to keep accurate
records of hours worked and overtime hours for which pre-
mium pay was required.

27. Although the defendants’ employees rarely com-
plained that they were not paid in accordance with the
FLSA, employees did not know or understand their rights
under the FLSA. Until 1995 defendants did not provide
employees sufficient information about hours worked and
pay calculations from which they could determine the
actual hours for which they were paid, compared to the

32a

actual hours they worked. From May 8, 1992 until October
15, 1993, employees received their pay in cash in
envelopes with no pay stubs or other payroll information.
From October 15, 1993 through December 31, 1994, the
employees did not receive accurate information about their
arrival and departure times nor the working time deducted
from their pay for lunch breaks or other reasons.

28. Defendants did not prove their defense that they had
a so-called “Belo” prepayment plan with individual
employees and groups of employees to prepay overtime
compensation and stabilize employees’ weekly pay. Defen-
dants had no such written agreements or oral agreements
with employees. Defendants did not prove the fluctuation
in hours each employee worked was so great that a Belo
plan was necessary. Defendants did not calculate employ-
ees’ wages in accordance with such prepayment plans.

CONCLUSIONS OF LAW

1. Jurisdiction of this action is conferred upon the court
by Sections 16 and 17 of the Fair Labor Standards Act of
1938, as amended (29 U.S.C. § 201, et seg.) and 28 U.S.C.
§ § 1331 and 1345.

2. Defendants Harold Levinson Associates, Inc. and
Edward Berro are employers within the meaning of section
3(d) of the Fair Labor Standards Act. Defendants consti-
tute a covered enterprise within the meaning of section
3(s)(1)(A) of the Act.

3. The court overrules all objections made during trial
on which ruling was reserved. Objections have been con-
sidered in determining the weight to be given evidence.
Plaintiff’s exhibits, including summaries based on employ-

33a

ees’ testimony and inadequate yet useful records kept by
the defendant company, fairly represent and summarize the
evidence about hours employees actually worked and
amounts due for unpaid overtime compensation.

4. Defendants violated Section 7 of the Act by failing to
pay employees for all hours worked over forty in a week at
time and one-half the employee’s regular hourly rate.

5. Defendants violated Section 11(c) of the Act by fail-
ing to accurately record all the hours employees actually
worked either on a daily or weekly basis.

6. The court ruled in an Order dated August 7, 2000,
after receiving briefs and oral arguments of counsel, that
for purposes of computing proper overtime pay, each work
week stands alone. Federal law does not ordinarily allow
an employer to credit for past or future payroll time peri-
ods the money above minimum wags that employees are
paid in a given time period. See 29 C.F.R. §§ 778.104 and
106. Section 778.104 provides in pertinent part:

[p]ayment may not be delayed for a period longer than
is reasonably necessary for the employer to compute
and arrange for payment of the amount due and in no
event may payment be delayed beyond the next pay-
day after such computation can be made.

7. Defendants’ violations of the overtime and record-
keeping provisions of the FLSA were willful under the
Portal-to-Portal Act, 29 U.S.C. § 255, and therefore a
three-year statute of limitations applies. After the 1991
investigation, defendants did not seek an opinion from the
Wage and Hour Administrator or the Secretary of Labor
concerning their pay practices that are here challenged.
Before October of 1993, defendants defied the results of

34a

the Secretary’s investigation and continued to keep inac-
curate and incomplete records. Defendants did not record
the actual hours employees worked and did not compen-
sate employees at the rate of time and one-half their regu-
lar hourly rate for each hour worked in excess of 40 each
work week.

8. Defendants violated the law and their agreement with
the Secretary by forcing employees to return to defendants
the unpaid overtime compensation found due in the Secre-
tary’s 1991 investigation, unpaid wages in amounts defen-
dants had agreed to pay. Defendants threatened employees
with adverse employment consequences if employees
refused to make the requested pay-backs. The defendants’
records of payments were therefore false. This uncon-
scionable conduct proves persuasively that defendants’
violations of record-keeping and wage-payment require-
ments were intentional, willful violations.

9. During the period May 1992 to October 1993 defen-
dants falsified their records of hours worked; during the
period October 1993 to December 31, 1994, defendants
maintained multiple sets of payroll records, some purport-
ing to comply with the requirements of the Act. Defen-
dants willfully disregarded their obligations to pay
employees time and one-half their regular rate for hours
worked over 40 each work week as required by their con-
tract with the union and by the FLSA.

10. During the period May 1992 to October 1993, defen-
dants knew that employees were working more hours than
they were being paid for. Defendant Berro was present on
a daily basis and observed employees working. Defendants
scheduled and required the employees to work the number
of hours they did, often more hours than scheduled. Defen-

35a

dant Berro’s deposition testimony to the contrary was eva-
sive and not credible. Berro directed other management
personnel to pay employees his way, knowing that his way
violated the law. He rejected other officers’ suggestions
that he hire other employees and add another shift, believ-
ing his method of paying fixed salaries covering all hours
worked for all employees gave him better control of the
employees and the overall operation of the business.

11. During the period October 1993 to December 31,
1994, defendant Berro and management personnel work-
ing at his direction supervised the employees and knew
they were working the number of overtime hours they
actually worked. Defendants paid by schedules of work
rather than actual hours worked even after they had the
means to record and pay by actual hours after the installa-
tion of their time clock. During the period October 1993 to
December 1994 defendants failed to pay time and one-half
the regular rate for all hours worked over 40 each work
week even after the installation of their time clock. During
this period defendants conducted business with the actual
knowledge that employees were working on a weekly basis
more hours than they were being paid for, including over-
time hours for which no overtime rate was paid. The defen-
dants’ record-keeping and overtime violations of the Act
were willful. See McLaughlin v. Richland Shoe Co., 486
U.S. 128, 132-36 (1988); Herman v. RSR Sec. Servs., 172
F.3d 132, 141-42 (2d Cir.1999); Reich v. Waldbaum, Inc.
833 F.Supp. 1037, 1045 (S.D.N.Y.1993), aff’d, 52 F.3d 35,
39-41 (2d Cir.1995); Brock v. Super‘or Care, 840 F.2d
1054, 1062-64 (2d Cir.1988).

12. The court denies the plaintiff’s request for injunctive
relief because the plaintiff has not shown that the defen-

36a

dants are still violating the FLSA or that injunctive relief
is needed to prevent future violations of the FLSA.

13. Plaintiff has sustained the burden to prove the num-
ber of unrecorded hours all employees worked and the
back wages due to those employees who did not testify.
Testimony of the credible employees who did testify was
fairly representative of testimony those not testifying
would have presented. See Anderson v. Mt. Clemens Pot-
tery Co., 327 U.S. 680 (1946); Reich v. Southern New Eng-
land Tele. Corp., 892 F.Supp. 389, 405 (D.Conn.1995),
aff’d, 121 F.3d 58 (2d Cir.1997); Reich v. Waldbaum, Inc.,
833 F.Supp. 1037, 1045 (S.D.N.Y.1993), aff’d, 52 F.3d 35,
39-41 (2d Cir.1995); Dole v. DeSisto, 929 F.2d 789, 792-
93 (Ist Cir.1991); Martin v. Selker Bros., Inc., 949 F.2d
1286, 1297 (3d Cir.1991); McLaughlin v. DialAmerica
Marketing, 716 F.Supp. 812, 824-25 (D.N.J.1989), aff'd
sub nom. Donovan v. DialAmerica Marketing, 935 F.2d
1281 (3d Cir.1991), cert. denied, 502 U.S. 981 (1991).

14. Plaintiff established a prima facie case by a prepon-
derance of all the evidence. Employee witnesses provided
adequate evidence of the hours worked by drivers, cleri-
cals, and warehouse employees. Defendants failed credibly
to rebut the testimony of these employees. Defendants’
flawed records, together with employees’ credible testimo-
ny, established overtime compensation was not paid for all
hours employees worked over 40 in each work week. The
plaintiff’s proffered method of computation of unpaid
Overtime compensation, as set forth in Exhibits 3-9, is rea-
sonable.

15. Employees Hladek, Cappizzi, and Krulish are salaried
employees due overtime at additional half-timne their regu-
lar hourly rate for all hours worked in excess of 40 each

37a

week. Defendants did not prove they were exempt from the
Overtime provisions of the Act. See Arnold v. Ben
Kanowsky, Inc., 361 U.S. 388, 391-92 (1960); Donovan v.
Carls Drug Co., 703 F.2d 650, 652 (2d Cir.1983); Martin
v. Cooper Elec. Supply Co., 940 F.2d 896, 900-07 (3d
Cir.1991); 29 C.F.R. § 541.

16. For the period May 2, 1992 until December 31,
1994, defendants must pay $487,584.58 in unpaid over-
time compensation to 105 employees, as set forth in trial
Exhibit 10, plus $16,500 due to Edward Krulish, for a total
of $504,084.58 due those 106 employees.

17. After plaintiff credibly proved a prima facie case of
FLSA violations, defendants did not meet their burden to
rebut the plaintiff’s proof of FLSA violations. Defendants
did not prove their proffered, though unpleaded, defense
based on prepayment and delayed payment of overtime
compensation. Defendants did not prove they paid over-
time compensation to employees for all hours worked in
excess of 40 each week. See Reich v. State of New York,
3 F.3d 581 (2d Cir.1993).

18. Defendants did not plead or prove at trial the exis-
tence of a bona fide so-called “Belo” prepayment plan, nor
did defendants prove any defense to the plaintiff’s claims
of record-keeping and overtime violations of the Act. A
bona fide prepayment plan requires an explicit agreement
between the employer and employee, employees regularly
working hours less than 40 per week, and a weekly record
of the running amount of prepaid overtime. In this case,
there was no such agreement. Employees invariably
worked in excess of forty hours per week, and the defen-
dants kept no records of a running account of overtime
purported to be prepaid. Defendants failed to carry their

38a

burden to prove the existence of any valid prepayment
plan.

19. Defendants failed to carry their burden to prove they
had a reasonable and objective good faith basis for their
violations of the overtime and record-keeping provisions
of the FLSA, or that they had reasonable grounds for
believing that their record-keeping and overtime practices
were in compliance with the FLSA. See Reich v. Southern
New England Tele. Corp., 892 F.Supp. 389, 405 (D.Conn.
1995), aff’d, 121 F.3d 58 (2d Cir. 1997). Defendants were
not just reckless, they were willful in intentionally violat-
ing record-keeping and overtime pay requirements of the
FLSA.

20. Plaintiff is awarded $487,584.58 in liquidated dam-
ages, equal to the unpaid overtime compensation in the
amounts listed on plaintiff’s trial Exhibit 10. See Herman
v. RSR Sec. Servs. Ltd., 172 F.3d 132, 141-42 (2d
Cir.1999); Reich v. Southern New England Tele. Corp., 892
F.Supp. 389, 405 (D.Conn. 1995), aff’d, 121 F.3d 58 (2d
Cir. 1997); Brock v. Wilamosky, 833 F.2d 11, 19-20
(2d Cir. 1982); Martin v. Cooper Elec. Supply Co., 940
F.2d 896, 907-11 (3d Cir. 1991) (reh’g denied), cert.
denied, USS. , 112 S.Ct. 1473 (1992).

21. On or before May 14, 2001, the defendants are
ordered to deliver to plaintiff’s counsel, or other designat-
ed representative of plaintiff, a certified check or equiva-
lent payment in the total amount of $991,669.16 for
distribution to the employees who were underpaid during
periods here in question.

22. Neither the defendant Berro, nor the defendant com-
pany, nor any person on their behalf shall directly or indi-

|
'
i
£
£
Fa

39a

rectly solicit or accept their return by any employee of any
sums defendants pay to employees as damages, in accor-
dance with this decision and the judgment to be entered by
the clerk of court on April 30, 2001.

23. By noon on April 27, 2001, the parties shall submit
to the clerk of court a joint proposed judgment to be
entered by the clerk, or separate proposed judgments, from
which the court and clerk of court will enter final judgment
on April 30, 2001.

IT IS SO ORDERED.
2001 WL 34088698 (E.D.N.Y.)

Supreme Court, U.S.
FILED

AUG 3 1 2005

OFFICE OF THE CLERK

4‘
No. 04-1602

Jn the Supreme Court of the United States

HAROLD LEVINSON ASSOCIATES, INC., ET AL.,
PETITIONERS

Vv.
ELAINE L. CHAO, SECRETARY OF LABOR

ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT

BRIEF FOR THE RESPONDENT
IN OPPOSITION

PAUL D. CLEMENT
HOWARD M. RADZELY Solicitor General
Solicitor of Labor Counsel of Record

ALLEN H. FELDMAN Department of Justice

, me Washington, D.C. 20530-0001
Associate Deputy Solicitor (202) 514-2217

NATHANIEL I. SPILLER
Senior Counselor
TAMARA SUE KILLION
Attorney
Department of Labor
Washington, D.C. 20210

QUESTIONS PRESENTED

1. Whether the court of appeals correctly held that
petitioners’ liability for unpaid overtime compensation
may not be offset by a credit under Section 207(h)(2) of
the Fair Labor Standards Act of 1938, 29 U.S.C.
207(h)(2), which authorizes such credit for “extra com-
pensation” paid to employees that meet the qualifica-
tions set forth in 29 U.S.C. 207(e)(5)-(7), because peti-
tioners failed to establish that they paid the qualifying
extra compensation.

2. Whether the court of appeals was correct to
uphold the district court's finding that the Secretary
correctly calculated, as a matter of just and reasonable
inference, the amount and extent of work that em-
plovees performed without being properly compensated.

TABLE OF CONTENTS

Opinions below

Jurisdiction

PUI sk cs SRA ba SSSR KOK AORTA SES eS .
Argument

Conclusion

TABLE OF AUTHORITIES

Cases:
Anderson ve Mt. Clemens Pottery Co., 328 US.
680 (19-46) 10, 11, 12
Brock v. Wilamousky, 833 F.2d 11 (2d Cir.
1987)
Goodman v. Lukeus Steel Co., 482 U.S. 656
(1987)
Herman ve. RSR Sec. Servs, Ltd., 172 F.3d 132
(2d Cir. 1999)
Overnight Motor Trausp. Co. v. Missel,
BR. FET) 2 4 1 | <2 Sapa een ep gee rnamn 6 rd eee x

Reich vy. Southern New England Telecomm.
Corp., 121 F.8d 58 (2d Cir. 1997)
Walling v. AH. Belo Corp., 316 U.S. 624 (1942)

Statutes, regulations and rule:
Fair Labor Standards Act of 1938, 29 ULS.C. 201
Er ea ees bs es i ee a ee ‘
29 USC.
Be IEE in kn oo a Ee ees ;
Far eek SEE ais oe eA oe ea ;

(11)

IV

Statutes, regulations and rule—Continued:

29 U.S.C. 20700 5)7)
29 USC. 20705)
29 ULS.C. 207/06)
29 UUS.C. 207(e 7)
WQUSC.20TW)
29 ULS.C. 207(h)
29 LLS.C. 207(h (2)
rR ee ANG 6 oe so kk ho nee a
FSC
we USAS
29 TIS.C, 26
20 FE: :
rt, ott:

ne ple, 3 TEESE Be Sate SR ot Seatac mene aren

Jn the Supreme Court of the Anited States

No. 04-1602

HAROLD LEVINSON ASSOCIATES, INC... ET AL..
PETITIONERS

F

ELAINE L. CHAO, SECRETARY OF LABOR

ON PETITION FOR A WRIT OF CERTIORARI
TO THE UNITED STATES COURT OF APPEALS
FOR THE SECOND CIRCUIT

BRIEF FOR THE RESPONDENT
IN OPPOSITION

OPINIONS BELOW

The summary order of the court of appeals (Pet. App.
la-5a) is not published in the Federal Reporter but is
reprinted in 121 Fed. Appx. 918. The remand decision
of the district court (Pet. App. 6a-14a) is unreported.
The initial summary order of the court of appeals (Pet.
App. 15a-22a) is not published in the Federal Reporter
but is reprinted in 37 Fed. Appx. 19. The initial decision
of the district court (Pet. App. 23a-39a) is not reported
in the Federal Supplement but is available at 2001 WL
S4088698,

JURISDICTION

The judgment of the court of appeals was entered on
February 23, 2005. The petition for a writ of certiorari
was filed on May 24, 2005. The jurisdiction of this Court
is Invoked under 28 U.S.C. 125401).

STATEMENT

1. The Fair Labor Standards Act of 1938 (FLSA), 29
U.S.C. 201 ef seg., requires employers to pay overtime
pay to covered employees at a rate not less than one and
one-half times the employee's regular rate for any hours
worked over 40 in a workweek. 29 U.S.C. 207(a)q1),
215(a)(2).. For purposes of the FLSA, an employee's
“regular rate” of pay is defined to include “all remunera-
tion of employment paid to, or on behalf of. the em-
ployee,’ with certain enumerated exceptions. 29 U.S.C.
207(e). Those exceptions include, among others, certain
extra compensation provided at a premium rate for
hours worked over eight in a day; for work performed
other than on regular workdays; or for work performed
outside a workday or workweek established pursuant to
an employment contract or collective bargaining agree-
ment. 29 U.S.C. 207(e)(5), (6) and (7). An employer may
credit extra compensation paid that falls under any of
the exceptions listed in Section 207(e5)(7) against
overtime compensation payable to the employee under
Section 207. 29 U.S.C. 207(h)(2).

The FLSA also requires covered employers to keep
records of their employees’ wages and hours. 29 C.F LR.
211(¢); see 29 C.FLR. Pt. 516. The Secretary of Labor
may sue to redress violations of the FLSA’s minimum
wage, overtime, and record-keeping provisions. See 29
U.S.C. 216(¢), 217. In addition to recovering back pay
for affected employees, the Secretary may recover an

3

equal amount in liquidated damages, unless the em-
ployer shows that he acted in good faith and had reason-
able grounds for believing his actions did not violate the
FLSA. 29 U.S.C. 216(¢), 260.

2. Petitioners are a corporation and its president
who are engaged in the wholesale distribution of ciga-
rettes, tobacco, and candy and related activities. Pet.
App. 24a. In 1990, a Labor Department investigator
(letermined that petitioners had been violating the
FLSA’s record-keeping and overtime requirements. /d.
at 28a. Petitioners agreed to make full restitution and
provided the investigator with signed statements show-
ing that employees had been paid, but later forced em-
ployees to return the money. /bid. Between May 1992
and December 1994, the time period at issue in this case,
petitioners made no genuine effort to maintain records
that accurately reflected the lengthy hours that employ-
ees worked. /bid. Between May 1992 and October 1993,
when petitioners used Paychex, a payroll services com-
pany, to prepare its payment records, the payrolls were
based on general schedules of hours that did not accu-
rately reflect employees’ working time. /d. at 27a, 29a.
From October 1993 to December 1994, when petitioners
used ADP, another payroll services company, to prepare
their payment records, they created payroll hours for
ADP that did not reflect time actually worked. /d. at
29a.

The Secretary of Labor brought an enforcement ac-
tion against petitioners, alleging violations of the over-
time and record-keeping provisions of the FLSA. Pet.
App. 15a, 33a. After a bench trial, the district court
found, inter alia, that petitioners had “continually, will-
fully evaded and violated known requirements of the
FLSA.” /d. at 28a. The court also found that petition-

ers had no lawful prepayment (or pay stabilization)
agreement with its employees and that petitioners had
ignored provisions in the collective bargaining ayree-
ment calling for an overtime rate of one and one-half
times the regular rate for hours in excess of 40 hours in
a workweek. /d. at 30a, 52a (factual findings), 37a-3Sa
(legal conclusions).

Accepting the Secretary's calculations of actual time
worked, actual pay received, and overtime pay due peti-
tioners’ employees, the court awarded S4A87AS1.58 in
back wages to 105 emplovees and an equal amount in
liquidated damages (plus an additional $16,500 in back
wages to one of the three employees for whom an ex
emption from overtime defense was claimed but not
proved). Pet. App. 37a-39a.

3. On May 22, 2002, the court of appeals affirmed
the majority of the district courts findings, but vacated
and remanded the case solely for a “partial recalculation
of damages.” Pet. App. l7a. Finding that the damages
award “unfairly penalizes the | petitioners” by assuming
that “in each week of the PCX |7¢.. Paychex] period
each employee worked precisely the average number of
hours worked [during the ADP period].” the court in-
structed recalculation to be “based on comparison of the
total hours worked by each employee for the entire PCN
period (computed by multiplying the imported ADP
weekly average by total PCX-period weeks worked)
against total hours compensated for the PCX period.”
fd. at 20a. In so doing, however, the court also rejected
petitioners argument that they were entitled to an off
set for “overpayments” to their employees, recognizing
that “this case does not involve payments that satisfy
the requirements” of Section 207(h). 7d. at 2la. It ex-

plained that its “decision to remand effectively gives the

|petitioners] the benefit of a credit for the PCX period,
but does so not because as 2a matter of law |they| are
entitled to credit one week’s overpayment against an-
other week’s liability, but because of the lack of founda-
tion for the [Secretary's] actual computations of weekly
hours for the PCX period.” /d. at 21a n.3.

1. Following the remand order, the Secretary per-
formed the directed recalculations, and a bench trial was
held cn August 4, 2003. Pet. App. 6a. The district court
issued a decision on December 30, 2003, which upheld
the Secretary's calculations and awarded $831,147.18 in
actual and liquidated damages. /d. at Ga, 13a.” Based on
the “plenary trial record” (including new evidence) de-
veloped in the event that the court of appeals might be
persuaded to “reopen all issues,” /d. at lla, the court
reached the same finaings of fact and conclusions of law
it had adopted in its first decision “except for the
method of calculating PCX damages for all but three
emplovees.” Jd. at 13a.

5. The court of appeals affirmed. Pet. App. la-da.
The court initially noted that its earlier decision-had
rejected petitioners’ arguments that (1) they were enti-
tled, under Section 207(h), to a credit of $529,000

In effect, the court suggested that the use of the ADP departmental
averages in the original calculations resulted in overstating the amount
of owed overtime payments in weeks in which the recorded hours
worked by an employee (who worked only during the Paychex period)
were less than the departmental average. See Pet. App. 20a.

- The district court determined: “|The Secretary's] exhibits *
accurately set forth the mathematical calculations called for by the
court of appeals decision. {The petitioners] have not presented any
credible challenge to those calculations.” Pet. App. 9a.

6

against their liability,’ and (2) that the district court's
formula for damages did “not vield a just and reasonable
approximation of overtime hours worked.” /d. at 3a.
Nonetheless, the court considered the new evidence
brought before the district court and concluded that peti-
tioners’ arguments were “wholly without merit.” /bid.
Specifically, the court held that petitioners had failed to
show that any alleged “overpayment” was made “for any
of the purposes specified at 29 U.S.C. § 207(h)(2)." [bhid.
Moreover, the court held that the district court acted
reasonably in adopting the Secretary's recalculation of
damages and in rejecting petitioners’ “unreasonable and
belatedly proferred alternative.” /d. at da.

ARGU MENT

The court of appeals’ decision is correct and does not
conflict with any decision of this Court or any other
court of appeals. Further review of this fact-bound case
is unwarranted.

1. Petitioners’ principal contention (Pet. 17-26) is
that the circuits are divided over the question whether
an employer's payment of extra compensation to its em-
plovees may “be credited across work weeks or work
periods to offset liability for overtime wages” under 29
U.S.C. 207(h)(2). Pet. 16. No such question is presented
in this case, however, because petitioners failed to estab-
lish that any alleged overpayment to their employees
“was paid for any of the purposes specified at 29 U.S.C.
§ 207(h)(2).” Pet. App. 3a.’

* According to petitioners, this sum is derived from their expert's
calculation that petitioners had overpaid their employees 540.000, and
underpaid them 311,000, for a net overpayment of 3529,000, Pet. 13.

' Petitioners assert (Pet. 5 & n.1) that they paid $529.000 in extra
compensation during the ADP period as part of an agreement to make

7

Section 207(h)(2) allows a credit only for compensa-
tion paid pursuant to 29 U.S.C. 207(e)(5), (6) and (7), ve.,
compensation paid at a premium rate for hours that ex-
ceed an eight-hour workday, for Saturday, Sunday, or
holiday work, or for work outside a workday or work-
week established by an employment contract or collec-
tive bargaining agreement. See 29 C.F.R. 778.201(¢)
(“No other types of remuneration for employment may
be eredited.”). As the court of appeals explained, peti-
tioners “fail[ed| to point to any evidence suggesting that
§ 207(e)(5), (6) or (7), as incorporated in § 207(h)(2), are
applicable.” Pet. App. 3a.n.1. The court of appeals ac-
cordingly did not consider whether premium pay credit-
able pursuant to 29 U.S.C. 207(h)(2) may be credited

up the difference between what the employees would have earned in
overtime compensation before the period at issue in this case and what
they would earn under the collective bargaining agreement governing
that period. Even if true, there would be no claim that any extra
compensation relating to either the Paychex or ADP periods was paid
for the purposes specified in Section 207(e)(5)-(7). Instead, petitioners
defended on the basis of 29 U.S.C. 207(f), which addresses prepayment
plans for employees with unpredictable and irregular hours of work.
Under Section 207(1), an employer may, under certain conditions and
pursuant to a bona fide individual contract or a collective bargaining
agreement, pay the employee a set amount each week despite varving
hours worked by the employee, without incurring overtime-pay
liabilities in the weeks in which the actual hours worked would normally
entitle the employee to overtime pay. Those plans are known as “Belo”
plans, following the decision that approved their use. See Walling v.
Ad1. Belo Corp., 316 U.S. 624 (1942). The district court found that
petitioners did not have a “Belo” prepayment plan, Pet. App. 37a-3&a,
a finding that the court of appeals affirmed, id. at 20a, and that
petitioners no longer contest.

---

Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386007_0960%3A2. Public record. Not legal advice.