Petition for Writ of Certiorari — Morgan Buildings & Spas, Inc. v. Becht

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~ Supreme Court,

{| FILE® *

“08 126.U 22 2003

No.

OFFICE OF THE CLERK

In The

Supreme Court of the Anited States

MORGAN BUILDINGS & SPAS, INC.,

Petitioner,

BRIAN R. BECHT,

Respondent.

, %

On Petition For Writ Of Certiorari

To The Supreme Court Of Louisiana

PETITION FOR A WRIT OF CERTIORARI

DAVID J. SCHENCK

Counsel of Record

CHRISTOPHER D. KRATOVIL

STUART BUCK

HUGHES & LUCE, L.L.P.

1717 Main Street, Suite 2800

Dallas, TX 75201

(214) 939-5500

COCKLE LAW BRIEF PRINTING CO. (800) 225-6964

OR CALL COLLECT (402) 342-2831

Lynainierinia mma 430

QUESTION PRESENTED

Whether a statute that imposes mandatory punitive

damages without any requirement of bad faith or malice,

without a heightened burden of proof, and without judicial

review violates the Due Process Clause in a case where the

punitive damages award is 215 times the actual damages?

CORPORATE DISCLOSURE STATEMENT

Petitioner Morgan Buildings and Spas, Inc., is a

wholly-owned subsidiary of GHM Corporation, a privately

held company. No publicly held company owns 10% or

more of Petitioner’s stock.

TABLE OF CONTENTS

Page

QUESTION PRESENTED ................ccccccsscscssssccesseces i

CORPORATE DISCLOSURE STATEMENT............. ii

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JURISDICTION OF THIS COURT........ ......:.ccceeeeees 1

STATEMENT OF RULE 29(C) NOTIFICATION ...... 1

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

STATEMENT OF THE CASB.................cecccscccsssseeeees 3

REASONS FOR GRANTING THE WRIT ................. 5

1. Punitive Damages, Whether Assessed By A

Jury Or Legislature, Are Penal In Nature

And Must Therefore Be Subject To Close

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2. As Illustrated By Louisiana Revised Statute

23:632, Statutory Punitive Damages That

Are Not Tailored To Actual Harm, That Do

Not Correlate To Culpability Of Conduct,

And Which Are Not Subject To Meaningful

Judicial Review, Create Problems Identical

To Those Stemming From Unlimited Jury-

Determined Punitive Damages...................00++ 12

A. Degree Cf Reprehensibility ..............0:00+ 13

B. Disparity Between Actual Harm Suffered

And Punitive Damages Awarded ............. 14

C. Civil Penalties Imposed In Comparable

TABLE OF CONTENTS - Continued

Page

D. Louisiana’s Punitive Damage Scheme Is

Devoid Of Meaningful Procedural Pro-

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CONCLUSION .........c.cccccccccrcccesccccvsccccccssssvoccseeeosoness 18

TABLE OF AUTHORITIES

Page

FEDERAL CASES

BM‘. of North Am., Inc. v. Gore, 517 U.S. 559

CR vasecesnvivnntcnsecvsnnsvessoninsstenttamieneiainannninnnntnunecn passim

Beard Air Line Railway v. Seegers, 207 U.S. 73

CF hicicecescisntsitanstinisvnnsnciisabsiciniadcuseselalaaiaaaanasiliiiial 10

Browning-Ferris Indus. v. Kelco, 492 U.S. 257

CI since wrivicsctosnsicic stint abiaicasaaniaansiiilaaiaaaiaainintibeibas 6

Buchanan v. Angelone, 522 U.S. 269 (1998)............cceeee 13

Cooper Indus., Inc. v. Leatherman Tool Group, Inc.,

SOD Ee, GG Ca wiicendscitiicnsinieninvacenneits 5, 7, 10, 11, 19

Honda Motor Co. Ltd. v. Oberg, 512 U.S. 415 (1994)..9, 17, 18

Native Am. Arts, Inc. v. Bundy-Howard, Inc., 168

F. Supp. 24 906 (ND. TEL. 2007) ....ccercccocosvrescccvecesecscosveeee 7

Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1

CROs. ccicicsctinshscnnctccltinniitiinidnndianrainadedinnaiiiiaines 6, 15,17

Parker v. Time Warner Entm’t Co., L.P., 331 F.3d 13

CR Cle: BD iscccncctisnstinsnnsivitsicnsesitninsneatensinncniiancdiiniena 8

Roberts v. Louisiana, 428 U.S. 325 (1976)............ssscceeeeeees 13

San Huan New Materials High Tech, Inc. v. Intl ~*

Trade Comm’n, 161 F.3d 1347 (Fed. Cir. 1998).............. 7

Seaboard Air Line R. Co. v..Seegers, 207 U.S. 73

CSTD sccenciivsecnccticcecdinsssnsntesitnibensnatensinaeaieesenimeaeinmebananiaanta 6

Siddiqui v. United States, 217 F. Supp. 2d 985 (D.

BER, FD wricccsentiedsitcctvenrnsnnttcchitinreninnicienicisivinmneninatatnntiveins 7

Southwestern Telegraph & Telephone Co. v. Dana-

Ker, SOB CFB 4EB CIGD) secescacovvecereissorecesenennsens 6, 7, 10, 11

St. Louis, I.M. & S. Ry. Co. v. Williams, 251 U.S. 63.

TO EE EE EE

TABLE OF AUTHORITIES — Continued

Page

State Farm Mut. Auto. Ins. Co. v. Campbell, 123

BS. CR. BREE Ca acevccescsccensssessismincnesetensennnhsanendeoenes passim

TXO Prod. Corp. v. Alliance Res. Corp., 509 U.S.

GD Ciitesintsneescussesenheiiaaaaiannie 8,11, 15

Tull v. United States, 481 U.S. 412 (1987) ............eeeeeeee 11

United States v. Koch Indus., Inc., 57 F, Supp. 2d

LESH CCE. CUD, BP cceiccoccssescisncincsntnncssuncnsetaneneaiaasenin 7

Waters-Pierce Oil Co. v. Texas (No. 1), 212 U.S. 86

(BD vin cnssscnnsecsoncestanvionsiniianateniatanteanssnaninaialaaaasaaii 5, 11

Woodson v. North Carolina, 428 U.S. 280 (1976).............. 13

STATE CASES

Beard v. Summit Inst. of Pulmonary Med. & Re-

hab., 707 So. 2d 1233 (La. 1998).............ccccsssrrsrcescsssees 8

Becht v. Morgan Bldgs. & Spas, Inc., 843 So. 2d

RIGO Cie. Bcc catscinnsnstoncennensiceianinniaiiznioniaabaseiaiasaiiaias 4

Carriere v. Pee Wee’s Equipment Co., 364 So. 2d 555

(Et. DTG Fo ..cvcnsstoescsnisiaisieheneechianenipiciennnladaniabdmeianandaannaiiin 12

Landry v. Pauli’s, Inc., 496 So. 2d 431 (La. Ct. App.

ROE D ..ncacasestnecsrnsinoncesasnnnsinistebssnpanseiaaeanitagesdnaiemnaaamne 12

Lysinger v. Sec. Indus. Ins. Co., 488 So. 2d 353 (La.

OR. Big, Wy iserscccscsnysnseviesencisrennineintinameianaaaaa 8

Powell v. Flotation Servs. Inc., 413 So. 2d 276 (La.

0, Fe: Ba snevenssecensuccivecscsisinnnahicinncsapineiaaadinananas 8

STATUTES

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BITTE... © 206 a cnccicineiessininscnsscsssetentanenintieidinananmaiamacns 16

Vii

TABLE OF AUTHORITIES — Continued

Page

19 U.S.C. § 1337(f)................ jsistilneiensiasiaabaisaaniinhiinisacladogintniial 7

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is Se TE en casntnieennicticctsnintsinneinsneniatenind passim

PETITION FOR A WRIT OF CERTIORARI

Petitioner Morgan Buildings & Spas, Inc. (“Morgan”)

respectfully prays that a Writ of Certiorari issue to review

the decision of the Supreme Court of Louisiana, entered in

the above-entitled proceeding on April 23, 2003.

OPINIONS BELOW

The opinion of the Supreme Court of Louisiana is

reported at 843 So. 2d 1109 and is reproduced in the

Appendix to the Petition (“Pet. App.”) at Pet. App. A. The

opinion of the Louisiana Court of Appeals is published at

822 So. 2d 56 and is attached hereto at Pet. App. B. The

judgment of the Louisiana trial court is unpublished and

is reprinted at Pet. App. C.

JURISDICTION OF THIS COURT

The Louisiana Supreme Court entered the judgment

below on April 23, 2003. This Court's certiorari jurisdiction

is invoked pursuant to 28 U.S.C. § 1254(1).

STATEMENT OF RULE 29(c) NOTIFICATION

The constitutionality of a Louisiana state statute is

drawn into question by this Petition for Certiorari. The

State of Louisiana, its agencies, officers and employees are

not parties to this proceeding. Therefore, 28 U.S.C.

§ 2403(b) may apply and Petitioner has served a copy of

this petition on the Attorney General of the State of

Louisiana.

STATUTORY PROVISIONS INVOLVED

This case implicates the Due Process guarantee of

the Fourteenth Amendment to the United States Consti-

tution. Also implicated are Louisiana Revised Statutes

23:631(A)(1)(b) and 23:632. La. Rev. Stat. § 23:631(A)(1)(b)

creates liability for an employer who fails to timely pay

wages owed to an employee after the employee leaves

employment:

Upon the resignation of any laborer or other em-

ployee of any kind whatever, it shall be the duty

of the person employing such laborer or other

employee to pay the amount then due under the

terms of employment, whether the employment

is by the hour, day, week, or month, on or before

the next regular payday or no later than fifteen

days following the date of resignation, whichever

occurs first.

La. Rev. Stat. § 23:632 awards punitive damages for such a

violation:

Any employer who fails or refuses to comply with |

the provisions of La. Rev. Stat. § 23:631 shall be

liable to the employee either for ninety days i

wages at the employee’s daily rate of pay, or else

for full wages from the time the employee’s de-

mand for payment is made until the employer

shall pay or tender the amount of unpaid wages |

due to such employee, whichever is the lesser |

amount of penalty wages. Reasonable attorney

fees shall be allowed the laborer or employee by

the court which shall be taxed as costs to be paid

by the employer, in the event a well-founded suit

for any unpaid wages whatsoever be filed by the

laborer or employee after three days shall have

elapsed from the time of making the first de-

mand following discharge or resignation.

Both Louisiana statutes are reproduced in full in the

Appendix to the Petition.

STATEMENT OF THE CASE

The facts of this case are simple and are not in dis-

pute. Morgan sells modular buildings, hot tubs, spas,

gazebos and greenhouses. Brian R. Becht (“Becht”) was

employed by Morgan as a salesman and was paid on

commission. Upon Becht’s voluntary departure from the

company, Morgan failed to pay Becht an outstanding

commission of $41.15, through, at worst, ordinary negli-

gence.

There is no evidence in the record that Morgan’s

failure to pay the $41.15 commission to Becht was moti-

vated by bad faith, and the record instead reflects that in

the wake of Becht’s departure Morgan promptly paid him

several other, substantially larger, commissions. Because

Morgan neglected to pay the $41.15 commission to Becht

within the limited time frame established by La. Rev. Stat.

§ 23:631, the punitive damage provision of La. Rev. Stat.

§ 23:632 automatically activated and required Morgan to

pay Becht “90 days penalty wages.” At Becht’s stipulated

daily rate of $99.04, the statutory punitive damages

totaled $8,913.60, a figure that is 215 times the $41.15

owed to Becht. This sanction was imposed without any

a i

regard to the underlying culpability of Morgan’s conduct,

the size of Becht’s actual damages, or Morgan’s financial

status. Nor was there required any showing that Morgan

had previously engaged in such wrongful conduct or was

likely to do so in the future. The Louisiana courts have no

statutory authority to alter the size of the automatic

punitive damage award mandated by La. Rev. Stat.

§ 23:632.

Morgan explicitly raised the issue of the “grossly

excessive” nature of the punitive damages award before

the Louisiana Supreme Court, arguing that it violated the

Due Process Clause of the Fourteenth Amendment. Mor-

gan’s third “Issue Presented for Review” before that Court

was, “Whether an award of punitive damages 215 times

the wages ultimately found to be due represents a grossly

excessive award in violation of the Due Process Clause of

the Fourteenth Amendment of the United States Constitu-

tion... .” Respondent Becht argued that, under Louisiana

state procedure, Morgan had waived this federal constitu-

tional argument by failing to raise it in the trial court. |

Becht simultaneously argued that the punitive damages

award was not constitutionally excessive. Thus, the

federal issue was fully briefed at the state level by both

sides.

The Louisiana Supreme Court chose to ignore Mor- |

gan’s Due Process complaints, though without applying or

relying on a procedural bar or waiver. Becht v. Morgan

Bldgs. & Spas, Inc., 843 So. 2d 1109 (La. 2003). Rather,

the court held that in order to recover punitive damages

under La. Rev. Stat. § 23:632, it is merely necessary to

show that (1) wages were due; (2) demand for payment

was made where the employee was customarily paid; and

(3) the employer did not pay upon demand. Jd. In other

words, merely because Morgan had stipulated that it owed

Becht $41.15, the court thought it mandatory to apply

punitive damages under Section 23:632. By treating the

application of punitive damages as automatic, the Louisi-

ana court impliedly, but necessarily, denied the existence

of any Due Process Clause violation. Thus, in spite of the

disparity between the punitive damages award and the

amount of actual damages, the Louisiana Supreme Court

evidently did not deem the award excessive.

REASONS FOR GRANTING THE WRIT

In recent terms, this Court has repeatedly recognized

a substantive Due Process “outer limit” on jury awards of

punitive damages.’ Decades before, the Court explicitly

acknowledged that Due Process similarly constrains

awards of punitive damages made pursuant to statute. See

Waters-Pierce Oil Co. v. Texas (No. 1), 212 U.S. 86, 111

(1909) (acknowledging that a state statute may not impose

fines “so grossly excessive as to amount to a deprivation of

* See State Farm Mut. Auto. Ins. Co. v. Campbell, 123 S. Ct. 1513,

1520 (2003) (“While States possess discretion over the imposition of

punitive damages, it is well established that there are procedural and

~ substantive constitutional limitations on these awards.... To the

extent an award is grossly excessive it furthers no legitimate purpose

and constitutes an arbitrary deprivation of property.”); Cooper Indus.,

Inc. v. Leatherman Tool Group, Inc., 532 U.S. 424, 434 (2001) (“The Due

Process Clause of its own force also prohibits the States from imposing

‘grossly excessive’ punishments on tortfeasors.”); BMW_of North Am.,

Inc. v. Gore, 517 U.S. 559, 568 (1996) (“Only when an award can fairly

be categorized as ‘grossly excessive’ in relation to these [State] interests

does it enter the zone of arbitrariness that violates the Due Process

Clause of the Fourteenth Amendment.”).

property without Due Process of law.”); Southwestern

Telegraph & Telephone Co. v. Danaher, 238 U.S. 482, 491

(1915) (setting aside statutory penalty imposed on a

telephone company on the grounds that it was so “plainly

arbitrary and oppressive” as to violate the Due Process

clause).”

Yet, in this case, the Supreme Court of Louisiana

approved a statutory scheme that imposes punitive dam-

ages that can exceed actual damages by a factor of hun-

dreds, even though there was no showing of culpability

and no possibility of judicial scrutiny of the punitive

damages award for reasonableness. Nor does the statute

in question feature any heightened burden of proof; on a

simple preponderance of the evidence showing a debt of

$41.15 La. Rev. Stat. § 23:632 imposed 215 times that sum

in punitive damages.’ BMW v. Gore established a clear

three-part test for evaluating the constitutionality of jury-

imposed punitive damages, but it is not clear whether or

how this test applies to statutorily-imposed punitive

* See also Browning-Ferris Indus. v. Kelco, 492 U.S. 257, 276 (1989)

(noting “[tJhere is some authority in our opinions for the view that the

Due Process Clause places outer limits on the size of a civil damages

award made pursuant to a statutory scheme... .”); St. Louis, ILM. & S.

Ry. Co. v. Williams, 251 U.S. 63, 66-67 (1919) (noting that the Four-

teenth Amendment “places a limitation upon the power of the States to

prescribe penalties for violations of their laws ... where the penalty

prescribed is so severe and oppressive as to be wholly disproportionate

to the offense and obviously unreasonable.”); Seaboard Air Line R. Co.

v. Seegers, 207 U.S. 73, 78 (1907) (“We know there are limits beyond

which penalties may not go. .. .”).

* See Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 21 n.11 (1991)

(declining to require a heightened burden of proof for punitive damages

where state law provided other significant procedural and substantive

safeguards).

damages or other statutory civil penalties, because thus

far this Court has explicitly applied the BMW “guideposts”

only in the context of jury-determined punitive damages,‘

and the Court’s early 20th-century cases recognizing the

Due Process limit on statutory punitive damages do not

announce any specific test for identifying “grossly exces-

sive” statutory fines.’

Unsurprisingly, lower courts are confused on whether

to apply the BMW analysis to statutory civil penalties or

statutory punitive damages. Compare San Huan New

Materials High Tech, Inc. v. Int’l Trade Comm’n, 161 F.3d

1347, 1363-64 (Fed. Cir. 1998) (affirming application of

BMW uv. Gore test to statutory civil penalty under 19

U.S.C. § 1337(f)); Siddiqui v. United States, 217 F. Supp.

2d 985, 991 (D. Ariz. 2002) (applying BMW v. Gore to claim

involving statutory punitive damages under 26 U.S.C.

§ 7431); United States v. Koch Indus., Inc., 57 F. Supp. 2d

1122, 1145 (N.D. Okla. 1999) (holding that if a civil pen-

alty “statute, as interpreted and applied to a particular set

of facts, produces an unconstitutionally excessive fine, the

amount of the penalty can then be remitted to prevent an

unconstitutional result”); with Native Am. Arts, Inc. uv.

Bundy-Howard, Inc., 168 F. Supp. 2d 905, 914-15 (N.D. Il.

2001) (holding that a “statutory damage provision” is not

subject to the BMW v. Gore test).

* See BMW, 517 U.S. at 575; State Farm, 123 S. Ct. at 1520; Cooper

Indus., 532 U.S. at 424.

* See Danaher, 238 U.S. at 491 (striking down a statutory fine on a

phone company as “arbitrary and oppressive” without articulating a

specific test for arbitrariness or oppressiveness).

Yet it seems clear that a grossly excessive award of

punitive damages made pursuant to statute can offend the

Due Process Clause as much as a similarly dispropor-

tioned award of pun ‘ve damages made by a jury.’ The

Louisiana statutes at issue yield absurd and troubling

results in this case, magnifying $41.15 in actual (“compen-

satory”) damages into $8,913.60 of punitive damages, in

addition to attorney’s fees. It is thus undeniable that

Becht, like others before him,’ reaped a dramatic windfall

through La. Rev. Stat. § 23:632. It is disturbing enough

that the punitive damages here are 215 times greater than

the underlying actual damages. Worse, the imposition of

* As the Second Circuit has noted, statutory damages in class

action cases might reach “so far beyond the actual damages suffered

that the statutory damages come to resemble punitive damages — yet

ones that are awarded as a matter of strict liability, rather than for the

egregious conduct typically necessary to support a punitive damages

award.” Parker v. Time Warner Entm't Co., L P., 331 F.3d 13, 26 (2d Cir.

2003).

" Multiple reported cases under La. Rev. Stat. § 23:632 reflect a

substantial — in some instances radical — disparity between minor

damages actually suffered and the substantial punitive award man-

dated by the statute. See, e.g., Beard v. Summit Inst. of Pulmonary

Med. & Rehab., 707 So. 2d 1233, 1238 (La. 1998) (awarding $432.00 in

compensatory damages and $9,720.00 or 22.5 times that amount in

statutory penalties); Lysinger v. Sec. Indus. Ins. Co., 488 So. 2d 353, 354

(La. Ct. App. 1986) (awarding $78.92 in compensatory damages and

$1,169.50 or nearly 15 times that amount in statutory penalties);

Powell v. Flotation Servs. Inc., 413 So. 2d 276, 278, 281 (La. Ct. App.

1982) (awarding $120.18 in compensatory damages and $9,000.00 or

nearly 75 times that amount in statutory penalties). To the best of

Petitioner’s Counsel’s ability to determine, Petitioner is the first to

challenge the validity of this problematic statute on constitutional Due

Process grounds. By way of contrast, this Court has noted that a

punitive damages award four times greater than actual damages “may

be close to the line of Constitutional permissibility.” TXO Prod. Corp. v.

Alliance Res. Corp., 509 U.S. 443, 459 (1993).

such an excessive punitive damage award under La. Rev.

Stat. § 23:632 was made with no showing of bad faith,

willfulness or intent, without a heightened burden of

proof, and without any meaningful opportunity to obtain

state judicial review of the size of the penalty.

Thus, this case presents the Court with the opportu-

nity to clarify how to determine when punitive damages

that are automatically awarded pursuant to statute,

rather than at the discretion of a jury, constitute a viola-

tion of the Due Process Clause.

1. Punitive Damages, Whether Assessed By A

Jury Or Legislature, Are Penal In Nature And

Must Therefore Be Subject To Close Scrutiny.

This Court has recognized that “punitive damages

may properly be imposed to further a State’s legitimate

interests in punishing unlawful conduct and deterring its

repetition.” Hence, punitive damages “serve the same

purpose as criminal penalties.” Because “defendants

subjected to punitive damages in civil cases have not been

accorded the protections applicable in a criminal proceed-

ing,” this Court has repeatedly expressed “concerns over

the imprecise manner in which punitive damages systems

are administered.”” Indeed, this Court has admonished

that “punitive damages pose an acute danger of depriva-

tion of property.”” Nearly a century earlier, the Court

* State Farm, 123 S. Ct. at 1520.

10 Id.

" Id. (citing Honda Motor Co. v. Oberg, 512 U.S. 415, 432 (1994)).

recognized that punitive civil penalties imposed by statute

require Due Process scrutiny. See Beard Air Line Railway

v. Seegers, 207 U.S. 73 (1907). Further, statutory punitive

damages imposed without “recklessness” or “intentional

wrongdoing” were found in 1915 to be unconstitutionally

“arbitrary” and “oppressive.” Danaher, 238 U.S. at 490.

The Court’s well-founded “concerns” over punitive

damages determined by juries culminated in the an-

nouncement of the three “guideposts” that must now be

considered: (1) the degree of reprehensibility of the defen-

dant’s misconduct; (2) the disparity between the actual

harm suffered by the plaintiff and the punitive damages

award; and (3) the difference between punitive damages

awarded by the jury and the civil penalties authorized or

imposed in comparable cases.” The importance of these

three guideposts is so high that this Court has mandated

that appellate courts conduct de novo review of a trial

court’s application of them to the jury’s punitive damage

award.” Further, as part of an evident effort to restore

order to the puritive damages award process, the Court

has reiterated these guideposts three times in just six

years.“

As this Court has recognized in decades past,” the

danger of “arbitrary deprivation of property” stemming

* BMW, “17 U.S. at 575; State Farm, 123 S. Ct. at 1520; —

Indus., 532 U.2. at 424.

* Cooper Indus., 532 U.S. at 424.

* BMW, 517 U.S. at 575; State Farm, 123 S. Ct. at 1520; Cooper

Indus. , 532 U.S. at 424.

* See footnote 2, supra.

from statutory punitive damages is no less “acute” than in

the context of jury-determined punitive damages. Both

types of punitive damages are penal in nature; as this

Court has recognized, “the remedy of civil penalties is

similar to the remedy of punitive damages.” Tull v. United

States, 481 U.S. 412, 423 n.7 (1987). In neither instance is

the defendant afforded the same procedural protections as

in a criminal trial. Both types of punitive damages may, in

any given case, be excessively and disproportionately

larger than the actual damages, or for the penalty imposed

to vastly exceed that in comparable cases. Indeed, BMW v.

Gore implicitly recognized that jury-determined punitive

damages are analytically similar to statutory punitive

damages, notwithstanding the long-recognized Due Proc-

ess limits on such awards. Modern cases dealing with

jury-determined punitive damages have regularly and

favorably invoked cases from the early part of last century

recognizing a constitutional cap on statutory punitive

damages. See, e.g., BMW, 517 U.S. at 575 (citing Williams,

251 U.S. at 66-67); TXO, 509 U.S. at 454 (citing Waters-

Pierce, 212 U.S. at 111; Danaher, 238 U.S. at 491; and

Williams, 251 U.S. at 66-67).

Despite the similarity between statutory punitive

damages and their jury-determined cousins, the three

critical guideposts announced in BMW and reiterated in

Cooper Industries and State Farm have so far been applied

by this Court only to jury-determined punitive awards.

And while this Court’s earlier jurisprudence undeniably

acknowledged the existence of a Due Process limit to the

* See BMW, 517 U.S. at 601 (Scalia, J., dissenting) (expressing

concern at the connection between jury and statutory awards).

size of statutory punitive damages, those older cases do

not provide a formula for determining when that limit is

reached. Thus, even as jury-determined punitive damages

have been constitutionally reigned in, statutory punitive

damages have remained unregulated and unreformed,

thereby creating a substantial gap in this Court’s punitive

damage jurisprudence.

2. As Illustrated By Louisiana Revised Statute

23:632, Statutory Punitive Damages That Are

Not Tailored To Actual Harm, That Do Not

Correlate To Culpability Of Conduct, And

Which Are Not Subject To Meaningful Judi-

cial Review, Create Problems Identical To

Those Stemming From Unlimited Jury-

Determined Punitive Damages.

A statute that automatically awards a fixed amount of

punitive damages without regard to culpability of conduct

or the size of the actual damages is inherently arbitrary.

This arbitrariness is compounded where, as here, the

statute forecloses any judicial modification of the size

of the punitive damages award.” Thus, the same Due

” Louisiana courts have recognized certain “equitable defenses” as

a total bar to punitive damages under La. Rev. Stat. § 23:632. See

Landry v. Pauli’s, Inc., 496 So. 2d 431, 434 (La. Ct. App. 1986) (collect-

ing cases and finding that courts generally recognize an equitable

defense in four common cases where: (1) there is a question regarding

the number of hours worked; (2) the employer is entitled to offsets from

the employee; (3) the employer made wage advances to the employee;

(4) the employee allegedly retained property of the employer). See also

Carriere v. Pee Wee’s Equipment Co., 364 So. 2d 555, 557 (La. 1978) (“A

good-faith non-arbitrary defense to liability for unpaid wages, i.e., a

reasonable basis for resisting liability, still permit{s] the court to excuse

(Continued on following page)

ETAL

Process concerns that plague punitive damages awards

made by juries also apply to statutory punitive damages: a

statute that awards punitive damages using a formula

utterly unrelated to actual damages may lead to results

every bit as arbitrary as awards made by a “runaway”

jury. 18

The “grossly excessive” punitive damage award

mandated in the instant case by La. Rev. Stat. § 23:632 is

illustrative of the danger of permitting statutory punitive

damages to remain without BMW-type guideposts. If the

result in this case dictated by La. Rev. Stat. § 23:632 were

to be examined using the BMW factors, it would badly fail

on all counts.

A. Degree Of Reprehensibility.

BMW ‘eaches that “the most important indicium of

the reasonableness of a punitive damages award? is the

degree of reprehensibility of the defendant’s conduct.””

This emphasis on culpability is equally important in a

statutory context, as many statutes mandate double,

the employer from the imposition of additional penalty wages.”).

Critically, however, even there “equitable defenses” do not vest the

courts with the discretion to reduce or limit an award of punitive

damages under La. Rev. Stat. § 23:632.

* By analogy, the Court’s death penalty jurisprudence makes clear

that excessive arbitrariness can result both where juries are given too

much discretion, see, e.g., Buchanan v. Angelone, 522 U.S. 269, 275-76

(1998) and where they are given too little (i.e., where the death penalty

was imposed mandatorily), see, e.g., Woodson v. North Carolina, 428

U.S. 280 (1976); Roberts v. Louisiana, 428 U.S. 325 (1976).

* BMW, 517 USS. at 575.

treble or quadruple damages to punish willful or inten-

tional bad conduct.” By contrast, the punitive damage

provision of La. Rev. Stat. § 23:632 utterly fails to take

into account the reprehensibility — or lack thereof — of the

defendant’s conduct. All conduct, from the merely negli-

gent to the intentionally malicious, is treated identically

by La. Rev. Stat. § 23:632, with punitive damages calcu-

lated using a single universal formula. Notably, there is no

evidence in the record that Morgan’s failure to pay Becht

$41.15 promptly was anything other than ordinary negli-

gence, yet Morgan now finds itself liable for the same

amount of punitive damages ($8,913.60) as would an

employer who had actively and maliciously plotted against

Becht.

B. Disparity Between Actual Harm Suffered

And Punitive Damages Awarded.

The second BMW guidepost evaluates the disparity

between the size of the actual or potential harm suffered

and the punitive damages awarded. This Court has

recently noted that “in practice, few awards exceeding a

single-digit ratio between punitive and compensatory

damages will, to a significant degree, satisfy due proc-

ess.” “Single-digit multipliers are more likely to comport

with Due Process, while still achieving the State’s goals of

deterrence and retribution, than awards with ratios in

* Id. at 581 (“Some 65 different enactments during the peviod

between 1275 and 1753 provided for double, treble, or quadruple

damages.”).

" State Farm, 123 S. Ct. at 1524

seieicenienDanieiiiitia iii

range of 500 to 1, or, in this case, of 145 to 1.”” Indeed, this

Court has previously indicated that a punitive damages

award four times greater than actual damages “‘may be

close to the line’ of Constitutional permissibility.”"” Thus,

the 215 to 1 ratio imposed by La. Rev. Stat. § 23:632 in this

case does not appear to comport with Due Process.

Worse still, La. Rev. Stat. § 23:632 does not even

attempt to correlate the size of the punitive damages to

the degree of actual harm suffered. The formula for calcu-

lating damages is based entirely on the former employee’s

rate of pay, not the amount of money that he is actually

owed. This Court has noted that the “most commonly cited

indicium of an unreasonable or excessive punitive dam-

ages award is its ratio to the actual harm inflicted on the

plaintiff. Because it does not link actual damages to

punitive damages, La. Rev. Stat. § 23:632 permits absurd

and arbitrary scenarios where a former employee who had

a high daily rate of pay but was owed a trivial amount of

money could receive greater punitive damages than an

employee who was owed a large sum of money but had a

low rate of pay. La. Rev. Stat. § 23:632’s failure to make

even a nominal effort to relate punitive damages to actual

damages reveals the arbitrary nature of the statute.

™ Id.

* TXO Prod. Corp. v. Alliance Res. Corp., 509 U.S. 443, 459 (1993)

(citing Pacific Mut. Life Ins. Co. v. Haslip, 499 U.S. 1, 23 (1991)).

* BMW, 517 U.S. at 580-81 (also noting that “[tJhe principle that

exemplary damages must bear a ‘reasonable relationship’ to compensa-

tory damages has a long pedigree.”).

C. Civil Penalties Imposed In Comparable

Cases.

The third BMW guidepost focuses on the disparity

between a punitive damages award and “civil penalties

authorized or imposed in comparable cases.”” This Court

has recently “referenced a long legislative history, dating

back over 700 years and going forward to today, providing

for sanctions of double, treble or quadruple damages to

deter and punish.™ Needless to say, nowhere in that

legislative history are found statutes in which punitive

damages are set hundreds of times higher than actual

damages. In contrast, La. Rev. Stat. § 23:632 imposes a

penalty radically harsher than even quasi-criminal stat-

utes such as the Clayton Act” or RICO.” Stated simply,

the excessive and arbitrary punitive damages mandated

by La. Rev. Stat. § 23:632 are not consistent with those of

past or present Anglo-American statutes. However, absent

guidance from this Court, La. Rev. Stat. § 23:632 and other

similarly arbitrary punitive damages statutes will be

allowed to stand for lack of a standard by which to evalu-

ate them.

* Id. at 575.

* State Farm, 123 S. Ct. at 1524.

* 15 U.S.C. § 15.

* 18 U.S.C. § 1964.

D. Louisiana’s Punitive Damage Scheme Is

Devoid Of Meaningful Procedural Protec-

tion.

In addition to offering the guidance of the three the

BMW factors, this Court has noted that “[jludicial review

of the size of punitive damages awards has been a safe-

guard against excessive verdicts for as long as punitive

damages have been awarded.” Honda Motor Co. Ltd. v.

Oberg, 512 U.S. 415, 421 (1994). More explicitly, “denial of

judicial review of the size of punitive damages awards

violates the Due Process Clause of the Fourteenth

Amendment.” Jd. at, 432. Likewise, the Court has consid-

ered whether a heightened burden of proof should be

required for punitive damages.” It declined to do so only

because the punitive damages scheme at issue, unlike this

one, included substantial procedural protections against

arbitrary deprivations of property.”

By treating the imposition of punitive damages as

automatic under La. Rev. Stat. § 23:632, the Louisiana

Supreme Court confirmed what the statute itself already

mandates; the punitive award is mandatory wherever a

preponderance of the evidence shows an outstanding debt

and Louisiana courts are without discretion to alter the

size of a punitive damages award made pursuant to La.

Rev. Stat. § 23:632. Punitive damages awarded under La.

Rev. Stat. § 23:632 are calculated pursuant to the statute’s

inflexible formula, and neither the statute itself nor

Louisiana case law indicates that the courts are free to

* Haslip, 499 U.S. at 21n.11.

7 a .

deviate from that formula.” As such, no meaningful

judicial review of the size of punitive damages awards

made under La. Rev. Stat. § 23:632 can take place.

Judicial review of punitive damages imposed by

statute is no less critical than judicial review of jury-

determined punitive damages. In both instances, judicial

review of the amount awarded provides a key procedural

safeguard against the arbitrary deprivation of property.

The absence of that review only compounds the risk of

arbitrary deprivation. Therefore, Petitioner prays that this

Court will make it clear that Oberg’s requirement that

judges review the size of punitive damages awards™

applies equally in the context of statutory punitive dam-

ages.

CONCLUSION

The punitive damages dictated by La. Rev. Stat.

§ 23:632 in this case are “grossly excessive” in every sense

of the term, as they vastly exceed actual damages, bear no

relationship to Petitioner’s real culpability, and are not

subject to any meaningful state judicial review. Indeed, it

* As noted above, Louisiana case law does permit certain total

“equitable defenses” to the imposition of punitive damages under La.

Rev. Stat. § 23:632. However, these “equitable defenses” attempt to

prevent the imposition of punitive damages altogether, and do not

permit the court to reduce the size of the punitive damages award. In

other words, these “equitable” defenses are an “all or nothing” proposi-

tion that do not increase the discretion of the court or allow it to tailor

the award of punitive damages.

* Oberg, 512 U.S. at 432.

is hard to conceive of a more arbitrary formula for award-

ing punitive damages than that in La. Rev. Stat. § 23:632.

However, no coherent legal standard presently exists for

evaluating the excessiveness of statutory awards of puni-

tive damages. Petitioner prays that the Court will draw on

BMW, Cooper Industries and State Farm to craft a test to

determine when a statutory award of punitive damages

exceeds the boundaries of Due Process. By doing so this

Court would close a serious potential “loophole” in its

BMW jurisprudence and would prevent any attempt at a

legislative “end run” around the constitutional limits on

punitive damages that it has now repeatedly recognized.

Respectfully submitted,

DAVID J. SCHENCK

CHRISTOPHER D. KRATOVIL

STUART BUCK

HUGHES & LUCE, L.L.P.

1717 Main Street, Suite 2800

Dallas, Texas-75201

214-939-5500

214-939-6100 — fax

Attorneys for Petitioner

Morgan Buildings & Spas, Inc.

July 22, 2003

APPENDIX TABLE OF CONTENTS

Page

. Becht v. Morgan Bldgs. & Spas, 843 So. 2d 1109

CF, BI visvecccsvisieasssasbsctiescincrsancveecinveervionninnens App. 1

. Becht v. Morgan Bldgs. & Spas, 822 So. 2d 56

(La. Ct. App. 2002) ........ccccccsssrccesrccssessssensecssoees App. 8

. La. City Court of Baton Rouge - Trial Court

Judgment (Not Published).............:ssssesseeeeeeees App. 15

. United States Constitution, Amendment XIV ...App. 17

Ba. Row. Skat. Anum. § ZOGL vecccssesccvecccccesesessvesees App. 19

. La. Rev. Stat. Ann. § 23:682 .............cccecesecesseeeees App. 22

App. 1

BRIAN R. BECHT versus

MORGAN BUILDING & SPAS, INC.

No. 2002-C-2047

SUPREME COURT OF LOUISIANA

2002-2047 (La. 04/23/03);

843 So. 2d 1109; 2003 La. LEXIS 1115

April 28, 2003, Decided

PRIOR HISTORY:

ON WRIT OF CERTIORARI TO THE COURT OF AP- .

PEAL, FIRST CIRCUIT, PARISH OF EAST BATON

ROUGE.

JUDGES:

KNOLL, Justice.

OPINION BY:

KNOLL

OPINION:

KNOLL, Justice

Louisiana Revised Statutes 23:631(A)(1)(b) imposes the

duty upon an employer to pay any amount due under the

terms of employment to an employee, upon his or her

resignation, on or before the next regular payday or no

later than fifteen days following the date of resignation,

whichever occurs first. We granted this writ for the sole

reason of evaluating the correctness of the court of appeal’s

finding that an extension of this statutorily imposed time

period by an employment contract is contrary to public

policy. However, after granting the writ we learned that

prior to trial, the parties had entered into a stipulation of

App. 2

facts which prevents us from reaching the issue for which

we granted the writ. We find the court of appeal unneces-

sarily reached this legal issue because all of the elements

necessary to establish a violation of La. R.S. 23:631 are

present in the stipulation. Accordingly, we pretermit the

issues raised in the court of appeal opinion and affirm, as

the result is correct.

FACTS AND PROCEDURAL HISTORY

Plaintiff was employed by defendant on February 23,

1998, as a salesman of portable or modular buildings,

portable spas, hot tubs, gazebos and greenhouses. In

connection with his hiring, plaintiff signed a Standard

Employment/Non-Competition Agreement which set out

the terms of his employment. Pursuant to the agreement,

plaintiff was employed on a full-time basis, earning

straight commission. Upon termination, the agreement

specified that a sales person who made a sale “will receive

his or her 75% share of the Store’s Commissions on those

sales made prior to termination if the product has been

DELIVERED, ACCEPTED, by the customer AND the

account has been PAID IN FULL prior to the end of the

last business day during which he or she was at work. The

final commissions, if any, will be paid within forty-five (45)

days of the end of the month during which the salesperson

terminated.”

On September 7, 1998, plaintiff voluntarily resigned

from his sales position and, on October 7, he made a

demand for unpaid wages. On November 23, 1998, 47 days

past demand, plaintiff received a paycheck in the amount

of $386.47 representing commissions arising from con-

tracts on which plaintiff was identified as the salesman and

Se rae

—_—

App. 3

which had been delivered and completely funded on the

date plaintiff left his employment. Nevertheless, on March

4, 1999, plaintiff brought suit alleging he had not been

paid in full in accordance with La. R.S. 23:631 and sought

penalties and attorney's fees pursuant to La. R.S. 23:632.

Before trial in the city court of Baton Rouge, the parties

submitted the case on briefs pursuant to a stipulation of

facts entered into on May 8, 2000. In particular, the

parties agreed to the following:

On October 7, 1998, Becht made a demand for pay-

ment through Lee Pace, an employee of Morgan

* * * *

Contract number 446736, in the name of Jeff Pollard,

was delivered on August 27, 1998 and completely funded

on August 24, 1998. Becht was identified as the salesman

on this contract and has not been paid a commission on

said contract. The commission due is $41.15.

* * * *

13.

For purposes of calculation of average daily wage, the

parties have agreed to average Becht’s wages over the

course of his employment. Thus, Becht’s average daily

wage is $99.04. 7

On August 4, 2000, the trial court rendered judgment

in favor of plaintiff. In its reasons for judgment, the court

stated that under La. R.S. 23:632, plaintiff was entitled to

90 days penalty wages, totaling $8,913.60, based on the

App. 4

neglect of defendant to pay plaintiff the commission of

$41.15. The court further found La. R.S. 23:632 entitled

plaintiff to $4,247.48 in attorney's fees.

On appeal, the First Circuit affirmed the trial court’s

award. In so doing, the court of appeal rejected defendant’s

argument that the matter was governed by the terms of

the employment contract which provided “final commis-

sions, if any, will be paid within forty-five (45) days of the

end of the month during which the salesperson termi-

nated,” rather than La. R.S. 23:631, which strictly requires

the payment of wages not later than fifteen days following

discharge or resignation. The court found that the main

purpose of La. R.S. 23:631 and 23:632 was to compel an

employer to pay the earned wages of an employee

promptly after his dismissal or resignation. Because the

provisions were intended to protect the public interest, the

court found that defendant could not rely on a contract

term in direct violation of this well-established Louisiana

law. Accordingly, the court of appeal held that penalty

wages provided under La. R.S. 23:632 were properly

awarded due to defendant’s failure to pay plaintiff his

earned wages within fifteen days of resignation.’

DISCUSSION

Louisiana Revised Statutes 23:631(A)(1\b) creates

liability for an employer who fails to timely pay wages

owed to an employee after the employee voluntarily leaves

employment:

* The court also awarded plaintiff an additional sum of $1000.00 in

attorney’s fees for the appeal.

App. 5

Upon the resignation of any laborer or other em-

ployee of any kind whatever, it shall be the duty

of the person employing such laborer or other

employee to pay the amount then due under the

terms of employment, whether the employment

is by the hour, day, week, or month, on or before

the next regular payday or no later than fifteen

days following the date of resignation, whichever

occurs first.

In addition, La. R.S. 23:632 specifies that penalty wages

and attorney’s fees may be awarded for such a violation:

Any employer who fails or refuses to comply with

the provisions of K.S. 23:631 shall be liable to the

employee either for ninety days wages at the

employee's daily rate of pay, or else for full wages

from the time the employee’s demand for pay-

ment is made until the employer shall pay or

tender the amount of unpaid wages due to such

employee, whichever is the lesser amount of pen-

alty wages: Reasonable attorney fees shall be al-

lowed the laborer or employee by the court which

shall be taxed as costs to be paid by the em-

ployer, in the event a well-founded suit for any

unpaid wages whatsoever be filed by the laborer

or employee after three days shall have elapsed

from the time of making the first demand follow-

ing discharge or resignation.

In order to recover penalty wages and attorney’s fees

under La. R.S. 23:632, the claimant must show that (1)

wages were due and owing; (2) demand for payment was

made where the employee was customarily paid; and (3)

the employer did not pay upon demand. Miller v. Heidi’s

Inc. of Baton Rouge, 818 So. Zi 959, 963 (La.App. 1

Cir.2002); Cleary v. LEC Unwired, L.L.C., 804 So. 2d 916,

923 (La. App. 1 Cir. 2001); Harvey v. Bass Haven Resort,

App. 6

Inc., 758 So. 2d 264, 268 (La.App. 3 Cir. 2000); Richard v.

Vidrine Automotive Services, Inc., 729 So. 2d 1174, 1177

(La.App. 1 Cir. 1999); Hebert v. Insurance Center, Inc., 706

So. 2d 1007, 1013 (La.App. 3 Cir. 1998); Pokey v. Five L

Investments, Inc., 681 So. 2d 489, 492 (La.App. 1 Cir.

1996).

Defendant asserts that, pursuant to the employment

contract, it was not obligated to provide a final accounting

of commissions until November 14, 1998 — 45 days from

the end of the month plaintiff’s employment was termi-

nated. Defendant further claims that it did not receive a

waybill documenting that contract 446736 had been

delivered to the customer until November 19, 1998. As a

result, defendant contends that plaintiff’s demand for

payment on October 7, 1998 was premature, and there-

fore, without effect.

Defendant’s argument is without merit. Contrary to |

the court of appoal, however, we find that an analysis of

the public policy implication arising from an employment

contract which extends the deadline under La. R.S. 23:631

is unnecessary inthis case. We instead find defendant’s

claims are forestalled by the clear terms of the stipulation |

of facts entered into by the parties on May 8, 2000. As this

Court stated in R.J. D’Hemecourt Petroleum, Inc. v.

McNamara, 444 So. 2d 600 (La. 1983):

A stipulation has the effect of a judicial admis-

sion or confession, which binds all parties and

the court. Stipulations between the parties in a

specific case are binding on the trial court when

not in derogation of law. Such agreements are

the law of the case.

i ala

App. 7

444 So. 2d at 601 (citations omitted). Accordingly, we note

with significance that all of the elements necessary to

establish a violation of La. R.S. 23:631 are sufficiently

presented in the stipulation itself. Indeed,-the stipulation

clearly states that plaintiff “made a demand for payment

through Lee Pace, an employee of [defendant]” on October

7, 1998. Furthermore, the stipulation reflects that all of

the conditions entitling plaintiff to a commission under the

employment contrat, i.e., delivery, acceptance, and pay-

ment by the customer, had been satisfied before plaintiff

resigned from employment. Indeed, defendant concedes

that plaintiff was still “due” $41.15 in commissions arising

from a contract number 446736 as of the time of trial —

over a year and a half after he resigned. Therefore, pay-

ment was not timely made under either the fifteen day

period proscribed by La. R.S. 23:631 or the forty-five day

period outlined in the employment contract.

Because we granted this writ solely to evaluate the

court of appeal’s holding regarding the extension of the La.

R.S. 23:631 deadline, we pretermit defendant’s remaining

assignment of errors.

DECREE

For the foregoing reasons, the lower courts’ awards of

penalty wages and attorney’s fees are affirmed.

AFFIRMED.

App. 8

BRIAN R. BECHT VERSUS

MORGAN BUILDINGS & SPAS, INC.

NUMBER 2001 CA 1091

COURT OF APPEAL OF LOUISIANA,

FIRST CIRCUIT

2001 1091 (La.App. 1 Cir, 06/21/02);

822 So. 2d 56; 2002 La. App. LEXIS 2066

June 21, 2002, Rendered

PRIOR HISTORY:

Appealed from the City Court of Baton Rouge, Parish

of East Baton Rouge, Louisiana. Trial Court Number 9903-

02356. Honorable Byron Stringer, Judge.

COUNSEL:

Chad F. Reynolds, Baton’ Rouge, LA, attorney for

Plaintiff-Appellee Brian R. Becht.

Murphy J. Foster, III, Jude C. Bursavich, John T.

Andrishok, Baton Rouge, LA attorneys for Defendant-

Appellant Morgan Buildings & Spas, Inc.

JUDGES:

_ BEFORE: WHIPPLE, FOGG, AND GUIDRY, JJ.

Whipple, J. concurs in part & dissents in part, for reasons

assigned.

OPINION BY:

FOGG

OPINION:

FOGG, J.

App. 9

In this suit for unpaid wages, both the employer and

the former employee appeal, asserting error in the trial

court’s award of penalties and attorney's fees. For the

following reasons, we amend the judgment of the trial

court and affirm, as amended.

On September 7, 1998, Brian R. Becht voluntarily

resigned from his sales position with Morgan Buildings &

Spas, Inc. Subsequently, Becht demanded his unpaid

wages, Morgan failed to remit payment, and Becht filed

suit. Morgan answered the suit, seeking attorney’s fees

pursuant to a contract of employment it had with Becht.

The parties stipulated that $41.15 in commissions re-

mained unpaid and submitte’ the matter. The trial court

awarded Becht $8,913.60 in penalty wages and $4,247.48

in attorney's fees, in accordance with LSA-R.S. 23:631 et

seq. Morgan appealed, and Becht answered the appeal.

Louisiana Revised Statute 23:631 imposes a duty on

an employer, upon discharge or resignation of any em-

ployee, to pay the employee the amount then due, under

the terms of the employment, not later than fifteen days

following the date of discharge or resignation. An employer

who fails or refuses to comply with the provisions of LSA-

R.S. 23:631 shall be liable to the employee either for

ninety days’ wages at the employee’s daily rate of pay, or

full wages from the time of the employee’s demand for

payment until the employer tenders the amount of unpaid

wages due to the employee, whichever is the lesser amount

of penalty wages. LSA-R.S. 23:632.

This statute is penal in nature and, therefore, must be

strictly construed. Equitable defenses are available, and

penalty wages are not to be absolutely imposed. Pace uv.

Parker Drilling Co. and Subsidiaries, 382 So. 2d 988

App. 10

(La.App. 1 Cir.), writ denied, 383 So. 2d 1016 (La. 1980).

Generally, when there is a good faith question of whether

the employer actually owes past due wages, resistance to

payment will not trigger penalty wages. However, when

the employer is arbitrary, sets out procedural pitfalls for

the employee, or is merely negligent in failing to pay past

due wages, penalty wages will be assessed. Pace, 382

So. 2d at 991. A trial court’s findings of fact with regard to

whether the plaintiff is entitled to penalty wages cannot

be reversed on appeal in the absence of manifest error.

Loup v. Louisiana State Sch. for the Deaf, 98-0329

(La.App. 1 Cir. 2/19/99), 729 So. 2d 689.

Initially, Morgan asserts that this matter is governed

by the terms of an employment contract that provided

“final commissions, if any, will be paid within forty-five

(45) days of the end of the month during which the sales-

person terminated,” rather than LSA-R.S. 23:631, which

strictly requires the payment of wages not later than

fifteen days following discharge or resignation. We dis-

agree.

Persons may not by their juridical acts derogate from

laws enacted for the protection of the public interest. Any

act in derogation of such laws is an absolute nullity. LSA-

C.C. art. 7; Morse v. J. Ray McDermott & Co., Inc., 344

So. 2d 1353 (La. 1976). The provisions of LSA-R.S. 23:631

and 632 are for the protection of employees. See Guidry v.

Anderson-Dunham, Inc., 597 So. 2d 1184 (La.App. 1 Cir.

1992). The main purpose of this legislation is to compel an

employer to pay the earned wages of an employee

promptly after his dismissal or resignation. Wilson uv.

Inessa Stewart’s Antiques, Inc., 96-2767 (La.App. 1 Cir

2/20/98), 708 So.2d 1132, writ denied, 98-0777 (La.

5/8/98), 718 So. 2d 435. Even those employed under a

App. 11

collective bargaining agreement are protected by these

statutory provisions. LSA-R.S. 23:640. Clearly, prompt

payment of wages to employees protects the public inter-

est. Therefore, Morgan cannot rely on contract terms in

direct violation of this well-established Louisiana law. See

Beard v. Summit Inst. for Pulmonary Med. and Rehab.,

Inc., 97-1784 (La. 3/4/98), 707 So. 2d 1233.

The failure to pay Becht his earned wages within

fifteen days of resignation exposed Morgan to penalty

wages pursuant to LSA-R.S. 23:632. Morgan has offered

no evidence of a good faith defense. Therefore, the trial

court’s imposition of penalty wages was not manifestly

erroneous.’

Morgan also asserts that the trial court erred in

failing to award it attorney's fees as provided by the

employment contract. It is undisputed that Becht and

Morgan entered into an employment contract that pro-

vided:

In the event the Employee in any manner de-

faults or breaches the terms and conditions of

this Agreement, or threatens to do same, or in

the event it becomes necessary for Morgan to

employ an attorney to enforce any provision of

this Agreement, obtain injunctive relief, or collect

damages on account of a breach or a threatened

breach of this Agreement, Employee shall pay to

* The submission of the case to the trial court on stipulations

rather than live testimony does not alter the manifest error standard of

review. Alexander v. Pellerin Marble & Granite, 93-1698 (La. 1/14/94),

630 So. 2d 706; Virgil v. Am. Guarantee and Liab. Ins. Co., 507 So. 2d

825 (La. 1987).

App. 12

Morgan such disbursements as Morgan may ex-

pend in such proceedings.

Absent from the record is any evidence of “disburse-

ments” by Morgan. Therefore, the trial court did not err in

failing to award Morgan attorney’s fees.

In his answer to the appeal, Becht seeks to increase

the award to include commissions he allegedly earned

prior to resignation, including the sum of $41.15 that

remained unpaid according to the stipulation of the

parties. The employment contract provided that upon

termination, Becht was entitled to “the compensation

earned by him prior to the date of termination computed

in accordance with Exhibit ‘B’ [HOW SALES COMMIS-

SIONS ARE PAID].” Section D of Exhibit B provided:

[a] terminated sales person will not receive any

percentage commissions on sales or deliveries

made by the Store during the pay period in

which the termination occurs. The terminated

salesperson who made the sale will receive his or

her 75% share of the Store’s Commissions on

those sales made prior to termination if the

product has been DELIVERED, ACCEPTED,

[sic] by the customer AND the account has been

PAID IN FULL prior to the end of the last busi-

ness day during which he or she was at work.

The record reveals Becht had ten sales wherein the

product was not delivered or for which full payment was

not received until after his resignation. Based on the

terms of the employment contract, Morgan did not pay

Becht commissions on these sales.

Becht asserts the provision limiting commissions to

sales wherein the product was delivered, accepted by the

App. 13

customer, and paid in full by the day of resignation consti-

tutes a prohibited forfeiture of wages under LSA-R.S.

23:634. That legislation strictly forbids an employer from

requiring an employee to forfeit his wages upon resigna-

tion and provides that the empivoyee shall be entitled to

the wages “actually earned” up to the time of their resig-

nation. :

When commission sales are at issue, the inquiry of

whether a wage was actually earned focuses on what work

associated with the sale remained at the time of resigna-

tion. See Howser v. Carruth Mortgage Corp., 476 So. 2d

830 (La.App. 5 Cir. 1985). In the instant matter, consider-

ing the nature of the sales and the clearly-established

method of determining compensation based on verifiable

post-sale events, we find no error in the trial court’s failure

to award commissions on these contracts.

However, we do find error in the trial court’s failure to

include in the award the sum of $41.15, which pursuant to

the parties’ stipulation remained unpaid. Therefore, we

will amend the trial court’s judgment to include an addi-

tional award of $41.15.

Finally, Becht seeks additional attorneys fees on

appeal, in accordance with LSA-R.S. 23:632. Additional

attorney's fees are usually awarded when a party appeals,

obtains no relief, and the appeal has necessitated addi-

tional work on the opposing party’s counsel. Loup, 98-0329

at pp. 8-9, 729 So. 2d at 694. Accordingly, we award Becht

the additional sum of $1,000.00 in attorney's fees on

appeal.

For the foregoing reasons, the judgment of the trial

court is amended to include additional awards in favor of

Brian R. Becht in the sums of $41.15 in commissions plus

App. 14

$1,000.00 in attorney's fees. In all other respects, the

judgment is affirmed. Costs are assessed against Morgan

Buildings & Spas, Inc.

AFFIRMED, AS AMENDED.

CONCUR BY:

Whipple (In Part)

DISSENT BY:

Whipple (In Part)

DISSENT:

Whipple, J. concurring in part and dissenting in

part.

I agree with the majority in all respects except

the denial of the remaining commissions claimed by

plaintiff. I disagree with the trial court’s (and the

majority’s) failure to make any award for the com-

missions generated by product sales made prior to,

(but with delivery after) plaintiff’s employment

ceased. In my view, the enforcement of this contrac-

tual provision is contra bonos mores, and is statuto-

rily prohibited. See LSA-R.S. 23:634. For these

reasons, I respectfully dissent in part.

App. 15

BRIAN R. BECHT : SUIT NO. 9903-02356 DIV. A

VERSUS * CITY COURT

MORGAN BUILDINGS : CITY OF BATON RO'GE

asics vaio : STATE OF LOUISIANA

JUDGMENT

This matter came before court on the 8th day of May,

2000, pursuant to an agreement by all parties to submit

briefs on the legal issues. Brief submitted on behalf of

plaintiff was by Chad Reynolds, Attorney, and for defen-

dant by Tami Tucker York, Attorney.

After consideration of the evidence, the law and the

argument of counsel,

IT IS ORDERED, ADJUDGED, AND DECREED

that there be judgment herein in favor of the plaintiff,

Brian R. Becht, and against the defendant, Morgan

Buildings & Spas, Inc., in the amount of EIGHT THOU-

SAND, NINE HUNDRED THIRTEEN AND 60/100

(8,913.60), together with legal interest thereon from the

date of judicial demand until paid and all costs of these

proceedings, as well as reasonable attorney's fees in the

amount of FOUR THOUSAND, TWO HUNDRED

FORTY SEVEN AND 48/100 ($4,247.48).

JUDGMENT READ, RENDERED, AND SIGNED

this 4th day of August, 2000, at Baton Rouge, Louisiana.

/s/ Byron Stringer

JUDGE BATON

ROUGE CITY COURT

Division A

FILED August 4 2000

App. 16

(SIGNED) s/ Carolyn B. Ivy

SENIOR LEGAL

SPECIALIST OF

CITY COURT

A TRUE COPY August 7 2000

(SIGNED) Carolyn B. Ivy

SENIOR LEGAL

SPECIALIST OF

CITY COURT

App. 17

U.S. Const.

Amendment XIV

Section. 1. All persons born or naturalized in the United

States and subject to the jurisdiction thereof, are citizens

of the United States and of the State wherein they reside.

No State shall make or enforce any law which shall

abridge the privileges or immunities of citizens of the

United States; nor shall any State deprive any person of

life, liberty, or property, without due process of law; nor

deny to any person within its jurisdiction the equal protec-

tion of the laws.

Section. 2. Representatives shall be apportioned among

the several States according to their respective numbers,

counting the whole number of persons in each State,

excluding Indians not taxed. But when the right to vote at

any election for the choice of electors for President and

Vice President of the United States, Representatives in

Congress, the Executive and Judicial officers of a State, or

the members of the Legislature thereof, is denied to any of

the male inhabitants of such State, being twenty-one years

of age, and citizens of the United States, or in any way

abridged, except for participation in rebellion, or other

crime, the basis of representation therein shall be reduced

in the proportion which the number of such male citizens

shall bear to the whole number of male citizens twenty-

one years of age in such State.

Section. 3. No person shall be a Senator or Representative

in Congress, or elector of President and Vice President, or

hold any office, civil or military, under the United States,

or under any State, who, having previously taken an oath,

as a member of Congress, or as an officer of the United

States, or as a member of any State legislature, or as an

App. 18

executive or judicial officer of any State to support the

Constitution of the United States, shall have engaged in

insurrection or rebellion against the same, or given aid or

comfort to the enemies thereof. But Congress may by a

vote of two-thirds of each House, remove such disability.

Section. 4. The validity of the public debt of the United

States, authorized by law, including debts incurred for

payment of pensions and bounties for services in suppress-

ing insurrection or rebellion, shall not be questioned. But

neither the United States nor any State shall assume or

pay any debt or obligation incurred in aid of insurrection

or rebellion against the United States, or any claim for the

loss or emancipation of any slave; but all such debts,

obligations and claims shall be held illegal and void.

Section. 5. The Congress shall have power to enforce, by

appropriate legislation, the provisions of this article.

App. 19

La._Rev. Stat. Ann.

CHAPTER 6. PAYMENT OF EMPLOYEES

§631. Discharge or resignation of employees; payment

after termination of employment

A.(1a) Upon the discharge of any laborer or other

employee of any kind whatever, it shall be the duty of the

person employing such laborer or other employee to pay

the amount then due under the terms of employment,

whether the employment is by the hour, day, week, or

month, on or before the next regular payday or no later

than fifteen days following the date of discharge, which-

ever occurs first.

(b) Upon the resignation of any laborer or other employee

of any kind whatever, it shall be the duty of the person

employing such laborer or other employee to pay the

amount then due under the terms of employment, whether

the employment is by the hour, day, week, or month, on or

before the next regular payday or no later than fifteen

days following the date of resignation, whichever occurs

first.

(2) Payment shall be made at the place and in the man-

ner which has been customary during the employment,

except that payment may be made via United States mail

to the laborer or other employee, provided postage has

been prepaid and the envelope properly addressed with

the employee’s or laborer’s current address as shown in

the employer’s records. In the event payment is made by

mail the employer shall be deemed to have made such

payment when it is mailed. The timeliness of the mailing

may be shown by an official United States postmark or

App. 20

other official documentation from the United States Postal

Service.

(3) The provisions of this Subsection shall not apply

when there is a collective bargaining agreement between

the employer and the laborer or other employee which

provides otherwise.

B. In the event of a dispute as to the amount due under

this Section, the employer shall pay the undisputed

portion of the amount due as provided for in Subsection A

of this Section. The employee shall have the right to file an

action to enforce such a wage claim and proceed pursuant

to Code of Civil Procedure Article 2592.

C. With respect to interstate common carriers by rail, a

legal holiday shall not be considered in computing the

fifteen-day period provided for in Subsection A of this

Section.

D.(1) For purposes of this Section, vacation pay will be

considered an amount then due only if, in accordance with

the stated vacation policy of the person employing such

laborer or other employee, both of the following apply:

(a) The laborer or other employee is deemed eligible for

and has accrued the right to take vacation time with pay.

(b) The laborer or other employee has not taken or been

compensated for the vacation time as of the date of the

discharge or resignation.

(2) The provisions of this Subsection shall not be inter-

preted to allow the forfeiture of any vacation pay actually

earned by an employee pursuant to the employer’s policy.

App. 21

Amended by Acts 1977, No. 317, § 1; Acts 1988, No. 602,

§ 1; Acts 1995, No. 325, § 1; Acts 1977, No. 56, § 1; Acts

2001, No. 1171, $1.

App. 22

La. Rev. Stat. Ann.

§632. Liability of employer for failure to pay; attorney fees

Any employer who fails or refuses to comply with the

provisions of R.S. 23:631 shall be liable to the employee

either for ninety days wages at the employee’s daily rate of

pay, or else for full wages from the time the employee’s

demand for payment is made until the employer shall pay

or tender the amount of unpaid wages due to such em-

ployee, whichever is the lesser amount of penalty wages.

Reasonable attorney fees shall be allowed the laborer or

employee by the court which shall be taxed as costs to be

paid by the employer, in the event a well-founded suit for

any unpaid wages whatsoever be filed by the laborer or

employee after three days shall have elapsed from time of

making the first demand following discharge or resignation.

Amended by Acts 1964, No. 422, § 1; Acts 1977, No. 317,

§ 1.

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