No. 12495 INTHE SUPREME COURT OF THE STATE OF MONTANA

STATE OF MONTANA, ex re1WILMER C. NEISS and HELEN M. NETSS, Husband and Wife, individually and d/b/a the CarlinHotel, Petitioners,

DISTRICT COURT OF THE THIRTEENTH JUDICIAL DISTRICT OF TIIE STATE OF MONTANA and the HONORABLE ROBERT H

# .WILSON

### ,Judge thereof, and SIDNEY T. SMITH, Commissioner of Labor and Industry and HONORABLE ROBERT L. WOODAHL, Attorney General of Montana. Respondents.

ORIGINAL PROCEEDING:

Counsel of Record: For Petitioners: Berger, Anderson, Sinclairand Murphy, Billings, Montana Arnold A. Berger argued, Billings, Montana For Respondents: Honorable Robert L. Woodahl, Attorney General, Helena,

Montana Jonathan B. Smith argued, Assistant Attorney General,

Helena, Montana Harold F. Hanser, County Attorney, Billings, Montana Ernest F. Boschert argued, Billings, Montana.

Submitted: May 22, 1973 Decided:

### JUL 

### 1 0

### 1973 Filed: 

### JUL 

### I01973Mr. Justice John Conway Harrison delivered the Opinion of the Court,
This is an original proceeding brought by petitionersWilmer C. and Helen M. Neiss, husband and wife, seeking a writ of supervisory control directed to the respondents to appear and show

causewhy petitionersfmotion for summary judgment in the district court should not be granted, The district court of the thirteenth judicial district,Yellowstone County,was the original respondent. The Montana Commissioner of Labor and Industry and the Montana Attorney Generalwere made parties, pursuant to an order of this Court. The dispute concerns a complaint received by the Montana Commissioner of Labor and Industry,hereinafter referred to as the Commissioner,regarding alleged failure of petitioners to pay the minimum wageasprescribed by statute. Petitioners operate and do business as the Carlin Hotel in Billings, Montana, In conducting such business, petitioners hire desk clerks and roommaintenance employees. Involved here are four categories of employees: 

### 1. Two casual employeeswhose last names are unknown to the State of Montana and to petitioners; they are unidentifiable. 2. Seven employeeswho did not assign any claim forwages to the Commissioner,but settled their own claimswith petitioners. 

### 3. One employeewho made complaint to the Commissioner and duly assigned such claim. 4, One employeewho asked the county attorney to represent her in the action, Following the Commissioner's receipt of the one complaint in September 1971,he conducted an audit of petitonersfbooks. The audit revealed petitioners had, in fact, failed to pay the minimumwage to certain employees. Subsequently the Commissioner ordered petitioners to pay the former employees the difference between the amount actually paid and the minimumwage. Petitioners did not comply. -2-TheGommissioner then requested the Yellowstone County Attorney to institute action against petitioners. Petitioners discovered that only one claim of the severalmentioned in the complaintwas assigned to the Commissioner. Petitioners then compromised certain of the claimswith some of their former employees for amounts less than the amounts due under the minimumwage statute. In answering the Commissioner's complaint,petitioners alleged satisfaction of the claims,having procured releases from some former employees. Petitionersmoved the district court for summary judgment on thebasis of the releases obtained from those certain employees, The district court denied petitioners' motion for summary judgment and petitioners now seek a writ of supervisory control in this Court. We accept jurisdictionand deny petitioners' request for a supervisorywrit. Thebasic issue is whether minimumwage claims may be compromised by petitioners and then established as a defense to proceedings seeking enforcement of minimumwage laws. Our answer is in the negative. Section 41-2306,R.C.M. 1947,provides that all actions regarding enforcement of minimumwages are commenced in accordance with sections 41-1301 through 41-1324,

### R.C.M, 1947, 

### Two of those sections are significanthere. Section 41-1314.1, R,C,M. 1947, authorizes the commissioner of labor to conduct all operations necessary to determinewhether any statutory minimumwage provi- -. 

# ,p'g* sions have beenviolated, Section 

### 41- 3 -2,R.C.M. 1947,provides in pertinent part:

It

Whenever the commissionerdetermines that one or more employees have claims for unpaid wages, he shall, upon the written request of the employee, take an assignment of the claim in trust for such employee, and may maintain any proceeding appropriate to enforce the claim, including liquidated damages pursuant to this act. With thewritten consent of the assignor, the commissionermay settle or adjust any claim assigned pursuant to this section," (Emphasis added) 

### It is petitioners' position that if the Commissioner,with thewritten consent of the employee, can settle and adjust any assigned claim,as the statute authorizes, then the individualmaysettleand adjust his own claim in absence of any assignment, petitioners' argument isuntenable. The Commissioner has the authority to compromise claims because he does so not only for the best interest of the claimant, but for the public aswell. That situation is quite apart from the instancewhere the party failing topay the minimum wage attempts tocompromise the claimant's demand. The best interest of neither the public nor the claimant is pursued by the party atfault; a compromise sought by the party atfault serves only that party. In considering the purpose of the Fair Labor Standards Act, the United States Court of Appeals, Ninth Circuit, inWirtz v. Malthor, Inc., 391 F.2d 1, 3, sai.d: "~t must be remembered that restraining appellees from withholding the minimum wages and overtime compensation ismeant tovindicate a public, rather than a private right, and that the withholding of i the money due isconsidered a continuing public offense. r I1 The court then went on tonote that the purpose of enforcement procedures is twofold: (1) toincrease the effectiveness of enforcement by depriving theviolator of his gain; and (2) to protect employers who do comply with the Act from having to compete unfavorably with those who do not comply. We find these purposes analogous tothe declaration of policy embodied in section 41-2301, R.C,M, 1947, Petitionersurge that the Commissioner's failure toobtain assignments from allthe claimants proves fatal to the ~ornmissioner's authority toact on the claimants' behelf and that those nonassigned claims may be settledby the claimants themselves, Again, we do not agree. This is a first impression casebefore this Court, In the future thisproblem can be avoided ifthe Commissioner obtains assignments from allclaimants. However, sincewe are dealing with a public right, public policy demands the minimum wage shallbe paid. Minimum wage provisions exist for the benefit of the whole public and a claimant of his own accord may notbargain away his statutory minimum wage.It is elementary that a law established fora public reason cannot be compromised by private agreement, Section 49-105, R.C.M. 1947.As concerns the first category of employees, listedheretofore, petitioners (employers) complied with theprayer of the original complaint and deposited the amount due those unidentifiable employees with the district court. Having fully complied with the prayer of the state's complaint, there isno penalty or forfeiture owing by petitioners. As concerns category 2, those who settled their claims for less than the minimum wage, we direct that the amount owing between the settlement made and the minimum wage be paid intodistrict court tobe paid over to those employees. These employees having been represented by the county attorney, we find the provisions for attorney fees and costs provided for in section 41-1322, R.C,M. 1947, arenot applicable. Under the circumstances here, liqui-- dated damages are likewise not applicable. As concerns category3 and category4, the employees who brought action either through the Commissioner or county attorney, petitioners herein have asserted a counterclaim which must be disposed of by the district court, petitioners' request for a writ of supervisory control i-s denied on the merits. The cause isremanded tothe district court forwhatever further action isnecessary, which action shallbe consistent with the directions provided herein. 

# C\/

Chief JusticeMr, JusticeWesley Castles dissenting: 

### I dissent. The fact statement in the majority opinion is not complete, The complaint filed by the Commissioner of Labor soughtpayment of underpaid wages, a bond or a cessation of business, Defendants complied by settling the claims not represented by the Commissioner and by depositing in the district court the amounts due two casual employees neither party was able to find. A.s to two claimants or employees, one was represented by the Commissioner after an assignment; the other merely asked the county attorney to representher. As to these two claimants, the defendants filed counterclaims. Thevalidity and good faith of the counterclaimswe should accept as true at this stage. Then and only then, did the Commissioner, without authority as to part of the claimants under the statute,assert liquidated damages. Keep in mind here thatwe are being asked to accept jurisdiction by way of supervisory control, We accept jurisdiction but deny petitioners' request for a supervisorywrit and then go on to rule on the merits, We have ruled that there isno defense. Montana statutes stateplainly that the Commissioner shall take an assignment in trust. With the written consent of the assignor,hemay settle or adjust. Then,it follows, under our statute, the beneficiary or claimant can settle for himself, 

### Idissent to the ruling as made here. Themajority opinion has at least recognized that no penalties should apply, With this, Iagree, Iwould grant the writ,

*. ,,,,,-,-d,~,--,-,-i,4,,u;-,,-- Associate Justice