Case Name: Arthur COLEMAN et al., Plaintiffs-Appellees, v. JIFFY JUNE FARMS, INC., et al., Defendants-Appellants; James D. HODGSON, Secretary of Labor, United States Department of Labor, Plaintiff-Appellee, v. JIFFY JUNE FARMS, INC., et al., Defendants-Appellants
Court: United States Court of Appeals for the Fifth Circuit
Jurisdiction: United States
Decision Date: 1971-11-29
Citations: 458 F.2d 1139
Docket Number: No. 71-1412
Parties: Arthur COLEMAN et al., Plaintiffs-Appellees, v. JIFFY JUNE FARMS, INC., et al., Defendants-Appellants. James D. HODGSON, Secretary of Labor, United States Department of Labor, Plaintiff-Appellee, v. JIFFY JUNE FARMS, INC., et al., Defendants-Appellants.
Judges: 
Reporter: Federal Reporter 2d Series
Volume: 458
Pages: 1139–1143

Head Matter:
Arthur COLEMAN et al., Plaintiffs-Appellees, v. JIFFY JUNE FARMS, INC., et al., Defendants-Appellants. James D. HODGSON, Secretary of Labor, United States Department of Labor, Plaintiff-Appellee, v. JIFFY JUNE FARMS, INC., et al., Defendants-Appellants.
No. 71-1412
Summary Calendar.
United States Court of Appeals, Fifth Circuit.
Nov. 29, 1971.
Rehearing Denied May 17, 1972.
Willis C. Darby, Jr., Mobile, Ala., for defendants-appellants.
H. Hayden Rector, Michael J. Salmon, Mobile, Ala., Beverley R. Worrell, Dept. of Labor, Atlanta, Ga., Bessie Margolin, Carin Ann Clauss, U. S. Dept. of Labor, Washington, D. C., for plaintiffs-appellees.
Before WISDOM, COLEMAN and SIMPSON, Circuit Judges.
Rule 18, 5 Cir.; see Isbell Enterprises, Inc. v. Citizens Casualty Company of New York et al., 5 Cir. 1970, 431 F.2d 409, Part I.

Opinion:
WISDOM, Circuit Judge:
The decision of the district court, 324 F.Supp. 664, is affirmed. A detailed statement of the Court's reasons for af-firmance would serve no precedential value, see Local Rule 21, except insofar as the decision interprets the three-year statute of limitations for the Fair Labor Standards Act ("FLSA"), 29 U.S.C. § 255, as amended in 1966.
Section 255 provides, in pertinent part, that every action for unpaid overtime compensation under the FLSA "shall be forever barred unless commenced within two years after the cause of action accrued, except that a cause of action arising out of a wilful violation may be commenced within three years after the cause of action accrued." In this action to recover unpaid overtime compensation, the district court held that the employer's refusal to pay overtime compensation was "wilful"-, even though the court also found that "the act or omission giving rise to the defendants' action was in good faith and he had reasonable grounds for believing that his acts or omissions were not in violation [of the FLSA]." The court therefore permitted the employees to recover their unpaid wages for three years back.
Before August 1966 the loaders and drivers employed by Jiffy June Farmers were paid overtime compensation in accordance with Section 7 of the FLSA. Then the Teamsters' Union organized the Jiffy June employees. The union negotiated a collective bargaining agreement with the Jiffy June management which granted an increase in the regular hourly wage, and in exchange the union agreed to a provision purportedly exempting the employees from the FLSA overtime rate because they were subject to the jurisdiction of the Interstate Commerce Commission. Before entering into the agreement Robert A. Trai- nor, Jr., the principal shareholder of Jiffy June, had consulted his attorney, who advised him that the Jiffy June loaders and drivers would be exempt under the applicable provision of the FLSA.
So far as we have been able to discover, no appellate court has construed the statute of limitations since it was amended in 1966. Three district court decisions — two from this Circuit — have applied the three year period upon a finding of wilfulness. But the district court cases provide little guidance as to the applicable period of limitations when the employer seeks and then relies on the advice of counsel prior to departing from the federal wage standard by signing a collective bargaining agreement.
In Hodgson v. Hyatt, D.C.Fla.1970, 318 F.Supp. 390, the employer altered his records of hours worked to reflect falsely that his employees had been paid the statutory rate for overtime work. The district court applied the three year statute "to violations which are intentional, knowing, or voluntary as distinguished from accidental, and [characterized by] conduct marked by careless disregard whether or not one has the right so to act." In Hyatt, the employer's alteration of his records demonstrated beyond any doubt that he knew of the applicability of the FLSA and intended to violate the Act. Hyatt therefore does nothing to resolve our problem here, namely, whether some lesser degree of knowledge may lead to a wilful violation of the Act. See also Krumbeck v. John Oster Mfg. Co., D.C. Wis.1970, 313 F.Supp. 257, where the court found that the employer had changed his job classifications "for the purpose of eluding the requirements of the Equal Pay Act." 313 F.Supp. at 264.
In Dowd v. Blackstone Cleaners, Inc., D.C.Tex.1969, 306 F.Supp. 1276, 1281, the district court applied substantially the same "intentional, knowing, or voluntary" test of wilfulness used in Hyatt, and found a wilful violation where the employees had refrained from punching a time clock when they worked overtime (on the weekends) and only then. The Court deduced that the employees had been ordered not to punch the clock, and that the employer had therefore sought to evade the FLSA. Thus Dowd, like Hyatt and Krumbeek, involved bad faith evasion of the Act and definite knowledge of its applicability. In Dowd, the defendant testified that he had made casual inquiries and been told that the Act did not apply to his employees. The court noted that the defendant did not consult "a lawyer or the Labor Department or an expert of any kind to verify this determination," and adhered to its view that the defendant knew his actions constituted a violation of the Act. Dowd, then, may imply in dictum that consultation with counsel is sufficient to negate wilfulness and avoid the three year statute of limitations, but it stops far short of any such holding.
In short, none of the three district court cases has addressed itself directly to the question' whether a violation committed in good faith may yet be wilful, as the Government and the plaintiffs argue here. Even though Trainor consulted his lawyers, and evidently relied on legal advice, we agree with the district court that Trainor's decision to change Jiffy June's rate of pay was "wilful" within the meaning of that term as used in the 1966 amendment of § 255. Trainor decided to consent to the change in rates of pay for overtime work despite his awareness that the FLSA might prevent such a change. He had previously paid his employees the federal overtime rate; and Trainor's decision to request an opinion of counsel is further evidence that he did not stop paying the statutory overtime without any inkling that the federal wage scheme might thereby be violated. We cannot excuse Trainor from these suspicions simply because his lawyer told him that he need not fear federal overruling of his new agreement with Teamsters'. The advice of counsel to proceed' with a favorable wage settlement which undercuts the FLSA would be an easy way of circumventing the requirements of the Act — far too easy a way for us to assume that Congress intended to subject employees to the strict two-year limitations period whenever an employer's lawyer had given him the green light to restructure their .pay.
The entire legislative history of the 1966 amendments of the FLSA indicates a liberalizing intention on the part of Congress. Requiring employers to have more than awareness of the possible applicability of the FLSA would be inconsistent with that intent. Consequently, we hold that employer's decision to change his employees' rate of pay in violation of FLSA is "wilful" when, as in this case, there is substantial evidence in the record to support a finding that the employer knew or suspected that his actions might violate the FLSA. Stated most simply, we think the test should be: Did the employer know the FLSA was in the picture? In this case, Trai-nor knew that the FLSA had to be considered when he ceased to comply with the Act and asked his lawyer if it was permissible to do so. We need not consider today whether the three-year statute of limitations applies in a case where the employer ought to have known of the possible applicability of the FLSA but can demonstrate compellingly that in fact he did not.
The decision below is affirmed.
. See NLRB v. Amalgamated Clothing Workers of America, 5 Cir. 1970, 430 F.2d 966.
. Section 13(b) (1) of the FLSA provides that the overtime provisions of the Act shall not be applicable to "any employee with respect to whom the Interstate Commerce Commission has power te establish qualifications and ipaximum hours of service pursuant to the provisions of section 204 of the Motor Carrier Act, 1935." 29 U.S.C. § 213(b) (1).
Under Local Rule 21, we have today affirmed the district court's holding that Jiffy June's drivers and loaders were not exempt from the coverage of the FLSA by virtue of Section 13(b) (1).