Opinion ID: 574924
Heading Depth: 2
Heading Rank: 2

Heading: The Availability of Penalty Wages.

Text: 17 The only remaining issue is whether the district court erred in awarding penalties against ACS. ACS takes the position that to receive the penalties, Mr. Batiansila must prove bad faith on the part of ACS. ACS argues that Mr. Batiansila did not show that its refusal to pay the bonus was in bad faith. Mr. Batiansila contends that ACS waived this argument by not raising it below. In the alternative, Mr. Batiansila argues that ACS had the burden of proving its good faith. 18 ACS states that it did not waive this argument. In support, ACS points to the Pretrial Order. Contested Issue of Fact Number Seven refers to whether Mr. Batiansila is entitled to recover attorney's fees and penalties. 8 This issue of fact can easily be interpreted to indicate that ACS had not waived its equitable defense to the penalties. 9 ACS also mentions that it orally requested an opportunity to brief the issue of entitlement to penalty wages, but this request was denied by the district court. Further, this Court's review of the record indicates that ACS elicited testimony at trial that could support a denial of penalty wages. Thus, we do not find that ACS waived this argument below. 19 This brings us to the question of burden of proof. ACS's argument that the plaintiff must prove bad faith to be entitled to the penalties is not without merit. There is some support in the cases for imposing such a burden upon the plaintiff. 10 There is also support for Mr. Batiansila's position that the employer must prove its equitable defense. 11 The Louisiana Supreme Court has not addressed this issue, and the lower courts in the State are not in agreement. Thus, this Court must determine how the Louisiana Supreme Court would answer this question. 20 The predecessor to La.R.S. 23:632, Acts 1920, No. 150, § 2, was first addressed by the Louisiana Supreme Court in Deardorf v. Hunter. 12 In that case, the trial court had refused to award the penalty wages. The employer had sent the payroll to another employee, Spears, who had used the money for other purposes. The employer did not know that the employees had not been paid. Once the employer learned of the non-payment, he deposited the wages, plus interest and court costs with the court. The trial court concluded that awarding the penalty in these circumstances would be inequitable. The question for the Court was whether the Act required the imposition of the penalty. In upholding the trial court, the Louisiana Supreme Court stated that [t]he language of the Act 150 of 1920 is not so peremptory as to forbid an equitable defense against the penalty. 21 The Louisiana Supreme Court, in other cases, has said that the act does not preclude equitable defenses 13 and that the penalty provision may be open to equitable defenses. 14 In the most recent comment concerning the penalty provision, the Court stated that a good-faith non-arbitrary defense to liability for unpaid wages, i.e., a reasonable basis for resisting liability, ... permit[s] the court to excuse the employer from the imposition of the additional penalty wages. 15 We find further support for Mr. Batiansila's position in Mason v. Norton, 16 in which the Court amended a judgment to include the penalty wages without any discussion of whether there had been a showing of bad faith. 22 Thus, the Louisiana Supreme Court cases hold only that courts are permitted to excuse the employer from the imposition of penalty wages when a good faith, non-arbitrary defense to liability is shown to exist. This does not mean that the employee must show bad faith. 17 To so hold would turn this equitable exception on its head. There are no Louisiana Supreme Court cases even implying that the employee must prove bad faith in order to receive the penalty wages. We find that the burden of proof is on the defendant to show that it has an equitable defense. 18