Court Opinion

ID: 6922555
Source: CourtListenerOpinion
Date Created: 2022-07-23 23:06:51.560185+00
Date Added: 2024-06-11T16:06:50.530334
License: Public Domain

TUTTLE, Chief Judge.
The Secretary of Labor appeals from the denial by the trial court of an injunction against future violations of the Fair Labor Standards Act, 29 U.S.C.A. § 201 et seq.
The employer in this case is engaged in the paving contracting business. The violations giving rise to the litigation occurred principally out of contracts for the paving of facilities at military air bases. There were other violations that occurred during ordinary road paving jobs. The total amount of wages unpaid to employees which, under the concession finally made by the employer would have been due his employees if the Act had been complied with, is approximately $39,000. Of this amount about $2,400 represented unpaid wages on the road construction projects.
The employer originally defended the action on the ground that airport construction dealt with instrumentalities of war and was therefore not a part of commerce or the- production of goods for commerce. The only reason given for failures to comply with respect to the road paving jobs was that these items were inadvertently overlooked because the contracts were with Army Engineers. The failure of compliance occurred continuously beginning four years prior to the date of trial, in March, 1955, down to April 23, 1959.
During the year 1955 the employer was advised by the Department of Labor that the Act was applicable to its military projects. Ballenger declined to comply, stating that he could not follow the department’s reasoning, that none of his competitors were doing it, and stating further that he felt if the Act was supposed to apply it would have been written into the contract. On May 31, 1956, Ballenger’s counsel wrote to the Department that “according to [his] informa*299tion, there is no law requiring overtime compensation for hours worked in excess of forty in a work week to employees employed on air fields or similar military construction.” On November 16, 1956, the Labor Department’s Regional Attorney called counsel’s attention to several cases, including Mitchell v. H. B. Zachry, 127 F.Supp. 377, a District Court decision exactly in point. Counsel replied, stating: “We feel that it is contrary to accepted law and we, of course, are not bound by it even if the factual situation were analogous.” In May, 1957, defendant was advised by the Labor Advisor for the Corps of Engineers that it was a contractor’s responsibilities to check with the Department of Labor as to coverage under the Fair Labor Standards Act. Twice in 1957 the employer was advised by a Labor Department representative that its air field operations were covered and that it was violating the Act in not complying with its terms. On October 18, 1957, this suit was filed.
On June 30, 1958, this Court decided the case of Mitchell v. Empire Gas Engineering Co., 5 Cir., 256 F.2d 781. In that case this Court expressly held that a contractor in the position of the appellee here was covered by the Fair Labor Standards Act. On or about January .23, 1959, in a conference between attorneys for the Secretary of Labor and counsel for the employer in the pending litigation, the Empire Gas Engineering Company case was called to the attention of employer’s counsel. This was communicated to Ballenger’s general counsel in Greenville, South Carolina, in a letter dated February 5, 1959. By a letter dated February 10th, the general counsel acknowledged receipt of this information, and stated: “It seems to me that the\ Empire Gas Engineering case is the coup de grace to our position.” Then follows the following pertinent comment: “My present inclination is to now advise Ballenger that it must comply with the FLSA and see if we can get a dismissal without an injunction based on our agreement to so abide. If you agree with this, let me know and I will take it up with Ballenger to see what his reaction is. The record is silent as to any other inter-counsel communications. However, it is not disputed that it was near the end of February before counsel actually notified Ballenger of his legal opinion. Even on this advice from counsel, Ballenger, without being advised to do so, still delayed compliance. The reason he gave was expressed in the following words:
“I felt like that the case might not have been a contested case; that Empire Gas worked a lot of union crafts in which they would have to pay time and a half over both eight and forty anyway, and I thought it was to our interest to find out whether or not that was a contested case.”
Thus it is that even after Ballenger was informed by his lawyer that its operation was covered by the Act, the Company continued until April 23rd, or at least six weeks longer of illegally computed weekly payrolls before it came into compliance. The Government points to the further significant fact that the letter signifying compliance was sent out shortly after the secretary filed notice that depositions would be taken on April 29th, the week following Ballenger’s ordered compliance.
In August, 1959, a pre-trial hearing was held and at that time the trial court in its pre-trial order stated: “The defendant concedes that a * * * decision by the Court of Appeals for the Fifth Circuit indicates that defendant has violated the Act. Defendant contends that said decision erroneously construes the Act.” Thus, it appears that even at that time the employer was still reserving its argument to test coverage. However, by the time the case came on for trial, this position was finally abandoned and the trial turned solely on the question whether an injunction should issue. The critical findings of fact by the trial court were as follows:
2—For several years prior to April, 1959, there existed in the mind of defendant and its executives, as to whether defendant’s operations in *300connection with runways on military air bases came within the provisions of said Act. It was generally believed among such contractors that the Act did not apply and defendant company was so advised by able counsel'. The belief that the Act did not apply was encouraged and fostered by other departments of the United States Government whose primary interest was not to enforce the Fair Labor Standards Act but to save as much money as possible in regard to such operations.1
3 — In July, 1958, the Fifth Circuit Court of Appeals decided the case of Mitchell v. Empire Gas Engineering Company, 256 F.2d 781, which put at rest the confusion above referred to. Defendant and its executives did not for a period of time get actual knowledge of this decision, there being testimony that it did not at once come to the attention of attorneys then representing defendant company, and even then that it was necessary for counsel to contact Empire Gas Engineering Company and ascertain the actual questions involved in the case. As stated above, this period of delay is the only factor or neglect upon the part of defendant company. However, this Court is accepting the sworn statement of the defendant company, its executives and the attorneys, all reputable men, to the above effect.
We are unable to find support for the findings of the trial court to the effect that the belief that the Act did not apply was encouraged and fostered by other departments of the United States Government. It is true that the paving contracts expressly included provisions that the terms of the Davis-Bacon Act and the eight-hour law were to be complied with. This followed simply because Federal statutes required that the contracts make specific reference to these acts. It is undisputed, however, that the employer was repeatedly told that the coverage under the wage and hour law was not passed upon by the contracting authority, but was referable to the Labor Department.
It is also plain that there is no actual evidence when the knowledge of Mitchell v. Empire . Gas Engineering Company come to the attention of Ballenger’s counsel. The only evidence is that it was called to their attention by the Wage and Hour attorneys on January 23, 1959. This was still not brought to the attention of Ballenger until the end of February and even then Ballenger declined to accept the opinion of his lawyer until he decided, without suggestion of his counsel, to satisfy himself that it was actually binding.
This court has recently had presented to it a number of appeals from the refusal of a trial court to grant an injunction where compliance has finally been conceded after substantial loss of wages to employees. In most of these cases, the argument is made that a good faith reliance on advice of counsel justifies the course of conduct followed by the employer and this factor looms large in the decision of the trial courts in denying an injunction.
Whereas we have recognized that an injunction does not-follow as a matter of course upon either a finding or stipulation of violation of the act, Mitchell v. Hodges Contracting Co., 5th Cir., 283 F.2d 380 and Mitchell v. Strickland Transportation Co., 5th Cir., 267 F.2d 821, we have nevertheless not hesitated to reverse an order of the trial court denying an injunction when it is clear that its discretion resulting in a denial has not been exercised in the light of the objectives of the Act. As the years pass by and the Act and its coverage become more and more a part of employer-employee relations, we find it more frequently necessary to direct the entry of a de*301cree of injunction on such appeals than has heretofore been the case. See Mitchell v. Hausman, 5th Cir., 261 F.2d 778 and Mitchell v. Blanchard, 5th Cir., 272 F.2d 574 and see especially Mitchell (Goldberg, Secretary of Labor) v. Pidcock, III, No. 18,687, 5th Cir., 299 F.2d 281, decided by this court on February 5, 1962.
This does not mean to say that each case must not still be determined on the basis of its own facts. It is to say, however, that the very apparent remedial purpose of this Act is too often overlooked where an employer has actually profited from his failure to comply with the law, and where his persistence in such failure, still to his profit, extends beyond the time when by all reason his doubts or uncertainties as to coverage should have vanished. This we think is such a ■case. Without in any way criticizing or modifying the trial court’s determination •of the high standing of the persons involved, we are nevertheless compelled to find that, under the circumstances of this ■case, the failure of Ballenger to pay the legally required wages for a period of more than nine months after this Court’s decision in Empire Gas, at a time when it was conscious of constant demands by the Department of Labor that it come Into compliance, and at a time when this precise point was being litigated, and which time involved three months after actual notice to its counsel and six weeks after actual notice and advice to its President, deprives it of any defense against -the Government’s claim that an injunction be issued.
Following the decision by the Supreme Court in Powell v. United States Cartridge Co. in 1950, 339 U.S. 497, 70 S.Ct. 755, 94 L.Ed. 1017, it was perfectly clear that the mere fact that the employment was in connection with national defense ■did not make the Fair Labor Standards Act inapplicable. Thereafter, this employer was put on notice that, once it was authoritatively decided that the U. S. Cartridge Company principle was applicable to military construction projects, it would be in violation of the Act if it continued to ignore its terms. We do not attempt to say just when counsel was under the duty to learn of this Court’s decision after it was announced in June 1958. We have no way of knowing whether the client placed on counsel the duty to keep abreast of the current decisions. We think, however, that there was an inescapable obligation on the employer, under the circumstances present in this case, to the need that it be told at the earliest practicable moment of any adverse decision touching on the matter in controversy. So long as an employer wishes to rely on advice of counsel to excuse his non-compliance with the law it must be made perfectly clear that he has plainly placed on counsel the burden of keeping currently informed of adverse decisions. It cannot seriously be argued that had able counsel of record in this case so enjoined by their client they would not have discovered that this Court had decided the Empire Gas case covering the precise point in issue before it was called to their attention by the Department of Labor representatives seven months after it was published. It was undoubtedly profitable to the employer not to pursue the matter too closely. For that or other reasons it did not keep abreast of the law. In short, it failed to do all it was legally required to do to discharge its legal obligations to its employees in resolving this issue against itself.
The Government urges that the failure of the employer to offer reimbursement of the wages illegally retained is a further indication of the lack of good faith in the employer’s promise of future compliance. While we do not hold that this factor can rise to such legal significance, it is undoubtedly true that if the employer had undertaken to make its employees whole, either as to road construction projects, as to which there was never any doubt about coverage, or as to military construction projects back to the date when the employer could, by exercising due diligence, have learned of *302this Court’s decision in Empire Gas, it would then have become abundantly clear, as is not now the case, that the failure to act more promptly was not attributable to the employer’s purpose to profit to the maximum pending a final determination in the litigation. Such conduct, in other words, would have been a well-nigh positive demonstration of good faith.
Consistent with the views we have expressed most recently in Mitchell (Goldberg) v. Pidcock et ah, supra, we conclude that the judgment must be reversed and the case remanded with directions to the trial court to enter an injunction.
Reversed and remanded.

. Government contracts for work on military bases provided that contractors should comply with the Davis-Bacon Act, 40 U.S.C.A. § 276a et seq. and the eight hour law. Regulations of the Department of Army prohibited any mention of the Fair Labor Standards Act in the construction contracts.