Court Opinion

ID: 9622859
Source: CourtListenerOpinion
Date Created: 2023-08-22 06:24:25.604537+00
Date Added: 2024-06-11T17:32:47.348280
License: Public Domain

Williams, J.
(concurring in part, dissenting in part)—I concur with the determination that the tip agreement between Henry's Off Broadway and its valets is void and unenforceable, but I dissent from the conclusion that the trial court did not err in allowing Henry's to present evidence of its good faith.
*108Under the Fair Labor Standards Act, 29 U.S.C. § 216(b), any employer who violates the minimum wage provisions of the act shall be liable to the affected employees in the amount of their unpaid wages plus an additional equal amount as liquidated damages. To recover liquidated damages, an employee need not establish his employer intentionally violated the act; once an employee has shown a violation, the employer has the burden of proving good faith and reasonable grounds under 29 U.S.C. § 260. Williams v. Tri-County Growers, Inc., 747 F.2d 121, 129 (3d Cir. 1984).
If an employer shows to the satisfaction of the court that his actions were in good faith and that he had reasonable grounds for believing he was not in violation of the act, the court may, in its discretion, award no liquidated damages or only a portion thereof. "Good faith" under 29 U.S.C. § 260 is an affirmative defense which an employer must plead and prove. Olson v. Superior Pontiac-GMC, Inc., 765 F.2d 1570, 1579, modified on other grounds, 776 F.2d 265 (11th Cir. 1985); Pierce v. Concrete Prods. & Supply Co., 186 So. 2d 751, 755 (Miss. 1966); see also 29 U.S.C. § 258.
Federal Rule of Civil Procedure 8(c) requires a party to affirmatively plead any matter constituting an affirmative defense. See also CR 8(c). Failure to plead an affirmative defense generally results in the waiver of that defense and its exclusion from the case. 5 C. Wright & A. Miller, Federal Practice § 1278, at 339 (1969); Rainier Nat'l Bank v. Lewis, 30 Wn. App. 419, 422, 635 P.2d 153 (1981). Henry's did not affirmatively plead good faith in its answer, though it did plead five other affirmative defenses; instead, it argues that its general denial of the valets' complaint for liquidated damages was enough to put good faith at issue. A general denied is not sufficient to raise an affirmative defense. 2A J. Moore, J. Lucas & G. Grotheer, Federal Practice § 8.27(3), at 8-182 (2d ed. 1987).
The purpose behind the rule for affirmative defenses is to put plaintiff on notice well in advance of trial that the defendant intends to present the defense. State Distribs., *109Inc. v. Glenmore Distilleries Co., 738 F.2d 405, 410 (10th Cir. 1984); see also Mahoney v. Tingley, 85 Wn.2d 95, 100, 529 P.2d 1068 (1975). There is nothing in the record establishing that the valets had notice Henry's would present the good faith defense at trial. In their trial brief, the valets argued Henry's had waived the defense; Henry's trial brief did not contest the assertion, nor did it discuss the defense. Accordingly, the trial court abused its discretion in allowing Henry's to raise good faith at trial and present evidence on the issue.
Moreover, nothing in the record proves Henry's acted in good faith. In order to establish the defense, an employer must prove the act or omission complained of was (1) in good faith, (2) in conformity with, and (3) in reliance on an administrative regulation, order, ruling, approval or interpretation of an agency of the United States. 29 U.S.C. § 258, 260; Olson v. Superior Pontiac-GMC, Inc., supra. Good faith is intended to apply only where an employer innocently and to his detriment followed the law as laid down to him by government agencies, without notice that such interpretations were claimed to be erroneous or invalid. Clifton D. Mayhew, Inc. v. Wirtz, 413 F.2d 658, 661 (4th Cir. 1969). 29 C.F.R. § 790.15 provides that good faith requires the employer to have honesty of intention and to be without knowledge of circumstances which ought to put him on inquiry.
Henry's good faith defense was based on its reliance on 29 C.F.R. §§ 531.52 and .55(a), which sanction employment agreements in which all tips become the property of the employer, and its claim that the 1974 amendment to section 3(m) of the FLSA did not invalidate those regulations. Prior to Henry's implementation of its tip agreement, the Wage and Hour Division of the Department of Labor issued several opinion letters stating that the amendment superseded the regulations and rendered such agreements illegal. That interpretation was also upheld in Richard v. Marriott Corp., 549 F.2d 303 (4th Cir.), cert. denied, 433 U.S. 915, 53 L. Ed. 2d 1100, 97 S. Ct. 2988 (1977). Despite *110clear notice the agreements were considered invalid, Henry's went forward. Henry's put its hand into the valets' pockets and took money generously given in the belief it would be the valets' to keep; it did not act in good faith.
Liquidated damages in an amount equal to the unpaid wages are mandatory, Joiner v. Macon, 814 F.2d 1537, 1539 (11th Cir. 1987), but an award of liquidated damages and prejudgment interest in the same suit is not proper. Brock v. Shirk, 833 F.2d 1326, 1331 (9th Cir. 1987); Ford v. Alfaro, 785 F.2d 835, 842 (9th Cir. 1986). Therefore, the award to the valets should be $32,192.67 in damages plus an additional $32,192.67 in liquidated damages, for a total recovery of $64,385.34.
Reconsideration denied September 12, 1988.
Review granted by Supreme Court January 10, 1989.