Court Opinion

ID: 8905886
Source: CourtListenerOpinion
Date Created: 2022-11-27 01:51:31.56735+00
Date Added: 2024-06-11T17:08:11.224231
License: Public Domain

GIBBONS, Circuit Judge,
dissenting.
The majority opinion takes us on a long excursion through the various subsections of Rule 60(b) in a labored effort to establish why many of them would not provide a ground for relief from the earlier judgment. The fact remains, however, that relief was given, and properly so. The district court granted the Board’s motion for relief from that part of its earlier injunction ordering future compliance with the terms of the Fair Labor Standards Act.1 However, the court refused to permit relief from that part of its injunction ordering the Board to pay to the Secretary of Labor a sum equal to back wages owed under the Act, despite the fact that the Secretary has not yet distributed the money to the employees. Neither the district court nor the majority here adequately discusses why, for purposes of a Rule 60(b) motion, those parts of the earlier judgment are treated differently. The Secretary’s action under § 17 of the Fair Labor Standards Act2 was equitable in nature. Both the order prohibiting future violations of the Act and the order enjoining the employer to pay back wages are equitable remedies not available in the absence of the federal statute. There is no equitable basis for differentiating between these two orders on a Rule 60(b) motion. Accordingly, I must dissent.
The judgment from which the Board sought relief arose out of an action brought by the Secretary of Labor pursuant to § 17 of the Fair Labor Standards Act. Section 17 states in relevant part:
The district courts . . shall have jurisdiction, for cause shown, to restrain violations of section 215 of this title, including in the case of violations of sections 215(a)(2) of this title the restraint of any withholding of payment of minimum wages or overtime compensations found *427by the court to be due to employees under this chapter . . . .3
The prayer for relief in the Secretary’s complaint was worded essentially in the language of § 17. The only judgment entered was an injunction. That injunction directed future compliance with § 15(a)(2) of the Act, 29 U.S.C. § 215(a)(2), and provided further:
Ordered, Adjudged, and Decreed that defendant shall not withhold the payment of wages and shall pay to its employees or former employees named in Exhibit A annexed hereto and which is hereby incorporated in and made part of this judgment the sum stated therein, which sum represents back wages found to be due to said employees under the Act, payment thereof to be made within thirty (30) days after entry of this judgment by certified check in the total amount of $5,570.43, made payable to the “Wage and Hour Division — Labor” and sent to the United States Department of Labor, Wage and Hour Division, 133 Ellison Street, Paterson, New Jersey 07505; and it is further
Ordered, Adjudged and Decreed that any net sums which within one (1) year after the filing of this judgment have not been distributed to employees named on Exhibit A or to their personal representatives, because of inability of either defendant or plaintiff to locate the proper person or because of the refusal of such persons to accept such sums, shall be deposited with the Clerk of this Court who shall forthwith deposit such money with the Treasurer of the United States pursuant to 29 [28] U.S.C. 2041 (1964) . . .
It is well settled that the Secretary’s action under § 17 is completely equitable. See, e. g., Wirtz v. Jones, 340 F.2d 901 (5th Cir. 1965); Dunlop v. Darboian Enterprises, Inc., 410 F.Supp. 479 (E.D.Mich.1975); Wirtz v. Riccio, 264 F.Supp. 134 (M.D.Pa. 1967); Wirtz v. Robert E. Bob Adair, Inc., 224 F.Supp. 750 (W.D.Ark.1963). The only remedy that the district court is empowered to grant under § 17 is an injunction. Although the court can enjoin the employer from “withholding payment of minimum wages or overtime compensation” found to be owing to the employees, such an order does not constitute compensatory relief. Dunlop v. Darboian Enterprises, Inc., 410 F.Supp. 479, 481 (E.D.Mich.1975). Rather, the purpose of such an injunctive order is to exact compliance with the terms of the statute. Enforcement of the statute by the Secretary precludes private damage actions by the employees under § 16(b) of the Act.4 Because an action under § 17 is equitable in nature, the defendant-employer is not entitled to a jury trial. See, e. g., Wirtz v. Jones, 340 F.2d 901 (5th Cir. 1965). Moreover, if the defendant fails to comply with the terms of the injunction decreed by the district court, that defendant can be held in contempt. Hodgson v. Hotard, 436 F.2d 1110 (5th Cir. 1971). The Court in Robert E. Bob Adair, Inc. aptly discussed the role of money payments in § 17’s equitable scheme:
Although the suit filed by the Secretary affects the rights of the employees mentioned in the complaint and although payments to them are sought, the action in the last analysis is not brought by the employees or for their personal benefit, except incidentally. The Secretary is suing for the benefit of the public and to vindicate a public right. The Secretary is seeking to secure future compliance with the law, which is in the public interest, and he is seeking by means of a negative order to compel the defendants to make reparations for alleged past violations of the law, which likewise is in the public interest. The relief sought is equitable and it is no less so because compliance with the decree which plaintiff seeks may require the defendants to pay out money. That the filing of the suit has affected, and that the outcome of the suit may further affect, the substantive rights of *428the employees does not convert the proceeding from a suit in equity to an action at law, and does not convert the prayer for a negative injunction requiring defendants to cease to withhold moneys allegedly due the employees into a legal claim for money damages.
224 F.Supp. at 756.
In granting the Board partial relief, the district court conceded that the unconstitutionality of the statute upon which its judgment had been based was a ground for relief from that judgment. Nevertheless, the court refused to vacate that part of its order restraining the employer from withholding payments due to the employees. Yet the Board’s Rule 60(b) motion was made before the Secretary had distributed any of the money to the employees named in the exhibit attached to the judgment and before he had paid over to the United States Treasury any portion of the $5,570.43 attributable to employees who could not be located. Thus, the Board filed its motion prior to the full execution of the injunction, while the Secretary still held the funds as a trustee, agent, or class representative for the listed employees. The Supreme Court’s decision in National League of Cities v. Usery, 426 U.S. 833, 96 S.Ct. 2465, 49 L.Ed.2d 245 (1976), makes clear that those employees have no legal right to receive the sums in question and, on any rational theory of constitutional law, never did have such a right. The district court’s opinion in support of its result points to no circumstance which would make it equitable for the injunction to be given the ongoing effect of paying to the Board’s employees sums to which they are not now and have never been legally entitled. If it was equitable to prevent the ongoing operation of the first two paragraphs of the injunction, it was equally equitable to prevent the ongoing operation of the last two paragraphs.
At least since 1856 it has been the rule that a change in the law which becomes effective before an injunction has been fully executed is a ground for relief from the judgment which imposed that injunction. In Pennsylvania v. Wheeling & Belmont Bridge Co., 54 U.S. (13 How.) 519, 15 L.Ed. 435 (1852), the Supreme Court, acting in its original jurisdiction, enjoined the maintenance of a bridge across a navigable stream unless the bridge’s span was constructed high enough to permit the passage below of high-stack steamboats. Subsequent to the Court’s decision, Congress passed a statute directing the steamboat crews to lower the stacks on their boats. Because of this statutory change, in Pennsylvania v. Wheeling & Belmont Bridge Co., 59 U.S. (18 How.) 421 (1856), the Supreme Court relieved the bridge owners from the dictates of its earlier injunction.
A change in constitutional law is an a fortiori case. Indeed it is difficult to conceive of any ground for relief from a judgment that is more compelling than that the statute which gave the court jurisdiction and created the cause of action has been declared unconstitutional. This court recognized as much in Neely v. United States, 546 F.2d 1059 (3d Cir. 1976). Neely brought a class action seeking relief from criminal convictions and from fines imposed under a federal statute later held to be unconstitutional. Neely and other members of the class had pleaded guilty. Nevertheless, we held that under the Tucker Act, 28 U.S.C. § 1346, the plaintiffs could obtain relief from the convictions and recover the fines paid. We properly construed Rule 60(b) as follows:
In abolishing coram nobis, as well as several other ancient procedural devices, Rule 60(b) did not, and indeed could not, “abridge, enlarge or modify any substantive right.” 28 U.S.C. § 2072. The very sentence which abolishes coram nobis provides for relief from a judgment by motion or by an independent action. The prior sentence of the rule provides that “[tjhis rule does not limit the power of a court to entertain an independent action to relieve a party from a judgment . ..” Clearly, the rule provides a choice be*429tween motion or independent action, at the initiating party’s option.
546 F.2d at 1065-66.
In this instance the Board chose to bring a Rule 60(b) motion rather than an independent action. The fact that the Board selected that route does not alter its equitable claim for relief from the judgment. See Boughner v. Secretary of HEW, 572 F.2d 976 at 977 (3d Cir. 1978) (recognizing the availability of Rule 60(b) relief where statute upon which judgment was based was declared unconstitutional). If, as we held in Neely, a Rule 60(b) motion or an equivalent independent action can be maintained to recover fines already paid into the United States Treasury, either route must be available to recover sums obtained from the Board and held by the Secretary in a purely representative or fiduciary capacity. It makes no difference that the fiduciary in this case also happens to be a government official. Indeed, until the law was changed and other remedies were substituted, it was recognized that a government agent who received funds on behalf of the government as a disclosed principal had the same duty as any other agent to refrain from paying them over once he was given notice of adverse claims. See, e. g., Elliott v. Swartwout, 35 U.S. (10 Pet.) 137, 9 L.Ed. 373 (1836); Tracy v. Swartwout, 35 U.S. (10 Pet.) 80, 9 L.Ed. 354 (1836). The Secretary here is in the classic position of an agent who is holding funds received from a third party and who has been put on notice that his principal is not entitled to the funds. His only possible justification for paying over the funds is the provision in the judgment directing him to do so. The third party claimant, the Board, contends that the Supreme Court’s decision in National League of Cities entitles it to be relieved from that judgment. The district court agreed that that decision justified relief under Rule 60(b) but nevertheless gave only partial relief. The court distinguished the injunctive provision directing the Secretary to pay the money to the employees from the injunctive provision directing the Board to make future payments. But the court did not refer to any equitable consideration which would support its distinction. Assuming the legitimacy of National League of Cities, no such equitable consideration exists. I can think of no reason why the Board’s employees should benefit from an injunction based on an unconstitutional statute, at least where that injunction has not been fully executed.
In its discussion of the various subsections of Rule 60(b), the majority ignores the single issue before us. Since the unconstitutionality of the statute clearly justified relief from the judgment, what equitable basis is there for distinguishing the ongoing effects of the first two paragraphs from the ongoing effects of the last two? In the only part of its opinion that addresses that question, the majority suggests that there is a distinction, for purposes of relief from a judgment, between an action at law and a suit in equity. Maj.Op. at 424-425. That sort of medieval reasoning, even assuming that it survives our Neely decision, does not serve any purpose in this case. The district court had no jurisdiction under § 17 of the Fair Labor Standards Act to enter a judgment at law. The entire action was equitable. The only judgment that was or could have been entered was an injunction. That injunction remains unexe-cuted. Relief from that equitable remedy should have been granted.
I would reverse the judgment of the district court and direct the Secretary to pay back the $5,570.43 to the Board.

. Act of June 25, 1938, ch. 676, 52 Stat. 1060, codified as amended at 29 U.S.C. § 201 et seq.

. 29 U.S.C. § 217.

. 29 U.S.C. § 217.

. 29 U.S.C. § 216(b).