Court Opinion

ID: 9443724
Source: CourtListenerOpinion
Date Created: 2023-08-03 19:28:52.230474+00
Date Added: 2024-06-11T17:29:35.084685
License: Public Domain

FRANK, Circuit Judge
(dissenting in part).
I agree with my colleagues that the retroactive features of the 1947 Portal-to-Portal Act are valid. I disagree, however, as to the constitutionality of the retroactive aspects of the 1949 and 1950 statutes.
I am mindful that the Supreme Court has become increasingly unwilling to invalidate legislation, especially federal legislation, and that, if the views of an inferior court on such a subject have slight import, those of a dissenting judge on such a court have still less. But as the question of constitutionality is before us in this case, I feel it my judicial duty to express my opinion, no matter how futilely.
The constitutional question, as to the 1949 and 1950 statutes, is this: Can the United States, after the Supreme Court has decided that it owes large sums to some of its citizens, resort to retroactive legislation to destroy the right to those sums, in the absence of some justifying major social need? Is the doctrine of Lynch v. United States, 292 U.S. 571, 54 S.Ct. 840, 78 L.Ed. 1434, extinct?1
That the destruction of such a right against the United States was the purpose of these statutes can scarcely be doubted. For everyone agrees that anything which the titular defendants here seemingly owed plaintiffs was, for all practical purposes, actually owed by the United States, under its cost-plus contracts with those defendants. In everything but form, then, the United States is the actual defendant. For that reason, the Attorney General of the United States has conducted the defense of this litigation from its inception. That there was no paramount social need to justify the 1949 and 1950 statutes I shall try to show.
1. After the Supreme Court, in Bay Ridge Operating Co., Inc., v. Aaron, 1948, 334 U.S. 446, 68 S.Ct. 1186, 92 L.Ed. 1502, had held that these plaintiffs, under the Fair Labor Standards Act, were entitled to so-called “clock overtime” for work done during the years 1943-1945, Congress — as a result of urging primarily from the Attorney General — enacted the 1949 and 1950 amendments, which were avowedly designed to wipe out those rights (as well as similar rights of other employees not parties to these suits). Relative to retroactivity, those amendatory statutes were significantly different from the Portal to Portal Act, enacted in 1947.
In 1948, in litigation not involving these plaintiffs, this court, in two decisions, held constitutional the retroactive features of the Portal-to-Portal Act.2 That Act can-celled rights that had already accrued to employees under the Fair Labor Standards Act — as construed in Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 66 S.Ct. 1187, 90 L.Ed. 1515 — for overtime compensation and liquidated damages, due for time spent upon an employer’s premises prelimi*100nary to, or after engagement in, the principal activities of the employees. Stating that, thanks to decisions like Ettor v. City of Tacoma, 228 U.S. 148, 33 S.Ct. 428, 57 S.Ct. 773,3 such retroactive legislation, cutting off consummated statutory rights, would have been invalid if enacted by a State, this court sustained this Act (1) because Congress had enacted it “in the exercise of its commerce power,” and (2) because of the grave nation-wide emergency (as recited in the preamble of that Act) created by the Mt. Clemens decision. Those decisions I think correct. Judicial notice supports the legislative recitals as to that emergency: The Supreme Court’s interpretation did give rise to liabilities which were “wholly unexpected,” and “immense in amount,” and which therefore, on a nationwide scale, might well “bring about financial ruin of many employers and seriously impair the capital resources of many others.” For doubtless thousands of employers, not on any notice that the Fail-Labor Standards Act would be so interpreted, had set aside no reserves and had not otherwise so- conducted themselves as to be able to meet these unanticipated liabilities.4
2. Vastly different is the background (nowhere mentioned by my colleagues 5) of the 1949 and 1950 amendatory statutes which are deliberately intended to expunge the Supreme Court’s Bay Ridge ruling. Neither of these statutes contains a recital or legislative declaration of any emergency. True, the Senate Committee Report on the 1949 legislation does purport to describe a financial emergency affecting some employers. The House Committee Report, however, says not a word of that sort, but (I shall quote it later) advances a quite different ground for this new statute.
Let us, however, make the assumption that, in such circumstances, we must take the Senate Committee Report alone as the equivalent of a declaration of emergency in the statute itself. Even so, we are not bound by it. See, e. g., Chastleton Corp. v. Sinclair, 264 U.S. 543, 44 S.Ct. 405, 406, 68 L.Ed. 841, where the Court (per Holmes, J.) said of a statute, declaring the existence of an emergency, that “a Court is not at liberty to shut its eyes to an obvious mistake, when the validity of the law depends upon the truth of what is declared.” And the Court there and elsewhere has held that the judiciary may use judicial notice in ascertaining the truth of such a legislative declaration.6 With that in mind, consider the Senate Committee Report:7 (a) We learn from it (and also from the record in these very cases) that, although there were differences of opinion about the correct construction of the Fair Labor Standards Act concerning “clock overtime,” yet from 1943 to 1945 (the period here in question), the defendants here (both the titular defendants and the United States) knew that there were plausible arguments, to say the least, for the construction which the Supreme Court later gave that Act in the Bay Ridge decision.8 Ac*101cordingly, that decision was nothing at all like the “wholly unexpected” Mt. Clemens decision which led to the Portal-to-Portal Act. (b) The Senate report states: “While this problem has arisen in a number of industries in this country, it has assumed particular importance in the long-shore and stevedoring industries. * * * Estimates of the possible liability of industry generally vary substantially. The minimum figure which has been cited for the longshore and stevedoring industries is $10,000,000, but other estimates for these industries range up to a figure approximating $300,000,000. In other industries, such as electric and gas utilities, where continuous operations are essential, the potential liability is undetermined but of a substantial nature.” Thus, according to this Report, we have a problem which concerns chiefly the longshore and stevedor-ing industry where, so far as the Committee had reliable information, the total liabilities in question are about $10,000,000; as to other industries, the information is very vague, (c) And we do know these facts: (1) So far as the court reports seem to show, in no other industry has there been any such litigation, a fact which suggests that “clock overtime” was not elsewhere a real problem. (2) The liability for such overtime in this industry is largely covered by “cost plus” contracts, which make the government the real debt- or.9
Even then if the Senate Committee Report alone is considered the equivalent of a legislative declaration, I think it cannot be said that — with the effects of the Bay Ridge decision (a) of such a relatively small magnitude, (b) confined largely to one industry, and (c) with most (if not all) the money owing by the government — there was such an emergency as to exempt this retroactive legislation from invalidation under the due-process clause.
But I think the Senate Committee Report, with its recital of a financial emergency, cannot be considered as a substitute for a Congressional declaration in the face of the fact that the House Committee Report (1) is utterly silent as to any financial difficulties of employers due to liabilities under the Supreme Court’s Bay Ridge interpretation of the Fair Labor Standards Act, and (2) states merely the following as occasioning the need for the amendatory statute: “The Committee has heard testimony of representatives of labor, management, and the Department of Labor, all of whom are in agreement that the present law, in circumstances such as those considered by the Supreme Court in the Bay Ridge case, is creating serious difficulty in the maintenance of desirable labor standards arrived at through collective bargaining in the longshore, stevedoring, building and construction industries,10 and that the amendment of the Act to correct this situation is urgently necessary in order to prevent labor disputes which would seriously burden and obstruct commerce. The potential effects of the present overtime requirements on these, types of agreements were demonstrated in the negotiations of a new contract for the east coast longshore industry in the fall of 1948. The inability of the parties to agree on a substitute for their traditional work pattern was an obstacle to settling a crippling strike. The anticipation of prompt legislative action to remedy this situation was one of the factors inducing settlement.” 11 So the House Committee gave as explanation nothing but factors looking to the future; it said nothing to support retroactivity.12 In these cir*102cumstances, I think this retroactive legislation finds no support in any emergency.
3. I assume that the concept of substantive due process still has some vitality, and that the doctrine of Ettor v. Tacoma, 228 U.S. 148, 33 S.Ct. 428, 57 L.Ed, 773,13 applies to the federal legislature, so that the 1949 and 1950 statutes were invalid in confiscating "vested rights” unless justified by a sufficiently grave social crisis. But what constitutes a sufficiently grave social crisis to meet this test presents a difficult problem. In the last analysis, the courts must give the answer, but always with marked respect to the legislature. A decision, however, like that of this court in this case— refusing to nullify a confiscatory statute when no real crisis exists — justifies future legislation that will endanger the sort of society which the great majority of our people cherish. It puts in jeopardy all so-called "vested rights.” For it will enable a reckless legislature to gut obligations incurred under private contracts. Worse, it will empower the United States, via its own legislation, to thumb its nose at its own creditors. A constitutional doctrine of that sort, laying the axe to basic American attitudes, attacking our central mores, alarmingly weakens our social cohesion and upsets “that tolerable continuity without which society dissolves.”14 In thus threatening what may be called our social constitution, it likewise threatens our governmental Constitution.
Of course, where (as here) civil liberties are not involved,15 our courts should be extraordinarily reluctant to hold legislation unconstitutional. But they ought not to shirk the duty of striking down statutes 16 which so clearly go beyond the powers of the legislature under our Constitution. I agree with those who say that — except as to major civil rights and the very few specifically worded constitutional provisions— the criteria of constitutional validity should be flexible, should change with changing circumstances, including in such changing circumstances the profound convictions of most of our citizens. Whether, outside the field of major civil rights, there are fundamentals which, short of constitutional amendments, remain legally unalterable no matter what the alterations in basic social attitudes, need not here be considered. For I am satisfied that today the overwhelming majority of our citizens, if they clearly comprehended the significance for the future of the decision here, would be deeply disturbed. Business men, if well advised, will not shrug it off as one affecting wage-earners only; for the rationale of this decision is far broader. A mere declaration of emergency in a Committee Report becomes by this decision virtually the only necessary basis for a drastic attack on “property” rights. And debts owing (directly or indirectly) from the government can thus neatly be expunged by the government itself.17
*103I grant that no clear-cut rules of constitutionality are possible. But the 1949 and 1950 statutes represent too gross an incursion on what I think the most modest notions of substantive constitutional limitations.
4. Absent an emergency, the sole asserted justification of this retroactive legislation is that it cut out rights which were but a “windfall.” As constitutionality is made to hang on that word, its definition becomes important. The dictionary defines it as an “unexpected acquisition or advantage” or “an unexpected legacy or other gain.” Judge LEARNED HAND, in his concurring opinion here, uses it as meaning a right which one obtains either without being aware of it or when acting without reliance upon obtaining it. I take it, then, that we are to understand that if money comes due to a person without his knowledge, the mere fact of that ignorance converts his right to that money into a “windfall,” with the consequence that the legislature may validly pass a statute eliminating that right.
Sitrely it cannot be sound doctrine that “vested rights” are thus vulnerable (i. e., if only the rightholders did not know of their rights when they “vested”), that due process insulates from legislative onslaughts only one’s known rights. If that were true, our legislatures would not be restrained by the due process clause from rubbing out rights in any of the following illustrative instances: An heir is ignorant of a legacy; the beneficiary of a trust has not heard of the trust; a party to a contract thinks the other party owes him $1000 but, under judicial decisions of which he has not yet learned, the correct amount is $15,000; a third-party beneficiary under a contract has not been notified that there is such a contract; a man buys a corporate bond for $200 and, under a subsequent unexpected court decision, it gives him security, of which he did not know when he bought the bond, that makes it worth $800.18 If the “windfall” contention can stand up, then the Supreme Court in Eltor v. Tacoma, 228 U.S. 148, 33 S.Ct. 428, 57 L.Ed. 773, would have sustained the retroactive statute there, if the affected property-owner had not learned of the damage to his property at the time when the damage occurred. Any such doctrine, if thoroughly understood, will shock most Americans. Particularly will it shock them when, as here, it is used by the United States to welsh on its own monetary obligations.
The “windfall” argument as used by Judge HAND here, seems to me singularly untenable: Judge HAND says that these longshoremen, entirely apart from theii overtime compensation under the Supreme Court’s Bay Ridge decision, “were getting what had sufficed to keep them on their jobs throughout the period.” 19 But Judge HAND neglects the notorious fact that, despite the collective bargaining agreements,20 these longshoremen as a class have been badly underpaid for years, and that their recoveries, pursuant to the Supreme Court’s decision in this very litigation, would merely have brought them *104somewhat closer to remuneration compatible with a decent living standard. Judge HAND also neglects the fact that the purpose of the Fair Labor Standards Act was precisely to yield decent wages to workers unable otherwise to command them. That Act intended to insure the employees receipt of such compensation — without any regard whatever to whether they knew, while working, that any such statute existed or that they were entitled to anything under it. If such ignorance transmutes payments under the Fair Labor Standards Act into “windfalls,” then all rights under that statute — not merely the rights in question here — were “windfalls” to many thousands of workers who, for many months after its enactment, worked in ignorance of that Act.
5. Since the 1949 and 1950 statutes aim to relieve the government of its obligations, perhaps they may be regarded as attempts to authorize a “taking” of the employees’ rights without compensation, and are invalid on that ground. Assuming that otherwise they would result in a “taking,” Judge HAND holds that they do not because they release not all but only “a part of the obligations.” With such a distinction I cannot agree.21 Again Ettor v. Tacoma, 228 U.S. 148, 33 S.Ct. 428, 57 L.Ed. 773, helps to illuminate the discussion: Suppose that there the retroactive state statute had provided that .the “vested” duty to pay the damages should not be wholly destroyed but only reduced 75%; I cannot believe that the Supreme Court would have reached a different conclusion. See, e. g., United States v. Causby, 328 U.S. 256, 264-268, 66 S.Ct. 1062, 90 L.Ed. 1206; State of Mississippi ex rel. Robertson v. Miller, 276 U.S. 174, 179, 48 S.Ct. 266, 72 L.Ed. 517; United States v. Welch, 217 U.S. 333, 339, 30 S.Ct. 527, 54 L.Ed. 787; Duckett & Co. v. United States, 266 U.S. 149, 151, 45 S.Ct. 38, 69 L.Ed. 216; United States v. Pewee Coal Co., 341 U.S. 114, 117, 71 S.Ct. 670, 95 L.Ed. 809.
6. Omitting the camouflage, this is a case in which the United States, having lost a lawsuit in court, transferred the litigation from the courtroom to the legislative committee room, where it won. Our court today in effect decides that Congress, in aid of the Treasury, may thus enter what amounts to a specific judicial decree, in a pending case against the government, reversing the Supreme Court’s previous decision as to the correct legal rule applicable to the particular facts of that particular case. Such conduct by a legislature was deemed most unwise, dangerous and undemocratic centuries ago.22 It seems to me to go directly counter to whatever is sound and desirable in the notion of the separation of governmental powers. For it means that the legislature sits “as a court of review to which parties * * * appeal when dissatisfied with the rulings of the court * * 23
In Town of Koshkonong v. Burton, 14 Otto 668, 104 U.S. 668, 678-679, 26 L.Ed. 886, the Court said: “When counsel, in Ogden v. Blackledge, 2 Cranch 272, 277 [2 L.Ed. 276], announced that, to declare what the law is, or has been, is a judicial power, to declare what the law shall be is legislative, and that one of the fundamental principles of all our government is that the legislative power shall be separated from the judicial, this court interrupted them with the observation that it was unnecessary to argue that point.” The Court then went on to decline to give a statute a “retrospective operation, so as to deprive a party- of a vested right,” saying, “It was not within the constitutional power of the legislature to take from the plaintiff his right, whether arising on express or implied contract, to interest upon interest, if, when the coupons were executed and delivered, he, or the then holder thereof, had such right, under the law of the State.”
7. Aside from this issue of constitutionality, I agree with all else that Judge SWAN says except this: Section 9 of the *105Portal-to-Portal Act uses the test of “good faith in conformity with and in reliance on any administrative ruling,” etc. I think this test is not satisfied if an employer acts in good faith in conformity with his incorrect interpretation of a ruling, even if it is reasonable for that particular employer in his peculiar circumstances so to interpret it. I construe Section 9 to require that he must (inter alia) act in conformity with the correct interpretation of the ruling, etc. However, on the facts here, the same result follows from Judge SWAN’S construction of Section 9 as from mine.

. See De La Rama S. S. Co. v. U. S., 344 U.S. 386, 389, 73 S.Ct. 381.
Tlie United States, in its petition for certiorari on the previous appeal of the cases at bar, referred to “the great pecuniary liability to which the United States would be subjected under the decision below.”

. Battaglia v. General Motors Corp., 2 Cir., 169 F.2d 254; Darr v. Mutual Life Insurance Co., 2 Cir., 169 F.2d 262.

. See also, e. g., Coombes v. Getz, 258 U.S. 434, 442-445, 52 S.Ct. 435, 76 L.Ed. 866; Forbes Pioneer Boat Line v. Board of Commissioners, 258 U.S. 338, 340, 42 S.Ct. 325, 66 L.Ed. 647.

. Cf. Unexcelled Chemical Corporation v. United States, 345 U.S. 59, 73 S.Ct. 580.

. Judge HAND’S concurring opinion reads as if the 1949 and 1950 statutes contained the recitals of the Portal-to-Portal Act, and as if the facts .there recited applied to those later statutes.

. See Wolff Packing Co. v. Industrial Court, 262 U.S. 552, 536, 43 S.Ct. 630, 67 L.Ed. 1103; Weaver v. Palmer Bros. Co., 270 U.S. 402, 410, 46 S.Ct. 320, 70 L. Ed. 654; cf. Child Labor Tax Case (Bailey v. Drexel Furniture Co.), 259 U.S. 20, 37, 42 S.Ct. 449, 66 L.Ed. 817; United States v. Rumely, 345 U.S. 41, 73 S.Ct. 543.

. Senate Report No. 402, 81st Cong., 1st Sess.

. The Report makes much of the fact that the arrangements for “clock overtime” were the “result of collective bargaining,” that “there is no evidence that the bargaining was other than at arms’ length,” and that the bring of the present suits were “deplored” by the union officials. Were these facts of importance, it might well be that recent disclosures, as to the act. cities of these union officials, would call for a remand to the trial court to ascertain whether those facts, stated in the Report, were true or whether the Senate Committee had been deceived.

. It was stated on the floor of the House, in debate on this measure, that the government would be liable for 95% of any recoveries. See also note 3, supra.

. This Report states that the “history of collective bargaining in the longshore and stevedoring industries” had “primarily given rise to the need of this amendment.”

. House Report No. 321, 81st Cong., 1st Soss.

. Only after this Report was made was the retroactive olauso added. But the House Committee made no Report covering that change and suggested no explanation of the need for it.
A member of the House Committee, in the debates on the measure, stated that the Committee had heard no evidence beai'ing on the retroactive feature or the amount of liabilities under the Bay *102Ridge decision. Congressional Record, Vol. 95, Part 7, p. 9495.

. There the Court said, 228 U.S. at page 156, 33 S.Ct. at page 430: “The necessary effect of the repealing act, as construed and applied by the court below, was to deprive the plaintiffs in- error of any remedy to enforce the fixed liability of the city to make compensation. This was to deprive the plaintiffs in error of a right which had vested before the repealing act- — a right which was in every sense a property right. Nothing remained to be done' to complete the plaintiffs’ right to compensation except the ascertainment of the amount of damage to their property. The right of the plaintiffs in error was fixed by the law in force when their property was damaged' for public purposes, and the right so vested cannot be defeated by subsequent legislation.”

. L. Hand, Mr. Justice Cardozo, 48 Yale L.J. 379 (1939).

. See, e. g., United States v. Carolene Products Co., 304 U.S. 144, 152 note, 58 S.Ct. 778, 783 note, 82 L.Ed. 1234.

. See Rostow, The Democratic Character of Judicial Review, 66 Harv.L.Rev. (1952) 193.

. Thus by a court-proof recital in a Committee report, the government can circumvent the wholesome doctrine of Lynch v. United States, 292 U.S. 571, 54 S.Ct. 840, 78 L.Ed. 1434.
“As regards property, security consists in receiving no check, no shock, no derangement to the expectation *103founded on the laws, of enjoying such and such a portion of good. The legislator owes the greatest respect to this expectation which he has himself produced.” Benchoin, Theory of Legislation (Dumont ed., Hildreth trans., 1864), p. 113.
The instant case is to be distinguished from those dealing with statutes imposing a penalty or forfeiture, or conferring privileges not yet exercised when the retroactive legislation was enacted.

. Think of unborn beneficiaries, or the rights of infants and idiots.

. Judge HARD, at the end of his opinion, says “it would have been shocking to allow the retention of their bonanzas to bring about the evils described in the declaration.” Since there is no “declaration” except in the Portal-to-Portal Act, it may be that, in speaking of “windfalls,” he is thinking not of “clock overtime” but of the amounts due, under the Mt. Clemens decision, which the Portal-to-Portal Act erased.

. If the recent disclosures, referred to in note 8 supra, should turn out to reveal the truth about the activities of the union leaders in this industry, one might perhaps say “because of”— not “despite” — the collective bargaining agreements.

. I would agree' if the injury to the rights (1) were so small as to come within the de minimis category or (2) were purely incidental, not direct.

. Aristotle, Politics, 1292a, 19 ct seq.; cf. Nicomachean Ethics, 1137b, 27.

. See Cooley, Constitutional Limitations (8th ed. 1927) 190-191.