Court Opinion

ID: 8940389
Source: CourtListenerOpinion
Date Created: 2022-11-27 07:52:58.759889+00
Date Added: 2024-06-11T17:09:43.270238
License: Public Domain

ENGEL, Circuit Judge,
dissenting.
I respectfully dissent. I would follow the lead of the Second Circuit in Wirtz v. Powell Knitting Mills, Inc., 360 F.2d 730 (2nd Cir.1966), and of the Fourth Circuit in Schultz v. Factors, Inc., 65 Lab.Cas. (CCH) 1132,487 (4th Cir.1971), and reverse.
If we were writing upon a clean slate, the majority opinion, in adopting a literal interpretation of the Fair Labor Standards Act, would have considerable appeal for the term “any person” is indeed broad and has been carefully defined by Congress, as the majority opinion observes. Beyond that, there is little to be said for the construction here mandated.
The evils foreseen and sought to be corrected by the Congress in enacting the “hot goods” provisions to the FLSA were twofold. Congress sought to improve working conditions by eliminating the incentive to manufacture goods at substandard wages and substandard hours; Congress also sought to prevent the injurious effect on trade that resulted when such goods were placed in interstate commerce in competition against goods that were manufactured in compliance with the FLSA. See United States v. Darby, 312 U.S. 100, 109-10, 61 S.Ct. 451, 455, 85 L.Ed. 609 (1941). To accomplish these goals, Congress took the profit and, hence, the incentive out of such practices by making it unlawful to place into interstate commerce goods that were manufactured in noncompliance with the minimum wage and hour provisions of the FLSA. This much is clear.
In my opinion, however, an employer’s inability to pay wages at all due to insolvency was not the target of the Act, at least where, as here, the employer is not otherwise shown to have been in noncompliance with the minimum wage and hour requirements of the statute. The problem here does not seem to have been an employer’s unwillingness to comply with the Act, but instead an inability to pay any wages at all due to financial distress. Characterizing the government’s literal reading of the Act as “wooden,” the Second Circuit observed in a similar situation, and correctly in my opinion, that “[o]ne purpose of making the sale illegal was to prevent the adverse competitive effects on those who comply with the Act. Here there can be no connection between the asserted violation and any effects on competition.” Wirtz v. Powell Knitting Mills Co., 360 F.2d 730, 733 (2nd Cir.1966). It is just as reasonable to assume that perhaps one reason for the company’s difficulty was its own previous compliance with the Act in the face of noncompliance by its competitors. No one has suggested that Congress, in passing the Fair Labor Standards Act, was seeking to tighten up the credit risks of producers of goods who may have otherwise been producing them in compliance with law but found themselves in financial difficulties. While imposing such risks upon lenders, as here, might *1207hasten the demise of an insolvent company and thus avoid some loss to the wage earners who could not be paid at the end, the advantage of protecting otherwise valid security interests might equally have given the company precious time in which to recover from its straitened circumstances and thus to have provided employment at lawful wages longer.
The practical effect of the majority’s decision is not to remove any tainted goods from competition for, as happened here, almost always the result will be that the goods are sold, if not in foreclosure, then in bankruptcy, or by other attaching creditors.1 As here, the goods will go out in the market, but whether they are sold for competitively destructive prices will not depend on the cost of their production but upon the manner of their sale in any event. The real effect of the majority’s interpretation is simply to create a judicial lien superior to the otherwise lawful lien which Citicorp possessed in the goods. In my view, this kind of pressure is the only motivation in the government in its present construction of the Act. Had it intended to create a federal lien law, Congress no doubt could have done so, but it did not. State laws governing creditors’ rights, state laws protecting employees from non-payment of wages and bankruptcy laws generally, provide a great deal of relief for the protection of employees of defunct and insolvent corporations. It seems to me that in this special area of concern, the operation of these more traditional sources of law was intended by Congress to be sufficient. It is my opinion, therefore, that under a common sense application of section (15)(a)(l), Congress was looking instead at application of the Act in the course of the ongoing production of goods and not at the situation obtaining here and in the like cases in the Second and Fourth Circuits.
Even were I to agree with the majority here, I would still be reluctant to depart from a construction of the Act which has been in effect in the Second Circuit for twenty years and in the Fourth Circuit for nearly fifteen years. The need for a uniform national construction of the Act is obvious. Adherence to the existing interpretation, while expressing disagreement with it, could highlight the dispute should certiorari be sought, but without in the meanwhile creating a conflict in the circuits. While I do not argue in favor of any new rule respecting standards for avoiding intercircuit conflicts, we cannot be unaware that the resolution of intercircuit conflicts places a heavy burden upon the limited resources of the Supreme Court.2 Until there is a resolution of the problem, I would prefer to accept the judgment of other circuits where they have uniformly held to one construction over a long period of time, at least where I do not have an abiding and serious disagreement with the construction already in effect.

. The record discloses that an agreement was made in the district court whereby the goods were in fact released on condition that Citicorp place the proceeds of the sale in a separate account pending final resolution of this matter. Citicorp was therefore free and expected to dispose of these goods and, thus, to introduce them into interstate commerce to compete against those goods that were presumably manufactured in compliance with the Act.

. See generally Burger, The Time is Now for the Intercircuit Panel, 71 A.B.AJ. 86 (1985); Burger, Annual Report on the State of the Judiciary, 69 A.B.A.J. 442 (1983); Carrington, Crowded Dockets and the Courts of Appeals: The Threat to the Function of Review and the National Law, 82 Harv.L.Rev. 542, 596 (1969); see also Wallace, Nature and Extent of Intercircuit Conflicts: A Solution Needed for a Mountain or a Molehill?, 71 Calif.L.Rev. 913 (1983).