Bruce BARCELLONA et al., Plaintiffs-Appellees, Cross-Appellants, v. TIFFANY ENGLISH PUB, INC., d/b/a TGI Friday‘s, Defendant-Appellant, Cross-Appellee.
No. 77-1892
United States Court of Appeals, Fifth Circuit
June 20, 1979
597 F.2d 464
This fails to distinguish the Bank‘s list from the retainer of a single attorney. The classification which the list creates is simply one between those attorneys retained and those not; there is no allegation that the line drawn is one “directed ‘against’ any individual or category of persons.” Marshall v. United States, 414 U.S. 417, 428, 94 S.Ct. 700, 707, 38 L.Ed.2d 618 (1974). As such, it is sufficient that the classification bears some rational relationship to the Bank‘s objectives.9 There is also no contention that the Bank‘s decision to reduce the number of attorneys involved in closings, apart from the means chosen to carry out this decision, was in any way unfounded or constitutionally infirm. We think that, faced with large numbers of attorneys indistinguishably qualified to certify titles and carry out closings for the Bank, an “arbitrary” reduction was a rational means of achieving the desired end. If the Bank is a federal entity for the purposes of its decision to reduce the attorneys who represent it in its closing business, therefore, its reduction of the list of eligible attorneys would not violate due process.
If the Bank is a private entity, the appellants’ antitrust claim is precluded by our decision in Forrest v. Capital Building & Loan Association, 504 F.2d 891 (5th Cir. 1974), aff‘g 385 F.Supp. 831 (M.D.La.1973). In that case, we held that two savings and loan associations’ practice of requiring their borrowers to pay the legal fees of attorneys which the associations selected to examine and certify title and prepare closing papers for mortgage loans was not tying prohibited by the antitrust laws. Our conclusion that the attorneys on the Federal Land Bank‘s approved list represent the Bank and not the borrower leaves no room for a distinction between the present case and Forrest.
The decision of the district court is AFFIRMED.
Thomas W. Tardy, III, Kenneth A. Rutherford, Jackson, Miss., for plaintiffs-appellees, cross-appellants.
Before TUTTLE, TJOFLAT and HILL, Circuit Judges.
TUTTLE, Circuit Judge:
The plaintiffs are former waiters who brought suit against this Friday‘s restaurant under the Fair Labor Standards Act (FLSA), seeking back wages, liquidated damages, and attorney‘s fees under
A crucial issue in the trial of this case related to the ownership of tips. The restaurant contended that it had a valid agreement with the waiters that all tips belonged to the restaurant, to be surrendered to it to count towards satisfying its obligation to pay the waiters a minimum wage. In practice, however, the system in no way resembled that described by the restaurant. Although the restaurant introduced “acknowledgments” apparently signed by some of the waiters which attempted to create the impression that the
If there was no agreement as to ownership, then the tips were the property of the recipient. Williams v. Jacksonville Terminal Co., 315 U.S. 386, 397, 62 S.Ct. 659, 86 L.Ed. 914 (1940). Prior to May 1, 1974, the Fair Labor Standards Act stated with respect to tips:
In determining the wage of a tipped employee, the amount paid such employee by his employer shall be deemed to be increased on account of tips by an amount determined by the employer, but not by an amount in excess of 50 per centum of the applicable minimum wage
On May 1, 1974, the Act was amended to place the burden of proving the amount of tips received on the employer for purposes of allowing the fifty percent tip credit. To implement this policy, the following sentence was added to
[The fifty percent tip credit] shall not apply with respect to the tipped employee unless (1) such employee has been informed of this subsection, and (2) all tips received by such employee have been retained by the employee . . . .
Since the parties agreed by stipulation that the restaurant did not inform the waiters of any tip credit after this change in the law, and since it is undisputed that far less than all tips received were returned by the
The district court‘s ruling on the issue of liquidated damages is more troublesome. The waiters contend that based on the facts as found by the district court in its decision on the question of liability, they are entitled to liquidated damages as a matter of law. We agree.
Section 16(b) of the FLSA,
The district court found on the liability issue that “the evidence in this case . . . shows by a preponderance of the evidence that there has been a flagrant violation by the employer of the requirements of the Fair Labor Standards Act,” but then rather surprisingly changed its tone one year later in its final order adopting the special master‘s recommendation to deny liquidated damages. In its subsequent opinion, the court made no specific finding of good faith or reasonable belief in the legality of the acts of the restaurant but merely stated:
This Court is convinced from the facts and circumstances and the background of the owners that there was nothing defiant intended by the defendant, but it simply did not know and did not understand exactly what it was to do with respect to these records on these waiters.
We understand the language of section 11 of the Portal-to-Portal Act to impose upon the employer who would escape the payment of liquidated damages a plain and substantial burden of persuading the court by proof that his failure to obey the statute was both in good faith and predicated upon such reasonable grounds that it would be unfair to impose upon him more than a compensatory verdict. See Rothman v. Publicker Industries, 201 F.2d 618, 620 (3d Cir. 1953). On the present record, the restaurant never seemed to attempt to meet the burden. The only indication we can glean from the record concerning Friday‘s good faith and the reasonableness of its belief in the legalities of its actions is the restaurant‘s contention that the owners were merely a couple of farmers, acting for the first time as employers, with blind faith in their franchisor. Perhaps this argument was the basis for the district court‘s decision to deny liquidated damages due to nondefiant ignorance. This is curious because the court‘s conclusory justification for its denial of liquidated damages is so totally inconsistent with its earlier finding of a willful and flagrant violation of the FLSA.
In addition to our concern over the inconsistency between the finding of a flagrant violation and yet a later denial of liquidated damages based on nondefiant ignorance, we also doubt the validity of ignorance as a defense to liability for liquidated damages under Section 11. We do not believe an employer may rely on ignorance alone as reasonable grounds for believing that its actions were not in violation of the
Finally, we must reverse the district court‘s award of prejudgment interest. This court has held in Foremost Dairies, Inc. v. Ivey, 204 F.2d 186 (5th Cir. 1953), that interest as such is not recoverable under this statute.
For these reasons, we reverse that part of the district court‘s decision which denied liquidated damages and awarded prejudgment interest, but we affirm the decision in all other respects. On remand, the district court should amend its judgment accordingly. The court should also consider supplementing the award of counsel fees to correspond with any adjustment in the final judgment on remand and to pay for the prosecution of the appeal.
AFFIRMED in part, REVERSED and REMANDED in part.
JAMES C. HILL, Circuit Judge, specially concurring.
It is our duty in this as in other cases to ascertain, if possible, the content of a law which the Congress has enacted. Upon discovering that law, we are required to apply it to the facts of the case before us. The majority opinion in this case correctly accomplishes this. I concur, but, for myself, add the following remarks.
We are dealing with the law establishing minimum wages. The provisions with which we have wrestled have nothing to do with assuring minimum earnings for the waiters.
Nevertheless, it is the law. Therefore, I concur.
Notes
1. The records of the restaurant were inaccurate, incomplete, and of very little value in attempting to determine the actual practice employed by the restaurant. The testimony of the witnesses paints a picture of a disorganized and confused management. Several waiters testified that they were specifically told they worked only for their tips. Although most waiters understood that it was the policy to require them to turn over some of their tips generally equal to the number of hours worked multiplied times the minimum wage, which they, in turn, would get back in the form of a paycheck withholding income and Social Security taxes, even this practice was not rigidly followed. Further, the waiters were not required to report any hours worked on double shifts, substitute shifts, or as shift leaders as an inducement to perform these roles.
2. Since we affirm the district court‘s finding that no agreement existed regarding ownership of tips, we do not reach the question of the validity of such agreements in face of the 1966 amendments to § 3(m) of the Act.
3. The court allowed the waiters damages for full minimum wage for those hours worked in a nontipped capacity, such as laying tables, cleaning up, and other duties preparing the restaurant for business, for which they had received no compensation. See Hodgson v. Frisch‘s Dixie, Inc., 469 F.2d 82 (6th Cir. 1972).
4. We have considered the restaurant‘s various challenges to the Special Master‘s computations and find them to be without merit.
Massachusetts Bd. of Retirement v. Murgia, 427 U.S. 307, 314, 96 S.Ct. 2562, 49 L.Ed.2d 520 (1976); City of New Orleans v. Dukes, 427 U.S. 297, 303-04, 96 S.Ct. 2513, 49 L.Ed.2d 511 (1976); Woods v. Holy Cross Hosp., 591 F.2d 1164, 1176 (5th Cir. 1979); Jackson v. Marine Exploration Co., Inc., 583 F.2d 1336, 1346 (5th Cir. 1978). See id. at 1346: “To respond to this argument with more than a few perfunctory cites to decisions such as Railway Express Agency v. New York, 336 U.S. 106, 69 S.Ct. 463, 93 L.Ed. 533 (1949) and Williamson v. Lee Optical Co., [348 U.S. 483, 75 S.Ct. 461, 99 L.Ed. 563 (1955)], supra, gives it a stature it scarcely deserves.”