United States v. Klinghoffer Bros. Realty Corp., Irving Jacobson and Albert Klinghoffer

statutory provisions. has anee with time, presumed he it be Commission, order a lease. of the su- the bonus for without a elected to take persedeas disregarded bond, not be “2. Tit. 52 O.S. Section 87.1 pending appeal. an 52 Okl.St.Ann. § 1951, with the is not conflict 113; Bryan Corp., Amis v. Petroleum guar- State or Federal Constitutions supra. anteeing private property shall Affirmed. private use nor not be taken for process of law. without due authorizing the “3. A statute regulate

Corporation Commission to gas

production oil so as to and equita-

prevent secure and to waste among apportionment ble owners of the oil and interest leasehold land, gas underlying their among them, fairly distribute ap- production and of the costs of America, UNITED STATES of proper exercise portionment is a Appellee, power police not does v. provisions State violate the CORP., KLINGHOFFER BROS. REALTY Anderson Federal Constitutions.” Irving Kling Jacobson and Albert Comm., supra, Corporation v. hoffer, Defendants-Appellants. page 700. P.2d at No. Docket 25692. Although theory advances Anderson Appeals United States Court of to be decided the remains that question there Second Circuit. the Commission’s of whether Argued April 1960. divesting him the effect of order had Decided Oct. 1960. previously interest vested of his transferring Rehearings same Elli- Denied Jan. unit and son, 1961. Supreme Oklahoma think the we questions and other this settled Court rights, and this action to his relitigate attempt the same issues. language, result In unmistakable Supreme Oklahoma Court’s deci- royalty that, for his in- sion

terest, Anderson his receive lost production. percentage He is recovery lease bonus limited to Commission,5 and further

fixed unnecessary. Nothing remains action comply the order with ex- to be done payment cept An- bonus

derson, it has been tendered. The stayed pend- the order was effect of not

ing appeal compli- in the absence of “ affirming order, equity ought In the Commission's per-

5. ‘In he to Supreme Phillips operator Court cited Oklahoma mitted to stand and see the Davis, Co. 194 Okl. Petroleum all take the ehanees of failure and come question pay in which a similar only P.2d in and or offer to after ” quoted language proved involved the venture has successful.’ Corporation P.2d 145: from 147 Comm., Okl., Anderson v. 327 P.2d son, appeal convic- vice-president, from by jury counts tions on three after trial violating Standards Labor the Fair 211(c), 207(a), Act, 29 U.S.C. §§ 215(a), 216(a). prosecution arose corpo- from the action of the defendant employees requiring to ration in four perform additional overtime financially the benefit of embarrassed whereby arrangement affiliate, under an compensated for were such additional the affili- overtime until emerged proceed- bankruptcy ate ing. from a jury ar- below found rangement violated $1.00 wage requirement 206 and of U.S.C. § provisions the overtime accompanied by keeping was of false 211(c). records in violation of § background. The defend- factual corporation corporations ant is one of ten having the same officersand shareholders constituting group,” the “Rotobroil enterprise generally engaged manufacture and sale of electric broil- April 7,1957, ers. On four of these com- panies, following certain financial revers- es, petitions arrangement filed Chapter XI of Bankruptcy One Act. companies filing Kay Jay Specialties Metal facturing Corporation, a manu- Sydney occupying Krause, Krause, Hirsch, concern five six building Heilpern, floors in a City (Alex & Gross at 3408 New Northern York Boulevard, Queens, Glauberman, J. brief), City, New sublessee of York on the the de- corporation, fendant defendants-appellants. which was lessee building. of the entire April 7, 1957, On Kahaner, Asst. U. S. Elliott Chief Jay Kay Metal, economy measure, as an (Cor- Atty., Y., Brooklyn, D.E. N. N. Y. terminated the services of a detective Jr., Atty., Wickersham, nelius U. W. S. agency previously which had been em- Atty., Trynin, and Nathan K. Asst. U. S. ployed guards to furnish prop- for the brief; Brooklyn, Y.,N. Harold C. erty at 3408. Nystrom, Acting Labor, Bessie Sol. of Sol., Margolin, guard E. Asst. and Robert To maintain a service for that Atty., Nagle, Dept, Labor, U. property S. Wash- the defendants then determined ington, rehearing), C., guards D. of counsel on utilize the reg- to services four appellee. ularly employedby Klinghoffer Realty Corp. nearby Bros. at building SWAN, CLARK, Before managed by owned and said defendant at. FRIENDLY, Judges. Circuit Northern Boulevard. On or about April 12, 1957, defendant Jacobson told' CLARK, Judge. Circuit guards company’s that the financial Klinghoffer Realty Defendant embarrassment made it Bros. Corp. put and its in some officers, them codefendant additional Albert work at. Klinghoffer, president, Irving compensation. guards without Jacob- ground this, refused have been ployer. possession to accede the em- pay. a cut that it was tantamount understanding then reached An charges Count 1. Count approximately guards put would promptly wage pay any failure per week six additional overtime put additional overtime in at 3408 compensation would and that wage violates the $1.00 minimum re forthcoming con- There is some on. later quirement of (a). 29 U.S.C. 206 But no testimony definite- flict in the guard received less than for a 40- $67.20 a fu- ness of this commitment week, guard hour and no more worked have date, seems ture the intention but than 67 average weekly hours. Thus the paid on guards been would that the employee received met the bankruptcy proceed- termination of the requirements 206(a). govern of ing's ar- involving Jay Kay This Metal. argues, ment nevertheless, that all of

rangement the with undertaken was weekly wage such by agree was allocated knowledge Al- approval of defendant ment to the work 3300, done at so that arrangement Klinghoffer. was bert the work at performed 3408 was without July 30, because terminated about pay. Therefore, contended, it is the time along go guards it with the refused to worked at paid 3408 was a for at rate of any further. per hour, $0.00 or an amount less than the $1.00 requirement. minimum ar- during the which week For each guards effect, the rangement wage guard was in paid If the total to each showing amount the during given any in time cards in turned this case week is at worked straight- over-time by of divided the total time he worked that by being card, checked week, resulting average hourly wage after Each 3300. the pay- the to forwarded supervisor, every every was exceeds the $1.00 week and payroll guard issued department, involved. roll We believe this is all corporate de- the necessary of name require- is in the to meet checks the of number 206(a). Congressional of the basis ments of fendant at purpose worked underlying The time reported. that section hours was to guarantee time these down on marked not was minimum livelihood to the have been by Payment cards, not seem does covered the Act.1 Decem- until weekly intervals reported the defendants shorter than is un- the after months usual employees and is not 1958—seventeen ber the enable the question. At that customary in employment meet their obli- already gations. been indict- defendants, Accordingly Congressional had who the guards purpose accomplished sched- long to submit is ed, the invited as the weekly wage paid by at 3408 and total employer worked the hours ules of accept payment an by issued weekly checks requirements therefor minimum meets the Jay Kay Metal. All of the statute, weekly name in the minimum re- of the quirement accepted guards being this invitation equal to the number of Conroy, upon guard the actually who declined worked that week multi- attorney. hourly statutory the district This be- plied advice payment long was about month requirement. lated Hence so as this arrangement Jay Kay plan weekly requirement met, 206(a) after the Chapter proceedings agreement parties by XI in Metal not violated if Aside being from the paid confirmed. schedules was all of that treat only to, regard just part referred record which work and of the certain oth- kept nothing. of the overtime awas er as done for Hence the log daily record maintained under conviction 1 must Count be re- appear guards, insufficiency law, but which does not to versed in and Report, H.R.Rep. (1937); H.R.Rep. Conference No. Cf. 1-3 No. 75th Cong., (1938); Cong., (1937). 3d 75th Sess. 28 1st 8-9 Sess. Sen.Rep. Cong., No. 75th 1st Sess. comply requirement, and not with ordered this count indictment violated the defendant was held to have dismissed. (2). 215(a) 29 U.S.C. §§ charges a 2. Count Count guards did not case in instant requirement of § violation they had was a even receive vague understanding All employees such pay scrip. employer indefi- some that at one than less guards case date, nite termina- future related to the regular rate their and one-half times arrangement proceedings, tion of the forty. every hour excess they would be taken In fact of. care “employer” 203(d) defines 29 U.S.C. § understanding payment would as to when directly acting or “any person to include have been be made does not seem indirectly of an interest clearly pres- articulated. time the At the employee.” The cor in relation to an they prosecution had ent was commenced “employer” porate was such an year. unpaid approximately been guards respect four with payment Final seven- was not made until regardless whether overtime at rendering teen months after employer, is used as that term actual question. delayed pay- services Jay Such contracts, in Kay law of itself ment requirements does not meet corporate defend For the Metal. 207(a). § guards making ant, in its own available financially affiliate, ei embarrassed its Cir., Rigopoulos Kervan, 140 2 In guards employed or act ther those itself 506, 507,151 1126,this Court F.2d A.L.R. “directly indirectly ed interest or in the Act, U.S. 29 stated: “Section 7 of the Jay Kay Metal, possible of” the other 207, plainly contemplates that C.A. § Accordingly employer. the the failure of paid compensation in shall overtime be corporate pay promptly defendant to the employment of the course and not accum- statutory compensation overtime was a beyond regular day.” pay ulated the 207(a). violation of 29 vague U.S.C. § There, employer, Court held that an compensation plan deferred which making tardy by of the restitution appears agreed upon to have been is not due, compensation amount of overtime requirements sufficient to meet the of liability did not relieve himself the of that section. damages liquidated had accrued on original expressly pay. present failure the does set FLSA While the payment, requirement prompt case is somewhat of different because forth apparent understanding requirement clearly established that the over- compensation by authorities, paid and in in- time ally. is codified would be eventu- regulation, legal terpretative But this 29 CFR 777.2 difference is without § construing significance, 206, 207, (a), 29 because U.S.C. the function of the §§ negotiable payment require types in cash or FLSA is determine of con- what employer payable par, except between employee at tract instruments as and will 3(m), Accordingly in be tolerated. statutory stated otherwise 29 § U.S.C. requirement (m). prompt compensation of 203 by agreement. cannot be waived Fleming Hardwood v. Pearson In Brooklyn D.C.E.D.Tenn., F.Supp. Flooring Co., O’Neil, Sav. 39 In Bank v. 324 payment 697, 707, employer, 65 of S.Ct. in U.S. 89 defendant L.Ed. wages, Supreme regular Court, invalidating overtime issued in and both lacking regular scrip employee’swaiver liqui- his to its redemption damages nego- uniformly 216(b), date and not dated 29 U.S.C. § liquidated damage par. provi- The court held the described that tiable “Congressional recognition compensa- and overtime as a sion minimum that by prescribed FLSA must be failure to tion minimum negotiable by paid instruments be in cash detrimental to main- par, per- payable otherwise tenance standard of liv- * * * ing by 3(m). scrip payment issued did mitted double must delay made in the event order willfulness which failed to indicate that to insure restoration of the worker law, to an honest mistake as to after that minimum well-being.” diligent standard inquiry, would be a valid de- (Emphasis added.) subsequent “willfully,” en- fense. The term as used actment a 216(c) of 29 U.S.C. FLSA, defense, constitutes includes such a Congressional revision of that decision this instruction was therefore erroneous. in the encouraging voluntary interest of But since the erroneous instruction was restitution, and does not limited detract from to Count the conviction under validity quoted Count 2 statement must be affirmed. above. Sen.Rep.No.640, Cong., See 81st charges an Count 3. Count 3 Sess., 1st Cong.Serv. U.S.Code falsification of records vio intentional 2247-49. 211(c), 215(a) (5), lation 29 U.S.C. §§ recognition Further necessity charged 216(a). The court prompt payment may found in Keen guilty jury could find un defendants V. Mid-Continent Corp., Petroleum D.C. der if the rec this count it found that N.D.Iowa, F.Supp. 120, 128, affirmed Klinghoffer kept Bros. ords defendant Cir., 310, Walling 157 F.2d v. Liv- Realty Corp. failed state the time ernois, D.C.E.D.Mich., F.Supp. worked at 3408. If the actual time, for such law, a matter contract Jay Kay Metal, however, individual defend Both of the arrangement kept corporate de ants records knew accurately compensation were instru ferred showed the time which the guards jury putting worked mental in it into effect. The that defendant. justified finding failing these actions “False” means show the true agreement and, deliberately parties. in in between if not Accord were taken ingly disregard statute, jury the should tentional of the have been instruct acquit ed to on toward it. Count if the least reckless indifference 3 3408 over with performed part the indi time ing on of was the This willfulness the with understand Jay Kay imputed may to the that Metal would be deemed vidual defendants corporate employer the for find the such overtime. For defendant. We that though Jay Kay may jury question charge on the Metal have been a to the joint satisfactory corporate and the with was that the defend willfulness ant, supported jury’s impose fact substan that did not on was the latter verdict duty keep to in its records notation of tial evidence. Jay Kay work which was for done Metal charge jury court de- to the the In its employer, imputed actual and which is willfully “performing an act- fined corporate only to the as a mat being wrong knowing aware to be it statutory policy. ter of The conviction thing wrong. To inadver- do of the retrial, under Count 3 is reversed. On a accidentally, byor honest mistake tently, government if presses the one, in jury the Thus was act.” not a wilful given structions should be as indicated acquit if it found properly to instructed above. (1) did not either defendants that intentionally the perform acts constitut- the appel Other contentions of the (2) ing of the statute or violation the have lants lack substance. We examined intentionally performed acts in the grand jury the minutes and find no abuse they mistaken, that honest, belief but discretion the court’s refusal to complying with the statute. were make them available defendants. requested subsequently Spangelet, Cir., jury the See United States v. 2 meaning “clarify of inten- 258 F.2d 338. Defendants on trial court requested as it relates to Count certain documents on the falsification tional ground they response In had this that been used indictment.” to re of gave government fresh the an instruction on recollection request court urge docu- error that fendants failed to the asserted To the extent witness. trial, request a time when the court could have so used at were ments necessary correction, appeal granted. the defend- contention On this appeal comes too that on rever- late to show the first ants assert ordinary point statute, enti- sible error. The one of 18 U.S.C. § Jencks procedure, inspection. interpretation trial not of to a broader them tled rights petition the new specifically under statute. assert Defendants’ failure denied. on trial is fatal while Jencks statute of testi- The admission to mony claim. this peti- The United States of America investigations appears prior er- rehearing tions reversal roneous, waived. Oth- the defect was but conviction under Count for failure groundless either er asserted errors are wages. pay minimum We concluded that prejudicial. or not 206(a) violated, 29 U.S.C. was not be- reversed count Convictions the first employee during cause each received each dismissed; convictions and that count compensation equal exceeding week to or affirmed; convictions on the second count product of the total number of hours proceed- third count on the ings reversed statutory worked and the ly minimum hour- not inconsistent remanded action government rate. The contends that opinion. this with holding authority runs counter payments for certain ex- Rehearing Petitions On cess of the minimum cannot be up reallocated to make for deficiencies Judge. CLARK, Circuit payments during made for other hours United States defendants general the week. In to the rehearing. petition for both America extent quarrel stated below we do not defendants’ first consider We shall government with cases on which the disposed quick- petition, think, relies. meaning however, We their ly. broadly. cannot be stated so seek reconsideration Defendants alleged government first their relies on a series conclusion court’s statute, arising pro- Jencks cases the overtime inspection under holding lost lack of U.S.C. visions U.S.C. agree straight payments “no that We that in ex- specific reference. statutory wage to invoke minimum can- words” is cess ritual granted by rights statute. See not be reallocated overtime hours to States, U.S.App. up pay- 108 make for deficiencies overtime v. United Howard language pres- 872, In the 38, F.2d 874. ments.1 function of 278 D.C. 207(a) request however, case, 206(a), differ from defendants’ and the § § ent by government inspection cited used overtime of documents cases was for controlling government interpretation not on the by refresh his are witness to wage provision. recollection, the minimum and the court undertook to Section 207(a) requires payments request. grant overtime contention now to be “reg- reports at one and one-half have been de- times the all is that should payments rate.” A up; ular reallocation of but livered at the time defend- statutory nothing excess of the minimum to to alert the court ants said to the up they making make for overtime deficiencies a claim would fact that were un- statutory requirement from this deviate der the Jencks statute. Since the de- 290, Overnight Transp, Missel, certiorari 144 F.2d denied 323 Motor Co. v. U.S. 751, 85, 602; Bumpus L.Ed. 65 S.Ct. 89 62 316 U.S. S.Ct. 86 L.Ed. Baking Co., Cir., 1682; Drilling v. Continental 6 124 F. Warren-Bradshaw Co. v. Hall, 88, 93, A.L.R. certiorari 2d 140 denied U.S. S.Ct. 87 317 63 Baking Bumpus, 83; Mfg. v. Co. Continental 316 Truck & Coach L.Ed. Yellow 367; Edmondson, Cir., 62 S.Ct. 86 L.Ed. 1772. F.2d U.S. v. Co. Bank, Cir., v. Union Dime Sav. Adams limiting liability by one and he overtime has course breached his contract. go minimum, rather than To one-half times the the extent cases the cited “regular,” beyond unwilling this, my one and one-half times the brothers are wording particular however, 207 to my rate. The follow part, them. § For (a), they I ground may justified which the basis of the overtime believe is be on cases, 206(a), contrary is not found in which that a rule would de- wage simply requires pay- bargained- minimum prive of their following (1) ments “at the payment in excess rates — * * hour; than less an$1 But hours. for the usual minimum unnecessary pass final now to I find it re- of different rules The existence cases, judgment since on line this garding 206(a) and reallocation under § distinguish- sufficiently present case is an understandable result is pay- no in that the hours which able functions of those two sec- the different clearly part received were ment was provid- tions. The former is directed ing compensable work week and were the recognized living standard, minimum can Under these cir- as such. long wage weekly be satisfied agreement to work cer- cumstances the provide sufficient to minimum. Sec- nothing tain additional hours hand, tion on the other is con- agreement accept essence an a reduc- deterring long cerned also with long pay. tion in So as the reduced by making long expen- hours more agree- hour, rate still exceeds an an $1 employer. purpose for the sive This can accept valid, ment to reduced not- successfully accomplished only if the withstanding 29 U.S.C. 218. White computing base “time and a half” is Cir., Co., Witwer Grocer 132 F.2d 108. regular, minimum, rather than the agreement an Such does not become il- wage. Otherwise whose legal merely because it takes the form regular rate, was one and one-half times of additional hours worked without com- minimum would face no incentive to pensation, express rather than of an re- avoid overtime. hourly duction of the rate. government also prosecution relies cases also stresses involving a failure to allocate an amount position it advocates that taken con- equal statutory to the minimum sistently Department to such of Labor periods job, “borderline” years as lunch period pub- over a as shown preparation work, etc., opinions lished of the Administrator of determined in Wage-Hour certain though circumstances to Division, even compensable periods constitute rulings of em contrary. had earlier been to the ployment. A failure change allocate at position least do not stress We point gov- further than to these out that the compensable periods “borderline” present work position, ernment’s on its own has been held to 206(a), violate even showing, one, is not a or one though wage paid for the usual precedents; work and for the buttressed exceeds the we have indicated it should not reasons up an amount sufficient to given make interpretation penal for the stat- deficiency in the “borderline” urged The desirable results ute. seem case, The Stock time.2 cited in amply footnote secured us ground rest on the that when an without extension bargained- has failed to agreed wage form of reduction. The hourly wage, otherwise, minimum or government’s petition is therefore also compensable period for a employment, denied. 2. F. W. Stock Thompson, & Cir., cially reported), Sons v. 13 WH Cases 493; 194 F.2d Mitchell 70,423 (D.C.M.D.Ga. Stewart Bros. Lab. Cases ¶ CCH Co., D.C.Neb., Const. F.Supp. ) 886; 1956 . Battery Mitchell v. (not Exeello Co. offi

Case Details

Case Name: United States v. Klinghoffer Bros. Realty Corp., Irving Jacobson and Albert Klinghoffer

Court Name: Court of Appeals for the Second Circuit

Date Published: Jan 30, 1961

Citation: 285 F.2d 487

Docket Number: 25692_1

Court Abbreviation: 2d Cir.