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Stilwell v. Hertz Drivurself Stations Inc.

decided.: March 21, 1949.


Author: Kalodner

Before BIGGS, Chief Judge and McLAUGHLIN and KALODNER, Circuit Judges.

KALODNER, Circuit Judge.

The plaintiffs, Leo F. Stilwell and Edward R. Roche, filed their complaint on September 5, 1946, to recover from the defendant, who had been their employer, unpaid overtime compensation, liquidated damages, and attorney fees pursuant to Section 16(b) of the Fair Labor Standards Act of 1938, 52 Stat. 1060, 1069, 29 U.S.C.A. § 216(b). Upon the jury verdict for the plaintiffs, a judgment was entered, and following the denial of defendant's motion for judgment under Rule 50(b), Federal Rules of Civil Procedure, 28 U.S.C.A., or, in the alternative, for a new trial, this appeal was taken.

As to the plaintiff Roche, defendant contends that (a) a substantial portion of his claim is barred by the applicable statute of limitations; (b) he had signed a release relinquishing his rights under the Fair Labor Standards Act of 1938, 29 U.S.C.A. § 201 et seq., effective in view of Section 3 of the Portal-to-Portal Act of May 14, 1947, 61 Stat. 86, 29 U.S.C.A. § 253; (c) if the release is not a bar to all of Roche's rights, it is at least a waiver of his claim to liquidated damages; and (d) under general contract law, Roche may be held to his release since he did not restore the consideration therefor.

As to the plaintiffs Stilwell and Roche generally, defendant contends that judgment should have been entered in its favor for lack of evidence upon which the verdict could have been based. Further, it asserts that, in any event, a new trial should be ordered because (a) the verdict returned is not supported by the evidence; (b) the plaintiffs' computation of damages is based on incorrect hourly rates; and (c) plaintiffs' counsel made improper and prejudicial remarks to the jury. Finally, it is urged that the amount awarded as counsel fee is excessive.

Undoubtedly, the defendant had, in the statute of limitations,*fn1 a good defense to a substantial portion of Roche's claim. Although the applicable statute was pleaded in defendant's answer, it cannot prevail on this appeal; not merely did defendant fail to include that defense as a ground for its motion for directed verdict,*fn2 but it further failed to request the court below to instruct the jury on the matter, and did not object to the omission from the charge of any reference to the statute.*fn3 Rule 51, Federal Rules of Civil Procedure. As we said in Alcaro v. Jean Jordeau, Inc., 3 Cir., 1943, 138 F.2d 767, at page 771:

"Rule 51 is designed to preclude counsel from assigning for error on appeal matter at trial which he did not fairly and timely call to the attention of the trial court."

The release upon which the defendant relies for its second defense against Roche's claim was executed on January 12, 1946.*fn4 It recites the existence of a bona fide dispute between Roche and the defendant with respect to (1) coverage by the Fair Labor Standards Act, (2) the number of overtime hours worked by Roche, and (3) the amount of defendant's liability under the Act. Roche released the defendant of "any and all liabilities and claims of any kind" under the Fair Labor Standards Act which he might have by reason of overtime worked by him.

Without regard to the prior law,*fn5 the defendant seeks to establish the validity of the release under Section 3 of the Portal-to-Portal Act of May 14, 1947, 61 Stat. 86, 29 U.S.C.A. § 253.*fn6 However, Section 3(a) of that statute expressly conditions the validity of a release of claims for overtime compensation upon the existence of "a bona fide dispute as to the amount payable". We do not think that condition is complied with in the instant case.*fn7

The uncontradicted testimony of Roche was that in December of 1945, or January of 1946, over five years after he had left the defendant's employ, he received a letter from the defendant. Prior to the receipt of that letter, he had not made any claim against the defendant for unpaid overtime compensation, nor had he discussed the matter with the company, or ever had a dispute with the company concerning overtime compensation. As a consequence of the letter, he went to the offices of the defendant, and relying upon the statements therein contained, as well as the statements in the release, he signed the latter and received a check. On cross-examination, Roche stated that he had read the release. "With the exception of the recital in the release, there is nothing in the record which shows that the respondent's (plaintiff's) release was obtained as the result of the settlement of a bona fide dispute between the parties with respect to coverage or amount." Brooklyn Savings Bank v. O'Neil, 1945, 324 U.S. 697, 703, 65 S. Ct. 895, 900, 89 L. Ed. 1296. Patently, the release here is a filled-in mimeographed form.

The recital in the release of the existence of a "bona fide dispute" is, in our opinion, merely the declaration of a legal conclusion.*fn8 We think the uncontradicted testimony as to what actually took place prior to the signing of the release could not, as a matter of law, support such a conclusion.*fn9 Whatever else a compromise of claims under the Fair Labor Standards Act of 1938 within the meaning of Section 3 of the Portal-to-Portal Act might contain, the statutory condition to the validity of such a compromise, the existence of a "bona fide dispute as to the amount payable", must be met. Since that prerequisite is not satisfied in this case, we conclude that the release here in controversy is invalid.*fn10 Moreover, we do not agree with the argument, based on Section 3(b) of the Portal-to-Portal Act, that the release is nevertheless binding on Roche with respect to the matter of liquidated damages: the arrangement is entire and indivisible; the failure of so substantial a portion of it as relates to overtime compensation - the root of the agreement - pulls down with it the remainder.*fn11

The defendant lastly asserts that Roche must be held to the terms of the release since he failed to restore the status quo by repaying what he had received. As to this, it need only be said that the defendant merely paid money, the amount of which can be, and was, credited in reduction of Roche's claim.*fn12

The remaining contentions of the defendant, directed generally to the verdict in favor of both plaintiffs do not require extended discussion. In our opinion, they are without merit. The record furnishes adequate ground for the jury's conclusion, and the testimony, of both the plaintiffs' and the defendant's witnesses, permitted, if it did not require, the conclusion that Stilwell and Roche were paid on the basis of a 54-four work week.

Again, with respect to the charge that the plaintiffs' attorney made improper and prejudicial remarks, it should be noted that some controversy apparently exists as to what was said, and that controversy cannot be resolved because no complete record of the remarks was made. In any event, a reading ...

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