UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
filed: March 13, 1978.
RAY MARSHALL, SECRETARY OF LABOR, UNITED STATES DEPARTMENT OF LABOR, APPELLEE,
BOARD OF EDUCATION, BERGENFIELD, NEW JERSEY; ARTHUR E. CLEMENTZ, INDIVIDUALLY AND AS PRESIDENT OF THE BOARD OF EDUCATION; AND CARL RUESS, INDIVIDUALLY AND AS SECRETARY AND BUSINESS ADMINISTRATOR OF THE BOARD, APPELLANT
Appeal from the United States District Court for the District of New Jersey (D.C. Civil No. 1791-71).
Gibbons and Garth, Circuit Judges, and Weiner,*fn* District Judge. Gibbons, Circuit Judge, dissenting.
Opinion OF THE COURT
GARTH, Circuit Judge
This is an appeal from a denial of a motion made by the Bergenfield Board of Education (Board) pursuant to Fed.R.Civ.P. 60(b).*fn1
After the Supreme Court determined that states need not comply with federal wage and hour legislation,*fn2 the Board moved the district court to vacate its judgment which compelled payments of past overtime wages to employees and restrained, inter alia, future underpayment. The Board's motion was made some eight months after this court had affirmed the district court's judgment.
The district court vacated so much of its judgment as related to the prospective operation of its decree but refused to vacate its award of past wages. We affirm.
The Secretary of Labor (Secretary) instituted this action in 1971*fn3 to enjoin the Board and other defendants*fn4 from violating certain provisions of the Fair Labor Standards Act of 1938 (Act)*fn5 which provide for minimum wages and maximum hours for employees.*fn6 On May 7, 1975, judgment for the Secretary was entered, ordering (1) future overtime payments and compliance by the Board with the Act's record-keeping provisions and (2) the payment of $5,570.43 in withheld past wages. Identifying by a separate schedule annexed to the judgment the particular employees and the amount of wages each of them was due, the court directed that a certified check totalling $5,570.43 for past wages be "made payable to the 'Wage and Hour Division -- Labor' and sent to the United States Department of Labor."*fn7 In February, 1976, this Court, rejecting the Board's plea to withhold decision pending the Supreme Court's determination of National League of Cities v. Usery, 426 U.S. 833, 49 L. Ed. 2d 245, 96 S. Ct. 2465 (1976) (see Brief for the Board at 7-8), summarily affirmed the May 7, 1975 Judgment (May 7th Judgment) of the district court. 530 F.2d 964 (3d Cir. 1976). The Board did not seek to appeal our Court's judgment to the United States Supreme Court, despite the Board's knowledge that National League was pending before that Court. Rather, in May, 1976, the Board, in satisfaction of the money judgment, delivered a check totalling $5,570.43 to the Secretary to cover the past wages withheld.*fn8
On June 24, 1976, the Supreme Court decided National League of Cities v. Usery, supra. Overruling Maryland v. Wirtz, 392 U.S. 183, 20 L. Ed. 2d 1020, 88 S. Ct. 2017 (1968), the National League Court held that in most instances the Act could not constitutionally be applied to states and localities. The Court reasoned that:
insofar as [the minimum wage and maximum hour provisions of the Act] operate to directly displace the States' freedom to structure integral operations in areas of traditional governmental functions, they are not within the authority granted Congress.
Id. 426 U.S. at 852.*fn9
In the wake of National League, state and local authorities inevitably challenged prior rulings which had applied the Act to them.*fn10 The Board as we have noted, having failed to seek review in the United States Supreme Court, then filed in the district court a motion pursuant to Fed.R.Civ.P. 60(b) to vacate the May 7th Judgment. That motion was filed on October 22, 1976, four months after National League was decided and eight months after this court had affirmed the district court's May 7, 1975 Judgment.
In response to the 60(b) motion, the district court, citing United States v. Swift & Co., 286 U.S. 106, 119, 76 L. Ed. 999, 52 S. Ct. 460 (1932), ruled that "equitable grounds have been established for modifying the injunction imposed upon defendants."*fn11 However, in considering whether to grant the Board's motion as to the money judgment totalling $5,570.43 that had been ordered, the district court ruled that it would not vacate that portion of the judgment. In so ruling, the district court relied upon and quoted Elgin National Watch Co. v. Barrett, 213 F.2d 776, 779 (5th Cir. 1954):
even if [the statute upon which the action was based] was, or is, unconstitutional the judgment based upon it is not void. Until such a judgment is reversed or regularly set aside, it is valid and binding upon the parties thereto and their privies. It is the law of the case. . . . Such a judgment, even though subsequent decisions prove it erroneous, is not void and, since it is not, is not subject to vacation under Rule 60(b)(4), Federal Rules of Civil Procedure, 28 U.S.C.A.*fn12
On January 24, 1977, the district court's order reflecting these determinations was filed. It is from so much of that order that requires the Secretary to "distribute to defendant's employees in the manner set forth in said [May 7th] Judgment the sum of $5,570.43 paid to [the Secretary] by [the Board] on May 3, 1976" that the Board now appeals.*fn13
Fed.R.Civ.P. 60(b) provides in relevant part:
Mistakes; Inadvertence; Excusable Neglect; Newly Discovered Evidence; Fraud, etc. On motion and upon such terms as are just, the court may relieve a party or his legal representative from a final judgment, order, or proceeding for the following reasons: (1) mistake, inadvertence, surprise, or excusable neglect; (2) newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b); (3) fraud (whether heretofore denominated intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party; (4) the judgment is void; (5) the judgment has been satisfied, released, or discharged, or a prior judgment upon which it is based has been reversed or otherwise vacated, or it is no longer equitable that the judgment should have prospective application; or (6) any other reason justifying relief from the operation of the judgment. The motion shall be made within a reasonable time . . ..
The motion filed by the Board on October 22, 1976 sought an order vacating the May 7th Judgment on the ground "that such Judgment is void, and on the further ground that it would be unequitable to enforce it against these defendants."*fn14 The motion was supported only by a memorandum of law.
The district court in its opinion recognized that the Board had failed to specify the particular subsections of Rule 60(b) on which it relied. Despite this omission and the failure of the Board to marshal affidavits or proofs in satisfaction of the strong showing required for the modification of a judgment, Mayberry v. Maroney, 558 F.2d 1159, 1163 (3d Cir. 1977) (Mayberry II); see 11 C. Wright & A. Miller, Federal Practice and Procedure § 2863, at 207, the district court nevertheless proceeded to analyze the Board's contentions under subsections (4), (5) and (6). Under subsection (4) the district court, citing In re Four Seasons Securities Laws Litigation, 502 F.2d 834, 842 (10th Cir.), cert. denied, 419 U.S. 1034, 95 S. Ct. 516, 42 L. Ed. 2d 309 (1974); Lubben v. Selective Service System Local Board No. 27, 453 F.2d 645, 649 (1st Cir. 1972); and 11 C. Wright & A. Miller, supra § 2862, at 200-01 (1973),*fn15 held that it had jurisdiction over the subject matter of the action when the May 7th Judgment was rendered, and that therefore the judgment was not void.*fn16 Under subsections (5) and (6), as we have previously noted the court modified the injunction as it would operate in the future, finding equitable grounds to do so in light of National League.*fn17 It refused, however, to vacate the money judgment which represented back wages due to the employees. Implicit in its January 11th Opinion and explicit in its order which followed the opinion*fn18 is the district court's recognition that the Board failed to make the requisite showing imposed upon a 60(b) movant.
In the district court and on appeal, the Board primarily relied on subsection (4) of Rule 60(b) for relief from the money judgment entered by the district court. That subsection provides that a court may relieve a party from a final judgment if "the [final] judgment is void."
A judgment may indeed be void, and therefore subject to relief under 60(b)(4), if the court that rendered it lacked jurisdiction of the subject matter or the parties or entered "a decree which is not within the powers granted to it by the law." United States v. Walker, 109 U.S. 258, 265-67, 27 L. Ed. 927, 3 S. Ct. 277 (1883); 7 J. Moore, Moore's Federal Practice para. 60.25, at 301-06 (2d ed. 1975); 11 C. Wright & A. Miller, supra § 2862, at 198-200; see Lubben v. Selective Service System Local Board No. 27, supra, 453 F.2d at 649-50.*fn19 By contrast, a judgment is not void and is therefore not within the ambit of 60(b)(4) simply because it is erroneous, or is based upon precedent which is later deemed incorrect or unconstitutional. Chicot County Drainage District v. Baxter State Bank, 308 U.S. 371, 374-78, 84 L. Ed. 329, 60 S. Ct. 317 (1940); Lubben v. Selective Service System Local Board No. 27, supra, 453 F.2d at 649-50; Elgin National Watch Co. v. Barrett, supra, 213 F.2d at 779; 7 Moore's Federal Practice, supra para. 60.25, at 303-06; 11 C. Wright & A. Miller, supra § 2862, at 198.
With these principles in mind, we are not persuaded by the Board's argument that the reversal of Maryland v. Wirtz, supra, by the National League Court rendered the May 7th Judgment void, and therefore divested the district court of jurisdiction ab initio. Chicot County, supra which is virtually indistinguishable in principle from this case has effectively disposed of the Board's contention that a subsequent change in constitutional law operates to void a judgment. In Chicot, bondholders sought to cancel a final judgment providing for state debt readjustment in light of a subsequent, unrelated Supreme Court decision which invalidated the federal statute affording such readjustment. The Supreme Court rejected the bondholders' argument that the subsequent invalidation of the statute on state sovereignty grounds divested the jurisdiction of the court which rendered the original decree. Instead the Supreme Court upheld the res judicata effect of the final judgment. 308 U.S. at 374-78.
There is little that appeared in Chicot that does not appear here. Here as in Chicot the losing party, although aware at the time of the entry of the original judgment, declined to seek ultimate review. Here as in Chicot a statute was held unconstitutional in subsequent, unrelated litigation. The conclusion which we reach under these circumstances was expressed in Chicot as follows:
The argument is pressed that the District Court was sitting as a court . . with the limited jurisdiction conferred by statute, and that, as the statute was later declared to be invalid, the District Court was without jurisdiction to entertain the proceeding and hence its decree is open to collateral attack. We think the argument untenable. The lower federal courts are all courts of limited jurisdiction, that is, with only the jurisdiction which Congress has prescribed. But none the less they are courts with authority, when parties are brought before them in accordance with the requirements of due process, to determine whether or not they have jurisdiction to entertain the cause and for this purpose to construe and apply the statute under which they are asked to act. Their determinations of such questions, while open to direct review, may not be assailed collaterally.
308 U.S. at 376; cf. McSparran v. Weist, 402 F.2d 867 (3d Cir. 1968) (en banc), cert. denied, 395 U.S. 903, 23 L. Ed. 2d 217, 89 S. Ct. 1739 (1969) (applying prospectively a determination of lack of jurisdiction in the diversity context).*fn20 We are therefore satisfied that despite the Board's contention that the district court lacked jurisdiction to enter the May 7th Judgment, thereby rendering that judgment void, neither precedent nor logic supports such a holding.*fn20a
Having held that the May 7th Judgment is valid, we turn to the other considerations adverted to in the briefs of the parties and in the district court opinion.
Even without regard to the legal analysis made by the district court as to the applicability of 60(b)(5) and 60(b)(6) -- an analysis with which we concur -- the failure of the Board to do other than characterize the district court's action as "unequitable"*fn21 is insufficient to establish the showing required for the modification of a final judgment. The record as we have previously noted contains no affidavits, no proofs, and no offers of proof which could constitute any showing, let alone a "strong" showing. It is significant to us that at no time has the Board ever contended that it has met the burden imposed upon it by Mayberry II, supra, 558 F.2d at 1163. It is therefore clearly evident to us that on this record with the burden on the movant Board, the district court did not abuse its discretion in refusing to vacate the money judgment which it had ordered to be paid some twenty months earlier.
Our legal analysis as to the applicability of Rule 60(b)(5) and (6) in these circumstances also dictates an affirmance of the district court's judgment.
First, the district court impliedly recognized,*fn22 as we recognize expressly, that a motion made under Rule 60(b)(5) or (6) may not generally substitute for an appeal. Martinez-McBean v. Government of Virgin Islands, 562 F.2d 908, 911 (3d Cir. 1977) (60(b)(6)); Lubben v. Selective Service System Local Board No. 27, supra, 453 F.2d at 650 (60(b)(5)); 11 C. Wright & A. Miller, supra § 2864, at 214-15; 7 Moore's Federal Practice, supra para. 60.27 , at 353; see Ackermann v. United States, 340 U.S. 193, 197-99, 95 L. Ed. 207, 71 S. Ct. 209 (1950). Here the Board, unlike the petitioners in New Jersey v. Usery, 427 U.S. 909, 49 L. Ed. 2d 1202, 96 S. Ct. 3196 (1976), and in Indiana v. Usery, 427 U.S. 909, 49 L. Ed. 2d 1202, 96 S. Ct. 3196 (1976), failed to appeal its case to the Supreme Court even though it knew that the precise issue posed here was pending before that Court in National League of Cities. In Ackermann, the Supreme Court denied Rule 60(b)(6) relief to a party who failed to protect his interests through use of available judicial channels. The Court admonished:
Petitioner made a considered choice not to appeal, apparently because he did not feel that an appeal would prove to be worth what he thought was a required sacrifice of his home. His choice was a risk, but calculated and deliberate and such as follows a free choice. Petitioner cannot be relieved of such a choice because hindsight seems to indicate to him that his decision not to appeal was probably wrong, considering the outcome of the [ National League ] case. There must be an end to litigation someday, and free, calculated, deliberate choices are not to be relieved from.
340 U.S. at 198. But cf. Polites v. United States, 364 U.S. 426, 433, 5 L. Ed. 2d 173, 81 S. Ct. 202 (1960).
Second, in its original opinion, the district court relied on Maryland v. Wirtz, the case subsequently overruled by National League. Reliance on a judgment in an unrelated case, however, does not make the original judgment vulnerable within the "prior judgment" clause of subsection 5.*fn23 Lubben v. Selective Service System Local Board No. 27, supra, 453 F.2d at 650;*fn24 see 11 C. Wright & A. Miller, supra § 2863, at 204 ("this ground [subsection (5)] is limited to cases in which the present judgment is based on the prior judgment in the sense of res judicata or collateral estoppel. It does not apply merely because a case relied on as precedent . . . has since been reversed"); cf. Ackermann v. United States, supra, 340 U.S. at 197-99; Chicot County Drainage District v. Baxter State Bank, supra, 308 U.S. at 374-78.
Third, the "prospective application" clause of Rule 60(b)(5)*fn25 affords the Board no relief. That clause incorporates the time-honored rule that a "court of equity [may] modify an injunction in adaptation to changed conditions." United States v. Swift & Co., 286 U.S. 106, 114, 76 L. Ed. 999, 52 S. Ct. 460 (1932); accord, Lubben v. Selective Service System Local Board No. 27, supra, 453 F.2d at 651; 7 Moore's Federal Practice, supra para. 60.26, at 327-28; 11 C. Wright & A. Miller, supra § 2863, at 204-05; see System Federation No. 91 v. Wright, 364 U.S. 642, 646-48, 5 L. Ed. 2d 349, 81 S. Ct. 368 (1961); Pennsylvania v. Wheeling & Belmont Bridge Co., 59 U.S. (18 How.) 421, 431-32, 15 L. Ed. 435 (1856); Jordan v. School District of City of Erie, 548 F.2d 117, 120-22 (3d Cir. 1977). The definitional limitation in subsection (5) is significant in that it empowers a court to modify a judgment only if it is "prospective," or executory, see Pennsylvania v. Wheeling & Belmont Bridge Co., supra, 59 U.S. (18 How.) at 431-32 (under common law).*fn26 By contrast, a judgment at law for damages for past wrongs is "inherently final," American Iron & Steel Institute v. EPA, 560 F.2d 589, 599 (3d Cir. 1977), cert. denied, 435 U.S. 914, 98 S. Ct. 1467, 55 L. Ed. 2d 505, 46 U.S.L.W. 3390 (1978), and remains unaffected by a subsequent change in the law. Pennsylvania v. Wheeling & Belmont Bridge Co., supra, 59 U.S. (18 How.) at 431. Thus the district court's refusal here to vacate the award of damages for past overtime wages wrongfully withheld conformed with the mandate of Rule 60(b)(5) and its common law heritage. Ryan v. United States Lines Co., 303 F.2d 430, 434 (2d Cir. 1962) (Rule 60(b)(5) "does not cover the case of a judgment for money damages"); 11 C. Wright & A. Miller, supra § 2863, at 205; see Pennsylvania v. Wheeling & Belmont Bridge Co., supra, 59 U.S. (18 How.) at 431; cf. American Iron & Steel Institute v. EPA, supra, 560 F.2d at 599 (court contrasted money judgment and other "inherently final" relief with "an order which necessarily is of a continuing nature"). See also System Federation No. 91 v. Wright, supra, 364 U.S. at 647-48 ("[a] balance must thus be struck between the policies of res judicata and the right of the court to apply modified measures to changed circumstances").*fn27
Lastly, nor may the Board rely on subsection (6) of Rule 60(b) ("any other reason justifying relief"), which "provides for extraordinary relief and may only be invoked upon a showing of exceptional circumstances." Vecchione v. Wohlgemuth, 558 F.2d 150, 159 (3d Cir. 1977), cert. denied, 434 U.S. 943, 98 S. Ct. 439, 54 L. Ed. 2d 304 (1977) quoting Mayberry v. Maroney, 529 F.2d 332, 335 (3d Cir. 1976) (Mayberry I); accord, Martinez-McBean v. Government of Virgin Islands, supra, 562 F.2d at 911; Mayberry II, supra, 558 F.2d at 1163; Stradley v. Cortez, 518 F.2d 488, 493 (3d Cir. 1975). As we have earlier indicated, no circumstances, least of all "exceptional circumstances" requiring "extraordinary relief," have been demonstrated in this record. The Board having failed to prove that "absent [Rule 60(b)] relief an 'extreme' or 'unexpected' hardship will result," Mayberry II, supra, 558 F.2d at 1163,*fn28 the district court properly exercised its discretion*fn29 when it denied the relief which the Board sought.
The order of the district court will be affirmed.
GIBBONS, Circuit Judge, dissenting.
The majority opinion takes us on a long excursion through the various subsections of Rule 60(b) in a labored effort to establish why many of them would not provide a ground for relief from the earlier judgment. The fact remains, however, that relief was given, and properly so. The district court granted the Board's motion for relief from that part of its earlier injunction ordering future compliance with the terms of the Fair Labor Standards Act.*fn1 However, the court refused to permit relief from that part of its injunction ordering the Board to pay to the Secretary of Labor a sum equal to back wages owed under the Act, despite the fact that the Secretary has not yet distributed the money to the employees. Neither the district court nor the majority here adequately discusses why, for purposes of a Rule 60(b) motion, those parts of the earlier judgment are treated differently. The Secretary's action under § 17 of the Fair Labor Standards Act*fn2 was equitable in nature. Both the order prohibiting future violations of the Act and the order enjoining the employer to pay back wages are equitable remedies not available in the absence of the federal statute. There is no equitable basis for differentiating between these two orders on a Rule 60(b) motion. Accordingly, I must dissent.
The judgment from which the Board sought relief arose out of an action brought by the Secretary of Labor pursuant to § 17 of the Fair Labor Standards Act. Section 17 states in relevant part:
The district courts . . . shall have jurisdiction, for cause shown, to restrain violations of section 215 of this title, including in the case of violations of sections 215(a)(2) of this title the restraint of any withholding of payment of minimum wages or overtime compensations found by the court to be due to employees under this chapter. . . .*fn3
The prayer for relief in the Secretary's complaint was worded essentially in the language of § 17. The only judgment entered was an injunction. That injunction directed future compliance with § 15(a)(2) of the Act and provided further:
Ordered, Adjudged, and Decreed that defendant shall not withhold the payment of wages and shall pay to its employees or former employees named in Exhibit A annexed hereto and which is hereby incorporated in and made part of this judgment the sum stated therein, which sum represents back wages found to be due to said employees under the Act, payment thereof to be made within thirty (30) days after entry of this judgment by certified check in the total amount of $5,570.43, made payable to the "Wage and Hour Division -- Labor" and sent to the United States Department of Labor, Wage and Hour Division, 133 Ellison Street, Paterson, New Jersey 07505; and it is further
Ordered, Adjudged and Decreed that any net sums which within one (1) year after the filing of this judgment have not been distributed to employees named on Exhibit A or to their personal representatives, because of inability of either defendant or plaintiff to locate the proper person or because of the refusal of such persons to accept such sums, shall be deposited with the Clerk of this Court who shall forthwith deposit such money with the Treasurer of the United States pursuant to 29  U.S.C. 2041 (1964) . . . .
It is well settled that the Secretary's action under § 17 is completely equitable. See, e.g., Wirtz v. Jones, 340 F.2d 901 (5th Cir. 1965); Dunlop v. Darboian Enterprises, Inc., 410 F. Supp. 479 (E.D.Mich. 1975); Wirtz v. Riccio, 264 F. Supp. 134 (M.D.Pa. 1967); Wirtz v. Robert E. Bob Adair, Inc., 224 F. Supp. 750 (W.D.Ark. 1963). The only remedy that the district court is empowered to grant under § 17 is an injunction. Although the court can enjoin the employer from "withholding payment of minimum wages or overtime compensation" found to be due to the employees, such an order does not constitute compensatory relief. Dunlop v. Darboian Enterprises, Inc., 410 F. Supp. 479, 481 (E.D.Mich. 1975). Rather, the purpose of such an injunctive order is to exact compliance with the terms of the statute. Enforcement of the statute by the Secretary precludes private damage actions by the employees under § 16(b) of the Act.*fn4 Because an action under § 17 is equitable in nature, the defendant-employer is not entitled to a jury trial. See, e.g., Wirtz v. Jones, 340 F.2d 901 (5th Cir. 1965). Moreover, if the defendant fails to comply with the terms of the injunction decreed by the district court, that defendant can be held in contempt. Hodgson v. Hotard, 436 F.2d 1110 (5th Cir. 1971). The Court in Robert E. Bob Adair, Inc. aptly discussed the role of money payments in § 17's equitable scheme:
Although the suit filed by the Secretary affects the rights of the employees mentioned in the complaint and although payments to them are sought, the action in the last analysis is not brought by the employees or for their personal benefit, except incidentally. The Secretary is suing for the benefit of the public and to vindicate a public right. The Secretary is seeking to secure future compliance with the law, which is in the public interest, and he is seeking by means of a negative order to compel the defendants to make reparations for alleged past violations of the law, which likewise is in the public interest. The relief sought is equitable and it is no less so because compliance with the decree which plaintiff seeks may require the defendants to pay out money. That the filing of the suit has affected, and that the outcome of the suit may further affect, the substantive rights of the employees does not convert the proceeding from a suit in equity to an action at law, and does not convert the prayer for a negative injunction requiring defendants to cease to withhold moneys allegedly due the employees into a legal claim for money damages.
224 F. Supp. at 756.
In granting the Board partial relief, the district court conceded that the unconstitutionality of the statute upon which its judgment had been based was a ground for relief from that judgment. Nevertheless, the court refused to vacate that part of its order restraining the employer from withholding payments due to the employees. Yet the Board's Rule 60(b) motion was made before the Secretary had distributed any of the money to the employees named in the exhibit attached to the judgment and before he had paid over to the United States Treasury any portion of the $5,570.43 attributable to employees who could not be located. Thus, the Board filed its motion prior to the full execution of the injunction, while the Secretary still held the funds as a trustee, agent, or class representative for the listed employees. The Supreme Court's decision in National League of Cities v. Usery, 426 U.S. 833, 49 L. Ed. 2d 245, 96 S. Ct. 2465 (1976), makes clear that those employees have no legal right to receive the sums in question and, on any rational theory of constitutional law, never did have such a right. The district court's opinion in support of its result points to no circumstance which would make it equitable for the injunction to be given the ongoing effect of paying to the Board's employees sums to which they are not now and have never been legally entitled. If it was equitable to prevent the ongoing operation of the first two paragraphs of the injunction, it was equally equitable to prevent the ongoing operation of the last two paragraphs.
At least since 1856 it has been the rule that a change in the law which becomes effective before an injunction has been fully executed is a ground for relief from the judgment which imposed that injunction. In Pennsylvania v. Wheeling & Belmont Bridge Co., 54 U.S. (13 How.) 518, 14 L. Ed. 249 (1852), the Supreme Court, acting in its original jurisdiction, enjoined the maintenance of a bridge across a navigable stream unless the bridge's span was constructed high enough to permit the passage below of high-stack steamboats. Subsequent to the Court's decision, Congress passed a statute directing the steamboat crews to lower the stacks on their boats. Because of this statutory change, in Pennsylvania v. Wheeling & Belmont Bridge Co., 59 U.S. (18 How.) 421, 15 L. Ed. 435 (1856), the Supreme Court relieved the bridge owners from the dictates of its earlier injunction.
A change in constitutional law is an a fortiori case. Indeed it is difficult to conceive of any ground for relief from a judgment that is more compelling than that the statute which gave the court jurisdiction and created the cause of action has been declared unconstitutional. This court recognized as much in Neely v. United States, 546 F.2d 1059 (3d Cir. 1976). Neely brought a class action seeking relief from criminal convictions and from fines imposed under a federal statute later held to be unconstitutional. Neely and other members of the class had pleaded guilty. Nevertheless, we held that under the Tucker Act, 28 U.S.C. § 1346, the plaintiffs could obtain relief from the convictions and recover the fines paid. We properly construed Rule 60(b) as follows:
In abolishing coram nobis, as well as several other ancient procedural devices, Rule 60(b) did not, and indeed could not, "abridge, enlarge or modify any substantive right." (28 U.S.C. § 2072). The very sentence which abolishes coram nobis provides for relief from a judgment by motion or by an independent action. The prior sentence of the rule provides that "this rule does not limit the power of a court to entertain an independent action to relieve a party from a judgment . . . " Clearly, the rule provides a choice between motion or independent action, at the initiating party's option.
546 F.2d at 1065-66.
In this instance the Board chose to bring a Rule 60(b) motion rather than an independent action. The fact that the Board selected that route does not alter its equitable claim for relief from the judgment. See Boughner v. Secretary of HEW, 572 F.2d 976 (3d Cir. 1978), at 3 (recognizing the availability of Rule 60(b) relief where statute upon which judgment was based was declared unconstitutional). If, as we held in Neely, a Rule 60(b) motion or an equivalent independent action can be maintained to recover fines already paid into the United States Treasury, either route must be available to recover sums obtained from the Board and held by the Secretary in a purely representative or fiduciary capacity. It makes no difference that the fiduciary in this case also happens to be a government official. Indeed, until the law was changed and other remedies were substituted, it was recognized that a government agent who received funds on behalf of the government as a disclosed principal had the same duty as any other agent to refrain from paying them over once he was given notice of adverse claims. See, e.g., Elliott v. Swartwout, 35 U.S. (10 Pet.) 137, 9 L. Ed. 373 (1836); Tracy v. Swartwout, 35 U.S. (10 Pet.) 80, 9 L. Ed. 354 (1836). The Secretary here is in the classic position of an agent who is holding funds received from a third party and who has been put on notice that his principal is not entitled to the funds. His only possible justification for paying over the funds is the provision in the judgment directing him to do so. The third party claimant, the Board, contends that the Supreme Court's decision in National League of Cities entitles it to be relieved from that judgment. The district court agreed that that decision justified relief under Rule 60(b) but nevertheless gave only partial relief. The court distinguished the injunctive provision directing the Secretary to pay the money to the employees from the injunctive provision directing the Board to make future payments. But the court did not refer to any equitable consideration which would support its distinction. Assuming the legitimacy of National League of Cities, no such equitable consideration exists. I can think of no reason why the Board's employees should benefit from an injunction based on an unconstitutional statute, at least where that injunction has not been fully executed.
In its discussion of the various subsections of Rule 60(b), the majority ignores the single issue before us. Since the unconstitutionality of the statute clearly justified relief from the judgment, what equitable basis is there for distinguishing the ongoing effects of the first two paragraphs from the ongoing effects of the last two? In the only part of its opinion that addresses that question, the majority suggests that there is a distinction, for purposes of relief from a judgment, between an action at law and a suit in equity. Maj.Op. slip op. at 13-14. That sort of medieval reasoning, even assuming that it survives our Neely decision, does not serve any purpose in this case. The district court had no jurisdiction under § 17 of the Fair Labor Standards Act to enter a judgment at law. The entire action was equitable. The only judgment that was or could have been entered was an injunction. That injunction remains unexecuted. Relief from that equitable remedy should have been granted.
I would reverse the judgment of the district court and direct the Secretary to pay back the $5,570.43 to the Board.