The ADEA incorporates by reference the statutes of limitations specified in the Portal-to-Portal Act of 1947. 29 U.S.C. § 626(e). For purposes of the case at bar, the Portal-to-Portal Act provides a three year statute of limitations in cases of "willful" violations, and a two year statute of limitations for all other violations. 29 U.S.C. § 255(a). Neither the ADEA nor the Portal-to-Portal Act elaborates upon the meaning of the term "willful."
At the time the parties submitted their briefs on this motion, courts had developed three distinct interpretations of willfulness, none of which is binding on this Court. In Coleman v. Jiffy June Farms, Inc., 458 F.2d 1139 (5th Cir. 1971), cert. denied, 409 U.S. 948, 34 L. Ed. 2d 219, 93 S. Ct. 292 (1972), the Fifth Circuit determined that an employer willfully violated the Fair Labor Standards Act if the employer knew the Act "was in the picture." Id. at 1142.
In Wehr v. Burroughs Corp., 619 F.2d 276 (3d Cir. 1980), overruled by, Transworld Airlines, Inc. v. Thurston, 469 U.S. 111, 105 S. Ct. 613, 83 L. Ed. 2d 523 (1985), the Third Circuit had ruled that for purposes of the liquidated damages provision of the ADEA,
an employer willfully violated the ADEA if the violation "was voluntary and not accidental, mistaken, or inadvertent." Wehr, 619 F.2d at 283.
Finally, in Thurston, supra, the Supreme Court ruled in the context of the ADEA's liquidated damages provision, an employer's violation is willful "if 'the employer either knew or showed reckless disregard for the matter of whether its conduct was prohibited by the ADEA.'" Thurston, 469 U.S. at 126 (quoting Court of Appeals language).
After the parties had filed their briefs on this motion, the Third Circuit, in Brock v. Richland Shoe Co., 799 F.2d 80 (3d Cir. 1986), expressly ruled that for purposes of the Portal-to-Portal Act's statute of limitations provision, an employer's labor law violation is willful "if the employer knew or showed reckless disregard for the matter of whether its conduct was prohibited." Id. at 81.
In Richland Shoe, the Department of Labor brought an action on behalf of seven mechanics against their employer, the Richland Shoe Company, charging the Company with violations of overtime and recordkeeping provisions of the Fair Labor Standards Act ("FLSA"). The same Portal-to-Portal Act statute of limitations provision at issue in this case is expressly applicable to the FLSA. 29 U.S.C. § 255(a). One issue in the case involved whether the employer's violations of the FLSA were willful, thereby triggering the three year statute of limitations. The District Court had applied the Jiffy June "in the picture" test and determined that because an officer of the employer had testified at deposition he was aware the FLSA applied to overtime systems such as the one used by the Richland Shoe Company, the three year statute of limitations applied.
The Third Circuit's reversal was straightforward. It ruled that the Jiffy June definition "is contrary to the plain meaning of the FLSA," and that nothing in the legislative history of the Portal-to-Portal Act supported the Jiffy June court's extraordinarily broad interpretation of willfulness. Id. at 82-3. Indeed, the Third Circuit pointed out that "the Jiffy June standard would frustrate legislative intent: because the standard is so lax that virtually any employer could be found to have acted willfully, the two-tiered scheme of liability that Congress evidently intended to implement would be eviscerated." Id. at 83.
Without considering the Wehr definition of a willful violation as one that is "voluntary and not accidental, mistaken or inadvertent," Wehr, 619 F.2d at 283, the Third Circuit embraced as "persuasive precedent" the "knew or showed reckless disregard" standard adopted by the Supreme Court in Thurston. Richland Shoe, 799 F.2d at 83. The Thurston opinion had expressly noted it did not address the question of willfulness in the statute of limitations context.
Nonetheless, the Third Circuit in Richland Shoe found no basis for cloaking willful with different meanings in the liquidated damages and statute of limitations contexts.
Several courts have attempted to distinguish Thurston, as a case involving liquidated damages, and hence clearly punitive measures enacted by Congress, from cases involving "non-punitive statute of limitations" extensions. See Donovan v. Bel-Loc Diner, Inc., 780 F.2d 1113, 1117 (4th Cir. 1985); Secretary of Labor v. Daylight Dairy Products, Inc., 779 F.2d 784, 789 (1st Cir. 1985). The Third Circuit expressly refuted these cases and their reasoning:
We disagree with the First Circuit [in Daylight Dairy Products ] because increasing an employer's liability based on his willfulness is essentially punitive . . . . Thus, the extension of liability is clearly based on Congress' perception that willful violations are more culpable than negligent ones. The extension is therefore a punitive measure, and no different in this regard from the double damages provision considered in Thurston.