No. 12326
I N T E SUPREME COURT O THE STATE O M N A A
H F F OTN
ROBERT ELMER GLICK, e t a l . ,
P l a i n t i f f s and Respondents,
THE STATE O MONTANA, ACTING BY AND
F
THROUGH THE M N A A DEPARTMENT O
OTN F
INSTITUTIONS,
Defendant and A p p e l l a n t .
Appeal from: D i s t r i c t Court of t h e F i f t h J u d i c i a l D i s t r i c t ,
Honorable John B. McClernan, Judge p r e s i d i n g .
Counsel of Record:
For Appellant :
Hon. Robert L. Woodahl, Attorney General, Helena,
Montana.
Lawrence D . Huss and William N. Jensen, A s s i s t a n t
Attorney Generals argued, Helena, Montana.
For Respondents:
C o r e t t e , Smith and Dean, B u t t e , Montana.
Kendrick Smith argued, B u t t e , Montana.
Submitted: February 26, 1973
Decided: APR 9 - 1973
Filed: APR 3 - 4973
M r , J u s t i c e John Conway Harrison delivered the Opinion of t h e
Court.
This i s an appeal from a judgment entered f o r p l a i n t i f f s
i n the d i s t r i c t court of t h e f i f t h j u d i c i a l d i s t r i c t , Madison County,
and a g a i n s t defendant S t a t e of Montana, The judgment was i n t h e
amount of $489,289.36.
P l a i n t i f f s a r e twenty-six employees of the Montana Children's
Center. They f i l e d a complaint on June 25, 1969, seeking t o recover
wages and overtime a l l e g e d l y due t o them - under the Federal F a i r
Labor Standards Act f o r a time period between February 1, 1967 t o
January 31, 1969. The complaint consisted of twenty-six counts,
one f o r each p l a i n t i f f . A amended complaint was f i l e d s t a t i n g
n
causes of a c t i o n under both s t a t e and f e d e r a l law; l a t e r t h e f i r s t
cause of a c t i o n under s t a t e law was withdrawn.
The matter was argued before two d i s t r i c t judges r e s u l t i n g
i n the granting of a limited summary judgment by Judge Frank Davis.
Judge Davis found p l a i n t i f f s were e n t i t l e d t o the b e n e f i t s and
protection of the F a i r Labor Standards Act, That decision was
appealed t o t h i s Court which sustained the t r i a l c o u r t ' s decision
on l i a b i l i t y and returned the cause t o the d i s t r i c t court f o r de-
termination of the amount due each p l a i n t i f f . Glick v. S t a t e of
Montana, 157 Mont. 204, 485 P.2d 42.
Thereafter, t h e d i s t r i c t court s i t t i n g without a jury on
January 3 and 4, 1972, heard the testimony presented and took t h e
matter under advisement. On February 7, 1972, the c o u r t issued
i t s findings of f a c t and conclusions of law.
Thereupon, defendant S t a t e f i l e d consolidated motions t o
amend t h e judgment and f o r a new t r i a l . Upon d e n i a l of i t s motions,
i t now appeals.
Four i s s u e s a r e presented f o r review:
1. Did the court e r r i n i t s findings a s t o t h e number of
hours worked by each p l a i n t i f f t o include an average of e i g h t hours
overtime ?
Did t h e c o u r t err computing t h e "regular rate
pay" under t h e F a i r Labor Standards Act?
3, Did t h e c o u r t err i n f i n d i n g l i q u i d a t e d damages which
i n e f f e c t doubled t h e award?
4. Did t h e c o u r t err i n awarding a t t o r n e y f e e s i n t h e
amount of $140,000?
To properly consider t h e f i r s t i s s u e i t i s necessary t o
consider t h e o r i g i n a l employment agreement. That agreement v a r i e s
between male and females only i n s o f a r a s some of t h e male p l a i n -
t i f f s d i d s h i f t s a s n i g h t watchmen a s p a r t of t h e i r d u t i e s , and
those a d d i t i o n a l hours must be compensated f o r , Typical of those
who worked a t t h e Children's Center a r e p l a i n t i f f s Glick. M r .
Glick t e s t i f i e d t h a t he sought employment f o r himself and h i s wife
i n 1964. H e was interviewed by M r . Finch of t h e Children's Center,
Glick i e s t i f i e d a s t o t h e periods of employment on t h e b a s i s of a
twenty-four hour day, and t h a t "we was allowed one p a r t of one day,
w e ' l l say, from I t h i n k i t run from 7 o ' c l o c k i n t h e morning u n t i l
we
9 o'clock a t n i g h t i n one weeklwere allowed t h a t o f f , and t h e next
week we w e r e allowed from 7 o'clock i n t h e morning u n t i l a l l t h a t
day and a l l t h a t n i g h t u n t i l 7 o'clock t h e next n i g h t off." Later
during t h e period i n question, from 1967 t o 1969, a s houseparents
t h e Glicks g o t Monday and Sunday o f f .
M r . Balkovatz, superintendent of t h e Children's Center,
t e s t i f i e d a s t o t h e work hours and conditions:
"* * * I was n o t d i r e c t l y involved i n t h e i n t e r -
viewing of each and every one of t h e i n d i v i d u a l s ,
b u t I i n s t r u c t e d m s t a f f upon interviewing t h e s e
y
people t h a t they were t o i n s t r u c t them s p e c i f i c a l l y
t h a t they would have t o l i v e i n , they would have two
days o f f a week, t h a t they would be r e q u i r e d t o l i v e
i n f o r 24 hours, and a l s o they would be i n s t r u c t e d t o o
t h a t they would have a two-hour rest period during
t h e school hours o r during t h e 180 school days; and
w e a l s o t o l d them t h a t i n t h e summer i n t h e event
w e were a b l e t o provide a d d i t i o n a l s t a f f i n g t o augment
our program w e would remove t h e c h i l d r e n from t h e i r
c o t t a g e and t h i s would give them a d d i t i o n a l f r e e t i m e , "
H e a l s o t e s t i f i e d t h a t i n h i s opinion each employee averaged about
two hours o f f a week over and above s l e e p time and t h e two normal
hours o f f each day.
Some of the p l a i n t i f f s had been employed over twenty years,
while o t h e r s began t h e i r employment i n t h e 1950's and 1960's.
A l l had s i m i l a r working conditions, a s s e t f o r t h above, and none
of them had kept records. The S t a t e likewise had no provision
p r i o r t o February 1, 1969, t o record the a c t u a l hours worked, a s
the employment agreement was f o r a twenty-four hour day.
A t t h e completion of the S t a t e ' s case, counsel f o r both
p l a i n t i f f s and defendant entered i n t o t h e following s t i p u l a t i o n
offered by p l a i n t i f f s ' attorney a s t o those p l a i n t i f f s not t e s t i -
f ying .
"* * * we would now ask counsel f o r the S t a t e t o
s t i p u l a t e t h a t i f t h e other P l a i n t i f f s were c a l l e d ,
they would t e s t i f y i n almost the same way a s Mrs.
Moore, t h a t they had 8 hours of e f f e c t i v e s l e e p and
during t h e daytime hours had one hour of f r e e time
a v a i l a b l e only during school days, and t h a t i s the
only e f f e c t i v e time off t h a t they would t e s t i f y they
had during these periods * * *,"
The t r i a l court found p l a i n t i f f s worked an average of
s i x t e e n hours per day, and night watchmen worked s i x t e e n and two-
t e n t h s hours per day, on a f i v e day week. The testimony given by
Stewart Moore, Margaret Moore, Harry Helton, and the Roslings,
reveals t h e t r i a l court erred i n s e t t i n g the t o t a l work week a s
eighty hours per week, plus ane hour e x t r a f o r those who performed
, night watchman duty, The sum t o t a l of t h e evidence shows work
weeks running from s i x t y - f i v e t o seventy-five hours per week, which
would average c l o s e r t o seventy hours per week. Due t o t h i s obvious
e r r o r i n t h e record, the case must be returned t o the d i s t r i c t court
f o r recomputation.
W note t h a t on recomputation, t h e record i n d i c a t e s as t o
e
night watchman time the p l a i n t i f f s did n o t perform these d u t i e s
far the l a s t s i x months of t h e d i ~ p u t e d ~ p e r i o d ,
~ e f e n d a n t ' ssecond i s s u e r e l a t e s t o the t r i a l c o u r t ' s method
of determining the regular r a t e of pay under the provision of the
Federal F a i r Labor Standards Act, The i s s u e involves a novel question
of the r e l a t i o n s h i p between the F a i r Labor Standards Act and
~ o n t a n a ' sc o n s t i t u t i o n a l provision f o r an e i g h t hour day, and
s t a t u t o r y provision f o r an e i g h t hour per day work day,
The formula adopted by the t r i a l court was:
Monthly wage x 1 2 month year i 52 weeks = Weekly wage.
Weekly wage 3 40 hrs/wk = Regular r a t e of pay.
Defendant S t a t e argues t h e court e r r e d i n using an a r t i f i -
c i a l base of f o r t y hours a s a d i v i s o r i n determining the r e g u l a r
r a t e of pay. Further t h a t F a i r Labor StandardsAct cases must be
computed i n accord with the decisions of the various f e d e r a l
d i s t r i c t c o u r t s , c i r c u i t c o u r t s of appeal, and the United S t a t e s
Supreme Court, and these court decisions have adopted, i n an
unbroken s e r i e s of cases, the following formula t o e s t a b l i s h t h e
r e g u l a r r a t e of pay:
Monthly wage x 1 2 moIyr 52 weeks/yr = Weekly wage.
Weekly wage ; Actual no h r s workedlwk = Regular r a t e of pay.
W note both formulas a r e the same i n determining t h e
e
weekly wage, but t h a t i n determining the regular hourly r a t e , by
using t h e a c t u a l number of hours worked,the regular r a t e of pay
decreases a s t h e number of hours worked increases.
Defendant c i t e s and r e l i e s upon leading United S t a t e s
Supreme Court cases f o r s e t t i n g f o r t h t h e c r i t e r i a f o r t h e above
formula. Overnight Motor Transport Co. v. Missel, 316 U.S. 572,
62 S e c t . 1216, 86 L ed 1682; Walling v. Helmerich & Payne, Inc.,
323 U.S. 37, 65 S.Ct. 11, 89 L ed 29; Bay Ridge Operating Co, v,
Aaron, 334 U.S. 446, 68 S,Ct. 1186, 92 L ed 1502,
However, a s noted by p l a i n t i f f s , t h e above c i t a t i o n s do
not consider the question considered here by the d i s t r i c t c o u r t
-- a s t a t e with an e i g h t hour c o n s t i t u t i o n a l provision plus a
s t a t u t o r y provision so providing. P l a i n t i f f s argue the Federal
F a i r Labor Standards Act provides a minimum base and t h a t s t a t e s
can give g r e a t e r b e n e f i t s t o the workers of t h e i r s t a t e .
I n support of t h e i r p o s i t i o n p l a i n t i f f s 1 argue t h a t the
c o u r t ' s finding No. 4, r e l y i n g on Montana's Constitution and
s t a t u t e i s controlling. The d i s t r i c t c o u r t ' s finding No. 4 reads:
"4. Qn t h e i s s u e of the hourly wage r a t e , t h e
Court f i n d s and determines t h a t by reason of t h e
provisions of the Constitution of Montana (Mont,
Const. ART, X V I I I , Sec.4) and by reason of t h e
Montana S t a t u t e , R.C.M. 1947, Sec. 41-1121, a period
of e i g h t hours a day c o n s t i t u t e s a day's work i n a l l
* * *. x
employments and p a r t i c u l a r 1 i n a l l employments by
any s t a t e government
A r t i c l e XVIII, Sec. 4, of t h e Montana Constitution,
reads :
"A period of e i g h t hours s h a l l c o n s t i t u t e a daqs
work i n a l l * ** employments,except farming and
stock r a i s i n g . 'I
Section 41-1121, R,C.M. 1947, provides:
"A period of e i g h t hours s h a l l c o n s t i t u t e a day's
work i n a l l works o r undertakings c a r r i e d on o r
aided by any *** s t a t e government. 11
P l a i n t i f f s c i t e and r e l y on a recent case from Nw Jersey,
e
S t a t e v. Comfort Cab, I n c , , 118 N,J.Super, 162, 286 A.2d 742, 748,
The f a c t s t h e r e concern t h e F a i r Labor Standards Act a s applied
t o cab d r i v e r s , but much of what was considered t h e r e i s applicable
here i n our i n t e r p r e t a t i o n of what i s "maximum work week" and
"overtime rates1' where t h e r e i s a s t a t e law c o n t r o l l i n g . There
t h e court held:
"The f e d e r a l a c t , 29 U,S.C,A. 5 218(a), mandates
compliance with a s t a t e maximum workweek requirement
lower than t h a t s e t by t h e f e d e r a l a c t , Though 'work-
week' i s n o t defined i n the f e d e r a l a c t , i t i s c l e a r l y
t h e i n t e n t of t h e Congress t h a t a lower s t a t e maximum
hour regulation, c r e a t i n g an overtime arrangement mare
favorable t o the employee than t h a t contained i n 5 207
of t h e f e d e r a l a c t , should p r e v a i l , Such an i n t e r -
p r e t a t i o n i s d i c t a t e d by the p l a i n meaning of the
s t a t u t o r y language. 'Haximum workweek' does not i n
f a c t l i m i t t h e number of hours an employee may work.
Missel v , Overnight Motor Transp,Co,, 126 F.2d 98, 104
(4 C i r , 1942), a f f ' d 316 U,S. 572, 62 S,Ct, 1216, 86
LoEd. 1682, rehoden. 317 U.S. 706, 63 S e c t . 76, 87 L,
Ed. 563. It must r e f e r t o t h a t number of excess hours
worked f o r which an overtime r a t e must be paid, This
conclusion i s f u r t h e r evidenced by the u t i l i z s t t o n .DT
t h e term 'workweek' i n 29 U,S.C,A, 5 207, where i t i s
used i n reference t o the number of hours worked i n
excess of which the overtime r a t e must be paid. See,
e.g., 29 U.S.C.A. 5 207(a)(2)(A). The term 'maximum
workweek' i n 29 U.S.C.A. 8 218 (a) i s thus synonymous
with maximum hour/overtime. Accordingly, t h e require-
ment of 29 U.S.C.A. $218(a) t h a t a lower s t a t e maximum
workweek be enfarced mandates the enforcement of a
s t a t e maximum hours/overtime provision more favorable
t o the employee than t h a t set by t h e f e d e r a l a c t . Since,
a s indicated, t h i s S t a t e ' s maximum hour/overtime provi-
sion (N,J,S,A. 34:ll-56a4) does so favor employees, t h a t
statute is applicable to defendant's non-
driver employees for the period February 1,
1967 to December 25, 1968, and the court has
jurisdiction over violations thereof,"
Here, as in New Jersey, we have constitutional and
statutory authority on the eight hour day that cannot be disregarded,
While we give no credence to plaintiffs' argument that as a result
of the bringing of this action the State began to computerize its
payroll and the children's Center became the first institution to
be so handled. However, commencing February 1, 1969, when the
computer payroll went into effect, it is not denied that each
employee was paid on a basis of a forty hour workweek and for
time and a half on hours worked in excess of forty, We find this
formula is proper in computing the overtime compiled during the
two year period from February 1, 1967 to January 31, 1969.
Defendant's third issue is directed to the trial court's
granting liquidated damages against defendant. The trial court's
finding of fact No. 6 reads:
" . On the issue of liquidated damages, the Court
6
finds and also concludes that under the Fair Labor
Standards Act, when there has been a determination
of the amount of total wages due, less wages received,
then the amount of net wages due should be inserted
in the form of the Exhibit attached hereto and marked
Exhibit "Bt'and then and when that has been done, a
like and equal amount must be inserted in said form
as liquidated damage in line 2 near the bottom of
said Exhibit "B", The Court finds and determines
that liquidated damages are required and are not a
matter of discretion because the State of Montana has
not shown any good faith in failing to pay these Plain-
tiffs for their overtime work. On the contrary, the
Court finds that the State of Montana chose to ignore
and did ignore the statement or advice given by M r .
Donald Drew, Field Office Supervisor, United States
Department of Labor, Wage and Hour and Public Contracts
Division of Salt Lake City, Utah, dated March 7, 1967,
which specifically advised that the 'Act would apply
to all employeest of Montana children's Center. The
ignoringanddisregarding of this advice and the failure
by the State and the Department of Institutions to do
anything further until February 1, 1969, is an indica-
tion of positive lack of good faith and shows an eva-
siveness which in its effect, constitutes bad faith in
not paying these Plaintiffs at the Childrens' Center
for their overtime work, Additionally, the Court finds
that payments made by the Defendant on an eight-hour
day and 40-hour week to employees at Pine Hills School
and Mountain View School, would also indicate a positive
lack of good faith and evasiveness and indeed bad faith
in not paying these Plaintiffs at the Childrens' Center
for their overtime work."
Historically the Fair Labor Standards Act had no appli-
cation to a state children's home. In 1966 Congress amended the
Fair Labor Standards Act (29 U.S.C. 5 203(s) ( ) to include the
4)
operation of an elementary or secondary school whether or not
operated for profit. The amendment became effective February 1,
1967. The record here indicates that at about that time Mr. Gooch,
Personnel Director of the Department of Institutions, began making
inquiries of the federal wage and hour office, located in Salt
Lake City, Utah, to ascertain whether the personnel at the Montana
children's Center came under the Fair Labor Standards Act. Several
telephone calls were made to the federal office but the question
raised was not resolved nor did Mr. Gooch get a definite answer.
He testified:
"Q. As a result of your contact with the Federal Wage
and Hour officials, did you receive a definite answer
as to whether or not the Montana Children's Center was
covered by the Fair Labor Standards Act? A. No, I
did not.
"Q. Did a question arise subsequent to this conver-
sation concerning the application of the Fair Labor
Standards Act to the Montana Children's Center? A,
Yes.
"Q. Approximately when did the question arise to the
best of your recollection and memory? A. It was a
continual question from the time that the Fair Labor
Standards Act first came to our attention.
"Q. All right, what action subsequent to your initial
contact with the federal officials was taken to re-
solve the question one way or another? A, Several
telephone conversations to Salt Lake City, where the
Fair Labor Standards people are based.
"Q. And was the matter ever finally resolved? A It
.
never was resolved. They could not give me definite
information.
"Q. Were any meetings held, excuse me, did you ever
meet with representatives of the Wage and Hour Division?
A, We had requested meetings but none were held until
December of '68.
"Q. And where was that meeting held? A. It was held
here in Helena, or rather in Helena in the museum building.
"Q. And who attended that meeting? A We invited
.
superintendents as a department to attend the meeting,
the Labor Commissioner's office was in attendance, the
University System was invited, the Budget Office, other
State people who would be concerned with implementation
of the Wage and Hour provision.
"Q. And when was this meeting held again, the date,
the approximate date, at least by month? A. To the
best of my recollection it was in the latter half of
December of 1968.
"Q. Now at this meeting in late December, were
representatives from the Wage and Hour Division of
the Department of Labor in attendance? A Yes, Mr.
.
Donald Drew was in attendance.
"Q. Were any representatives of the over nor's office
in attendance? A. I don't recall.
"Q. What was the result of this meeting? A. I
don't know if I could comment on the result. Well,
I guess I could. The result af the meeting was to
advise us, let me say the meeting was held to advise
us of wage and hour provisions and their application,and
the result of the advisement was that they were in-
structed at that time that definitely the Children's
Center would be a covered agency.
"Q. This was in late December, 1968? A. Yes, sir.
"Q. Was this the first knowledge that you yourself,
and to the best of your recollection the Department of
Institutions had that the Montana Children's Center
was covered by the Fair Labor Standards Act?"
At this point there was considerable discussion as to
whether or not this was the first knowledge, timewise, of this
coverage, but the following testimony was later brought out in
direct examination:
"Q. Generally does the Board of Institutions, through
the Director, require you to handle personnel matters
relating ta State institutions as part of your job as
Personnel Director? A, Yes, they do.
"Q. During the period in question, February 1, '67,
through January 31, '69, were you the representative
of the Board at all proceedings concerning the wage
and hour applications of the Fair Labor Standards Act
to the various State institutions? A. Yes, I was.
"Q. And during any of these meetings when you acted
as a representative of the Board of Institutions prior
to the meeting of December, I 68, were you ever advised
as Personnel Director that the Montana Children's Center
was covered by the provisions of the Fair Labor Standards
Act? A. No, I was never so advised.
"Q. Did you communicate with the Governor's office
subsequent to the meeting held in December, '68, con-
cerning application of the Fair Labor Standards Act?
A. Yes, we did.
"Q. You heard the testimony of Mr. Balkovatz in the
intraduction into evidence of Executive Order 1-69
stating that it has been called to the attention of the
Governor that the employees of the Montana Children's
Center at Twin Bridges were not in compli8nce with
federal wage hour legislation and federal law requires
the i n s t i t u t i o n t o be i n compliance no l a t e r than
February I s t , 1969, a r e you f a m i l i a r with t h a t
Executive Order? A . Yes, I am.
tt
Q. A a r e s u l t of t h a t Executive Order, t o t h e
s
b e s t of your knowledge did the Montana Children's
Center come i n t o compliance with t h e provisions of
the F a i r Labor Standards Act? A. Yes, they did."
Some emphasis i s made by p l a i n t i f f s d i r e c t e d t o the
l e t t e r of M r . Gooch, dated March 3, 1967, several months a f t e r
the Act bcame e f f e c t i v e , t o a M r . Donald Drew, the administrator
of the Act ' in' ' this a r e a , wherein he asked:
"SITUATION The law s p e c i f i e s 'Educational
I n s t i t u t i o n s ' a r e included a s covered agencies.
W have an i n s t i t u t i o n t h a t has the primary ob-
e
j e c t i v e of caring f o r dependent and neglected
c h i l d r e n , however, encompassed within t h i s i n s t i -
t u t i o n ' s program i s education on the elementary
and secondary l e v e l .
"QUESTION: Would t h a t portion of the i n s t i t u t i o n
t h a t i s involved i n the education process be con-
sidered a s being subject t o the a c t ? I f so, would
i t include such p o s i t i o n s t h a t a r e n o t d i r e c t l y
involved i n the teaching process, but supportive
thereof, such as c l e r k s , j a n i t o r s , e t c .
"We w i l l appreciate your consideration of t h i s
request. I t
P l a i n t i f f s ' Exhibltt "7" shows t h a t on March 7, 1967, an answer
was received from M r . Drew, which said:
"If the educational program does c o n s t i t u t e an
elementary and secondary school a s determined
under S t a t e law, t h a t Act would apply t o a l l
employees of t h e u n i t s . Lacking f u l l d e t a i l s on
the program i n question, I cannot render an opinion.
I f you wish t o submit f u r t h e r informationh I w i l l
give the matter a d d i t i o n a l consideration,
The record i n d i c a t e s , and Mr,Gooch t e s t i f i e d , t h a t he
understood the ward "units" t o mean educational u n i t s located a t
t h e Center and t h a t u n t i l Executive Order 1-69, the Act did n o t
apply t o the e n t i r e personnel of the i n s t i t u t i o n , Personnel within
the educational program w e r e put under the Act.
These a r e not f a c t s i n d i c a t i n g a lack of good faith,much
l e s s do they i n d i c a t e a s the t r i a l court found, a "positive lack
of good f a i t h and shows an evasiveness which i n i t s e f f e c t , con-
s t i t u t e s bad f a i t h , "
In our opinion the test for a determination of what
constitutes good faith is found in Snelling v 0.R.
. Service
Garage, Inc., (E,D.Ky. 1970), 311 F.Supp. 842, 846, where the
court stated:
"Left for determination is whether the plaintiffs
are entitled to liquidated damages as provided for
in section 16 of the Act. This is a fact question
and must be decided according to the reasonableness
of the defendant's decision not to pay minimum and
overtime compensation. If the defendant in good faith
reasonably believed the Act did not apply to his em-
ployees then liquidated damages should be refused.
The liquidated damage provision of the Act provides
a mechanism whereby plaintiffs can be compensated
for the withholding of a minimum wage which may have
resulted in intangible damages concomitant with sub-
standard living situations. Theoretically liquidated
damages are compensatory, but whatever label is at-
tached to such an award it cannot be gainsaid that
it is a severe sanction. Prior to the Portal-to-Portal
Act ok 1947, 29 U,S.C, section 260, liquidated damages
were deemed-to be mandatory in all-minimumand over:
time compensation cases. [Cases cited] It became
apparent, however, that such an onerous rule created
wholly unexpected liabilities which threatened em-
ployers with financial ruin and encouraged champertous
suits involving employees who hoped to acquire a wind-
fall. Accordingly Congress enacted the Portal-to-
Portal Act of 1947 which authorized courts not to
award liquidated damages where it appeared the employer
had acted in good faith. Liquidated damages should
only be granted where an oppressive employer, well
knowing it has no defense to the application of the
Fair Labor Standards Act, stubbornly retuses to comply
with it. The facts of this case are not so clear cut
m e defendant could not sincerely believe he was
.
exempt 1t
For cases citing examples of good faith see: Retail Store Emp.
Loc.400 v. Drug Fair-Community Drug Co., 307 F.Supp. 473 (D~C.
1969); Martinez v. Phillips Petroleum Co., 283 F.Supp. 514 (Idaho
1968) ; Crago v. Rockwell Mfg. Co., 301 F.Supp. 743 (Penno 1969) ;
Hodgson v. Daisy Mfg. Co., 317 F.Supp. 538, 554, (Ark. 1970).
In HodgsonI the court speaking on the issue of good faith
said :
"This actian primarily involved an issue of law
which was novel at the time the suit was commenced,
in 1965, and concerning which this court has only
recently been provided with binding precedent. The
Third Circuit Court of Appeals * * * and more recently
the Eighth Circuit Court of Appeals * * * have construed
the word 'equal' as used in the Act, to mean 'substan-
tially equal' as opposed to 'substantially identical.'
This construction of one of the essential elements of
the Act is contrary ta the meaning which might in good
f a i t h be i n f e r r e d by an employer from a f a i r
reading of the l e g i s l a t i v e h i s t o r y of the s t a t u t e
* * *. The f a c t t h a t the law a s i t applied t o t h e
defendant was u n s e t t l e d f o r almost a l l of the f i v e
years t h i s s u i t has been pending i s c l e a r l y a
f a c t o r bearing on the question of good f a i t h , [Citing
c a s e ] Few employers could s a t i s f y a t e s t of good
f a i t h i f required t o c o r r e c t l y a n t i c i p a t e j u d i c i a l
precedent. I I
P l a i n t i f f s ' counsel admits t h i s i s a novel i s s u e of law,
one of f i r s t impression, and t o hold defendant g u i l t y of bad
f a i t h i s a manifest abuse of the t r i a l c o u r t ' s d i s c r e t i o n ,
Defendant's f i n a l i s s u e on appeal d i r e c t s i t s e l f t o t h e
award of attorney fees.
Congress i n 29 U.S,C. Sec. 216(b), provided:
"The court i n such a c t i o n s h a l l , i n addition t o
any judgment awarded t o the p l a i n t i f f or plain-
t i f f s , allow a reasonable a t t o r n e y ' s fee t o be
paid by the defendant, and c o s t s of t h e action. I I
Here, counsel had a contingent f e e contract arrangement with a l l
p l a i n t i f f s t h a t provided, according t o counsel's testimony:
"The Montana schedule adopted by the Bar Association
f o r contingent f e e arrangements i s 25% of a contingent
f e e on t h e settlement; 33 113 a f t e r s u i t i s brought i f
s e t t l e d ; 40% i f t r i e d ; and 50% i f the matter goes t o
the Supreme Court. Nw t h i s has already been t o t h e
o
Supreme Court, and f o r a l l I know i t w i l l go again. W e
do not ask f o r more than 40%, but we do ask f o r t h a t
40%. W ask f o r i t under t h e F a i r Labor Standards Act,
e
which s p e c i f i c a l l y provides f o r the allowance of a t t o r -
ney f e e s i n the d i s c r e t i o n of the Court and those
attorney f e e s t o be paid by the State. A s I s a i d i n
m opening statement t o t h e Court I a not seeking and
y m
do not seek a duplication i n f e e s ; but t o the e x t e n t
t h a t the Court w i l l impose upon the S t a t e of Montana
the obligation t o pay attorneys f e e s , t o t h a t e x t e n t
the f e e s we w i l l charge d i r e c t l y t o each P l a i n t i f f w i l l
be correspondingly reduced."
The t r i a l court went t h e e n t i r e distance with counsel's r e q u e s t ;
i t awarded 40% f o r attorney f e e s , amounting t o approximately
In view of our remand f o r modification of t h e amount of
the award t o p l a i n t i f f s h e r e i n , the award of attorney f e e s must
likewise be s e t a s i d e and remanded f o r modification. I n t h i s
connection, we note t h e F a i r Labor Standards Act provides f o r an
award of "a reasonable a t t o r n e y ' s f e e t o be paid by defendant".
I n awarding a t t o r n e y f e e s t h e d i s t r i c t c o u r t i s not bound t o
award a t t o r n e y f e e s on t h e b a s i s of t h e provisions of t h e con-
t i n g e n t f e e agreement between p l a i n t i f f s and t h e i r a t t o r n e y s ,
but i s e n t i t l e d t o consider t h i s a s one of t h e f a c t o r s t o be
It
considered i n determining a reasonable a t t o r n e y ' s fee" under
t h e F a i r Labor Standards Act. W remand t o t h e d i s t r i c t c o u r t
e
f o r t h a t determination accordingly.
The cause i s remanded t o t h e t r i a l c o u r t f o r a c t i o n n o t
i n c o n s i s t e n t with t h i s o p i n l k
/ \ Associate b u s t i c e
j
/ /Chief Justice
.................................
Associate J u s t i c e s .
..... C . . . * . . . C
M r . J u s t i c e Wesley C a s t l e s concurring i n p a r t and d i s s e n t i n g
i n part :
I concur i n p a r t of t h e majority opinion b u t d i s s e n t t o
t h e Court's determination of I s s u e No. 2 , t h a t i s a s t o t h e r a t e
of pay, There i s nothing "novel" about t h e question. The p l a i n -
t i f f s ' r a . t e of pay was t h e weekly wage divided by t h e hours
worked. That was t h e agreement; t h e only change came about by
operation of law. I would r e v e r s e t h e d i s t r i c t c o u r t on t h a t
i t e m too.
- -(kg.L. I r.
/ /'-
- - 2; ,
Associate justice.