Lupien v. City of Marlborough

United States Court of Appeals
For the First Circuit

No. 04-1188

STEPHAN W. LUPIEN; MICHAEL J. AMOROS; EDWIN J. BADUSKI; ROBERT
BONINA; GREGORY P. BREWSTER; JOHN BROGAN; THOMAS BRYANT;
ANTHONY EVANGELOUS; DAVID J. GARCEAU; RICHARD GAUDETTE;
DAVID A. GIORGI; MICHAEL J. GOUGH; TIMOTHY HARPIN; PATRICK
HOGAN; ROBERT INSANI; DEREK L. JOHNSON; JOANNE JUSSEAUME;
ROBERT J. JUSSEAUME; CHARLES LEAHY; RICHARD MAHONEY;
FREDERICK MALLOY, JR.; JOHN A. MANNING; PAUL F. MCCARTHY;
RICHARD T. MCDEVITT; KENNETH V. MCKENZIE, JR.; JAMES N.
METIVIER; RONALD NEY; RICHARD OLDROYD; JOSEPH PACIFIC; JAMES
C. POLYMEROS; JOSEPH A. RIELLY; DAVID R. ROBERTS; MERCEDES
ROMAN; MICHAEL J. RYAN; MARTHA A. SHEA; BRIAN R. THEIS;
LOUIS J. TURIEO, JR.; ALAN VORCE; BORDEN WICKS; CATHERINE
WINCHESTER; JAMES P. ZICHELLA; PETER E. BRADLEY; SCOTT
DECIERO; JOHN P. GRAHAM, JR.; JAMES P. GOUGH; MATTHEW
HAPPAPES; BRIAN A. LANGEZIER; ANDREW LAROSE; CHRISTOPHER S.
LEDUC; FRANK N. MASCIARELLI, III; KEITH MOSO; ROBERT W.
SIBILIO, JR.,

Plaintiffs, Appellants,

v.

CITY OF MARLBOROUGH; MARLBOROUGH POLICE DEPARTMENT,

Defendants, Appellees.

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF MASSACHUSETTS

[Hon. William G. Young, U.S. District Judge]

Before

Lynch, Circuit Judge,
Stahl, Senior Circuit Judge,
Lipez, Circuit Judge.
 Jack J. Canzoneri, with whom McDonald & Associates, Michael T.
Leibig and Leibig, Zwerdling, L.L.C. were on brief, for appellants.
Mark M. Whitney, with whom Keith H. McCown and Morgan, Brown
& Joy, LLP were on brief, for appellees.

October 28, 2004
 LYNCH, Circuit Judge. Police officers currently or

formerly employed by the Marlborough Police Department

("plaintiffs") filed suit on April 20, 2001, against the City of

Marlborough, Massachusetts, and its Police Department (collectively

referred to as the "City"), alleging that the City had operated an

unlawful "comp time" (compensatory time, or paid time off) system

that violated Section 207(o) of the Fair Labor Standards Act

("FLSA"), 29 U.S.C. § 201 et seq. This system had been agreed to

in the collective bargaining agreement ("CBA") between the police

union and the Department and the relevant terms had been in effect

since 1992.

Before trial, the City conceded that the comp time plan

was in violation of the FLSA and admitted liability. It also

argued that any remedy should take into account the fact that

almost all of the comp time had been given to the officers in the

form of paid time off rather than cash payment. The plaintiffs'

theory was that compensatory damages should equal the dollar value

of the total amount of FLSA overtime accrued in the relevant

liability period, regardless of whether any such overtime was paid

out in the form of comp time. The district court rejected the

plaintiffs' theory, holding that, for remedial purposes, the

plaintiffs' compensatory damages under the FLSA were limited to the

dollar value of "banked" or unused comp time then existing

(approximately $13,535.41 as of November 21, 2002). The court left

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for trial the issue of whether the plaintiffs were entitled to

liquidated damages under the FLSA.

The parties then stipulated that liquidated damages would

be one-half of the amount of compensatory damages. The parties

further stipulated that if the legal principle underlying the

court's compensatory damages ruling were not upheld on appeal, the

issue of liquidated damages may be re-litigated. The district

court entered judgment incorporating the parties' stipulations on

January 13, 2004, and the plaintiffs timely appealed. We affirm.

I.

The comp time system at issue in this case was

established by the CBA between the City of Marlborough and the

union representing the Marlborough police officers, the

International Brotherhood of Police Officers, Local 527. The CBA

provides that

(1) Police officers may accept compensatory
time off in lieu of monetary compensation for
overtime service. Compensatory time shall be
earned at the rate of 1 1/2 hours
Compensatory time for every overtime hour
worked. Compensatory time off may not be
taken without prior written approval of the
Chief or his designee/ [sic] Such approval
shall not be arbitrarily or capriciously
denied.
(2) The granting and use of Compensatory time
off shall conform to the following
guidelines:
1. It may be granted and used only
in one (1), two (2) or three (3)
hour increments;

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 2. Under any circumstances, its
granting or use shall not cause
overtime;
3. It shall not be granted prior to
the day of use;
4. If granted, it may be revoked,
based on staffing levels;
5. Once granted, it shall, for the
purpose of granting or allowing
the use of Personal or Vacation
Days by other officers, be
considered the same as a Personal
or Vacation Day.

The relevant portion of the CBA remained unchanged for the 1997-

2000 and 2000-2003 contracts.

Despite the CBA, many officers wanted more flexibility in

how the comp time policy was administered. They took the issue to

arbitration, but lost in August of 2000.

They then tried a different tack. On April 20, 2001,

some forty-one current and former patrol officers of the

Marlborough Police Department1 filed a complaint in federal court

against the City for violating the FLSA. Specifically, the

officers alleged that they had accrued comp time in lieu of cash

overtime compensation, that the City had denied the plaintiffs the

opportunity to use the accrued comp time even though such use would

not create an "undue disruption," and that as such, the comp time

agreement was in violation of the requirements of 29 U.S.C. §

207(o). The basic dispute was over whether this comp time scheme

1
Eleven additional consentees were added as plaintiffs in the
Final Judgment of the district court.

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qualified under the exception in the FLSA which permitted public

agency employers to give time off rather than cash payment for

overtime work. The plaintiffs sought declaratory judgment,

compensatory and liquidated damages as provided in 29 U.S.C. §

216(b), and attorney's fees and costs.

After reviewing the matter, on October 28, 2002, the City

filed a Motion for Entry of Judgment in which it admitted liability

under the FLSA.2 In the same motion, the City sought a protective

order from the plaintiffs' discovery requests, arguing that

discovery in light of the City's admission of liability would be

moot. The court accepted the City's admission of liability, stayed

discovery, and set a deadline for briefing on the issue of the

remedy owing the plaintiffs.

The plaintiffs advanced a theory for computing the City's

compensatory damages under the FLSA that essentially disregarded

the value of any comp time which was accrued by an officer for

overtime but which was not actually used until after the workweek

in which such comp time was earned. Section 207(o) of the FLSA

2
At a hearing on November 1, 2002, the City explained that the
restrictions in the CBA on how officers may use the accrued comp
time, and in particular the denial of a request to use comp time
because it would cause overtime, probably violated the "undue
disruption" standard governing comp time schemes under the FLSA.
"[A public] employee . . . who has accrued compensatory time off.
. . and . . . who has requested the use of such compensatory time,
shall be permitted by the employee's employer to use such time
within a reasonable period after making the request if the use of
the compensatory time does not unduly disrupt the operations of the
public agency." 29 U.S.C. § 207(o)(5).

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allows public agencies to use comp time as a substitute for cash

overtime compensation pursuant to a collective bargaining agreement

if certain conditions are met. See 29 U.S.C. § 207(o).

Because the City has conceded that the comp time system

established by the CBA does not qualify under the conditions set by

Section 207(o) of the FLSA, the City's use of comp time in lieu of

cash payment for overtime work violated the FLSA and made the City

liable for the "unpaid overtime compensation." 29 U.S.C. § 216(b).

The statute requires that: "Any employer who violates the

provisions of . . . section 207 of this title shall be liable to

the employee or employees affected in the amount of their unpaid

minimum wages, or their unpaid overtime compensation, as the case

may be, and in an additional equal amount as liquidated damages."

Id.

The plaintiffs argued that the computation of the amount

of "unpaid overtime compensation" depended on answers to only two

questions outlined in the federal regulations: 1) whether the

overtime wages were due based on a week-by-week calculation of FLSA

hours worked, and 2) whether the overtime wages were paid by the

first pay date after the workweek in which the overtime liability

was incurred. See 29 C.F.R. § 778.104 ("The [FLSA] takes a single

workweek as its standard and does not permit averaging of hours

over 2 or more weeks."); § 778.106 ("The general rule is that

overtime compensation earned in a particular workweek must be paid

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on the regular pay day for the period in which such workweek

ends."). Applying these two factors to this case, the plaintiffs

argued that "back wages [should] be calculated . . . using a cash

only system and allowing no offset for compensatory time taken

outside the individual seven-day workweek in which the overtime

compensation is due." The plaintiffs also contended that they were

entitled to liquidated damages, see 29 U.S.C. § 216(b), and that

the damages should be computed under the three-year statute of

limitations applicable to willful violations of the FLSA. See 29

U.S.C. § 255(a).

The City vociferously objected to the plaintiffs' theory

of damages. It argued that "[t]he statutory and regulatory scheme

obviously contemplates that the accrual of comp time at a rate of

1 1/2 hours for each hour of overtime worked, and then the

subsequent use of the comp time for paid time off, is the

equivalent of being paid the overtime in the first place." The

City argued that although the comp time scheme in this case was

unlawful, the officers, when they took paid time off, were paid

according to the principle in the statutory scheme. As a result,

the proper measure of compensatory damages under Section 216(b) is

the amount of unused comp time which remained banked by the

plaintiffs (amounting to approximately $13,535.41). The City noted

that following the plaintiffs' theory of damages would give the

plaintiffs a "gigantic windfall."

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 The district court issued its Memorandum And Order on

February 6, 2003. The district court rejected the plaintiffs'

theory of damages, characterizing the plaintiffs' argument as

entailing the result that "individuals should receive payment at

overtime rates for every overtime hour worked in the relevant

liability period in addition to the comp time they have already

received." Such a result, the court held, "derives support neither

from the statute nor from sound public policy." Citing this

court's decision in Roman v. Maietta Constr., Inc., 147 F.3d 71

(1st Cir. 1998), the district court determined that paid comp time

could be deducted from an award of back pay under the FLSA, and

that the plaintiffs' compensatory damages should be limited to the

value of the unpaid comp time then existing. Given that the

measure of compensatory damages was limited to banked comp time, it

was immaterial whether the two-year or three-year statute of

limitations would be applicable. The district court then ruled

that the only issue for trial would be whether the City did not act

reasonably and in good faith, entitling the plaintiffs to

liquidated damages. Finally, the district court enjoined the City

from enforcing the comp time provision of the CBA.

On February 13, 2003, the plaintiffs and the City entered

into a stipulation resolving the amount owing as liquidated damages

to approximately one-half of the amount of compensatory damages,

provided that the liquidated damages and the relevant statute of

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limitations issues could be re-opened if the judgment relating to

compensatory damages under the FLSA were to be overturned on

appeal. The district court thereafter entered final judgment on

January 13, 2004, incorporating the court's rulings and the

parties' stipulations. The plaintiffs filed their notice of appeal

to this court on February 4, 2004.

II.

On appeal, the plaintiffs challenge primarily the

district court's rejection of their theory of compensatory damages.

In addition, subject to our disposition of the compensatory damages

issue in their favor, the plaintiffs also seek to challenge the

amount of the liquidated damages and the issue of the relevant

statute of limitations applicable to the case. We review the

district court's application of the law to the facts of a case de

novo. Roman, 147 F.3d at 74.

Compensatory Damages

The plaintiffs assert that the district court erred by

allowing paid comp time to offset the City's liability under the

FLSA, with the result that compensatory damages were limited to the

unpaid, banked comp time. They urge us to hold that the theory of

damages they advanced in the district court is the correct measure

of compensatory damages for this case. We disagree.

Roman held that, in calculating compensatory damages

under Section 216(b), courts can deduct paid comp time from the

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total amount of overtime pay the employer would have owed the

employee. 147 F.3d at 76-77. In Roman, the plaintiff employee and

the defendant employer agreed to a comp time arrangement under

which in any given week, any hours in excess of forty worked by the

employee would be "held" as "compensatory time" and be paid out at

the regular rate or taken by the employee as paid time off in

subsequent weeks when the employee worked fewer than forty hours.

Id. at 74. This practice was held to violate the FLSA. As a

result, the plaintiff was entitled to overtime back pay for the

unpaid comp time hours. Id. at 76. Because "'[p]laintiffs are

entitled to be made whole, not to a windfall at the [defendant's]

expense,'" Roman held that the defendant employer was entitled to

an offset credit for the regular wages he paid out to the employee

in subsequent weeks for those held hours. Id. at 76-77 (quoting

D'Camera v. District of Columbia, 722 F. Supp. 799, 803-04 (D.D.C.

1989)) (alterations in original).

The plaintiffs contend that Roman is not applicable to

the case at hand, and to the extent that it is, it has been, or

should be, overruled. The plaintiffs base this argument on the two

federal regulations discussed above, 29 C.F.R. §§ 778.104 and

778.106, and language in our decision in O'Brien v. Town of Agawam,

350 F.3d 279 (1st Cir. 2003).

In O'Brien, police officers challenged, among other

things, the roll-call pay scheme in their collective bargaining

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agreement with the town as violating the FLSA, arguing that the

town was obligated to include in the workweek the ten minutes

necessary to attend roll call in addition to each eight-hour shift.

Id. at 282, 284. Rather than including the ten-minute period in

each shift, which would often push the officers' weekly hours over

forty and obligate the town to pay FLSA overtime, the compensation

scheme allotted an annual lump-sum payment for time spent in roll-

call. Id. at 297. O'Brien found that the rule in 29 C.F.R. §

778.106 that overtime payments must be made by the first pay day

after the amount can be determined provided a "clear and useful

test for when wages become 'unpaid' under the [FLSA]." Id. at 298.

O'Brien held that the town must include the time required for roll-

call in the officers' weekly hours worked and that it must

compensate the officers accordingly. Id. at 297-98.

Because we had no occasion to refer to 29 C.F.R. §§

778.104 and 778.106 in Roman but discussed them as persuasive

authority in O'Brien,3 the plaintiffs argue that O'Brien has

overruled or modified Roman. O'Brien, the plaintiffs assert,

stands for the proposition that computation of the amount owed to

the plaintiffs for unpaid overtime compensation under the FLSA

should be done week-by-week without offset for "comp time taken

3
Because 29 C.F.R. §§ 778.104 and 778.106 are interpretative
bulletins, they do not command formal deference from this court.
See Batterton v. Francis, 432 U.S. 416, 425 n.9 (1977); O'Brien,
350 F.3d at 298.

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outside the seven-day workweek in which [the City's] unpaid

overtime compensation liability was incurred."

This is not a correct understanding of the law. The

plaintiffs' argument confuses the issue of liability under the FLSA

with the issue of remedy: whether offset to that liability would be

allowed for comp time already given. The two questions of

liability and remedy are analytically distinct. Recognizing this

distinction, O'Brien addressed only how liability under the FLSA

for unpaid wages should be determined. Under O'Brien, "unpaid

overtime compensation" in Section 216(b) means that liability for

unpaid overtime is incurred by an employer when overtime is not

paid by the first payday after the amount of overtime pay can be

determined. See O'Brien, 350 F.3d at 298; see also 29 U.S.C.

216(b) ("[An employer violating Section 207] shall be liable . . .

in the amount of . . . unpaid overtime compensation . . . .")

(emphasis added). But, in O'Brien, we specifically declined to

reach the issue of the extent to which the town employer may offset

contractual overtime payments against its FLSA overtime liability,

remanding those determinations to the district court. O'Brien, 350

F.3d at 298.

By contrast, Roman dealt with the second issue: whether,

as part of the remedy, an offset to FLSA liability is permissible

for paid time off. It squarely held that liability for unpaid

wages under the FLSA may be offset by the paid time off (or a

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partial offset if the rate of pay is not at overtime rates).

Roman, 147 F.3d at 77; see also D'Camera, 722 F. Supp. at 803

(holding that compensatory time used by plaintiff police officers

can be deducted from award of back pay). Nothing in O'Brien is to

the contrary. Further, we are unaware of any authority holding

that offsetting liability under the FLSA is impermissible in these

circumstances, and the plaintiffs have not brought any to our

attention.

It is true that Roman suggested that "unpaid overtime

compensation" in Section 216(b) supported the conclusion that

"[s]ince [the plaintiff employee] received partial payment for his

overtime hours, [the defendant employer] remains responsible only

for the unpaid portion." Roman, 147 F.3d at 77 (second emphasis

added). In so far as this language may be read to suggest that

"unpaid overtime compensation" in Section 216(b) refers to the

amount of compensatory damages or liquidated damages due to the

plaintiff rather than liability under the FLSA, it could be in

tension with our holding in O'Brien. However, since liability

under the FLSA is not the issue in Roman, the quoted passage from

Roman did not purport to interpret Section 216(b). Roman did not

use "unpaid" as a term of art under the FLSA, but in a colloquial

sense. The passage, in any event, is dicta not necessary to the

holding in Roman. Applying the O'Brien understanding of "unpaid

overtime compensation" to determine liability under the FLSA to the

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Roman case does not affect Roman's conclusion that an offset

against FLSA liability for paid comp time is appropriate to compute

compensatory damages.

Here, the district court relied on Roman and correctly

held that in computing the plaintiffs' compensatory damages, the

City's liability under the FLSA could be offset by the used comp

time hours. On this record, the sum of $13,535.41 in unused,

banked comp time is not contested by the plaintiffs, and it is the

correct measure for compensatory damages.4 In so far as the City's

liability is limited to the hours for which it paid the plaintiffs

in comp time rather than cash, the district court's use of the

banked comp time is simply a proxy for, and equivalent to, the two-

step formal analysis for calculating compensatory damages: The

City's liability (all hours for which comp time credits were

granted but not used within the same week during the relevant

damages period) minus offset for comp time paid out equals

compensatory damages.

4
The plaintiffs have conceded, in their brief, that "[t]he
City's admission of liability means that it has incurred liability
for unpaid overtime compensation under 29 U.S.C. § 216(b) to the
extent that it provided Plaintiffs with comp time credits rather
than weekly cash overtime payment . . . ." (emphasis added). We
therefore assume, for the purposes of the appeal, that only those
hours that resulted in comp time credits for the plaintiffs may
count towards the City's liability under the FLSA. The plaintiffs
allude to other possible arguments that may increase the City's
liability beyond those hours, but any such arguments are not
briefed, and they are waived.

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 Roman in part rested on equitable principles and we

comment on the equities here. This is not a case in which the

employer forced employees to work overtime for free. Although

there may have been some detriment caused by the rules and

practices governing when officers could use the comp time, the

record is silent on whether there were any patterns to how long the

plaintiffs had to wait before being allowed to use their banked

comp time. But it is uncontested that the plaintiffs received

banked comp time for their overtime hours, which they could choose

to use later, subject to the restrictions in the CBA. To be sure,

the restrictions on when comp time could be used made the comp time

plan unlawful under the FLSA, and the plaintiffs suffered some lack

of flexibility and delay in payment of their overtime wages.

However, that is the sort of harm that liquidated damages under the

FLSA are meant to redress. See Brooklyn Sav. Bank v. O'Neil, 324

U.S. 697, 715-16 (1945) (declaring that an FLSA plaintiff cannot

recover both prejudgment interest and liquidated damages because

liquidated damages serve as "compensation for delay in payment of

sums due under the Act"); Powell v. Grinnell Corp., 915 F.2d 34, 39

n.6, 41 (1st Cir. 1990) (noting that the Age Discrimination in

Employment Act incorporated the FLSA's remedies and that liquidated

damages are meant to compensate for delay in payment). Adopting

the plaintiffs' scheme for computing compensatory damages and

liquidated damages would mean that the plaintiffs would be paid

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three times for the same hours: once in the form of paid time off,

once as compensatory damages, and once more as liquidated damages.

This would be contrary to the FLSA's aim that "plaintiffs are

entitled to be made whole, not to a windfall at the [City's]

expense." Roman, 147 F.3d at 77 (internal quotation marks and

alterations omitted).

Liquidated Damages and Statute of Limitations

Because we uphold the district court's award of

compensatory damages, the parties' stipulations make it unnecessary

for us to reach the liquidated damages and statute of limitations

issues.

III.

The judgment of the district court is affirmed.

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