Opinion
NO. 08-4703.
May 5, 2010
MEMORANDUM AND ORDER
On March 5, 2010, I issued Findings of Fact and Conclusions of Law, determining that Defendant had violated the Fair Labor Standards Act ("FLSA") and Pennsylvania's Minimum Wage Act ("PMWA") by failing to properly pay Plaintiffs both for credited hours they worked in excess of forty in a workweek ("the credited overtime"), and for time that they spent working and traveling to and from jobsites at the beginning and end of each workday ("the uncompensated morning and evening time"). Counsel agreed to provide additional briefing on the calculation of damages once the court had issued its findings and conclusions. See N.T. 10/13/09 at 8-9. On April 2, 2010, based on my findings and conclusions, counsel stipulated to the damages owing each Plaintiff. Plaintiffs have now filed a motion for an award of prejudgment interest, which Defendant opposes. For the reasons that follow, I find that Plaintiffs are entitled to prejudgment interest on the unpaid wages for which they were not awarded liquidated damages.
The case was heard in October 2009. Following trial and transcription of the proceedings, counsel provided proposed findings of fact and conclusions of law.
Although the parties' figures differed slightly from the court's, I accepted the parties' stipulation.
In my findings and conclusions, I determined that Defendant had failed to properly compensate Plaintiffs for credited overtime, because Defendant paid Plaintiffs straighttime rather than time-and-a-half for the hours worked in excess of forty hours. Thus, Defendant owed Plaintiffs the "half" portion of "time and a half." Because it was impossible to determine from the records provided what wage rate had been paid for the excess hours, I concluded that the weighted average of all hours worked that particular week would be used to determine the regular rate paid to each Plaintiff for that week, and the wages owed would be based on that figure. See 29 U.S.C. § 207(a)(1) (overtime paid "at a rate not less than one and one-half times the regular rate at which [the employee] is employed"). I did not, however, find that Defendant's failure to properly compensate Plaintiffs was willful. As a result, I did not extend the FLSA two-year statute of limitations to three years, but found that the PMWA provided for the third year of damages.
Unlike the burden to establish willfulness, which is on the plaintiff, the defendant must establish good faith to avoid the imposition of liquidated damages under the FLSA. 29 U.S.C. § 260. In my findings and conclusions, I determined that Defendant had failed to meet this burden. Thus, I awarded liquidated damages for the FLSA violation (two-year statute of limitations) arising from Defendant's failure to properly compensate Plaintiffs for the credited overtime hours. With respect to the uncompensated morning and evening time, I found no willful violation and did not award liquidated damages because Defendant had a good faith reason for his failure, namely the uncertainty of the interplay between the FLSA and the Portal-to-Portal Act.
In their motion for prejudgment interest, Plaintiffs concede that they are not entitled to prejudgment interest on the wages that were subject to liquidated damages, see Pls.' Memo. at 3, but request an award of prejudgment interest on the wages that were not. Defendant contends that Plaintiffs are not entitled to prejudgment interest on any of the wages, whether the wages were awarded under the FLSA or the PMWA, because the court already awarded liquidated damages. See Def. Memo. at 3-4. Defendant further argues that the court's denial of FLSA liquidated damages on the uncompensated morning and evening time precludes an award for prejudgment interest on these wages. Because Defendant makes similar arguments in contesting an award of prejudgment interest under both the FLSA and the PMWA, I will address the arguments together.
The Third Circuit has explained that "there is a presumption in favor of awarding prejudgment interest on a back pay award under the FLSA," and if such a request is denied, "the District Court must explain why the usual equities in favor of such interest are not applicable." Pignataro v. Port Auth. of New York and New Jersey, 593 F.3d 265, 273 (3d Cir. 2010). The PMWA can be analogized to the FLSA in this regard, as Pennsylvania law similarly favors the award of interest where a fixed sum of money was improperly withheld. See Friedrich v. U.S. Computer Sys., Inc., No. 90-1615, 1995 WL 412385, at *3 (E.D. Pa. Jul 10, 1995) (although PMWA does not expressly provide for prejudgment interest, reading such a requirement in is consistent with purpose of making employee whole) (citing Nagle Engine Boiler Works v. City of Erie, 38 A.2d 225, 228 (Pa. 1944)). It is within the sound discretion of the district court whether to make such an award. Young v. Lukens Steel Co., 881 F.Supp. 962, 977 (E.D. Pa. 1994) (referring to interest on back pay award for age discrimination) (citing Gelof v. Papineau, 829 F.2d 452 (3d Cir. 1987)).
Similarly, the FLSA does not expressly provide for prejudgment interest, but such a remedy has become part of the compensatory damages awarded under the FLSA. See Brock v. Richardson, 812 F.2d 121, 127 (3d Cir. 1987).
In response to Plaintiffs' motion for prejudgment interest, Defendant first argues that Plaintiffs are not entitled to prejudgment interest because they have already received liquidated damages. It is well-settled in FLSA jurisprudence that a plaintiff cannot recover both liquidated damages and prejudgment interest because both serve the same purpose, namely to compensate employees for losses caused by delayed receipt of wages they are due, See Brooklyn Say. Bank v. O'Neil, 324 U.S. 697, 715 (1945) (recovery of liquidated damages and prejudgment interest is "double compensation for damages arising from delay in the payment of the basic minimum wages"); see also Martin v. Cooper Elec. Supply Co., 940 F.2d 896, 910 (3d Cir. 1991) (describing similar purpose of liquidated damages and prejudgment interest); Starceski v. Westinghouse Elec. Corp., 54 F.3d 1089, 1102 (3d Cir. 1995) (contrasting punitive nature of liquidated damages in ADEA case with non-punitive liquidated damages in FLSA case). Thus, there is no dispute that the court cannot award prejudgment interest on wages for which liquidated damages have been awarded.
Defendant takes the argument a step further and asserts that any award of liquidated damages prohibits any award of prejudgment interest. I disagree. The cases upon which Defendant relies merely stand for the proposition that the court cannot award both liquidated damages and prejudgment interest on the same unpaid wages. See Bowers v. Foto-Wear, Inc., No. 03-1137, 2007 WL 4086339, at *6 (M.D. Pa. Nov. 15, 2007) (declining to award prejudgment interest where court awarded liquidated damages on all unpaid wages); Friedrich, 1995 WL 412385, at *4 (awarding prejudgment interest when liquidated damages were denied);Signora v. Liberty Travel. Inc., 886 A.2d 284, 286-87 (Pa. Super. 2005) (finding award of liquidated damages would be duplicative where prejudgment interest was granted on same award of unpaid wages).
As previously discussed, the purpose of prejudgment interest is to compensate the plaintiff for losses resulting from the delayed payment of wages. See Brooklyn, 324 U.S. at 715; Martin, 940 F.2d at 910. Here, Plaintiff's received an award of liquidated damages under the FLSA for two years of unpaid wages owed for the credited overtime for which they had not been properly compensated. They have not received any compensation for the delayed payment of the third year of credited overtime or any of the uncompensated morning and evening time. The equities favor an award of prejudgment interest for these unpaid wages. See Brock v. Richardson, 812 F.2d 121, 127 (3d Cir. 1987) (explaining the "usual equities favor" award of prejudgment interest in FLSA case).
Defendant also argues that the court's denial of liquidated damages for the uncompensated morning and evening time under the FLSA precludes an award of prejudgment interest. See Def's Memo. at 4. This is incorrect. Although liquidated damages and prejudgment interest both seek to compensate the plaintiff for the delay in receiving his wages in the FLSA context, the denial of liquidated damages does not dictate the denial of prejudgment interest. In fact, in some of the cases cited by Defendant, the court awarded prejudgment interest while denying liquidated damages. See, e.g., Friedrich. In order to avoid liquidated damages, the burden is on the defendant to show that it was acting in good faith and "had reasonable grounds for believing that his act or omission was not a violation of the [FLSA]." 29 U.S.C. § 260, With respect to prejudgment interest, the Third Circuit has said that prejudgment interest is presumed unless the "usual equities in favor of such interest are not applicable."Pignataro, 593 F.3d at 273 (citing Brock, 812 F.2d at 126). Here, although I find that Defendant had a reasonable basis for failing to compensate Plaintiffs for the morning and evening time, this does not change the fact that Plaintiffs were denied wages they were owed. The purpose of prejudgment interest is served by such an award in this case.
Defendant also seems to argue that because the court did not award liquidated damages on the additional year of credited overtime damages provided by PMWA, Plaintiffs' are not entitled to now seek prejudgment interest on these additional unpaid wages because it gives Plaintiffs "a second bite at the apple." See Def.'s Memo. at 9. The main problem with Defendant's argument is that PMWA does not provide for liquidated damages and casclaw has not extended this remedy to PMWA cases. See 43 P.S. § 333.113 (damages available as civil remedy do not include liquidated damages). Accordingly, Plaintiff's properly did not seek liquidated damages under PMWA, see Pls.' Proposed Findings and Conclusions at ¶ 96 n. 14, and the court did not award them. There is no bar to Plaintiffs' request for prejudgment interest.
Next, Defendant argues that Plaintiff's failure to request prejudgment interest prior to the filing of the current motion precludes such recovery. See Def's Memo. at 8. I disagree. In their Complaint, Plaintiffs seek "[c]ompensatory and back pay damages to the fullest extent permitted under federal and state law." Compl. at Prayer for Relief, At the final pretrial conference, counsel agreed that submissions concerning the calculation of damages would follow the court's findings and conclusions. In their Proposed Findings and Conclusions, Plaintiffs specifically reference prejudgment interest as an alternative to liquidated damages. See Pls.' Proposed Findings and Conclusions at ¶ 99 n. 15. I also note that Defendant has suffered no prejudice based on the Plaintiffs' request for prejudgment interest at this time.
In addition, Defendant argues that the court should decline to award prejudgment interest on the uncompensated morning and evening time because this is not an easily calculable fixed sum, particularly because "it was the Plaintiffs' lack of credibility which led to the uncertainty." Def's Memo, at 10. Defendant relies on Pennsylvania caselaw which states that interest is due "[w]henever a fixed sum of money is wrongfully withheld from a parly to whom it is properly due." Id. at 9 (quoting Friedrich, 1995 WL 412385, at *3). Here, Defendant argues that the calculation of prejudgment interest is made uncertain by Plaintiffs' lack of credibility, itself. Thus, the award of prejudgment interest would be inequitable.
At trial, Plaintiffs testified that they arrived at the shop before work and performed work prior to leaving for the jobsite every workday. Defendant presented credible evidence that Plaintiffs left from the shop only 35% of the time and went directly to the jobsite from their homes 65% of the time. In fact, Defendant presented evidence identifying specific jobs for which Plaintiffs traveled directly to the jobsite. Therefore, I found that Plaintiffs were entitled to 35% of the total uncompensated morning and evening time. Although I agree that Plaintiffs are partially to blame for any uncertainty in the calculation of prejudgment interest, Defendant lost the Plaintiffs' timesheets, see N.T. 10/13/09 at 87-88, and thereby contributed to the uncertainty.
Moreover, considering the purpose of prejudgment interest, I believe the equities favor such an award for the uncompensated morning and evening time. Plaintiffs were not paid the wages they were owed and have not had the use of that money. Thus, an award of prejudgment interest is appropriate.
The parties' damages stipulation did not distinguish between amounts that are attributable to the credited overtime versus the unpaid morning and evening time. In order for the court to calculate prejudgment interest, I need counsel to identify what sums are attributable to the credited overtime for September 30, 2007-September 30, 2008 (the credited overtime for which Plaintiff's did not receive liquidated damages) for each Plaintiff. In addition, counsel shall identify what amount is due each Plaintiff for the uncompensated morning and evening time. The court will then calculate prejudgment interest, using the Pennsylvania state statutory rate for the wages paid pursuant to the PMWA, and the post-judgment interest statute (Treasury bill rate) for the wages due under the FLSA, for which liquidated damages were not awarded. I will allocate one third of the uncompensated morning and evening time to each year for which damages were awarded, calculating the interest due, and compounding accordingly. Obviously, the prejudgment interest on the credited overtime does not begin to accrue until the third year.
Although the amount of liquidated damages should equal the award for the reduced payment of the first two years of credited overtime, I cannot ascertain from the stipulation how much is attributable to the third year of credited overtime, and how much is attributable to the uncompensated morning and evening time
Finally, Defendant argues that any calculation of prejudgment interest must be considered in light of the rejected Offer of Judgment. Once the court has considered and calculated all of the sums included in the Offer of Judgment, including costs and attorneys' fees, I will be able to compare the Offer of Judgment to the judgment rendered, and be in a better position to make a determination regarding the effect of the Offer of Judgment.
At this point, counsel shall have 10 days to provide a detailed breakdown of the stipulated damages, identifying the amounts attributable to the categories noted above, after which, the court shall enter judgment. Plaintiffs' counsel shall have 14 days after the entry of judgment to file a motion for attorneys' fees and costs, detailing the dates that the fees and costs were incurred. Defense counsel shall have 14 days to respond to the motion for fees and costs. Once the court has ruled on the attorneys' fees and costs, I will entertain a motion to mold the verdict based on the Rule 68 Offer of Judgment.
An appropriate Order follows.