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No. 12495 I N THE SUPREME COURT O THE STATE OF M N A A F OTN

STATE O MONTANA, e x r e 1 WILMER C. NEISS F and HELEN M. NETSS, Husband and Wife, i n d i v i d u a l l y and d / b / a t h e C a r l i n H o t e l , Petitioners,

DISTRICT COURT OF THE THIRTEENTH JUDICIAL DISTRICT O TIIE STATE O M N A A and t h e F F OTN HONORABLE ROBERT H WI LSON , Judge t h e r e o f , and SIDNEY T. SMITH, Commissioner o f Labor and I n d u s t r y and HONORABLE ROBERT L. WOODAHL, A t t o r n e y G e n e r a l o f Montana.

.

Respondents.

ORIGINAL PROCEEDING:

Counsel o f Record: For P e t i t i o n e r s : B e r g e r , Anderson, S i n c l a i r and Murphy, B i l l i n g s , Montana Arnold A. B e r g e r a r g u e d , B i l l i n g s , Montana F o r Respondents: Honorable R o b e r t L. Woodahl, A t t o r n e y G e n e r a l , H e l e n a , Montana J o n a t h a n B. Smith a r g u e d , A s s i s t a n t A t t o r n e y G e n e r a l , Helena, Montana Harold F. Hanser, County A t t o r n e y , B i l l i n g s , Montana E r n e s t F. B o s c h e r t argued, B i l l i n g s , Montana.

Submitted: Decided : Filed:

May 22, 1973

JUL 10 1973

JUL I 0 1973

Mr. Justice John Conway Harrison delivered the Opinion of the Court, This is an original proceeding brought by petitioners Wilmer C. and Helen M. Neiss, husband and wife, seeking a writ of supervisory control directed to the respondents to appear and show cause why petitionersf motion for summary judgment in the district court should not be granted, The district court of the thirteenth judicial district, Yellowstone County, was the original respondent. The Montana Commissioner of Labor and Industry and the Montana Attorney General were made parties, pursuant to an order of this Court. The dispute concerns a complaint received by the Montana Commissioner of Labor and Industry, hereinafter referred to as the Commissioner, regarding alleged failure of petitioners to pay the minimum wageas prescribed by statute. Petitioners operate and do

business as the Carlin Hotel in Billings, Montana, In conducting such business, petitioners hire desk clerks and room maintenance employees. Involved here are four categories of employees:

1. Two casual employees whose last names are unknown to the
State of Montana and to petitioners; they are unidentifiable.
2.

Seven employees who did not assign any claim for wages

to the Commissioner, but settled their own claims with petitioners.

3. One employee who made complaint to the Commissioner and
duly assigned such claim.
4,

One employee who asked the county attorney to represent

her in the action, Following the Commissioner's receipt of the one complaint in September 1971, he conducted an audit of petitonersf books. The audit revealed petitioners had, in fact, failed to pay the minimum wage to certain employees. Subsequently the Commissioner

ordered petitioners to pay the former employees the difference between the amount actually paid and the minimum wage. did not comply.
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Petitioners

The Gommissioner then requested the Yellowstone County Attorney to institute action against petitioners. Petitioners

discovered that only one claim of the several mentioned in the complaint was assigned to the Commissioner. promised Petitioners then com-

certain of the claims with some of their former employees

for amounts less than the amounts due under the minimum wage statute. In answering the Commissioner's complaint, petitioners alleged satisfaction of the claims, having procured releases from some former employees. Petitioners moved the district court for summary

judgment on the basis of the releases obtained from those certain employees, The district court denied petitioners' motion for summary judgment and petitioners now seek a writ of supervisory control in this Court. We accept jurisdiction and deny petitioners' request for a supervisory writ. The basic issue is whether minimum wage claims

may be compromised by petitioners and then established as a defense to proceedings seeking enforcement of minimum wage laws. answer is in the negative. Section 41-2306, R.C.M. 1947, provides that all actions Our

regarding enforcement of minimum wages are commenced in accordance with sections 41-1301 through 41-1324, R.C.M, sections are significant here. 1947, Two of those

Section 41-1314.1, R,C,M. 1947,

authorizes the commissioner of labor to conduct all operations necessary to determine whether any statutory minimum wage provi-. sions have been violated, in pertinent part: Whenever the commissioner determines that one or more employees have claims for unpaid wages, he shall, upon the written request of the employee, take an assignment of the claim in trust for such employee, and may maintain any proceeding appropriate to enforce the claim, including liquidated damages pursuant to this act. With the written consent of the assignor, the commissioner may settle or adjust any claim assigned pursuant to this section," (Emphasis added)
It

Section 41- 3 -2, R.C.M. 1947, provides

,p'g*

It is petitioners' position that if the Commissioner, with
the written consent of the employee, can settle and adjust any assigned claim, as the statute authorizes, then the individual may

s e t t l e and a d j u s t h i s own c l a i m i n absence of any assignment, p e t i t i o n e r s ' argument i s untenable. The Commissioner has t h e

a u t h o r i t y t o compromise c l a i m s because he does so n o t o n l y f o r t h e b e s t i n t e r e s t of t h e c l a i m a n t , b u t f o r t h e p u b l i c a s w e l l . That

s i t u a t i o n i s q u i t e a p a r t from t h e i n s t a n c e where t h e p a r t y f a i l i n g t o pay t h e minimum wage a t t e m p t s t o compromise t h e c l a i m a n t ' s demand. The b e s t i n t e r e s t of n e i t h e r t h e p u b l i c nor t h e claimant

i s pursued by t h e p a r t y a t f a u l t ; a compromise sought by t h e p a r t y a t f a u l t s e r v e s only t h a t p a r t y . I n c o n s i d e r i n g t h e purpose of t h e F a i r Labor Standards Act, t h e United S t a t e s Court of Appeals, Ninth C i r c u i t , i n Wirtz v. Malthor, I n c . , 391 F.2d 1, 3 , sai.d:
" ~ t must b e remembered t h a t r e s t r a i n i n g a p p e l l e e s from withholding t h e minimum wages and overtime compensation i s meant t o v i n d i c a t e a p u b l i c , r a t h e r than a p r i v a t e r i g h t , and t h a t t h e withholding of t h e money due i s considered a i c o n t i n u i n g p u b l i c o f f e n s e . r I1

The c o u r t then went on t o n o t e t h a t t h e purpose of enforcement procedures i s twofold: (1) t o i n c r e a s e t h e e f f e c t i v e n e s s of

enforcement by d e p r i v i n g t h e v i o l a t o r of h i s g a i n ; and (2) t o p r o t e c t employers who do comply w i t h t h e Act from having t o
W e find these

compete unfavorably w i t h t h o s e who do n o t comply.

purposes analogous t o t h e d e c l a r a t i o n of p o l i c y embodied i n s e c t i o n 41-2301, R.C,M, 1947,

P e t i t i o n e r s urge t h a t t h e Commissioner's f a i l u r e t o o b t a i n assignments from a l l t h e c l a i m a n t s proves f a t a l t o t h e ~ o r n m i s s i o n e r ' s a u t h o r i t y t o a c t on t h e c l a i m a n t s ' b e h e l f and t h a t t h o s e nonassigned c l a i m s may b e s e t t l e d by t h e c l a i m a n t s themselves, not agree. Again, we do

This i s a f i r s t impression c a s e b e f o r e t h i s Court,

I n t h e f u t u r e t h i s problem can be avoided if t h e Commissioner o b t a i n s assignments from a l l c l a i m a n t s . However, s i n c e we a r e d e a l i n g w i t h a p u b l i c r i g h t , p u b l i c p o l i c y demands the minimum wage s h a l l be paid. Minimum wage pro-

v i s i o n s e x i s t f o r t h e b e n e f i t of t h e whole p u b l i c and a c l a i m a n t of h i s own accord may n o t b a r g a i n away h i s s t a t u t o r y minimum wage.

I t i s elementary t h a t a law e s t a b l i s h e d f o r a p u b l i c r e a s o n
cannot be compromised by p r i v a t e agreement, 1947. Section 49-105, R.C.M.

A s concerns t h e f i r s t c a t e g o r y of employees, l i s t e d h e r e t o f o r e , p e t i t i o n e r s (employers) complied w i t h t h e p r a y e r of t h e o r i g i n a l complaint and d e p o s i t e d t h e amount due t h o s e u n i d e n t i f i a b l e employees w i t h t h e d i s t r i c t c o u r t . Having f u l l y complied w i t h t h e

p r a y e r of t h e s t a t e ' s complaint, t h e r e i s no p e n a l t y o r f o r f e i t u r e owing by p e t i t i o n e r s .
A s concerns c a t e g o r y 2 , t h o s e who s e t t l e d t h e i r c l a i m s f o r

l e s s than t h e minimum wage, we d i r e c t t h a t t h e amount owing between t h e s e t t l e m e n t made and t h e minimum wage b e paid i n t o d i s t r i c t c o u r t t o be paid over t o t h o s e employees. These employees having

been r e p r e s e n t e d by t h e county a t t o r n e y , we f i n d t h e p r o v i s i o n s f o r a t t o r n e y f e e s and c o s t s provided f o r i n s e c t i o n 41-1322, R.C,M. 1947, a r e n o t a p p l i c a b l e . Under t h e circumstances h e r e , liqui--

dated damages a r e l i k e w i s e n o t a p p l i c a b l e .
A s concerns c a t e g o r y 3 and c a t e g o r y 4 , t h e employees who

brought a c t i o n e i t h e r through t h e Commissioner o r county a t t o r n e y , p e t i t i o n e r s h e r e i n have a s s e r t e d a counterclaim which must be disposed of by t h e d i s t r i c t c o u r t , p e t i t i o n e r s ' r e q u e s t f o r a w r i t of s u p e r v i s o r y c o n t r o l i-s denied on t h e m e r i t s . The cause i s remanded t o t h e d i s t r i c t c o u r t

f o r whatever f u r t h e r a c t i o n i s n e c e s s a r y , which a c t i o n s h a l l be c o n s i s t e n t w i t h t h e d i r e c t i o n s provided h e r e i n .

C  /

Chief J u s t i c e

Mr, Justice Wesley Castles dissenting:

I dissent. The fact statement in the majority opinion is
not complete, The complaint filed by the Commissioner of Labor sought payment of underpaid wages, a bond or a cessation of business, Defendants complied by settling the claims not represented by the Commissioner and by depositing in the district court the amounts due two casual employees neither party was able to find. A.s to two claimants or employees, one was represented by the Commissioner after an assignment; the other merely asked the county attorney to represent her. As to these two claimants, The validity and good faith

the defendants filed counterclaims.

of the counterclaims we should accept as true at this stage. Then and only then, did the Commissioner, without authority as to part of the claimants under the statute, assert liquidated damages. Keep in mind here that we are being asked to accept jurisdiction by way of supervisory control, We accept jurisdiction but deny petitioners' request for a supervisory writ and then go on to rule on the merits, We have ruled that there is no defense. Montana statutes state plainly that the Commissioner shall take an assignment in trust. With the written consent of the Then,it follows, under our

assignor, he may settle or adjust.

statute, the beneficiary or claimant can settle for himself,

I dissent to the ruling as made here.

The majority opinion

has at least recognized that no penalties should apply, With this, I agree, I would grant the writ,
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Associate Justice



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