Mitchell v. Robert De Mario Jewelry, Inc./Opinion of the Court

Section 15(a)(3) of the Fair Labor Standards Act of 1938, 52 Stat. 1068, 29 U.S.C. § 215(a)(3), 29 U.S.C.A. § 215(a)(3), makes it unlawful for an employer covered by that Act-

'to discharge or in any other manner discriminate against any     employee because such employee has filed any complaint or      instituted or caused to be instituted any proceeding under or      related to this Act *  *  * .'

By § 17 of the Act, 52 Stat. 1069, as amended, 29 U.S.C. § 217, 29 U.S.C.A. § 217, the District Courts are given jurisdiction

'for cause shown, to restrain violations of section 15:     Provided, That no court shall have jurisdiction, in any      action brought by the Secretary of Labor to restrain such      violations, to order the payment to employees of unpaid      minimum wages or unpaid overtime compensation or an      additional equal amount as liquidated damages in such      action.'

The question for decision is whether, in an action brought by the Secretary of Labor to enjoin violations of § 15(a)(3), Section 17 empowers a District Court to order reimbursement for loss of wages caused by an unlawful discharge or other discrimination.

The facts, as found by the District Court, are not in dispute. Several of the employees of the respondent corporation had sought the aid of the Secretary of Labor, petitioner here, in seeking to recover wages allegedly unpaid in violation of §§ 6(a) and 7(a) of the Act. The Secretary instituted an action pursuant to § 16(c) of the statute, 63 Stat. 919, 29 U.S.C. § 216(c), 29 U.S.C.A. § 216(c), on behalf of the aggrieved employees, for the recovery of the unpaid compensation. After the commencement of such action, respondents commenced a course of discriminatory conduct against three of the complaining employees, culminating in their discharge. In a second action by the Secretary, pursuant to § 17, this discrimination was found by the District Court to have been caused by respondents' 'displeasure' over the actions of the employees in authorizing suit.

Finding the evidence of unlawful discrimination 'clear and convincing,' the District Court granted an injunction against further discrimination and ordered reinstatement of the three discharged employees, without loss of seniority. As to reimbursement for loss of wages, the court, expressly reserving the question whether it had jurisdiction to order such reimbursement, declined in the exercise of its discretion to do so. On appeal, the Court of Appeals did not reach the question of abuse of discretion, for it held that the District Court lacked jurisdiction to order reimbursement of lost wages resulting from an unlawful discharge. 5 Cir., 260 F.2d 929. The decision being in conflict with that of the Court of Appeals for the Second Circuit in Walling v. O'Grady, 146 F.2d 422, we granted certiorari. 359 U.S. 964, 79 S.Ct. 879, 3 L.Ed.2d 833.

We initially consider § 17 apart from the effect of its proviso, which was added in 1949. The court below took as the touchstone for decision the principle that to be upheld the jurisdiction here contested 'must be expressly conferred by an act of Congress or be necessarily implied from a congressional enactment.' 260 F.2d at page 933. In this the court was mistaken. The proper criterion is that laid down in Porter v. Warner Holding Co., 328 U.S. 395, 66 S.Ct. 1086, 90 L.Ed. 1332. This Court there dealt with an action brought by the Price Administrator under the Emergency Price Control Act of 1942, 50 U.S.C.A.Appendix, § 925, to enjoin the collection of excessive rents and to require the landlord to reimburse its tenants for moneys paid as a result of past violations. We upheld the implied power to order reimbursement, in language of the greatest relevance here:

'Thus the Administrator invoked the jurisdiction of the     District Court to enjoin acts and practices made illegal by      the Act and to enforce compliance with the Act. Such a     jurisdiction is an equitable one. Unless otherwise provided     by statute, all the inherent equitable powers of the District      Court are available for the proper and complete exercise of      that jurisdiction. And since the public interest is involved     in a proceeding of this nature, those equitable powers assume      an even broader and more flexible character than when only a      private controversy is at stake. * *  * (T)he court may go      beyond the matters immediately underlying its equitable      jurisdiction *  *  * and give whatever other relief may be      necessary under the circumstances. * *  *

'Moreover, the comprehensiveness of this equitable     jurisdiction is not to be denied or limited in the absence of      a clear and valid legislative command. Unless a statute in so     many words, or by a necessary and inescapable inference,      restricts the court's jurisdiction in equity, the full scope      of that jurisdiction is to be recognized and applied. 'The     great principles of equity, securing complete justice, should      not be yielded to light inferences, or doubtful      construction.' Brown v. Swann, 10 Pet. 497, 503, 9 L.Ed. 508.     *  *  * ' 328 U.S. at pages 397-398, 66 S.Ct. at page 1089.

The applicability of this principle is not to be denied, either because the Court there considered a wartime statute, or because, having set forth the governing inquiry, it went on to find in the language of the statute affirmative confirmation of the power to order reimbursement. Id., 328 U.S. at page 399, 66 S.Ct. at page 1089. When Congress entrusts to an equity court the enforcement of prohibitions contained in a regulatory enactment, it must be taken to have acted cognizant of the historic power of equity to provide complete relief in the light of statutory purposes. As this Court long ago recognized, 'there is inherent in the Courts of Equity a jurisdiction to * *  * give effect to the policy of the legislature.' Clark v. Smith, 13 Pet. 195, 203, 10 L.Ed. 123. To the policy of the Fair Labor Standards Act we therefore now turn.

The central aim of the Act was to achieve, in those industries within its scope, certain minimum labor standards. See § 2 of the Act, 52 Stat. 1060, 29 U.S.C. § 202, 29 U.S.C.A. § 202. The provisions of the statute affect weekly wage dealings between vast numbers of business establishments and employees. For weighty practical and other reasons, Congress did not seek to secure compliance with prescribed standards through continuing detailed federal supervision or inspection of payrolls. Rather it chose to rely on information and complaints received from employees seeking to vindicate rights claimed to have been denied. Plainly, effective enforcement could thus only be expected if employees felt free to approach officials with their grievances. This ends the prohibition of § 15(a)(3) against discharges and other discriminatory practices was designed to serve. For it needs no argument to show that fear of economic retaliation might often operate to induce aggrieved employees quietly to accept substandard conditions. Cf. Holden v. Hardy, 169 U.S. 366, 397, 18 S.Ct. 383, 390, 42 L.Ed. 780. By the proscription of retaliatory acts set forth in § 15(a)(3), and its enforcement in equity by the Secretary pursuant to § 17, Congress sought to foster a climate in which compliance with the substantive provisions of the Act would be enhanced.

In this context, the significance of reimbursement of lost wages becomes apparent. To an employee considering an attempt to secure his just wage deserts under the Act, the value of such an effort may pale when set against the prospect of discharge and the total loss of wages for the indeterminate period necessary to seek and obtain reinstatement. Resort to statutory remedies might thus often take on the character of a calculated risk, with restitution of partial deficiencies in wages due for past work perhaps obtainable only at the cost of irremediable entire loss of pay for an unpredictable period. Faced with such alternatives, employees understandably might decide that matters had best be left as they are. We cannot read the Act as presenting those it sought to protect with what is little more than a Hobson's choice.

Respondents argue that, in the absence of a contrary contractual provision, an employee cannot recover lost wages owing to a discriminatory discharge, and that the jurisdiction here invoked is therefore to be regarded as 'punitive,' outside the function of equity unless expressly authorized by the statute. We intimate no view as to the validity of the premise, for it in no way supports the conclusion. Whatever the rights of the parties may be under traditional notions of contract law, it is clear that under § 15(a)(3) such a discharge is not permissible. Even assuming, without deciding, that the Act did not contemplate the private vindication of rights it bestowed, the public remedy is not thereby rendered punitive, where the measure of reimbursement is compensatory only. Respondents cannot be heard to assert that wages are ordered to be paid for services which were not performed, for it was the employer's own unlawful conduct which deprived the employees of their opportunity to render services.

It is contended, however, that even though equitable jurisdiction to restore lost wages resulting from an unlawful discharge may originally have existed under § 17, such jurisdiction was withdrawn by the 1949 proviso which disabled courts in § 17 actions from awarding 'unpaid minimum wages or unpaid overtime compensation or an additional equal amount as liquidated damages * *  * .' 80 S.Ct. at page 334. When considered against its background we think the proviso has no such effect.

Shortly before the enactment of this proviso the Court of Appeals for the Second Circuit had decided in McComb v. Frank Scerbo & Sons, 177 F.2d 137, that in a § 17 suit brought by the Secretary to enjoin violations of the minimum wage and overtime provisions of the Act, the court had power to order reimbursement of unpaid overtime wages. The effect of this decision was to enable the Secretary in such a suit to recover on behalf of employees that which would otherwise have been recoverable only in an action brought by the employees themselves under § 16(b) of the statute, 52 Stat. 1069, 29 U.S.C. § 216(b), 29 U.S.C.A. § 216(b). The § 17 proviso was aimed at doing away with this result. Even so, Congress did not see fit to undo the effects of Scerbo entirely, for at the time it enacted the § 17 proviso it also added to the Act § 16(c), whereby the Secretary was empowered to bring a representative action on behalf of employees to recover unpaid wages in cases other than those involving 'an issue of law which has not been settled finally by the courts.' 63 Stat. 919, 29 U.S.C. § 216(c), 29 U.S.C.A. § 216(c). Thus, presumably Congress felt that the Secretary should not lend his weight to, nor be burdened with, actions for unpaid wages except in the clearest cases.

We find no indication in the language of the § 17 proviso, or in the legislative history, that Congress intended the proviso to have a wider effect, that is, that it was intended to apply to reimbursement of lost wages incident to a wrongful discharge, as distinguished from the recoupment of underpayments of the statutorily prescribed rates for those while still employed. The proviso speaks entirely in terms of unpaid minimum wages and overtime. In effectuating the policies of the Act the proper reach of equity power in suits by the Secretary under the wage provisions of the statute, and that in suits under the discharge provisions, are attended by quite different considerations, which, in passing the 1949 amendments, Congress evidently had in mind. We are not persuaded by respondents' argument that because the Second Circuit in Scerbo partially relied on its earlier decision in Walling v. O'Grady, supra, and because the House Conference Report on the 1949 amendments stated that the § 17 proviso 'will have the effect of reversing such decisions as McComb v. Scerbo * *  * in which the court included a restitution order in an injunction decree granted under section 17,' H.R.Conf.Rep. No. 1453, 81st Cong., 1st Sess., p. 32, the proviso must be taken as having been intended to overrule the O'Grady case as well. O'Grady was a discriminatory discharge case, not a wage case as was Scerbo. And before the 1949 amendments expressions of other lower courts had indicated a point of view similar to that espoused in Scerbo. See Fleming v. Alderman, D.C., 51 F.Supp. 800; Walling v. Miller, 8 Cir., 138 F.2d 629; Fleming v. Warshawsky & Co., 7 Cir., 123 F.2d 622.

Rather than expressing a general repudiation of equitable jurisdiction to order reimbursement to effectuate the policies of the Act, we think that the 1949 amendments evidence a purpose to make only limited modifications in the nature and extent of the Secretary's power to obtain reimbursement of unpaid compensation. This being so, there is no warrant for construing the § 17 proviso as reaching beyond suits to enjoin violations of the minimum wage and overtime provisions of the statute, so as wholly to eradicate any jurisdiction to restore wage losses to employees discharged in violation of § 15(a)(3). To the contrary, in view of the related character of the issues presented in O'Grady and Scerbo, the modification in the area treated by the latter case bespeaks an intention to leave the O'Grady decision intact. The 1949 amendments, then, only serve to confirm the result we reach independently of them.

We hold that, in an action by the Secretary to restrain violations of § 15(a) (3), a District Court has jurisdiction to order an employer to reimburse employees, unlawfully discharged or otherwise discriminated against, for wages lost because of that discharge or discrimination. The Court of Appeals did not reach the question whether the District Court abused its discretion in declining to order reimbursement. While, because of what we have found to be the statutory purposes there is doubtless little room for the exercise of discretion not to order reimbursement, since we do not have the entire record before us we shall remand the case to the Court of Appeals for consideration of that issue.

Reversed and remanded.

Mr. Justice DOUGLAS, while joining in this opinion, agrees with Mr. Justice WHITTAKER that other remedies are available and that any remedy obtained in this equity action is complementary to them.

Mr. Justice WHITTAKER, with whom Mr. Justice BLACK and Mr. Justice CLARK join, dissenting.