IOWA BEEF PACKERS, INC. v. THOMPSON

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Argument of Griswold

Chief Justice Warren E. Burger: We will hear arguments next in Number 70-286, Iowa Beef Packers against Edward Thompson.

Mr. Solicitor General.

Mr. Griswold: Mr. Chief Justice and may it please the Court.

I move that A. Raymond Randolph be authorized to appear as for the United States as amicus curiae in this case.

Mr. Randolph is a member of my staff, a member of the bar of the Supreme Court of California and I believe he is well qualified.

Chief Justice Warren E. Burger: Your motion is granted, Mr. Solicitor General.

We will be glad to hear from Mr. Randolph.

Mr. Goldberg.

Argument of Louis S. Goldberg

Mr. Louis S. Goldberg: Mr. Chief Justice and may it please the Court.

There is a motion in this case.

It is called by the respondent has called a suggestion of the writ having being improvidently granted and we have a resistance on the file for that.

As I understand the rule of the Court, there is to be no oral argument as to that motion.

Chief Justice Warren E. Burger: The grant was limited.

Mr. Louis S. Goldberg: On the merits, if I may at the outset, I would like to present very briefly the three central points that petitioner believes are critical in this case.

One is that the case invites a policy decision in the area of labor management relations and they urge that the decision of this Court in the Republic Steel against Maddox governs this case.

Number two, the substantive rights involved in this case, as in Maddox, derives simply from the contract, the collective bargain agreement, there is not such right is provided for in the Fair Labor Standards Act.

Third, that our case is not at all an attack on the Fair Labor Standards Act.

Our contract does not diminish rights under the Act.

It enlarges rights.

Now, the facts here are quite simple.

Iowa Beef was and is engaged in the processing of meat and the shipment of meat interstate throughout the country.

The 14 respondents who bought -- who brought 14 separate actions in this case were employed and some of them are still employed by Iowa Beef in the Maintenance and Repair Department to keep the machinery in operation for production.

They worked under a collective bargaining agreement which is set out in the record.

The agreement provides, among other things, for a lunch period.

The respondents argue that -- did argue in the court below and that was sustained by the courts below on the facts, as to those facts, they argued that because the machinery broke down from time to time, they were called upon to do repair work during their lunch time, even though they got the lunch time later on or even when they were not actually called upon, that they were subject to call during their lunch time, in case there was a breakdown, for those reasons, the respondents argued that there was a violation of the collective bargaining agreement by the petitioner which then they say gave rise to a course of action under Fair Labor Standards Act.

Now, the collective bargaining agreement also provides for grievance procedures and for arbitration in three or four steps.

Instead of proceeding through the grievance procedures, the respondents began these 14 separate actions directly under the Fair Labor Standards Act.

The Iowa Court sustained them on the merits of their claim and we do not challenge that here while we do not agree with the correctness of it.

But we did challenge, by answer and by motion, the point that these respondents should have applied or attempted the grievance and arbitration provisions, instead of proceeding directly to Court action of the Fair Labor Standards Acts.

That was overruled and incidentally on the record, the record on page 4 of the record plainly states that these respondents admitted that they did not attempt to utilize the grievance procedures.

Justice Byron R. White: Now let us assume in the ordinary situation under this contract that grievance and trial or that an employee has a grievance?

Were the grievance procedures and the arbitration provisions open to use by an employee alone?

Mr. Louis S. Goldberg: The --

Justice Byron R. White: Or did the Union have to energize the process?

Mr. Louis S. Goldberg: No, Your Honor.

The Union or the employee, the individual employee or the Union could initiate the grievance procedures and could --

Justice Byron R. White: Could an individual employee if he was turned down the -- turned down by the employer in the initial steps request arbitration?

Mr. Louis S. Goldberg: Not directly, no.

The Union then is directed to undertake the further steps?

Justice Byron R. White: So the employee could initiate a grievance procedure, but he could not take it to arbitration?

Mr. Louis S. Goldberg: Not entirely on his own, Your Honor.

Justice Byron R. White: Well not entirely.

If the Union said no arbitration, that was the end of the process, was it not?

Mr. Louis S. Goldberg: No, I would say -- well, it might but it would not terminate the employees’ rights.

Justice Byron R. White: Well, I would not terminate his rights, but it would terminate his rights to arbitrate?

Mr. Louis S. Goldberg: Well, Vaca against Sipes of course requires the union to exercise proper diligence and so forth.

Justice Byron R. White: Well I know, but Vaca against Sipes also said that every time a union refuses, it does not mean that it is wrong?

Mr. Louis S. Goldberg: Well, that is true, Your Honor.

Justice Byron R. White: Now, let us assume that a union at the end of the grievance procedure refuses to take the case to arbitration?

Now, the employee I suppose is then exhausted, he had the contract rights, has he not?

Mr. Louis S. Goldberg: That is right.

Justice Byron R. White: And he could go to Court under 301?

Mr. Louis S. Goldberg: But --

Justice Byron R. White: Right?

Mr. Louis S. Goldberg: But in this case, they did not even to attempt the first step, Your Honor.

Justice Byron R. White: They did not even attempt to take it to grievance?

Mr. Louis S. Goldberg: That is right, Your Honor.

Justice Byron R. White: Now let us assume that he had and is he entitled to represent himself or is the union entitled to be there at the grievance procedure?

Mr. Louis S. Goldberg: The first step sir, plaintiff recites I believe in the collective bargaining agreement that the individual employee may initiate that first step.

Justice William J. Brennan: Does employees involve with a union representative if he chose his right at the first step?

Mr. Louis S. Goldberg: Yes, Your Honor.

Justice William J. Brennan: Every step after that apparently has to be handled by the steps two and three and up to arbitration at any event, it has to be handled by union representatives, is it under grievance and arbitration?

Mr. Louis S. Goldberg: That is right.

These employees in the union knew that effectiveness of these of these grievance procedures because as the record show --

Justice William J. Brennan: Apart from that, I gather you rely in any event on the 14 individual employees, and not even discuss the process of grievance with the immediate supervisor, is that right?

Mr. Louis S. Goldberg: That is right.

They did not attempt even the first step.

Justice William O. Douglas: Isn't it all very theoretical, there is no more union?

Mr. Louis S. Goldberg: I am sorry.

I do not hear very well.

Justice William O. Douglas: Is this not all very theoretical?

There is no more union.

The union is not in the picture?

Mr. Louis S. Goldberg: The same point Mr. Justice was made in the Maddox case and that this Court summarily overruled that --

Justice William O. Douglas: Well, the Union does not represent these employees anymore, does it?

Mr. Louis S. Goldberg: Well, that is right.

That was three years after this case was began and it was a long after the case had been decided in the Trial Courts and the people were put on notice here by our answer and by our motion that they were required to utilize grievance procedures and did not even attempt to do so even then.

Justice William O. Douglas: But the present posture of the case is quite different, is it not?

Mr. Louis S. Goldberg: Well, I think the individual still has the right to initiate grievance procedure and I would think Your Honor that in the absence of a union there would be no rule of law.

No Court would bar him from proceeding on his own towards the subsequent steps in the grievance procedures and in arbitration.

Justice William O. Douglas: But the only provision that was required was the provision in the union contract that no longer exists?

Mr. Louis S. Goldberg: Well, that was so argued in the Maddox case and Maddox overruled that to point Your Honor whereas the Marilyn (ph) said --

Justice William O. Douglas: Well, I am rephrasing it again, I just wondered?

I do not want to distract you.

Mr. Louis S. Goldberg: No problem, Your Honor.

The Iowa Court relayed chiefly on the Arguelles case in which the decision opposed to on our point about attempting grievance, Now, these 14 separate actions were started in 1967, five years ago and this is the record that they faced in beginning, these actions.

In 1947, Congress enacted the Labor Management Relations Act, declaring grievance procedures as the desirable method for settling wage disputes between employer or an employee.

Ten years later, Lincoln Mills ruled that grievance procedures were enforceable at the demand of the Union, but did not include individual employees at that time.

In 1965, this Court ruled in Maddox that the individual employees were eligible then and could enforce grievance procedures and arbitration.

Thus on that basis that we present, largely present our case.

The Maddox case also stressed the comprehensiveness and the uniformity of law desirable under the Congressional mandate and the policies as formulated by this Court.

Justice Potter Stewart: Maddox was not -- what was the claiming Maddox?

Was it for termination pay or for wrongful discharge?

Mr. Louis S. Goldberg: Sovereign’s pay, Your Honor under the contract.

Justice Potter Stewart: Sovereign’s pay under the contract?

Mr. Louis S. Goldberg: Yes (Voice Overlap)

Justice Potter Stewart: It was not damage for wrongful discharge, was it?

Mr. Louis S. Goldberg: The mine has been closed there and there was no foreman and Maddox said that therefore there was no way to attempt the grievance procedure, but this Court in Maddox summarily overruled that contention.

Justice Potter Stewart: And of course in Maddox the only substantive right he had to sovereign’s pay was by the reason of the collective bargaining agreement?

Mr. Louis S. Goldberg: That is right and we say here that also, the only substantive right involved here is lunch period and the violation of that agreement by the employer.

Justice Potter Stewart: Well, the court may look at it, but here at least you do have in the background Fair Labor Standards Act which give overtime for pay and a half where in they work eight hours a day for 40 hours a week?

Mr. Louis S. Goldberg: That is over 40 hours a week.

Our contract does the same, Your Honor that and they do not get to Fair Labor Standards Act status under facts of our case until first the employer has violated the contract right.

The violation of that contract right, not to any violation of the Fair Labor Standards Act requirements, the violation of the Contract right then may trigger remedial rights under the Fair Labor Standards Act.

Justice Potter Stewart: Well, except the Fair Labor Standards Act is more than remedial rights, does it not?

It gets substantive rights to pay and a half over eight hours a day or 40 hours a week?

Mr. Louis S. Goldberg: That is right Your Honor and the --

Justice Potter Stewart: So if there were no collective bargaining agreement here, you would concede that on the allegations of the plaintiff’s complaint, they have a course of action in the Fair Labor Standards Act, would that not be true?

Mr. Louis S. Goldberg: That is --

Justice Potter Stewart: And by contract in the Maddox case, if there had been no collective bargaining agreement, there could have been no course of action, is that not also true?

Mr. Louis S. Goldberg: No, the -- this difference show Mr. Justice that the Fair Labor Standards Act does not require the granting of lunch time.

We could have provided for eight hours consecutive work without lunch time, we would never had this problem, but we did agree to give lunch time.

We violated that agreement.

So we have a right -- purely a contract right and a violation of that contract right that then triggers remedial processes.

Then we say this that the arbitrator under the arbitration requirements and under the decisions is bound to follow the law so that the arbitrator would have to apply all the remedial provisions of the Fair Labor Standards Act and I believe that Mr. Justice White in the dissenting opinion -- in the opinion for four justices of their Court in the Arguelles case emphasized that point.

The arbitrator could apply all the remedial remedies and we have four decisions of the United States Circuit Courts of Appeal in Fair Labor Standards Act cases which they said that arbitration must precede any court action.

Chief Justice Warren E. Burger: In this case, in this case Mr. Goldberg, suppose you were to prevail than the employees would have to go back under a grievance procedure under the contract, is that right or could they go directly into arbitration?

Mr. Louis S. Goldberg: Well, possibly Your Honor under the Maddox decision, there was just a reversal of the case below.

What happens after that I do not know?

Now, what would happen here after if this Court were to reverse, I do not know either?

We would have to leave that to the development of the circumstances on the law.

Justice Byron R. White: Well, the first step of the grievance procedure (Inaudible)?

Mr. Louis S. Goldberg: Pardon?

I did not hear the last.

I am sorry.

Justice Byron R. White: The first step of the grievance procedure provided for in the contract, sets a time limit on discussing the matter with foreman (Inaudible)?

Mr. Louis S. Goldberg: No, I think not.

There are time --

Justice Byron R. White: After that?

After that there are time?

Mr. Louis S. Goldberg: Yes.

Justice Byron R. White: Only in future step?

Mr. Louis S. Goldberg: That is right and the arbitrator; he will be required to apply all the remedial provisions of the Standards Act.

The statute limitation provision, the penalty provisions for liquidated damages and cause and as a matter of fact, I am not at all sure this case involves the liquidated damages provision because there were no liquidated damages allowed by the Court below.

It may well be -- and Mr. Justice Harlan in his special concurrence in the Arguelles case, the Simmons case which is very much unlike this because there we had a special statute in which the distinctive doctrines that had been applied to Simmons, traditionally since 1790 by the Congress and by the Courts.

The Simmons case applied, the Arguelles case applied that doctrine to that very special statute and that statute made no provision either for administrative enforcement, whereas under the Fair Labor Standards Act, they both could be enforcement as shown by the reports of the administrator himself cited in one of the footnotes to the original brief in this case indicates that very few actions are brought by employees and most of those that are brought by employees are brought by employees who came after the law had already had ceased to being in an employee of the employer.

So that Mr. Justice Harlan indicated plainly that that his understanding that the case of U.S. Bulk Carriers against Arguelles did not decide simply because that there was a statute that that made all the difference.

The point was to examine the precise nature of that statute and see then which of the policies, arbitration on the one hand or direct section on the other hand of the statute should apply.

And we respectfully submit here that our statute, the Fair Labor Standards Act Statute is not the type of statute that would come within the sweep of the Simmons case in the -- under the Arguelles' Doctrine.

Quite the contrary, we have indicated in our brief that the Fair Labor Standards act is not unqualified and it is not all inclusive.

There we list in our -- indicate in our brief at least 37 exceptions under one Section of the act and others under other Sections so that it is not the policy of the Congress to make that Act exclusive.

And the four cases in the U.S. Courts of Appeals in Fair Labor Standards Acts cases indicate very plainly that two things are I think relevant here.

One that the Fair Labor Standards Act does not require a court action.

It just says court action may be brought and secondly that the arbitrators are bound to apply the law by all provisions of the Fair Labor Standards Act in reaching a decision in arbitration.

I believe that's pointed out too in Wilko against Swan and Mr. Justice White in the Arguelles case.

I would like to say this if I may, Your Honors, that the briefs of the respondent on the merits, on the brief of -- the amicus brief were delivered to us only one of them seven days, the other one only five working days before this day of argument so we had no opportunity to file a reply brief.

We did file a very short reply brief in the original proceedings for a writ and I would beg record if I may to regard that reply brief as something of the reply to the briefs here on the merits.

Now, I think they are reasonably adequate for that purpose.

Among the many differences between the statute in the Arguelles case and the statute under the Fair Labor Standards Act are these.

That the Fair Labor Standards Act makes provisions for enforcement largely by the administrator and that has been the practice.

An administrator can administratively require payment of wages and may also bring court actions to require the payment of wages and there is a provision for injunction by the administrator and also for criminal proceedings.

I do hope to make it very clear to the Court that no steps, not even the first step was taken here by the employees to use grievance procedures and the respondents have admitted on the record, this is on page 4 of the record beginning at line 25, they have expressly admitted that no steps permitted under the grievance procedures provided by those agreements were taken by the plaintiffs below or the respondents here.

It is rather --

Justice William O. Douglas: Is there any issue in this case involving the construction of the collective agreements?

Mr. Louis S. Goldberg: I think none.

There is nothing in the record, Your Honor.

The brief does -- the brief by respondent does argue the aribitrability now, but that's a matter of law.

There was no exception taken in the record to that.

The respondent’s brief too in a footnote --

Justice William O. Douglas: So that there is problems relating to in fact the custom or usage of tradition practices?

Mr. Louis S. Goldberg: No, Your Honor, there is nothing here to rebut the requirement for using the grievance procedures.

There is a footnote in the respondents --

Justice William J. Brennan: What then -- what then have the grievance procedure been involved by the 14 employees?

What would have gone to arbitration if there had not been charges?

What would the arbitrator had to decide?

Mr. Louis S. Goldberg: Precisely, the thing that that Court just -- that the Court was called upon.

One, did the contract relied for a lunch period?

Second, was that lunch period actually furnished, was there a violation of that contract right?

Justice William J. Brennan: Well, if that's so, then there is a matter of construction and application of the contract.

There is an issue of arbitration or the construction of application of the contract?

Mr. Louis S. Goldberg: Oh!

Definitely, I think the entire substantive right depends on the contact.

Justice William J. Brennan: You said to Mr. Justice Douglas that there wasn't any?

Mr. Louis S. Goldberg: Well, I guess I did not understand the full part of the question then.

We admit that advice was given and that we admit so far as the record goes that we violated that right which is a substantive contract right?

Justice William O. Douglas: Well does it come down to what is overtime under the statute?

Mr. Louis S. Goldberg: The overtime under the contract too, Your Honor.

The contact provided for overtime not only after 40 hours, but also after eight hours in one day.

Justice William O. Douglas: Both use the word overtime, is that right?

Mr. Louis S. Goldberg: Oh!

Yes, Your Honor.

So that the violation of the contract right automatically under the contract would give them the right to overtime pay.

Chief Justice Warren E. Burger: Do you claim any practice or custom in this industry that employees should be on call during their lunch hour?

Mr. Louis S. Goldberg: No, I think not.

These employees were on call as a matter of fact.

There is no denial of that and it is on that basis that the Court below ruled that we violated the contract and did not pay for the overtime involved in eating.

Even though a lunch time was provided, later in the day, but they were still subject to call there.

So that under the decisions, currently, we did not furnish lunch time and we should pay for time and a half during the lunch time period and it is only the violation of that contract right that triggers the remedial rights under the Fair Labor Standards Act and they have the same rights under the contract and as the --

Justice Byron R. White: Well if you admitted the right and the violation of the right, why did you not just pay them?

Mr. Louis S. Goldberg: Oh!

We did not – Oh! It is only at this level that we are not challenging that Mr. Justice.

We did challenge the factual matter in the Trial Court and in the Supreme Court, but the Trial Court ruled against us --

Justice Byron R. White: But do you would have –- you would have wanted to present the arbitrator your opposition to the claim?

You would have wanted to say that you did not violate the right.

So there was not a right that you did not violate it?

Mr. Louis S. Goldberg: Precisely, that is what the same is --

Justice Byron R. White: You want the arbitrator rather than the Court to determine it?

Mr. Louis S. Goldberg: That is right Your Honor.

Justice Byron R. White: I see.

Justice William H. Rehnquist: But Mr. Goldberg, might there had been evidence that you could have introduced before the arbitrator that you could not introduce in the Fair Labor Standards Act case?

Mr. Louis S. Goldberg: I think not Your Honor.

Justice William H. Rehnquist: Would it have been practical?

Mr. Louis S. Goldberg: We presented the same evidence I think in both situations.

Justice William O. Douglas: You do not get a jury trial before the arbitrator?

Mr. Louis S. Goldberg: No, Your Honor.

There was no Jury Trial actually in this case either.

I would like to reserve some time for rebuttal if I may.

Chief Justice Warren E. Burger: Mr. Randolph.

Argument of A. Raymond Randolph, Jr.

Mr. A. Raymond Randolph, Jr.: Mr. Chief Justice and may it please the Court.

I think it is important to get to the precise nature of the employee’s claim in this case in proper focus right at the outset.

The employees have never claimed throughout these entire proceedings that their employer violated the collective bargaining agreement.

A complaint which is set out on pages 82 to 84 of the appendix is related solely to the rights under Fair Labor Standards Act.

Obviously, they are not seeking a work free lunch period for time between 1965 and 1967.

As times passed, the work free lunch period even if the employer said you are entitled to it would not help them at all.

What they are seeking is simply wages that they claim were due under the Fair Labor Standards Act.

Chief Justice Warren E. Burger: But it is a straight -- from your point of view, it is a straight excess of eight hours and 40 hours, isn't it?

Mr. A. Raymond Randolph, Jr.: The Fair Labor Standards Act only provides a (Voice Overlap) compensation.

Chief Justice Warren E. Burger: Forty hours?

Mr. A. Raymond Randolph, Jr.: Over 40 hours in the workplace.

They claim they worked within the meaning of the Fair Labor Standards Act for over 40 hours in work week because they were on call for this 30-minute period each day and that they were entitled to pay and that the employer violated the Fair Labor Standards Act by not paying them.

The Standard -- Fair Labor Standards Act claim, the point is that even if the contract in this case said that employees were not entitled to pay for on call time, that would be irrelevant because it has been held by this Court in three-decade period after an Act under the Fair Labor Standards Acts that unions cannot bargain away the employees rights under the Act.

The Act is set up to create a uniform standard throughout the country that does not vary from industry to industry or employer to employer.

Justice Byron R. White: Do you -- does the government challenge the aribitrability of the matter into the contract?

Mr. A. Raymond Randolph, Jr.: The government does not challenge that, although the co-counsel --

Justice Byron R. White: The Arbitration Clause is brought not to include the claim on the under the Fair Labor Standards Act (Voice Overlap)?

Mr. A. Raymond Randolph, Jr.: Co-counsel has raised that issue and he will argue that point.

The government will assume that the grievance was arbitrable.

Justice Byron R. White: And then what is the reason for not limiting the matter to arbitration in the government case?

Mr. A. Raymond Randolph, Jr.: Well, I think there are many, many reasons.

I think that examining those reasons has to begin with examination of the statute itself.

As I have said, these employees sued solely under the Fair Labor Standards Act.

They sued under Section 16 (b) of the Act which is set out in respondent’s brief on pages F, on page A2.

Under Section 16 (b), an employee is entitled to sue, “in any Court of competent jurisdiction to recover minimum wages or overtime compensation withheld in violation of the Act.”

Also, under Section 16 (b), an employer is entitled to liquidate the damages in an equal amount to the wages that were unlawfully withheld unless the employer “shows to the satisfaction of the Court that he acted in good faith and did not and had reasonable grounds for violating the Act.”

In that situation, “the Court may in its sound discretion order a lesser amount of liquidated damages.”

Also under Act an employee is entitled to attorney’s fees from the defendant if he prevails and also he is entitled to two years within which to bring his suit or if the employer’s violation was willful he is entitled to three years.

The government contends that all these are matters of substance.

It is quite important to enforcement of the Act and the forum where the rights are to be enforced is tied up with the very rights and remedies of the Act.

It is an integral part of the statutory structure.

Indeed, Section 16 (b) itself speaks of “the right to bring an action and we think that when Congress said, employees have a right to bring an action” they meant just that.

They did not mean that employees have a right to bring an action unless they are governed by collective bargaining agreement, in which case they may or if they have to go to arbitration of the grievance processes first.

We think examination, close examination of all these provisions in the Act, particularly in light of their legislative history leads to this conclusion.

First of all let us look at liquidated damages.

Arbitrators as this Court has pointed out in Steelworkers charge, these are confined to an interpretation of the collective bargaining agreement.

The award is totally valid only so long as it draws its essence from the collective bargaining agreement.

In that situation and that is the situation in this case, under this collective bargaining agreement, it is doubtful at first whether an arbitrator could award liquidated damages.

It would have to go beyond the collective bargaining agreement to do so.

Let's suppose he could, suppose the Court says that we can apply that?

Well even if he could, the point is Congress said the Court should decide.

It is a Court, judicial discretion which is guided by sound legal principles is to be exercised in determining whether liquidated damages should be given.

More important, I have been assuming that case goes to arbitration, but under this collective bargaining agreement which quite typical after the very first step, the union has control over the grievance.

The point is that the grievance may well be settled along the way before it reaches arbitration.

Indeed this Court has pointed on many occasions that this is the preferable way of handling disputes to get them settled because the grievance process itself is considered part of collective bargaining agreement.

The only trouble is that is absolutely clear under the Fair Labor Standards Act that the minimum rights are not to be thrown on the bargaining table so that the union and employer can bargain agreement.

This is something that that Congress gave the employees.

It is a minimum standard and it is not to be reduced even upon agreement by the employer and the union.

Indeed, in the Sholty case which was decided back in the 1940 and we discussed in our brier on pages 16 to 17, this Court held that even in an individual employee entering into a settlement, a bona fide settlement agreement over a claim with his employer could not be held to have waived his right to liquidate the damages, so let us go to union and do it for him.

Also, the Act as I said before provides that employee --

Justice Byron R. White: Well, that would not necessarily prevent remission to arbitration?

It is like the NLRB deferring to arbitration and that is done by it?

Mr. A. Raymond Randolph, Jr.: Supposing -- My point is Mr. Justice White --

Justice Byron R. White: You just might avoid the lawsuit at all if it went to arbitration and get everything they wanted?

Mr. A. Raymond Randolph, Jr.: My point is that before you -- arbitration may or may not happen.

Now the claim here is that the employee should subject their Fair Labor Standards Act Claims to the grievance process which may or may not lead to arbitration.

My point was that suppose the grievance process works as it is supposed to work that is the claim is settled between the union and employer before it reaches arbitration.

Unknown Speaker: (Inaudible)

Mr. A. Raymond Randolph, Jr.: That is right.

And my point is that if that is true --

Unknown Speaker: Would that not be presented at all?

Mr. A. Raymond Randolph, Jr.: No, my point is, I conclude from that the Congress could not possibly have intended the employees to go through the grievance process before they submit their claims in Court.

Unknown Speaker: (Inaudible)

Mr. A. Raymond Randolph, Jr.: Sorry?

Unknown Speaker: (Inaudible)

Mr. A. Raymond Randolph, Jr.: I am taking about what Congress intended whether -- and I think that Congress had -- knew that as well as I do.

Chief Justice Warren E. Burger: Do you think Congress put any limitations on the right of these men, these claimants to settle their claim directly with the employer after it had been asserted either before or after the pendency of the lawsuit?

Mr. A. Raymond Randolph, Jr.: Well, this Court has held that one that when the dispute between the employer and the union, this is the Sholty case involves a question whether the Act, in fact Congress then that the only time the employee can bound to a settlement agreement is that the settlement agreement is upon a stipulated judgment.

If a settlement is outside the Court, it will not be upheld.

Chief Justice Warren E. Burger: Well, let us assume that they go by stipulation for judgment; do you think your position puts any barriers in the way of having these matters disposed of without litigation?

Mr. A. Raymond Randolph, Jr.: Oh!

No, not at all.

Chief Justice Warren E. Burger: You certainly would agree that it is better that these cases be settled rather than tried?

Mr. A. Raymond Randolph, Jr.: It is certainly better that the employer would comply from the outset.

I guess the next best thing is that he would comply as soon as the employee complains.

I certainly would hope that if the employee does find out the violation --

Chief Justice Warren E. Burger: You are talking about the compliance now, that means giving a hundred cents on the dollar of the total claim.

I am talking about compromised settlement.

Mr. A. Raymond Randolph, Jr.: Well, that is interesting history.

Chief Justice Warren E. Burger: Do you think there is anyone -- the government or anyone has any interest in putting barriers in the way of compromised settlements of small claims?

Mr. A. Raymond Randolph, Jr.: Yes, I think the government does.

The reason is this.

That if the employee and employer get together and settle claim for less than the amount that was due, that gives the employer an advantage over his competitors who are bound to the minimum standards of the Act.

Suppose for an example, an individual employee is only paying his employees a dollar an hour when he is supposed to be paying him $1.60, employees come to him and say, you are violating the Fair Labor Standards Act, please pay as the amount we are due and they compromise on a $1.30 an hour.

Well, that gives an employer an advantage and its also gives the employer who can bargain the hardest with his employees, the advantage of getting that increase.

I think it is absolutely clear that Congress never intended that.

They wanted uniform application.

These are the reasons that lead the Court in the Sholty case and indeed in the Brooklyn Bank case back in 1943 to hold that settlement agreements were not valid, that employees could not be bound by that and that they can come into court and get more.

Unknown Speaker: Mr. Randolph, are you saying that if after all (Inaudible)?

Mr. A. Raymond Randolph, Jr.: No, I said they can settle, but I think the government has an interest in making sure that they get exactly what they are entitled to under the Act.

Now, the question whether they can settle over the bona fide dispute involving the number of hours they should be paid has never been before this Court.

I do not think it is essential for this case.

I mean I think they have many other things under the Act that indicate that Congress could not have been intended them to go through the grievance process.

For example, the limitations on action when Congress gave these employers two years within which to sue before 1947, state law controlled the statute of limitations.

They were diversion views and Congress found in 1947 that this lack of uniformity has created an undesirable situation in the United States.

They therefore set a two-year Federal Standard.

The point is they did this not only to get uniformity but because they believe employees might not generally know their rights under the Act and needed that long period of time within which to bring their suit.

Suppose we accept the employer's claim in this case that employees are barred from Court because they did not invoke grievance procedures when they were available.

This would bring about even greater lack of uniformity and that's precisely what Congress legislated against because if they take it that would mean that when the grievance process was available they would be bound by the terms of the grievance process which may set its own time limits or when they could bring the grievance.

In this case, except to (Inaudible) Mr. Justice White you asked my colleague here whether there is no any limit on the first step.

As I read the contract which is set down on 829, the appendix says, yes, 10 days.

Unknown Speaker: Where, where?

Mr. A. Raymond Randolph, Jr.: In the event he does receive a satisfactory answer --

Unknown Speaker: Well, that --

Mr. A. Raymond Randolph, Jr.: -- he shall within 10 days of --

Unknown Speaker: I think he refers to that, first step is that he has with or without union representative there was immediate supervisor?

Mr. A. Raymond Randolph, Jr.: Well, it is titled Step one in the contact that is what I was referring --

Unknown Speaker: They did not even go to that step, did they?

Mr. A. Raymond Randolph, Jr.: No, but I think that the way I read it, it says he shall submit within 10 days of knowledge of the incident.

That certainly means the incident he is complaining about.

So after he goes to his employer says and says, look you are doing something wrong under the contract then within 10 days, he has to file a written grievance.

Unknown Speaker: You write out of that sentence in the event he does not receive a satisfactory answer?

Mr. A. Raymond Randolph, Jr.: Yes.

No, I do not write that out.

If he does receive a satisfactory answer, of course, there is no reason for him to file a written grievance, but the point is that all collective bargaining agreements set their own time limits and that is precisely the contrary what Congress wanted.

They wanted a uniform standard throughout the country and they did not want 10 days or 15 days, or a year, they wanted two years.

So further indication, I think this is quite important is that before 1947, unions could bring actions on behalf of their own employees.

But in 1947, Congress under Section 16 (b), deleted the provision allowing representative actions so that now 16 (b) reads “that only the employee himself controls and prosecutes his own action.”

Compare that to the grievance process, it is precisely the opposite of what Congress said because in the grievance process, beyond the very first step where the employee steps down as written grievance it is the union that controls prosecution of the claims.

That is directly contrary to a Congress legislated in 1947.

So further and I think I have been talking about this already, the point is that the maximum hours provision is concerned more simply than we ware simply helping the industry.

This is an important part of the helping the individual employee bear the burden of having to worked over 40 hours, concerned with more than that, because one of the reasons that Congress set down a limit on maximum hours is to spread employment throughout the country by exerting pressure on employee -- employers to hire more people rather than working the people they have in an overtime.

Also, since the minimum standards apply throughout the country.

They have to be applied uniformly.

If they are not, one employer gains an advantage over his competitors.

Congress could not possibly have thought that they could realize, that these goals could be realized from the grievance process or even through arbitration.

The claims are settled by the union and the employer along the way.

The lack of uniformity is quite obvious.

Each employer in each industry is going to be treated differently because the grievance process is tailored to the particular problems of the plant, but even if the matter reaches arbitration, arbitrators are not necessarily trained in the law.

They don't necessarily fall to stare decisis.

They do not have to give reasons for their opinions.

Their record is not as complete as in a Judicial Trial.

There is very limited judicial review of what they held and all these factors are quite important if you are going to have uniform interpretation of what is in fact of the Fourteenth Federal Enactment that applies to people throughout the country.

In addition, finally, Congress in Section 16 (c) and Section 17 of the Act said the Secretary of Labor can enforce it even when the employee himself is unwilling or unable to bring the action.

Now, we think that it the Secretary has direct access to the Court, it makes little sense to say that employees don't, that they have to go though the grievance process where Secretary can bring an action directly in court and that the employee --

Justice Thurgood Marshall: There is one difference, the Secretary did not sign the contact?

Mr. A. Raymond Randolph, Jr.: That is true, the Secretary has to enforce -- The Secretary is not (Voice Overlap) contract right, that is the important thing and neither is the --

Justice Thurgood Marshall: In this case that arbitration could not been done?

Mr. A. Raymond Randolph, Jr.: Well, first of all this is purely statutory.

Justice Thurgood Marshall: The one who could not pay counsel fee?

What is it?

Mr. A. Raymond Randolph, Jr.: It is purely statutory claim.

The contract here is limited --

Justice Thurgood Marshall: We are talking about dollars or cents, aren't we?

Mr. A. Raymond Randolph, Jr.: Well, I said it is doubtful at best whether they can award liquidated damages.

The employee is entitled to twice -- to twice the amount of the damages and I take it if the –- suppose the contract is violated, what does that mean?

That means the employer owes the employee for the amount he has not taken.

The arbitrator is confined to the contract that is what he awards.

The statute does no say that.

It says, we think the employees are damaged even more than that and they are entitled to an equal amount.

Unknown Speaker: (Voice Overlap) provision is broad enough to include (Inaudible)?

Mr. A. Raymond Randolph, Jr.: That is right.

In this case.

I am saying in general --

Unknown Speaker: Well then three to five years, the arbitrators will set the place, I thought you admitted that?

Mr. A. Raymond Randolph, Jr.: No, I said, I would assume that.

I did not admit it.

I said I will assume that for the purposes of my argument.

Unknown Speaker: Well, assume that then?

Mr. A. Raymond Randolph, Jr.: Yes.

Unknown Speaker: Then what about the arbitration?

Mr. A. Raymond Randolph, Jr.: Then I say it is doubtful at best whether the arbitrator is going to award the liquidated damages.

Unknown Speaker: (Inaudible)

Mr. A. Raymond Randolph, Jr.: No, because my assumption was -- my assumption went to the question whether the arbitrator can determine under the Fair labor Standards Act whether this was worth and I assume he can, but I am talking about the remedies he gives after he makes that determination.

Whether they are governed by the contract or not is doubtful at best and the point is that this is supposed to be uniform throughout the county and it should in turn what the contract says.

Moreover, in the Republic Steel case, this Court’s decision in the Republic Steel case is quite distinguishable from here because Republic Steel dealt only with the question of contract interpretation.

The point is neither Congress nor this Court has ever said that grievance proceedings in the labor contract is a preferred method of vindicating an employees' statutory rights independent of the contract.

Chief Justice Warren E. Burger: We will continue there after lunch, Mr. Randolph.[Lunch Break]

Mr. A. Raymond Randolph, Jr.: You may continue Mr. Randolph.

Mr. A. Raymond Randolph, Jr.: Thank you Mr. Chief Justice and may it please the Court.

I was discussing the Bulk Carrier’s case which this Court decided last term.

I also made reference to the McKinney case which was decided in 1957 which we have discussed on pages 24 to 25 of our brief.

In both of these cases, this Court held that when Congress provided, the Court should be the forum for enforcing an employees' statutory rights, the employee was entitled to direct the access to the courts.

The Court so held in both cases even though the contract grievance procedures were available and even though determination of the employees' statutory rights required interpretation of the collective bargaining agreement.

We think this is even a stronger case because in this case, they said at the outset, the employees' claims did not require interpretation of the collective bargaining agreement.

Their claims under the Act of overtime compensation are derived entirely from the Fair Labor Standards Act and we think this case is also stronger than Bulk Carriers and McKinney because Congress' intent to afford direct access to the Courts is even more apparent than the provisions and policies of the Fair Labor Standards Act and it was with the respect of the statutes involved in McKinney and Bulk Carriers.

Over the three decades, that have passed since enactment of the Fair Labor Standards Act in 1938, a considerable body of Federal law has developed through the State and Federal Court decisions construing and applying the Act.

These decisions and the Acts provisions and legislative history together with administrative determinations must be considered in deciding the merits of every case that arises under the Fair Labor Standards Act.

The point is this is a job for the Courts and the not arbitrators.

An important point is that Congress made it a job for the Courts and certainly not a task that can be handled through bargaining by the union and the employer in grievance proceeding, particularly since employees’ rights, the minimum wages, and overtime compensation under the Fair Labor Standards Act cannot be bargained away.

For these reasons, we urge the Court to affirm the decision of the Supreme Court of Iowa.

Thank you.

Chief Justice Warren E. Burger: Mr. Franck.

Argument of Raymond Edward Franck

Mr. Raymond Edward Franck: Mr. Chief Justice and may it please the Court.

I am the attorney representing the respondents in this case.

We are in full agreement with the law as expressed by the government as a general law, but we must return to the fact of the instant case to determine just what the rights of the respondents were.

If we will refer to the contract, which was entered into by the Union and the management, the first thing we must realize that this is not a contract in any way, like a contract in Bulk Carriers.

The contract in Bulk Carriers provided something to the effect that the arbitrators had the power to settle any and all disputes between the employees and the employer.

We must return to the individual contract in this case.

In the Steelworker cases and especially the Wheel case and also in the Warrior Gulf case, the Court held that the arbitrators power came from the contract.

That is why we must refer to this individual contract that I have before me which is set out in the appendix.

The first thing it does, it defines by its terms what a grievance is.

A grievance pertains to the violation of the agreement.

No reference to any and all problems between employer and employee.

No reference to any federal statutes, just a direct reference to this contract.

Secondly, in Section 2 on page 30, the power of the arbitrator is specifically set out.

His decision in the grievance shall be final and binding on the party, provided he shall not have authority other than to apply the terms and conditions specifically set forth in this Contract.

So let us refer back to our instant case again.

At no point, did any of the 14 respondents complained that they did not get a meal break, no place in their petition, no place in their reply, no place in the trial or lawsuit.

The respondents admit, they got their meal break.

Under the facts in this case, the contract provides that they are entitled to a meal break.

It does not provide the length of the meal break whether it is five minutes or whether it is an hour.

Now, there isn't any question that the employees got their meal break.

Under the facts in this case, they say five hours after they reported for work.

They were on their meal break in a special cafeteria set aside, not the general cafeteria where the other labors were, but only the maintenance men were permitted to use this special cafeteria.

When the bell rang for a breakdown, if that was doing their lunch period, they left their lunch period, fixed the breach and came back and they were given their lunch break.

So we are not complaining abut the fact that we did not get a lunch break.

What we are complaining about is the fact that we never got paid under the Fair Labor Standards Act for the on call time.

Unknown Speaker: Mr. Franck?

Mr. Raymond Edward Franck: Yes?

Unknown Speaker: Are there (Inaudible)?

Mr. Raymond Edward Franck: Yes, I would but I do not agree with the Supreme Court of Iowa.

I think we got to consider that this is a different case, a much stronger case than either the McKinney case versus the Railroad or Republic Steel or even the case of Bulk Carriers.

When we look at the McKinney case, we have a remedy based upon a contact.

The same is true in Bulk Carriers.

When we go to the case of Republic Steel, we there have a contract right.

But here we have a statutory right and a statutory remedy which the respondents went into the Court and requested it'd be enforced against the employer.

Now insofar as they will admit and they do admit in their brief that before you can come under the terms of hours work which is Article 7 of the contract, you must first establish whether or not the meal times were subject to be paid because they were on call.

There is nothing in this contract about on call and then if we proceed to the next step, it seems apparent to me that the government intended that the Fair Labor Standard Act should be treated differently than other union regulations because of this two-year statute of limitation.

Now, it appears to me that the union fails in this and they take over the matter and they do not comply with their statute limitation which says in the event he does not receive a satisfactory answer he shall within ten days of the knowledge of the incident.

Not of the discussion with his employer, within knowledge of the incident he is barred unless he starts his grievance procedure.

This is going to create a tremendous hardship on the employees who are represented by a union and give a great advantage to a person who works on a non-union job.

For this reason, under the Act, it provides the Portal-to-Portal Act and the Fair Labor Standards Act that number one, each work week is a separate incident or a separate cause of action.

Now, if we proceed then to the Portal-to-Portal Act where we have the two-year statute limitation and a recent amendment to three years, we find that we are penalizing someone who is working in a union job, taking away rights that a man in a non-union job would have.

And for this reason we feel that these people should be permitted; Number one, irregardless of any other rule.

That Maddox does not apply here because we do not have the type of contract that would permit arbitration by a fair return.

Secondly, in the Bulk Carrier’s case and the dissent therein does not apply because Bulk Carriers have this very wide contractual agreement which said in effect we are going to let arbitrators settle any problem between an employer and an employee.

Now, if the Court should decide that this was true in this case, then there would not be any reason why you could not require a man who was hurt in the plant under a state law to arbitrate workman’s compensation, that is the statutory right.

So I feel that the Supreme Court of Iowa should be affirmed.

That there is not any statutory or congressional intent which would obviate that reason.

I would also like to point out that the union contract is not in existence.

The union itself is not in existence.

There is no way for these people to obtain a remedy unless the basis of this and insofar as the facts of this case, in 1966, one year prior to the time of the filing of these suits an attempted grievance was filed.

It never went beyond any formal situation.

The record is not clear as whether payment was made or whether it was not made, there are statements on both sides.

However, we must remember that that was a grievance according to the record on a failure to have a lunch period, not an on call lunch period and to show the problems that arose after these suits were filed, and a letter was sent out from the company which is a part of the record, instructing these people to use their grievance procedure and not to answer the bell if it rang.

When they refused to answer the bell, the foreman said to them, well, you answer to that bell, do not pay any attention to what those people say upstairs, they do not know what is going on down here.

So I think that any attempt to make them do this would have been futile.

So therefore I respectfully urge the Court to affirm the Supreme Court of the State of Iowa.

Chief Justice Warren E. Burger: Very well, Mr. Franck.

Mr. Goldberg you have about two minutes left.

Rebuttal of Louis S. Goldberg

Mr. Louis S. Goldberg: Mr. Chief Justice and may it please the Court.

The amicus brief relies most largely for its position on the Brooklyn Savings Bank case.

As we point out on page 22 of our brief, the Court there said that the Fair Labor Standards Act was designed to protect certain groups of the population from substandard wages due to the unequal bargaining power as between employer and employee.

We do not have that unequal bargaining power here and that is the reason for distinguishing collective bargaining agreements.

Justice Byron R. White: So what you are after is the assertion that collective bargaining contract itself did not specifically give the arbitrator the power to hear a statutory as compared with a contractual claim?

Mr. Louis S. Goldberg: Mr. Justice White, our understanding is that the operation of the law is just the other way that under the opinion in Maddox and in the opinions in the Steelworkers cases, the rule seems to be as we understand it, laid down that arbitration does apply unless there is an express exclusion of some subject matter in the contract.

Justice Byron R. White: Well, this provision says that arbitration is limited to the construction and application of the contract and if a claim is asserted based on the statute, independent of any contract what business does the arbitrator got?

Mr. Louis S. Goldberg: I think that very point was Mr. Justice in the Buckley case in the Ninth Circuit and it was rejected for the reason that that becomes just a matter of semantics.

The basis of the claim there as here was a violation of the contract, agreement to give a lunch period and a failure to give it because of the on call provision.

Now, that triggers entry into the remedial provisions of the Fair Labor Standards Act, but it does not provide the basic right and that was argued unsuccessfully by the parties in the Buckley case and decided our way.

Generally arbitrator --

Justice Harry A. Blackmun: Mr. Goldberg, if you prevail here what remedies do these respondents have now?

Mr. Louis S. Goldberg: Well, possibly the same remedy that Maddox had or that the parties in the Lockridge case had, whatever they may be, that would have to be determined afterwards.

The Maddox, simply overruled the -- or simply reversed the case and left it there.

These parties had notice of the law long before they filed their lawsuit.

Unknown Speaker: Again, they might be zeroed?

Mr. Louis S. Goldberg: It may not be.

It depends on what may have developed, but anyway they chose their route at their own peril.

Unknown Speaker: But the union is out and counteract is terminated?

Mr. Louis S. Goldberg: Well, the contract per se I think terminated by its terms, but I think the absence of the union does not terminate the rights under the contract that was in existence during the time that these people are talking about.

Justice Harry A. Blackmun: Is there a different union in now at the Iowa Beef Packers?

Mr. Louis S. Goldberg: No, I understand there is no union now, Your Honor but the individuals have their rights under the express terms of the contract.

Chief Justice Warren E. Burger: Thank you, Mr. Goldberg, Mr. Randolph, Mr. Franck.

The case is submitted.