Karabetis v. Mayor of Baltimore

ALPERT, Judge. This case is about an alleged present day economic exploitation of laborers in a doughnut factory. The plight of workers has historically been manifested by two extremes: long working hours for low wages on the one hand, and rampant unemployment on the other. The apex was reached more than half a century ago during that era of economic despair known as the Great Depression.

Competition for limited markets demanded that labor costs be cut. The result was substandard wages, rampant unemployment, and increased use of children as a cheap labor source. 1 Those tragically lean years gave birth, in 1938, to the Fair Labor Standards Act (FLSA). FLSA created a national minimum wage, mandatory overtime pay, and rules concerning child labor for employees engaged in interstate commerce or in the production of goods for interstate commerce. The Congressional findings and declaration of policy stated: (a) The Congress finds that the existence, in industries engaged in commerce or in the production of goods for commerce, of labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers (1) causes commerce and the channels and instrumentalities of commerce to be used to spread and perpetuate such labor conditions among the workers of the several States; (2) burdens commerce and the free flow of goods in commerce; (3) constitutes an unfair method of competi ⁴¹¹ tion in commerce; (4) leads to labor disputes burdening and obstructing commerce and the free flow of goods in commerce; and (5) interferes with the orderly and fair marketing of goods in commerce.

That Congress further finds that the employment of persons in domestic service in households affects commerce. (b) It is declared to be the policy of this chapter, through the exercise by Congress of its power to regulate commerce among the several States and with foreign nations, to correct and as rapidly as practicable to eliminate the conditions above referred to in such industries without substantially curtailing employment or earning power. 29 U.S.C. § 202 (1982). Some 28 years after enactment of FLSA, the Mayor and City Council of Baltimore found: many persons employed in Baltimore are paid wages which, in relation to the cost of living in the City and the income necessary to sustain minimum standards of decent living conditions, are insufficient to provide adequate maintenance for themselves and their families; that the employment of such persons at such wages impairs the health, efficiency, and well-being of the persons so employed and of their families, reduces the purchasing power of such persons, diminishes and depresses business, trade, and industry in the City, threatens the stability and well-being of the City’s economic life, fosters and contributes toward slum conditions and housing evils and creates conditions of want and deprivation tending to weaken and undermine family life and breed crime and juvenile delinquency. Baltimore City Code, Art. 19, § 61 (1983).

The City, therefore, enacted its own Wage Law. 2 ⁴¹² Violation of the City ordinance by appellants resulted in a judgment of $78,294.66 ($54,294.66 restitution and $24,000 in civil penalties) against them and spawned this appeal. In October 1983, the Wage Commission for Baltimore City (the “Commission”) began receiving complaints that Elrino Bakery, a general partnership, was not paying its employees overtime compensation in accordance with the Baltimore City Wage Law, Baltimore City Code, art. 19 § 61 et seq. (1983), which requires, inter alia, that employees be paid one and one-half times the usual hourly rate for all hours worked in excess of forty during a single work week. Subsequently, both the Wage Commission for Baltimore City and the Federal Wage and Hour Division of the United States Department of Labor began investigations to determine whether Elrino Bakery was paying overtime compensation.

Upon learning of the federal investigation, the Baltimore City investigator “put his investigation on hold” while the federal investigation continued. The federal investigator determined that Elrino Bakery had violated the FLSA provision requiring that employees be paid time and a half for overtime. 29 U.S.C. § 207 (a)(1) (1983). Before instituting formal proceedings, the federal investigator offered a settlement of $26,000.00 to the owners of Elrino Bakery. The owners accepted the offer and promptly paid $26,000.00 in restitution.

Elrino Bakery admitted to previous violations, but asserted that it had complied with the law since the federal investigation. After the federal settlement, the federal investigator referred the case back to the Baltimore City Wage Commission, which reopened its investigation of the same time period covered by the federal investigation. 3 The city inves ⁴¹³ tigator determined that the federal investigation was incomplete and cursory and that the violations discovered by the federal investigator were a mere “drop in the bucket.” An administrative hearing was held on December 10, 1985, before the Baltimore City Wage Commission to determine whether Elrino Bakery owed overtime compensation to its employees pursuant to the Baltimore City Wage Law. George Karabetis, part owner of the bakery, appeared before the Commission without benefit of counsel. He demonstrated some difficulty with the English language, causing the tribunal concern over whether there would be communication difficulties.

Nevertheless, Karabetis acknowledged that he had not been paying time and a half to employees who worked overtime. The Commission scheduled a second hearing for January 4, 1986. The owners of Elrino Bakery, appellants, did not attend the second hearing. The Commission issued an order requiring them to pay $54,294.66 in restitution and $24,000.00 in civil penalties.

Appellants failed to appeal this order to the Circuit Court for Baltimore City within the thirty day period required by the Baltimore City Wage Law. Baltimore City Code, art. 19 § 70(d) (1983). On April 24, 1986, appellees, the Mayor and City Council of Baltimore, filed a complaint in the Circuit Court for Baltimore City to enforce the administrative order of the Wage Commission for Baltimore City. When served with this complaint, Elrino Bakery retained an attorney to defend the enforcement action.

The Mayor and City Council of Baltimore filed a motion for summary judgment, which was heard by Judge Thomas Ward. Appellants opposed the motion for summary judgment, asserting that: (1) the action of the Wage Commission for Baltimore City was pre-empted by the FLSA, thereby making the administrative order invalid and unenforceable; ⁴¹⁴ (2) Elrino Bakery could properly raise the validity of the administrative order sought to be enforced even though an appeal was not taken within the thirty (30) days provided by the Baltimore City Wage Law; and (3) the facts in the record were insufficient to sustain a judgment in the enforcement action. On November 14, 1986, Judge Ward signed an order granting the motion for summary judgment. Elrino Bakery filed a timely appeal to this court and presents the following questions: I. Whether, in judicial proceedings to enforce an order of the Wage Commission for Baltimore City, Defendant[s], who had previously failed to appeal from such order within the thirty (30) days provided by local ordinance, were entitled to raise as a defense in the enforcement proceedings the issue of the validity of the order sought to be enforced?

II

Whether the jurisdiction of the Wage Commission for Baltimore City to issue an order to enforce the maximum hour provisions of the Baltimore City Wage Law, Baltimore City Code art. 19 § 61 et seq. (Repl.Vol.1983) was pre-empted by the Federal Fair Labor Standards Act, 29 U.S.C. § 201 et seq. (1982) where both the Federal Act and the City Ordinance specify the same maximum hour provisions and where the employer in question was subject to the provisions of the Federal Fair Labor Standards Act?

III

Did the trial court err in granting plaintiffs motion for summary judgment where plaintiff had not proven all of the elements of its cause of action for enforcement of the Order of the Wage Commission for Baltimore City? I. Raising the Validity of the Commission’s Order As a Defense in the Enforcement Proceeding Appellants contend that the trial court erred in granting appellee’s motion for summary judgment. Specifi ⁴¹⁵ cally, appellants argue that, although they did not file a timely appeal from the order of the Wage Commission for Baltimore City, they were entitled to defend the enforcement action brought by Baltimore City by challenging the validity of the order sought to be enforced. The Baltimore City Wage and Hour Law established a Wage Commission, Baltimore City Code, art. 19, § 62 (1983), and empowered that commission to take action to enforce the Baltimore Wage and Hour Laws, Baltimore City Code, art. 19, § 63 (1983).

Once the Commission has resolved a case and issued a final order, the respondent may file an appeal to the Circuit Court for Baltimore City within 30 days. Baltimore City Code, art. 19, § 70(d) (1983). If the respondent files no appeal and fails to comply with the order, the Wage Commission “may certify such proceedings to the City Solicitor and request that he petition the Circuit Court for Baltimore City to enforce” the order. Id.

The Maryland “B” Rules govern appeals from administrative agencies of which the Wage and Hour Commission is one. Rule B1 dictates that “[t]his subtitle shall apply to the review of any final action of an administrative agency by a court where such review is specially authorized by statute----” Thus, the B rules are applicable to the case sub judice, since Baltimore City Code, art. 19, § 70(d) (1983) specifically authorizes appeal to the circuit court. Rule B4(a) requires an order for appeal to be filed “within 30 days from the date of the action appealed from.” If the appellant fails to file an appeal within 30 days, Rule B5 requires that “the court shall dismiss the appeal unless cause to the contrary can be shown.” For cases construing this rule, see Francois v. Albert Van & Storage Co., Inc., 285 Md. 663, 671-3 , 404 A.2d 1058 (1979); Border v. Grooms, 267 Md. 100, 105-7 , 297 A.2d 81 (1972); Volk v. Pugatch, 262 Md. 80, 83 , 277 A.2d 17 (1971); Warmack v. Bradley Club, 242 Md. 394, 396-8 , 219 A.2d 12 (1965); Salisbury Board of Zoning Appeals v. Bounds, 240 Md. 547 , 214 A.2d 810 (1965); Renehan v. Public Service Commission of Maryland, 231 Md. 59, 63 , 188 A.2d 566 (1963) ⁴¹⁶ (applying the predecessor to the B Rules); Levitz Furniture Co. v. Prince George’s County, 72 Md.App. 103 , 527 A.2d 813, 815-17 (1987); Matthew Bender & Co. v. Comptroller, 67 Md.App. 693, 698-703 , 509 A.2d 702 (1986). In the case sub judice, appellant failed to file a timely appeal from the Commission’s order.

The Commission, pursuant to Baltimore City Code, art. 19, § 70(d), then filed an action to enforce the order. It is clear that the failure to file a timely appeal renders a judgment final even when the judgment of the lower tribunal was “wrong or rested on a legal principle subsequently overruled in another case.” Federated Department Stores, Inc. v. Moitie, 452 U.S. 394, 398 , 101 S.Ct. 2424, 2428 , 69 L.Ed.2d 103 (1981). See also Epstein v. Chatham Park, Inc., 52 Del. 56 , 153 A.2d 180, 185 (1959); Petrus v. Robbins, 196 Va. 322 , 83 S.E.2d 408, 412 (1954). See generally 46 Am.Jur.2d Judgments § 461 (1969).

As the Supreme Court explained: [A]n “erroneous conclusion” reached by the court in the first suit does not deprive the defendants in the second action “of their right to rely upon the plea of res judicata____ A judgment merely voidable because based upon an erroneous view of the law is not open to collateral attack, but can be corrected only by a direct review and not by bringing another action upon the same [cause of action.]” We have observed that “[t]he indulgence of a contrary view would result in creating elements of uncertainty and confusion and in undermining the conclusive character of judgments, consequences which it was the very purpose of the doctrine of res judicata to avert.” Federated Dept. Stores, 452 U.S. at 398 , 101 S.Ct. at 2428 . The decision of an administrative agency “has the same effects under the rules of res judicata, subject to the same exceptions and qualifications, as a judgment of a court.” 4 — ⁴¹⁷ Restatement of Judgments § 83(1) (1982). Further, objections or questions which were not raised in the administrative proceeding will not be considered on review by an appellate court.

Cicala v. Disability Review Bd. for Prince George’s County, 288 Md. 254 , 418 A.2d 205 (1980); Bulluck v. Pelham Woods Apartments, 283 Md. 505 , 390 A.2d 1119 (1978); Tucker v. American Smelting and Re ⁴¹⁸ fining Co., 189 Md. 250 , 55 A.2d 692 (1947). Accordingly, appellant’s failure (1) to raise the pre-emption defense during the administrative hearing and (2) to file a timely appeal of the administrative decision to the circuit court rendered the agency’s decision final. Thus, appellant’s pre-emption defense, unless considered jurisdictional, was barred by the doctrine of res judicata since it could have been raised before the administrative tribunal and on a timely administrative appeal. A challenge to the Commission’s jurisdiction (i.e., its power to hear the case) could, of course, be raised at any time.

McLean Constr. Co. v. Md. Transp. Auth., 70 Md.App. 514, 526 , 521 A.2d 1251 (1987). See also discussion infra.

II

Pre-emption and Jurisdiction of the Commission Appellants contend that “in the area of wage and hour regulation ... Congress intended to allow the states to exercise concurrent jurisdiction only when the state law or municipal ordinance provided for a higher minimum wage or lower maximum hour provision than the FLSA.” Appellants note that both the Baltimore City Wage Law, Baltimore City Code art. 19, § 67 (1983), and the FLSA, 29 U.S.C. § 207 (a)(1) (1982), dictate that employees be paid time and a half for all work over forty hours in a work week. Accordingly, appellants assert that the Wage Commission for Baltimore City had no jurisdiction over the case since the Baltimore City act “was pre-empted by the Federal Fair Labor Standards Act, 29 U.S.C. § 201 et seq. (1982), where both the federal act and the city ordinance specify the same maximum hours provisions and where the employer ... was subject to the provisions” of the federal act.

Jurisdiction At this point, We deem it necessary to examine the term “jurisdiction,” for appellants argue that pre-emption deprives the City Wage Commission of its authority to hear the case. In Stewart v. State, 287 Md. 524 , 413 A.2d 1337 (1980), the Court of Appeals said that “[¡juridically, jurisdiction refers to two quite distinct concepts: (i) the power of a ⁴¹⁹ court to render a valid [final judgment], and (ii) the propriety of granting the relief sought,” 287 Md. at 526 , quoting Moore v. McAllister, 216 Md. 497, 597 , 141 A.2d 176 (1958) (emphasis in original). See also First Federated Commodity Trust v. Comm’r, 272 Md. 329, 334 , 322 A.2d 539 (1974); Preissman v. City of Baltimore, 64 Md.App. 552, 559 , 497 A.2d 826 (1985). See generally 1 Pomeroy, Equity Jurisprudence §§ 129-31 (5th ed. 1941).

Only when a court lacks the “fundamental jurisdiction to render the judgment” is there an absence of authority so as to render the judgment a nullity. Stewart, 287 Md. at 526 , 413 A.2d 1337 ; First Federated Commodity Trust, 272 Md. at 334 , 322 A.2d 539 . See also Pulley v. State, 287 Md. 406 , 412 A.2d 1244 (1980); Parks v. State, 287 Md. 11 , 410 A.2d 597 (1980); Block v. State, 286 Md. 266, 270-3 , 407 A.2d 320 (1979). The power of a court to hear and determine disputes is derived from applicable constitutional and statutory provisions.

Stewart, 287 Md. at 527 , 413 A.2d 1337 . If, by that law which defines the authority of the court, a judicial body is given the power to render a judgment over the class of cases within which a particular one falls, then its action cannot be assailed for want of subject matter jurisdiction. Id. (emphasis in original), quoting First Federated Commodity Trust, 272 Md. at 335 , 322 A.2d 539 .

Parties to a controversy cannot consent to or confer jurisdiction in its fundamental sense upon a court. Stewart, 287 Md. at 527 , 413 A.2d 1337 ; McLean Cont., 70 Md.App. at 526 , 521 A.2d 1251 . Moreover, the lack of fundamental jurisdiction may be raised at any time, including on appeal. Id.

On the other hand, the propriety of granting the relief sought, as opposed to fundamental jurisdiction, merges into the final judgment and cannot be attacked once enrolled. Id. Thus, we must determine whether the Wage Commission had the fundamental power to hear