New Jersey Department of Labor v. Pepsi Cola Company

SYLLABUS
 

(This syllabus is not part of the opinion of the Court. It has been prepared by the Office of the Clerk for the convenience of the reader. It neither has been reviewed nor approved by the Supreme Court. Please note that, in the interests of brevity, portions of any opinion may not have been summarized).

New Jersey Department of Labor v. Pepsi Cola Company (A-87-00)


(NOTE: The Court wrote no full opinion in this case. Rather, the Court's affirmance of the judgment of the Appellate Division is based substantially on the reasons expressed in Judge King's opinion below.)
 
Argued October 10, 2001 -- Decided November 14, 2001

PER CURIAM

The Court addresses the power of the Commissioner of Labor (Commissioner) to award prejudgment interest as an element of damages in a wage-and-hour dispute over payment of overtime.

The matter arose out of an enforcement action by the New Jersey Department of Labor (DOL) for payment of overtime wages. On November 30, 1995, the DOL notified Pepsi-Cola Company (Pepsi) that it was in violation of N.J.S.A. 34:11-56a4 and N.J.S.A. 34:11-4.2 for failure to pay overtime to fountain drivers. These fountain drivers deliver syrup and other bulk products used in dispensing machines. The DOL assessed Pepsi $1,885,509.87 in back wages, a $2000 penalty, and $188,509.87 in administrative fees. Pepsi was notified that it had fifteen days to appeal that decision.

In December 1995, Pepsi requested a hearing before the Office of Administrative Law (OAL). On August 19, 1996, the Administrative Law Judge (ALJ) permitted Teamsters Locals 125 and 185 (Teamsters) representing Pepsi's drivers to intervene. On October 15, 1996, the ALJ issued a prehearing order that limited the hearing to the determination of liability to twelve drivers - the test claimants. The ALJ's order provided that counsel, after a decision was made on behalf of the test claimants, could move to have the decision applied to all claimants.

On February 24, 1998, Pepsi conceded that three fountain drivers were entitled to overtime compensation. On November 18, 1998, the Teamsters moved for partial final judgment and sanctions and requested back wages and prejudgment interest on those wages for those three drivers. On March 16, 1998, the ALJ awarded back wages but declined to award prejudgment interest , citing an absence of legal authority.

On April 14, 1999, the Commissioner issued a final agency decision affirming the ALJ's award of back wages but reversing the decision on prejudgment interest. The Commissioner found that as a matter of equity, he had the discretion to make an award of prejudgment interest, particularly in light of the six-year delay in paying the back wages.

Pepsi appealed the Commissioner's order regarding prejudgment interest and the Appellate Division granted a stay of the DOL's order pending appeal. The Appellate Division affirmed the decision of the Commissioner, concluding that he had the discretion to impose prejudgment interest on the back wages. According to the Appellate Division, the Commissioner should be able to impose prejudgment interest because he is specifically charged with the recovery and payment of wages due to a New Jersey employee. Prejudgment interest is an equitable remedy created to recover the loss of what the money owed would have earned if payment had not been delayed. The court noted that if only the face value of the lost wages were paid to the employees after a six- year delay, Pepsi would benefit from its deferral of wages to the detriment of the employees. Thus, the Appellate Division recognized the Commissioner's ancillary power to impose prejudgment interest as a matter of equity, fairness, and simple justice. In addition, the Appellate Division held that the Commissioner's power to award prejudgment interest does not require rule-making.

The Supreme Court granted certification.

HELD: The judgment of the Appellate Division is affirmed substantially for the reasons expressed in Judge King's opinion. The Commissioner of Labor has the power to award prejudgment interest against Pepsi-Cola Company in order to make whole the claimants who were underpaid for overtime hours worked.
 
1. The power of the Commissioner to award prejudgment interest can arise only from his express and implied powers granted by the Legislature in enabling legislation, and not from any non-statutory ability to exercise equitable powers. (P. 2)

2. An administrative officer's powers are limited to those expressly granted by statute or those fairly implied as necessary to carry out his or her assigned function. Here, the Commissioner's award of prejudgment interest is fully supported by the statutes that set forth the Commissioner's powers and responsibilities under the Wage and Hour Law. The award of prejudgment interest in this enforcement action was a proper exercise of the Commissioner's statutory powers necessary to the enforcement of that law. (Pp. 2-4)

3. The promulgation of a regulation is not always required when the Commissioner initially seeks to exercise statutory express or implied power. However, the principles of Metromedia, Inc. v, Director, Division of Taxation counsel that a regulation be promulgated to provide the public with notice and opportunity to comment on future application of the regulatory authority. The Commissioner's recent promulgation of a rule that specifies when he will impose prejudgment interest in future cases was a proper action and in no way undermines the soundness of the exercise of his implied power to award prejudgment interest in this case. (Pp. 4-5)

Judgment of the Appellate Division is AFFIRMED.

CHIEF JUSTICE PORITZ and JUSTICES STEIN, COLEMAN, LONG, LAVECCHIA and ZAZZALI join in this PER CURIAM opinion. JUSTICE VERNIERO did not participate.
 

SUPREME COURT OF NEW JERSEY
A- 87 September Term 2000

NEW JERSEY DEPARTMENT OF
LABOR,

Petitioner-Respondent,

and

TEAMSTERS LOCAL 125 and 185
INDIVIDUAL CLAIMANTS,

Intervenors-Respondents,

v.

PEPSI-COLA COMPANY,

Respondent-Appellant.

______________________________

Argued October 10, 2001 -- Decided November 14,2001
 
On certification to the Superior Court, Appellate Division, whose opinion is reported at 336 N.J. Super. 532 (2001).
 
Wayne J. Positan argued the cause for appellant (Lum, Danzis, Drasco, Positan & Kleinberg, attorneys; Mr. Positan and Richard A. West, Jr., on the briefs).
 
Karen A. Du Mars, Deputy Attorney General, argued the cause for respondent New Jersey Department of Labor (John J. Farmer, Jr., Attorney General of New Jersey, attorney; Nancy Kaplen, Assistant Attorney General, of counsel).
 
James L. Linsey argued the cause for respondents Teamsters Local 125 and 185 Individual Claimants (Cohen, Weiss and Simon, attorneys).
 

PER CURIAM

We affirm the judgment of the Appellate Division allowing the Commissioner of Labor to award prejudgment interest against Pepsi-Cola Company in order to make whole the claimants who were underpaid for overtime hours worked. We do so substantially for the reasons stated in the thorough and thoughtful opinion of Judge King. New Jersey Dep't of Labor v. Pepsi-Cola, 336 N.J. Super. 532 (App. Div. 2001).
We reaffirm, however, that the right of the Commissioner to award prejudgment interest can arise only from his express and implied powers granted by the Legislature in enabling legislation, and not from any non-statutory ability to exercise equitable powers. Administrative agencies, including administrative officers, are creatures of legislation. In Re Regulation F-22, Office of Milk Indus., 32 N.J. 258, 261-62 (1960). Their powers are limited to those expressly granted by statute or those fairly implied as necessary to carry out their assigned function. Ibid; Cammarata v. Essex County Park Comm'n, 26 N.J. 404, 411 (1958) ( The grant of an express power is always attended by the incidental authority fairly and reasonably necessary or appropriate to make it effective. . . . Authority delegated to an administrative agency should be construed so as to permit the fullest accomplishment of the legislative intent. (citations omitted)). However, inherent or implied power is not boundless. Playmate Toys, Inc. v. Director, Div. of Taxation, 162 N.J. 186, 187 (1999).
In this case, the Commissioner's award of prejudgment interest is fully supported by the statutes that set forth the Commissioner's powers and responsibilities under the Wage and Hour Law, N.J.S.A. 34:11-4.1 to -67. N.J.S.A. 34:11-56a23 and N.J.S.A. 34:11-16 vest enforcement powers in the Commissioner for violations of the Wage and Hour Law. Significantly, the statute states:
As an alternative to any other sanctions or in addition thereto, herein or otherwise provided by law for violation of this act or of any other rule or regulation duly issued hereunder, the Commissioner of Labor is authorized to supervise the payment of amounts due to employees under this act. . . .
 

[N.J.S.A. 34:11-56a23 (emphasis added).]

The powers provided to the Commissioner under the statute comport with the purpose of the Wage and Hour Law: [T]o safeguard [workers'] health, efficiency and general well-being and to protect them as well as their employers from the effects of serious and unfair competition . . . . N.J.S.A. 34:11-56a. The broad language of the statute charges the Commissioner with recovering wages due to New Jersey employees and imbues him with sweeping supervisory authority to implement remedies of back pay to employees due their fair compensation. The remedial purpose of the Wage and Hour Law dictates that it should be given a liberal construction. See Yellow Cab Co. v. State, 126 N.J. Super. 81, 86 (App. Div. 1973). We agree with the Appellate Division that the Commissioner acted within his statutory authority to carry out his duty to obtain proper compensation for the employees owed back pay for inadequately remunerated overtime hours worked. The Commissioner's award of prejudgment interest in this enforcement action was a proper exercise of his statutory powers necessary to the enforcement of the Wage and Hour Law.
The law does not always require the promulgation of a regulation when the Commissioner initially seeks to exercise a statutory express or implied power. Indeed, the first time the question whether an implied power exists often arises in the context of an adjudicatory action. In Re C.V.S. Pharmacy Wayne, 116 N.J. 490, 503 (1989). In those settings, we have not denied the administrative agency use of a power deemed necessary to the proper disposition of the case. To be sure, the principles of Metromedia, Inc. v. Director, Division of Taxation counsel that a regulation be promulgated to provide the public with notice and opportunity to comment on future application of the regulatory authority. 97 N.J. 313, 328-30 (1984). In conformity therewith, the Commissioner recently promulgated a rule that specifies when he will impose prejudgment interest in future cases. N.J.A.C. 12:56-1.5. The Commissioner's compliance with Metromedia's precepts was entirely proper and, in no way undermines the soundness of the exercise of his implied power to award prejudgment interest in this case.
The judgment of the Appellate Division is affirmed.
CHIEF JUSTICE PORITZ and JUSTICES STEIN, COLEMAN, LONG, LaVECCHIA and ZAZZALI join in this opinion. JUSTICE VERNIERO did not participate. SUPREME COURT OF NEW JERSEY
 

NO. A-87

SEPTEMBER TERM 2000
ON APPEAL FROM
ON CERTIFICATION TO Appellate Division, Superior Court

NEW JERSEY DEPARTMENT OF
LABOR,

Petitioner-Respondent,

and

TEAMSTERS LOCAL 125 and 185
INDIVIDUAL CLAIMANTS,

Intervenors-Respondents,

v.

PEPSI-COLA COMPANY,

Respondent-Appellant.

DECIDED November 14, 2001 Chief Justice Poritz

PRESIDING
OPINION BY Per Curiam
CONCURRING OPINION BY DISSENTING OPINION BY
CHECKLIST
AFFIRM CHIEF JUSTICE PORITZ X JUSTICE STEIN X JUSTICE COLEMAN X JUSTICE LONG X JUSTICE VERNIERO ------------------- --------- -------- JUSTICE LaVECCHIA X JUSTICE ZAZZALI X TOTALS
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