B-115655, AUGUST 6, 1953, 33 COMP. GEN. 66

B-115655: Aug 6, 1953

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WHICH HELD THAT THE RECOVERY OF LIQUIDATED DAMAGES FROM A GOVERNMENT CONTRACTOR BY THE UNITED STATES IN AN ACTION BROUGHT UNDER THE PROVISIONS OF THE WALSH HEALEY ACT MORE THAN TWO YEARS AFTER THE CAUSE OF ACTION ACCRUED IS BARRED BY THE TWO -YEAR STATUTE OF LIMITATIONS CONTAINED IN SECTION 6 OF THE PORTAL-TO- PORTAL ACT OF 1947. 1953: FURTHER REFERENCE IS MADE TO YOUR LETTER OF MAY 6. THE FACT THAT COLLECTION ALREADY HAD BEEN EFFECTED WAS NOT BROUGHT TO THE ATTENTION OF THE COURTS AND WAS NOT CONSIDERED BY THEM. ONLY FORECLOSES RESORT TO COURT ACTION AFTER A TWO-YEAR PERIOD FROM THE ACCRUAL OF THE CAUSE OF ACTION" AND THAT "THE WITHHOLDING REMEDY IS LEFT UNAFFECTED.'. THE DEPARTMENTAL VIEW IS AMPLIFIED BY THE ACTING SOLICITOR.

B-115655, AUGUST 6, 1953, 33 COMP. GEN. 66

LIQUIDATED DAMAGES - WALSH-HEALEY ACT VIOLATIONS - RECOVERY BY SETOFF, ETC., AFTER EXPIRATION OF STATUTORY PERIOD FOR FILING SUIT THE DECISION OF THE SUPREME COURT OF THE UNITED STATES IN UNEXCELLED CHEMICAL CORPORATION V. UNITED STATES, 345 U.S. 59, WHICH HELD THAT THE RECOVERY OF LIQUIDATED DAMAGES FROM A GOVERNMENT CONTRACTOR BY THE UNITED STATES IN AN ACTION BROUGHT UNDER THE PROVISIONS OF THE WALSH HEALEY ACT MORE THAN TWO YEARS AFTER THE CAUSE OF ACTION ACCRUED IS BARRED BY THE TWO -YEAR STATUTE OF LIMITATIONS CONTAINED IN SECTION 6 OF THE PORTAL-TO- PORTAL ACT OF 1947, APPLIES ONLY TO COURT ACTIONS AND THE DECISION DOES NOT PRECLUDE THE GOVERNMENT FROM EFFECTING COLLECTION OF SUCH DAMAGES BY SETOFF, WITHHOLDING ACTION, OR OTHERWISE, AFTER THE EXPIRATION OF THE STATUTORY PERIOD FOR FILING SUIT.

COMPTROLLER GENERAL WARREN TO L. GARY CLEMENTE, AUGUST 6, 1953:

FURTHER REFERENCE IS MADE TO YOUR LETTER OF MAY 6, 1953, REQUESTING RETURN OF $15,600 COLLECTED BY THE GOVERNMENT FROM THE UNEXCELLED CHEMICAL CORPORATION AS LIQUIDATED DAMAGES FOR VIOLATIONS OF THE WALSH HEALEY ACT, 49 STAT. 2036, 41 U.S.C. 35.

WHILE YOU SUGGEST THAT THE SUPREME COURT OF THE UNITED STATES HAS RESOLVED THE LEGAL RIGHTS INVOLVED BY ITS DECISION OF MARCH 9, 1953, 345 U.S. 59, AS STATED IN MY LETTER OF JULY 2, 1953, IT APPEARS THAT THE COURT DECIDED ONLY THAT THE GOVERNMENT MAY NOT ENFORCE LIABILITY FOR SUCH DAMAGES THROUGH A SUIT COMMENCED MORE THAN 2 YEARS AFTER THE DATE WHEN VIOLATIONS OCCURRED. APPARENTLY, THE FACT THAT COLLECTION ALREADY HAD BEEN EFFECTED WAS NOT BROUGHT TO THE ATTENTION OF THE COURTS AND WAS NOT CONSIDERED BY THEM, ALTHOUGH IT HAD BEEN ACCOMPLISHED PRIOR TO THE ORIGINAL ACTION OF THE DISTRICT COURT ON JUNE 22, 1951 (99 F.1SUPP. 155).

THE DEPARTMENT OF LABOR, REPORTING TO THIS OFFICE UPON YOUR REQUEST, HAS TAKEN THE VIEW THAT ,THE LIMITATION PROVISION OF THE PORTAL ACT, 61 STAT. 84, ONLY FORECLOSES RESORT TO COURT ACTION AFTER A TWO-YEAR PERIOD FROM THE ACCRUAL OF THE CAUSE OF ACTION" AND THAT "THE WITHHOLDING REMEDY IS LEFT UNAFFECTED.' THE DEPARTMENTAL VIEW IS AMPLIFIED BY THE ACTING SOLICITOR, AS FOLLOWS:

THE LANGUAGE OF THE STATUTE ITSELF AFFORDS THE MOST CONVINCING ARGUMENT FOR THE LATTER POSITION. THUS, SECTION 6 OF THE PORTAL ACT BEGINS: "ANY ACTION COMMENCED * * * TO ENFORCE ANY CAUSE OF ACTION FOR * * *; WHILE SECTION 7 READS IN PART: " "IN DETERMINING WHEN AN ACTION IS COMMENCED FOR THE PURPOSES OF SECTION 6, AN ACTION * * * SHALL BE CONSIDERED TO BE COMMENCED ON THE DATE WHEN THE COMPLAINT IS FILED; * * *.'" CLEARLY, THESE ARE TERMS OF ART, APPROPRIATE ONLY TO FORECLOSING SUITS IN THE COURTS. AS THE SUPREME COURT SAID IN THE UNEXCELLED CHEMICAL CASE," CONGRESS * * * WAS ADDRESSING ITSELF TO LAW SUITS IN THE CONVENTIONAL SENSE.' THE SAME CONCLUSION IS PLAINLY INFERRABLE FROM THE DECLARATION OF " FINDINGS AND POLICY" CONTAINED IN PART I OF THE ACT.

THERE IS REASON TO BELIEVE THAT CONGRESS DID NOT INTEND TO EXTINGUISH THE LIABILITY AS WELL AS THE REMEDY. WHEN, IN SIMILAR SITUATIONS, IT DOES SO INTEND, IT USES EXPLICIT LANGUAGE TO THAT END. THUS, IN SECTION 1106 (A) OF THE REVENUE ACT OF 1926 CONGRESS PROVIDED THAT," THE BAR OF THE STATUTE OF LIMITATIONS AGAINST THE UNITED STATES IN RESPECT OF ANY INTERNAL- REVENUE TAX SHALL NOT ONLY OPERATE TO BAR THE REMEDY BUT SHALL EXTINGUISH THE LIABILITY; * * *" IT WOULD HAVE BEEN VERY SIMPLE FOR CONGRESS TO HAVE INCLUDED SOME SUCH PROVISION IN SECTION 6 OF THE PORTAL ACT, AND THE FACT THAT IT DID NOT DO SO, BUT ON THE CONTRARY EMPLOYED WELL-ESTABLISHED TERMS OF ART USUALLY ASSOCIATED WITH ORDINARY REMEDIAL STATUTES OF LIMITATION, IS DEEMED HIGHLY SIGNIFICANT. THIS CONSIDERATION IS ESPECIALLY RELEVANT IN VIEW OF THE FACT THAT CONGRESS WAS UNDOUBTEDLY AWARE AT THE TIME IT PASSED THE PORTAL ACT THAT THE WALSH-HEALEY ACT PROVIDED THE GOVERNMENT WITH A DUAL MEANS OF COLLECTING SUMS DUE IT AS THE RESULT OF BREACHES OF CONTRACT AND VIOLATIONS OF THE ACT.

WHEN THERE IS ADDED TO THE FOREGOING THE GENERAL PRINCIPLES THAT STATUTES OF LIMITATION SHOULD BE STRICTLY CONSTRUED IN FAVOR OF SUSTAINING THE GOVERNMENT'S RIGHTS ( UNITED STATES V. WHITED AND WHELESS, 246 U.S. 552), AND THAT THE UNITED STATES, WHEN ASSERTING SOVEREIGN RIGHTS, IS NOT TO BE BOUND BY ANY STATUTE OF LIMITATION UNLESS CONGRESS HAS CLEARLY MANIFESTED SUCH AN INTENTION IN EXPRESS TERMS ( UNITED STATES V. NASHVILLE CHATTANOOGA AND ST. LOUIS RY. CO., 118 U.S. 120), THE CONCLUSION SEEMS WARRANTED THAT THE PORTAL ACT'S LIMITATION PROVISION HAS NO APPLICABILITY TO THE WITHHOLDING REMEDY PROVIDED BY SECTION 2 OF THE WALSH-HEALEY ACT.

I AGREE THAT THE EFFECT OF THE RECENT SUPREME COURT DECISION MAY NOT BE REGARDED AS CONCLUSIVE WITH RESPECT TO THE LIABILITY OF THE UNEXCELLED CHEMICAL CORPORATION IN THE MATTER, AND, ACCORDINGLY, MUST DECLINE TO REVISE THE COLLECTION ACTION HERETOFORE TAKEN.