GRAVES et al. v. PEOPLE OF STATE OF NEW YORK ex rel. O'KEEFE.
Mr. Henry Epstein, of Albany, N.Y., for petitioner.
Mr. Daniel McNamara, Jr., of Brooklyn, N.Y., for respondent.
Mr. Robert H. Jackson, Sol. Gen., for the United States, as amicus curiae, by special leave of Court.
We are asked to decide whether the imposition by the State of New York of an income tax on the salary of an employee of the Home Owners' Loan Corporation places an unconstitutional burden upon the federal government.
Respondent, a resident of New York, was employed during 1934 as an examining attorney for the Home Owners' Loan Corporation at an annual salary of $2,400. In his income tax return for that year he included his salary as subject to the New York state income tax imposed by Art. 16 of the Tax Law of New York (Consol. Laws, c. 60). Subdivision 2f of § 359, since repealed, exempted from the tax 'Salaries, wages and other compensation received from the United States of officials or employees thereof, including persons in the military or naval forces of the United States. * * *' Petitioners, New York State Tax Commissioners, rejected respondent's claim for a refund of the tax based on the ground that his salary was constitutionally exempt from state taxation because the Home Owners' Loan Corporation is an instrumentality of the United States Government and that he, during the taxable year, was an employee of the federal government engaged in the performance of a governmental function.
On review by certiorari the Board's action was set aside by the Appellate Division of the Supreme Court of New York, People ex rel. O'Keefe v. Graves, 253 App.Div. 91, 1 N.Y.S.2d 195, whose order was affirmed by the Court of Appeals. 278 N.Y. 691, 16 N.E.2d 404. Both courts held respondent's salary was free from tax on the authority of New York ex rel. Rogers v. Graves, 299 U.S. 401, 57 S.Ct. 269, 81 L.Ed. 306, which sustained the claim that New York could not constitutionally tax the salary of an employee of the Penama Rail Road Company, a wholly-owned corporate instrumentality of the United States. We granted certiorari December 19, 1938, 305 U.S. 592, 59 S.Ct. 252, 83 L.Ed. -, the constitutional question presented by the record being of public importance.
The Home Owners' Loan Corporation was created pursuant to § 4(a) of the Home Owners' Loan Act of 1933, 48 Stat. 128, 12 U.S.C. 1461 et seq., 12 U.S.C.A. § 1461 et seq., which was enacted to provide emergency relief to home owners, particularly to assist them with respect to home mortgage indebtedness. The corporation, which is authorized to lend money to home owners on mortgages and to refinance home mortgage loans within the purview of the Act, is declared by § 4(a), 12 U.S.C.A. § 1463(a), to be an instrumentality of the United States. Its shares of stock are wholly government-owned. § 4(b). Its funds are deposited in the Treasury of the United States, and the compensation of its employees is paid by drafts upon the Treasury.
For the purposes of this case we may assume that the creation of the Home Owners' Loan Corporation was a constitutional exercise of the powers of the federal government. Cf. Kay v. United States, 303 U.S. 1, 58 S.Ct. 468, 82 L.Ed. 607. As that government derives its authority wholly from powers delegated to it by the Constitution, its every action within its constitutional power is governmental action, and since Congress is made the sole judge of what powers within the constitutional grant are to be exercised, all activities of government constitutionally authorized by Congress must stand on a parity with respect to their constitutional immunity from taxation. McCulloch v. Maryland, 4 Wheat. 316, 432, 4 L.Ed. 579; Van Brocklin v. Tennessee, 117 U.S. 151, 158159, 6 S.Ct. 670, 674, 29 L.Ed. 845; South Carolina v. United States, 199 U.S. 437, 451, 452, 26 S.Ct. 110, 112, 50 L.Ed. 261, 4 Ann.Cas. 737; Helvering v. Gerhardt, 304 U.S. 405, 412415, 58 S.Ct. 969, 971973, 82 L.Ed. 1427. And when the national government lawfully acts through a corporation which it owns and controls, those activities are governmental functions entitled to whatever tax immunity attaches to those functions when carried on by the government itself through its departments. See McCulloch v. Maryland, supra, pages 421, 422 of 4 Wheat.; Smith v. Kansas City Title Co., 255 U.S. 180, 208, 41 S.Ct. 243, 248, 65 L.Ed. 577; Federal Land Bank v. Crosland, 261 U.S. 374, 43 S.Ct. 385, 67 L.Ed. 703, 29 A.L.R. 1; New York ex rel. Rogers v. Graves, supra.
The single question with which we are now concerned is whether the tax laid by the state upon the salary of respondent, employed by a corporate instrumentality of the federal government, imposes an unconstitutional burden upon that government. The theory of the tax immunity of either government, state or national, and its instrumentalities, from taxation by the other, has been rested upon an implied limitation on the taxing power of each, such as to forestall undue interference, through the exercise of that power, with the governmental activities of the other. That the two types of immunity may not, in all respects, stand on a parity has been recognized from the beginning, McCulloch v. Maryland, supra, pages 435, 436 of 4 Wheat., and possible differences in application, deriving from differences in the source, nature and extent of the immunity of the governments and their agencies, were pointed out and discussed by this Court in detail during the last term. Helvering v. Gerhardt, supra, pages 412, 413, 416, 58 S.Ct. pages 972, 973.
So far as now relevant, those differences have been thought to be traceable to the fact that the federal government is one of delegated powers in the exercise of which Congress is supreme; so that every agency which Congress can constitutionally create is a governmental agency. And since the power to create the agency includes the implied power to do whatever is needful or appropriate, if not expressly prohibited, to protect the agency, there has been attributed to Congress some scope, the limits of which it is not now necessary to define, for granting or withholding immunity of federal agencies from state taxation. See Van Allen v. Assessors, 3 Wall. 573, 583, 585, 18 L.Ed. 229; Bank of New York v. Supervisors of New York County, 7 Wall. 26, 30, 31, 19 L.Ed. 60; Thomson v. Union Pacific Railroad, 9 Wall. 579, 588, 590, 19 L.Ed. 792; People of New York v. Weaver, 100 U.S. 539, 543, 25 L.Ed. 705; Mercantile Bank v. New York, 121 U.S. 138, 154, 7 S.Ct. 826, 834, 30 L.Ed. 895; Owensboro National Bank v. Owensboro, 173 U.S. 664, 668, 19 S.Ct. 537, 538, 43 L.Ed. 850; Shaw v. Gibson-Zahniser Oil Corp., 276 U.S. 575, 581, 48 S.Ct. 333, 335, 72 L.Ed. 709; Oklahoma v. Barnsdall Refineries, 296 U.S. 521, 525, 526, 56 S.Ct. 340, 342, 80 L.Ed. 366; Baltimore National Bank v. State Tax Comm., 297 U.S. 209, 211, 212, 56 S.Ct. 417, 419, 80 L.Ed. 586; British-American Company v. Board of Equalization, 299 U.S. 159, 57 S.Ct. 132, 81 L.Ed. 95; James v. Dravo Contracting Co., 302 U.S. 134, 161, 58 S.Ct. 208, 221, 82 L.Ed. 155, 114 A.L.R. 318; Helvering v. Gerhardt, supra, pages 411, 412, 417, 58 S.Ct. pages 971, 974; cf. United States v. Bekins, 304 U.S. 27, 52, 58 S.Ct. 811, 815, 82 L.Ed. 1137. Whether its power to grant tax exemptions as an incident to the exercise of powers specifically granted by the Constitution can ever, in any circumstances, extend beyond the constitutional immunity of federal agencies which courts have implied, is a question which need not now be determined.
Congress has declared in § 4 of the Act that the Home Owners' Loan Corporation is an instrumentality of the United States and that its bonds are exempt, as to principal and interest, from federal and state taxation, except surtaxes, estate, inheritance and gift taxes. The corporation itself, 'including its franchise, its capital, reserves and surplus, and its loans and income,' is likewise exempted from taxation; its real property is subject to tax to the same extent as other real property. But Congress has given no intimation of any purpose either to grant or withhold immunity from state taxation of the salary of the corporation's employees, and the Congressional intention is not to be gathered from the statute by implication. Cf. Baltimore National Bank v. State Tax Comm., supra.
It is true that the silence of Congress, when it has authority to speak, may sometimes give rise to an implication as to the Congressional purpose. The nature and extent of that implication depend upon the nature of the Congressional power and the effect of its exercise. 1 But there is little scope for the application of that doctrine to the tax immunity of governmental instrumentalities. The constitutional immunity of either government from taxation by the other, where Congress is silent, has its source in an implied restriction upon the powers of the taxing government. So far as the implication rests upon the purpose to avoid interference with the functions of the taxed government or the imposition upon it of the economic burden of the tax, it is plain that there is no basis for implying a purpose of Congress to exempt the federal government or its agencies from tax burdens which are unsubstantial or which courts are unable to discern. Silence of Congress implies immunity no more than does the silence of the Constitution. It follows that when exemption from state taxation is claimed on the ground that the federal government is burdened by the tax, and Congress has disclosed no intention with respect to the claimed immunity, it is in order to consider the nature and effect of the alleged burden, and if it appears that there is no ground for implying a constitutional immunity, there is equally a want of any ground for assuming any purpose on the part of Congress to create an immunity.
The present tax is a non-discriminatory tax on income applied to salaries at a specified rate. It is not in form or substance a tax upon the Home Owners' Loan Corporation or its property or income, nor is it paid by the corporation or the government from their funds. It is measured by income which becomes the property of the taxpayer when received as compensation for his services; and the tax laid upon the privilege of receiving it is paid from his private funds and not from the funds of the government, either directly or indirectly. The theory, which once won a qualified approval, that a tax on income is legally or economically a tax on its source, is no longer tenable, New York ex rel. Cohn v. Graves, 300 U.S. 308, 313, 314, 57 S.Ct. 466, 467, 81 L.Ed. 666, 108 A.L.R. 721; Hale v. State Board, 302 U.S. 95, 108, 58 S.Ct. 102, 106, 82 L.Ed. 72; Helvering v. Gerhardt, supra; cf. Metcalf & Eddy v. Mitchell, 269 U.S. 514, 46 S.Ct. 172, 70 L.Ed. 384; Fox Film Corp. v. Doyal, 286 U.S. 123, 52 S.Ct. 546, 76 L.Ed. 1010; James v. Dravo Contracting Co., supra, page 149, 58 S.Ct. page 216; Helvering v. Mountain Producers Corp., 303 U.S. 376, 58 S.Ct. 623, 82 L.Ed. 907, and the only possible basis for implying a constitutional immunity from state income tax of the salary of an employee of the national governmentor of a governmental agency is that the economic burden of the tax is in some way passed on so as to impose a burden on the national government tantamount to an interference by one government with the other in the performance of its functions.
In the four cases in which this Court has held that the salary of an officer or employee of one government or its instrumentality was immune from taxation by the other, it was assumed, without discussion, that the immunity of a government or its instrumentality extends to the salaries of its officers and employees. 2 This assumption, made with respect to the salary of a governmental officer in Dobbins v. Commissioners of Erie County, 16 Pet. 435, 10 L.Ed. 1022, and in Collector v. Day, 11 Wall. 113, 20 L.Ed. 122, was later extended to confer immunity on income derived by a lessee from lands leased to him by a government in the performance of a governmental function, Gillespie v. Oklahoma, 257 U.S. 501, 42 S.Ct. 171, 66 L.Ed. 338; Burnet v. Coronado Oil & Gas Co., 285 U.S. 393, 52 S.Ct. 443, 76 L.Ed. 815, and cases cited, although the claim of a like exemption from tax on the income of a contractor engaged in carrying out a government project was rejected both in the case of a contractor with a state, Metcalf & Eddy v. Mitchell, supra, and of a contractor with the national government, James v. Dravo Contracting Co., supra.
The ultimate repudiation in Helvering v. Mountain Producers Corp., supra, of the doctrine that a tax on the income of a lessee derived from a lease of government owned or controlled lands is a forbidden interference with the activities of the government concerned led to the reexamination by this Court, in the Gerhardt case, of the theory underlying the asserted immunity from taxation by one government of salaries of employees of the other. It was there pointed out that the implied immunity of one government and its agencies from taxation by the other should, as a principle of constitutional construction, be narrowly restricted. For the expansion of the immunity of the one government correspondingly curtails the sovereign power of the other to tax, and where that immunity is invoked by the private citizen it tends to operate for his benefit at the expense of the taxing government and without corresponding benefit to the government in whose name the immunity is claimed. See Metcalf & Eddy v. Mitchell, supra, pages 523, 524, 46 S.Ct. page 174; James v. Dravo Contracting Co., supra, pages 156158, 58 S.Ct. pages 219, 220. It was further pointed out that, as applied to the taxation of salaries of the employees of one government, the purpose of the immunity was not to confer benefits on the employees by relieving them from contributing their share of the financial support of the other government, whose benefits they enjoy, or to give an advantage to that government by enabling it to engage employees at salaries lower than those paid for like services by other employers, public or private, 3 but to prevent undue interference with the one government by imposing on it the tax burdens of the other.
In applying these controlling principles in the Gerhardt case the Court held that the salaries of employees of the New York Port Authority, a state instrumentality created by New York and New Jersey, were not immune from federal income tax, even though the Authority be regarded as not subject to federal taxation. It was said that the taxpayers enjoyed the benefit and protection of the laws of the United States and were under a duty, common to all citizens, to contribute financial support to the government; that the tax laid on their salaries and paid by them could be said to affect or burden their employer, the Port Authority, or the states creating it, only so far as the burden of the tax was economically passed on to the employer; that a non-discriminatory tax laid on the income of all members of the community could not be assumed to obstruct the function which New York and New Jersey had undertaken no perform, or to cast an economic burden upon them, more than does the general taxation of property and income which, to some extent, incapable of measurement by economists, may tend to raise the price level of labor and materials. 4 The Court concluded that the claimed immunity would do no more than relieve the taxpayers from the duty of financial support to the national government in order to secure to the state a theoretical advantage, speculative in character and measurement and too unsubstantial to form the basis of an implied constitutional immunity from taxation.
The conclusion reached in the Gerhardt case that in terms of constitutional tax immunity a federal income tax on the salary of an employee is not a prohibited burden on the employer makes it imperative that we should consider anew the immunity here claimed for the salary of an employee of a federal instrumentality. As already indicated, such differences as there may be between the implied tax immunity of a state and the corresponding immunity of the national government and its instrumentalities may be traced to the fact that the national government is one of delegated powers, in the exercise of which it is supreme. Whatever scope this may give to the national government to claim immunity from state taxation of all instrumentalities which it may constitutionally create, and whatever authority Congress may possess as incidental to the exercise of its delegated powers to grant or withhold immunity from state taxation, Congress has not sought in this case to exercise such power. Hence these distinctions between the two types of immunity cannot affect the question with which we are now concerned. The burden on government of a non-discriminatory income tax applied to the salary of the employee of a government or its instrumentality is the same, whether a state or national government is concerned. The determination in the Gerhardt case that the federal income tax imposed on the employees of the Port Authority was not a burden on the Port Authority made it unnecessary to consider whether the Authority itself was immune from federal taxation; the claimed immunity failed because even if the Port Authority were itself immune from federal income tax, the tax upon the income of its employees case upon it no unconstitutional burden.
Assuming, as we do, that the Home Owners' Loan Corporation is clothed with the same immunity from state taxation as the government itself, we cannot say that the present tax on the income of its employees lays any unconstitutional burden upon it. All the reasons for refusing to imply a constitutional prohibition of federal income taxation of salaries of state employees, stated at length in the Gerhardt case, are of equal force when immunity is claimed from state income tax on salaries paid by the national government or its agencies. In this respect we perceive no basis for a difference in result whether the taxed income be salary or some other form of compensation, or whether the taxpayer be an employee or an officer of either a state or the national government, or of its instrumentalities. In no case is there basis for the assumption that any such tangible or certain economic burden is imposed on the government concerned as would justify a court's declaring that the taxpayer is clothed with the implied constitutional tax immunity of the government by which he is employed. That assumption, made in Collector v. Day, supra, and in New York ex rel. Rogers v. Graves, supra, is contrary to the reasoning and to the conclusions reached in the Gerhardt case and in Metcalf & Eddy v. Mitchell, supra; Group No. 1 Oil Corporation v. Bass, 283 U.S. 279, 51 S.Ct. 432, 75 L.Ed. 1032; James v. Dravo Contracting Co., supra; Helvering v. Mountain Producers Corp., supra; McLoughlin v. Commissioner, 303 U.S. 218, 58 S.Ct. 539, 82 L.Ed. 758. In their light the assumption can no longer be made. Collector v. Day, supra, and New York ex rel. Rogers v. Graves, supra, are overruled so far as they recognize an implied constitutional immunity from income taxation of the salaries of officers or employees of the national or a state government or their instrumentalities.
So much of the burden of a nondiscriminatory general tax upon the incomes of employees of a government, state or national, as may be passed on economically to that government, through the effect of the tax on the price level of labor or materials, is but the normal incident of the organization within the same territory of two governments, each possessing the taxing power. The burden, so far as it can be said to exist or to affect the government in any indirect or incidental way, is one which the Constitution presupposes, and hence it cannot rightly be deemed to be within an implied restriction upon the taxing power of the national and state governments which the Constitution has expressly granted to one and has confirmed to the other. The immunity is not one to be implied from the Constitution, because if allowed it would impose to an inadmissible extent a restriction on the taxing power which the Constitution has reserved to the state governments.
Mr. Chief Justice HUGHES concurs in the result.
I join in the Court's opinion but deem it appropriate to add a few remarks. The volume of the Court's business has long since made impossible the early healthy practice whereby the Justices gave expression to individual opinions. 1 But the old tradition still has relevance when an important shift in constitutional doctrine is announced after a reconstruction in the membership of the Court. Such shifts of opinion should not derive from mere private judgment. They must be duly mindful of the necessary demands of continuity in civilized society. A reversal of a long current of decisions can be justified only if rooted in the Constitution itself as an historic document designed for a developing nation.
For one hundred and twenty years this Court has been concerned with claims of immunity from taxes imposed by one authority in our dual system of government because of the taxpayer's relation to the other. The basis for the Court's intervention in this field has not been any explicit provision of the Constitution. The States, after they formed the Union, continued to have the same range of taxing power which they had before, barring only duties affecting exports, imports, and on tonnage. 2 Congress, on the other hand, to lay taxes in order 'to pay the Debts and provide for the common Defence and general Welfare of the United States', Art. 1, Sec. 8, U.S.C.A.Const., can reach every person and every dollar in the land with due regard to Constitutional limitations as to the method of laying taxes. But, as is true of other great activities of the state and national governments, the fact that we are a federalism raises problems regarding these vital powers of taxation. Since two governments have authority within the same territory, neither through its power to tax can be allowed to cripple the operations of the other. Therefore state and federal governments must avoid exactions which discriminate against each other or obviously interfere with one another's operations. These were the determining considerations that led the great Chief Justice to strike down the Maryland statute as an unambiguous measure of discrimination against the use by the United States of the Bank of the United States as one of its instruments of government.
The arguments upon which McCulloch v. Maryland, 4 Wheat. 316, 4 L.Ed. 579, rested had their roots in actuality. But they have been distorted by sterile refinements unrelated to affairs. These refinements derived authority from an unfortunate remark in the opinion in McCulloch v. Maryland. Partly as a flourish of rhetoric and partly because the intellectual fashion of the times indulged a free use of absolutes, Chief Justice Marshall gave currency to the phrase that 'the power to tax involves the power to destroy.' Id., at page 431 of 4 Wheat. This dictum was treated as though it were a constitutional mandate. But not without protest. One of the most trenchant minds on the Marshall court, Justice William Johnson, early analyzed the dangerous inroads upon the political freedom of the States and the Union within their respective orbits resulting from a doctrinaire application of the generalities uttered in the course of the opinion in McCulloch v. Maryland. 3 The seductive cliche that the power to tax involves the power to destroy was fused with another assumption, likewise not to be found in the Constitution itself, namely the doctrine that the immunities are correlativebecause the existence of the national government implies immunities from state taxation, the existence of state governments implies equivalent immunities from federal taxation. When this doctrine was first applied Mr. Justice Bradley registered a powerful dissent, 4 the force of which gathered rather than lost strength with time. Collector v. Day, 11 Wall. 113, 128, 20.Ed. 122.
The judicial history of this doctrine of immunity is a striking illustration of an occasional tendency to encrust unwarranted interpretations upon the Constitution and thereafter to consider merely what has been judicially said about the Constitution, rather than to be primarily controlled by a fair conception of the Constitution. Judicial exegesis is unavoidable with reference to an organic act like our Constitution, drawn in many particulars with purposed vagueness so as to leave room for the unfolding future. But the ultimate touchstone of constitutionality is the Constitution itself and not what we have said about it. 11 Neither Dobbins v. Commissioners of Erie County, 16 Pet. 435, 10 L.Ed. 1022, and its offspring, nor Collector v. Day, supra, and its, can stand appeal to the Constitution and its historic purposes. Since both are the starting points of an interdependent doctrine, both should be, as I assume them to be, overruled this day. Whether Congress may, by express legislation, relieve its functionaries from their civic obligations to pay for the benefits of the State governments under which they live is matter for another day.
Mr. Justice McREYNOLDS and I are of opinion that the Home Owners' Loan Corporation, being an instrumentality of the United States heretofore deemed immune from state taxation, 'it necessarily results,' as held in New York ex rel. Rogers v. Graves, 1937, 299 U.S. 401, 57 S.Ct. 269, 272, 81 L.Ed. 306, 'that fixed salaries and compensation paid to its officers and employees in their capacity as such are likewise immune'; and that the judgment of the state court, unquestionably required by that decision, should be affirmed.
From the decision just announced, it is clear that the Court has overruled Dobbins v. Commissioners of Erie County, 1842, 16 Pet. 435, 10 L.Ed. 1022, Collector v. Day, 1871, 11 Wall. 113, 20 L.Ed. 122, New York ex rel. Rogers v. Graves, supra, and Brush v. Commissioner, 1937, 300 U.S. 352, 57 S.Ct. 495, 81 L.Ed. 691, 108 A.L.R. 1428. Thus now it appears that the United States has always had power to tax salaries of state officers and employees and that similarly free have been the States to tax salaries of officers and employees of the United States. The compensation for past as well as for future service to be taxed and the rates prescribed in the exertion of the newly disclosed power depend on legislative discretion not subject to judicial revision. Futile indeed are the vague intimations that this Court may protect against excessive or destructive taxation. Where the power to tax exists, legislatures may exert it to destroy, to discourage, to protect or exclusively for the purpose of raising revenue. See e.g. Veazie Bank v. Fenno, 8 Wall. 533, 548, 19 L.Ed. 482; McCray v. United States, 195 U.S. 27, 53 et seq., 24 S.Ct. 769, 775, 49 L.Ed. 78, 1 Ann.Cas. 561; Magnano Co. v. Hamilton, 292 U.S. 40, 44 et seq., 54 S.Ct. 599, 601, 78 L.Ed. 1109; Cincinnati Soap Co. v. United States, 301 U.S. 308, 57 S.Ct. 764, 81 L.Ed. 1122.
Appraisal of lurking or apparent implications of the Court's opinion can serve no useful end for, should occasion arise, they may be ignored or given direction differing from that at first seemingly intended. But safely it may be said that presently marked for destruction is the doctrine of reciprocal immunity that by recent decisions here has been so much impaired.
The failure of Congress to regulate interstate commerce has generally been taken to signify a Congressional purpose to leave undisturbed the authority of the states to make regulations affecting the commerce in matters of peculiarly local concern, but to withhold from them authority to make regulations affecting those phases of it which, because of the need of a national uniformity, demand that their regulation, if any, be prescribed by a single authority. Cooley v. Board of Wardens, 12 How. 299, 319, 13 L.Ed. 996; Minnesota Rate Cases, 230¢u.S. 352, 399, 400, 33 S.Ct. 729, 739, 57 L.Ed. 1511, 48 L.R.A.,N.S., 1151, Ann.Cas.1916A, 18; Kelly v. Washington, 302 U.S. 1, 14, 58 S.Ct. 87, 94, 82 L.Ed. 3; South Carolina State Highway Dept. v. Barnwell Brothers, 303 U.S. 177, 184, 185, 58 S.Ct. 510, 513, 82 L.Ed. 734; Milk Control Board v. Eisenberg Farm Products, 306 U.S. 346, 59 S.Ct. 528, 83 L.Ed. -, decided February 27, 1939. As to the implications from Congressional silence in the field of state taxation of interstate commerce and its instrumentalities, see Western Live Stock v. Bureau of Revenue, 303 U.S. 250, 58 S.Ct. 546, 82 L.Ed. 823, 115 A.L.R. 944; Gwin, White & Prince, Inc. v. Henneford, 305 U.S. 434, 59 S.Ct. 325, 83 L.Ed. 272, decided January 3, 1939.
In Dobbins v. Commissioners of Erie County, 16 Pet. 435, 10 L.Ed. 1022, a Pennsylvania tax, nominally laid upon the office of the captain of a federal revenue cutter, but roughly measured by the salary paid to the officer, ws held invalid. The Court seems to have rested its decision in part on the ground that a tax on the emoluments of his office was the equivalent of a tax upon an activity of the national government, and in part on the ground that it was an infringement of the implied superior power of Congress to fix the compensation of government employees without diminution by state taxation.
'In Collector v. Day, 11 Wall. 113, 20 L.Ed. 122, this Court held that the salary of a state probate judge was constitutionally immune from federal income tax on the grounds that the salary of an officer of a state is exempt from federal taxation if the function he performs as an officer is exempt, citing Dobbins v. Commissioner of Erie County, supra, and that there was an implied constitutional restriction upon the power of the national government to tax a state in the exercise of those functions which were essential to the maintenance of state governments as they were organized at the time when the Constitution was adopted. The possibility that a non-discriminatory tax upon the income of a state officer did not involve any substantial interference with the functioning of the state government was not discussed either in this or the Dobbins case.
In New York ex rel. Rogers v. Graves, 299 U.S. 401, 57 S.Ct. 269, 81 L.Ed. 306, the question was whether the salary of the general counsel of the Panama Rail Road Company was exempt from state income tax because the railroad company was an instrumentality of the federal government. The sole question raised by the taxing state was whether the railroad company was a government instrumentality. The Court, having found that the railroad company was such an instrumentality, disposed of the matter of tax exemption of the salary of its employees by declaring: 'The railroad company being immune from state taxation, it necessarily results that fixed salaries and compensation paid to its officers and employees in their capacity as such are likewise immune.' New York ex rel. Rogers v. Graves, supra, page 408, 57 S.Ct. page 272.
In Brush v. Commissioner, 300 U.S. 352, 57 S.Ct. 495, 81 L.Ed. 691, 108 A.L.R. 1428, the applicable treasury regulation upon which the government relied exempted from federal income tax the compensation of 'state officers and employees' for 'services rendered in connection with the exercise of an essential governmental function of the State.' The Court held that the maintenance of the public water system of New York City was an essential governmental function, and in determining whether the salary of the engineer in charge of that project was subject to federal income tax the Court declared, citing New York ex rel. Rogers v. Graves, supra, page 408, 57 S.Ct. page 272: 'The answer depends upon whether the water system of the city was created and is conducted in the exercise of the city's governmental functions. If so, its operations are immune from federal taxation and, as a necessary corollary, 'fixed salaries and compensation paid to its officers and employees in their capacity as such are likewise immune." Brush v. Commissioner, supra, page 360, 57 S.Ct. page 495.
The fact that the expenses of the one government might be lessened if all those who deal with it were exempt from taxation by the other was thought not to be an adequate basis for tax immunity in Metcalf & Eddy v. Mitchell, 269 U.S. 514, 46 S.Ct. 172, 70.Ed. 384; Group No. 1 Oil Corp. v. Bass, 283 U.S. 279, 51 S.Ct. 432, 75 L.Ed. 1032; Burnet v. Jergins Trust, 288 U.S. 508, 53 S.Ct. 439, 77 L.Ed. 925; James v. Dravo Contracting Co., 302 U.S. 134, 58 S.Ct. 208, 82 L.Ed. 155, 114 A.L.R. 318; Helvering v. Mountain Producers Corp., 303 U.S. 376, 58 S.Ct. 623, 82 L.Ed. 907.
That the economic burden of a tax on salaries is passed on to the employer or that employees will accept a lower government salary because of its tax immunity, are formulas which have not won acceptance by economists and cannot be judicially assumed. As to the 'passing on' of the economic burden of the tax, see Seligman, Income Tax, VII Encyclopedia of Social Sciences, 626 638; Plehn, Public Finance (5th Ed.), p. 320; Buehler, Public Finance, p. 240; Lutz, Public Finance (2d Ed.), p. 336, and see Indian Motocycle Co. v. United States, 283 U.S. 570, 581, footnote 1, 51 S.Ct. 601, 603, 75 L.Ed. 1277. As to preference for government employment because the salary is tax exempt, see Dickinson, Compensating Industrial Effort (1937), pp. 78; Douglas, The Reality of Non-Commercial Incentives in Industrial Life, c. V of The Trend of Economics (1924); Vol. I, Fetter, Economic Principles (1915), p. 203.
The state of the docket of the High Court of Australia and that of the Supreme Court of Canada still permits them to continue the classic practice of seriatim opinions.
Article 1, Sec. 10, U.S.Constitution, U.S.C.A.
Weston v. City Council of Charleston, 2 Pet. 449, 472, 473, 7 L.Ed. 481.
'I dissent from the opinion of the court in this case, because it seems to me that the general government has the same power of taxing the income of officers of the state governments as it has of taxing that of its own officers. * * * In my judgment, the limitation of the power of taxation in the general government, which the present decision establishes, will be found very difficult to control. Where are we to stop in enumerating the functions of the state governments which will be interfered with by Federal taxation? * * * How can we now tell what the effect of this decision will be? I cannot but regard it as founded on a fallacy, and that it will lead to mischievous consequences.' 11 Wall. 113, 128, 129.
E.g., Gillespie v. Oklahoma, 257 U.S. 501, 42 S.Ct. 171, 66 L.Ed. 338; Panhandle Oil Co. v. Mississippi, 277 U.S. 218, 48 S.Ct. 451, 72 L.Ed. 857, 56 A.L.R. 583; Macallen Co. v. Massachusetts, 279 U.S. 620, 49 S.Ct. 432, 73 L.Ed. 874, 65 A.L.R. 866; Indian Motocycle Co. v. United States, 283 U.S. 570, 51 S.Ct. 601, 75 L.Ed. 1277; Burnet v. Coronado Oil & Gas Co., 285 U.S. 393, 52 S.Ct. 443, 76 L.Ed. 815; New York ex rel. Rogers v. Graves, 299 U.S. 401, 57 S.Ct. 269, 81 L.Ed. 306; Brush v. Commissioner of Internal Revenue, 300¢u.S. 352, 57 S.Ct. 495, 81 L.Ed. 691, 108 A.L.R. 1428.
E.g., Mr. Justice Brandeis, dissenting, in Jaybird Mining Co. v. Weir, 271 U.S. 609, 615, 46 S.Ct. 592, 594, 70 L.Ed. 1112; Justice Holmes, dissenting, in Panhandle Oil Co. v. Mississippi, 277 U.S. 218, 222, 48 S.Ct. 451, 452, 72 L.Ed. 857, 56 A.L.R. 583; Mr. Justice Stone, dissenting, in Indian Motocycle Co. v. United States, 283 U.S. 570, 580, 51 S.Ct. 601, 604, 75 L.Ed. 1277; Mr. Justice Roberts, dissenting, in Brush v. Commissioner of Internal Revenue, 300 U.S. 352, 374, 57 S.Ct. 495, 502, 81 L.Ed. 691, 108 A.L.R. 1428. See, also, Mr. Justice Black, concurring, in Helvering v. Gerhardt, 304 U.S. 405, 424, 58 S.Ct. 969, 977, 82 L.Ed. 1427.
Bank of Toronto v. Lambe, 12 App.Cas. 575; D'Emden v. Pedder, 1 C.L.R. 91.
Especially is this true of the Australian Constitution. One of its framers, who afterwards became one of the most distinguished of Australian judges, Mr. Justice Higgins, characterized it as having followed our Constitution with 'pedantic imitation.' Australasian Temperance and General Mutual Life Assurance Co., Ltd., v. Howe, 31 C.L.R. 290, 330.
Abbott v. City of St. John, 40 Can.Sup.Ct. 597; Caron v. The King, (1924) A.C. 999; Amalgamated Society of Engineers v. Adelaide Steamship Co., Ltd., 28 C.L.R. 129; West v. Commissioner of Taxation, 56 C.L.R. 657.
E.g., James v. Dravo Contracting Co., 302 U.S. 134, 58 S.Ct. 208, 82 L.Ed. 155, 114 A.L.R. 318; Helvering v. Mountain Producers Corp., 303 U.S. 376, 58 S.Ct. 623, 82 L.Ed. 907; Helvering v. Gerhardt, 304 U.S. 405, 58 S.Ct. 969, 82 L.Ed. 1427.
State of SOUTH CAROLINA, Plaintiff v. Donald T. REGAN, Secretary of the Treasury of the United States.
ROCKFORD LIFE INSURANCE COMPANY, Appellant v. ILLINOIS DEPARTMENT OF REVENUE et al.
State of SOUTH CAROLINA, Plaintiff v. James A. BAKER, III, Secretary of the Treasury of the United States.
Paul S. DAVIS, Appellant v. MICHIGAN DEPARTMENT OF TREASURY.
CALIFORNIA STATE BOARD OF EQUALIZATION, Petitioner v. SIERRA SUMMIT, INC.
NORTH DAKOTA, et al., Appellants v. UNITED STATES.
OKLAHOMA TAX COMMISSION, Petitioner, v. CHICKASAW NATION.
Rosalind McCLANAHAN, etc., Appellant, v. STATE TAX COMMISSION OF ARIZONA.
Ernest FRY and Thelma Boehm, Petitioners, v. UNITED STATES.
UNITED STATES et al., Appellants, v. COUNTY OF FRESNO et al.
UNITED STATES v. BURNISON et al. UNITED STATES v. GAYETTY et al.
Commonwealth of MASSACHUSETTS, Petitioners, v. UNITED STATES.
STATE TAX COMMISSION OF UTAH et al. v. VAN COTT.
O'MALLEY v. WOODROUGH et ux.
PITTMAN v. HOME OWNERS' LOAN CORPORATION OF WASHINGTON, D.C.
INLAND WATERWAYS CORPORATION et al. v. YOUNG.
HINES, Secretary of Labor and Industry of Pennsylvania, et al. v. DAVIDOWITZ et al.
SUPERIOR BATH HOUSE CO. v. McCARROLL, Com'r of Revenues for State of Arkansas.
STATE OF ALABAMA v. KING & BOOZER et al.
FEDERAL LAND BANK OF ST. PAUL v. BISMARCK LUMBER CO. et al.
PENN DAIRIES, Inc., et al. v. MILK CONTROL COMMISSION OF PENNSYLVANIA.
OKLAHOMA TAX COMMISSION v. UNITED STATES (three cases).
Charles W. BAKER et al., Appellants, v. Joe C. CARR et al.
UNITED STATES, Petitioner v. NEW MEXICO, et al.
CITY OF DETROIT et al., Appellants, v. The MURRAY CORPORATION and the United States. CITY OF DETROIT et al., Petitioners, v. The MURRAY CORPORATION and the United States. UNITED STATES and Borg-Warner Corporation, Appellants, v. CITY OF DETROIT. UNITED STATES, Appellant, v. TOWNSHIP OF MUSKEGON et al. CONTINENTAL MOTORS CORPORATION, Etc., Appellant, v. TOWNSHIP OF MUSKEGON et al.
UNITED STATES of America and Borg-Warner Corporation (Detroit Gear Division), Appellants, v. CITY OF DETROIT, a Municipal Corporation.
KERN-LIMERICK Inc., et al. v. SCURLOCK, Com'r of Revenues for State of Arkansas.
OKLAHOMA TAX COMMISSION v. TEXAS CO. OKLAHOMA TAX COMMISSION v. MAGNOLIA PETROLEUM CO.
FIRST AGRICULTURAL NATIONAL BANK OF BERKSHIRE COUNTY, Appellant, v. STATE TAX COMMISSION.
Edgar B. SIMS, Petitioner, v. UNITED STATES of America.
UNITED STATES et al. v. ALLEGHENY COUNTY, PA.
UNITED STATES et al., Appellants, v. B. J. BOYD, Commissioner.
FEDERAL LAND BANK OF WICHITA, Petitioner, v. BOARD OF COUNTY COMMISSIONERS OF the COUNTY OF KIOWA, STATE OF KANSAS, et al.


text:
See 325 U.S. 893 , 65 S.Ct. 1189. [324 U.S. 697, 698] Messrs. Homer Cummings, of Washington, D.C., and Sedwick Snedeker, of Brooklyn, N.Y., for petitioner Brooklyn Sav. Bank.
Mr. Max R. Simon, of Brooklyn, N.Y., for respondent O'Neil.
Mr. Hyman Ginsberg, of Baltimore, Md., for petitioner Dize.
Mr. Paul Berman, of Baltimore, Md., for respondent Maddrix.
Mr. Robert R. Bruce, of New York City, for petitioners Arsenal Bldg. Corp. and another.
Mr. Aaron Benenson, of New York City, for respondent Greenberg.
The writs of certiorari granted in these three cases present questions as to the interpretation of Section 16(b) of the Fair Labor Standards Act of 1938, 52 Stat. 1060, at 1069, 29 U.S.C.A. 216(b), which provides that an employer who violates the [324 U.S. 697, 699] minimum wage and maximum hour provisions of the Act '... shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount as liquidated damages. ...'1 Cases No. 445 and No. 554, raise the question whether an employee subject to the terms of the Act can waive or release his right to receive from his employer liquidated damages under Section 16(b). Case No. 421 presents the issue of whether in a suit brought pursuant to the provisions of Section 16(b) the employee is entitled to interest on sums recovered as wages and liquidated damages under that section. Since these three cases involve similar problems relating to the interpretation of Section 16(b) and the Congressional policy behind its adoption, all three cases will be dealt with in one opinion. See also J. F. Fitzgerald Const. Co. v. Pedersen, No. 462, 324 U.S. 720 , 65 S.Ct. 892.
The petitioner, Brooklyn Savings Bank, owned and operated an eleven story office building in which the respondent was employed as a night watchman during a two year period from November 5, 1938, to August 30, 1940. Since a substantial portion of that building was [324 U.S. 697, 700] devoted to the production of goods for commerce,2 the respondent was entitled to overtime compensation under the provisions of Section 7 of the Fair Labor Standards Act, 29 U.S.C.A. 207. 3 52 Stat. 1063. No such compensation was paid at that time. However, in November, 1942, over two years after the respondent had left petitioner's service, the petitioner computed the statutory overtime compensation due the respondent and offered him a check for $423.16 in return for a release of all of his rights under the Act. The respondent signed the release and took the check. Since this sum did not include any payment for liquidated damages provided for in Section 16(b) of the Act, the respondent subsequently instituted the present proceeding in a New York City Municipal Court to recover liquidated damages due him under Section 16(b). The complaint was dismissed on the grounds that respondent failed to prove a cause of action and also that the respondent 'released any claim for liquidated damages or counsel fees.' The Appellate Term reversed, per curiam, holding that respondent was employed in the production of goods for commerce within [324 U.S. 697, 701] the meaning of the Fair Labor Standards Act and was entitled therefore to recover liquidated damages by reason of petitioner's default in making overtime payments as required by Section 7 of the Act. 4 This decision was affirmed by the New York Appellate Division,5 and by the New York Court of Appeals. 6 Since the New York Court of Appeals decided a federal question of substance not heretofore determined by this Court, we granted certiorari7 limited to the question of whether the respondent's release of all further claims and damages under the Act, given at the time he received payment of the overtime compensation due under the Act, is a defense to an action subsequently brought solely to recover liquidated damages. The jurisdiction of this Court rests on Section 237(b) of the Judicial Code, 28 U.S.C.A. 344(a).
Because the decision of the Circuit Court of Appeals decided an important question of federal law which has not been, but should be, settled by this Court, we granted certiorari10 limited to the question of whether there had been a compromise of respondent's claim. Jurisdiction of this Court rests on Section 240(a) of the Judicial Code, 28 U.S.C.A. 347( a).
Neither the statutory language, the legislative reports15 nor the debates16 indicates that the question at issue was [324 U.S. 697, 706] specifically considered and resolved by Congress. In the absence of evidence of specific Congressional intent, it becomes necessary to resort to a broader consideration of the legislative policy behind this provision as evidenced by its legislative history and the provisions in and structure of the Act. See Tennessee Coal, Iron & R. Co. v. Muscoda Local No. 123, 321 U.S. 590, 597 , 64 S.Ct. 698, 702; United States v. Darby, 312 U.S. 100, 117 , 118 S., 122, 123, 657, 61 S.Ct. 451, 458, 459, 461, 132 A.L.R. 1430. Such consideration clearly shows that Congress did not intend that an employee should be allowed to waive his right to liquidated damages.
The legislative history of the Fair Labor Standards Act shows an intent on the part of Congress to protect certain groups of the population from substandard wages and excessive hours which endangered the national health and well-being and the free flow of goods in interstate commerce. 17 The statute was a recognition of the fact that due to the unequal bargaining power as between employer and employee, certain segments of the population required federal compulsory legislation to prevent private contracts on their part which endangered national health and efficiency and as a result the free movement of goods in inter- [324 U.S. 697, 707] state commerce. 18 To accomplish this purpose standards of minimum wages and maximum hours were provided. Neither petitioner nor respondent suggests that the right to the basic statutory minimum wage could be waived by any employee subject to the Act. No one can doubt but that to allow waiver of statutory wages by agreement would nullify the purposes of the Act. We are of the opinion that the same policy considerations which forbid waiver of basic minimum and overtime wages under the Act also prohibit waiver of the employee's right to liquidated damages.
We have previously held that the liquidated damage provision is not penal in its nature but constitutes compensation for the retention of a workman's pay which might result in damages too obscure and difficult of proof for estimate other than by liquidated damages. Overnight Motor Transp. Co. v. Missel, 316 U.S. 572 , 62 S.Ct. 1216. It constitutes a Congressional recognition that failure to pay the statutory minimum on time may be so detrimental to maintenance of the minimum standard of living 'necessary for health, efficiency, and general well- being of workers'19 and to the free flow of commerce, that double payment must be made in the event of delay in order to insure restoration of the worker to that minimum standard of well-being. 20 Em- [324 U.S. 697, 708] ployees receiving less than the statutory minimum are not likely to have sufficient resources to maintain their well-being and efficiency until such sums are paid at a future date. The same policy which forbids waiver of the statutory minimum as necessary to the free flow of commerce requires that reparations to restore damage done by such failure to pay on time must be made to accomplish Congressional purposes. Moreover, the same policy which forbids employee waiver of the minimum statutory rate because of inequality of bargaining power, prohibits these same employees from bargaining with their employer in determining whether so little damage was suffered that waiver of liquidated damage is called for. This conclusion is in accord with decisions of the majority of the federal courts that have considered this question. 21 This result, [324 U.S. 697, 709] moreover, avoids the difficult problems of allocation that would arise in numerous cases where a lump sum was paid for back wages and waiver of right to liquidated damages and where issue was subsequently raised as to whether there had been full payment of the basic minimum and overtime wages specified in the Act. Nor does the instant case involve exceptional circumstances of the kind held to justify a waiver agreement such as was upheld in Fort Smith & W.R. Co. v. Mills, 253 U.S. 206 , 40 S.Ct. 526.
Prohibition of waiver of claims for liquidated damages accords with the Congressional policy of uniformity in the application of the provisions of the Act to all employers subject thereto, unless expressly exempted by the provisions of the Act. An employer is not to be allowed to gain a competitive advantage by reason of the fact that his employees are more willing to waive claims for liquidated damages than are those of his competitor. 25 The same considerations calling for equality of treatment which we found so compelling in Midstate Horticultural Co., Inc., supra, exist here.
Respondent argues that Section 16(b) indicates that the right to liquidated damages arises only if the employee is compelled to sue for minimum wages due. Section 16(b) in no way bears out this interpretation. 27 It provides absolutely that the employer shall be liable for liquidated damages in an amount equal to minimum wages overdue; liability is not conditioned on default at the time suit is begun. It is also argued that the elimination from a predecessor bill of a provision prohibiting waiver of the provisions of the Act indicates a Congressional intent to allow an employee to waive his claim to liquidated damages. 28 [324 U.S. 697, 712] But such a contention proves too much. It applies with equal force to the right to minimum wages. Such an interpretation would nullify the effectiveness of the Act. It is also suggested that the failure to impose criminal sanctions for the violation of the liquidated damage provisions or to authorize an injunction to prevent their violation manifests a difference in Congress' attitude toward the waiver of the employee's right to the basic statutory wage as compared with his right to liquidated damages. But there is no reason for making an employer subject to a criminal penalty or an injunction for failure to pay liquidated damages. They are collectible as private damages by the employee for failure to obey the same requirements as to wages which are punished and controlled, so far as the purely public interest is concerned, by criminal sanctions and injunction.
The invalidity of the release or waiver in No. 445 makes the release and waiver involved in No. 554 a fortiori invalid. In the latter case both the federal District Court31 and the Circuit Court of Appeals32 found 'that both parties knew more than $500.00 was due ...' at the time the petitioner tendered $500 to the respondent in return for a comprehensive release covering all of the respondent's claims against the petitioner employer. Thus in that case the employer and employee attempted by means of that release to waive the right to the basic statutory minimum as well as the right to liquidated damages. This [324 U.S. 697, 714] attempted release and waiver of rights under the Act was absolutely void. See Smith v. McCullough, 270 U.S. 456, 465 , 46 S.Ct. 338-341. When petitioner attempted to pay the additional sum due as a statutory minimum, the respondent refused to accept payment, thus there was no valid settlement which would operate to bar the respondent employee's right to recover the balance of the statutory minimum wage still due and liquidated damages equal in amount to the entire sum of wages which the employer had not paid promptly.
Our decision of the issues raised in No. 445 and No. 554 has not necessitated a determination of what limitation, if any, Section 16(b) of the Act places on the validity of agreements between an employer and employee to settle claims arising under the Act if the settlement is made as the result of a bona fide dispute between the two parties, in consideration of a bona fide compromise and settlement. Neither of the above mentioned cases presented such issues for our consideration. Cf. Duncan v. Thompson, 315 U.S. 1, 7 , 62 S.Ct. 422, 424; Garrett v. Moore-McCormack Co., 317 U.S. 239 , 63 S.Ct. 246; Tennessee Coal, etc., Co. v. Muscoda Local No. 123, 321 U.S. 590, 603 , 64 S.Ct. 698, 705.
There remains to be considered the question whether an employee recovering minimum wages and liquidated damages under the provisions of Section 16(b) is also entitled to interest on the sums so recovered. 33 We granted certiorari in No. 42134 to the Circuit Court of Appeals for [324 U.S. 697, 715] the Second Circuit, limited to the question of the propriety of allowing interest on recoveries of unpaid overtime compensation and liquidated damages under the Act. Certiorari was granted because this court decided an important federal question of substance which had not previously been determined by this Court. The jurisdiction of this Court in No. 421 rests on Section 240(a) of the Judicial Code, 28 U.S.C.A. 347(a).
The judgments in No. 445 and No. 554 are hereby affirmed. The judgment in No. 421 is reversed in so far as it included interest.
Judgments in 445 and 554 affirmed; judgment in 421 reversed in part.
Mr. Chief Justice STONE, dissenting in No. 445 and concurring in No. 554.
Mr. Justice ROBERTS, Mr. Justice FRANKFURTER and I think the judgment should be reversed in Brooklyn Savings Bank v. O'Neil, No. 445, and affirmed in Dize v. Maddrix, No. 554.
Respondent was employed by petitioner in New York, and in New York gave to petitioner, without consideration, a purported written release of its obligation to pay the statutory liquidated damages prescribed by 16( b) of the Fair Labor Standards Act, 29 U.S.C.A. 216(b). Section 243 of the Debtor and Creditor law of New York, Consol. Laws N.Y. c. 12, declares a written instrument purporting to release 'all claims, debts, demands or obligations ... shall not be invalid because of the absence of consideration or of a seal.' Counsel are agreed that, unless the words or policy of the Fair Labor Standards Act preclude, the written release was as effective to discharge the obligation for liquidate damages as was the release under seal at common law.
We find nothing in the Fair Labor Standards Act to prevent the effective operation of such a release upon the cause of action for liquidated damages more than any other. Section 16(b) of the Act authorizes the employee to recover liquidated damages from an employer who violates the duty imposed by 6 and 7 of the Act, 29 U.S.C.A. 206, 207, to pay the prescribed minimum and overtime wages. That duty is expressed in 6 and 7 in terms of a command to the [324 U.S. 697, 717] employer. Willful failure to obey it is made a criminal offense by 15(a)( 2) and 16(a), and authority to enjoin violations of 6 and 7 is given by 15 and 17, 29 U.S.C.A. 215, 217.
These provisions and these alone afford some basis for inferring a Congressional policy against the release of minimum and overtime wages. But the Act places the right to recover liquidated damages authorized by 16(b) on a very different footing. That section expresses no command. It merely imposes a civil liability on the employer and gives an action to the employee to enforce the liability. Failure by the employer to pay the prescribed liquidated damages is not made a criminal offense by 15 and 16 and may not be enjoined under 15 and 17.
The studious avoidance of any provision making the non-payment of the liquidated damages a public wrong, by the omissions of sanctions which the statute does impose for the failure to pay minimum and overtime wages, is the most persuasive kind of evidence that it was the Congressional purpose to leave undisturbed the general policy of the law that a mere private claim for damages may be released at the will of the claimant. It is not an answer to say that 'there is no reason for making an employer subject to a criminal penalty or an injunction for failure to pay liquidated damages', since they are 'collectible as private damages.' It is precisely because the statute in this case has in every respect treated the claim for liquidated damages as a private claim while imposing sanctions, as for a public wrong, for non-payment of minimum and overtime wages, that we must infer that Congress intended that the claim for liquidated damages should have the status of private claims, which are subject to release, a status which the statute denied to minimum and overtime wages.
This pointed difference in the treatment of the two classes of claims is underscored by the complete lack of [324 U.S. 697, 718] any legislative history suggesting that there was any Congressional purpose to treat alike the two classes of claims which it treated so differently in the statute. In its progress through Congress there was stricken from the bill, which was finally enacted as the Fair Labor Standards Act, a clause providing that any agreement for waiver of compliance with any provision of the Act should be void. Section 17(b), S. 2475, as passed by Senate, 75th Cong., 1st Sess., 1937. With this provision eliminated, the mandatory terms of 6 and 7, the criminal penalties of the Act, and its provision for relief in equity, afford the sole ground to be found either within or without the statute for any inference of a Congressional policy against the release of claims arising under the Act. These factors concern only the minimum and overtime wages. They neither support nor suggest any Congressional policy against release of liquidated damages to which they are inapplicable and wholly unrelated.
If such an undeclared policy is to be inferred, it must be inferred from the statute, read in its appropriate setting. The statute is silent as to any exceptional policy with respect to claims for unliquidated damages-a silence which is given meaning by the provisions affirmatively making non-payment of minimum and overtime wages a public wrong. Any inference that a release of minimum and overtime wages is invalid must be because the release is an aggravation of the public wrong. But to draw that inference is to foreclose the possibility of a like inference with respect to liquidated damages, the non-payment of which is not made a public wrong.
We held in Overnight Motor Transp. Co. v. Missel, 316 U.S. 572 , 62 S. Ct. 1216, that the provision for liquidated damages is not punitive. Hence it cannot in itself be said either to have created or sanctioned a public right or interest in the recovery of liquidated damages. In view of the uncer- [324 U.S. 697, 719] tain coverage of the Act we cannot ignore the fact that the statutory liability may be harsh in its application and enable the employee to recover an amount far in excess of any damage which he has in fact suffered. All these considerations persuasively suggest that Congress has adopted no policy which precludes the employee from releasing, as in the case of other claims, the claim for liquidated damages when the release conforms to local law and is procured without overreaching or unfairness. DP On the contrary the provisions of the Act show, and the legislative history emphasizes, that Congress intended to treat the liquidated damage obligation differently from its command to pay minimum and overtime wages. Because of this difference we cannot say that it intended to place the employee so far in tutelage as not to be free to give, and the employer to obtain, a release of what is by the terms of the statute nothing more than a cause of action for damages which in fact he may or may not have suffered.
There appears to have been no accord and satisfaction in this case, and for the reasons stated in our opinion in Brooklyn Savings Bank v. O'Neil, No. 445, the attempted release by respondent of his claim for overtime wages was void as against the policy of the Fair Labor Standards Act. Because of petitioner's failure to pay overtime wages as directed by 7 of the Act, respondent is entitled to recover liquidated damages as provided by 16(b) and the judgment should be affirmed.
[ Footnote 2 ] The New York Appellate Term held that the Fair Labor Standards Act applied to the petitioner's operation of its building. This holding was affirmed by the Appellate Division and the Court of Appeals. See notes 5 and 6. Petitioner did not raise this issue in his petition for certiorari.
[ Footnote 4 ] O'Neil v. Brooklyn Savings Bank, 180 Misc. 542, 43 N.Y.S.2d 25.
[ Footnote 5 ] O'Neil v. Brooklyn Savings Bank, 267 App.Div. 317, 46 N.Y.S.2d 631.
[ Footnote 6 ] Affirmed without opinion, 293 N.Y. 666, 56 N.E.2d 259.
[ Footnote 7 ] 323 U.S. 698 , 65 S.Ct. 117.
[ Footnote 8 ] Maddrix v. Dize, 7 Wage Hour Rep. 313 (Jan. 31, 1944, not officially reported).
[ Footnote 9 ] Dize v. Maddrix, 4 Cir. 144 F.2d 584.
[ Footnote 10 ] 323 U.S. 702 , 65 S.Ct. 135.
[ Footnote 11 ] See note 1 supra.
[ Footnote 12 ] The respondent, employee, was informed by a third person some two years after he left the petitioner's employment that petitioner had some money for him. Respondent went to petitioner's offices. According to respondent's testimony, there was no discussion or dispute prior to his acceptance of the check given him by the petitioner either as to the existence of liability under the Act or as to the amount of such liability. Viewed most favorably petitioner's witness' testimony was merely to the effect that the petitioner had subjective doubts as to the existence and amount of its liability.
[ Footnote 13 ] For a general discussion of the problem raised by this case, see Herman, The Administration and Enforcement of the Fair Labor Standards Act, 6 Law and Contemp.Probs. 368; Tepper, Consent Judgments and Contempt Cases under the Fair Labor Standards Act of 1938, 22 Boston Univ.L.Rev. 390; Determination of Wages under Fair Labor Standards Act, 43 Col.L.Rev. 355; 57 Harv.L.Rev. 257.
[ Footnote 14 ] See United States ex rel. Johnson v. Morley Const. Co., 2 Cir., 98 F.2d 781, 788; N.L.R.B. v. American Potash & Chemical Corporation, 9 Cir., 113 F.2d 232, 129 A.L.R. 874; Id., 9 Cir., 118 F.2d 630; N.L.R.B. v. Stackpole Carbon Co., 3 Cir., 128 F.2d 188, 190; Waterman S.S. Corporation v. N.L.R.B., 5 Cir., 119 F.2d 760; Perry v. W. L. Huffman Automobile Co., 104 Neb. 211, 175 N.W. 1021, reversed on rehearing, 104 Neb. 214, 179 N.W. 501; Harrington v. Department of Labor and Industry, 252 Mich. 87, 233 N.W. 361.
There were three legislative reports on predecessor bills but these bills did not contain any provision analogous to Section 16(b). S. Rep. No. 884, 75th Cong., 1st Sess.; H. Rep. No. 1452, 75th Cong., 1st Sess.; H. Rep. No. 2182, 75th Cong., 3d Sess.
[ Footnote 17 ] H. Rep. No. 2738, 75th Cong., 3d Sess., pp. 1, 13, 21 and 28.
[ Footnote 18 ] The legislative debates indicate that the prime purpose of the legislation was to aid the unprotected, unorganized and lowest paid of the nation's working population; that is, those employees who lacked sufficient bargaining power to secure for themselves a minimum subsistence wage. 81 Cong.Rec. 7652, 7672, 7885; 82 Cong.Rec. 1386, 1395, 1491, 1505, 1507; 83 Cong.Rec. 7283, 7298, 9260, 9265. See also H. Rep. No. 1452, 75th Cong., 1st Sess., p. 9; S. Rep. No. 884, 75th Cong., 1st Sess., pp. 3, 4.
[ Footnote 19 ] Section 2(a), 52 Stat. 1060, 29 U.S.C.A. 202(a).
[ Footnote 20 ] The necessity of prompt payment to workers of wages has long been recognized by Congress as well as by state legislatures. Numerous statutory provisions have been adopted to insure prompt payment. See for example, 33 U.S.C. 914(e) and (f); 33 U.S.C.A. 914(e) and (f); 46 U.S. C. 506, 46 U.S.C.A. 596; Wis.Rev.Stat.1941, 103.39; N.Y.Labor Law, Consol.Laws, c. 31, 196; Calif. Labor Code, 1937, 204, 205, 219, St. Cal.1937, pp. 197, 200.
As to the importance to the worker of receiving prompt payment, see Labor Laws and their Administration, 1936 Bull. No. 629, U.S. Dept. of Labor, Bureau Labor Statistics, p. 139.
[ Footnote 21 ] Post et al. v. Fleming et al., 2 Cir., 146 F.2d 441; Seneca Coal & Coke Co. v. Lofton, 10 Cir., 136 F.2d 359; Rigopoulos v. Kervan, 2 Cir., 140 F.2d 506, 151 A.L.R. 1126; Birbalas v. Cuneo Printing Industries, 7 Cir., 140 F.2d 826; Travis v. Ray, D.C., 41 F.Supp. 6; Hutchinson v. William C. Barry, Inc., D.C., 44 F.Supp. 829. Contra: Guess v. Montague, 4 Cir., 140 F.2d 500.
There has been less unanimity over the right to compromise claims under the statute in cases involving a bona fide dispute. See Atlantic Company v. Broughton, 5 Cir., 146 F.2d 480; Post et al. v. Fleming, et al., supra; Fleming v. Warshawsky & Co., 7 Cir., 123 F.2d 622; Donahue v. Susquehanna Collieries Co., 3 Cir., 138 F.2d 3, 149 A.L.R. 271; Rigopoulos v. Kervan, supra; David v. Atlantic Co., 69 Ga.App. 643, 26 S.E.2d 650. For discussion of the release and settlement problem as it has arisen under the state Workmen's Compensation Acts, see Dodd, Administration of Workmen's Compensation, 186 et seq.
For lower federal court decisions holding that right to unpaid minimum wages and overtime compensation constitute a single right, see Post et al. v. Fleming et al., supra; Birbalas v. Cuneo, supra. Cf. Buckley v. Oceanic S.S. Co., 9 Cir., 5 F.2d 545.
[ Footnote 22 ] See statement by Secretary of Labor, Joint Hearings, Committee on Education and Labor, United States Senate, and Committee on Labor of House of Representatives, 75th Cong., 1st Sess., on S. 2475 and H.R. 7200, Part 1, p. 181. See also note 16, supra.
[ Footnote 23 ] Joint Hearings, op. cit., supra, note 22, part 2, p. 457. See also note 16, supra.
[ Footnote 24 ] See Sage v. Hampe, 235 U.S. 99, 105 , 35 S.Ct. 94, 95; Smith v. McCullough, 270 U.S. 456, 465 , 46 S.Ct. 338; Muschany v. United States, 324 U.S. 49 , 65 S.Ct. 442.
[ Footnote 26 ] Section 16, 52 Stat. 1069, 29 U.S.C.A. 216.
[ Footnote 27 ] See note 1, supra.
'Sec. 20. (a) Any contract, agreement, or understanding for the employment of any person in violation of any provision of this Act or of a regulation or order thereunder shall be null and void.
S. 2475, 75th Cong., 1st Sess., introduced May 24, 1937; H.R. 7200, 75th Cong., 1st Sess., introduced May 24, 1937.
Except for renumbering of the section and one slight change in language, this provision remained in the bill and its various amendments, apparently until it was eliminated by the Conference Committee. Section 17, S. 2475, Calendar No. 905, (Report No. 884), 75th Cong., 1st Sess., reported with an amendment, July 6, 1937; Section 17, S. 2475, Union Calendar No. 535 (Report No. 1452), 75th Cong., 1st Sess., reported with amendment, Aug. 6, 1937; Section 16, S. 2475, 75th Cong., 2d Sess., amended and recommitted, Dec. 17, 1937. The reason for eliminating this provision from the final bill does not appear. It was done in the course of the general revision of the bill in the Conference Committee.
[ Footnote 29 ] The following federal statutes contain express provisions relating to the waiver or settlement of claims under them: Longshoremen's and Harbor Workers' Comp. Act, 33 U.S.C. 908(i), 915(b), 916, 33 U.S.C.A. 908(i), 915(b), 916; Federal Employers' Liability Act, 45 U.S.C. 55, 45 U.S.C.A. 55; Jones Act, 46 U.S.C. 688, 46 U.S.C.A. 688; settlement of wage claims of merchant seamen, 46 U.S.C. 597, 644, 46 U.S.C.A. 597, 644. The federal courts have interpreted these provisions strictly so as to protect the employee. Garrett v. Moore-McCormack Co., 317 U.S. 239 , 63 S.Ct. 246; Duncan v. Thompson, 315 U.S. 1 , 62 S.Ct. 422; Pacific Mail S.S. Co. v. Lucas, 258 U.S. 266 , 42 S.Ct. 308; Arrow Stevedore Co. v. Pillsbury, 9 Cir., 88 F.2d 446; Pacific Employers Ins. Co. v. Pillsbury, 9 Cir., 130 F.2d 21; Henderson v. Glens Falls Indemnity Co., 5 Cir., 134 F.2d 320; Westenrider v. United States, 9 Cir., 134 F.2d 772.
[ Footnote 30 ] See note 14, supra.
[ Footnote 31 ] 7 Wage Hour Rep. 313.
[ Footnote 32 ] 4 Cir., 144 F.2d 584, 585.
[ Footnote 33 ] In No. 445 the New York Appellate Term allowed interest on unpaid liquidated damages. O'Neil v. Brooklyn Savings Bank, 180 Misc. 542, 43 N.Y. S.2d 25. This was affirmed on subsequent appeals to higher state courts. See notes 5 and 6 supra. Since petitioner in No. 445 did not seek certiorari on this issue, we have not examined it. Connecticut Railway & Lighting Co. v. Palmer, 305 U.S. 493, 495 , 59 S.Ct. 316, 319.
The federal District Court and Circuit Court of Appeals in No. 554, did not award the employee in that case interest on sums adjudged due as unpaid overtime wages and liquidated damages.
[ Footnote 34 ] 323 U.S. 698 , 65 S.Ct. 116.
[ Footnote 35 ] See note 1, supra.

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In 2009, Sergey Aleynikov was a computer programmer employed by Goldman Sachs to write high-frequency trading code. He accepted an offer to join a new Chicago-based company, Teza Technologies. Before he left Goldman Sachs, however, he sent portions of Goldman’s high frequency trading code to a German server for his own future use. After Goldman found out, it went to the FBI; Aleynikov was then arrested on a flight home from a visit to Chicago. With that arrest began a circuitous journey through the U.S. legal system, governed by two different sovereigns and under two different legal regimes – neither one of which was ultimately found to cover his actions.
Whoever, with intent to convert a trade secret, that is related to or included in a product that is produced for or placed in interstate or foreign commerce, to the economic benefit of anyone other than the owner thereof, and intending or knowing that the offense will, injure any owner of that trade secret, knowingly . . . without authorization . . . downloads, uploads, . . . transmits, . . . or conveys such information . . . [would be guilty of a criminal offense punishable by up to ten years in jail].
The parties disputed the application of the EEA to Aleynikov’s behavior, Aleynikov’s intent in uploading the code to the German server, and the importance of the uploaded code. Ultimately, however, the jury found Aleynikov guilty under the EEA and NSPA.
The U.S. Court of Appeals for the Second Circuit interpreted the EEA and the NSPA more narrowly than the trial court. It stressed that the EEA had been adopted as a response to the Supreme Court’s decision that the relevant section of the NSPA (18 U.S.C. § 2314) did not apply to purely intangible property, as found in Dowling v. United States, 473 U.S. 207 (1985). It then considered the differences in language between the economic espionage provision of the EEA (18 U.S.C. § 1831) and the trade secrets provision (18 U.S.C. § 1832). The former did not require that the information be “related to or included in a product that is produced for or placed in interstate or foreign commerce,” while the latter did. Given the statutory language, the Second Circuit found that Goldman’s code was intended to remain confidential (and not be related to any product placed in interstate commerce). It therefore overturned Aleynikov’s Federal conviction.
Remarkably, the Second Circuit’s decision in the Federal Aleynikov case subsequently led to a change in the EEA. Although it cannot apply to the Aleynikov case (under both the Constitution’s ex post facto clause and double jeopardy case law), § 1832 was amended to apply to any trade secret “that is related to a product or service used in or intended for use in interstate or foreign commerce.” Thus, in future cases, misappropriation of computer code that is intended to remain confidential, but used in relation to a service performed in interstate commerce, will be an offense under the EEA.
After sitting in prison for over a year awaiting resolution of the Federal claims against him, Sergey Aleynikov thought he was no longer in jeopardy when the Second Circuit issued its opinion absolving him of criminal liability. Not true. Rather than returning Aleynikov’s computer, other evidence, and passport, the U.S. Attorney’s Office turned it all over to the New York County (Manhattan) DA’s office. Ultimately, that evidence was ruled to be illegally transferred and inadmissible as evidence against Aleynikov. The DA’s office nonetheless decided to prosecute Aleynikov.
A person is guilty of unlawful duplication of computer related [material] . . . when having no right to do so, he or she copies, reproduces or duplicates in any manner: 1. any computer data or computer program and thereby intentionally and wrongfully deprives or appropriates from an owner thereof an economic value or benefit in excess of [$2,500].
Aleynikov challenged his state indictment on numerous grounds, ranging from double jeopardy, to the high-frequency trading code not being “secret scientific material,” to not having made a “tangible reproduction or representation,” and to not having deprived Goldman of the value of the code. The trial court judge rejected those arguments and allowed the case to go forward to trial.
At trial in April 2015, Aleynikov argued that he had committed no crime, based both on his own lack of culpable intent and the technical language of the relevant statutes. The jury returned with a split verdict: guilty on one count of Unlawful Use of Secret Scientific Material, hung on the other count of Unlawful Use of Secret Scientific Material, and not guilty of Unlawful Duplication of Computer Related Material. After the jury verdict, Aleynikov renewed his motion to dismiss both counts of Unlawful Use of Secret Scientific Material; the trial court granted the renewed motion in a carefully reasoned 72-page decision issued on July 6, 2015.
The trial court’s dismissal of the two counts of Unlawful Use of Secret Scientific Material rested on two separate grounds. First, the court found that the prosecution had not proved that Aleynikov had made “a tangible reproduction or representation of [any] secret scientific material.” Second, the court found that the prosecution had not proved that Aleynikov had the “intent to appropriate to himself or another the use of secret scientific material.” In both cases, the trial court’s decision was not based on a lack of evidence; rather, the trial court found that the act of making a copy of computer code was improper but could not violate the statute for either reason.
The trial court began its consideration of the renewed motion to dismiss with a review of the origins of the statute. The law was intended to be a counterpart to a larceny statute (N.Y. Pen. L. § 155.30(3)) that makes it a felony to “steal property” which consists of “secret scientific material.” The difference between the two statutes was the physical act proscribed: in the case of the unlawful use statute, it was making a tangible reproduction or representation of scientific material; in the case of the larceny statute, it was taking the scientific material itself. For example, the unlawful use statute would be violated by writing down the synthetic steps for making a product, whereas the larceny statute would be violated by stealing the product itself. In both cases, a violation required the accused to have the same intent to steal. Both statutes grew out of a theft of trade secrets from the Lederle Laboratory Division of the American Cyanamid Company in which employees had taken confidential records and microorganisms used in the synthesis of antibiotics and steroids from Lederle and turned them over to be sold to other drug companies.
In resolving which definition of “tangible” would apply, the court turned to four sources: canons of statutory construction, decisions under the EEA (based on the prior Aleynikov prosecution), New York state decisions construing similar statutes, and the Rule of Lenity.
The most important canon of construction for the trial court was the principle that every word in a statute must have a meaning and was assumed to have been inserted for a purpose. The statute would not have been violated if a representation or reproduction had been imaginary or incomprehensible because there would be no economic value to appropriate, so tangible had to mean something other than merely real or comprehensible. The DA first argued that tangible meant that the reproduction or representation itself need not be tangible, only that it be able to be physically reproduced or represented. Alternatively, the DA argued that the term “tangible” was intended to distinguish memories.  The court found the first option would still render the word superfluous in the statute, and the second defied common sense. Further, the DA’s attempts at construction violated a second canon of construction, which was that statutes are to be construed according to their meaning at the time of enactment. When the statute was enacted in 1967, even the computer-related media that were available (like fax machines or photocopiers) yielded tangible, paper copies of original documents. Thus, the court found that a physical definition of “tangible” was required.
Second, the distinction between a virtual copy of computer code and a “tangible” physical copy was also starkly shown in Federal jurisprudence under the EEA. After Aleynikov had been absolved of criminal liability by the Second Circuit, another defendant, Samarth Agrawal, argued that his conviction should also be reversed. But Agrawal, unlike Aleynikov, had printed out code from his employer’s high-frequency trading system on paper. As the Second Circuit found, “[t]his makes all the difference.” In addition, earlier in the state Aleynikov case, a different justice of the New York Supreme Court had suggested that the misappropriated source code was “intangible property” in contrasting the Agrawal case.
Finally, the court considered the Rule of Lenity. In addition to all of the evidence that suggested that the term “tangible” did not apply, the Rule counsels that “[i]f two constructions of a criminal statute are plausible, the one more favorable to the defendant should be adopted.” Thus, the court found that virtual computer code could not support a finding that Aleynikov made a “tangible reproduction or representation” and the conviction had to be overturned.
To “appropriate” property of another to oneself or a third person means (a) to exercise control over it, or to aid a third person to exercise control over it, permanently or for so extended a period or under such circumstances as to acquire the major portion of its economic value or benefit, or (b) to dispose of the property for the benefit of oneself or a third person.
The former definition applies to the Unlawful Use of Secret Scientific Material statute, the latter definition to the larceny statute. Thus, there were two questions that the court had to answer. First, what does “the major portion of [property’s] economic value or benefit” mean? And second, can it be defined independently from the rightful owner’s retained value or is it a zero-sum definition?
Based on dictionary definitions and the context of the statute, the court found that “the major portion” would have to be the majority of the value. Importantly, the definitional statute of “appropriate” uses the definite article, indicating that there can be only one major portion. And a Federal district court considering the same question came to the same result, rejecting arguments that “the major portion” could be a significant, but minority, portion.
The court also found that appropriation would have to be a “zero-sum game,” where a defendant would not only obtain benefits but also deprive the rightful owner of the same benefits. To the extent that such a result was not compelled by the relative definition of “the major portion,” it was supported by case law on larceny and the Rule of Lenity. Because Aleynikov had not taken most of the value of the code from Goldman (and no evidence was introduced that supported a valuation of the code, its value to Aleynikov, or its remaining value to Goldman), his conviction could not stand.
Finally, despite the outcome of the Aleynikov case itself, the court noted that efforts were underway in the New York legislature to plug the holes into which the conviction had fallen. While those updates to the law would not rescue Aleynikov’s conviction, they would have the same effect as the amendments of the EEA in punishing later misdeeds.
Despite the court’s careful decision and the steps already being taken to fix the statute, the prosecution chose to appeal the court’s dismissal of Aleynikov’s conviction. On July 24, 2015, it filed a notice of appeal. Thus, an appellate panel will consider whether conduct like Aleynikov’s could violate the Unlawful Use of Secret Scientific Material statute.
Sergey Aleynikov is in the remarkable position of having been tried twice for the same acts, having two juries find him guilty, but having been absolved by two different courts. He also has been the driving force between an amendment to a Federal statute and, most likely, his absolution will be the cause for an update of state laws as well. However, his situation goes to show how poor a fit current criminal statutes are to the fast-moving virtual world. That is one of the reasons that numerous parties have sought a Federal trade secrets law, which would allow private parties to bring civil suits to enforce their rights. Such a law, the Defend Trade Secrets Act of 2015, has been introduced in Congress and may prove to be the best tool for combatting acts like Aleynikov’s.
 United States v. Aleynikov, 737 F. Supp. 2d 173, 177, 185 (S.D.N.Y. 2010). Aleynikov was also indicted on a charge of unauthorized computer access in violation of the Computer Fraud and Abuse Act (“CFAA”), 18 U.S.C. § 1030(a)(2)(C), but that charge was dismissed by the trial court. Id. at 190–94.
 Economic Espionage Act of 1996, Pub. L. No. 104-294, §§ 1831–39, October 11, 1996, 110 Stat 3488.
 18 U.S.C. §§ 2311–15 (2006).
 Economic Espionage Act of 1996 § 1832.
 United States v. Aleynikov, 676 F.3d 77, 82-83 (2d Cir. 2012).
 Pub. L. 112–236, § 2, Dec. 28, 2012, 126 Stat. 1627.
 People v. Aleynikov, No. 04447/12, slip. op. 1 (N.Y. Sup. Ct. July 6, 2015). The Manhattan DA’s office offered Aleynikov a plea bargain: if he pled guilty to one of the counts, they would agree to drop the other charges and seek no time beyond the one year he had already served awaiting trial on the Federal charges. Aleynikov rejected the plea deal.
 N.Y. Pen. L. § 156.30.
 People v. Aleynikov, slip. op. at 72.
 United States v. Agrawal, 726 F.3d 235 (2d Cir. 2013).
 People v. Aleynikov, slip. op. at p. 38–40.
 Id. at 40 (citing People v. Kent, 19 N.Y.3d 290 (2012)).
 Id. at 44 (quoting People v. Golb, 23 N.Y.3d 455, 468 (2014)).
 N.Y. Pen. L. § 155.00(4).
 People v. Aleynikov, slip. op. at 49.
 Id. at p. 50 (quoting Perfect Curve Inc. v. Hat World Inc., 988 F. Supp. 2d. 38, 60–61 (D. Mass. 2013)).