OPINION OF THE COURT
BECKER, Circuit Judge.
This appeal involves the interrelationship of two provisions — one statutory and one contractual — designed to ensure that seamen are paid promptly for the work they perform. The statutory provision, popularly known as the penalty wage statute, is 46 U.S.C. § 596.
The collective bargaining agreement between the defendant shipper and the union representing the plaintiff seamen is the second provision designed to ensure prompt payment. Its requirements are somewhat stricter than those of the statute, but its penalty is less severe. The agreement provides that, where a ship lands in a foreign port on a weekday, the seamen covered must be paid their wages by 5 p.m. Friday of that week. If such payments are not made, the seamen are entitled to "continuous wages" for the weekend, that is, the sum to which they would have been entitled had they actually worked over the weekend.
The precise issue before us is whether an owner who pays all "ordinary wages" within the period prescribed by section 596, but not within the period provided by the collective bargaining agreement, is liable for penalty wages under section 596 for failure to pay the "continuous wages" required by the collective bargaining agreement in such circumstances. More concisely, the issue is whether "continuous wages" are "wages" for purposes of section 596. We hold that they are not. If a collective bargaining agreement provides for payment of seamen's wages in a more prompt fashion than required by section 596 and assesses its own penalty for delinquent payment, it does not further the purposes of the penalty wage statute to subject the delinquent payments of these damages to the draconian two-for-one penalties of that statutory provision. Rather, the Congressional purpose is fully satisfied where payments for actual, earned wages are made in the time period prescribed by the statute.
Accordingly, we affirm the grant of summary judgment for the defendant by the district court, 587 F.Supp. 93, which decided this case on other grounds.
The facts of this case are relatively simple. Plaintiff-appellants Robert Merrick
Section 4A(d) of the collective bargaining agreement between Sea-Land and the Marine Engineers Beneficial Association, which represented Merrick and Kachinski, provided that:
This agreement would seem to have required Sea-Land to pay Merrick and Kachinski their wages by 5 p.m. Friday at the latest. No payment was made until Saturday, May 30, 1981, however, at which time Merrick's and Kachinski's shipping articles were terminated.
Merrick and Kachinski made a claim for three days-worth of continuous wages by calling it to the attention of their union, which submitted the grievance to Sea-Land pursuant to the collective bargaining agreement. After a flurry of letters and conferences concerning this claim and others of Merrick and Kachinski arising out of subsequent voyages, on October 2, 1981, Sea-Land forwarded a check for $133.00 to Merrick and of $176.00 to Kachinski, which sums apparently represent two days' "continuous wages" less withholding of various taxes. Merrick and Kachinski cashed these checks.
On November 25, 1981, Merrick and Kachinski filed suit against Sea-Land claiming penalty wages under section 596 for the delay in payment from May 30, 1981, to October 2, 1981, of continuous wages required by the collective bargaining agreement.
We decline to decide the three thorny issues presented by plaintiff as grounds for appeal, but instead, pursuant to our prerogative under Dandridge v. Williams, 397 U.S. 471, 475 n. 6, 90 S.Ct. 1153, 1156 n. 6, 25 L.Ed.2d 491 (1970), affirm the grant of summary judgment for Sea-Land on grounds of the first affirmative defense it interposed: "continuous wages," as defined in the collective bargaining agreement, are not "wages" for purposes of section 596.
It will not always be easy for courts to determine which of the many payments that the owner or master of a vessel may make to a seaman should properly be classified as wages. It is clear, however, both from logic and precedent that courts cannot make this determination of the basis of the name accorded the payments by the parties. Such a rule would permit overreaching shippers to eviscerate the protections Congress gave seamen in section 596 simply by using the economic power they are thought to possess to affix other labels on the payments they must make to seamen in exchange for their work. Similarly, in these days of powerful maritime unions, a judicial approach that permitted the economic power of the unions to determine what payments constituted wages, might expand the reach of section 596 far beyond that originally envisaged by the law makers that promulgated that provision.
For this reason, and as suggested by the Second Circuit in Glandzis v. Callinicos, 140 F.2d 111 (2d Cir.1944), courts must look to economic reality and thus determine the "character" of the payments involved. Thus, it has been held that payments made to seamen to reward them for entering war zones and that overtime payments are "wages" within the meaning of section 596. Id; Monteiro v. Sociedad Maritima Son Nicolas S.A., 280 F.2d 568, 573 (2d Cir.), cert. denied, 364 U.S. 915, 81 S.Ct. 272, 5 L.Ed.2d 228 (1960). These payments are "compensation paid by an employer for services rendered him by others ...." within the meaning of section 596. Applying the same principles, however, courts have also held that payments required by 46 U.S.C. § 594 to compensate the seamen for premature terminations of voyages are not "wages" subject to the section 596 penalty, but rather "in the nature of compensation or liquidated damages for breach of a contract." Lewis v. Texaco, Inc., 1975 A.M.C. 61 (S.D.N.Y.1974), aff'd, 527 F.2d 921 (2d Cir.1975); see Newton v. Gulf Oil Corp., 87 F.Supp. 210, 211 (E.D.Pa.1949).
We hold that the "continuous wages" provided for in the collective bargaining agreement, like payments required by statute under section 594, are not "wages" as Congress understood the term, but rather "liquidated damages for breach of a contract." The payments bear no relation to work performed by the seaman and are not intended to induce such work. Rather, the payments are intended to reward the seaman and punish the owner or master for delay in prompt payment of wages from the time that the ship comes into port. Though not identical, the purpose is similar to section 596 itself.
Our holding should not be seen as condoning the seemingly unreasonable delay of the defendant here in paying two days of continuous wages owed seamen Merrick and Kachinski under the collective bargaining agreement. Nor should it be seen as foreclosing the parties from providing private
For the reasons set forth above, we will affirm the summary judgment for the defendant.
The master or owner of any vessel making coasting voyages shall pay to every seaman his wages within two days after the termination of the agreement under which he was shipped, or at the time such seaman is discharged, whichever first happens; and in case of vessels making foreign voyages, or from a port on the Atlantic to a port on the Pacific, or vice versa, within twenty-four hours after the cargo has been discharged, or within four days after the seaman has been discharged, whichever first happens; and in all cases the seaman shall be entitled to be paid at the time of his discharge on account of wages a sum equal to one-third part of the balance due him. Every master or owner who refuses or neglects to make payment in the manner hereinbefore mentioned without sufficient cause shall pay to the seaman a sum equal to two days' pay for each and every day during which payment is delayed beyond the respective periods, which sum shall be recoverable as wages in any claim made before the court; but this action shall not apply to masters or owners of any vessel the seamen of which are entitled to share in the profits of the cruise or voyage. This section shall not apply to fishing or whaling vessels or yachts.
Since the time that the claims involved in this case have matured, Congress has repealed 46 U.S.C. § 596 as part of a comprehensive reorganization and recodification of the Shipping Code. See Act of August 26, 1983, Pub.L. No. 98-89, § 4(b), 97 Stat. 500. Under the terms of the repealing statute, however, this case is still governed by old section 596 since the claim involved here matured prior to passage of the repealing statute. In the future, penalty wage claims will be governed by 46 U.S.C. § 10313.