State of Maryland v. Wirtz

• Decision Date: 13 June 1967
• Docket Number: Civ. A. No. 18005.
• Citation: 269 F. Supp. 826
• Parties: STATE OF MARYLAND, Plaintiff, and State of Colorado et al., Intervening Plaintiffs, v. W. Willard WIRTZ, Secretary of Labor, United States Department of Labor and Clarence T. Lundquist, Administrator of the Wage and Hour and Public Contracts Division of the United States Department of Labor, and William Hargadine, Jr., Regional Director, Third Region, Wage and Hour and Public Contracts Division, United States Department of Labor, Defendants.
• Court: U.S. District Court — District of Maryland

269 F. Supp. 826

STATE OF MARYLAND, Plaintiff, and State of Colorado et al., Intervening Plaintiffs, v. W. Willard WIRTZ, Secretary of Labor, United States Department of Labor and Clarence T. Lundquist, Administrator of the Wage and Hour and Public Contracts Division of the United States Department of Labor, and William Hargadine, Jr., Regional Director, Third Region, Wage and Hour and Public Contracts Division, United States Department of Labor, Defendants.

Civ. A. No. 18005.

United States District Court D. Maryland.

June 13, 1967.

Francis B. Burch, Atty. Gen. of Maryland, Alan M. Wilner and Franklin Goldstein, Asst. Attys. Gen. of Maryland (Robert F. Sweeney, Deputy Atty. Gen. of Maryland, and Loring E. Hawes, Asst. Atty. Gen. of Maryland, on brief), A. J. Carubbi, Hawthorne Phillips and Robert W. Norris, Asst. Attys. Gen. of Texas (Crawford C. Martin, Atty. Gen. of Texas, and Cecil A. Morgan, Fort Worth, Tex., for Ft. Worth Independent School District, on brief), William M. Hoiles, Asst. Atty. Gen. of Ohio, G. T. Blakenship, Atty. Gen. of Oklahoma, James Noble, Atty. Gen. of New Mexico, for plaintiffs.

Charles Donahue, Sol. of Labor, Thomas J. Kenney, U. S. Atty., Dist. of Maryland, James M. Miller, Deputy Associate Sol., Dept. of Labor (Barefoot Sanders, Asst. U. S. Atty. Gen., Harland F. Leathers, William A. Gershuny, Attys., Dept. of Justice, Bessie Margolin, Associate Sol., Dept. of Labor, Robert E. Nagle and William Fauver, Attys., Dept. of Labor, on brief), for defendants.

J. Albert Woll, Robert C. Mayer, Lawrence Gold and Thomas E. Harris, Washington, D. C., on brief for American Federation of Labor and Congress of Industrial Organizations, amici curiae.

Henry Kaiser, Ronald Rosenberg and Van Arken & Kaiser, Washington, D. C., on brief for American Federation of State, County and Municipal Employees, AFL-CIO, amicus curiae.^*

Before WINTER, Circuit Judge, THOMSEN, Chief Judge, and NORTHROP, District Judge.

WINTER, Circuit Judge:

This is an action brought by the State of Maryland, in which twenty-five other States have intervened as parties plaintiff, asking the Court to declare unconstitutional the 1966 Amendments to the Fair Labor Standards Act¹ (the "1966 Amendments") insofar as they apply to employees of the plaintiff States, and to enjoin enforcement of the Act, as amended, against the States. Although the 1966 Amendments extend the Act's coverage to employees of enterprises, whether public or private, engaged in the operation of schools, hospitals and related institutions, street, suburban or interurban electric railways, and local trolley and motorbus carriers, the States, in briefs and oral argument, challenge application of the Act only to public schools, hospitals and related institutions; and this Court will limit its consideration accordingly.

Defendants have filed a motion to dismiss or, in the alternative, a motion for summary judgment. Plaintiffs have filed cross-motions for summary judgment. The parties have entered into extensive stipulations of fact with regard to Maryland, Texas and Ohio. It is agreed that these data may be taken as representative of the situation in the other plaintiff States. Some objections to relevancy and materiality have been raised, but the Court is satisfied that the conclusions reached herein would not be affected by the exclusion of any of the stipulated evidence.

INTRODUCTION

The Fair Labor Standards Act, 29 U.S. C.A. § 201 et seq., was first enacted in 1938 as a result of Congressional findings, recited in § 2(a) of the Act, 29 U.S. C.A. § 202, that:

"the existence, in industries engaged in commerce or in the production of goods for commerce, of labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers (1) causes commerce and the channels and instrumentalities of commerce to be used to spread and perpetuate such labor conditions among the workers of the several States; (2) burdens commerce and the free flow of goods in commerce; (3) constitutes an unfair method of competition in commerce; (4) leads to labor disputes burdening and obstructing commerce and the free flow of goods in commerce; and (5) interferes with the orderly and fair marketing of goods in commerce."

It was therefore declared to be the policy of Congress, through the exercise of its power to regulate commerce among the several States "to correct and as rapidly as practicable to eliminate the conditions above referred to in such industries without substantially curtailing employment or earning power." 29 U.S. C.A. § 202(b). Congress accordingly provided that employers must pay those employees who were "engaged in commerce or in the production of goods for commerce" a minimum hourly wage, 29 U.S.C.A. § 206(a), and one and one-half times their regular hourly rate for weekly hours over a specified maximum, 29 U.S.C.A. § 207(a) (1). States and their political subdivisions were excluded from the Act's definition of "Employer." 29 U.S.C.A. § 203(d).

The constitutionality of the original Act was sustained in United States v. Darby, 312 U.S. 100, 61 S.Ct. 451, 85 L.Ed. 609 (1941). The Court stated, inter alia, that the power of Congress over commerce "extends to those activities intrastate which so affect interstate commerce or the exercise of the power of Congress over it as to make regulation of them appropriate means to the attainment of a legitimate end, the exercise of the granted power of Congress to regulate interstate commerce." Id., at p. 118, 61 S.Ct., at p. 459.²

The Act has been amended several times,³ but until the 1966 Amendments state employees were not brought within its coverage.

In 1961 the "enterprise" concept was introduced. 29 U.S.C.A. § 203(r), 75 Stat. 65. In addition to employees previously covered—those personally engaged in interstate commerce or in the production of goods for commerce—the Act was extended to cover "the related activities performed (either through unified operation or common control) by any person or persons for a common business purpose, and includes all such activities whether performed in one or more establishments or by one or more corporate or other organizational units including departments of an establishment operated through leasing arrangements, but shall not include the related activities performed for such enterprise by an independent contractor." An "enterprise engaged in commerce or in the production of goods for commerce," and therefore covered by the Act, was defined in terms of a minimum annual dollar volume of gross sales and, in some instances, the particular type of business involved. See 29 U.S.C.A. § 203(r) and (s). The validity and scope of the enterprise concept has not yet been decided by the Supreme Court.

The 1966 Amendments extended the enterprise basis of coverage and brought within the Act public as well as private enterprises engaged in operating schools, hospitals and related institutions, street, suburban or interurban electric railways, and local trolley or motorbus carriers.⁴ The definition of "Employer" in 29 U.S. C.A. § 203(d) was amended to eliminate the existing exclusion of States and their political subdivisions insofar as they engaged in those activities. In fitting employees first covered by the 1966 Amendments into the minimum wage and maximum hour scale of employees theretofore covered, the 1966 Amendments provide for an escalation of the minimum wage and of maximum hours over a period of five years.⁵

The 1966 Amendments, which thus had the effect of extending the minimum wage and overtime provisions of the Fair Labor Standards Act to a portion of the labor market not theretofore covered,⁶ are attacked insofar as they extend coverage to certain employees of public schools, hospitals and related institutions. Despite the impression sought to be created by several of the plaintiff States, extension of the Act to certain groups of state employees was not a concept first advanced in the Second Session of the 89th Congress under circumstances which would have prevented the States from presenting their views in opposition to the proposal, had they sought to keep abreast of matters under consideration by Congress.

The first legislative effort to extend coverage to some state employees occurred in the First Session of the 89th Congress.⁷ During the Second Session of the 89th Congress, when H.R. 13712, which, as amended, was enacted as the 1966 Amendments, was introduced into the House of Representatives, it contained language which would have extended coverage (subject to the exemptions in § 13)⁸ to any person "in connection with the operation of a hospital, an institution primarily engaged in the care of the sick, the aged, the mentally ill or defective who reside on the premises of such institution, a school for mentally handicapped or gifted children, or an institution of higher education (regardless of whether or not such hospital, institution or school is public or private or operated for profit or not for profit) * *."⁹ (emphasis supplied) During legislative consideration of the bill, the only variation as to the extent of coverage, pertinent to this law suit, was whether public or private school employees covered should be limited to those employed by "an institution of higher education" or whether they should include persons employed by "an elementary or secondary school."¹⁰ The question was resolved by extending coverage to employees of elementary and secondary schools, as well as institutions of higher learning, subject, again, to the exemptions contained in § 13 of the Act, as also amended by the 1966 Amendments.

The plaintiff States attack the constitutionality of the 1966 Amendments on the ground that the activities of the States and various school districts in the operation of schools, hospitals and related institutions are not commerce,¹¹ that the "enterprise" concept embodied in the Act...