Wirtz v. McDaniel
| Decision Date | 04 December 1963 |
| Docket Number | No. 17269.,17269. |
| Citation | 325 F.2d 78 |
| Parties | W. Willard WIRTZ, Secretary of Labor, United States Department of Labor, Appellant, v. H. D. McDANIEL and D. H. "Dee" McDaniel, Individually, and as Co-Partners, Doing Business as McDaniel Brothers Construction Company, Appellees. |
| Court | U.S. Court of Appeals — Eighth Circuit |
Beate Bloch, Atty., U. S. Dept. of Labor, Washington, D. C., made oral argument for the appellant and Charles Donahue, Solicitor of Labor, Washington, D. C., Bessie Margolin, Assoc. Solicitor, Washington, D. C., Earl Street, Regional Atty., Dallas, Tex., were with her on the brief.
James E. McDaniel and Charles M. Monney, of McDaniel, Ward & Mooney, Jonesboro, Ark., were counsel for the appellees. No oral argument was made and no brief filed on behalf of appellees.
Before VOGEL, MATTHES and MEHAFFY, Circuit Judges.
The Secretary of Labor commenced this action under § 17 of the Fair Labor Standards Act, 29 U.S.C.A. §§ 201 et seq., to enjoin the defendants from violating the Act's overtime and record-keeping provisions with respect to their employees engaged in the construction of a manufacturing plant at Jonesboro, Arkansas, such plant to be used by the Crane Company. Non-compliance with the provisions of the Act was conceded. The District Court, however, concluded that the employees were not subject to the Act and accordingly dismissed the action. 209 F.Supp. 399.
The facts are not in dispute. The defendants are general contractors, their business including the construction of factories and other manufacturing facilities. On February 10, 1960, they entered into a contract with the Jonesboro Industrial Development Corporation (JI DC) for the construction of a new factory building on land owned by the City of Jonesboro, Arkansas (City) for use by the Crane Company in the manufacturing of plumbing brass. JIDC is an agency of City. It engaged the defendants to construct a new plant on the basis of a "Facilities Construction Contract" whereby City undertook to construct such a factory in accordance with plans and specifications prepared by Crane, and Crane undertook to enter into a long-term lease thereof — 23 years with renewal options.
Crane and its subsidiaries manufacture plumbing, heating and air conditioning equipment as well as other products at numerous locations throughout the country and distribute their products both nationally and internationally. Before the construction of the Jonesboro factory, Crane manufactured plumbing brass at its own plant in Chicago, Illinois, and also at the plant of a wholly-owned subsidiary, Repcal Brass Manufacturing Company, in Los Angeles, California. Brass produced by these plants was shipped to wholesalers and supply houses in every state of the Union and Canada and also to other manufacturing plants operated by Crane and its subsidiaries in Trenton, New Jersey, Chattanooga, Tennessee, and Colton, California, for use in the manufacture of plumbing fixtures.
Crane desired a new mid-continent location to replace its Chicago plant in the manufacture of plumbing brass and to which it planned to divert a portion of the production carried on by its subsidiary in Los Angeles. JIDC, which was organized for the purpose of attracting industry or facilitating its location in Jonesboro, acted as the "alter ego" of City in handling negotiations concerning the construction of the new plant with Crane and with the defendants herein.
On January 28, 1960, Crane entered into the "Facilities Construction Contract" and a "Lease Agreement" with JIDC, the City of Jonesboro, the Jonesboro Airport Commission, and the City Water and Light Plant. These agreements followed several weeks of negotiations, during which Crane submitted to the City its own plans for the type of building it wanted. Such plans included numerous special features geared to the particular requirements of brass manufacturing. The building was to be "put around the equipment" used in the production operations. The building was tailored especially to meet Crane's needs. Defendants' construction contract was negotiated entirely on the basis of Crane's plans and specifications. The defendants were aware of the fact that the building was planned for occupancy by Crane. Construction of the building would not have been undertaken at all had there been any question but that Crane would lease the building. Construction was financed through a bond issue which widely publicized Crane's intended use of the plant.
The construction contract was entered into on February 10, 1960, between the defendants and JIDC and subsequent to the facilities construction contract and lease agreement. Construction commenced in February 1960. In April or May of that year substantial changes in the original plans were necessitated by Crane's decision to close its Los Angeles plant entirely and transfer all of its production to the new Jonesboro plant. Substantial changes were necessitated in order to accommodate electric furnaces shipped from the California plant to be used in the new factory. These and other changes in the original plans were discussed by the Crane representatives with the defendants directly, either in person or by correspondence.
As the new building neared completion, key personnel of both Crane and its subsidiary, Repcal Brass of Los Angeles, were transferred to the new plant and machinery and equipment were moved to Jonesboro from Chicago and Los Angeles. Brass was shipped to the new Jonesboro plant from Los Angeles and component parts from Chicago. By the time of trial Crane was producing plumbing brass at Jonesboro and shipping it to Crane establishments located all over the United States.
The Act provides, insofar as it may be applicable herein, 29 U.S.C.A.:
The question is, of course, whether the employees of the defendant were "engaged in commerce or in the production of goods for commerce". If they were engaged in any "closely related process or occupation directly essential to the production" of goods for commerce, they would also be within the provisions of the Act. In other words, the occupation, to qualify, here must be closely related to and also directly essential to the production of goods for interstate commerce.
In holding that the Act was not applicable to the facts in this case and in dismissing the complaint, the District Court concluded:
"* * * I do not feel that employees who are constructing a manufacturing building are closely enough related to production to place it `in that proximity to "commerce" which the Act demands as a predicate to coverage.\'"
While recognizing the present limitations of the so-called new construction rule, the District Court also said:
"* * * It is the opinion of this court that the new construction doctrine announced in the Vollmer case has been limited to repairs and extensions of existing industrial facilities, and the repairs, constructions, and reconstructions of interstate facilities."
We believe the lower court to have been in error in dismissing the action and that the employees of the defendants who were engaged in the construction of concededly a new factory, but which factory would replace existing facilities as part of a nation-wide production and distribution network in interstate commerce, were both "closely related" and "directly essential" to the production of goods for commerce within the meaning of the Act.
Summarized, the undisputed testimony here indicates:
1. The Crane Company was engaged in interstate commerce in all of the several states and internationally.
2. The factory building erected by the defendants was specifically constructed for the use of the Crane Company in the manufacturing of plumbing brass.
3. The Crane Company had entered into a lease agreeing to rent the new factory for a period of not less than 23 years.
4. The new factory was built in accordance with the plans and specifications of the Crane Company.
5. The new factory was built for the sole purpose of serving as a replacement or relocation of existing facilities of the Crane Company then located in Chicago and Los Angeles.
6. The new factory building was made to accommodate equipment shipped from Crane's other plants which it was to replace.
7. Crane Company's factories in Chicago and Los Angeles which were to be replaced by the new plant at Jonesboro were engaged in producing goods for interstate commerce.
8. Key personnel of Crane from Chicago and Los Angeles as well as machinery and equipment were moved to the new factory in Jonesboro.
9. While all the initial negotiations were handled by JIDC, there was direct contact between defendants and Crane officials as the construction progressed.
10. The new factory would not have been built had there been any question but that Crane would lease it.
The Supreme Court in Mitchell v. C. W. Vollmer & Co., 1955, 349 U.S. 427, at page 429, 75 S.Ct. 860, at pages 861-862, 99 L.Ed. 1196, referred to by the...
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Reich v. Stewart
...of interstate commerce as to be, in practical effect, a part of it, rather than isolated, local activity"), and Wirtz v. McDaniel, 325 F.2d 78, 82 (8th Cir.1963) (same). Stewart contends that the Secretary presented no evidence that the pallets actually left Lincoln, Nebraska, and, therefor......