Addison v. HURON STEVEDORING CORPORATION

• Decision Date: 06 January 1947
• Citation: 69 F. Supp. 956
• Parties: ADDISON et al. v. HURON STEVEDORING CORPORATION. AARON et al. v. BAY RIDGE OPERATING CO., Inc.
• Court: U.S. District Court — Southern District of New York

69 F. Supp. 956

ADDISON et al. v. HURON STEVEDORING CORPORATION.

AARON et al. v. BAY RIDGE OPERATING CO., Inc.

District Court, S. D. New York.

January 6, 1947.

Max R. Simon, and Goldwater & Flynn, all of New York City (Monroe Goldwater, James L. Goldwater, and Joseph E. O'Grady, all of New York City, of counsel), for plaintiffs.

John F. Sonnett, Asst. Atty. Gen., John F. X. McGohey, U. S. Atty., of New York City (J. Francis Hayden, Sp. Asst. to the Atty. Gen., Marvin C. Taylor, Atty., Department of Justice, and Mary L. Schleifer, Labor Law Counsel, War Shipping Admin., both of Washington, D. C., of counsel), for defendant.

RIFKIND, District Judge.

The Fair Labor Standards Act provides: "7(a) No employer shall * * * employ any of his employees * * * for a work week longer than forty hours * * * unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed" 29 U.S.C.A. § 207.

The collective bargaining agreement between the International Longshoremen's Association and the defendants, which governs the employment practices of the plaintiffs and the defendants herein, provided for two classes of compensation: a "straight time" hourly rate and an "overtime" hourly rate. Paragraph 3 of the agreement, in effect during the period involved in this litigation, provided as follows: "(a) Straight time rate shall be paid for any work performed from 8 A. M. to 12 Noon and from 1 P. M. to 5 P. M., Monday to Friday inclusive, and from 8 A. M. to 12 Noon Saturday. (b) All other time, including meal hours and the Legal Holidays specified herein, shall be considered overtime and shall be paid for at the overtime rate."

For general cargo, the straight time hourly rate was $1.25 and the overtime hourly rate was $1.875.

It is the plaintiffs' contention that the excess of the "overtime" rate over the "straight time" rate represented a shift differential; that $1.875 per hour constituted the regular rate for the night shift; that when more than 40 hours of work was done in any one week and all such work was performed during the night shift, the overtime rate must be calculated at 150% of $1.875 and such rate applied to the hours in excess of 40; that in all cases the compensation should be calculated in one of two ways, the first of which plaintiffs prefer. 1. Total wages paid divided by total hours worked equals regular rate to be applied to 40 hours; and 150% thereof to the hours in excess of 40. 2. Wages payable at contract rates for the first 40 hours of work, divided by 40, equals the regular rate; 150% thereof is the rate to be applied to the hours in excess of 40.

There is a certain plausibility about plaintiffs' case. For instance, in the case of an employee who worked only during the so-called "overtime" hours, it is true that he received compensation at no greater rate for the hours in excess of 40 than for the hours within 40. Such a result seems to fly in the face of the statute.

The defendants' contention is on its face equally plausible. They declare that the "regular rate", which is the statute's measuring rod, has been contractually established by the parties at $1.25 an hour; that for all hours in excess of 40, defendants have, in accordance with the statutory command, paid $1.875 an hour; and that in addition, beyond the command of the statute, they have paid $1.875 an hour for all hours outside of a specified clock-pattern. Having paid more than required by statute, they contend, they have not violated its provisions.

The I.L.A. is not a party to the litigation. However, Mr. Joseph B. Ryan, its president, testified as a witness for the defendants. He reported that 30,000 members were employed at the Port of New York during the war; that the Union objectives were "to decasualize longshore work as much as possible, to have the work done in the daytime as much as possible, and make it as expensive for the employers as possible on Sunday"; that there has been no strike of longshoremen from 1907 to 1945; and that the Union was opposed to the suit "as it might wipe out all of the gains we had made for our men over a period of 25 years".

This controversy requires for its resolution a delicate adjustment to accommodate the harmonious application of three national policies. A heavy handed meshing of these three policies with the industrial machine which fails to minimize the friction at their points of contact can generate enough heat to impair one or more of the policies or severely injure the machine itself.

In chronological order we have (1) the National Labor Relations Act, July 5, 1935, 49 Stat. 449, 29 U.S.C.A. § 151 et seq., to encourage the practice of collective bargaining; (2) the Fair Labor Standards Act, June 25, 1938, 52 Stat. 1060, 29 U.S. C.A. § 201 et seq., to correct and eliminate the labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency and general well being of workers; (3) the national need during the war for the maximum of production as illustrated by Executive Order 9301, February 9, 1943, 8 Fed. Reg.1825, establishing the 48 hour week for the duration of the war.

A few simple illustrations make this necessity clear.

1. A number of industries have, by collective bargaining, established a workweek of less than 40 hours — 36 or 30 — although actual work is pursued during 48 hours or longer. In such industries the employees receive "straight time" compensation for the stipulated hours and "time and a half" for all hours in excess thereof. Manifestly they do not receive, for hours in excess of 40, 150% of the average rate paid for the hours within 40. I see nothing in the policy and purposes of F.L.S.A. which forecloses bona fide negotiation between employers and a union for a shorter work week than 40 hours a week.¹

2. A number of industries have developed collectively bargained agreements which have established a work week measured not only by a specified number of hours per week but by a specified number of hours per day — usually, eight hours. Compensation for hours of work in excess of the prescribed daily schedule of eight hours is calculated at 150% of the established rate even if the aggregate of hours for the week does not exceed 40. Assuming a work schedule of five 10-hour days, the employees would receive under their contract, compensation at overtime rates for 8 hours of the first forty. The rate of pay for hours in excess of forty would be less than 150% of the average rate for the hours within forty. Manifestly, the application to such an employment arrangement of either of the formulae suggested by plaintiffs would constitute a deterrent to the negotiation of such employment contracts.

3. Following the promulgation of Executive Order No. 9301, and in many instances before that date, in response to the war-time demand for production, the 48 hour work week became quite general. In the case of newly recruited employees in the war industries, 48 hours measured the "normal" work week throughout the term of their employment. In a sense, the 40 hour week was merely a theoretical fiction as opposed to the "real" fact of a 48 hour week. The logical extension of plaintiffs' argument would require a holding that in paying such employees for the 8 hours of overtime at a rate equal to 150% of the straight time rate, such employers had violated the F.L.S.A.; that the wages payable to such employees must now be recalculated by finding the "regular rate" to consist of the quotient of total weekly wages, divided by 48, and the overtime rate as equal to 150% thereof. Would employers, even in the exigencies of the war, have so readily yielded to the demands of national policy for a longer work week if they could foresee such an enlarged wage liability?

Whatever the answer to such a rhetorical question, it is clear that the application of either of plaintiffs' formulae to the Nation's wage bill retrospectively would create havoc with established labor relations, put collective bargaining in the category of a device for obtaining money under false pretenses and probably strain the resources of a substantial proportion of American industry.

Such catastrophic results are inevitable once we accept plaintiffs' underlying premise—that in determining the "regular rate" intended by Congress, we must close our eyes to the contract in good faith negotiated between employer and employees and look only to the actual work pattern. Upon such a premise, genuine collective bargaining cannot live.

If we are free to reject the contractual "regular rate" in the case of longshoremen, there is no rational basis for not rejecting it in the three illustrations. The inevitable consequence of such a rule would be severely to restrict the scope of collective bargaining, to check the development of agreements more favorable to employees than...