Libby, McNeill & Libby v. Mitchell

• Decision Date: 11 August 1958
• Docket Number: No. 16865.,16865.
• Parties: LIBBY, McNEILL & LIBBY, Appellant, v. James P. MITCHELL, Secretary of Labor, United States Department of Labor, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

256 F.2d 832 (1958)

LIBBY, McNEILL & LIBBY, Appellant, v. James P. MITCHELL, Secretary of Labor, United States Department of Labor, Appellee.

No. 16865.

United States Court of Appeals Fifth Circuit.

June 26, 1958.

Rehearing Denied August 11, 1958.

L. Robert Frank, Tampa, Fla., Willard Ayres, Greene, Ayres & Green, Ocala, Fla., Allen, Dell, Frank & Trinkle, Tampa, Fla., for appellant.

Sylvia S. Ellison, Bessie Margolin, Attys., Dept. of Labor, Washington, D. C., Stuart Rothman, Solicitor, Eugene R. Jackson, Atty., Dept. of Labor, Washington, D. C., Beverley R. Worrell, Regional Atty., Birmingham, Ala., for appellee.

Before RIVES, BROWN and WISDOM, Circuit Judges.

JOHN R. BROWN, Circuit Judge.

The question here is whether the production of citrus pulp cattle feed and citrus molasses simultaneously performed during the processing of fresh citrus fruits into canned or concentrated frozen juices or fruit entitled the Employer to an Fair Fair Labor Standards Act § 7(b) (3) "seasonal industry" exemption. It is conceded that for these two by-product operations the Employer is entitled to the § 7(c) exemption.

At the outset it simplifies our understanding to contrast in a gross way these two exemptions¹ §§ 7(b) (3) and 7(c). Section 7(c), if applicable, is so because of its own terms. It is self-executing and requires only that the facts bring the employer's activity under it. Section 7(b) (3), on the other hand, is not self-executing. It applies only to "an industry² found by the Administrator to be of a seasonal nature." A finding by the Administrator is therefore an indispensable requirement. Under § 7(c) the fourteen week exemption relates to overtime for all hours worked in excess of 40 hours. Under § 7(b)(3) the exemption is limited to a maximum of 12 hours in any one day and 56 hours in any one workweek. And, of extreme importance, under § 7(c) the exemption applies only to those employees "engaged in the first processing of * * * seasonal fresh fruits or vegetables * * *" whereas § 7(b) (3), on the other hand, extends the exemption to "any employee * * * if such employee is * * * employed * * * in an industry." It is at this point that the issue is crucial here for while those employees engaged directly and immediately in the manufacturing process of citrus pulp feed and citrus molasses come under § 7(c), a large number of clerical, administrative and service employees who would be "employed * * * in an industry" under § 7(b) (3) are not within the reach of § 7(c). In addition, although not stressed here, we understand that the two exemptions may under some circumstances be cumulative.

Both exemptions are therefore valuable and if applicable are as important in the Congressional pattern as any other provision. For the Wage and Hour Act is a complex piece of legislation in which Congress, articulately seeking to accommodate the general aims of this legislation to our diverse economy, was as acutely concerned over the areas and circumstances not covered as those covered. See Maneja v. Waialua Agricultural Co., 349 U.S. 254, 75 S.Ct. 719, 99 L.Ed. 1040.

The problem becomes somewhat unmanageable and awkward if the two exemptions are not carefully distinguished. This is especially so where such terms as "first processing" are used in the definitive description of an industry found by the Administrator to be seasonal under § 7(b) (3) and which are, of course, the statutory basis under § 7(c). Indeed, this is the heart of the Employer's approach. For in the final analysis it treats the "first processing" of § 7(c) and the "first processing" in the Administrator's 1940 determination of the seasonal nature of the fresh fruit industry as a common denominator. The Employer, transposing this in the equation, then contends that whatever comes within "first processing" under § 7(c) automatically is eligible under § 7(b) (3) if the Administrator's determination of a given seasonal industry expressly encompasses a "first processing" operation. In this approach the Employer has respectable analogous support in the so-called Musselman doctrine, now formally recognized by an Administrator's Regulation³ under which by-product operations carried on simultaneously with and as an integral part of first processing of fresh fruits or vegetables are deemed to be § 7(c) "first processing" up to the point in the manufacturing process of the first non-perishable by-product.

With "first processing" as the common denominator and the Musselman concept as its theme, the Employer makes a substantial factual showing. For it is without dispute that, almost as with any modern manufacturing undertaking, the impact of irrepressible, competitive drives and forces has brought about in the Florida citrus industry during the postwar decade, a remarkable industrial process in which by efficient stream and assembly line techniques the fresh whole citrus fruit is simultaneously processed⁴ to the point of practical exhaustion of all edible as well as inedible products and by-products.

Were this approach correct, we would certainly agree with the Employer and disagree with the Court below.

But this approach, in our view disregards, first, the necessity for a finding by the Administrator that production of citrus pulp feed or citrus molasses (or both) is a seasonal industry, and second, the fact that, as to part in 1952, and as to all of it in 1955, the Administrator has found that such operation is not a seasonal industry.

It is true, of course, that in 1940 the Administrator dealt with two phases of the fresh fruit and vegetable business and as to them it found two things. First, that "3. The packing, handling, and preparing in their raw or natural state of perishable or seasonal fresh fruits and vegetables is a branch of an industry and of a seasonal nature within the meaning of Section 7(b) (3) of the Fair Labor Standards Act and Part 526, as amended, of the Regulations⁵ issued thereunder." Having found the first, the question then followed whether first processing and canning of such perishable fruit was a branch of an industry of a seasonal nature. The second finding then was that "5. The first processing and canning of perishable or seasonal fresh fruits and vegetables is a branch of an industry and of a seasonal nature within the meaning of Section 7(b)(3) of the Fair Labor Standards Act and Part 526, as amended, of the Regulations issued thereunder."⁶

But while Courts were some day to hold, and the Administrator finally recognized, see note 3, supra, that by-product operations carried on simultaneously to the point of the first non-perishable product were to have the § 7(c) "first processing" status, this was not the course followed as to citrus pulp. Almost immediately it was, as a practical matter, treated as something other than "first processing." At least it was in the sense of the 1940 finding that first processing of fresh fruit was a branch of an industry and of a seasonal nature within § 7 (b)(3). Instead of relying on such an interpretive application of "first processing", interested segments of the industry in 1941 sought a determination that, as carried on in Florida, Texas and California, the citrus pulp operation was seasonal in nature. This was rejected by a finding that the industry was not seasonal in nature since it appeared that citrus waste was available for approximately eight months in Florida. In 1943 reconsideration of this adverse 1941 determination was sought by Florida processors of citrus waste. This rehearing resulted in a finding⁷ of seasonality for the Florida and Texas branches of the industry. The basis was stated to be that while the evidence showed that "citrus waste was technically available in Florida for a period of approximately eight months," various factors made it actually "available * * * for a period of time averaging six to seven months out of each year."

There was thus administrative determination as to citrus pulp by-product operations that (a) such activities were not automatically under the "first processing" 7(b) (3) determination of 1940 and (b) would require a specific separate application and determination, and (c) were seasonal in nature because citrus waste was actually available substantially for only six months. As this continued to be the determination until 1952 when the citrus molasses application for 7(b)(3) seasonal finding was denied, it comes here with the unique imprimatur which the Fair Labor Standards Amendments of 1949, § 16(c), 63 Stat. 910, put on pre-1949 orders, regulations, and interpretations of the Administrator. Alstate Construction Co. v. Durkin, 345 U.S. 13, 16-17, 73 S.Ct. 565, 97 L.Ed. 745; Maneja v. Waialua Agricultural Co., 349 U.S. 254, 270, 75 S.Ct. 719, 99 L.Ed. 1040; Steiner v. Mitchell, 350 U.S. 247, 255, 76 S.Ct. 330, 100 L.Ed. 267.

This state of fact was again recognized in 1952 when application was made by the Citrus Processors Association, Inc. to extend to citrus molasses the 1943 determination, note 7, supra, which was limited to the manufacture of citrus pulp cattle feed. Citrus molasses, as the description of the process, note 4, supra, reveals, is a by-product which is capable of separate use as such, or, as here, in reconstituting the dried pulp into feed.

Not only does this demonstrate again the uniform administrative treatment of the citrus pulp by-products operation as one separate and apart from the 7(b)(3) "first processing" status earlier accorded in 1940, but it reflects the substantial basis for it. In 1943 the Administrator reversed his 1941 ruling on the ground that citrus waste, while theoretically available, was not actually available in excess of six months. But by 1952 postwar developments had occurred which were almost revolutionary in nature. Production of fruit of different varieties resulted in a marked and spectacular growth⁸ in the volume and extent of operations. The citrus fruit operations and those related...