Mitchell v. Livingston & Thebaut Oil Company

• Decision Date: 13 August 1958
• Docket Number: No. 16974.,16974.
• Citation: 256 F.2d 757
• Parties: James P. MITCHELL, Secretary of Labor, United States Department of Labor, Appellant, v. LIVINGSTON & THEBAUT OIL COMPANY, Inc., et al., Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

256 F.2d 757 (1958)

James P. MITCHELL, Secretary of Labor, United States Department of Labor, Appellant, v. LIVINGSTON & THEBAUT OIL COMPANY, Inc., et al., Appellees.

No. 16974.

United States Court of Appeals Fifth Circuit.

June 30, 1958.

Rehearing Denied August 13, 1958.

Bessie Margolin, Asst. Sol., Dept. of Labor, Washington, D. C., Stuart Rothman, Sol., Sylvia S. Ellison, Harry M. Leet, Attorneys, United States Department of Labor, Washington, D. C., Beverley R. Worrell, Regional Atty., Birmingham, Ala., for appellant.

William R. Frazier, Jacksonville, Fla., Hill & Frazier, James P. Hill, Jacksonville, Fla., for appellees.

Before CAMERON, JONES and BROWN, Circuit Judges.

JONES, Circuit Judge.

The Secretary of Labor brought suit against the appellee corporations charging them with violations of the overtime and record keeping provisions of the Fair Labor Standards Act of 1938, as amended. 29 U.S.C.A. § 201 et seq. An injunction against violations was sought and the complaint also incorporated a prayer for general relief.

Livingston & Thebaut Oil Company, Inc., supplied gasoline and other petroleum products to thirteen filling stations in Northeast Florida which are owned or leased by appellees, their principal officers or members of the officers' families, and to fifteen filling stations owned and operated by others in areas of Daytona Beach, Florida, and Lake City, Florida. The Secretary asserted that the employees of the appellees who were engaged in the handling of goods shipped from outside the State were engaged in interstate commerce.

Livingston & Thebaut is and since January 1, 1954, has been the exclusive distributor in Northeast Florida of the petroleum products of Richfield Oil Refining Co., a subsidiary of Sinclair Refining Company, Inc. The contract between Livingston & Thebaut and Richfield provided that Richfield should sell and Livingston & Thebaut should buy the latter's entire requirements of gasoline, oils and greases, with a proviso that not less than a stated minimum nor more than a stated maximum should be purchased. Gasoline is brought into Jacksonville by Richfield, primarily by tankships, and placed in its storage tanks. Gasoline intended for the service stations in the Daytona Beach and Lake City areas is delivered into trucks of Livingston & Thebaut and by those trucks is delivered to the service stations. Gasoline intended for the filling stations operated by the appellees and individuals associated with the appellees is transferred from Richfield's storage tanks to the storage tanks, of which there are six, of Livingston & Thebaut and from these tanks gasoline is drawn and delivered as needed. Livingston & Thebaut had no pre-existing orders for the purchase of any specific quantities of gasoline. None of the appellees made sales or deliveries of gasoline or other petroleum products outside of Florida. Prior to the agreement with Richfield, Livingston & Thebaut had an arrangement with Atlantic Refining Company which, in so far as is here material, was the same as the deal with Richfield.

The district court made findings of fact upon evidence which was uncontradicted and largely stipulated. The district court found that there was no continuity of movement in interstate commerce of the gasoline purchased by Livingston & Thebaut from either Richfield or Atlantic Refining Company. The purchases of gasoline were made by Livingston & Thebaut, so the district court held, after the gasoline had come to rest in the State of Florida. It was determined by the district court that the business of the appellees, consisting of the intrastate distribution of gasoline and other petroleum products for resale, was not subject to the Fair Labor Standards Act. The district court further determined that even if one or more employees of the appellees are covered by the Act, an injunction should not issue. From the judgment of the district court dismissing the complaint with prejudice the Secretary has appealed. The initial question for our consideration is whether the district court was correct in concluding that there was no continuity of movement in interstate commerce of the gasoline purchased by Livingston & Thebaut from Richfield and Atlantic.

In the landmark case of Walling v. Jacksonville Paper Co., 317 U.S. 564, 63 S.Ct. 332, 87 L.Ed. 460, it is held that where a wholesaler purchases goods from without the state to meet the needs of specific customers pursuant to a preexisting contract or understanding with its customer, and there is a practical continuity of movement from the manufacturer or supplier without the state, through the distributor's warehouse, to the customers whose prior orders or contracts are being filled, the interstate movement does not necessarily end when the goods are placed in the distributor's warehouse. If the passage of the goods through the warehouse is but an intermediate step in the progress from origin to destination, the pause at the warehouse does not terminate the interstate movement. The distributor's employees whose activities, in substantial part, are related to the handling of the goods before the interstate movement has ended are covered by the Act. The Secretary finds in the holding of the Jacksonville Paper Co. case a doctrine which he believes requires the adoption of the rule for which he here contends. This case was analyzed by the Court of Appeals for the Sixth Circuit in this manner:

"But the Jacksonville case considered the movement of goods bought by a wholesaler in interstate commerce to be sold and distributed to retailers. These on the record there made fell into three categories, those purchased by the wholesaler upon the order of a customer with the definite intention that such goods shall be carried at once to the customer, those obtained by the wholesaler from the manufacturer or supplier to meet the needs of specified customers pursuant to some understanding with the customer though not for immediate delivery, and those based on anticipation of the needs of specific customers, rather than upon prior orders or contracts. Goods in the first and second category were held to remain `in commerce\' and their interstate journey to end only when delivered to retail customers. Goods in the third category are not necessarily in commerce after receipt by the wholesaler. They are said to remain in commerce only when the evidence with particularity shows them to be different from goods acquired and held by a local merchant for local disposition." Allesandro v. C. F. Smith Co., 6 Cir., 1943, 136 F.2d 75, 77.

The contention of Livingston & Thebaut is that it is in the third...