Walling v. Rockton & Rion RR

• Citation: 54 F. Supp. 342
• Decision Date: 29 February 1944
• Docket Number: No. 339.,339.
• Court: U.S. District Court — District of South Carolina
• Parties: WALLING, Administrator of Wage and Hour Division, United States Department of Labor, v. ROCKTON & RION R. R.

54 F. Supp. 342

WALLING, Administrator of Wage and Hour Division, United States Department of Labor, v. ROCKTON & RION R. R.

No. 339.

District Court, W. D. South Carolina, Rock Hill Division.

February 29, 1944.

George A. Downing, Regional Atty., Department of Labor, and Dakyns B. Stover, Associate Atty., Department of Labor, both of Atlanta, Ga. (Douglas B. Maggs, Sol., Archibald Cox, Associate Sol., and Hugh McCloskey, Supervising Atty., all of Washington, D. C., and Vincent A. Burns, of Boston, Mass., Atty., on the brief), for plaintiff.

Hemphill & Hemphill, of Chester, S. C., and Julian L. Johnson, of Columbia, S. C., for defendant.

WYCHE, District Judge.

This is a suit to enjoin the defendant from violating provisions of the Fair Labor Standards Act, 29 U.S.C.A. § 201 et seq., as to the payment of minimum wages and overtime compensation, and the maintenance of proper records. Defendant denies the material allegations of the complaint, and as to the charge of overtime violations, asserts that it has no obligation to pay such because of an exemption provided in section 13(b) (2), 29 U.S.C.A. § 213(b), under which section overtime need not be paid to "any employee of an employer subject to the provisions of Part I of the Interstate Commerce Act." 49 U. S.C.A. §§ 1-27.

A summary of the facts is as follows:

The defendant operates a short line railroad in Fairfield County, South Carolina, between the points of Anderson's Quarry and Rockton, a distance of approximately twelve miles, and connects with the Southern Railway at Rockton by means of a house-track of the Southern Railway. It owns four locomotive engines, two cranes, two box cars, ten or twelve flat cars, eighteen or twenty dump cars, twelve yard and eight yard dump cars, and two coal cars; and it procures from the Southern Railway other cars as needed.

The railroad which the defendant operates was built in 1907 by the Winnsboro Granite Corporation. It was owned and operated solely as a private railroad, as an integral part of the Winnsboro Granite Corporation, and as an adjunct to its quarrying and granite producing operations. The Winnsboro Granite Corporation now leases its quarry, machinery and equipment to the Quarry Company, a partnership now located on the railroad of the defendant. Other quarry and granite companies located along the line of defendant's railroad are Phillips Granite Company, Brooks Granite Company, and the Rion Crush Stone Company.

On February 8, 1932, the defendant was incorporated under the laws of South Carolina for the purpose of purchasing the private railroad owned and operated by the Winnsboro Granite Corporation. It subsequently acquired the private railroad and equipment of the granite corporation at a price of $10,000, the entire purchase price being represented by an issue of bonds to the granite corporation, and twenty-five shares of capital stock of the par value of $100 each were delivered to the granite corporation to assure the purchase agreement. The stockholders of the railroad corporation were at the time of its organization connected with granite companies along the line.

On April 15, 1932, the defendant applied to the Interstate Commerce Commission under Section 1(18) of the Interstate Commerce Act, 49 U.S.C.A. § 1(18), for authority to acquire and operate as a common carrier in interstate commerce that portion of the railroad extending from Rockton to Rion. The Commission denied the application, finding that public convenience and necessity were not shown to require the acquisition and operation by the defendant of the line from Rockton to Rion. 189 I.C.C. 545. The Commission found as a fact that under the plan presented, the granite companies were merely attempting to change the status of the line from a plant facility to a common carrier. The Commission rejected the applicant's contention that it was not industrially controlled, finding as a fact that the same individuals who would own all of the applicant's capital stock also owned an interest in the stone companies which proposed to use the line. Despite the denial of its certificate, the defendant completed its incorporation, acquired the road, and henceforth proceeded to operate it under the authority of its State charter as an intrastate common carrier, hauling all freight tendered it for transportation by the public, charging the rates prescribed by the South Carolina Public Service Commission.

In 1939 certain local competitors of the granite companies which use the defendant's railroad instituted proceedings before the Interstate Commerce Commission against the defendant, the Southern Railroad, and other connecting lines (Weston & Brooker Co. et al. v. Southern Railroad Co., 1940, 243 I.C.C. 105), alleging that the Rockton & Rion Railroad was "unlawfully engaged in interstate commerce"; that by reason of divisions accorded the Rockton & Rion Railroad by connecting carriers on intrastate traffic, shippers on the Rockton & Rion line were unduly preferred to the prejudice of the complainants; and that the rates from and to points on the Rockton & Rion line were in violation of Sections 1, 3, 6 and 13 of the Interstate Commerce Act, 49 U.S.C.A. §§ 1, 3, 6 and 13. The Commission was asked to prescribe future rates and to require the defendant to cease and desist from interstate transportation. The contention was that the Rockton & Rion Railroad, by the method of billing and interchanging freight, had nullified the Commission's earlier decision refusing to grant the railroad a certificate of convenience and necessity to acquire and operate the line as an interstate common carrier.

The Commission, after a formal hearing, found that the operation of the Rockton & Rion Railroad, so far as interstate commerce was concerned, was that of a plant facility of the shippers on its line. It dismissed the complaint, finding that the Rockton & Rion Railroad was not shown "to be engaged in unauthorized interstate common carrier operation", and that its participation in joint rates and divisions on intrastate shipments as authorized by the South Carolina Public Service Commission had not been shown to be in violation of Section 13 of the Interstate Commerce Act, 49 U.S.C.A. § 13.

Defendant is engaged in transporting over its line a large volume of shipments destined for points outside of South Carolina, practically all such shipments being made by granite companies located on defendant's line. During the period covered by the complaint, such shipments have averaged in number in excess of two hundred a month. Although the less than carload shipments have predominated, yet measured in terms of carload shipments, the total monthly average has ranged from approximately thirty-five to approximately one hundred carloads. During the same period of time the intrastate shipments (all carload lots) have averaged approximately three hundred and fifty a month. On a weight and tonnage basis, defendant's superintendent testified that the interstate shipments accounted for only about ten per cent. of the total traffic. When measured either on the basis of the number of shipments or of tonnage hauled, the defendant is substantially engaged in transporting goods destined to out-of-state points, since on either basis large volumes of goods transported by the defendant are ultimately carried to out-of-state points.

The defendant is also engaged in transporting over its line a substantial number of shipments which have originated at out-of-state points. All of such shipments are consigned to the granite companies located upon the defendant's line at Rion and at Anderson's Quarry. The defendant also frequently handles incoming express shipments as freight which have originated at out-of-state points. These also are all consigned to the granite companies.

The defendant maintains distinctions in its methods for the handling of interstate and intrastate shipments, particularly in shipping documents, billing methods, arrangements for maintaining and participating in joint rates, divisions of rates, etc.; the details of such methods are set forth in the Findings of Fact which have been duly filed.

The defendant's annual operating revenues have never exceeded $100,000.

While the defendant owns no stock in the quarry and granite companies along its line, and at this time such quarry and granite companies own no stock in the defendant corporation, there is a community of interest, affiliation between, and interrelationship among, the defendant railroad and the quarry and granite company shippers located along defendant's railroad, brought about by reason of overlapping ownership and interlocking management and operations, interwoven with some common stockholders, common directors, common officers and common employees and agents, and by the devotion of a substantial part of defendant's operations to the performance gratis of considerable hauling and switching services for some of the quarry and granite company shippers along its line.

The defendant employs about thirty-two employees in the operation of its railroad, including engineers, firemen, flagmen, section hands, construction crews and clerical employees.

From November 2, 1939, to February 12, 1942, the defendant did not pay to some of its employees the minimum wages and overtime pay prescribed by the provisions of the Fair Labor Standards Act, and during said time failed to keep records of the hours worked each day in each week as to some of its employees, and of the hourly rate at which some of its employees were employed; and from February 12, 1942, continuously to the date of trial, the defendant employed some of its employees for work weeks in excess of the hours provided in the Act, and failed to compensate said employees for such overtime work at rates of not less than one and one-half times their regular rates of pay.

These facts present the following questions, (1) are the defendant's employees engaged in...