Beggs v. Kroger Co.

• Decision Date: 28 April 1948
• Docket Number: No. 13611.,13611.
• Parties: BEGGS et al. v. KROGER CO.
• Court: U.S. Court of Appeals — Eighth Circuit

167 F.2d 700 (1948)

BEGGS et al. v. KROGER CO.

No. 13611.

Circuit Court of Appeals, Eighth Circuit.

April 28, 1948.

T. J. Gentry, of Little Rock, Ark., for appellants.

E. L. McHaney, Jr. of Little Rock, Ark. (Grover T. Owens, of Little Rock, Ark., on the brief), for appellee.

Before SANBORN, JOHNSEN, and COLLET, Circuit Judges.

COLLET, Circuit Judge.

This action was instituted by several employees and former employees of the Kroger Company to recover overtime wages under the Fair Labor Standards Act, 29 U.S. C.A. § 201 et seq. The trial court found that appellants, who will be referred to as plaintiffs, were not engaged in the production of goods for interstate commerce and also found that they were engaged in interstate commerce, subjecting them to the jurisdiction of the Interstate Commerce Commission and exempting them from the overtime provisions of the Fair Labor Standards Act. Accordingly, that court dismissed plaintiffs' complaint on the merits. This appeal is from the judgment of dismissal.

The facts are not in dispute. The defendant Kroger Company operates a number of retail food stores in the State of Arkansas. It maintains a warehouse in Little Rock, Arkansas, through which passes approximately 60% of all merchandise sold by defendant in its retail stores in that state. Substantially all of the merchandise received at the warehouse is received from out of the State of Arkansas, is unloaded, placed in the warehouse, and later by company-owned trucks distributed to the various company-owned retail stores in Arkansas. About 18% of the merchandise sold by the defendant in its retail stores in Arkansas is manufactured or processed by defendant in plants located outside the state. Substantially all of this type of merchandise passes through the warehouse. It neither owns nor operates any manufacturing or processing plants within the state. All other merchandise sold by defendant is purchased by it. Approximately 89% of all merchandise sold in Arkansas is purchased, manufactured or processed outside the state and shipped to the retail stores in Arkansas. As heretofore stated, approximately 60% passes through the warehouse and the remainder of the 89% is sent direct to the stores from outstate sources. The remainder, or approximately 11%, of the merchandise sold at the retail stores is purchased in the State of Arkansas. A portion of the latter passes through the warehouse and the remainder of the 11% is delivered directly to the stores by the vendors. All of the merchandise purchased, manufactured or processed by defendant outstate and shipped to the warehouse is purchased, manufactured, or processed for sale in the defendant's retail stores in Arkansas. The defendant does not operate the warehouse as a wholesale grocery but delivers all merchandise from the warehouse to its stores on scheduled trips each week.

Plaintiffs are truck drivers engaged in delivering the merchandise from the warehouse in trucks owned by defendant to defendant's retail stores in Arkansas. Plaintiffs seldom assist in loading their trucks at the warehouse but do unload them at the retail stores. On return trips to the warehouse from the stores they deliver empty bottles and slow moving merchandise to the warehouse for shipment outside the state. In making deliveries to and from the warehouse, plaintiffs do not go outside the State of Arkansas.

Plaintiffs were paid an hourly rate in excess of the minimum rates fixed by the Fair Labor Standards Act. It is stipulated that if they had been paid one and one-half times their hourly wage for all hours worked over 40 during any one work week, they would all have received an aggregate total of $9,261.06 in excess of what they were paid.

If the Fair Labor Standards Act applies, Section 7(a) (3) thereof, 29 U.S. C.A. § 207(a) (3), provides for the payment of one and one-half times the regular wage for all hours over 40 which plaintiffs worked during any one work week.¹ But the Fair Labor Standards Act will not apply, although plaintiffs may have been engaged in the production of goods for commerce within the meaning of that Act,² if plaintiffs were employees with respect to whom the Interstate Commerce Commission has power to establish qualifications and maximum hours of service pursuant to Sections 202 and 204 of the Motor Carrier Act of 1935, 49 U.S.C.A. §§ 302 and 304.³

The defendant was not a common carrier or a contract carrier, but it was a private carrier of property by motor vehicle if defendant was engaged in the transportation of goods in interstate commerce for the purpose of sale or in furtherance of any commercial enterprise. It is readily obvious that defendant was engaged in the transportation of goods for sale and in the furtherance of a commercial enterprise, hence, the instant question is narrowed to the determination of whether it was engaged in the transportation of goods in interstate commerce. The conclusion is inescapable that it was. Walling v. Jacksonville Paper Co., 317 U.S. 564, 63 S.Ct. 332, 87 L.Ed. 460; Walling v. Mutual Wholesale Food & Supply Co., 8 Cir., 141 F.2d 331. Practically all of the goods the defendant transported to its retail stores in Arkansas were processed, manufactured or purchased outstate for the specific purpose of being moved to the retail stores for sale. That part of the goods which went through the warehouse did not "come to rest" at the warehouse. The warehouse was merely a convenient instrumentality for the division of the shipments coming to it and the continuation of the movement of each part to the retail stores. The facts in this case distinguish it from cases such as Atlantic Coast Line R. Co. v. Standard Oil of Ky., 275 U.S. 257, 48 S.Ct. 107, 72 L.Ed. 270. Here the defendant knew when the shipments began outstate that all of them were destined to the retail stores. The warehouse was not a wholesale establishment and none of the goods that entered it were resold.

But plaintiffs contend that the fact that the operations of the drivers of the trucks were wholly within the State of Arkansas should have decisive weight upon the question of whether that part of the defendant's transportation activity which plaintiffs performed was in interstate commerce. That fact is not decisive when, as pointed out, the plaintiffs' activities constituted a part of a continuous movement of freight from points outside of the State of Arkansas to the retail stores.

The plaintiffs being engaged in interstate commerce, the question remains as to whether Section 13(b) (1) of the Fair Labor Standards Act, heretofore quoted in the margin, exempts them from the overtime requirements of Section 7 of that Act. The exemption applies to "any employee with respect to whom the Interstate Commerce Commission has power to establish qualifications and maximum hours of service." It is not the need for regulation of a transportation activity by the Interstate Commerce Commission which determines the applicability of the exemption clause above-quoted. It is the existence or nonexistence of the power to regulate which is decisive. Southland Gasoline Co. v. Bayley, 319 U.S. 44, 63 S.Ct. 917, 87 L.Ed. 1244. The Interstate Commerce Commission need not regulate private carriers. Its duty with reference to the regulation of such carriers is dependent upon a finding by the Commission that need therefor exists. Southland Co. v. Bayley, supra; Morris v. McComb, 332 U.S. 422, 68 S.Ct. 131. In that respect the Commission's duty is different from that which has been placed upon it with reference to common carriers and contract carriers. The Commission is given the sole authority to determine that need. Southland Co. v. Bayley, supra; Levinson v. Spector Motor Service, 330 U.S. 649, 67 S.Ct. 931. As pointed out in Levinson v. Spector Motor Service, 330 U.S., loc. cit. 665, 67 S.Ct. loc. cit. 940, the Commission has found that "there is need for Federal regulation of private carriers of property to promote safety of operation of motor vehicles used by such carriers in the transportation of property in interstate or foreign commerce." In Morris v. McComb, supra, 332 U.S. loc. cit. 436, 68 S.Ct. loc. cit. 138, the Supreme Court directs attention to the facts that an intra-state motor carrier may secure an exemption from regulation by the Interstate Commerce Commission upon application to that Commission and a proper showing therefor. But even if the exemption from regulation by the Commission be granted, the power of regulation by the Commission remains. And it is the power of regulation which determines the applicability of the exemption clause of the Fair Labor Standards Act.⁴

Both the Fair Labor Standards Act and the Motor Carrier Act of 1935 cannot apply simultaneously. As the Supreme Court said in Levinson v. Spector...