Bledsoe v. Wirtz

• Decision Date: 27 October 1967
• Docket Number: No. 9401.,9401.
• Citation: 384 F.2d 767
• Parties: C. C. BLEDSOE and Emmett Marcum, as Individuals and d/b/a Oklahoma Auction Yard, a Partnership, Appellants, v. W. Willard WIRTZ, Secretary of Labor, United States Department of Labor, Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

384 F.2d 767 (1967)

C. C. BLEDSOE and Emmett Marcum, as Individuals and d/b/a Oklahoma Auction Yard, a Partnership, Appellants, v. W. Willard WIRTZ, Secretary of Labor, United States Department of Labor, Appellee.

No. 9401.

United States Court of Appeals Tenth Circuit.

October 27, 1967.

Robert P. Kelly, Pawhuska, Okl. (Bruce W. Gambill, Pawhuska, Okl., on the brief), for appellants.

Robert E. Nagle, Atty., Dept. of Labor, Washington, D. C. (Charles Donahue, Sol. of Labor, Bessie Margolin, Associate Sol., and Allen H. Sachsel, Atty., Dept. of Labor, Washington, D. C., on the brief), for appellee.

Before PICKETT, HILL and HICKEY, Circuit Judges.

HILL, Circuit Judge.

The case is here on appeal for the second time. Upon the first appeal, which was by the Secretary, the case was remanded to the trial court for further proceedings. Wirtz v. Bledsoe, 10 Cir., 365 F.2d 277. Those further proceedings resulted in a judgment in favor of the Secretary and that judgment is now appealed from.

The action was instituted by the Secretary of Labor under Section 17 of the Fair Labor Standards Act, 29 U.S.C. § 201 et seq., on November 20, 1964. The complaint alleged that the appellants had violated the overtime wage provisions of the Act and had failed to keep adequate records as required by the Act. The appellants are co-partners, doing business as Oklahoma Auction Yard at Hominy, Oklahoma; the Auction Yard facilities are leased to livestock auction companies who sell livestock at auctions. Appellants' employees receive, sort, feed, care for and load cattle being sold at these auctions, some of which are regularly shipped to out-of-state designations. The action involved five employees, four of which were employed as yardmen and for whom defendants had kept records of time worked and payrolls. The fifth employee, Woodrow Linville, lived on appellants' premises in a house rented from appellants, and worked as yard foreman at a monthly salary of $350.00. Hours worked by Linville were not recorded in the company books and no additional compensation was paid Linville if he worked more than a forty hour week. At the first trial, the trial court held that the appellants were covered by the Act, but that as the appellants did not have knowledge of the employees working overtime, and as Woodrow Linville was employed in an executive capacity and, therefore, exempt, they had not violated the Act. This court on appeal held that Linville was not entitled to an executive exemption, and that it was no defense that overtime work was performed without the appellants' knowledge and contrary to their express instructions. The action was, therefore, remanded to the district court for further proceedings.

Upon retrial the district court entered judgment against appellants in the amount of $1,220.35 for wages owed the five employees¹ and issued an injunction against future violations by appellants. On this appeal it is claimed that the district court's determination of the number of hours worked by Woodrow Linville is erroneous; that the court erred in the manner in which it applied the 14-work week overtime exemption; and that the court abused its discretion by enjoining future violations. In addition, appellants claim that their employees are not within the coverage of the Act.

In the initial complaint filed by the Secretary it was alleged that the employees of appellants are regularly engaged in interstate commerce and the production of goods for interstate commerce as defined by the Act and, therefore, the appellants were covered by the Act. This allegation was denied in appellants' answer. The trial court at the first trial found that the appellants were covered by the Act even though they had not violated the provisions of the Act. This finding of coverage was not challenged by appellants, then appellees, upon the first appeal to this court. The trial court found that since the issue of coverage was not raised in the appeal or in the retrial of the case before the trial court it would adopt its findings of fact and conclusions of law from the first trial on these matters. On this appeal, appellants raise for the first time the argument that as a matter of law they are not covered by the provisions of the Fair Labor Standards Act. Appellee claims that this court does not need to consider the issue of coverage of the Act on its merits, more particularly, that the appellants are estopped from arguing this point because they failed to raise the point during the first appeal, citing Sun Co. v. Vinton Petroleum Co., 5 Cir., 248 F. 623, cert. denied 247 U.S. 514, 38 S.Ct. 580, 62 L.Ed. 1244. However, coverage under the Fair Labor Standards Act by engagement in interstate commerce is more than a substantive issue in the trial of this cause of action. Jurisdiction in the Federal courts depends solely upon a finding of engagement in interstate commerce and no diversity or jurisdictional amount need be shown. Consolidated Timber Co. v. Womack, 9 Cir., 132 F.2d 101; Bracey v. Luray, D.C., 49 F.Supp. 821; Gustafson v. Fred Wolferman, Inc., D.C., 6 F.R.D. 503, Cf. Pure Oil Co. v. Puritan Oil Co., 2 Cir., 127 F.2d 6. See also Bank of Utah v. Commercial Security Bank, 10 Cir., 369 F.2d 19. The question of whether the court has jurisdiction over the subject matter of a cause of action has primary importance and can be raised at any time even on the court's own motion. Black & Yates v. Mahogany Ass'n, 3 Cir., 129 F.2d 227, 148 A.L.R. 841; see also McGrath v. Kristensen, 340 U.S. 162, 71 S.Ct. 224, 95 L.Ed. 173; Kern v. Standard Oil Co., 8 Cir., 228 F.2d 699. Therefore, since the issue of whether the defendants are engaged in interstate commerce so that they are covered by the Fair Labor Standards Act raises a jurisdictional issue it will be considered by this court on this appeal even though not raised on the first appeal.

On the merits of the issue of coverage under the Fair Labor Standards Act appellants argue that their activity is purely local in nature and that they do not engage in buying or selling of the cattle but solely lease the facilities to commission companies. This argument, however, focuses on the wrong activities. It is clear that for determining coverage under the Fair Labor Standards Act the court examines the employee's connection with interstate commerce rather than the employer's. Overstreet v. North Shore Corp., 318 U.S. 125, 63 S.Ct. 494, 87 L.Ed. 656; Mitchell v. Lublin, McGaughy & Associates, 358 U.S. 207, 79 S.Ct. 260, 3 L.Ed.2d 243. The employees in this case receive, sort, feed, care for and load cattle being sold at the auction, some of which are regularly shipped in interstate commerce. Sections 6 and 7 of the Fair Labor Standards Act, 29 U.S.C.A. §§ 206, 207, apply to employees who are "engaged in commerce or in the production of goods for commerce." Produced is defined in 29 U.S.C.A. § 203(j) as "produced, manufactured, mined, handled, or in any other manner worked on in any State; and for the purposes of this chapter an employee shall be deemed to have been engaged in the production of goods if such employee was employed in producing, * * * handling, transporting, or in any other manner working on such goods, * * *." The employees here clearly "handled" goods, i e., cattle, which moved in interstate commerce and thus appellants are covered by the provisions of the Fair Labor Standards Act. Mitchell v. Pidcock, 5 Cir., 299 F.2d 281; Walling v. Friend, 8 Cir., 156 F.2d 429. Appellants rely principally on two cases to support their argument that they are not covered by the Act. Hopkins v. United States, 171 U.S. 578, 19 S.Ct. 40, 43 L.Ed. 290, and Mitchell v. Moore, 6 Cir., 241 F.2d 249. Neither of these cases is applicable.²

Appellants next urge that the trial court erroneously denied them the statutory exemption of 14 workweeks for the part of each of the years selected by them. During the years in question the Fair Labor Standards Act, 29 U.S.C. § 207(c), gave employers in appellants' business classification a yearly fourteen week exemption from the Act.³ Supplementing this statute, the Secretary promulgated a regulation set out in 29 C.F. R. § 516.13, which required any employer claiming such exemption to note upon his records the beginning and end of every such week claimed and to further post a notice informing the employees of the same. Appellants did not comply with this regulation. After so determining, the trial court followed the practice of the Secretary⁴ by applying the exemption to the first fourteen weeks for which overtime was not paid.

In the instant situation appellee argues that the practice as set out by the...