Borden Co v. Borella

• Citation: 89 L.Ed. 1865,325 U.S. 679,65 S.Ct. 1223,161 A.L.R. 1258
• Decision Date: 11 June 1945
• Docket Number: No. 688,688
• Parties: BORDEN CO. v. BORELLA et al
• Court: United States Supreme Court

325 U.S. 679

65 S.Ct. 1223

89 L.Ed. 1865

BORDEN CO.

v BORELLA et al.

No. 688.

Argued April 6, 1945.

Decided June 11, 1945.

Mr. John A. Kelly, of New York City, for petitioner.

Mr. A. H. Frisch, of New York City, for respondents.

Bessie Margolin, of Washington, D.C for Administrator of Wage and Hour Division, United States Department of Labor, amicus curiae by sp cial leave of Court.

Mr. Justice MURPHY delivered the opinion of the Court.

Once again, as in Kirschbaum v. Walling, 316 U.S. 517, 62 S.Ct. 1116, 86 L.Ed. 1638, we are required to consider the application of the Fair Labor Standards Act of 1938¹ to employees engaged in activities relating to the maintenance and operation of a building.

In the Kirschbaum case we held that the Act does apply to such employees working in a loft building in which large quantities of goods for interstate commerce are physically produced. In the instant case, the porters, elevator operators and night watchmen in question work in a 24-story office building in the business district of New York City. The building is owned and operated by the petitioner, the Borden Company, which is a New Jersey corporation engaged in the business of manufacturing milk products and other food products. Petitioner occupies approximately 17 of the 24 floors and 58% of the total rentable area. The remainder of the office space is leased to various tenants, none of which was found by the District Court to produce, manufacture, handle, process or in any other manner work on any goods in the building.²

Petitioner has manufacturing plants and factories in both the United States and Canada and its products are sold in large volumes throughout this and other countries. These establishments are admittedly engaged in the production of goods for interstate commerce. The heart of this industrial empire, however, lies in the central office building in New York City. Here the entire enterprise is supervised, managed and controlled.

In this building the directors meet and the corporate officers conceive and direct the policies of the company. Although geographically divorced from the manufacturing plants, employees working in this building dictate, control and coordinate every step of the manufacturing processes in the individual factories. By means of direct teletype wires, they maintain detailed and meticulous supervision of the plants, the local superintendents exercising discretion only in the conduct of routine matters. While no products are actually processed or sold in the building, the purchase of raw materials and supplies, the methods of production, the amounts to be produced, the quantity and character of the labor, the safety measures, the budgeting and financing, the legal matters, the labor policies and the maintenance of the plants and equipment are all directed from this building. Such are the activities of petitioner's central office which is maintained, serviced and guarded by the respondent employees.

The respondents brought this suit against petitioner to recover overtime compensation and liquidated damages, plus reasonable counsel fees. The District Court denied relief, holding that they were not entitled to the benefits of the Act under the rule of the Kirschbaum case.³ 52 F.Supp. 952. The Second Circuit Court of Appeals reversed the judgment. 145 F.2d 63. We took the case because of the asserted conflict with the decision of the Tenth Circuit Court of Appeals in Rucker v. First Nat. Bank of Miami, Okl., 138 F.2d 699, and because of the importance of the issue as to the application of the Kirschbaum doctrine to such facts as are here presented.

Under Section 7(a) of the Act, overtime compensation must be paid to all employees 'engaged in commerce or in the production of goods for commerce.' As to the latter category of employees it is unnecessary that they directly participate in the actual process of producing goods inasmuch as Section 3(j) provides that 'for the purposes of this Act an employee shall be deemed to have been engaged in the production of goods if such employee was employed * * * in any process or occupation necessary to the production thereof, in any State.' Our problem thus is to determine whether the respondent maintenance employees are engaged in a process or occupation necessary to the production of goods for commerce so as to come within the ambit of Section 7(a).

The Kirschbaum case made it clear that the work of maintenance employees in a building where goods were physically manufactured or processed had 'such a close and immediate tie with the process of production for commerce, and was therefore so much an essential part of it, that the employees are to be regarded as engaged in an occupation 'necessary to the production of goods for commerce." 316 U.S. at pages 525, 526, 62 S.Ct. at page 1121, 86 L.Ed. 1638. The maintenance of a safe, habitable building, with adequate light, heat and power, was deemed necessary to the production of goods for commerce, See also Walton v. Southern Package Corporation, 320 U.S. 540, 64 S.Ct. 320, 88 L.Ed. 298; Armour & Co. v. Wantock, 323 U.S. 126, 65 S.Ct. 165. The only distinction between this and the Kirschbaum case lies in the fact that here the employees work in a building where production of goods is administered, managed and controlled rather than carried on physically. We hold, however, that this distinction is without eco- nomic or statutory significance and that it cannot form the basis for concluding that the respondent employees are engaged in occupations unnecessary to the production of goods for commerce.

In an economic sense, production includes all activity directed to increasing the number of scarce economic goods. It is not simply the manual, physical labor involved in changing the form or utility of a tangible article. Such labor is but an integral part of the coordinated productive pattern of modern industrial organizations. Equally a part of that pattern are the administration, management and control of the various physical processes together with the accompanying accounting and clerical activities. Economic production, in other words, requires planning and control as well as manual labor.⁴ He who conceives or directs a productive activity is as essential to that activity as the one who physically performs it. From a productive standpoint, therefore, petitioner's executive officers and administrative employees working in the central office building are actually engaged in the production of goods for commerce just as much as are those who process and work on the tangible products in the various manufacturing plants. And since the respondent maintenance employees stand in the same relation to this production as did the maintenance workers in the Kirschbaum case, it follows that they are engaged in occupations 'necessary' to such production, thereby qualifying for the benefits of the Fair Labor Standards Act.

We find nothing in the Act militating against this conclusion. Sections 7(a) and 3(j) both speak of production without attempting to limit its meaning to physical labor. Section 3(j) in particular defines the term 'produced' not only in the physical sense of manufacturing, mining and handling but also in the more general sense of producing or 'in any other manner' working on goods. In the absence of any contrary evidence we are...