Bowie v. Gonzalez

• Citation: 117 F.2d 11
• Decision Date: 10 January 1941
• Docket Number: No. 3590.,3590.
• Parties: BOWIE et al. v. GONZALEZ et al.
• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)

117 F.2d 11 (1941)

BOWIE et al. v. GONZALEZ et al.

No. 3590.

Circuit Court of Appeals, First Circuit.

January 10, 1941.

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E. T. Fiddler, of San Juan, P. R. (Bowie & Burke, of Baltimore, Md., Fiddler, McConnell & Gonzalez, of San Juan, P. R., Robert R. Bowie, of Baltimore, Md., and H. S. McConnell, of San Juan, P. R., on the brief), for appellants.

John J. Babe, of Washington, D. C. (A. Cecil Snyder, of San Juan, P. R., on the brief), for appellees.

Gerard D. Reilly, Irving J. Levy, John J. Babe, Robert S. Erdahl, David Persinger, and Milton C. Denbo, all of Washington, D. C., for amicus curiæ.

Before MAHONEY, Circuit Judge, and PETERS and FORD, District Judges.

MAHONEY, Circuit Judge.

This case is before the court on appeal from a declaratory judgment entered in the United States District Court for the District of Puerto Rico, in favor of the appellees, who are employees of the appellants. The latter are trustees of an express trust and are known collectively as Eastern Sugar Associates. It involves the application to certain phases of the sugar industry in Puerto Rico of the Fair Labor Standards Act of 1938, 52 Stat. 1060, 29 U.S.C.A. § 201 et seq., and particularly Sections 3(f), 6(a), 7(c), and 13(a) (6), (10) thereof.

The findings of fact are not in dispute and may be summarized as follows:

The appellants are engaged in growing sugar cane on land owned or leased by them on the Island of Puerto Rico and the neighboring Island of Vieques. They own, maintain and operate sugar mills on the Island of Puerto Rico where cane, which they grow, is ground, and sugar and molasses extracted from it. These mills also grind the sugar cane of other farmers known as colonos, and as compensation for hauling the cane of the colonos and extracting the sugar therefrom, the appellants receive approximately 35 per cent of the raw centrifugal sugar produced from such cane. The appellants do not purchase sugar cane from any colonos, but all their operations, so far as the colonos' sugar cane is concerned, are on a toll basis. The other 65 per cent is either delivered to the colonos or is held in the appellants' warehouse and sold as and when directed by the farmer for his account. The appellants' sugar cane and that of the colonos is mixed, and no segregation takes place for the purpose of grinding. Between 33 and 40 per cent of all the sugars produced by the mills of the appellants is derived from the sugar cane of about 350 independent colonos. The remainder is from the cane produced by the appellants. Practically the entire income of the appellants is derived from the sale of sugar and molasses produced in their mills.

The appellants also own and operate a railroad line which serves the rather large area occupied by the appellants. The line connects the mills and extends to the Port of Humacao. It is used for hauling to the mills the sugar cane belonging both to the appellants and the colonos. After the sugar is ground, it is taken by the railroad to the Port of Humacao, where it is delivered to steamships for transportation to points outside of Puerto Rico, or it is stored in appellants' warehouse. Supplies for the use of the appellants are hauled from the port to the mills, but the railroad does not haul goods or merchandise for the public.

Sugar cane itself is not an article of commerce, as it is highly perishable and must be ground very soon after it is cut. Raw sugar is extracted from the cane by squeezing the juice from the cane by mechanical means. This removes impurities from the sugar, eliminates water, and reduces the pure juice crystals and separates the raw sugar from the molasses by centrifugal force. Raw sugar is the form in which the commodity moves in commerce, and molasses is a by-product.

The operation of the sugar mills is seasonal, and the crop or grinding season extends from some time in January or February to June. During the grinding season, cane is cut, hauled to the mills and ground. During this season the railroad and the mills are normally in full operation. The balance of the year is known as the dead season, and during this time repairs and replacements are made to the railroad, mills and other property of the appellants, and cultivation and planting are likewise attended to.

The appellees, the employees of the mills and transportation service of the appellants, contend that Section 6 of the Fair Labor Standards Act is applicable to them and that they are entitled to the minimum wage set up therein. The appellants maintain that they are exempt from both the wages and hours provisions of the Act on the ground that all of their employees are engaged in agriculture, and that even if not so exempt, the Administrator of the Act should so define the "area of production" as provided in Section 13(a) (10) as to include their sugar grinding activities and exempt them. The appellants further insist that the Act is unconstitutional in its entirety.

Because of this difference in position various labor difficulties have arisen between the appellees and appellants on the question of wages. An agreement was eventually reached whereby the difference in wages paid to the employees and those which would be required if the Act were applicable was deposited in a New York bank to be held in escrow pending the determination of the applicability of the Act. On February 9, 1939, the appellants filed this suit against three employees individually and as representative of the employees engaged in transportation and milling operations as a class. The bill asked for an injunction against the activities of their employees and a declaratory judgment stating that Congress intended to exempt such employees as are here involved from the minimum wage provisions of the Act.

The bill included the proper allegations of irreparable damage and alleged that the decision of the Administrator that he had no authority to define an area of production for the sugar grinding industry was arbitrary and unreasonable. The appellees raised questions as to the jurisdiction of the court and suggested that no real controversy existed. However, the District Court found that under all the circumstances of the case it had jurisdiction because the Fair Labor Standards Act is one to regulate commerce among the states and that a justiciable controversy existed cognizable by the court within the Federal Declaratory Judgment Act, Jud.Code § 274d, 28 U.S.C.A. § 400. We believe that the District Court was right in so holding.

The appellees alleged in their answer that the appellants are engaged primarily in manufacturing sugar and only incidentally in agriculture, and that the minimum wage provisions of the Act in question are applicable to the employees here involved. The trial court upheld their contention that the appellees, employees engaged in the mills and transportation service, were not engaged in agriculture within the meaning of the Act, and that the sugar grinding industry was in no way exempt from the wage provisions of the Act. The court further declared that the Act was a valid exercise of the power of Congress to regulate commerce. The judgment provided that the employees engaged in the mill operations of the appellants, or any necessary incident thereof, those engaged in transporting raw centrifugal sugar from the appellants' mills to points outside such mills, and in any necessary incident thereof, and those involved in transporting sugar cane for grinding at appellants' mills from points outside the mills at which they accept delivery of the sugar cane from the independent farmers for whom they grind sugar cane on a toll basis, or in any necessary incident thereof, were entitled to the minimum wages provided by the Act.

From this judgment this appeal was taken, and the appellants press the same arguments relied upon below. The Administrator of the Act has filed a brief as amicus curiæ, and requests the court to clarify the judgment given to include specifically employees engaged in transportation of molasses and those engaged in repair and maintenance work during the so-called dead season. He also requests that paragraph 2(c) of the judgment be corrected to read "all employees of complainants engaged in transporting sugar cane of independent growers for grinding at complainants' mills, or in any necessary incident thereof".

The broad questions before us are whether the Fair Labor Standards Act is constitutional and, if so, whether the appellees are entitled to its benefits. It is our opinion that both questions should be answered in the affirmative and that the decision of the District Court must be affirmed.

The power of Congress to protect interstate commerce is extremely broad. It has been expressly held that any statutory rule designed "to prevent the flow of commerce from working harm to the people of the nation, is within the competence of Congress". Mulford v. Smith, 1939, 307 U.S. 38, 48, 59 S.Ct. 648, 652, 83 L.Ed. 1092. Sub-standard working conditions are a major cause of labor unrest with its consequent ill effect on interstate and foreign commerce, and we believe Congress has full power to correct by legislation these evils when affecting such commerce. That the appellants' employees here involved are engaged in such commerce is too clear for argument. The purpose and justification of the Act are very similar to that of the National Labor Relations Act, 29 U.S.C.A. § 151 et seq. and the cases upholding the constitutionality of the latter are equally applicable here. See, e. g., Consolidated Edison Co. v. National Labor Relations Board, 1938, 305 U.S. 197, 59 S.Ct. 206, 83 L.Ed. 126; Santa Cruz Packing Co. v. National Labor Relations Board, 1938, 303 U.S. 453, 463, 58 S.Ct. 656, 82 L.Ed. 954; National Labor Relations Board v. Jones & Laughlin Steel Corp., 1937, 301 U.S. 1, 38-40, 57 S.Ct. 615, 81 L.Ed. 893, 108 A.L.R. 1352.

The Fair Labor Standards Act...