Burke v. Mesta Mach. Co.

• Decision Date: 27 July 1948
• Docket Number: Civil Action No. 2744.
• Citation: 79 F. Supp. 588
• Parties: BURKE et al. v. MESTA MACH. CO.
• Court: U.S. District Court — Eastern District of Pennsylvania

79 F. Supp. 588

BURKE et al. v. MESTA MACH. CO.

Civil Action No. 2744.

United States District Court W. D. Pennsylvania.

July 27, 1948.

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Mortimer B. Wolf, of Witt & Cammer, all of New York City, and Ernest G. Nassar, of Pittsburgh, Pa., for plaintiffs.

John C. Bane, Jr., and John G. Wayman, of Reed, Smith, Shaw & McClay, all of Pittsburgh, Pa., for defendant.

WALLACE S. GOURLEY, District Judge.

This action is brought pursuant to Section 16(b) of the Fair Labor Standards Act of 1938, 52 Stat. 1060, 29 U.S.C.A. § 216(b), and which must be considered in light of the Portal-to-Portal Act of 1947, 61 Stat. 84, 29 U.S.C.A. § 251 et seq. Frank Burke and Napoleon Massa brought the suit as representatives of four hundred fifty-one (451) employees of the defendant.

Plaintiffs seek to recover overtime compensation which it is claimed should have been paid under the provisions of the Fair Labor Standards Act, 29 U.S.C.A. § 201 et seq., an additional equal amount as liquidated damages, a reasonable attorney's fee and the costs of the action, as authorized and required by Section 16(b) of the Act.

After the trial, but before the submission of arguments or any disposition of the case, the Portal-to-Portal Act of 1947 was approved. On June 11, 1947, defendant presented an amendment to its answer, by which it has pleaded the additional defenses permitted by Section 9 and Section 11 of the Portal-to-Portal Act.

The gravamen of the suit is that between the time that the Fair Labor Standards Act became effective on October 25, 1938, and May 1, 1943, defendant did not compensate the employees for overtime hours "at a rate not less than one and one-half times the regular rate at which (they were) employed," as required by Section 7(a) of the Act, 29 U.S.C.A. § 207(a). Instead, defendant paid for statutory overtime hours at one and one-half times the "basic hourly rate" which it established for each employee, which was not the "regular rate" prescribed by the Act.

Incentive bonus earnings were paid to the employees under a long-established bonus system in the plant whereby employees who performed work in less than a prescribed standard time received as additional compensation pay for one-half of the time saved at the basic hourly rate established by defendant for each employee. Defendant failed to include these incentive earnings in the "regular rate" of the employees and to compute overtime compensation under the Act upon such "regular rate" until May 1, 1943. Instead, defendant paid statutory overtime only on the "basic hourly rate."

The right of any plaintiff to recover, without consideration of the many other involved factual and legal questions which exist, in the first instance must be premised on the fact that each plaintiff was paid an incentive bonus during some pay period in which he had also been allowed overtime hours.

This consideration eliminates from any further part in the case one hundred seventy-six (176) individuals who were listed as plaintiffs in the action. Said plaintiffs received no incentive bonuses in any pay period during which they worked any overtime and, therefore, no error in the defendant's manner of computing overtime upon incentive bonuses could have affected them.

For other reasons, which are not material to the determination of the issues, additional plaintiffs were dropped from the suit.

As a result thereof the list of four hundred fifty-one (451) plaintiffs has been reduced to two hundred fifty-five (255).

The applicable provisions of the Fair Labor Standards Act to be considered in the adjudication of the questions which exist are as follows:

Section 3(b), 29 U.S.C.A. § 203(b) —

"`Commerce' means trade, commerce, transportation, transmission, or communication among the several States or from any State to any place outside thereof."

Section 3(i), 29 U.S.C.A. § 203(i) —

"`Goods' means goods, * * * wares, products, commodities, merchandise, or articles or subjects of commerce of any character, or any part or ingredient thereof, but does not include goods after their delivery into the actual physical possession of the ultimate consumer thereof other than a producer, manufacturer, or processor thereof."

Section 3(j), 29 U.S.C.A. § 203(j) —

"`Produced' means produced, manufactured, mined, handled, or in any other manner worked on in any State; and for the purpose of this Act an employee shall be deemed to have been engaged in the production of goods if such employee was employed in producing, manufacturing, mining, handling, transporting, or in any other manner working on such goods, or in any process or occupation necessary to the production thereof, in any State."

Section 7(a), 29 U.S.C.A. § 207(a) —

"No employer shall, except as otherwise provided in this section, employ any of his employees who is engaged in commerce or in the production of goods for commerce —

* * * * * *

"(3) for a workweek longer than forty hours after the expiration of the second year from such date, unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed."

Section 16(b), 29 U.S.C.A. § 216(b) —

"Any employer who violates the provisions of section 6 or section 7 of this Act shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount as liquidated damages. Action to recover such liability may be maintained in any court of competent jurisdiction by any one or more employees for and in behalf of himself or themselves and other employees similarly situated, or such employee or employees may designate an agent or representative to maintain such action for and in behalf of all employees similarly situated. The court in such action shall, in addition to any judgment awarded to the plaintiff or plaintiffs, allow a reasonable attorney's fee to be paid by the defendant, and costs of the action."

The applicable provisions of the Portal-to-Portal Act, 61 Stat. 84, 29 U.S.C.A. § 251 et seq., to be considered in the adjudication of the questions which exist are as follows:

Section 9, 29 U.S.C.A. § 258 —

"In any action or proceeding commenced prior to or on or after May 14, 1947 based on any act or omission prior to May 14, 1947, no employer shall be subject to any liability or punishment for or on account of the failure of the employer to pay minimum wages or overtime compensation under the Fair Labor Standards Act of 1938, as amended, the Walsh-Nealey Act, or the Bacon-Davis Act, if he pleads and proves that the act or omission complained of was in good faith in conformity with and in reliance on any administrative regulation, order, ruling, approval, or interpretation, of any agency of the United States, or any administrative practice or enforcement policy of any such agency with respect to the class of employers to which he belonged. Such a defense, if established, shall be a bar to the action or proceeding, notwithstanding that after such act or omission, such administrative regulation, order, ruling, approval, interpretation, practice, or enforcement policy is modified or rescinded or is determined by judicial authority to be invalid or of no legal effect."

Section 11, 29 U.S.C.A. § 260 —

"In any action commenced prior to or on or after May 14, 1947 to recover unpaid minimum wages, unpaid overtime compensation, or liquidated damages, under the Fair Labor Standards Act of 1938, as amended, if the employer shows to the satisfaction of the court that the act or omission giving rise to such action was in good faith and that he had reasonable grounds for believing that his act or omission was not a violation of the Fair Labor Standards Act of 1938, as amended, the court may, in its sound discretion, award no liquidated damages or award any amount thereof not to exceed the amount specified in section 216(b) of this title."

Defendant is engaged at its plant in West Homestead, Pennsylvania, in the manufacture of steel rolling mill machinery and equipment, including strip mills, cast iron and steel and forged rolls, blooming mills and hot strip mills. It has been engaged continuously in this type of production since 1898, and at all times since October 25, 1938. Its normal products are large machines, custom built for the owners of steel and metal working plants and establishments, commonly costing several million dollars each, and each requiring a year or more of manufacturing and construction work in the defendant's plant; some of the machines of this kind built between 1938 and 1943 were sold for installation within the Commonwealth of Pennsylvania, and others for use in other States.

The production of goods by the defendant for interstate commerce was spread throughout each year, and according to the records of the company during the whole of the period of time involved in this proceeding, part of each day's goods produced would be sent in interstate commerce. During each calendar year between 1938 and 1943 the defendant manufactured and shipped to purchasers outside the Commonwealth of Pennsylvania products of a value of at least $250,000. Subsequent to this country being involved in the Second World War, the defendant had numerous government contracts for the production of materials and other equipment for the war effort. In this connection the materials or goods were sold to the United States Government at the plant where they were produced and the defendant did not actually deliver the goods outside the state of Pennsylvania.

The company normally employs three thousand (3,000) men but during the war the number was expanded to approximately four thousand five hundred (4,500). The company does not maintain any type of separation, in so far as its production...