Clougherty v. James Vernor Co.

• Decision Date: 01 August 1947
• Docket Number: Civil Action No. 4745.
• Citation: 74 F. Supp. 364
• Parties: CLOUGHERTY v. JAMES VERNOR CO.
• Court: U.S. District Court — Western District of Michigan

74 F. Supp. 364

CLOUGHERTY v. JAMES VERNOR CO.

Civil Action No. 4745.

District Court, E. D. Michigan, S. D.

August 1, 1947.

Arthur J. Hass, of Detroit, Mich., for plaintiff.

Clark, Klein, Brucker & Waples, of Detroit, Mich., for defendant.

PICARD, District Judge.

The question in this case is whether certain employees of defendant company are covered by the Fair Labor Standards Act, 29 U.S.C.A. § 201 et seq. The period is from March 23, 1939, to December 31, 1944, and five different functions of defendant's employees are involved —

(a) City drivers,

(b) City salesmen's helpers,

(c) Highway drivers,

(d) Shipping room foreman, and

(e) Chief router.

The first three classes include several employees, (d) and (e) each one. Since January 1, 1945, however, (a), (b) and (c) have been compensated according to the Fair Labor Standards Act, but without defendant admitting legal liability.

Statement of Facts.

Here are the pertinent facts: Defendant, Vernor Company of Detroit, manufactures and sells ginger ale in 8 and 24 ounce bottles, placed in cardboard cartons, either containing 2 dozen 8-ounce or one dozen 24-ounce bottles.

During the period involved the company couldn't keep up with demand for its product, either because of lack of its own delivery facilities, or because of shortage of some necessary ingredient such as sugar. As a result sometimes both filled and empty cases of bottles were stored at the plant from three days to two weeks.

The facts show that to cover breakage and loss (estimated 3%) new bottles were purchased, but the manufacturing process and route of the bottle, whether new or one that had been returned after its contents consumed, begins when it is placed on a conveyor which carries it to the soaking and rinsing room where it is cleaned, sterilized and rinsed, then to the syrup machine where extract and syrup are added, to the filling room for the carbonated water, the crowning machine where it is capped, and then to the "spinner" where the ingredients are properly agitated. The next and final steps are the placing of the bottles in cardboard cases and transferred by a conveyor to the stock room ready for shipment.

Class (a), the city driver, got his consignment, orders and routing instructions from the shipping room foreman and, in making his deliveries, usually received back empty bottles from the retail outlet to the same extent as he delivered. On his return to the Vernor plant the truck body containing these empty bottles was lifted by a crane from the chassis, swung into the plant, the empty bottles unloaded by shipping floor employees from which point they proceeded to the stock pile in the plant to be stored until they began their new journey. In the ordinary course none of the bottles delivered to Michigan dealers would go out of the state on that particular trip, but the company had eight warehouses outside Michigan and during the period in question from 14 to 20 per cent of all its ginger ale went out of Michigan. It can be assumed that some of the bottles delivered to retail stores in Detroit one week and picked up later were the same bottles that went into interstate commerce on their second trip. Whether the number was more or less than the ratio of interstate to intrastate sales would be practically impossible to ascertain but we believe this court would be safe in assuming that such ratio over a period of a year would average just about the same as in and out of state sales since bottles used in the State of Michigan were not segregated each trip from bottles used for the out-of-state consumer.

Some city drivers made deliveries to the boat dock companies along the Detroit River, sometimes to boats plying on the Great Lakes and to manufacturing places admittedly engaged in interstate commerce.

In addition to the city drivers there were city salesmen, admittedly independent contractors who had helpers (class (b), above, paid by defendant. These men helped in delivering the filled and getting back the empty cases. They might even assist in driving the salesman's truck. These city salesmen's helpers also went with the highway drivers outside of Detroit performing the same work for the highway drivers as they did for the city salesmen.

The highway drivers delivered ginger ale to eight branch warehouses in different cities in Michigan and to the eight warehouses outside the state. They might work a full week exclusively in transporting stock either in or out of Michigan, or the week might see them transporting ginger ale both in and out of Michigan. So the issue as to them also includes the question of whether they come under the Fair Labor Standards Act or are controlled by the Motor Carrier Act, 49 U.S.C.A. § 301 et seq.

The shipping room foreman had charge of loading the trucks and work incidental to delivery of the ginger ale in and out of Michigan and the chief router made up the routes for all city deliveries. These two, defendant contends, are exempt, one as an executive, the other as an administrator.

It is contended by plaintiff that since there is no segregation of returned Michigan bottles from those returned from out of state, and because of their activities in picking up Michigan empties, putting them on trucks, taking them back to the plant, where upon refilling many of these same bottles went into interstate commerce, that all (a), (b), (c), (d) and (e) came under the Fair Labor Standards Act since they were all engaged "in the production of goods for commerce."

Defendant does not deny that most of its other employees come under the Fair Labor Standards Act, and it is admitted that as to these employees defendant has complied with the Act's provisions; but it denies the Act covers any employees classed in (a), (b), (c) (d) or (e).

We first discuss the city drivers because if they are covered by the Fair Labor Standards Act, then (b) and (c) are also covered.

Conclusions of Law.

As a result of numberless decisions there are certain well recognized beacons of light illuminating the highway of the Fair Labor Standards Act which are indicative of its general scope, and which must be considered in arriving at our conclusions.

For example, it has become well established that some employees of a firm which is admittedly engaged in interstate commerce may come under the Fair Labor Standards Act while others among its employees do not. Walling v. Jacksonville Paper Co., 317 U.S. 564, 63 S.Ct. 332, 87 L. Ed. 460. And it is also well fixed that the maxim "de minimis" is not applicable if the employee concerned engaged in producing "any" goods which could reasonably be expected to find their way into interstate commerce. Mabee v. White Plains Pub. Co., 327 U.S. 178, 66 S.Ct. 511, 90 L.Ed. 607. And all those engaged in interstate commerce or in the "production" of those goods are affected and covered by the act. Mabee v. White Plains Pub. Co., supra; Schulte Co. v. Gangi, 328 U.S. 108, 66 S.Ct. 925, 90 L.Ed. 1114, 167 A.L.R. 208

It has also been held that "no ritual of placing goods in a warehouse can be allowed to defeat" the interstate nature of the entire transaction, and "a temporary pause in their transit does not mean they are no longer `in commerce'" within the meaning of the Act. Walling v. Jacksonville Paper Co., supra 317 U.S. 564, 63 S. Ct. 335.

Turning to the facts it is admitted that the sale of ginger ale by the Vernor Company out of state was not sporatic and if these city drivers by the act of picking up Vernor's empty bottles and cases and returning them to the Vernor plant, where it it reasonable to assume that 14 to 20 per cent of them then went into interstate commerce — if by those acts those employees are "producing goods" for commerce, they come under the provisions of the Fair Labor Standards Act.

And that is the main question here.

Two definitions become important: What is meant by "goods"? And What is meant by "produced"? "Goods" is defined in Section 203(i) of the Fair Labor Standards Act as meaning:

"* * * 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."

And Sec. 203(j) of the same Act, defines "produced" as

"* * * produced, manufactured, mined, handled, or in any other manner worked on in any state; and 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 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."

To substantiate his point many citations are presented by plaintiff, among them Griffin Cartage Co. v. Walling, 6 Cir., 153 F.2d 587, affirmed on appeal from this court and which is perhaps the nearest of all cases so cited to the one at bar. There we held that employees of a cartage company that transported castings from one plant to another, within the city of Detroit, for additional processing, and then to the manufacturer to be placed in an automobile sold and shipped in interstate commerce, were engaged in the production of goods for commerce, the test being whether this was a step in the journey of these goods into interstate commerce, and if so, however slight that step might be, it became a part of the production of such goods.

But a mere review of the facts in the Griffin case emphasizes the difference between it and the facts here because there the transporting and handling of castings between plants while they were being worked upon was all part of the production of the completed article. In the case at bar returning the bottles to the Vernor plant was all done before production was even started on ginger ale that went into...