Devine v. Joshua Hendy Corporation

• Decision Date: 30 April 1948
• Docket Number: No. 6176.,6176.
• Citation: 77 F. Supp. 893
• Parties: DEVINE et al. v. JOSHUA HENDY CORPORATION.
• Court: U.S. District Court — Southern District of California

77 F. Supp. 893

DEVINE et al. v. JOSHUA HENDY CORPORATION.

No. 6176.

District Court, S. D. California, Central Division.

April 30, 1948.

Perry Bertram and David L. Mohr, both of Los Angeles, Cal., for plaintiffs.

Robert H. Sanders and Robert G. Irvin, both of Los Angeles, Cal., for defendant.

YANKWICH, District Judge.

The action, originally begun against California Shipbuilding Corporation, a corporation, was instituted under the Fair Labor Standards Act of 1938,¹ on February 27, 1947. It seeks recovery of overtime, which the plaintiffs allege they were required to work, and for which they were not compensated.

Many proceedings were had before the trial, as disclosed by the voluminous record. Many questions of law were raised, — especially following the enactment of what is commonly known as the Portal-to-Portal Act of 1947, Public Law 49, 80th Congress, Chapter 52, 1st session,² which became law on May 14, 1947, when it was approved by the President.

Of the original plaintiffs, only twenty-nine actually remain in the case. The testimony given related to their claims.

We must, therefore, interpret this Act in its relation to the Fair Labor Standards Act.³

I The Fair Labor Standards and the Portal-to-Portal Acts

The Fair Labor Standards Act, because of its nature and aim, has been construed liberally by all the courts which have had occasion to interpret it. Such liberality extends to all its provisions, and especially to what I might call — using an insurance term — "coverage." The courts have been very generous in determining which workmen are entitled to the benefits of the Act. One of the latest declarations on the subject is found in a case from the Tenth Circuit Court of Appeals.⁴ Judge Bratton states:

"In respect of coverage of employees, the definitive provisions of the Act are extremely comprehensive in their sweep. United States v. Rosenwasser, 323 U.S. 360, 65 S.Ct. 295, 89 L.Ed. 301. The Act is remedial and must be given a liberal construction with its manifest intent and purpose in view. E. C. Schroeder Co. v. Clifton, 10 Cir., 153 F.2d 385, certiorari denied, 328 U.S. 858, 66 S.Ct. 1351, 90 L.Ed. 1629; Fleming v. Hawkeye Pearl Button Co., 8 Cir., 113 F.2d 52; Bowie v. Gonzalez, 1 Cir., 117 F.2d 11; Fleming v. Palmer, 1 Cir., 123 F.2d 749, certiorari denied Carribean Embroidery Co-op v. Fleming, 316 U.S. 662, 62 S.Ct. 942, 86 L.Ed. 1739; Helena Glendale Ferry Co. v. Walling, 8 Cir., 132 F.2d 616. And in doubtful situations, coverage is to be determined broadly by reference to the underlying economic realities rather than by traditional rules governing legal classifications of master and servant on one hand, and employer and independent contractor on the other. Cf. National Labor Relations Board v. Hearst Publications, 322 U.S. 111, 64 S.Ct. 851, 88 L.Ed. 1170."

Another late case is from the Circuit Court of Appeals from the Seventh Circuit.⁵ Speaking for the court, Judge Kerner writes:

"The Fair Labor Standards Act is remedial and must be given a liberal construction with its manifest intent and purpose in view. One of its objectives is to fix standards of hours and wages of those engaged in handling goods or producing goods for interstate commerce. It must not be applied in a narrow, grudging manner."⁶

Adopting this as the norm of construction, the courts have interpreted the meaning of the word "commerce" broadly. So doing, they have given expression to a policy which they have followed with great consistency, a policy which cannot be understood if we try to reconcile the decisions which interpret the commerce clause,⁷ regardless of the objectives of the statute by which the regulation is achieved.

To be more explicit: The teaching of the cases is that the power of the Congress to control commerce — a plenary power — is not the same in every field. If we examine decisions which interpret the Sherman Anti-Trust Act,⁸ we find in late decisions a repudiation of the doctrine of stoppage. The older cases would indicate that when goods came to rest in a state, they ceased to be in "the flow" of interstate commerce, and could no longer be reached by the Act. But in more recent years, the Supreme Court has held that certain practices may be in violation of the Act, although the commodities to which they related and which originated in interstate commerce had come to rest. Following these decisions, I ruled in 1942, that when a group of grocers combined to set prices for foods and groceries transported in interstate commerce — such as canned milk, baking powder, and the like — the price fixing affected commodities in interstate commerce and was in violation of the law, although the prices took effect after the merchandise reached the grocer's shelves.⁹

On the other hand, in the realm of state taxation and regulation of local activities, the courts take an entirely different view. Illustrative is the case arising in California, where the Southern Pacific Company had transported certain rails, equipment, machinery, tools and office supplies to California, which were not intended for use in that state, but in other Southwestern States in which the Company was engaged in the operation of railroads. The Supreme Court held that, under the Use Tax Act, the State of California could tax these materials while they remained in the State.¹⁰

A similar situation arose in a three-judge case in which I sat some years ago. This was a raisin control case, which involved the question whether the State of California, under its Agricultural Prorate Act of 1933, as amended, could establish a method of control before the raisins were processed. It appeared that ninety per cent of the raisins consumed in the United States are grown and processed in California, and that the processing was for interstate commerce chiefly.

Two members of the court felt that this was an interference with interstate commerce. I wrote a dissenting opinion, in which I applied the criterion just discussed, namely, that there is no absolute and all-inclusive definition of what is, and what is not, interstate commerce, but that all definitions are relative, and limited by the scope of particular statutory regulations or restrictions. I expressed the view that during the period of stemming and cleaning the raisins and packing them into boxes, — i. e., during the processing, which took place from the time they left the grower's vineyard, went through the processing plant, the packer's establishment, and into interstate commerce, the State of California had the right to regulate the industry and control marketing and distribution, although the product was intended chiefly for interstate commerce.¹¹ The Supreme Court upheld my view.¹²

In a case involving the California Caravan Act of 1937, which regulated the operation of automobiles by caravans from other states, I took the view that the State of California had the power to determine the conditions under which automobiles were brought into the state, and that a tax to be paid by persons using our roads, not for ordinary transportation, but for business and commercial purposes, was valid.¹³

In construing the Fair Labor Standards Act of 1938, and the Portal-to-Portal Act of 1947, we must bear these principles in mind.

Section 203, Title 29 U.S.C.A., gives the definition of "commerce". I quote subdivision (b) of that section:

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

The Supreme Court, in a leading case¹⁴ interpreting the word "commerce" in this Section and the provision contained elsewhere in the Act, which make the statute applicable to employees engaged "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,"¹⁵ has ruled that it is not so much the character of the employer's business as that of the employees, which determines the applicability of the Act. The Court said:

"The petitioners assert, however, that the building industry of which they are part is purely local in nature and that the Act does not apply where the employer is not himself engaged in an industry partaking of interstate commerce. But the provisions of the Act expressly make its application dependent upon the character of the employees' activities. And, in any event, to the extent that his employees are `engaged in commerce or in the production of goods for commerce,' the employer is himself so engaged. Nor can we find in the Act, as do the petitioners, any requirement that employees must themselves participate in the physical process of the making of the goods before they can be regarded as engaged in their production."¹⁶

One of the defenses urged in this case is that the defendant is not engaged in interstate commerce. This contention, which was stressed eloquently at the trial, and in the trial memorandum filed by the defendant, seems grounded chiefly on the language of the Supreme Court in Northern Pacific Ry. Co. v. United States.¹⁷ That was an action brought under the Tucker Act, 28 U.S.C.A. § 41(20). The question before the court was whether the railroad was entitled to commercial rates, or the land grant rates which it received for the transportation of government property. The Act which governed was known as the Transportation Act of 1940.¹⁸ The railroad company questioned whether the property, being the property of the United States, and having been shipped to Army and Navy officers in four or five instances, and in the last instance to the Civil Aeronautics Authority, was "military or naval" property, and whether it was moving for "military or naval" use. Mr. Justice Douglas, speaking for an unanimous court, said:

"An army and navy on foreign shores or in foreign waters cannot live and fight without a supply fleet in their support. The agency, whether civil or...