Fleming v. AB Kirschbaum Co., 7733.

• Citation: 124 F.2d 567
• Decision Date: 17 December 1941
• Docket Number: No. 7733.,7733.
• Parties: FLEMING, Administrator of the Wage and Hour Division, United States Department of Labor, v. A. B. KIRSCHBAUM CO.
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

124 F.2d 567 (1941)

FLEMING, Administrator of the Wage and Hour Division, United States Department of Labor, v. A. B. KIRSCHBAUM CO.

No. 7733.

Circuit Court of Appeals, Third Circuit.

Argued October 8, 9, 1941.

Decided December 17, 1941.

Writ of Certiorari Granted March 2, 1942.

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William Clarke Mason, (Sidney L. Krauss, Frederick H. Knight and Morgan, Lewis & Bockius, all of Philadelphia, on the brief), for appellant.

Abner Brodie, of Washington, D. C., (Gerard D. Reilly, Sol., Irving J. Levy, Asst. Sol., John M. Gallagher, Regional Atty., and Ernest N. Votaw, U. S. Department of Labor, Edward J. Fruchtman and Norman S. Altman, all of Washington, D. C., on the brief), for appellee.

Before MARIS, JONES, and GOODRICH, Circuit Judges.

Writ of Certiorari Granted March 2, 1942. See 62 S.Ct. 800, 86 L.Ed. ___.

MARIS, Circuit Judge.

This is an appeal by the defendant from a judgment of the District Court for the Eastern District of Pennsylvania, 38 F. Supp. 204, which enjoined it from violating Section 15(a) (2) of the Fair Labor Standards Act of 1938, 29 U.S.C.A. §§ 215(a) (2).

The defendant is the owner of a six story building which it at one time occupied as a factory for the production of men's clothing. For the past nine years the defendant has done no manufacturing. It leases space in its building to tenants, a number of whom manufacture goods which are shipped in interstate commerce. The defendant employs, among others not herein involved three elevator operators, two watchmen, three firemen, an engineer, a carpenter, a carpenter's helper and a porter. The court found that the defendant paid those employees at a rate less than that prescribed in Section 6 of the act, 29 U.S.C.A. § 206, and employed them for a number of hours in excess of that prescribed in Section 7, 29 U.S.C.A. § 207, without compensating them at the overtime rate therein prescribed. It concluded that this amounted to a violation of Section 15(a) (2) of the act and granted an injunction in accordance with the power conferred upon it by Section 17 of the act, 29 U.S.C.A. § 217.

The defendant's arguments in support of its appeal fall into two general divisions: First, that the wage and hour provisions of the act do not apply to any employees of employers such as this defendant who are not engaged in interstate commerce or in the production of goods for interstate commerce; and Second, that the defendant's employees are not entitled to the benefit of the wage and hour provisions of the act because they are not themselves engaged in interstate commerce or in the production of goods for interstate commerce and also because they are employees in a service establishment and therefore expressly excluded from the benefits of the act by Section 13(a) (2) thereof, 29 U.S.C.A. § 213(a) (2).

Few courts have dealt directly with the first point raised by the defendant and in those courts which have recognized it as a distinct problem the decisions have not been uniform. Representative of the cases holding that the application of the act is determined by the character of the employee's work is Hall v. Warren-Bradshaw Drilling Co., D.C. N.D.Tex.1941, 40 F.Supp. 272, and of the cases holding that it is determined by the nature of the employer's business as well as by the character of the employee's work is Killingbeck v. Garment Center Capitol, Inc., 1940, 259 App.Div. 691, 20 N.Y.S.2d 521. In our view neither the language used in Sections 6 and 7 nor the legislative history of those sections furnish any support for the position taken by the defendant that the coverage of the act is dependent upon the character of the employer's business. Section 6(a) reads: "Every employer shall pay to each of his employees who is engaged in commerce or in the production of goods for commerce" wages at a specified rate. Here there is no limitation upon the universality of the class of employers based upon the nature of the employer's business. On the contrary the expression "every employer" is all embracing and includes within its scope employers whose business is not in commerce¹ and who produce nothing for commerce.² It is the employee's work which must be in commerce or, in the alternative, in the production of goods for commerce. Equally clear and unambiguous is the language of Section 7(a) which reads: "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" for a workweek longer than the prescribed number of hours unless he pays the employee at a fixed overtime rate. The phrase "No employer" certainly may not logically be qualified as meaning "no employer who is engaged in commerce or in the production of goods for commerce" which is the construction urged by the defendant. The emphasis in both sections is clearly placed upon the nature of the employee's work.

That the phraseology used was deliberately chosen by Congress and aptly expresses its intention to make coverage dependent upon the work done by the employee and not upon the nature of the employer's business is indicated by the legislative history of the sections. The wage and hour sections of the bill as it had passed the Senate were amended by the House of Representatives so as to read: "every employer engaged in commerce in any industry affecting commerce shall * * * pay, each employee employed by him * * *" certain wages based upon a fixed minimum and "no employer engaged in commerce in any industry affecting commerce shall employ any of his employees * * *" in excess of certain maximum hours without paying overtime compensation.³ It will be seen that under this amendment the wage and hour provisions of the act were to apply only if the employer was engaged in commerce in an industry affecting commerce. The Senate refused to accede to these House amendments, however, and a conference between the two houses ensued. The conference committee report which was thereafter adopted by both houses substituted for the prior text of the bill the language now embodied in the act. The statement of the House conferees made to the House of Representatives in explanation of the changes proposed by the conference report said, in this connection:

"Section 6 of the conference agreement provides for the establishment of minimum wages for employees engaged in commerce or in the production of goods for commerce. The House amendment provided for the establishment of minimum wages if the employer was engaged in commerce in any industry affecting commerce. * * *"

"Section 7 of the conference agreement provides for the establishment of maximum hours of employment for employees engaged in commerce or the production of goods for commerce. The House amendment provided for the establishment of maximum hours of employment if the employer was engaged in commerce in an industry affecting commerce. * * *"⁴

Nothing in Sections 2, 5 and 8 of the act justifies the conclusion that Congress meant other than it said in Sections 6 and 7. Section 2 expresses the policy of the act to be the elimination of substandard labor conditions in industries engaged in commerce or in the production of goods for commerce. Sections 6 and 7 embody the means chosen to accomplish this purpose, specifically, a statutory minimum standard of wages and maximum standard of hours without overtime wages for all those engaged as workers in commerce or in the production of goods for commerce. Sections 5 and 8, on the other hand, embody a device whereby Congress sought to provide through industry committees a flexible means to accelerate the time within which the minimum wage of 40 cents an hour which it deemed desirable could be made effective in whole industries engaged in commerce without causing serious economic dislocation in any such industry. We conclude that it was the intention of Congress to make the act applicable to all those who are employed in commerce or in the production of goods in commerce without regard to the nature of their employer's business and that this intention was given apt expression in Sections 6 and 7 of the act.

The defendant takes the position that if the act is so construed it violates the Tenth Amendment to the Constitution. That amendment provides: "The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people." The power to regulate interstate and foreign commerce was delegated to the federal government by Article I, Section 8, clause 3 of the Constitution. The regulation by Congress through the Fair Labor Standards Act of 1938 of the wages and hours of those engaged in interstate commerce or in the production of goods for interstate commerce is a valid exercise of the commerce power. United States v. Darby, 312 U.S. 100, 61 S.Ct. 451, 85 L.Ed. 609, 132 A.L.R. 1430. Whether the act seeks to regulate commerce by using a classification based upon the general character of the business of the industry by which individuals are employed or by a classification based upon the individual character of the work performed by each employee is a matter of statutory construction. Either is a permissible method of exercising the legislative power delegated to Congress by the commerce clause and accordingly does not encroach upon the powers reserved to the states.

The defendant next insists that, even if the coverage of the act is dependent upon the nature of the work done by each employee, the work of the employees involved in the present case is neither in commerce nor in the production of goods for commerce. It is quite obvious that the defendant's engineer, firemen, elevator operators, watchmen, carpenters and porter were not engaged in the production of goods for commerce in the sense that they had actual physical contact with the goods produced. The word "produced," however, was used in no such...