Fleming v. Atlantic Co.

• Decision Date: 19 September 1941
• Docket Number: No. 2274 C. A.,2274 C. A.
• Citation: 40 F. Supp. 654
• Parties: FLEMING v. ATLANTIC CO.
• Court: U.S. District Court — Northern District of Georgia

40 F. Supp. 654

FLEMING v. ATLANTIC CO.

No. 2274 C. A.

District Court, N. D. Georgia, Atlanta Division.

June 25, 1941.

On Rehearing September 19, 1941.

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Gerard D. Reilly, Sol., Irving J. Levy, Asst. Sol. in charge of litigation, Abner Brodie, Edward J. Fruchtman, Erwin B. Ellmann, and Norman S. Altman, all of Washington, D. C., and George A. Downing, Regional Atty., of Atlanta, Ga., for plaintiff.

Spalding, Sibley, Troutman & Brock, Wm. K. Meadow, and W. J. Hobbs, all of Atlanta, Ga., for defendant.

RUSSELL, District Judge.

Philip B. Fleming, as Administrator of the Wage and Hour Division of the United States Department of Labor, filed a complaint seeking to enjoin the Atlantic Company from violating Sections 15(a) (1), 15 (a) (2), and 15(a) (5) of the Fair Labor Standards Act of 1938, U.S.C.A., Title 29, Sec. 201 et seq.

From the allegations of the petition and the evidence introduced in support thereof, it appears that the defendant is a Georgia corporation, engaged in extensive business which falls into three general types, viz.: (1) the operation of a brewery for the production and sale of beer; (2) the operation of a cold storage warehouse; and (3) the manufacture of ice which is sold locally for refrigeration, and a considerable portion of which is furnished under contract to interstate railroads and Fruit Growers Express and used in the refrigeration of shipments of perishable commodities.

In addition to the question of the application of the Act to the operations and employees in each branch of the business of the defendant, upon the trial the question arose as to the validity of an arrangement referred to as "employment cards" relating to salaried employees of the defendant.

After the conclusion of the trial and by motion filed within the time permitted for the filing of briefs, defendant attacks the constitutionality of the Fair Labor Standards Act, and especially Sections 6 and 7 thereof, contending that the manufacture of goods with the intent to ship them in interstate commerce is not within the regulatory power of Congress; that Congress is without the power to regulate wages and hours in interstate commerce; that Section 7 of the Act is not a regulation of hours or wages but is an attempt to create additional jobs; that the Act is arbitrary and unequal in its application because of the exceptions contained in Section 13 thereof, and that Section 7 is arbitrary and invalid because of the nature of the exceptions contained therein.

This motion was filed prior to the decisions of the Supreme Court in the cases of United States v. Darby Lumber Company, 312 U.S. 100, 61 S.Ct. 451, 85 L.Ed. 609, 132 A.L.R. 1430, and Opp Cotton Mills, Inc. v. Administrator of Wage and Hour Division of Department of Labor, 312 U.S. 126, 61 S.Ct. 524, 85 L.Ed. 624. The principles ruled in the decisions in these cases amply sustain the legality of the Act against the objections urged and no good purpose could be served by a further discussion, and this motion of defendant is overruled.

The case was tried and has been argued in the briefs with separate consideration to each branch of the business, and in the interest of clarity will be so considered here.

I. The Production and Sale of Beer.

No question of the applicability of the Act to the brewery business of the defendant is presented, for it is conceded by the defendant that a substantial portion of its output of beer and ale is sold in interstate commerce, but defendant contends that it has been paying, and is now paying, to its employees engaged in the production of beer the wages required by the Act.

With reference to this phase of defendant's business, the only material question presented is whether certain employees who it is contended are not directly engaged in the production of beer, such as specified clerical employees and mechanics engaged in the maintenance and repair of the machinery, are engaged in the production of beer. As to these, it is clear from the evidence that the services of the clerical help and of the maintenance and repairmen are essential to the production and shipment of beer. Therefore, under the terms of the Act such employees are employed in producing, handling, and working on such goods, and in occupations necessary to the production thereof, and in their employment defendant is required to comply with the provisions of the Act.

From the evidence, it is clear that without the services of the maintenance carpenters and mechanics the production could not be carried on, and it is clear that the services of the clerical help and engineers are so intimately and directly connected with the production and sale of the beer as to be an essential part thereof.

Regardless of whether the failure to keep the records required by the Act was due to the contention in good faith that such employees were not covered by the terms of the Act, the plaintiff has established that the records kept by the defendant and the payment of wages and over time compensation as to such employees was not in accord with the provisions of the Act, and constitute a violation thereof. Violation of Section 15(a) (1) by shipment follows.

II. Cold Storage Warehouse.

In the operation by the defendant of its cold storage warehouse, shipments of commodities requiring refrigeration are constantly received, stored, and re-shipped or delivered. It is an extensive business. The warehouse is adjacent to the railroad yards and convenient to carriers by motor truck. From 70% to 90% of the incoming shipments of merchandise originate from points outside of Georgia, and more than 25% of shipments received are subsequently reshipped to points outside of Georgia. Frequently the defendant re-ships for distribution upon order of the original consignor, itself paying the freight or carrier charges, which are included in the storage charges.

Upon certain items, directions for reshipment are received prior to the actual receipt of the goods, and interstate shipments of such goods are made upon their arrival. Upon a weekly average, the equivalent of 10 railroad cars are unloaded at defendant's railroad platform, and there is a daily and continuous flow of goods into and from the cold storage warehouse by trucks.

It is unnecessary to further detail the character of defendant's cold storage warehouse operations, for it is conceded that the unloading and storage of interstate shipments and the re-loading of the interstate shipments are covered by the Act. The defendant asserts that the protection and proper refrigeration of the goods while on storage is not within the terms of the Act. However, it is apparent from the evidence that there is no real separation of activities, and the services of those employed in the warehouse, between what is admittedly interstate business and intrastate transactions.

The business of a cold storage warehouse certainly as well includes the proper refrigeration and care of goods stored as it does the operations by which such goods are received, stored, shipped and delivered. Each act and service is essential to completion of the entire cold storage warehousing which defendant carries on. The stoppage by storage of interstate shipments intended afterwards to go forward in continuation of such commerce does not remove such goods from commerce. See Stafford v. Wallace, 258 U.S. 495, 42 S.Ct. 397, 66 L.Ed. 735, 23 A.L.R. 229; McGoldrick v. Gulf Oil Corp., 309 U.S. 414, 60 S.Ct. 664, 84 L.Ed. 840; Mulford v. Smith, 307 U.S. 38, 59 S.Ct. 648, 83 L.Ed. 1092; Southern Pacific Terminal Co. v. Interstate Commerce Comm., 219 U.S. 498, 31 S.Ct. 279, 55 L.Ed. 310; Texas v. Anderson Clayton & Co., 5 Cir., 92 F.2d 104.

The same labor and clerical help conducts both phases of defendant's cold storage business in all its aspects, and each of them are employed and help in carrying on the commerce of the defendant. This commerce is the receipt, unloading, storage, the necessary refrigeration, re-shipment and delivery of goods. The business operations of the defendant are such that it is impossible to determine what proportion of the services of employees is devoted to interstate commerce and to local operations. The business and plant need only be considered in its entirety, and the carpenters and maintenance men are essential to the conduct of that portion of the defendant's business which is interstate, and the fact that the repair of an elevator or a door, or services necessary in furnishing refrigeration, likewise facilitate the local business of the defendant, does not remove the activities of such employees from the realm of interstate commerce, to which such services equally relate.

In other words, where the business of the employer is substantially interstate, as well as intrastate, and the clerical help, maintenance men and laborers indiscriminately perform services essential to the carrying on of both classes of business, they are engaged in commerce within the meaning of the Act. The activities of each are required in the carrying on of the interstate business of the defendant.

The applicability of the Act to such employees being established, the evidence shows violations by the defendant of Sections 15(a) (2) and 15(a) (5).

III. Production of Ice for Sale to Common Carrier Railroads and Fruit Growers Express for Refrigeration of Shipments of Perishable Commodities.

In the conduct of its ice manufacture, the defendant operates several plants in the City of Atlanta and regularly produces ice at its central plant, Brookwood, Decatur, East Atlanta and West End plants for the purpose of fulfilling its contracts for the sale and delivery to the Fruit Growers Express and various railroads of ice for use in refrigerating railroad refrigerator freight cars. It occasionally produces ice for such purpose at its Kirkwood, Nelson Street, Ridge Avenue, North Avenue and Number Seven, Decatur Street, plants.

It appears that at all the...