Goldberg v. McDaniel
| Decision Date | 20 September 1962 |
| Docket Number | No. J 60 C 49.,J 60 C 49. |
| Citation | 209 F. Supp. 399 |
| Parties | Arthur J. GOLDBERG, Secretary of Labor, United States Department of Labor, Plaintiff, v. H. D. McDANIEL and D. H. "Dee" McDaniel, Individually and as Co-partners Doing Business as McDaniel Brothers Construction Company, Defendant. |
| Court | U.S. District Court — Eastern District of Arkansas |
Charles Donahue, Sol., Washington, D. C., Earl Street, Regional Atty., T. Hagan Allin, Trial Attorney, Dallas, Tex., for plaintiff.
McDaniel & Mooney, Jonesboro, Ark., for defendant.
This is an action brought by the Secretary of Labor under Section 17 of the Fair Labor Standards Act of 1938, as amended, 29 U.S.C.A. § 217; the plaintiff seeks to enjoin the defendants from a continuation of defendants' alleged violations of the Act's overtime provisions.
The defendants are engaged in the general construction business, which includes the construction of factories and other manufacturing facilities. The defendants recently built a factory for the Jonesboro Industrial Development Corporation on property owned or formerly owned by the City of Jonesboro, Arkansas. During this job some of the defendants' employees worked more than a 40 hour workweek without the overtime compensation required by the Fair Labor Standards Act.
On the 28th day of January, 1960, Crane Company, which is engaged in interstate commerce, entered into a "Facilities Construction Contract" with the City of Jonesboro, Arkansas, a municipal corporation, the Jonesboro Industrial Development Corporation, and the City Water & Light Plant. This contract states in part that Crane Company desires to undertake a manufacturing operation in Jonesboro and will lease from the City a manufacturing building in accordance with plans and specifications prepared by Crane. The City of Jonesboro was to be responsible for the construction of this building.
Pursuant to a delegation of authority from the City of Jonesboro, the Jonesboro Industrial Development Corporation, an alter ego of that city, entered into a contract with the defendants to build a plant that was to be occupied by Crane Company.
As we have said above, there is no doubt that Crane Company is engaged in interstate commerce; their products are distributed nationally and internationally to independent wholesalers.
Prior to moving to Jonesboro, Crane Company was manufacturing plumbing brass in its Chicago, Illinois plant, and being supplied by Repcal Brass Manufacturing Company, a wholly-owned subsidiary of Crane located in Los Angeles, California.1 The Jonesboro plant will eventually manufacture and distribute all the products that were being produced by Crane's Chicago plant and by Repcal's Los Angeles plant. Key personnel of both Crane and Repcal Brass have been transferred to Jonesboro from Chicago and Los Angeles, and a considerable quantity of equipment in operation at the Los Angeles and Chicago plants has been and will be transferred to and utilized in the Jonesboro plant.
The plans and specifications for the construction of the Jonesboro plant were originally prepared by Crane Company engineers, draftsmen, and architects and designed to meet the Crane Company requirements for production purposes. The construction of the foundry and plating areas of the plant include specially constructed pits and other features, specially designed to meet Crane Company's specifications essential to the manufacturing and processing of the particular products produced for Crane. The defendants and Crane Company officials discussed the construction freely as is evidenced by testimony and correspondence introduced by the plaintiff. Although the defendants were building the plant for the City, they were at all times aware that the City had contracted to lease it to Crane upon completion for that company's manufacturing operations.
This factual situation again forces us to face the problem of determining whether certain construction workers are engaged in interstate commerce and thus covered under 29 U.S.C.A. § 207, as amended. It must be understood at the outset that commerce concerns more than actual interstate movements, but one must also keep in mind that the coverage under Section 207 does not extend to all interstate commerce which could constitutionally be reached. Kirshbaum Co. v. Walling, 316 U.S. 517, 62 S.Ct. 1116, 86 L.Ed. 1638 (1942). Coverage under the Act is not carried to its broadest constitutional extreme but is limited by Section 3(b) of the Act to "trade, commerce, transportation, transmission, or communication among the several States * * *." Mitchell v. H. B. Zachry Co., 362 U.S. 310, 80 S.Ct. 739, 4 L.Ed.2d 753 (1960). The judiciary must be careful "not to absorb by adjudication essentially local activities that Congress did not see fit to take over by legislation." 10 East 40th St. Co. v. Callus, 325 U.S. 578, 65 S.Ct. 1227, 89 L.Ed. 1806 (1945). It becomes obvious then that the attitude of Congress is helpful if not necessary in determining coverage. Mitchell v. H. B. Zachry Co., supra, concluded that the last clause of Section 3(j) of the Act as amended in 1949 intended to constrict the coverage of the Act.2 It is, therefore, the duty of this court to decide whether the activity involved here is so affected by local interest as to be removed from the coverage, or is so closely related to interstate commerce to be covered under the Act. Justice Frankfurter in Zachry, sets out the three ways which an employee may be engaged in interstate commerce sufficient to satisfy the Act. They are: (1) Employment "in" trade commerce, transportation, transmission, or communication among the several states; (2) Employment "in" production of goods which are "for" commerce, etc.; (3) Employment in an activity which is only related to such production. Local interests are least affected by number one, and it is covered by the Fair Labor Standards Act. Number two is a step removed but may still be covered by the F.L.S.A. See Alstate Construction Co. v. Durkin, 345 U.S. 13, 73 S.Ct. 565, 97 L.Ed. 745 (1953). Number three is the furthest removed; it is at the periphery of coverage, and although some activities in this category may be covered, it is the opinion of the writer that the Supreme Court in Zachry severely limits coverage in this area. Justice Frankfurter says in Zachry at page 316 of 362 U.S. at page of 744, 80 S.Ct.:
Mitchell v. Zachry also tells us that the amendment of Section 3(j) reinforced the requirement that in applying the last clause of the section, which is represented by number three above, "its position at the periphery of coverage be taken into account as a relevant factor in determination." The last clause of Section 3 (j) marks the outer limits of coverage.
The issue before us can be condensed in one simple question: Is the construction of a building which is to be used for the manufacture of goods which are destined to be placed in interstate commerce covered under 29 U.S.C.A. § 207 as amended?
It is clear that the mere fact that this is new construction or replacement construction will not preclude coverage. Mitchell v. C. W. Vollmer & Co., 349 U.S. 427, 75 S.Ct. 860, 99 L.Ed. 1196 (1955); Mitchell v. Lublin, McGaughy & Associates, 358 U.S. 207, 79 S.Ct. 260, 3 L.Ed.2d 243 (1959); Mitchell v. Zachry, supra. The test is "whether the work is so directly and vitally related to the functioning of an instrumentality or facility of interstate commerce as to be, in practical effect, a part of it, rather than isolated, local activity." Mitchell v. C. W. Vollmer & Co., supra. The Supreme Court of the United States in Zachry while deciding that employees engaged in building a dam to create an expended reservoir which would supply water to industries engaged in interstate commerce,3 were not covered said: The Supreme Court did not tell us what activities were "sufficiently closely related," nor does it define a "facility of commerce" or a "facility of production." It appears to me that the answer to these labyrinthine problems lies in a study of the pertinent decisions.
The test laid down in Vollmer has already been discussed. A very important decision which the Government relies upon is the Lublin case;4 the Court had to decide whether employees of an architectural and consulting engineering firm, which designed, inter alia, interstate facilities and instrumentalities "including air bases, roads, turnpikes, bus terminals, and radio and television installations" were covered. It is of interest to note, however, that the Court was not confronted by the new construction problem because the defendant company had engaged in many projects involving "repair, extension, or relocation of existing interstate facilities." (358 U.S. at p. 213, 79 S.Ct. at p. 265). The dictum in Lublin, however, would tend to limit coverage in construction work to activities which are related "to interstate instrumentalities or facilities, such as bridges, canals and roads * * *." (358 U.S. at p. 212, 79 S.Ct. at p. 264).
The Government cites many cases to uphold its contention that the new construction of a building which will house a manufacturing...
To continue reading
Request your trial
-
Wirtz v. McDaniel
...conceded. The District Court, however, concluded that the employees were not subject to the Act and accordingly dismissed the action. 209 F.Supp. 399. The facts are not in dispute. The defendants are general contractors, their business including the construction of factories and other manuf......
- Rockport Yacht & Supply Company v. M/V CONTESSA