Goldberg v. Wharf Constructers

• Decision Date: 08 October 1962
• Docket Number: Civ. A. No. 1202.
• Parties: Arthur J. GOLDBERG, Secretary of Labor, United States Department of Labor, Plaintiff, v. WHARF CONSTRUCTERS, Robert H. Smith, Bell Bottom Foundation Company, W. Ray Brown and A. A. Cross, Defendants.
• Court: U.S. District Court — Northern District of Alabama

209 F. Supp. 499

Arthur J. GOLDBERG, Secretary of Labor, United States Department of Labor, Plaintiff, v. WHARF CONSTRUCTERS, Robert H. Smith, Bell Bottom Foundation Company, W. Ray Brown and A. A. Cross, Defendants.

Civ. A. No. 1202.

United States District Court N. D. Alabama, E. D.

October 8, 1962.

Charles Donahue, Sol., Beverley R. Worrell, Regional Atty., and George D. Palmer, Atty., Dept. of Labor, Birmingham, Ala., for plaintiff.

Memory L. Robinson and Reid D. Barnes, of Lange, Simpson, Robinson & Somerville, Birmingham, Ala., and James J. Loeffler and Paul R. Robertson, of Fulbright, Crooker, Freeman, Bates & Jaworski, Houston, Tex., for defendants.

LYNNE, Chief Judge.

This is a suit brought by the Secretary of Labor under the provisions of the Fair Labor Standards Act (hereinafter referred to as "FLSA"), 29 U.S.C.A. § 217, as amended, to restrain alleged violations of that Act, including specifically the withholding of unpaid wages due certain employees of defendants. The defendants are Wharf Constructers, a joint venture or partnership allegedly engaged in construction work at Anniston Ordnance Depot, Calhoun County, Alabama; Bell Bottom Foundation Company, a Texas corporation and a member of the joint venture; W. Ray Brown, an individual resident of Calhoun County, Alabama, and the project manager of Wharf Constructers; Robert H. Smith, an individual resident of Texas and a member of the joint venture; and A. A. Cross, an individual resident of Texas and the employee and attorney-in-fact of Wharf Constructers. Purported service of process was made upon Wharf Constructers by serving W. Ray Brown, its project manager, as provided for by Fed.R.Civ.P. 4(d) (3), 28 U.S.C.A.; upon W. Ray Brown by personal service; and upon Bell Bottom Foundation Company, Robert H. Smith and A. A. Cross by substituted service in the manner prescribed by Ala. Code, Tit. 7, § 199(1) for nonresident individuals or unqualified corporations doing business or performing work in Alabama out of which the claim sued upon arises. Each of the defendants has moved for dismissal on various grounds, including that of improper venue, which alone is presented for consideration at this time.

Because the FLSA contains no special venue provisions, the general venue provisions of 28 U.S.C.A. § 1391 control.¹ And since jurisdiction of this suit is based on the provisions of 29 U. S.C.A. § 217, the only pertinent portions of § 1391 are its subsections (b) and (c), which provide:

"(b) A civil action wherein jurisdiction is not founded solely on diversity of citizenship may be brought only in the judicial district where all defendants reside, except as otherwise provided by law.

"(c) A corporation may be sued in any judicial district in which it is incorporated or licensed to do business or is doing business, and such judicial district shall be regarded as the residence of such corporation for venue purposes."

In order that venue be proper, therefore, either the residence requirements of § 1391(b) and (c) must be satisfied or the defendants must be found to have waived their privilege. It is primarily the latter ground upon which plaintiff relies, asserting that by their conduct of business operations and other acts here those defendants which are not residents of this district have impliedly consented to this venue. Defendants, on the other hand, contend that since it appears affirmatively in the pleadings and an affidavit that all of the defendants are not residents of this district, the action must be dismissed in toto.

Since the plaintiff's insistence upon waiver applies to all of the defendants and, if successful, would alone be dispositive of the motion, it is best to consider this question first. It is well established, of course, that the right to object to improper venue may be waived in any of several ways: a failure to interpose a timely and sufficient objection, as expressly provided by 28 U.S.C.A. § 1406(b); the utilization of court facilities in a manner which is inconsistent with an objection to the venue, as the filing of a counterclaim in Rubens v. Ellis, 202 F.2d 415 (5th Cir.1953); an express waiver; or by implied waiver under the rule established by Neirbo Co. v. Bethlehem Shipbuilding Corp., 308 U.S. 165, 60 S.Ct. 153, 84 L.Ed. 167 (1939). It is upon the last of these that plaintiff must rely in the present case. Neirbo was a suit brought in the Southern District of New York by a New Jersey resident against a New York corporation and Bethlehem, a Delaware corporation. Since neither all of the plaintiffs nor all of the defendants were residents of New York, the venue was improper. However, Bethlehem did business in New York and, as required by New York law, had actually appointed an agent for service of process in that state. The court per Justice Frankfurter, "finding", as stated in 308 U.S. at 175, 60 S.Ct. at 158, "an actual consent by Bethlehem to be sued in the courts of New York," held that the privilege had been effectively waived thereby. By its decision the Court recognized that "state legislation and consent of parties may bring about a state of facts which will authorize the courts of the United States to take cognizance of a case." Ibid. But Neirbo of course did not imply an equivalence of service of process and venue, and its limits in this respect were sharply drawn by Olberding v. Illinois Central R. R., 346 U.S. 338, 74 S.Ct. 83, 98 L. Ed. 39 (1953), Justice Frankfurter again writing for the majority. In that case substituted service of process was made under a state nonresident motorist statute. The lower courts held, as had a number of others, that objections to venue had been waived under the Neirbo rule through the consent to suit and appointment of state officer as process agent implied from the operation of the motor vehicle. In reversing, the Court stated in 346 U.S. at 340-342, 74 S.Ct. at 85-86:

"It is true that in order to ease the process by which new decisions are fitted into pre-existing modes of analysis there has been some fictive talk to the effect that the reason why a non-resident can be subjected to a state's jurisdiction is that the non-resident has `impliedly' consented to be sued there. In point of fact, however, jurisdiction in these cases does not rest on consent at all. * * * The defendant may protest to high heaven his unwillingness to be sued and it avails him not. * * * To conclude * * that the motorist, who never consented to anything and whose consent is altogether immaterial, has actually agreed to be sued and has thus waived his federal venue rights is surely to move in the world of Alice in Wonderland. * * *

"This conclusion is entirely loyal to the decision and reasoning of Neirbo Co. v. Bethlehem Corp., * * * supra. * * * We held that * * * the designation of process agent there constituted an `actual consent' to be sued in New York, not the less so because it was `part of the bargain by which Bethlehem enjoys the business freedom of the State of New York.' * * * But here no such designation was required or made, and hence the Neirbo case has no applicability." Emphasis added.²

Plaintiff cannot maintain in the present case that there has been an actual designation by any of the defendants of an agent in Alabama for service of process: There is neither allegation nor indication that any of the defendants did expressly appoint such an agent, and service upon defendants Smith, Cross and Bell Bottom in fact was made instead by substituted service under Ala. Code, Tit. 7, § 199(1). In plaintiff's briefs, however, the position seems to be taken that by doing business or performing work in Alabama each of the nonresident defendants has under the Neirbo rule impliedly consented to suit here by virtue of the provisions of § 199 (1). In support of this contention, plaintiff relies upon Knott Corp. v. Furman, 163 F.2d 199 (4th Cir.1947), cert. denied, 332 U.S. 809, 68 S.Ct. 111, 92 L. Ed. 387, which, under substantially the same circumstances and on the basis of a Virginia statute similar to § 199(1), held the Neirbo rule applied and venue objections were therefore waived. Judge Parker's opinion analogized the circumstances of that case to decisions upholding the applicability of Neirbo to defendants served under nonresident motorist statutes and stated in 163 F.2d at 204:

"There is no reason for any distinction between express and implied consent, however, when it comes to the waiver of venue. If the doing of business can be held to furnish the basis of consent with respect to suit in the courts of the state, there is no reason why it should not be equally efficacious with respect to furnishing the basis of consent to suit in the federal courts. If the view be taken that the consent is wholly fictitious, there is no reason why the fiction should not serve as well in one case as in the other." Emphasis added.

Strangely, Knott appears to be the only decision to have squarely considered the applicability of Neirbo to a "consent" implied from a statute similar to § 199 (1). But Knott was decided prior to Olberding, which is concerned chiefly with distinguishing just such a fictitious from an actual consent.³ Of course, valid service under § 199(1) may require a greater amount or a different quality of activity by a defendant in Alabama than does service under a nonresident motorist statute. But this is not to say that a defendant who may be served under § 199(1) has actually consented to be sued here any more than has a motorist operating a vehicle in Alabama, and there is nothing in either Neirbo or Olberding to indicate that the amount or nature of activity alone is pertinent. There was found, moreover, no case⁴ which purports to limit the venue considerations of Olberding to only nonresident motorist statutes, and to attempt to do so, it is believed, would grossly ignore the rationale of that decision.

Finally, Mitchell v. Thome, 40 CCH Lab. Cas. Par. 66.604 (E.D.Tenn. ...