Gulf King Shrimp Company v. Wirtz

• Decision Date: 10 February 1969
• Docket Number: No. 25695.,25695.
• Citation: 407 F.2d 508
• Parties: GULF KING SHRIMP COMPANY, Appellant, v. W. Willard WIRTZ, Secretary of Labor, United States Department of Labor, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

407 F.2d 508 (1969)

GULF KING SHRIMP COMPANY, Appellant, v. W. Willard WIRTZ, Secretary of Labor, United States Department of Labor, Appellee.

No. 25695.

United States Court of Appeals Fifth Circuit.

February 10, 1969.

Edmond J. Ford, Jr., Corpus Christi, Tex., for appellant.

Bessie Margolin, Assoc. Sol., Dept. of Labor, Robert E. Nagle, Atty., Dept. of Labor, Carin Ann Clauss, Atty., Dept. of Labor, Washington, D. C., for appellee.

Before GEWIN, PHILLIPS^* and GOLDBERG, Circuit Judges.

GOLDBERG, Circuit Judge:

We consider here the propriety of an injunction issued in connection with the employment of the underaged in the beheading of shrimp. The injunction arises from a suit brought by the Secretary of Labor against appellant, Gulf King Shrimp Company (Gulf King), for alleged violations of the Fair Labor Standards Act, 29 U.S.C.A. § 201 et seq. At the conclusion of the trial, the district court made findings of fact and conclusions of law which found that Gulf King had violated the prohibition against the employment of "oppressive child labor,"¹ had failed to maintain adequate employment records,² and had in some instances not complied with the minimum wage requirements of the Act.³ The Court enjoined Gulf King from violating the child labor and record-keeping provisions of the Act, but refrained from enjoining future minimum wage violations in the conviction that proper compliance with the record-keeping provisions would insure the payment of the minimum wage. Gulf King then perfected this appeal. Concluding as we do that the injunctive order has factual and legal impregnability, we affirm.

Gulf King is the largest shrimp processor at Conn Harbor, Aransas Pass, Texas. It processes, packages and ships shrimp to points outside of Texas, and is therefore within the coverage of the Fair Labor Standards Act.⁴

The shrimp which Gulf King uses in its processing operation come from shrimp boats that ply the waters of the Gulf of Mexico and Corpus Christi Bay. When the shrimp boats dock, local residents, often in family groups, present themselves at Gulf King's business establishment and take their places at a large table in the "heading shed." Here shrimp that have been carried by conveyor belt from the boats to the shed are dumped on a beheading table where workers decapitate them by hand. The body parts go into a trough running down the center of the table and are flumed in chilled water into a basket; then boxed, iced, and sent to market. The heads are put into fourteen-quart buckets, and when a bucket is filled, the worker takes it to a "counter" or "puncher" who credits the header for his work by punching a hole in a card with the worker's name on it. The worker then returns to the table and his beheading. For each bucket he brings to the "puncher," the worker receives an additional credit. At the end of the week his card is examined and he is paid on a per bucket basis.

Gulf King employs about 100 headers at a time during its peak season. While each header is supposed to have his own "heading card," the district court found that it was not unusual for several members of a single family to work under only one card. The practice is significant. It not only placed Gulf King in danger of violating the record-keeping requirements of the Act,⁵ but on numerous occasions it permitted minors under the age of sixteen to work on Gulf King's premises without a formal employment agreement and without appearing on the company payroll. By working on the card of a parent or older brother or sister, these minors hoped to do the same work as other headers, but to remain anonymous. Their buckets, or the buckets which they helped to fill, would be taken to the puncher only by an adult cardholder. Later the cardholder (and perhaps through him the minor) would receive payment in the amount of credit accumulated on the heading card. While on occasion some of these minors were discovered and expelled from the premises by Gulf King employees, the district court found that many of them remained on the job throughout the 1964 and 1965 seasons. The court also found that in one instance a minor only fourteen years of age was issued a card in his own name and carried on Gulf King's payroll.

In 1962, 1963 and 1965, Gulf King was informed by the Department of Labor that its method of keeping records was inadequate. The district court also found that on two of these occasions Gulf King was notified that minors had been discovered working on its premises. While the defendant had repeatedly assured the Labor Department investigator that any violations would be corrected, the court concluded that compliance with the Act had not been completely successful and that an injunction against further child labor and record-keeping violations would be appropriate. Accordingly an injunction was issued pursuant to Section 17 of the Act. 29 U.S.C.A. § 217.

On this appeal Gulf King does not contest the fact that minors under the age of sixteen did in fact work in its heading shed.⁶ However, appellant does contend most vigorously that these minors were not "employees" as that term is defined in the Fair Labor Standards Act. Alternatively, appellant argues that even if they were employees within the meaning of the Act, nonetheless the district court's conclusion in this regard was defective because it failed to make certain "essential" findings of fact. Appellant also maintains that the injunction should not have issued even if there were violations of the Act in 1964 and 1965 because there was no evidence that such violations would continue in the future.

We direct our attention first to appellant's contention that the minors working in its heading shed at Conn Harbor were not "employees" within the meaning and intent of the Fair Labor Standards Act. Appellant recognizes that the Act defines an employee as including "any individual employed by an employer," 29 U.S.C.A. § 203(e) and it recognizes that "employ" is defined as including "to suffer or permit to work." 29 U.S.C.A. § 203(g). Appellant also concedes that in determining who is and who is not an employee under the Act, "common law employee categories * * * are not of controlling significance." Walling v. Portland Terminal Co., 1947, 330 U.S. 148, 150, 67 S.Ct. 639, 91 L.Ed. 809, 812. However, appellant maintains that to "suffer or permit" connotes a consciousness of the employment relationship and a condoning thereof. It argues that an employer must have actual knowledge that another is working for him in order for that other to be an "employee" under the Act.

The difficulty with appellant's argument is that it proves too much. It places the employment relationship, and through it the very coverage of the Act itself, at the mercy of an employer's subjective understanding. If records have not been kept, and if an employer has been discreetly aloof from those who have served his interest, he may under this argument disown knowledge of them and escape the Act. We cannot accept such a proposition. Employment under the Act is as much a matter of circumstance as it is of consensual agreement. A relationship may exist between two parties whether or not either or both of them give it express recognition. As said by the Supreme Court in Goldberg v. Whitaker House Co-op., 1961, 366 U.S. 28, 33, 81 S.Ct. 933, 936, 6 L.Ed.2d 100, 103: "`economic reality' rather than `technical concepts' is * * * the test of employment." "The determination of the employment relationship does not depend" upon "isolated factors but rather upon the circumstances of the whole activity." Rutherford Food Corp. v. McComb, 1947, 331 U.S. 722, 730, 67 S.Ct. 1473, 1477, 91 L.Ed. 1772, 1778.

We begin with the precept enunciated in Lenroot v. Interstate Bakeries Corporation, 8 Cir. 1945, 146 F.2d 325, 328, that a corporation "must be held strictly accountable for the child labor violations of subordinates." As the court went on to say, relying on the words of Judge Cardozo in People ex rel. Price v. Sheffield Farms-Slawson-Decker Co., 1918, 225 N.Y. 25, 121 N.E. 474, 476:

"* * * the mandate of the statute is directed to the employer and `he may not escape it by delegating it to others.\' The `duty rests on the employer to inquire into the conditions prevailing in his business. He does not rid himself of that duty because the extent of the business may preclude his personal supervision, and compel reliance on subordinates. He must then stand or fall with those whom he selects to act for him. * * the duty must be held personal, or we nullify the statute * * *.\' `The cases must be rare where prohibited work can be done within the plant, and knowledge or the consequences of knowledge avoided\' (ibid)." 146 F.2d at 328.

As the Lenroot case indicates, an employer's knowledge is measured in accordance with his "duty * * * to inquire into the conditions prevailing in his business." We are told that "The cases must be rare where prohibited work can be done within the plant, and knowledge or the consequences of knowledge avoided." With these principles in mind we need only inquire whether the circumstances of the present case were such that the employer either had knowledge that minors were illegally in his employ, or else had "the opportunity through reasonable diligence to acquire knowledge." People ex rel. Price v. Sheffield Farms-Slawson-Decker Co., supra, 121 N.E. at 476.

There are a number of circumstances discussed in the district court's findings of fact which support the conclusion that Gulf King had the opportunity to acquire knowledge of the minors who worked for it. In the first place, as found by the court, all work done by the minors was done on the premises. This work was directed by Mr. James Bogan, manager of Gulf King's packing house, and supervisor of the heading shed. Bogan testified that he knew it was a common practice for more than one member of a family to "head" shrimp under one card. Despite the fact that...