Hodgson v. Royal Crown Bottling Company

• Decision Date: 29 December 1970
• Docket Number: No. EC 69-29-S.,EC 69-29-S.
• Citation: 324 F. Supp. 342
• Parties: James D. HODGSON, Secretary of Labor, United States Department of Labor (Substituted as Plaintiff for George P. Shultz, Resigned), Plaintiff, v. ROYAL CROWN BOTTLING COMPANY, Inc., and Ralph L. Webb, Individually, Defendants.
• Court: U.S. District Court — Northern District of Mississippi

324 F. Supp. 342

James D. HODGSON, Secretary of Labor, United States Department of Labor (Substituted as Plaintiff for George P. Shultz, Resigned), Plaintiff, v. ROYAL CROWN BOTTLING COMPANY, Inc., and Ralph L. Webb, Individually, Defendants.

No. EC 69-29-S.

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

December 29, 1970.

Beverley R. Worrell, Regional Sol., U. S. Dept. of Labor, Atlanta, Ga., for plaintiff.

W. J. Threadgill of Threadgill & Smith, Columbus, Miss., for defendants.

MEMORANDUM OPINION

ORMA R. SMITH, District Judge.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

This action came on for trial on June 2, 1970, before the court sitting without a jury. The court has heard the evidence, reviewed the documents received in evidence at the trial, considered arguments and briefs of counsel and is now fully advised in the premises.

The subject action was brought by plaintiff, Secretary of Labor (hereinafter referred to as the Secretary), to enjoin defendant, Royal Crown Bottling Company, Inc. (hereinafter referred to as Royal Crown), and Ralph W. Webb, individually, from violating the provisions of Sections 15(a) (2) and 15(a) (5) of the Fair Labor Standards Act of 1938, as amended (29 U.S.C.A. § 201, et seq. (hereinafter referred to as the Act)), and to restrain defendants from withholding payment of minimum wages and overtime compensation due their employees under the Act.

Royal Crown is a Mississippi corporation organized in 1964. Prior to the incorporation of Royal Crown, its organizers and stockholders operated the business as a partnership. The partnership and its successor Royal Crown have been and are engaged in the production and distribution of soft drinks.

Royal Crown has two plants. One plant is located at Columbus, Mississippi. There are four soft drink routes operated out of this plant. Three of the routes are entirely within the State of Mississippi. The fourth route extends across the state line into the State of Alabama. The Alabama route produces a substantial part of the gross revenue of the Columbus plant. Before reaching the state line the Alabama route services a few customers located in Mississippi. The Mississippi customers generate only a small percentage of the gross revenue on the Alabama route.

Royal Crown's other plant is situated at Tupelo, Mississippi. All routes originating at the Tupelo plant serve only Mississippi customers, although two of the routes cross the state line in doing so.

Prior to October 25, 1968, Royal Crown operated a separate bottling plant and distribution center at each location. Since that date there have been no bottling operations at the Columbus plant and the Tupelo plant has bottled the drinks which have been sold through both the Tupelo and Columbus distribution centers.

During the period of time pertinent to this action when Royal Crown operated a bottling plant at both locations, Columbus acquired sugar from points outside the state, and Tupelo acquired new bottles and cases from outside the state. The sugar, bottles and cases were utilized by both plants in the bottling of drinks, transfers being made between the plants as the goods were needed.

During the pertinent period, the sales and distribution routes of each plant were in charge of driver-salesmen, who employed helpers to assist in the work. The helpers, in addition to other duties hereinafter mentioned, picked up used bottles and cases on the routes served by them and these were returned to the plant. In its bottling operation these used bottles and cases were used in the bottling of drinks. The bottles and cases were utilized without discrimination, and became a part of the drinks sold in the State of Alabama.

The Secretary of Labor, approximately ten years ago, brought an action similar to the one involved in the action sub judice against the partnership.¹ The case was decided adversely to the Secretary, and his appeal to the Fifth Circuit was later dismissed by him.² District Judge Clayton's written opinion dealt with the sole question of whether the helpers on the Alabama route out of the Columbus plant were employees of the driver-salesman, or Royal Crown. The oral opinion rendered from the bench dealt with the other issues involved in the case. Defendants contend that the final judgment rendered by this court in that action constitutes res judicata and bars the prosecution of the case sub judice.

The court will subsequently adopt detailed findings of fact and conclusions of law which will dispose of all issues in the action. At this point, however, the court will discuss principles of law applicable to the facts found to exist in the case.

One paramount issue is whether the employees of defendants at their Tupelo plant were covered by the Act. Defendants received new bottles, cases, and other goods (hereinafter referred to as goods) from other states. These goods were delivered to defendants' plant by motor carriers, unloaded from the carriers' vehicles and placed on the unloading dock, or on the floor near the door of the warehouse. There is some evidence that employees of defendants, other than those designated or authorized to do so, assisted in moving the goods from the vehicle to the plant's unloading dock. There is a factual dispute on this issue, but defendants concede that employees assisting in removing the goods from the vehicles to the unloading dock are covered under the Act. The parties differ, however, on the legal issue of whether employees who move or assist in moving the goods from the place of unloading to the warehouse space are covered under the Act. Defendants contend that the interstate journey of the goods ended when the goods came to rest on the unloading dock. Plaintiff contends that the interstate journey continued until the goods came to rest in the storage area, and, as to new bottles and cases purchased for the use of the Columbus plant, the journey continued until the goods were placed in the Columbus warehouse.

The parties have submitted numerous authorities on the point. The court is persuaded that the plaintiffs' contention is the correct interpretation of the law, and is supported by the greater weight of authorities. Walling v. Jacksonville Paper Co., 317 U.S. 564, 63 S.Ct. 332, 335, 87 L.Ed. 460, 466, where the court said:

"* * * No ritual of placing goods in a warehouse can be allowed to defeat that purpose. The entry of the goods into the warehouse interrupts but does not necessarily terminate their interstate journey. A temporary pause in their transit does not mean that they are no longer `in commerce' within the meaning of the Act. * * *"

See Mitchell v. Royal Baking Co., 219 F.2d 532 (5 Cir. 1955); Mitchell v. Sunshine Dept. Stores, Inc., 292 F.2d 645 (5 Cir. 1961); Nunn's Battery & Electric Co. v. Goldberg, 298 F.2d 516 (5 Cir. 1962); Wirtz v. Standard Container and Paper Co., 389 F.2d 134 (5 Cir. 1967); Sucrs. De A. Mayol & Co. v. Mitchell, 280 F.2d 477 (1 Cir. 1960); Shoemake v. Gainesville Nehi Bottling Co., Inc., 55 CCH Lab.Cas. Section 31,898, (N.D.Ga. 1967); Stewart-Jordan Distributing Co. v. Tobin, 210 F.2d 427 (5 Cir. 1954); Mitchell v. C & P Shoe Corp., 286 F.2d 109 (5 Cir. 1960).

Thus, all employees of defendants were covered employees who assisted in unloading goods received from an out-of-state source and moving such goods to the storage area to be comingled with the stock on hand. In the case of goods received at one plant to be used at the other the interstate journey continued until the goods came to rest in the warehouse of the plant to which they were removed.

The helpers at the Tupelo plant assist the driver-salesmen on the routes operating therefrom. All sales are made in the State of Mississippi. These helpers pick up used bottles and cases and return them to the plant where they are used again in the bottling operation. A portion of the used bottles and cases are incorporated into the finished product which is later sold on the Alabama route out of the Columbus plant. The helpers on the Tupelo routes are, therefore, engaged in the production of goods for commerce and covered under the Minimum Wage Provision of the Act. See Wirtz v. Pepsi Cola Bottling Company of Augusta, 342 F.2d 820 (5 Cir. 1965).

Another paramount issue is whether the helpers for the driver-salesmen are employees of defendants. Defendants contend, especially with reference to helpers on the Alabama route, that the helpers are not their employees, but employees of the driver-salesmen. Defendants rely principally on Judge Clayton's opinion in the former suit, Goldberg v. Webb, supra, and a Fifth Circuit decision, Wirtz v. Dr. Pepper Bottling Company of Atlanta, 374 F.2d 5 (5 Cir. 1967). Judge Clayton held in Goldberg v. Webb that the helper on the Alabama route was an employee of the driver-salesman, because "* * * Such helper is 1) not hired by defendants, 2) not fired by defendants, 3) not controlled by defendants, 4) not required by defendants, and 5) not paid by defendants". Judge Clayton also found that the helper assisted in loading filled drink bottles on the trucks and unloading empties on the return. The fair inference from the proven facts in the case sub judice is that the defendants add to the guaranteed minimum weekly wage of the driver-salesman a sufficient amount to take care of the weekly wage of the helper. The helper returns to the plant on Saturday morning to wash and clean the truck, and on occasions while there carries cases of drinks from the warehouse to vehicles of customers who have come to the plant for supplies of soft drinks. The defendants' bookkeeper computes the helper's wages and furnishes a pay envelope for the helper to be delivered to him by the driver-salesman. The driver-salesman does not keep any books, has no federal employer's identification number and makes no federal or state tax return, except income tax returns. The court is persuaded that there is a different factual situation...