Jackson v. Northwest Airlines

• Decision Date: 09 October 1947
• Docket Number: 939,1024.,982,972,949,1005,Civ. No. 760
• Citation: 75 F. Supp. 32
• Parties: JACKSON v. NORTHWEST AIRLINES, Inc., et al. MURPHY et al. v. NORTHWEST AIRLINES, Inc. (six cases).
• Court: U.S. District Court — District of Minnesota

75 F. Supp. 32

JACKSON v. NORTHWEST AIRLINES, Inc., et al.

MURPHY et al. v. NORTHWEST AIRLINES, Inc. (six cases).

Civ. Nos. 760, 939, 949, 972, 982, 1005, 1024.

District Court, D. Minnesota, Third Division.

October 9, 1947.

A. H. Markert and John A. Burns, both of St. Paul, Minn. for plaintiffs in Civ.A. No. 760.

Mark H. Gehan, of St. Paul, Minn. for plaintiffs in all actions except Civ.A.No. 760.

Charles S. Kidder, of St. Paul, Minn. (Orr, Stark & Kidder, of St. Paul, Minn., of counsel), for intervener in Civ.A.No.760.

Victor E. Anderson, U. S. Atty., and Linus J. Hammond, Asst. U. S. Atty., both of St. Paul, Minn., for defendant.

Michael J. Doherty and Pierce Butler, both of St. Paul, Minn. (Doherty, Rumble, Butler, Sullivan & Mitchell, of St. Paul, Minn., of counsel), for amicus curiæ, Air Transport Ass'n of America.

NORDBYE, District Judge.

The above proceedings are before the Court to determine the existence of interstate commerce and if plaintiffs were producing goods for interstate commerce within the meaning of the Fair Labor Standards Act of 1938, as amended, 29 U.S.C.A. § 201 et seq.

Plaintiffs are seeking to recover for overtime pursuant to the provisions of the Fair Labor Standards Act of 1938, as amended, 29 U.S.C.A. § 201 et seq., hereinafter sometimes called the Wage and Hour Act. This Court previously has determined that the plaintiffs are not exempted from the Act under Section 13(a) (4) thereof. Jackson et al. v. Northwest Airlines et al., D. C. 1947, 70 F.Supp. 501. But defendant now presses the question, Were plaintiffs engaged in commerce or in the production of goods for commerce? Defendant also disputes that it was, in law, the employer of these plaintiffs. After stipulation by the parties, the Court again has agreed to hear and determine these general issues in order to speed the final determination of these claims. Although the statement of facts heretofore made in 70 F.Supp. 501 is hereby incorporated herein by reference, the following facts permit a better understanding of the instant problem.

Defendant was incorporated in 1934 as a commercial air carrier, and from that time until January, 1942, it was engaged exclusively in operating a commercial airline from Chicago and the Twin Cities to the northwestern United States and to part of Canada. But with the advent of war, defendant was requested by the United States government to perform various projects necessary to the war effort. Pursuant to the Government's request, defendant in February, 1942, began modifying in St. Paul, Minnesota, army planes which were manufactured on the production lines of various companies and which, together with military planes from storage and parking fields, or from combat zones, were flown to defendant for various structural or mechanical changes, alterations, or additions in the planes or the military equipment thereon.

All the plaintiffs in this proceeding were employed on the modification project, although some of those whose cases are being determined by the instant decision performed mechanical work, some were guards, and some were janitors. Plaintiffs were paid overtime under the Railway Labor Act, 45 U.S.C.A. § 151 et seq., at the rate of time and one-half for all hours worked in excess of 48 hours per week. In this proceeding they are seeking overtime under the Wage and Hour Act for the eight hours worked over 40 hours per week and for which they were not paid under the Railway Labor Act. They also seek an equal amount in liquidated damages under Section 16(b) of the Wage and Hour Act, 29 U.S.C.A. § 216(b). They contend that they were producing goods for commerce within the meaning of Section 7 of the Act.

Section 7(a) of the Act, 29 U.S.C.A. § 207(a), provides:

"No employer shall, except as otherwise provided in this section, employ any of his employees who is engaged in commerce or in the production of goods for commerce —

* * * * * *

"(3) for a workweek longer than forty hours after the expiration of the second year from such date, unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed."

Defendant contends that plaintiffs were not producing goods for commerce as required by Section 7 because (1) the planes were transported for war purposes by the Government and (2) the planes were produced for the ultimate consumer (the Government) and therefore were not "goods" in commerce within the meaning of the Wage and Hour Act. Defendant also contends that the Government, not defendant, was in law the employer of the plaintiffs. Section 3(d) provides: "`Employer' includes any person acting directly or indirectly in the interest of an employer in relation to an employee but shall not include th United States or any State * * *." These defenses raise the present issues of the instant proceedings. The following facts aid in their determination.

Defendant commenced its modification activities pursuant to a letter of intent from the Government with respect to the planes then received. It had no specific contract until later. The work was done at all times at Holman Municipal Airport (St. Paul) where, prior to the war, defendant maintained repair and overhaul shops for its own planes and also the general offices for the airlines. Defendant assigned some of its own commercial airlines workers to the modification work when the first planes arrived, and their work was supervised by defendant's regular supervisory staff. But as the bombers continued to arrive for modification, defendant required more help, and through its own facilities and activity, hired additional persons to work on the planes. When the modification project began, approximately 200 persons were employed in St. Paul, but when the project ceased, between 5,500 and 6,000 were employed on the project in defendant's name. Defendant elevated some of the mechanical help who had performed modification work on defendant's own planes before the war to supervisory jobs in modification work on bombers.

At first defendant used its own raw materials, supplies, and equipment to perform the work. And the work was originally performed in defendant's hangar and outside immediately adjacent to the hangar. But the project's growth necessitated more space, and in early 1942 the Government began to obtain some materials for the work and to obtain more sheltered working space. Upon completion of the so-called "Riverside" hangars, which were constructed at government expense, the defendant performed some of the work in those hangars and also in the National Guard Air Squadron's Hangar, which had been obtained for the project's use. Small special purpose hangars also were constructed at government expense on the field so that even more work could be carried on simultaneously.

Defendant did not maintain its commercial airline repair shops at the airport throughout the modification project's duration. They were moved to another location in 1944. Its general offices were moved prior to that time. About September, 1942, defendant's commercial airlines planes ceased to operate into the St. Paul Airport.

When the modification project commenced, and during part of its existence, some employees worked on defendant's engines as well as on modification work, as time permitted. And after defendant's commercial airlines shops were moved from the project, none of its commercial airline engine work appears to have been done there. Defendant collected $41,000,000 from the Government for modification work performed from the beginning to the end of the project, exclusive of some materials and the fees for operating the project. Defendant was a cost-plus-a-fee contractor. The Government deposited money for its payroll, and other needs of the company, and this money was the money upon which defendant eventually drew. Approximately 3,500 bomber planes were modified at the project during its operation, and the work performed at the modification center was substantially the same after defendant's airline work was moved as before it moved. The Army set up rigid protection rules for the project, and the rules were enforced.

All the employees of the modification center originally were hired by defendant's supervisory employees, but subsequently a personnel department was established and hired all employees. The modification employees were hired for modification work. The modification center employees, like those on other projects, were on the same payroll as defendant's commercial airline employees. They were paid by Northwest Airlines checks. Seniority rights prevailed throughout the company's activities, and many employees exercised those rights by transferring to or from another company branch, including the commercial airlines. The modification project employees were represented by the same union which represented the airline employees. The book work for the modification project was handled along with the rest of the accounts of defendant by its regular office staff, supplemented according to the amount of work to be done.

At various times defendant attempted to segregate the airline and modification project costs, but contends that it was unable to do so accurately to its own satisfaction. The accounts of its commercial airlines and the project apparently were so merged and difficult to separate that they could not be separated accurately, in so far as defendant was concerned. The bombers were brought to and taken from the modification project by army pilots.

I. Was Defendant or the United States Government the Plaintiffs' Employer in Law?

Defendant, not the United States Government, was the employer of each plaintiff. Defendant was not the agent of the Government in the employee sense. It was an independent contractor. As noted in this Court's previous decision in this case (70 F.Supp. 501), defendant was, in effect,...