Kennedy v. Silas Mason Co

Decision Date17 May 1948
Docket NumberNo. 590,590
Citation334 U.S. 249,92 L.Ed. 1347,68 S.Ct. 1031
PartiesKENNEDY et al. v. SILAS MASON CO
CourtU.S. Supreme Court

Mr. Leonard Lloyd Lockard, of Shreveport, La., for petitioners.

[Argument of Counsel from page 250 intentionally omitted] Messrs. William L. Marbury, of Baltimore, Md., and Charles D. Egan, of Shreveport, La., for respondents.

Mr. Justice JACKSON delivered the opinion of the Court.

This case involves questions as to the application of the overtime provisions of the Fair Labor Standards Act1 to certain persons who worked in a government-owned plant in which respondent produced munitions under a cost-plus-fixed-fee contract with the War Department. It involves such subsidiary issues as whether the plaintiffs were employees of the Government or of the private contractor, whether munitions produced for shipment across state lines in war use are produced for 'commerce'2 and whether they are 'goods' 3 within the meaning of the Act. Substantial claims of petitioners may be denied or large sums added to the cost of the war by the answers to these questions, and many cases other than this will be controlled by its decision.

The manner in which the case has thus far developed raises the question whether as a matter of good judicial administration this Court should attempt to decide these far-reaching issues on this record.

No one questions that, taking its allegations at their face value, the complaint in this case states a cause of action under the Fair Labor Standards Act. Summary judm ent has gone against the plaintiffs because, by affidavit and exhibits, the allegations have been found unsustainable. The defendant filed a motion for summary judgment under Rule 56 of the Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c,4 'on the ground that the defendant is entitled to judgment as a matter of law.' The motion, so far as the Fair Labor Standards Act was concerned, was based on an affidavit 'which states facts showing that as a matter of law neither complainants nor defendant were covered' by the Act in that neither 'were engaged in commerce or in the production of goods for commerce.' Made part of the affidavit by reference were defendant's construction and operation contract with the Government and some 22 supplements or change orders covering nearly 200 pages of the record. The complainants then filed a supplemental complaint which added by reference all regulations and interpretative bulletins of the Department of Labor and Administrator of the Fair Labor Standards Act clarifying and explaining it. And, as against defendant's affidavit and exhibits the plaintiffs as recited in the District Court's opinion, offered by reference affidavits of three former employees of the contractor showing the customs of payment and operation as bearing on the issue of whether they were government employees of those of the private contractor. The affidavits do not appear in the record, but parts deemed relevant are set out in the court's opinion.

On this basis the District Court first denied summary judgment. 68 F.Supp. 576. It was of the view that the plaintiffs, whatever the forms of the transaction, were in reality employed by the Government and, hence, the Fair Labor Standards Act by its own terms did not cover them. But it held that they were covered by § 4(b) of the Act of July 2, 1940,5 and were entitled to recover overtime under it.

On rehearing, the court concluded, however, that no remedy under this latter Act was available to them in this action as it was not pleaded. Accordingly, it granted summary judgment against them. D.C., 70 F.Supp. 929. The Circuit Court of Appeals, Fifth Circuit, sitting en banc affirmed. 164 F.2d 1016. It held that the plaintiffs were in substance employees of the United States, that munitions were not a part of commerce within the meaning of the Act, and that in any event munitions were not 'goods' within the meaning of the Act. One judge, concurring, did not pass on the question whether petitioners were employees of the Government but held only that munitions were produced for war, not for commerce. One judge dissented on the ground that the whole system 'was designed and operated so that the United States should not be the employer' and considered that munitions produced for transportation to a place outside of the State were produced for commerce and those engaged therein were subject to the Act. The case is here on cerriorari, 333 U.S. 841, 68 S.Ct. 664.

The Silas Mason Company, in a sense, is no more than a nominal defendant, for it is entitled to reimbursement from the Government. The Government, the ultimate party in interest, appears through the Department of Justice in support of the statutory basis for the claims against itself. But it advises us that 'The Department of the Army is of the view that respondent's position has merit for the reasons set forth in the brief filed by respondent. The Army is concerned with the great cost to which the Government will be subjected if the numerous suits akin to this are lost, or even if it must bear the cost of defending them. Furthermore, the Army believest hat the classes of employees involved in these cases were well paid, that they accepted their compensation without complaint or expectation of receiving more until this litigation was commenced sometime after the termination of their employment, and that accordingly there is little equity in the employees' present position.'

Three Acts of Congress require consideration. The plaintiffs and the Government say the Fair Labor Standards Act is controlling. The defendant, the Department of the Army, which handled the transaction, and the District Court consider that the Act of July 2, 1940, controls the liability. But the trial court held it cannot be the basis of adjudication of plaintiffs' claims because no such issue was pleaded and that holding has become the law of the case since there has been no appeal. The plaintiffs pleaded their cause of action also under the Walsh-Healey Public Contracts Act,6 but it was held unavailable to them below and their petition for certiorari to this Court raises no question as to that Act and acquiesces in dropping it from our consideration.

On the question as to who was the employer, on which this case was decided below, the complaint makes a clear, factual and simple allegation. It says that these plaintiffs were employed by the corporate defendant itself. This allegation has been overborne by interpreting the terms of the contracts between that alleged employer and a third party, that is, the Government, which terms may or may not have been known to the employees. There is substantial...

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    ...if the record has not been sufficiently developed to allow for a fully informed decision. Kennedy v. Silas Mason Co., 334 U.S. 249, 256-57, 68 S.Ct. 1031, 1034, 92 L.Ed. 1347 (1948); Anderson v. Hodel, 899 F.2d 766, 770-71 (9th Cir.1990); see also William Schwarzer, Summary Judgment Under t......
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