Martinez v. Phillips Petroleum Company

• Decision Date: 11 April 1968
• Docket Number: Civ. No. 4-66-8.
• Citation: 283 F. Supp. 514
• Parties: Jack MARTINEZ et al., Plaintiffs, v. PHILLIPS PETROLEUM COMPANY, a Delaware corporation, Defendants.
• Court: U.S. District Court — District of Idaho

283 F. Supp. 514

Jack MARTINEZ et al., Plaintiffs, v. PHILLIPS PETROLEUM COMPANY, a Delaware corporation, Defendants.

Civ. No. 4-66-8.

United States District Court D. Idaho, E. D.

April 11, 1968.

COPYRIGHT MATERIAL OMITTED

McClenahan & Greenfield, Boise, Idaho, for plaintiffs.

Merrill & Merrill, Wesley F. Merrill, Pocatello, Idaho, Bogle, Gates, Dobrin, Wakefield & Long, J. Tyler Hull, Dustin C. McCreary, Seattle, Wash., for defendant.

MEMORANDUM DECISION

McNICHOLS, District Judge.

This is an action for damages brought by Jack Martinez and Joe Talbot on behalf of themselves and on behalf of the 106 consenting plaintiffs similarly situated, as plaintiffs, against their employer, Phillips Petroleum Company, as defendant. The action is for overtime compensation allegedly owing to plaintiffs as a result of their employment by defendant under a contract between defendant and the United States Atomic Energy Commission.

The complaint, which consists of two counts, alleges two causes of action. Briefly, Count One alleges overtime liability arising under the Fair Labor Standards Act (29 U.S.C. § 217) because of defendant's alleged failure to pay for hours worked in excess of forty per week and for liquidated damages, costs, interest and attorneys' fees. (29 U.S.C. § 216(b).) Count Two alleges overtime liability arising under the Eight-hour Law (40 U.S.C. §§ 321-326) because of defendant's alleged failure to pay for hours worked in excess of eight per day.

Federal jurisdiction is invoked under Section 216(b) of the Fair Labor Standards Act which confers original jurisdiction on all federal and state courts to adjudicate actions to recover unpaid overtime compensation required by said Act. Because both causes of action arise from the same employment and same facts and circumstances, this Court, having primary jurisdiction over plaintiffs' claim under the Fair Labor Standards Act, also has an incidental or pendent jurisdiction to adjudicate the issues raised in Count Two of the Complaint. As a matter of fact, defendant does not, as to Count Two, contest the jurisdiction of the Court based upon the jurisdictional amount required by 28 U.S.C. § 1331, but does contest jurisdiction of the Court over the subject matter of this action and issues existent thereon as will be more fully detailed later.

This matter is submitted for determination on the merits. All issues are raised in the Complaint and Answer. However, the issues are, by agreement, limited to those dealing with the liability of the defendant. In the event the liability question or questions are determined adversely to the defendant, and the Court finds plaintiffs are entitled to recover damages, the parties have reserved the right to raise any and all issues relating to damages or the amount thereof in a subsequent proceeding. An agreed statement of facts was substituted for the taking of formal evidence. Briefs and reply briefs have been filed by the parties and carefully considered by the Court.

The Court adopts as Findings of Fact the "Admitted Facts" as set out in the pre-trial order filed herein on April 21, 1967, beginning with paragraph III, at page 5 thereof, which admitted facts are, by reference made a part hereof as though fully set forth herein. A generalization of these underlying facts will, it is felt, lead to a clearer understanding of the Court's determination of the questions submitted.

At all times material to this action, defendant was under a contract with the United States Atomic Energy Commission (hereinafter called "AEC") to perform certain functions for the AEC in conjunction with the National Reactor Testing Station (hereinafter called "NRTS") located near Idaho Falls, Idaho. Commencing on various dates under a subsequent modification of the contract, executed September 1, 1953, defendant provided until June 30, 1966, certain services which could be characterized as housekeeping services for the AEC at and in conjunction with the NRTS. However, the contract did not cover all housekeeping services at or in conjunction with the NRTS. Subsequently, completely renegotiated, rewritten agreements (modifications) between defendant and the AEC, pursuant to which defendant undertook to perform certain services, together with other functions, were executed on or about March 27, 1957, and September 29, 1961. Following June 30, 1966, defendant has not had a contract with the AEC under which defendant performs "housekeeping" services at or in conjunction with the NRTS.

Included in the "housekeeping" services was the operation of a bus transportation system, for the purpose of transporting the NRTS employees working at the site to and from work, and also transporting mail and freight to and from the site.

Initially, the Lost Rivers Transportation Company (hereinafter called "Lost Rivers") operated the bus transportation system pursuant to a contract with the AEC which became effective May 2, 1951 and terminated June 30, 1952. In the spring of 1952, the contract was extended to 1956. This contract was modified numerous times until it was terminated September 30, 1953.

In early 1953, the Idaho Operations Office of the AEC had under consideration the question of consolidation under a single contractor certain functions being performed by several contractors or the AEC itself. The consolidation considered would include (a) the Materials Testing Reactor operated by Phillips; (b) the Chemical Processing Plant operated by American Cyanamid Company, (c) central shops and maintenance services previously performed by National Industrial Maintenance Co., but in 1953 being performed by Lost Rivers under an interim agreement with the AEC; (d) the bus transportation system operated by Lost Rivers; (e) the warehousing and procurement, central library and document control, and reproduction services being performed by AEC personnel. Concluding that the consolidation of these activities would achieve a more economical program, the AEC invited American Cyanamid Company and Phillips to submit proposals for the projected consolidated operation.

Phillips was selected to be the contractor for the consolidated functions, and the Phillips-AEC contract which covered the Materials Testing Reactor, was renegotiated and rewritten on September 1, 1953 so as to include the consolidated functions.

The AEC-owned and leased buses which had been utilized by Lost Rivers were continued in use by Phillips and a number of real estate leases for parking lots, pickup stations, etc. were formally assigned by Lost Rivers to Phillips. The Lost Rivers Project Manager, Howard A. Davis, and substantially all of his staff, including drivers, transferred to Phillips. Phillips commenced operating the transportation system on October 1, 1953, and the Lost Rivers-AEC contract was terminated effective September 30, 1953. Phillips continued to operate the transportation system through June 30, 1966.

Each of the plaintiffs was, at one time or another following April 14, 1960, employed as a bus driver by defendant Phillips.

As mentioned above, the plaintiffs launch a two-pronged attack under Count One and Count Two of the Complaint. For the purpose of this decision, the Court will firstly dispose of Count Two.

COUNT TWO

Under Count Two of the Complaint, plaintiffs allege that they were employed by defendant for work days in excess of eight hours but that defendant, in violation of the Eight-hour Law (40 U.S.C. §§ 321-326), failed to compensate them for such excess time at the rate of one and one-half times their regular rate of pay. Under Count Two, plaintiffs allege that as a result of defendant's alleged violation of the Eight-hour Law, the sum of at least $300,000 is due and owing to them, and demand judgment for all sums which may be found owing to them, together with interest and costs.

The parties stipulate that nine issues of law arise under Count Two of the Complaint, which are numbered 8 through 16, inclusive. Issues 8 and 9 read as follows:

"8. Does the court have jurisdiction over the subject matter of Count Two of this action?"

"9. Have plaintiffs stated a claim upon which relief can be granted?"

Defendant takes the position that the Court does not have jurisdiction over the subject matter of Count Two of plaintiffs' action and that plaintiffs have failed to state a claim upon which relief can be granted because (1) the Eight-hour Law does not authorize or provide employees with a right to action against their employer for alleged violations thereof; and (2) plaintiffs have no right to bring this action as third party beneficiaries of either the AEC-Phillips contract or the collective bargaining agreement between Amalgamated Division 1517 (a labor union) and Phillips.

The plaintiffs contend that the Court does have jurisdiction over the subject matter of Count Two and that they have stated a claim upon which relief can be granted because (1) their right to bring this action is necessarily implied in the Eight-hour Statute, (2) they have the right to bring this action as third party beneficiaries of the Phillips-AEC contract, and (3) the provisions of the Eight-hour Law form a part of the collective bargaining agreement between Phillips and Amalgamated Division 1517, by operation of law, and consequently, plaintiffs have the right to bring this action as third party beneficiaries of that contract and jurisdiction is conferred upon this Court by reason of § 301 of the Labor-Management Relations Act of 1947, as amended (29 U.S.C. § 185).

Turning to the first question, i. e., whether or not plaintiffs have standing to sue under the Eight-hour Law, it is found that no controlling authority for either position has been presented to this Court. The scant case law that is provided only shows that there is a split of authority as to the question involved. Only two federal cases have been cited by the parties which deal with the precise question involved. Veader v. Bay State...