McComb v. Puerto Rico Tobacco Marketing Co-op. Ass'n

• Decision Date: 07 December 1948
• Docket Number: No. 5106.,5106.
• Citation: 80 F. Supp. 953
• Parties: McCOMB, Administrator of Wage and Hour Division, U. S. Department of Labor, v. PUERTO RICO TOBACCO MARKETING CO-OP. ASS'N.
• Court: U.S. District Court — District of Puerto Rico

80 F. Supp. 953

McCOMB, Administrator of Wage and Hour Division, U. S. Department of Labor, v. PUERTO RICO TOBACCO MARKETING CO-OP. ASS'N.

No. 5106.

United States District Court D. Puerto Rico San Juan Division.

December 7, 1948.

Kenneth P. Montgomery, of Santurce, Puerto Rico, for plaintiff.

E. Martinez Rivera and Luis Blanco Lugo, both of San Juan, Puerto Rico, for defendant.

CHAVEZ, District Judge.

Plaintiff William R. McComb, Administrator of the Wage and Hour Division, United States Department of Labor, brought this action to enjoin defendant, Puerto Rico Tobacco Marketing Cooperative Association, from violating the provisions of Sec. 15(a) (1), 15(a) (2) and 15(a) (5) of the Fair Labor Standards Act of 1938, Title 29 U.S.C.A. § 201 et seq. The defendant denies the alleged violations and contends that by virtue of Secs. 13 (a) (6) and 13(a) (10) Title 29 U.S.C.A. § 213(a) (6) 213 (a) (10), its employees are exempt from the scope of the Act.

The defendant is a farmer's cooperative association which markets tobacco grown by its members. It is incorporated under the laws of Puerto Rico and maintains its principal office in San Juan and operates warehouses and stemmeries for tobacco in nine districts in Puerto Rico. The association has broad general purposes which include: the most effective marketing of tobacco in order to promote the welfare of its members and the prosperity of the tobacco industry, the successful cultivation, harvesting and marketing of tobacco produced both by its own members and by non-members, and the promotion of all activities relating to harvesting and marketing which may benefit its members.

Defendant association is directed by a board of eleven directors which has full authority to act in any appropriate way to promote the ends for which the association was organized.

Active members must market their entire crop of tobacco through the association. Members who fail to do this become inactive members and after three years they can regain active status only by fulfilling the requirements established for new members.

Annually, the defendant has an assembly of all members as well as district assemblies. The members, each of whom has one vote, elect the members of the Board of Directors. Each member is bound by a contract to sell to the Association all of the tobacco produced by him or acquired by him. Furthermore, the terms of this contract are that a sale is made to the defendant and that the association takes absolute title to the tobacco as soon as the tobacco has a potential existence and agrees to resell it. The association is a corporate entity having full and complete power to act without reference, except in yearly elections, to the individuals who are its members.

Each of defendant's plants or warehouses receives tobacco from farmers who are members, sorts, grades, ferments, stems and packs the tobacco for shipment to the United States. It is conceded that the employees are engaged in the production of goods for commerce and are entitled to the minimum wage provided by the Fair Labor Standards Act unless they are exempt by specific provision of law.

There is no question as to the facts, the same being stipulated to by the parties. The Court, however, makes the following additional finding of fact:

The Court finds that the process of fermenting leaf tobacco as described in stipulation of fact No. VI(4) and VI(9) takes from 60 to 120 days and that fermentation produces a chemical change in the tobacco by making it milder and sweeter.

Upon the pleadings and the facts, the issues in this case are as follows:

1. Are defendant's employees engaged in agriculture within the meaning of the Fair Labor Standards Act, and, therefore, exempt from the wage and hour provisions of that Act by virtue of Sec. 13(a) (6) thereof?

2. Are defendant's employees engaged within the area of production in handling, packing, storing, drying or preparing tobacco in its raw or natural state for marketing and therefore exempt from the Wage and Hour Provision of the Act by virtue of Sec. 13(a) (10)?

3. Has defendant violated Sec. 6 of the Fair Labor Standards Act by paying less than the minimum wage of 27¢ per hour to employees entitled to such payment for all hours worked.

4. Has defendant failed to keep records of the hours worked each work day and each work-week by employees in stemming tobacco as required by record-keeping regulations issued pursuant to Sec. 11(c) of the Act.

It is well settled that any one asserting that its employees are exempt from the wage and hour provisions of the Act has the burden of showing affirmatively that they come clearly within an exemption provision. Walling v. General Industries Co., 330 U.S. 545, 67 S.Ct. 883, 91 L.Ed. 1088; Mid-Continent Petroleum Corp. v. Keen, 8 Cir., 157 F.2d 310; Armstrong Co. v. Walling, 1 Cir., 161 F.2d 515; McComb v. Hunt Food Inc., 9 Cir., 167 F.2d 905; and the exemption provision is to be narrowly construed, due regard being accorded the plain language of the Act and the intent of Congress. Phillips, Inc., v. Walling, 324 U.S. 490, 65 S.Ct. 807, 89 L.Ed. 1095, 15 A.L.R. 876; Fleming v. Hawkeye Pearl Button Co., 8 Cir., 113 F.2d 52, 56; Bowie v. Gonzalez, 1 Cir., 117 F.2d 11; Miller Hatcheries v. Boyer, 8 Cir., 131 F. 2d 283; Helena Glendale Ferry Co. v. Walling, 8 Cir., 132 F.2d 616; Schmidtke v. Conesa, 1 Cir., 141 F.2d 634; Walling v. Bay State Dredging & Contracting Co., 1 Cir., 149 F.2d 346, 161 A.L.R. 825, certiorari denied 326 U.S. 760, 66 S.Ct. 140, 90 L.Ed. 457; Walling v. Consumers Co., 7 Cir., 149 F.2d 626; West Kentucky Coal Co. v. Walling, 6 Cir., 153 F.2d 582; Walling v. Friend, supra, 8 Cir., 156 F.2d 429; McComb v. Hunt Foods, Inc., 9 Cir., 167 F.2d 905.

Sec. 13(a) (6) Title 29 U.S.C.A. § 213 (a) (6) provides:

"(a) the provisions of sections 206 and 207 of this Title shall not apply with respect to * * *; or (6) any employee employed in agriculture."

Sec. 3(f), Title 29 U.S.C.A. § 203(f), provides: "`Agriculture' includes farming in all its branches and among other things includes the cultivation and tillage of the soil, dairying, the production, cultivation, growing, and harvesting of any agriculture or horticultural commodities (including commodities defined as agricultural commodities in section 1141j (g) of Title 12), the raising of livestock, bees, furbearing animals, or poultry, and any practices (including any forestry or lumbering operations) performed by a farmer or on a farm as an incident to or in conjunction with such farming operations including preparations for market, delivery to storage or to market or to carriers for transportation to market."

Defendant's employees are not engaged in agriculture within the meaning of Sec. 3(f), Title 29 U.S.C.A. § 203(f) and, therefore, are not exempt under the provisions of Sec. 13(a) (6) of the Act. Walling v. McCracken, County Peach Growers Association, D.C.W.D.Ky., 1943, 50 F.Supp. 900; Bowie v. Gonzalez, 1 Cir., 117 F.2d 11, 18; Lenroot v. Hazlehurst Mercantile Co., D.C.S.D.Miss., 59 F.Supp. 595; Walling v. Lincoln Loose Leaf Warehouse, D.C.E.D.Tenn., 59 F.Supp. 601; McComb v. Farmers Reservoir & Irr. Co., 10 Cir., 167 F.2d 911.

This has been the position of the Administrator of the Wage and Hour Division. Interpretative Bulletin No. 10 issued March 31, 1939; and superseded and replaced by General Statement on Farmers Cooperative Associations, effective September 9, 1947.

We come now to the exemption claimed by defendant under Sec. 13 (a) (10), of the Act, Title 29 U.S.C.A. § 213(a) (10) which provides:

"(a) The provisions of sections 206 and 207 of this title shall not apply * * * (10) to any individual employed within the area of production (as defined by the Administrator) engaged in handling, packing, storing, ginning, compressing, pasteurizing, drying, preparing in their raw or natural state * * *."

The parties have stipulated that the Comerio warehouse and stemmery is a first concentration point (within the meaning of that term as used in the Administrator's definition of area of production with respect to Puerto Rico leaf tobacco) for all tobacco received and worked upon there.

Also plaintiff concedes that defendant's operations are performed within the area of production but denies that certain of defendant's employees are engaged in the work which is exempt when so performed.

Stipulation of Fact No. 10 provides:

"Plaintiff, for the purpose of this action only, concedes that within the meaning of the applicable regulations and terms of the law, employees engaged in the receipt of stalk-out-tobacco, in the classification and bulking of such tobacco and in the re-classification, packing, moving and fumigating of such tobacco prior to stemming are exempt from the minimum wage and overtime provisions of the Fair Labor Standards Act, by virtue of Section 13 (a) (10) when they are engaged in the listed occupations in an establishment which is a first concentration point for such tobacco."

Thus we come to the question: are the operations or processes described in the record; that is, the stemming and fermenting of...