Mitchell v. Budd

• Decision Date: 26 March 1956
• Docket Number: No. 278,278
• Citation: 100 L.Ed. 565,76 S.Ct. 527,350 U.S. 473
• Parties: James P. MITCHELL, Secretary of Labor, United States Department of Labor, Petitioner, v. Joseph T. BUDD, Jr., and Florence W. Budd, Co-Partners, Doing Business as J. T. Budd, Jr. and Company; King Edward Tobacco Company of Florida, and May Tobacco Company
• Court: U.S. Supreme Court

350 U.S. 473

76 S.Ct. 527

100 L.Ed. 565

James P. MITCHELL, Secretary of Labor, United States Department of Labor, Petitioner,

v Joseph T. BUDD, Jr., and Florence W. Budd, Co-Partners, Doing Business as J. T. Budd, Jr. and Company; King Edward Tobacco Company of Florida, and May Tobacco Company.

No. 278.

Argued Feb. 29 and March 1, 1956.

Decided March 26, 1956.

Rehearing Denied May 14, 1956.

See 351 U.S. 934, 76 S.Ct. 786.

Bessie Margolin, Washington, D.C., for petitioner.

Mr. Milton C. Denbo, Washington, D.C., for respondents Budd, and King Edward Tobacco Co.

Mr. Mark F. Hughes, New York City, for respondent May Tobacco Co.

Mr. Justice DOUGLAS delivered the opinion of the Court.

These are actions brought by the Secretary of Labor under § 17 of the Fair Labor Standards Act, 52 Stat. 1060, 63 Stat. 910, 29 U.S.C. § 201 et seq., 29 U.S.C.A. § 201 et seq., to enjoin respondents from violating the minimum wage, § 6, and record-keeping provisions, § 11, of the Act. The employees concerned work in tobacco-bulking plants operated by respondents in Quincy, Florida, which has a population in excess of 2,500. Respondents claim these employees are exempt from the Act. The District Court ruled against the respondents. 114 F.Supp. 865. The Court of Appeals reversed. 221 F.2d 406. We granted certiorari 350 U.S. 859, 76 S.Ct. 103, because of the importance of the problems presented and of the apparent conflicts between the decision below and Tobin v. Traders Compress Co., 10 Cir., 199 F.2d 8, and Maneja v. Waialua Agricultural Co., 349 U.S. 254, 75 S.Ct. 719, 99 L.Ed. 1040.

The processing operations involve U.S. Type 62 Sumatra tobacco, a leaf tobacco used exclusively for cigar wrappers. This type of tobacco requires special cultivation. It is grown in fields that are completely enclosed and covered with cheesecloth shade. The leaves of the plant are picked in stages, as each matures. The leaves are taken immediately to a tobacco barn, located on the farm, where they are strung on sticks and dried by heat. Before the drying process is completed, the leaves are allowed to absorb moisture. Then they are dried again. There is some fermentation at this stage. But the treat- ment in the tobacco barns is essentially a drying operation during which the moisture content is reduced to between 10% and 25%.

At the end of the drying operation, the leaves are packed in boxes and taken from the farm to a bulking plant for further processing. At the bulking plant, the leaves are placed in piles, known as 'bulks,' aggregating from 3,500 to 4,500 pounds of tobacco. This is the 'sweating' or fermentation process, which requires carefully controlled regulation of temperature and humidity. Proper heat control includes, among other things, breaking up the bulk, redistributing the tobacco, and adding water. Proper fermentation or aging requires the bulk to be reconstructed several times. The bulking process lasts from four to eight months, after which the tobacco is baled. The bulking process requires a large amount of equipment, including a steam-heated plant, platforms, thermometers, bulk covers, baling boxes and presses, baling mats and packing, sorting and grading tables. The bulking process substantially changes the physical properties and chemical content of the tobacco, improving the color, increasing combustibility, and eliminating the rawness and harshness of the freshly cured leaf.

The overwhelming majority of farmers in the region in litigation in this case have their tobacco processed by others. In that region there are 300 farmers who grow this type of tobacco. Of these, only 9 maintain and operate bulking plants; and only 5 maintain and operate bulking plants processing tobacco grown only by themselves. It appears that bulking cannot be economically done by the ordinary small farmer growing less than 100 acres. Of the 300 farmers in the present group, 80% grow less than 25 acres per year, while the majority grow from 1 1/2 to 10 acres a year.

Respondent Budd grows no tobacco itself and confines its operations to processing the tobacco grown on 263 acres by 52 farmers. Budd employs about 108 workers for bulking, sorting, grading, and baling tobacco.

Respondent King Edward processes in the bulking plant involved in this litigation only tobacco produced on farms operated by it. (It has two other bulking plants that process tobacco purchased from other growers.) The bulking plant involved here is about 13 miles from King Edward's farms. A majority of the 120 employees in the bulking plant also work on King Edward's farms.

May has its own bulking plant and processes there only the tobacco which it grows on its own farms. This plant is about 10 miles from the farms. The employees, who work the farms, work in the bulking plant, being transported back and forth by May. Seventy are employed in the bulking plant.

Area of Production.—Section 13(a) of the Act creates several exemptions from the minimum wage and maximum hours provisions of the Act. One of those exemptions contained in § 13(a)(10) includes:

'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, or canning of agricultural or horticultural commodities for market, or in making cheese or butter or other dairy products'.

The Administrator's definition of 'area of production' provides that a plant is within the 'area of production' if it is located (1) 'in the open country or in a rural community', which is defined as not including 'any city, town or urban place of 2,500 or greater population', and (2) within a specified mileage distance from the source of 95% of its commodities.¹

The Court of Appeals, following its earlier decisions in Jenkins v. Durkin, 5 Cir., 208 F.2d 941, and Lovvorn v. Miller, 5 Cir., 215 F.2d 601, held that the regulation was invalid. It concluded that once 'geographic lines of the area of production have been established, the act makes the exemption effective within that area', and that any qualification by reason of size of the town where the establishment is located is invalid. 215 F.2d at page 603. For that conclusion the Court of Appeals found comfort in Addison v. Holly Hill Fruit Products, Inc., 322 U.S. 607, 64 S.Ct. 1215, 88 L.Ed. 1488.

Holly Hill involved one of the alternative definitions of 'area of production'. That alternative defined 'area of production' in geographic terms and then added another standard whether the employee was in an establishment having no more than seven employees. We held that '* * * Congress did not leave it to the Administrator to decide whether within geographic bounds defined by him the Act further permits discrimination between establishment and establishment based upon the number of employees.' Id., 322 U.S. 616, 64 S.Ct. 1220. We said that the phrase "area of production" had 'plain geographic implications' with which the size of a plant within the area was not consistent. Id., 322 U.S. 618, 64 S.Ct. 1221. That definition, therefore, was struck down. But its alternative, substantially the one that is involved here, was not passed upon. In fact, we reserved decision in Holly Hill as to whether the population criterion, now presented for decision, was valid. Id., 322 U.S. 610, 64 S.Ct. 1217.

We think the present regulation is a valid definition of 'area of production'. We think it valid by the standard we used in Holly Hill. In that case we said that '* * * 'area' calls for delimitation of territory in relation to the complicated economic factors that operate between agricultural labor conditions and the labor market of enterprises concerned with agricultural commodities and more or less near their production.' Id., 322 U.S. 613—614, 64 S.Ct. 1219. The aim of Congress was to exempt employees 'employed in agriculture', § 13(a)(6), and those engaged in agricultural enterprises in the 'area of production', § 13(a)(10). That meant drawing a line between agricultural enterprises operating under ruralagricultural conditions and those subject to urban-industrial conditions. An individual working in an agricultural packing plant on the edge of Los Angeles is in a strikingly different environment from one doing the same work in a small town in the heart of Kansas. Nearness to a large city has relation to the problem of the Administrator in making his definition. For the proximity of the plant to a metropolitan center, like the size of the town where the plant is located, may make the decisive difference between an agricultural and an urban environment. ² Likewise, nearness of the plant to its supplies cannot be considered an irrelevancy. For 'area' is understandable in terms of nearness and farness. Distance is an important factor in any formula which seeks to treat more or less as a unity labor on farms and labor in agricultural enterprises in the 'area of production'.³

No definition of 'area of production' could produce complete equality, for the variables are too numerous. The Administrator fulfills his role when he makes a reasoned definition. See Gray v. Powell, 314 U.S. 402, 411, 62 S.Ct. 326, 332, 86 L.Ed. 301. On no phase of this problem can we say that the Administrator proceeded capriciously or by the use of inadmissible standards. Experts might disagree over the desirability of one formula rather than another. It is enough for us that the expert stayed within the allowable limits. We think he did here and that the definition of 'area of production' under § 13(a)(10) is a valid one.

Agriculture.—The Court of Appeals held that the employees in the bulking plants of King Edward and May were exempt under § 13(a)(6) which covers 'any employee employed in agriculture'. It relied on the broad definition of 'agriculture' contained in § 3(f) of the Act which provides, in relevant part, that the term 'includes farming in all its branches and...