Mitchell v. Hygrade Water & Soda Company

• Decision Date: 12 December 1960
• Docket Number: 16484.,No. 16483,16483
• Citation: 285 F.2d 362
• Parties: James P. MITCHELL, Secretary of Labor, U. S. Department of Labor, Appellant, v. HYGRADE WATER & SODA COMPANY, a Corporation, Appellee. James P. MITCHELL, Secretary of Labor, U. S. Department of Labor, Appellant, v. PEPSI-COLA BOTTLERS OF ST. LOUIS, INC., a Corporation, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

285 F.2d 362 (1960)

James P. MITCHELL, Secretary of Labor, U. S. Department of Labor, Appellant, v. HYGRADE WATER & SODA COMPANY, a Corporation, Appellee.

James P. MITCHELL, Secretary of Labor, U. S. Department of Labor, Appellant, v. PEPSI-COLA BOTTLERS OF ST. LOUIS, INC., a Corporation, Appellee.

Nos. 16483, 16484.

United States Court of Appeals Eighth Circuit.

December 12, 1960.

Jacob I. Karro and Judah Best, Attys., U. S. Dept. of Labor, Washington, D. C., for appellant. Harold C. Nystrom, Acting Sol. of Labor, and Bessie Margolin, Asst. Sol., U. S. Dept. of Labor, Washington, D. C., and B. Harper Barnes, Regional Atty., U. S. Dept. of Labor, Kansas City, Mo., were with Jacob I. Karro and Judah Best, Washington, D. C., on the brief.

Charles H. Rehm, of Dyer, Rehm & Weitzman, St. Louis, Mo., for appellees.

Before SANBORN, WOODROUGH, and MATTHES, Circuit Judges.

MATTHES, Circuit Judge.

The Secretary of Labor, refusing to be controlled by the teachings of the courts in Clougherty v. James Vernor Co., 6 Cir., 187 F.2d 288, certiorari denied 342 U.S. 814, 72 S.Ct. 28, 96 L.Ed. 616, and Tobin v. Double Cola Bottling Company (N.D. of Ga.1953), 23 Labor Cases 67,511,¹ (not officially reported) instituted these actions against Hygrade Water & Soda Company, and Pepsi-Cola Bottlers of St. Louis, Inc., hereinafter singularly referred to as "Hygrade" and "Pepsi," and collectively as "appellees," seeking to enjoin them from violating §§ 15(a) (1), 15(a) (2) and 15(a) (5) of the Fair Labor Standards Act of 1938. As to Hygrade, the complaint alleged that it had violated § 6 of the Act, which fixes minimum wages; § 7 of the Act which deals with overtime wages and maximum hours, and § 11(c), which requires the keeping of adequate records. As to Pepsi, the complaint alleged that it had violated §§ 7 and 11(c). Sections 6, 7, 11(c) and 15 appear as §§ 206, 207, 211(c) and 215 of Title 29 U.S.C.A., respectively.

The trial court denied the relief sought and dismissed the complaints, and the Secretary appeals.

The uncontroverted facts as found by the trial court disclose that appellees are affiliated Missouri corporations having their offices, plant and warehouse at the same address in St. Louis, Missouri. Pepsi produces a bottled carbonated beverage known as "Pepsi-Cola," and distributes some of its product directly through vending machines in the State of Missouri for local consumption. Hygrade is engaged in the production, and also in the sale and distribution of bottled beverages, and a substantial portion of Pepsi's production is sold through Hygrade. Approximately 10% of Hygrade's sales, including Pepsi-Cola, are to Illinois distributors, who in turn distribute to retail outlets in Illinois.

Certain employees of Pepsi service the vending machines in Missouri. These employees drive trucks, previously loaded by other employees, to the various vending machine locations in Missouri, and fill the machines, collect the money, remove and place the empty cases and bottles on the trucks and return to the plant where the empty bottles and cases are removed by other employees.

Hygrade employs approximately 50 persons as drivers' helpers, who assist the driver-salesmen in making deliveries to outlets in the State of Missouri; they unload the filled bottles and cases at the customers' premises and collect empty bottles and cases from such premises and place them on the trucks. The helpers are not required to report to the plant in the morning or return thereto at the end of the day's work. At their convenience, they may meet the truck at the first stop along the route and abandon it at the last stop. At no time do any of the trucks, the truck drivers or drivers' helpers leave the State of Missouri.

Many of the empty bottles picked up by the employees referred to are reused by appellees in the production, distribution and sale of the beverages. The returned empty bottles are unloaded from the trucks by warehouse employees, and placed in storage where they remain until needed. The bottles returned for reuse are not segregated as to destination after refilling, and approximately 10% of bottled beverages sold in Illinois are contained in bottles taken from the general supply of bottles available. The sales to Illinois distributors are actually made in Missouri, and the merchandise is picked up in Missouri by Illinois distributors.

The production of the beverage begins when a new or returned bottle is placed on a conveyor, rinsed, sterilized and inspected. None of the employees here involved performs any duties with respect to placing empty or filled bottles in storage at the plant, nor with the manufacturing process in the plant. They transport no beverage that goes into interstate commerce, do not handle the bottles while they are in the process of being filled, have never gone on the road for the purpose of picking of empties and have not gone from one outlet or customer to another solely for that purpose.

The drivers' helpers are paid $5 per day plus a commission of two and one-half cents per case of beverage sold. The drivers delivering to the vending machine are paid $80 per week, which is in accord with the terms of a union contract.

Neither of the appellees is engaged in the business of buying, selling, manufacturing or dealing in bottles, neither has shipped any empty bottles out of the State of Missouri, and with the exception of the vending machine drivers and drivers' helpers, they are complying with all the provisions of the Fair Labor Standards Act.

As observed at the outset, the relief sought is an injunction. While the issue is raised that the Secretary failed to prove that appellees had violated the minimum wage and maximum hours provisions, Title 29 U.S.C.A. §§ 206, 207, concededly, appellees did not maintain adequate records as required by § 211(c), and this alone would entitle the Secretary to injunctive relief if the employees come within the ambit of the Act.

A delineation of the issues presented reveals just what the Secretary is and is not pressing for determination. He does not contend that the activities of the drivers and drivers' helpers are in commerce, as was found in Clougherty v. James Vernor Co., supra, 187 F.2d at page 293, of some drivers who delivered the bottled beverage in Michigan to boats operating on the Great Lakes, and as was found of the employees who actually loaded and unloaded beverages from interstate freight cars in Young v. Caldarera (E.D. of Ark.1954), 12 WH Cases 217 (not officially reported), or otherwise handled empty bottles which moved in interstate commerce, as in Stewart-Jordan Distributing Co. v. Tobin, 5 Cir., 210 F.2d 427, certiorari denied, Stewart-Jordan Co. v. Mitchell, 347 U.S. 1013, 74 S.Ct. 866, 98 L.Ed. 1136. He does contend (a) that the instant employees are engaged in the production of goods for commerce within the meaning of the Act, or (b) if not engaged in production of goods for commerce, they are at least employed in a "closely related process or occupation directly essential to" such production within the second part of the definition of "production" found in § 203(j).²

The question underlying contention (a) is whether the empty bottles handled by the instant employees are "goods" within the statutory meaning of that term. If, as the Secretary urges, they fall in that category, then we must consider if the activities of these employees are within the ambit of the statutory definition of "produced" inasmuch as the handling of the bottles, i. e., retrieving the empties and placing them on the trucks, would not in the ordinary sense be understood to mean "producing" goods. Conversely, if the bottles are not "goods," it will be unnecessary to determine whether the "handling" herein constituted "production."

Seeking to gain sanction of his position, the Secretary argues that the bottle is an intrinsic part of the commodity (beverage) which appellees produce and sell; that the bottle is an indispensable and integral part of its contents, so that the bottle and beverage together constitute the "goods" within the literal terms of the § 203(i) definition. To sustain his argument, we are cited to cases holding that cartons, boxes, or other containers, were "goods," e. g. Enterprise Box Co. v. Fleming, 5 Cir., 125 F.2d 897, certiorari denied Enterprise Box Co. v. Holland, 316 U.S. 704, 62 S.Ct. 1312, 86 L.Ed. 1772; Dize v. Maddrix, 4 Cir., 144 F.2d 584, affirmed sub nom. Brooklyn Sav. Bank v. O'Neil, 324 U.S. 697, 65 S.Ct. 895, 89 L.Ed. 1296.

We do not regard these cases as controlling or dispositive of our problem. Here it stands uncontroverted that appellees neither manufacture nor deal in bottles as such. As pointed out by the trial court in the Clougherty case, supra, D.C., 74 F.Supp. 364-368, it is this very circumstance that renders the foregoing authorities which deal with containers clearly distinguishable. The bottles used by appellees only become a part of their actual production process when they are removed from storage and placed upon the production line.

Additionally, the Secretary places emphasis on the cost of new bottles. It appears that appellees pay approximately 6½ cents for each new bottle, and that they make a charge of 2 cents a bottle and 12 cents per empty case, or a total of 60 cents to each customer. This circumstance does not, in our opinion, afford proof that appellees are dealing in bottles. The record conclusively demonstrates that this charge for the bottles and empty cases is in reality a deposit exacted for the purpose of encouraging the return of the bottles to appellees.

Cases which involved handling or processing of the actual ingredients of goods are likewise clearly distinguishable. See Mitchell v. Hooper Equipment Company, 5 Cir., 279 F.2d 893, (employees who mined rock, which was processed into cement used for construction of interstate facilities); Mitchell v. Metals Transportation, D.C.Wyo., 173 F.Supp. 887,...