Mitchell v. Pidcock

• Decision Date: 17 April 1962
• Docket Number: No. 18687.,18687.
• Citation: 299 F.2d 281
• Parties: James P. MITCHELL, Secretary of Labor, United States Department of Labor (Arthur J. Goldberg, Secretary of Labor, substituted as party appellant in the place and stead of James P. Mitchell, resigned), Appellant, v. Frank R. PIDCOCK, III, doing business as Pidcock Tobacco Warehouses, and J. E. Ladson, Jr., doing business as Ladson's Leader Tobacco Warehouses, Appellees. Frank R. PIDCOCK, III, doing business as Pidcock Tobacco Warehouses, and J. E. Ladson, Jr., doing business as Ladson's Leader Tobacco Warehouses, Appellants, v. James P. MITCHELL, Secretary of Labor, United States Department of Labor (Arthur J. Goldberg, Secretary of Labor, substituted as party appellee in the place and stead of James P. Mitchell, resigned), Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

299 F.2d 281 (1962)

James P. MITCHELL, Secretary of Labor, United States Department of Labor (Arthur J. Goldberg, Secretary of Labor, substituted as party appellant in the place and stead of James P. Mitchell, resigned), Appellant, v. Frank R. PIDCOCK, III, doing business as Pidcock Tobacco Warehouses, and J. E. Ladson, Jr., doing business as Ladson's Leader Tobacco Warehouses, Appellees.

Frank R. PIDCOCK, III, doing business as Pidcock Tobacco Warehouses, and J. E. Ladson, Jr., doing business as Ladson's Leader Tobacco Warehouses, Appellants, v. James P. MITCHELL, Secretary of Labor, United States Department of Labor (Arthur J. Goldberg, Secretary of Labor, substituted as party appellee in the place and stead of James P. Mitchell, resigned), Appellee.

No. 18687.

United States Court of Appeals Fifth Circuit.

February 5, 1962.

Rehearing Denied April 17, 1962.

Bessie Margolin, Asst. Sol., Charles Donahue, Sol. of Labor, Jacob I. Karro, Judah Best, Attys., Dept. of Labor, Washington, D. C., Beverley R. Worrell, Regional Atty., Birmingham, Ala., for appellant.

R. Lamar Moore, Moultrie, Ga., Moore & Moore, Moultrie, Ga., of counsel, for appellee.

Before CAMERON, BROWN, and WISDOM, Circuit Judges.

WISDOM, Circuit Judge.

The Secretary of Labor brought three suits, consolidated for this appeal, to require certain tobacco warehousemen to comply with the Fair Labor Standards Act, 29 U.S.C.A. § 201 et seq. In two of the suits the Secretary sued Frank R. Pidcock, III, and J. E. Ladson, Jr., under Section 17 of the Act, to enjoin the defendants from violating provisions of the Act relating to minimum wage and record-keeping requirements. In the third suit he sued Pidcock, under Section 16(c), to recover unpaid minimum wages on behalf of an employee, Dewitt Harrell. The trial judge held that the defendants had violated the Act. He denied an injunction on the ground that it was not necessary to prevent future violations. He granted recovery in the suit for the unpaid back wages. Both sides appealed. We affirm the holding as to the violation of the Act and the award of back wages. We hold that the trial judge exceeded the bounds of discretion in failing to grant an injunction, since there was no reasonable basis for the defendants to refuse to comply with the Act.

Pidcock and Ladson operate tobacco warehouses in Moultrie, Georgia. During the operating season of three to four weeks each in July and August the warehouses provide facilities for the local tobacco growers to market their tobacco. The defendants' employees receive and unload the tobacco at the warehouse; weigh, ticket, and arrange the lots on the warehouse floor in preparation for the auction; guard the tobacco while it awaits sale; assist in the auction operations; retrieve floor scrapings to be put up for sale; move the lots out of the warehouse and onto the purchasers' trucks; and take receipts from the purchasers. Substantial portions of it are shipped after sale to points outside the state.

Before 1958 the defendants paid their employees wages equal to those prescribed by the minimum wage law.¹ They testified, however, that although they had paid those wages they were not sure of the coverage of the Act. In 1958 they consulted attorneys to inquire whether the Act applied to their operations. The attorneys advised them that "the employees of a tobacco warehouseman are not engaged in commerce or in the production of goods for commerce within the meaning of the Act". Acting on this advice, so they contend, the defendants reduced the wages of certain employees from $1.00 an hour to 75 cents an hour.² Investigators for the Wage and Hour Division made several efforts to obtain voluntary compliance.³ After these efforts failed, the Secretary of Labor filed the instant suits against the defendants to obtain legal enforcement of the Act.

I.

The section basically involved in this appeal, Section 6 of the Fair Labor Standards Act, 29 U.S.C.A. § 206, provides that "every employer shall pay to each of his employees who is engaged in commerce or in the production of goods for commerce wages at" the prescribed minimum rate.⁴ "Commerce" is defined in Section 3(b), 29 U.S.C.A. § 203(b), as "trade, commerce, transportation, transmission, or communication among the several States or between any State and any place outside thereof". The defendants argue that their tobacco warehouse operations do not constitute "commerce or the production of goods for commerce," a contention we find untenable. The gist of their argument is that they handle the tobacco after it has been produced and before it has entered commerce, while it is in transit to the point where it begins its trip in interstate commerce. This argument ignores the fact that the marketing process is as integral a stage in the interstate movement of the goods as other stages concededly within the coverage of the Act. The auctioning of the tobacco is an indispensable step in the overall process. Moreover, there is no basis for believing that commerce does not begin until a point after production of the goods is completed. "Commerce" is a broad term. It overlaps stages of production. It encompasses preliminary steps necessary in the preparation of goods for sale in commerce. Mitchell v. Pilgrim Holiness Church Corp., 7 Cir., 1954, 210 F.2d 879; Walling v. Mutual Wholesale Food & Supply Co., 8 Cir., 1944, 141 F.2d 331; Atlantic Co. v. Walling, 5 Cir., 1942, 131 F.2d 518. When production ends, commerce has already begun; there is no interval in between the two in which a function so important as marketing can be performed outside the reach of the statute.

These general considerations lead us to the specific authority supporting the Secretary's position. The abundance of such authority raises the question whether, against the factual backdrop of this case, the court should accept the defendants' excuse that they relied on advice of counsel.

II.

The defendants assert their good faith and resist any injunction. They rely on their attorney's opinion of July 18, 1958, given in response to their question whether the Act applied to employees of a tobacco warehouseman. In pertinent part, the opinion reads:

"You have requested an opinion from us as to whether or not the provisions of the Fair Labor Standards Act, commonly known as the Wage and Hour Law, is applicable to the operator of a tobacco warehouse selling bright leaf tobacco during the tobacco marketing season, i. e., whether the employees of such warehouse operator come within the coverage of the Act. * * * While we have found no case in which the courts have ruled on the status of the employees of a tobacco warehouseman, and the Administrator of the Act has promulgated no regulation directly applicable thereto, it is our opinion that the employees of a tobacco warehouseman are not engaged in commerce or in the production of goods for commerce within the meaning of the Act * * * If the employees of the tobacco warehouseman should be held to be otherwise within the coverage of the Act, their employer would not be required to pay them for any overtime except the number of hours worked in excess of fifty-six hours in any one workweek * * * ¶ Finally, if it should at long last be held and determined that a warehouseman is subject to the provisions of this law, all that could be required of him would be that he should pay his employees the amount, if any, by which their regular compensation was less than $1.00 an hour and one and one-half times the minimum wage for such hours, if any, as any of them worked in excess of 56 hours in any workweek." (Emphasis supplied).

We observe, in passing, that the last paragraph is not without significance. We read it as advising the defendants: take a chance; you cannot get hurt; at worst, you may have to pay what the law requires you to pay.

If even a half-hearted attempt to research the law had been made in the summer of 1958, it would have shown that there were four decisions squarely holding that the Act covers employees of tobacco warehousemen. Reliance Storage & Inspection Co. v. Hubbard, W.D. Va., 50 F.Supp. 1012; Walling v. Home Loose Leaf Tobacco Warehouse Co., E.D. Ky., 1943, 51 F.Supp. 914; Walling v. Lincoln Looseleaf Warehouse Co., E.D. Tenn., 1942, 59 F.Supp. 601; Fleming v. Kenton Loose Leaf Tobacco Warehouse Co., E.D.Ky., 1941, 41 F.Supp. 255. Although these are district court cases, they have never been questioned, distinguished, or overruled by later authority.

From the earliest days of enforcement, the Wage and Hour Division has consistently asserted that the Act applies to tobacco warehouse auctions and employees of tobacco warehousemen. The Secretary of Labor's Interpretative Bulletin on coverage (admitted in evidence by stipulation) specifically cites one of the four cases, Walling v. Home Loose Leaf Tobacco Warehouse Co., as authority for the principle:

"employees in * * * warehouses * * * who sort, screen, grade, store, pack, label, address or otherwise handle or work on goods in preparation for shipment of the goods out of the state are engaged in the production of goods for commerce within the meaning of the Act." (Bulletin No. 776, Section 776.16, published as far back as May 1950 in the Code of Federal Regulations, Title 29, Chapter IV, Section 776.16.)

The attorney who prepared the opinion for Pidcock testified that he did not recall examining this bulletin. The bulletin was published in the Code of Federal Regulations, however, and in his opinion the attorney made reference to the Administrator's favorable determination on seasonal exemptions. This determination appeared in the same place in the Code in another section.

Thanks to the proliferation of decisions these days, one almost may find a case for or against any legal notion. A determined lawyer, therefore, would be expected to extend his research to situations analogous to the situation here. Any lawyer informed in the field of...