National Labor Relations Board v. Fainblatt

• Citation: 98 F.2d 615
• Decision Date: 08 September 1938
• Docket Number: No. 6490.,6490.
• Parties: NATIONAL LABOR RELATIONS BOARD v. FAINBLATT et al.
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

98 F.2d 615 (1938)

NATIONAL LABOR RELATIONS BOARD v. FAINBLATT et al.

No. 6490.

Circuit Court of Appeals, Third Circuit.

July 28, 1938.

Rehearing Denied September 8, 1938.

Malcolm F. Halliday, Charles Fahy, General Counsel, Robert B. Watts, Associate General Counsel, Mortimer B. Wolf, and Ruth Weyand, all of Washington, D. C., for petitioner.

Leon Gerofsky and Joseph Halpern, both of Somerville, N. J., for respondents.

Before BUFFINGTON and BIGGS, Circuit Judges, and DICKINSON, District Judge.

BUFFINGTON, Circuit Judge.

In this case — a petition by the National Labor Relations Board to enforce an order to cease and desist — the initial and decisive question involved is whether under the proofs in the case the respondents are engaged in interstate commerce.

In that regard the Intermediate Report (Record, page 461) states: "The business of respondents is clearly of an interstate nature." If this statement is correct, the order should be enforced. On the other hand, if the Board has not shown that "the business of the respondents is clearly of an interstate nature", this Court should decline to enforce the proposed order.

Addressing ourselves to that controverted question, the proofs show that Benjamin Fainblatt, a respondent, is the sole owner of a small garment manufacturing plant in the village of Somerville, New Jersey, employing at times sixty persons, according to the manufacturing orders he receives from a partnership in New York called Lee Sportswear Company, which was composed of his sons, and which was engaged in marketing women's sports garments. Their father had no interest in the partnership, and the sons had no interest in the plant or business of their father. The New York Lee Sportswear Company, hereafter called Lee Company, as their business required, owned all the tailoring material here involved. Such material from time to time was cut in New York by Lee Company and shipped in trucks employed by it to respondent's factory, — hereafter called Somerville. At times, in order to avoid delay, Lee Company's material was shipped direct from mills to Somerville. All shipments were there cut, tailored, pressed by Somerville, and delivered to the trucks employed by Lee Company for delivery either to the New York partnership or its customers as directed by it. To that end Lee Company kept a representative in the factory. The material was owned by Lee Company and respondent had no control, ownership or interest in the material sent by Lee Company or in the tailored article. He was paid for the tailoring work he did, no one but himself was interested in his factory and the profits arising therefrom were included in his personal income tax return. From the testimony produced by the Board, these facts are shown.

Bearing on the fact that respondent had no interest in the Lee Company, respondent's uncontroverted testimony was:

"Q. And you are not financially interested in that company? A. No, sir.

"Q. Is that a corporation? A. No, sir.

"Q. That, too, is just a business operating under a trade name? A. A partnership.

"Q. I see. You have no financial interest in it? A. No, sir.

"Q. Were you ever associated with that company? A. No, sir."

As to Lee Company paying no bills for or at Somerville, the proof is:

"Q. Well, does the Lee Sportswear Company pay any of the bills of the Somerville Company? A. No.

"Q. Not at all? A. No, no.

* * * * * *

"Q. Did it ever pay for the installation of any of your machinery? A. No, sir.

"Q. Or repairs to your machinery? A. No."

That respondent's work was simply tailoring and cutting, the proof is:

"Q. But what you are actually engaged in here is the tailoring? A. Tailoring and cutting.

"Q. Which is the substantial operation in your plant? A. Tailoring.

* * * * * *

"Q. You went into that business with your own capital? A. Yes.

"Q. You assumed all financial obligations and responsibilities in running this business in Somerville? A. Yes.

"Q. And that is solely a manufacturing business? A. Yes."

That the profits from his plant are reported by respondent and that the Lee Company had no share therein is shown in the Record, page 113:

"Q. Do you file a personal income tax return? A. Yes.

"Q. Do you include in that personal income tax return your income from manufacturing here? A. Yes.

"Q. And does the Lee Sportswear, to your knowledge, include in their income tax return any income from the Somerville Manufacturing Company? A. They haven't got no income from the Somerville Manufacturing Company."

Recognizing these proofs by the witness produced by itself, the Labor Board, in its Intermediate Report, says: "Mr. Fainblatt testified that he is the sole owner of the two companies, and that he has no financial interest in the Lee Sportswear Co."

Moreover, in its report, the Labor Board states: "All of the raw material converted into garments by respondents are owned by the Lee Sportswear Co." As to the operations generally, the Labor Board states:

"All of the raw material, converted into garments by respondents, are owned by the Lee Sportswear Co. Although the proportion varies from time to time, it is customary for the Lee Sportswear Co. to furnish the material already cut and ready for the operators to sew. If the Lee Sportswear Co. is very busy, material is sent to the respondents for cutting. Sometimes, however, the material is shipped directly from the mills to respondents in Somerville, where it is cut. Respondents receive extra compensation for the cutting, whether the uncut material comes from the mills or from Lee Sportswear Co. Some of the mills from which respondents receive these shipments are located outside the state of New Jersey. During recent months most of the material has been cut when received by respondents. After the garments are made up they are shipped back to the Lee Sportswear Co. in New York City, although some of them are turned over to a representative of that company stationed at the Somerville plant, who may ship them directly to customers. Most of the raw materials and finished garments are handled by an expressman or trucking concern, Sissler Brothers, of Somerville, N. J. Lee Sportswear Co. pays the trucking charges. In general no stock of raw materials is maintained at the Somerville plant, although there are times when there is more work on hand than at others.

* * * * * *

"The garments as finished by respondents do not carry any label. Sol Fainblatt, Benjamin Fainblatt's son, is employed by and acts as the Somerville agent of the Lee Sportswear Co. He goes to New York City each morning as a part of his work, gets his orders, returns to Somerville, N. J. about two o'clock in the afternoon, and ships his goods out. The goods that he ships are those turned over to him by respondents. The Lee Sportswear Co. pays in advance for the garments manufactured by respondents. This payment represents principally the labor involved in the cost of manufacture."

In the face of these proofs, given by its own witness and without any proof to the contrary, the Board (Record page 470) made this contradictory and unwarranted finding: "The respondents are doing business in Somerville, New Jersey, under the firm names, Somerville Manufacturing Company and Somerset Manufacturing Company, and are engaged in the manufacture, sale and distribution of Women's sportswear. In the course of this business they have caused substantial amounts of raw material and finished goods to be purchased, transported and sold in interstate commerce."

On the contrary, the proofs adduced by the Board show that the respondents have made no purchases of "raw material", have made no purchases of "finished product", have sold no goods or materials, and have transported nothing. That the Lee Company, which is not here involved, in the purchase of its raw materials or in its sale of the tailored product, in its transportation to and fro across state lines, was engaged in interstate commerce, in no way affects the respondent, who owns no material, who is not engaged in commerce, who has no commerce to transport, who buys nothing and sells nothing, and who has no voice, power, interest or control in or of what is done by Lee Company in bringing to or taking from his factory its own merchandise. That such an one and his local plant can be drawn into the network of national control under the constitutional power to "regulate the commerce between the states", this court cannot hold.

So regarding, the petition of the Board is denied.

BIGGS, Circuit Judge (dissenting).

There is no dispute as to the essential circumstances of the case at bar, though discrepancies occur in the testimony. The question presented is really one of law. The facts may be stated briefly as follows:

In August, 1934, Benjamin Fainblatt, acting in co-operation with his daughter, Marjorie, established a business in Somerville, New Jersey, under two names procured under the "Business Names Act" of New Jersey.¹ One name was "Somerville Manufacturing Company"; the other was "Somerset Manufacturing Company". The two names were used interchangeably. The individuals principally concerned in the business were the respondents, Benjamin Fainblatt and Marjorie Fainblatt. The name "Somerville Manufacturing Company" was not made use of by the respondents after February 15, 1935, and following that date all business was conducted under the name "Somerset Manufacturing Company".

The business had been financed by Lee Sportswear Company, a co-partnership doing business in New York City and consisting of Leo and Irving Fainblatt, sons of Benjamin Fainblatt, and Marjorie Fainblatt. Benjamin Fainblatt had been employed by this partnership immediately prior to his going into business in Somerville. The business at Somerville consisted of finishing and tailoring women's sportswear. The materials which were finished or tailored were supplied by Lee Sportswear Company and shipped to the respondents' plant at Somerville....