Phillips v. Meeker Cooperative Light & Power Ass'n

• Decision Date: 13 November 1945
• Docket Number: 1148.,No. 1136,1136
• Court: U.S. District Court — District of Minnesota
• Parties: PHILLIPS v. MEEKER COOPERATIVE LIGHT & POWER ASS'N (WALLING, Adm'r, Wage and Hour Division, U. S. Department of Labor, Intervener). RENVILLE-SIBLEY COOPERATIVE POWER ASS'N v. DENTON et al. and Joe Maxwell (WALLING, Adm'r, Wage and Hour Division, U. S. Department of Labor, Intervener).

63 F. Supp. 733

PHILLIPS v. MEEKER COOPERATIVE LIGHT & POWER ASS'N (WALLING, Adm'r, Wage and Hour Division, U. S. Department of Labor, Intervener).

RENVILLE-SIBLEY COOPERATIVE POWER ASS'N v. DENTON et al. and Joe Maxwell (WALLING, Adm'r, Wage and Hour Division, U. S. Department of Labor, Intervener).

Nos. 1136, 1148.

District Court, D. Minnesota, Fourth Division.

November 13, 1945.

COPYRIGHT MATERIAL OMITTED

John A. Goldie and Samuel I. Sigal, both of Minneapolis, Minn., for George P. Phillips.

Patrick J. Casey, of Litchfield, Minn., Lauerman & Pfeiffer, of Olivia, Minn., and Harold Le Vander, of South St. Paul, Minn., for Meeker Cooperative Light & Power Ass'n.

Lauerman & Pfeiffer, of Olivia, Minn., for Renville-Sibley Light & Power Ass'n.

B. D. Grogan, of Mankato, Minn., Alexander Seifert, of Springfield, Minn., and Sidney P. Gislason, of New Ulm, Minn., for both cooperatives.

L. J. Lauerman, of Olivia, Minn., for National Rural Electric Cooperative Ass'n and Minnesota Electric Cooperative.

Douglas B. Maggs, Sol., and Archibald Cox, Associate Sol., both of Washington, D. C., and James M. Miller, Regional Atty., and Robert L. Barrett, Asst. Atty., both of Minneapolis, Minn. (C. Ira Funston, Supervising Atty., of Washington, D. C., of counsel), for United States Department of Labor.

NORDBYE, District Judge.

The Administrator of the Wage and Hour Division, United States Department of Labor, intervened in both of the above-entitled actions. These two cases involve common questions of law and will be considered together. The action noted as Civil No. 1148 seeks relief in behalf of certain employees against their employer for overtime compensation under Section 7 of the Fair Labor Standards Act, 29 U. S.C.A. § 201 et seq. The action noted as Civil No. 1136 was instituted by the Renville-Sibley Cooperative Power Association against two of its employees seeking a declaratory judgment that the Fair Labor Standards Act is inapplicable to it, and seeking to restrain these two employees from enforcing any right under the Act. These two employee defendants made no appearance at the trial, and, at the suggestion of the parties, the Administrator was considered to be the plaintiff and the Association the defendant, so that the burden of proof rested upon the Administrator in going forward in establishing the right to the relief which he sought in his complaint in intervention; that is, the Administrator in the intervening complaint sought a declaratory judgment that the Association was subject to the Act with respect to the defendants named and the other employees, and sought injunctive relief restraining the Association from violating the provisions of the Act.

In discussing these cases, the Meeker Cooperative Light & Power Association will be referred to as the Meeker Cooperative, and the case involving this cooperative will be referred to as the Meeker case. The Renville-Sibley Cooperative Power Association will be referred to as the Renville-Sibley Cooperative, and the case involving this cooperative will be referred to as the Renville-Sibley case. The following questions are presented in both cases:

1. Are the so-called outside employees of these cooperative companies engaged in the production of goods for commerce within the purview of the Act?

2. Are the office employees of the two cooperative companies engaged in the production of goods for commerce and are they also engaged in commerce within the meaning of the Act?

3. Are the employees of these two cooperatives exempt from the Wage and Hour provisions of the Act under Section 13(a) (1) (2) thereof?

A somewhat extended statement of facts seems necessary as to each cooperative.

Meeker Cooperative: This cooperative distributes electricity in six Minnesota counties and covers an area of some 2,400 square miles. It has approximately 960 miles of line and has about 2,300 consumer members. Its customers are varied. They include farmers, creameries, a hatchery, a few hybrid seed-corn processors, some fur farms, the Civil Aeronautics Authority, which supervises the lighting of two air-line beacons, churches, schools, and homes. All of the customers, with the exception of the churches, schools, and homes, use the electricity so distributed for light, heat and power in the regular course of their respective businesses. The parties have stipulated that, with the same exception above noted, the operations of these consumers result in the production of goods produced, raised and processed, a substantial portion of which find their way directly or indirectly into interstate commerce. All of the electricity distributed by this cooperative is purchased from a municipal light plant in the State of Minnesota, and the electricity generated by the municipal plant and that distributed by the cooperative does not cross State boundaries. This cooperative receives its electricity at a voltage of 2,300 and it increases the voltage to 7,200 for distribution. It is stepped down, however, so that the consumer uses a voltage of either 110 or 220. It has 11 employees, 6 of whom are outside employees and 5 of whom are office employees. The outside employees engage in new construction and in maintenance. The maintenance of the line includes all the necessary work to keep the lines in repair so as to insure continuity of service. Generally speaking, about 50% of their time is devoted to construction of new lines and 50% to maintenance. This division, however, may vary each year. The lines are constructed and maintained up to the yard pole and meter on the consumer's premises. Obviously, if the lines are not kept in repair so that there is a cessation in the distribution of electricity, the various consumers affected would have to close down the operations which are dependent on electric current.

The financing of this cooperative has been underwritten by the Rural Electrification Administration with loans totaling $976,000. The first loan was made in June, 1936, for $450,000, and the last loan in September, 1944, for $150,000. At the present time, the indebtedness to the R.E. A. amounts to between $650,000 and $700,000. The lines which are now operated cost approximately $877,000. It appears that the loans from the R.E.A. which has its offices in St. Louis, Mo., have been arranged by means of loan contracts, mortgages, mortgage notes, and deeds of trust. This financial set-up requires close supervision and control of the operation of the cooperatives by the R.E.A. office in St. Louis. Construction work is either done by a contractor or by the cooperative through its own crews. Since 1942, most of the construction has been done by the maintenance and construction employees. When a contractor does the work, there must be an approval of the contract by the R.E.A., and also of the contractor and the engineer hired. The payments to the contractor are made available from loan funds allotted to the cooperative by the R.E.A. When construction work is carried on by the cooperative's own employees, an Estimate Construction Work Order, together with other data, is sent by the office employees to the R.E.A. office for approval. Usually the work is not commenced until R.E.A. approval is obtained. During the progress of the work, daily time records are maintained by the men and turned in to the office employees, together with a daily inventory sheet. After the construction is completed, the Final Construction Work Order is prepared, reflecting the information on the time and inventory sheets, and two copies of this document, together with a letter of transmittal, are forwarded to the R.E.A. office at St. Louis for approval. Before funds are advanced by the R.E.A., a requisition must be submitted, and accompanying this requisition order there is required a statement which indicates how the last money advanced by the R.E.A. was expended, and such expenditures must be verified with attached receipts or comparable data. There is also inventory information forwarded at the same time so that a proper balance is reflected. The office procedure referred to above in a general way reflects the steps taken by the office force where the construction work is done by the local crew. It differs slightly when the work is done by a contractor. In addition to these transactions with the R.E.A. office, when new construction is being carried on, monthly reports are made to the R.E.A. office. Typewritten copies of the minutes of the Board of Directors, including the monthly as well as the special meetings of the Board, are also forwarded to the R.E.A. office. It appears from the evidence that at the present time this cooperative has adopted the so-called group purchase plan promulgated by the R.E.A., and in availing itself of this facility, copies of purchase orders are mailed to the R.E.A. office.

The inside employees also take care of the book work, correspondence, billing, sending out of meter cards, the writing and mailing of checks, and such other clerical work as may be necessary for the operation of the business of the cooperative. It may be noted that the bookkeeping system follows a form recommended by the R.E.A. office. A partial analysis of the checks sent out in the years 1942 and 1944 shows that some 474 checks were mailed out, with the total divided about equally in the two years mentioned. Out of this total, some 64 checks were forwarded by mail to points outside of the State. The evidence indicates that since October 24, 1938, there have been 4,582 checks mailed from the office, and of that number 485 checks were sent out of the State. These checks were drawn on the Operation Account. Since that same date, some 250 or 260 checks have been drawn on the Construction Account, and of that number 47 have been sent to points outside the State.

Renville-Sibley Cooperative: This cooperative distributes electricity in five Minnesota counties. It has approximately 525 miles of line and 1,013 consumer...