PUBLIC BUILDING AUTHORITY OF BIRMINGHAM v. Goldberg

• Decision Date: 25 January 1962
• Docket Number: No. 19056.,19056.
• Parties: The PUBLIC BUILDING AUTHORITY OF the CITY OF BIRMINGHAM, Appellant, v. Arthur J. GOLDBERG, Secretary of Labor, United States Department of Labor, Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

298 F.2d 367 (1962)

The PUBLIC BUILDING AUTHORITY OF the CITY OF BIRMINGHAM, Appellant, v. Arthur J. GOLDBERG, Secretary of Labor, United States Department of Labor, Appellee.

No. 19056.

United States Court of Appeals Fifth Circuit.

January 25, 1962.

J. M. Breckenridge, Birmingham, Ala., for appellant.

Bessie Margolin, Asst. Sol., Morton Liftin, Atty., Dept. of Labor, Charles Donahue, Sol. of Labor, Jacob I. Karro, Isabelle R. Cappello, Attys., Dept. of Labor, Washington, D. C., Beverley R. Worrell, Regional Atty., Dept. of Labor, Birmingham, Ala., for appellee.

Before TUTTLE, Chief Judge and POPE^* and GEWIN, Circuit Judges.

TUTTLE, Chief Judge.

This is an appeal by the Public Building Authority of the City of Birmingham, an intervenor, from a judgment enjoining minimum wage, overtime and record-keeping violations of the Fair Labor Standards Act, 29 U.S.C.A. § 201 et seq., by Building Management Corporation, one of the three defendants below. The sole question on appeal is whether the employees in question are covered by the Act.

Appellant is a political subdivision of the state of Alabama which was organized for the purpose of providing buildings and facilities for lease by the city, county and the United States. It is the owner of the Social Security Building in Birmingham which is leased to the United States. The building is occupied exclusively by three federal agencies: (1) the Birmingham Payment Center of the Bureau of Old Age and Survivors' Insurance, Social Security Administration; (2) the Birmingham Regional Office of the Bureau of Accounts, Division of Disbursements, United States Treasury; and (3) the Communications Center of the General Services Administration.

The Payment Center "is principally concerned with and directed toward the timely issuance of Social Security benefit checks" to claimants in ten Southeastern states. The employees of the Center process applications for social security benefits and determine whether and to what extent claimants are entitled to benefits. They certify their findings to the Treasury Disbursing Office which is responsible for the actual preparation and mailing of the checks to beneficiaries. In a typical month, the Disbursing Office produces and mails almost two million checks, the great majority of which go to people outside the State of Alabama. The Communications Center is a small office containing a telephone exchange operated by the General Services Administration.

The Social Security Building is managed by the Building Management Corporation under a contract with the appellant which specifies that the Corporation is the "exclusive agent" of the appellant. Under the contract, the Corporation is required to hire and supervise maids, janitors, nightwatchmen, etc., to maintain and service the building. Apart from having the right to approve the number of employees hired by the Corporation, appellant has nothing whatever to do with the hiring, firing, supervision or payment of these employees. The question on appeal is whether these employees are covered by the F.L.S.A. The District Court held that they are.

The following are the pertinent provisions of the F.L.S.A.:

"Sec. 3. As used in this Act —

* * * * * *

"(b) `Commerce\' means * * * transportation, transmission, or communication among the several States or between any State and any place outside thereof.

* * * * * *

"(d) `Employer\' * * * shall not include * * * any State or political subdivision of a State * *

* * * * * *

"(i) `Goods\' means * * * articles or subjects of commerce of any character * * *

"(j) `Produced\' means produced, manufactured, mined or handled, or in any other manner worked on in any State; and for the purposes of this Act an employee shall be deemed to have been engaged in the production of goods if such employee was employed in producing, manufacturing, handling, transporting, or in any other manner working on such goods, or in any closely related process or occupation directly essential to the production thereof, in any State."

An "employer" must comply with the minimum wage, overtime and record-keeping provisions of the Act with respect to all its employees who are "engaged in commerce or in the production of goods for commerce."

It is clear that the employees in question are not engaged in "commerce" as that term is defined in the Act. It is equally clear that these employees are not engaged in the actual production of goods for commerce. If they are covered by the Act, it must be on the theory that the federal employees in the building are engaged in the production of goods for commerce, and that the employees in question are engaged in a "closely related process or occupation directly essential" to that production.

Thus, there are three questions involved in this appeal. First, are the employees in question actually or constructively the employees of appellant, and thereby exempt from coverage because appellant is a political subdivision of a state and not an "employer" within the meaning of that term as defined in the Act? Second, are the federal employees in the building engaged in the production of goods for commerce? Third, if the federal employees are engaged in the production of goods for commerce, are the employees in question engaged in any "closely related process or occupation directly essential" to that production?

With respect to the first question, the decided cases make clear that the employees cannot be considered as the employees of the appellant in view of the fact that appellant exercises almost no control over their work. See Powell v. United States Cartridge Co., 339 U.S. 497, 70 S.Ct. 755, 94 L.Ed. 1017 and cases cited in 29 U.S.C.A. § 203, notes 119, 123 and 124.

The solution to the second question is not so simple. If we were to consider the matter as one of first impression, we would find it difficult to say that conceptually either the Social Security employees, engaged in working up claims and data for the payment or rejection of Social Security...