Puerto Rico Tobacco Marketing Coop. Ass'n v. McComb

• Decision Date: 28 April 1950
• Docket Number: No. 4417.,4417.
• Citation: 181 F.2d 697
• Parties: PUERTO RICO TOBACCO MARKETING COOPERATIVE ASS'N v. McCOMB.
• Court: U.S. Court of Appeals — First Circuit

181 F.2d 697 (1950)

PUERTO RICO TOBACCO MARKETING COOPERATIVE ASS'N v. McCOMB.

No. 4417.

United States Court of Appeals First Circuit.

April 28, 1950.

E. Martinez Rivera, San Juan, Puerto Rico (Luis Blanco Lugo, San Juan, Puerto Rico, on brief), for appellant.

Bessie Margolin, Assistant Solicitor, Washington, D. C. (William S. Tyson, Solicitor, and William A. Lowe and Harry A. Tuell, all of Washington, D. C. and Kenneth P. Montgomery, Regional Attorney, Santurce, Puerto Rico, on brief), for appellee.

Before MAGRUDER, Chief Judge, and MARIS and WOODBURY, Circuit Judges.

WOODBURY, Circuit Judge.

The Administrator of the Wage and Hour Division, United States Department of Labor, brought the instant action against the Puerto Rico Tobacco Marketing Cooperative Association to restrain it from violating § 15(a) (1), (2), and (5) of the Fair Labor Standards Act of 1938, 52 Stat. 1068, 29 U.S.C.A. § 215(a) (1), (2), (5) with respect to certain of its warehouse and stemmery employees. The court below on stipulated facts and the testimony of one expert witness called by the Administrator, entered judgment for the plaintiff according to the complaint and the defendant thereupon took this appeal.

The defendant is a cooperative association incorporated not for pecuniary profit under Insular Act No. 70 of 1925. Laws of Puerto Rico 1925, p. 368 et seq. It has a principal office in San Juan, and tobacco warehouses and stemmeries in eight other municipalities in the Island. Its warehouse and stemmery operations at Comerio have been stipulated, we take it because they typify its operations of that kind elsewhere, and it is stipulated that all of its employees there "are engaged in processes or occupations necessary to the production of goods for interstate commerce and, therefore, are within the general coverage of the Fair Labor Standards Act and are entitled to its benefits unless they are exempted by specific provisions of the Act." The specific exemption provisions involved are those having to do with agricultural employments embodied in §§ 13(a) (6) and 13 (a) (10) of the Act.

The Association handles only tobacco grown by its members, of whom there are about 7,000, and each member is under contract to market all his tobacco through the Association. The latter by the terms of its contracts with its members takes title to the tobacco as soon as it has "potential existence", but the member is responsible for his crop until he delivers it to the Association. Upon delivery the Association grades and weighs the tobacco, and then processes it for marketing exclusively in continental United States. It is stipulated that the Comerio warehouse and stemmery, and on our assumption its other warehouses and stemmeries also, is a "first concentration point" for all tobacco received and worked upon there within the meaning of that term as used by the Administrator in his definition of "area of production" with respect to Puerto Rico leaf tobacco. Regulations Defining Area of Production, as amended December 1946, § 536.2(a) (2) and (c).

The members first dry their tobacco in barns or sheds on their premises and then deliver it at the Association's warehouses in loose bales or bundles weighing about one quintal, or one hundred pounds. There it is first weighed and receipted for and then graded according to type and quality. Following this the tobacco is put into piles known locally as "estibas" of about 150 quintales and allowed to ferment under controlled conditions of temperature for about two months, during which time the piles are torn down and rebuilt by moving the inside leaves to the outside of the pile, and vice versa, some six or eight times as the fermentation process requires. When this fermentation process, known as bulking, is completed the tobacco is stacked for later stemming.

When the stemming season starts the fermented tobacco is reclassified into tobacco of inferior quality, known as "boliche", and tobacco of superior quality. The "boliche" is not stemmed, but merely fumigated and packed for shipment. The tobacco of superior quality which is to be stemmed is first dipped in water to soften it for the purpose, and then the moistened leaves are left in piles for several days. After this the piles are separated into packages called "pesadas" weighing 5 or 6 pounds and these "pesadas" are wrapped in cloth and taken to a steaming room from which they are later removed for delivery to the stemmers.

Stemming consists in removing the central vein or rib from the tobacco leaf. It is performed manually, usually by women, who hold the point of the vein or rib in their teeth and pull away the sides of the leaf with their hands. The separated leaves of tobacco after stemming are roughly classified by the stemmer and stacked by her on the bench at which she works. Employees known as reviewers check her work, and then carry the stemmed leaves to a place in the warehouse where they are collected for baling into bulks or "tongas" for a second fermentation process similar to the one already described, but lasting only about a month. When the second fermentation process is complete, the tobacco is dried, sorted, classified according to quality, and packed for shipment to the United States.

In addition to the employees engaged in the processes described, the Association also has two or three employees in each warehouse who work during the harvesting season in dispatching material such as fertilizer, cord, Paris green, etc., to the members, and one or more others who deliver this material to the members by truck. It also employs laborers who move tobacco from place to place in the warehouses to prevent spoilage by heat, other laborers who collect, clean and fumigate the scrap tobacco resulting from the stemming process, repair and maintenance men, men who move bales of tobacco ready for shipment, and persons who perform the necessary supervision, clerical and office work.

The Administrator concedes, but only for the purpose of this case, "that within the meaning of the applicable regulations and terms of the law, employees engaged in the receipt of stalk-out-tobacco, in the classification and bulking of such tobacco and in the reclassification, packing, moving and fumigating of such tobacco prior to stemming are exempt from the minimum wage and overtime provisions of the Fair Labor Standards Act, by virtue of Section 13(a) (10) when they are engaged in the listed occupations in an establishment which is a first concentration point for such tobacco." And, as already pointed out, the Administrator also concedes that the defendant's warehouses and stemmeries are in fact first concentration points for tobacco within his own definition. Furthermore the Administrator concedes that the defendant has paid at least the legal minimum wage of 27 cents per hour^* to all of its employees engaged in processing operations from wetting in preparation for stemming on to final shipment. Nor does he allege that the defendant has violated any of the provisions with respect to maximum hours of employment contained in § 7 of the Act.

The conduct of the defendant, which it admits, of which the Administrator complains is the employment of certain of its employees during the same workweek both on work which he concedes is exempt from the minimum wage provisions of the Act and on work which he contends is not exempt, and the payment of those employees at the rate of 27 cents per hour for their time on allegedly non-exempt work but only 25 cents per hour for their time on concededly exempt work. He contends that this split workweek basis for paying these employees is in violation of the Act; they being entitled to the 27 cents per hour minimum wage for every hour worked in every week in which any part of their work is non-exempt. And the Administrator also contends that the defendant has failed to keep the records required by § 11 (c) of the Act with respect to its stemmers, who are paid piece rates, although he concedes that these employees are not employed more than 40 hours in any workweek and are paid substantially more than the legal minimum wage.

The defendant on this appeal rests its defense solely upon the broad dual proposition, first, that all of its employees are exempt from the provisions of the Act for the reason that they are employed in agriculture, within the meaning of § 13(a) (6), and second, that they are also exempt from the provisions of the Act for the reason that they are employed within the area of production in handling and preparing agricultural commodities in their raw or natural state for market, within the meaning of § 13(a) (10).

The defendant's contention that its employees fall within the exemption of § 13(a) (6) because they are "employed in agriculture" as that term is defined in § 3(f) must be categorically rejected on the authority of Farmers Reservoir & Irrigation Co. v. McComb, 337 U.S. 755, 69 S.Ct. 1274, in which the Supreme Court rejected the same contention with respect to the employees of an incorporated mutual ditch company organized on a non-profit basis by a group of farmers in Colorado for the purpose of collecting, storing, and proportionately distributing water to its farmer-members for irrigation purposes. In its opinion in the above cited case the court pointed out, 337 U.S. at page 762 et seq., 69 S.Ct. at page 1278, that the definition of agriculture in § 3(f) had two branches — first a "primary meaning" which includes "farming in all its branches"; specific farming practices, such as cultivation and tillage...