St. Johns River Shipbuilding Co. v. Adams

• Decision Date: 12 December 1947
• Docket Number: No. 12000.,12000.
• Citation: 164 F.2d 1012
• Parties: ST. JOHNS RIVER SHIPBUILDING CO. v. ADAMS et al.
• Court: U.S. Court of Appeals — Fifth Circuit

164 F.2d 1012 (1947)

ST. JOHNS RIVER SHIPBUILDING CO. v. ADAMS et al.

No. 12000.

Circuit Court of Appeals, Fifth Circuit.

December 12, 1947.

Walter F. Rogers and Francis D. Wheeler, both of Jacksonville, Fla., for appellant.

J. Ollie Edmunds and Alston Cockrell, both of Jacksonville, Fla., for appellees.

Before SIBLEY, HUTCHESON, HOLMES, McCORD, WALLER, and LEE, Circuit Judges.

SIBLEY, Circuit Judge.

R. A. Adams, an employee of St. Johns River Shipbuilding Company, brought suit for himself and others similarly situated for time and a half pay for hours worked in excess of forty hours per week between January 1, 1942, and July 31, 1945, plus liquidated damages and attorneys fee, by virtue of the Fair Labor Standards Act. Other employees intervened, a trial was had, and judgment was given in favor of the plaintiffs who were "expediters" and "sergeants of the guard," on a holding that they were not excepted from the Act as administrative or executive employees; but against the editor of a plant magazine, on a holding that he was an administrative employee and not within the Act. The Company alone appeals.

Since the trial the so-called Portalto-Portal Act has been passed, 61 Stat. 84, 29 U.S.C.A. § 251 et seq. It appears to have a bearing upon the question of limitation raised in the case (See McCloskey & Co. v. Eckart, 5 Cir., 164 F.2d 257); and also on the question whether under Section 9 thereof the Company is excused because in fixing and paying the salaries of plaintiff and intervenors without reference to overtime it acted in good faith "in reliance on administrative regulation, order, ruling, approval or interpretation of any agency of the United States, or any administrative practice or enforcement policy of any such agency with respect to the class of employees to which he belonged." The Company asserts and offered evidence to show that these employees were classified and their salaries fixed in cooperation with the United States Maritime Commission, the National Labor Relations Board, and the Salary Stabilization Unit of the Bureau of Internal Revenue.^* The precise things done or relied on have not been shown or adjudged, nor whether they fall within the intent of Section 9. The general finding of the district court that the Company acted in good faith in the matter of salary payments was made before and without reference to the Portal-to-Portal Act and is not a sufficient basis for us to direct the dismissal of the claims, as we have been moved to do by the Company. The alternative motion that the judgment be set aside and the case be remanded for reexamination under the new legislation we will grant. Carpenter v. Wabash Railway Co., 309 U.S. 23, 27, 60 S.Ct. 416, 84 L.Ed. 558; Alaska Juneau Gold Mining Co. v. Robertson, 331 U.S. 793, 67 S.Ct. 1728; 149 Madison Ave. Corp. v. Asselta, 331 U.S. 795, 67 S.Ct. 1726.

We might here leave the case; but since the question whether the plaintiffs were employed in "producing goods for commerce" (which is their sole claim for the application to them of the Fair Labor Standards Act of 1938, 29 U.S.C.A. § 201 et seq.) has been fully investigated in the district court and argued before us, we will decide it for the further guidance of that court.

This Company is a private corporation organized in March, 1942, for the sole purpose of entering into contracts with the United States Maritime Commission to construct for the United States a shipyard at Jacksonville, Florida, and to build ships there, using the shipyard without rent. The construction and first shipbuilding contracts were made on March 4, 1942. Thirty "Liberty Ships" were to be completed and turned over to the Commission between Dec. 15, 1942 and Dec. 31, 1943. The shipyard, all tools and material were the property of the United States, as were the vessels at all times, from keel to rigging. The work was all on a cost-plus-variable-fee basis, the variation resting on promptness in executing the work. Most of the material was bought by the government and shipped in. Pay rolls were paid by the Company, but reimbursed weekly. Considerable oversight and direction of work and employees was exercised by government officials. The first ship contract was followed by the second on April 23, 1943, for 52 more Liberty Ships to be finished between February 10, 1944, and December 29, 1944. Lastly, on July 26, 1944, a contract was made to build twelve tankers of a different design, to be finished between March 8, 1945, and May 6, 1945. The last Liberty Ship was turned over to the Commission February 24, 1945, and the last tanker on September 28, 1945. The Company then ceased operations, except to guard the shipyard.

Many circumstances tend to indicate that the Company was itself an agent or agency of the United States, but all its contracts expressly state that it was to act not as agent, but as an independent contractor. Its treasurer testifies this to be his understanding; many other circumstances support that view, and the Company makes no contrary contention before us. So assuming, the plaintiffs are the Company's employees and not employees of the United States, and may be under the Fair Labor Standards Act if producing goods for commerce. None claims to have been engaged in commerce. The petition alleges the Company was engaged in commerce, but it is well settled that not the employer's business, but the employee's work, is what counts. So says the Act, Sect. 7, 29 U.S. C.A. § 207. Kirschbaum v. Walling, 316 U.S. 517, 62 S.Ct. 1116, 86 L.Ed. 1638.

These employees were found to be employed in building ships and doing work essential to that end. Ships are by the definition of the statute included among "goods." Sect. 3(i), 29 U.S.C.A. § 203(i). Ships which are to be used as vehicles of interstate and foreign transportation are fairly "goods for commerce," for the statute, Sect. 3(b), and the Constitution include transportation as commerce. There would be no difficulty save for the fact of war, declared in December, 1941. Yet war does not stop all commerce nor suspend the laws regulating commerce. Goods, including ships, may still be produced for commerce, and we think the Liberty Ships were so produced. The Maritime Commission, normally a peace time agency, made the contracts for these, the contracts reciting as their authority Act No. 247, Aug. 25, 1941, of the 77th Congress, 55 Stat. 669, 681, authorizing it to contract for "merchant vessels of such type, size, and speed as it may determine to be useful for carrying on the commerce of the United States and suitable for conversion into naval or military auxiliaries." The contracts state that the vessels ordered are such vessels. The evidence shows no different purpose in producing them. The Interpretive Bulletin No. 5 of the Wage and Hour Division of the Department of Labor issued in December 1938, revised November, 1939, state: "Employees are engaged in the production of goods for commerce where the employer intends or hopes or has reason to believe that the goods or any unsegregated portion of them will move in interstate commerce. * * * The facts at the time the goods are being produced determine whether an employee is engaged in the production of goods for commerce, and not any subsequent act of his employer, or some third party." Thus the agreed purpose of these ships was primarily commerce, with only a possibility of utilizing them later for war. As the intentions of the owner and builder stood at the time of construction they appear to have been...