Tobin v. Traders Compress Co., 4417.

• Decision Date: 01 October 1952
• Docket Number: No. 4417.,4417.
• Citation: 199 F.2d 8
• Parties: TOBIN, Secretary of Labor, v. TRADERS COMPRESS CO.
• Court: U.S. Court of Appeals — Tenth Circuit

199 F.2d 8 (1952)

TOBIN, Secretary of Labor, v. TRADERS COMPRESS CO.

No. 4417.

United States Court of Appeals Tenth Circuit.

September 2, 1952.

Rehearing Denied October 1, 1952.

Bessie Margolin, Asst. Solicitor, U. S. Department of Labor, Washington, D. C. (William S. Tyson, Solicitor, William A. Lowe, and David F. Babson, Jr., Attorneys, Washington, D. C., on the brief), for appellant.

John H. Todd, Washington, D. C. (C. B. Cochran, Oklahoma City, Okl., on the brief), for appellee.

Before BRATTON, MURRAH and PICKETT, Circuit Judges.

MURRAH, Circuit Judge.

Five employees of the appellee, Traders Compress Company, brought this suit under the Fair Labor Standards Act, c. 676, 52 Stat. 1060; c. 736, 63 Stat. 910, 29 U. S.C.A. § 201 et seq., to recover the difference between the minimum statutory rate of 75¢ per hour and 47½¢ per hour, paid during the period in question. The Compress admitted the employment, the hours worked and the rate of pay, but defended on the ground, among others, that the employees were exempt from the coverage of the Act by virtue of Section 13(a) (10), which provides in material part that the Act shall not apply to "any individual employed within the area of production (as defined by the Administrator), engaged in * * * compressing * * * agricultural * * * commodities for market * * *." The Secretary of Labor, who is entrusted with the administration of the Fair Labor Standards Act, intervened, charging violations of the Act with respect to wages, and sought injunctive relief against such violations.

During the time material here, the Administrator's definitive regulation, 29 C. F.R. Paragraph 536.2, promulgated after hearings, pertinently provided that an individual shall be regarded as employed in the "area of production" within the meaning of Section 13(a) (10) of the Fair Labor Standards Act in compressing agricultural commodities if the establishment where he is employed is located in open country, or in a rural community, and ninety-five per cent of the commodities on which the operations are performed by the establishment come from the normal rural sources of supply located not more than fifty air miles from the establishment. And, for purposes of the regulation, "open country" or "rural community" should not include any city, town or urban place of 2500 or greater population. In short, to be exempt under the definition, the employees here must have been employed in an establishment not in or near a city or town of more than 2500 population, and within fifty air miles of ninety-five per cent of the sources of supply of the commodities received and on which operations at the establishment were performed.

The appellee concedes that its establishment is not within an area of production as defined by the Administrator, but attacks the definition as not within the statutory intendment, hence arbitrary and capricious. It takes the position that since its plant is actually located within an area where cotton is produced in large quantities, and the operations are as described in the exemption, they come within the exemption, and it is contrary to its intended meaning to allow the Administrator to base his definition of "area of production" on artificial distances and population.

The trial court was of the view that the definition gave undue consideration to the achievement of the economic balance between the interest of rural agricultural labor on one hand and urban industrial labor on the other. Observing that the Administrator's definition would almost entirely eliminate compress-warehouses from exemption — a result not intended — the court concluded that the definition had no reasonable relationship to the purposes of the exemption, and was therefore arbitrary and capricious. It accordingly denied any relief, but retained jurisdiction until such time as the Administrator promulgated a valid definition of "area of production".

The definitive regulation now under attack was promulgated after a prior regulation, 29 C.F.R. (Supp.1939) Paragraph 536.2 (a) (d), p. 2240, had been partially condemned in Addison v. Holly Hill Fruit Products, Inc., 322 U.S. 607, 64 S.Ct. 1215, 1219, 88 L.Ed. 1488. In addition to the distance and population criteria, the regulation considered in the Addison case contained a limitation on the allowable number of employees in an establishment within the exempt geographic bounds. The establishment in that case met the population, but not the distance or number of employees test. After reviewing the legislative background of the "parenthetical qualifications `(as defined by the Administrator)'", the court observed that the textual meaning of "area of production" was reinforced by its context; that "area" called for "delimitation of territory in relation to the complicated economic factors that operate between agricultural labor conditions and the labor market of enterprises concerned with agricultural commodities and more or less near their production."

While the court thought the critical phrase most apt, it was certain that in view of the variety of agricultural and industrial conditions throughout the country, the bounds of the area could not be defined by Congress or left to the "inevitable diversities of litigation"; that the function of "boundary making" was therefore left to the experienced and informed judgment of the Administrator with "appropriate discretion to assess all factors relevant to the subject matter." But, the court did not think that discretion to weigh and synthesize the complicated economic factors that operate between agricultural and industrial labor authorized the Administrator to discriminate between the smaller and bigger establishments in determining the area of production. So the court invalidated that part of the Administrator's definition which made the number of employees in an establishment a criterion for statutory exemption.

From the Addison case, we are clear that "area of production" cannot be measured or delineated by the mere fact of production alone. If the task had been deemed that simple, Congress could have easily provided its own definition without resort to administrative implementation. On the contrary, it is evident that Congress intended to exempt some, but not all, of the employees engaged in the enumerated industries, and that the exemptions must be determined by drawing geographic lines in order to differentiate between that which is predominantly rural in its economic sense, and that which is essentially industrial. It is also clear beyond doubt that the function of drawing these geographic lines is committed to the peculiar competence of the Administrator, not the courts. In the resolution of this problem, the Administrator may weigh and synthesize all of the economic factors which enter into the equation between rural and industrial labor conditions. The...