United States v. New England Coal and Coke Company, 6064.

• Decision Date: 04 June 1963
• Docket Number: No. 6064.,6064.
• Citation: 318 F.2d 138
• Parties: UNITED STATES of America, Plaintiff, Appellant, v. NEW ENGLAND COAL AND COKE COMPANY, Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

318 F.2d 138 (1963)

UNITED STATES of America, Plaintiff, Appellant, v. NEW ENGLAND COAL AND COKE COMPANY, Defendant, Appellee.

No. 6064.

United States Court of Appeals First Circuit.

Heard March 4, 1963.

Decided June 4, 1963.

David L. Rose, Atty., Dept. of Justice, with whom Joseph D. Guilfoyle, Acting Asst. Atty. Gen., W. Arthur Garrity, Jr., U. S. Atty., and Alan S. Rosenthal, Atty. Dept. of Justice, were on brief, for appellant.

Francis J. Vaas, Boston, Mass., with whom James S. Eastham, William M. Brady, Boston, Mass., John J. Glessner, III, and Ropes & Gray, Boston, Mass., were on brief, for appellee.

Before HARTIGAN and ALDRICH, Circuit Judges, and GIGNOUX, District Judge.

GIGNOUX, District Judge.

The United States of America appeals from a summary judgment dismissing its action against New England Coal and Coke Company for the recovery of damages claimed to be due the United States by reason of alleged violations of the Walsh-Healey Public Contracts Act, 41 U.S.C. § 35 et seq.

The Walsh-Healey Public Contracts Act, the pertinent portions of which are set forth in the margin,¹ provides that only manufacturers and regular dealers² are eligible to bid upon government contracts for the manufacture or furnishing of materials and supplies in amounts exceeding $10,000, and that all such contracts shall contain certain representations and stipulations prescribing minimum labor standards to be observed with respect to "all persons employed by the contractor" in the performance of such contracts. This appeal presents the question of whether a regular dealer, who contracts as such to furnish goods to the government, is responsible for the failure of its suppliers to comply with Walsh-Healey standards with respect to the employees of the suppliers.

The basic facts were found by a Department of Labor hearing examiner,³ and are not in dispute. New England has been a regular dealer in coal since its organization in 1905. It purchases coal from mines in coal-mining states, has the coal transported by ship to its docks in Boston Harbor, and delivers coal from its stockpiles there to industrial and commercial consumers in the New England area.

In the normal course of its business, New England successfully bid upon and was awarded four contracts with the government to supply coal, of a type known as Beacon Stoker, to various government installations in the Boston area during the period January 1, 1957 through June 30, 1959. Each contract represented that New England was a regular dealer in coal,⁴ and contained the other representations and stipulations required by the Walsh-Healey Act. Each contract also specified that the coal was to be obtained by New England from "Mary Frances No. 7" mine, which was owned by the Mary Frances Coal Company, of Pax, West Virginia.⁵

New England issued purchase orders to the Mary Frances Coal Company, which was one of its regular suppliers, for the amount of coal called for by the government contracts. Mary Frances was in no way affiliated with New England or subject to its control. To fill these orders Mary Frances obtained the coal which it sold to New England from three sources: (1) from its own Mary Frances No. 7 mine, produced by its own employees; (2) from so-called "contractors," who mined coal on mining properties leased from Mary Frances; and (3) from other suppliers, who operated mines on other properties not owned by Mary Frances. Mary Frances collected, mingled and processed the coal from all these sources at its tipple at Willis Branch, West Virginia, for sale to New England and other customers in the normal course of its business. The coal sold to New England was shipped by railroad to the coast and from there by coast-wise colliers to New England's stockpiles in Boston. In addition, the Beacon Stoker coal from New England's other sources was mingled during shipment and in the stockpiles from which it made deliveries to the government.

The Beacon Stoker coal in New England's stockpiles was of the grade and quality required by the government contracts, although only a small percentage had in fact been secured from Mary Frances No. 7 mine. During the period in question, only 6.86% of this coal was purchased from Mary Frances, and the remaining 93.14% was obtained from fifteen other producing mines. The coal from all sources was intermingled. During the same period, only 11.64% of New England's total deliveries from its Beacon Stoker stockpiles went to the government.

The basis of the government's complaint (in this action and in the administrative proceedings) is that certain employees of the contractors and suppliers who furnished the raw coal to Mary Frances were not paid in accordance with the minimum wage and overtime requirements of the Walsh-Healey Act and that their working conditions did not meet the Act's health and safety standards.⁶ The theory on which the government relies is that the Walsh-Healey stipulations agreed to by New England applied to the employees of these contractors and suppliers, as well as to New England's own employees. On cross-motions for summary judgment, based upon the administrative record, the district court entered judgment for New England on the ground that the employees of such contractors and suppliers were not "persons employed by the contractor" within the meaning of the Walsh-Healey Act, and that accordingly the Walsh-Healey stipulations agreed to by New England did not apply to them. The sole issue presented by this appeal is the correctness of this ruling.

The heart of the government's case is its contention that the phrase "all persons employed by the contractor" as used in the Walsh-Healey Act includes all persons "utilized" by the contractor in the performance of his contract, and is not limited to the contractor's own employees. From this, the government goes on to argue that the employees of Mary Frances' suppliers were persons utilized by New England in the performance of its contracts, since the coal furnished by New England to the government included coal shipped to New England by Mary Frances, at least some of which was produced by Mary Frances' substandard suppliers.⁷

We cannot agree. In our view, the interpretation suggested by the government runs contrary to the plain meaning of the language of the Act, the clear intent of Congress as manifested by the Act's legislative history, and any reasonable interpretation of the regulations and rulings issued under the Act. We also deem it significant that although the Act has been in effect since 1936, the government has cited no administrative or court decision which squarely supports its position.

Established principles must guide us in our construction of the Walsh-Healey Act as it applies to the issue raised by this appeal. "In matters of statutory construction the duty of this Court is to give effect to the intent of Congress, and in doing so our first reference is of course to the literal meaning of words employed." Flora v. United States, 357 U.S. 63, 65, 78 S.Ct. 1079, 1081, 2 L.Ed.2d 1165 (1958). Unless the contrary appears, it is presumed that statutory words were used in their ordinary sense. Richards v. United States, 369 U.S. 1, 9, 82 S.Ct. 585, 7 L.Ed.2d 492 (1962); Massachusetts Protective Ass'n, Inc. v. United States, 114 F.2d 304, 310-311 (1st Cir. 1940). A primary consideration is "the mischief to be corrected and the end to be attained" by the enactment of the legislation, Warner v. Goltra, 293 U.S. 155, 158, 55 S.Ct. 46, 48, 79 L. Ed. 254 (1934); United States v. Silk, 331 U.S. 704, 713, 67 S.Ct. 1463, 91 L.Ed. 1757 (1947); N. L. R. B. v. Hearst Publications, Inc., 322 U.S. 111, 124, 64 S.Ct. 851, 88 L.Ed. 1170 (1944); and, where possible, its terms should be construed to give effect to the Congressional intent. Sinclair Refining Co. v. Atkinson, 370 U.S. 195, 215, 82 S.Ct. 1328, 8 L.Ed.2d 440 (1962); United States v. Silk, supra; N. L. R. B. v. Hearst Publications, Inc., supra; United States v. Darby, 312 U.S. 100, 115, 61 S.Ct. 451, 85 L.Ed. 609 (1941). Extrinsic aids such as the legislative history of the Act, United States v. Wise, 370 U.S. 405, 414, 82 S.Ct. 1354, 8 L.Ed.2d 590 (1962); Flora v. United States, 362 U.S. 145, 151, 80 S.Ct. 630, 4 L.Ed.2d 623 (1960); Porter v. Murray, 156 F.2d 781, 785 (1st Cir. 1946), appeal dismissed sub nom., Murray v. Fleming, 330 U.S. 804, 67 S.Ct. 963, 91 L.Ed. 1262 (1947), and the accepted interpretation of similar language in related legislation, cf., Rutherford Food Corp. v. McComb, 331 U.S. 722, 723, 67 S.Ct. 1473, 91 L.Ed. 1772 (1947), are helpful in interpreting ambiguous statutory language. Finally, administrative interpretations by the agency entrusted with the enforcement of the statute are persuasive. Federal Housing Administration v. Darlington, Inc., 358 U.S. 84, 90, 79 S.Ct. 141, 3 L. Ed.2d 132 (1958); N. L. R. B. v. Hearst Publications, Inc., supra, 322 U.S. at 130-131, 64 S.Ct. at 860-861. However, the power to issue regulations is not the power to change the law, and it is for the courts, to which the task of statutory construction is ultimately entrusted, to determine whether or not administrative interpretations are consistent with the intent of Congress and the words of the Act. Social Security Board v. Nierotko, 327 U.S. 358, 368-370, 66 S.Ct. 637, 90 L.Ed. 718 (1946); Panama Refining Co. v. Ryan, 293 U.S. 388, 428-429, 55 S.Ct. 241, 79 L.Ed. 446 (1935); Commissioner of Internal Revenue v. Winslow, 113 F.2d 418, 423, 133 A.L.R. 405 (1st Cir. 1940).⁸

With these principles in mind, we turn to a construction of the statutory phrase "all persons employed by the contractor" in the context of the Walsh-Healey Act. The purpose of the Act is not disputed. At a time when Congress was deeply concerned with the improvement of working conditions, the governmental policy of awarding contracts to the lowest bidder favored the sweat-shop operator and the bid broker.⁹ Congress passed the...