Veazey Drug Co. v. Fleming, 723.

Citation42 F. Supp. 689
Decision Date16 December 1941
Docket NumberNo. 723.,723.
PartiesVEAZEY DRUG CO. v. FLEMING, Administrator, et al.
CourtUnited States District Courts. 10th Circuit. Western District of Oklahoma

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Everest, McKenzie & Gibbens, of Oklahoma City, Okl., for plaintiff.

Hayson, Jennings & Fisher, of Oklahoma City, Okl., for individual defendants.

VAUGHT, District Judge.

In this action the plaintiff seeks a declaratory judgment defining the rights of certain of its employees under the Fair Labor Standards Act of 1938, 29 U.S.C.A. c. 8, §§ 201-219.

The purpose of this Act is to regulate wages and hours of employment by employees engaged in interstate commerce and under section 213 it specifically exempts "any employee engaged in any retail or service establishment the greater part of whose selling or servicing is in intrastate commerce."

The defendants, Philip Fleming, Administrator of the Wage and Hour Division, United States Department of Labor; G. C. Street, Jr., Regional Director under the Administrator of the Wage and Hour Division, United States Department of Labor; Robert H. Jackson, Attorney General of the United States; and Charles E. Dierker, United States District Attorney for the Western District of Oklahoma, have filed their motions to dismiss for want of jurisdiction and for other reasons. Said motions have been sustained and the only defendants remaining in the case are employees of the plaintiff, Veazey Drug Company.

The facts are stipulated. The plaintiff is an Oklahoma corporation operating a general retail drug business within the city of Oklahoma City, Oklahoma. It operates twenty retail stores situated in various sections of the city and for the convenience of its stores, maintains a warehouse centrally located, to which practically all of the merchandise shipped to said corporation, both from within and without the state, is delivered.

It is admitted that all shipments of merchandise to the plaintiff are delivered by the shipper, or the carrier under orders of the shipper, to the warehouse of the plaintiff, and that the remaining defendants are the persons employed in said warehouse.

In February, 1941, the plaintiff received a letter from the Regional Director stating that his office had received information indicating that the plaintiff's employees probably were subject to the Fair Labor Standards Act. On February 15, the plaintiff replied to this letter, stating that it did not consider that its employees, employed at the warehouse, were subject to the minimum wage or overtime provisions of the Wage and Hour Law. To this letter, the Regional Director replied on February 28, stating "since your statement indicates that you have not complied with the provisions of the Act with respect to such employees, to achieve compliance with the Act's provisions, it will be necessary that you pay each of your present and former employees the difference between the amounts already paid them and the amounts due under the Act."

Because of the different constructions placed upon the Wage and Hour Act by the Regional Director and the plaintiff, and the resulting dissatisfaction created among the employees of said plaintiff, and to have the Act construed with reference to its application to the plaintiff and its employees, this action was filed.

The attitude of the defendant employees is that, if this Act covers their employment, they desire to have their wages paid in accordance therewith; if it does not, that they are entitled to be so advised.

It is agreed that the plaintiff is not engaged in the transportation of merchandise in any manner other than from its warehouse to its various stores, all within the city. The trucks delivering merchandise to the plaintiff, either from the railroad station or from points without the state, deliver the merchandise to the dock of the plaintiff's warehouse, and no employee of the plaintiff company performs any service except to receive the merchandise at the dock. In some instances, certain of the employees may have rendered very limited services in assisting in removing some of the heavy merchandise from the rear end of the truck onto the platform or dock of the plaintiff, but even this limited service is not performed by the said employees until the merchandise has been checked in by the checker, an employee of said plaintiff, and actually received by said plaintiff. The defendants are employed by the plaintiff for the purpose of receiving said goods, checking them with the invoices, and after they are delivered onto the dock of the plaintiff's warehouse, transferring them into the warehouse and marking the retail price thereon, sometimes on the unbroken packages and sometimes after the merchandise has been taken from the original packages.

The real question in controversy is whether or not the assistance rendered by the employees of the plaintiff on the warehouse dock, in receiving the goods from the truck, constitutes interstate commerce within the provisions of the Fair Labor Standards Act.

Under ordinary circumstances it ought not to be necessary to define the distinction between "intrastate" and "interstate commerce," but evidently from the briefs filed in this case and the contention of counsel for the defendants at the hearing in this case, it is necessary to make clear this distinction, and in making this distinction, this court limits its definition of those terms to the definitions as given in the decisions of the federal courts.

The Act itself defines "commerce" as follows: "`Commerce' means trade, commerce, transportation, transmission, or communication among the several States or from any State to any place outside thereof." 29 U.S.C.A. § 203(b).

Intrastate commerce is commerce wholly within a state. If the plaintiff, through its employees, is engaged in intrastate commerce only, then Congress would have no power to enact a measure which would seek to control hours and wages of its employees.

The sole power of Congress to regulate commerce of any character is found in Article I, Section 8 of the Constitution, as follows: "The Congress shall have Power * * * To regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes; * * *"

The first important case in which the Supreme Court of the United States construed this section of the Constitution is Gibbons v. Ogden, 9 Wheat. 1, 22 U.S. 1, 211, 6 L. Ed. 23, and in that famous opinion the court, referring to the right to engage in commerce between the states, said: "In pursuing this inquiry at the bar, it has been said, that the constitution does not confer the right of intercourse between state and state. That right derives its source from those laws whose authority is acknowledged by civilized man throughout the world. This is true. The constitution found it an existing right, and gave to congress the power to regulate it."

Certainly under this construction of the Constitution, the power to engage in commerce and the right to engage in commerce were inherent. The sole power granted to Congress under this provision of the Constitution was to regulate the commerce between the states and with foreign nations. This same line of reasoning was approved in Brown v. Maryland, 12 Wheat. 419, 25 U.S. 419, 6 L.Ed. 678.

Prior to the adoption of the Constitution, the words "interstate and foreign commerce" were not recognized as words with legal significance.

The Constitution gave to Congress, and took from the states, the power to regulate interstate and foreign commerce and, therefore, the necessity for defining interstate and foreign commerce, as well as intrastate commerce, rests ultimately with the Supreme Court.

In Coe v. Errol, 116 U.S. 517, 6 S.Ct. 475, 477, 29 L.Ed. 715, the Supreme Court again had occasion to pass upon this question. The case grew out of a shipment of logs which were cut in New Hampshire for final shipment to Maine. According to custom, they remained in or near the river for a year or more, apparently for the purpose of seasoning. They were taxed while in that condition by the state of New Hampshire and it was held that the tax was valid, as the property was not actually in interstate commerce. The test laid down was when did "they commence their final movement for transportation from the state of their origin to that of their destination," and the court said:

"There must be a point of time when they cease to be governed exclusively by the domestic law, and begin to be governed and protected by the national law of commercial regulation, and that moment seems to us to be a legitimate one for this purpose, in which they commence their final movement for transportation from the state of their origin to that of their destination."

In Hammer v. Dagenhart, 247 U. S. 251, 272, 38 S.Ct. 529, 531, 62 L.Ed. 1101, 3 A.L.R. 649, Ann.Cas.1918E, 724, the court again addressed itself to this rule, and said:

"Commerce `consists of intercourse and traffic * * * and includes the transportation of persons and property, as well as the purchase, sale and exchange of commodities.' The making of goods and the mining of coal are not commerce, nor does the fact that these things are to be afterwards shipped, or used in interstate commerce, make their production a part thereof. Delaware, Lackawanna & Western R. R. Co. v. Yurkonis, 238 U.S. 439, 35 S.Ct. 902, 59 L.Ed. 1397.

"Over interstate transportation, or its incidents, the regulatory power of Congress is ample, but the production of articles, intended for interstate commerce, is a matter of local regulation.

"`When the commerce begins is determined, not by the character of the commodity, nor by the intention of the owner to transfer it to another state for sale, nor by his preparation of it for transportation, but by its actual delivery to a common carrier for transportation, or the actual commencement of its transfer to another state.' Mr. Justice Jackson in Re Greene, C.C., 52 F.104 113. This principle has been recognized often in this court....

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