Walling v. Jacksonville Paper Co.

• Decision Date: 23 January 1947
• Docket Number: Civil Action No. 209-J.
• Citation: 69 F. Supp. 599
• Parties: WALLING, Administrator of Wage and Hour Div., U. S. Dept. of Labor, v. JACKSONVILLE PAPER CO. et al.
• Court: U.S. District Court — Southern District of Florida

69 F. Supp. 599

WALLING, Administrator of Wage and Hour Div., U. S. Dept. of Labor, v. JACKSONVILLE PAPER CO. et al.

Civil Action No. 209-J.

District Court, S. D. Florida, Jacksonville Division.

January 23, 1947.

George A. Downing, Regional Atty., of Atlanta, Ga., James H. Shelton, Sr. Atty., of Atlanta, Ga., for plaintiff.

Louis Kurz and Ragland, Kurz & Layton, all of Jacksonville, Fla., for defendants.

De VANE, District Judge.

This case is again before the Court on an application of the Administrator of the Wage and Hour Division of the United States Department of Labor, filed April 16, 1946, seeking an adjudication in civil contempt of the defendants based on alleged violations of the terms of the Judgment of this Court entered August 29, 1941, and of the Amended and Modified Judgment entered June 3, 1943.

On July 8, 1940, petitioner's predecessor filed a complaint against all the above named defendants seeking an injunction under Section 17 of the Fair Labor Standards Act, 29 U.S.C.A. §§ 201 et seq., 217, against alleged violations of said Act. After trial the Court, on August 29, 1941, entered a final judgment against the co-partner defendants doing business as Southern Industries and against the Jacksonville Paper Company as to its operations in its main office and warehouse in Jacksonville and against the following branches: Jacksonville Paper Company, Jacksonville; Capitol Paper Company, Tallahassee; Pensacola Paper Company, Pensacola; Partin Paper Company, Mobile, Alabama; and against the Atlantic Paper Company, Savannah, Georgia. The Court held that employees of the Jacksonville Paper Company at the following branches were not subject to the terms and provisions of the Wage and Hour law, to-wit: Tampa Paper Company, Tampa; Lakeland Paper Company, Lakeland; Central Paper Company, Orlando; East Coast Paper Company, West Palm Beach; Everglades Paper Company, Miami; Pinellas Paper Company, St. Petersburg, all in the State of Florida, and Macon Paper Company, Macon, Georgia.

Both sides appealed and the Circuit Court of Appeals in Fleming, Administrator, v. Jacksonville Paper Company et al., and visa versa, 5 Cir., 128 F.2d 395, reversed the lower court primarily on the ground that the judgment and injunctive order went beyond the relief sought by plaintiff and directed that a new judgment and injunctive order be entered restricting the injunction to prohibition of violations alleged in the complaint. The Circuit Court of Appeals held that the duties of each particular employee would govern the coverage, but held against the contention of the Administrator that all employees of all branches were within the Act because the merchandise handled by them, to a large extent, came from outside the State. Certiorari was granted by the Supreme Court of the United States and in Walling, Administrator, v. Jacksonville Paper Company, 317 U.S. 564, 63 S.Ct. 332, 335, 87 L.Ed. 460, the Supreme Court modified and as modified affirmed the judgment of the Circuit Court of Appeals.

The Supreme Court held that that part of the decision of the Circuit Court of Appeals, which held that "any pause at the warehouse is sufficient to deprive the remainder of the journey of its interstate status" was too restrictive. The Supreme Court held that a temporary pause at the warehouse does not mean that goods are no longer "in commerce," within the meaning of the Act; if the halt in the movement of the goods is a convenient and natural step in the process of getting them to their final destination they remain in commerce until they reach those points. The Court held, however, that the Administrator had not sustained the burden which was on him to show that the goods continued in commerce where they passed through defendant's warehouse. This question was left for decision by the District Court after further evidence thereon.

Following the decision of the Supreme Court, the lower Court, without further hearing, entered an amended and modified judgment pursuant to the mandate of the Supreme Court, enjoining the defendant from violating the specific provisions of the Wage and Hour Act, with which they had been charged in the complaint and which the Circuit Court of Appeals and the Supreme Court had determined they were violating.

None of the practices now complained of and for which plaintiff asks the Court to adjudge the defendants in civil contempt were specifically enjoined by the judgment of August 29, 1941, or by the judgment of June 3, 1943, although most of the practices were in existence at the time these orders were entered. The reason for this grew out of the fact that the first trial of this case centered around the controversy as to what extent the defendants were subject to the Act. Nothing further was decided in the first trial of this case and that question was not fully decided.

The questions the Court now has before it may be summarized as follows:

1. Are the employees of the Jacksonville Paper Company, at its branches in Tampa, Orlando, St. Petersburg, Lakeland and West Palm Beach, Florida, engaged in work in Interstate Commerce, within the meaning of the Act? Plaintiff offered no proof of violations at three of the branches, viz., Miami and Daytona Beach, Florida, and Macon, Georgia.

2. Is the so-called Accumulated-Hours Plan in violation of the Act?

3. Does the Bonus Plan result in failure to pay required overtime?

4. Were certain employees misclassified as "executive" and "administrative" employees?

5. Did the defendants violate Section 7 of the Act by payment of straight piece rates to piece workers who worked in excess of forty hours per week?

6. Did the defendant violate Sections 6 and 7 of the Act in failing to compensate their employees for hours worked, which were not registered by the time clock?

7. Have the defendants violated the record keeping and shipping provisions of the Act?

These questions will be considered in the order stated. A proper exploration of the facts relating to each question will make this Memorandum Opinion tedious and long.

1. Are the Employees of Jacksonville Paper Company at Its Branches at Tampa, Orlando, St. Petersburg, Lakeland and West Palm Beach, Florida, Engaged in Work in Interstate Commerce, Within the Meaning of the Act?

Jacksonville Paper Company is engaged in the wholesale distribution of a large variety of paper, paper products and related articles. Its home office and warehouse are maintained in Jacksonville, Florida, and the company also maintains thirteen branches. As stated above, the employees at the home office and five of the branches were found, at the original trial of this case, to be subject to the Act. The Court now has before it the question as to whether the employees at the above named branches are also subject to the Act.

Approximately three-fourths to four-fifths of the goods which Jacksonville Paper Company distributes are supplied by manufacturers located in States other than the State of Florida, the remainder being supplied by Southern Industries, the co-partnership defendants herein. The branches we are here considering make no sales across State lines. Employees at these branches are subject to the Act only if goods received at the branches from points outside the State of Florida and sold within the State being then under the Act.

The factual situation surrounding defendant's business and its methods of operating changed substantially during the War which recently ended. Wartime restrictions made it necessary for defendant to allocate to each of its customers a proportionate share of practically all goods purchased by it. This allocation of goods between customers clearly put the merchandise "in commerce" within the meaning of the Act, at all its branches as that term is construed by the decision of the Supreme Court in Walling v. Jacksonville Paper Company, supra. However, the War is now ended. Wartime restrictions have been largely removed and this case should not and will not be decided on the basis of wartime conditions.

Disregarding that part of the evidence touching the effect of the War upon defendant's operations, other evidence undeniably shows that the branches here in question are engaged in Interstate Commerce in certain particulars. The evidence shows that these branches handle and distribute prior order goods, special order goods and drop shipments. They sell citrus, cigar and other labels which are intended for and actually move in shipments of citrus, cigars and other products to out-of-State points. They sell newsprint to newspaper companies with circulations outside the State. Also numerous items are ordered for specific customers with their names, etc., printed upon the merchandise. This class of business is all "in commerce" and the Supreme Court so held in Walling v. Jacksonville Paper Company, supra.

The Opinion of this Court, therefore, as to whether defendant is engaged in Interstate Commerce at the branches here in question will be based upon broader grounds. As pointed out above, approximately three-fourths to four-fifths of all goods sold customers come from outside the State of Florida. The company has an established business with salesmen at each branch and orders are placed for each branch to meet the demands of customers served by the branch as such customers' demands are disclosed by prior orders and purchases. It is impossible for the Court to determine from the evidence precisely what goods shipped in interstate commerce to the branches are purchased to fill contracts or anticipated needs of specific customers and what goods are intended for warehouse purposes to meet demands of unknown customers at the time the goods are ordered. But the evidence leaves no doubt in the mind of the Court that by far the larger part of all goods received at the branches is ordered to fill contracts and anticipated needs of specific customers. And it is the opinion of the Court that the evidence introduced...