Walling v. News Printing Co.

• Decision Date: 05 March 1945
• Docket Number: No. 8443.,8443.
• Citation: 148 F.2d 57
• Parties: WALLING, Adm'r, Wage and Hour Division, U. S. Dept. of Labor, v. NEWS PRINTING CO., Inc.
• Court: U.S. Court of Appeals — Third Circuit

148 F.2d 57 (1945)

WALLING, Adm'r, Wage and Hour Division, U. S. Dept. of Labor, v. NEWS PRINTING CO., Inc.

No. 8443.

Circuit Court of Appeals, Third Circuit.

Argued December 22, 1943.

Decided March 5, 1945.

Writ of Certiorari Granted May 21, 1945.

Bessie Margolin, of Washington, D. C. (Douglas B. Maggs, Sol., of Washington, D. C., John K. Carroll, Regional Atty., of New York City, and Morton Liftin and Joseph I. Nachman, Attys., both of Washington, D. C., United States Department of Labor, on the brief), for appellant.

Elisha Hanson, of Washington, D. C., and David L. Cole, of Paterson, N. J. (Cole & Morrill, of Paterson, N. J., on the brief), for respondent.

Before BIGGS, GOODRICH, and McLAUGHLIN, Circuit Judges.

Writ of Certiorari Granted May 21, 1945. See 65 S.Ct. 1200.

BIGGS, Circuit Judge.

The Administrator of the Wage and Hour Division, United States Department of Labor, petitioned the court below to enforce a subpoena duces tecum pursuant to the provisions of Section 9 of the Fair Labor Standards Act of 1938, 29 U.S.C.A. § 209, to compel the respondent, News Printing Company, Inc., to produce the books, records and documents described in the subpoena before the Administrator or his representatives at Newark, New Jersey. The records sought to be examined relate to the wages paid to the respondent's employees, the hours of work, and the sale or transportation of newspapers, books, periodicals or goods shipped by the respondent in interstate commerce. The respondent would not permit an examination of its records by agents of the Administrator and refused to obey the subpœna. Consequently the Administrator filed a petition to the court below seeking an order directing the respondent to produce the records covered by the subpœna at such time and place as the court should direct. The petition alleged upon information and belief that respondent was engaged in interstate commerce within the meaning of the Act and was violating Sections 6, 7, 11(c), and 15 (a) (1) (2) (5) of the Act, 29 U.S.C.A. §§ 206, 207, 211(c), and 215(a) (1), (2, 5).

A rule to show cause was issued and the respondent filed a return and answer asserting that it was not within the purview of the Act, that to require it to produce the records specified in the subpœna would constitute a violation of the rights guaranteed to it by the First, Fourth and Fifth Amendments to the Constitution of the United States. The respondent's answer asserted also that it was exempted by the provisions of Section 13(a) (1), 29 U.S. C.A. § 213(a) (1), because it was engaged in "a bona fide executive, administrative, professional, or local retailing capacity, or in the capacity of outside salesman * * *." An affidavit, executed by the president of the respondent, alleged that it was engaged in printing and publishing in Paterson, New Jersey, a daily newspaper called the "Paterson Evening News" with a circulation of more than three thousand copies and that less than 1% of its papers moved in interstate commerce. Other affidavits filed by the respondent, executed by persons who are experts in the newspaper filed, state their conclusions as to what will be the effect of the Act on the newspapers of the United States including that of the respondent. They assert that executing the provisions of the Act will destroy the freedom of the press.

The learned District Judge held that the objections to the subpœna based on the Fifth Amendment were without merit. He held also that other objections made by the respondent based on the Fourth Amendment turned on the question of the coverage of the respondent by the Act. The court thereupon discharged the rule, stating that since the Administrator had not had the opportunity "sufficiently to argue the question of coverage", the matter was left open for further proceedings. See 49 F.Supp. 659, 661.

The Administrator has appealed. The appeal was taken in accordance with the procedure established by the Rules of Civil Procedure, 28 U.S.C.A. following Section 723c, and also in accordance with the former appellate practice. The appellant has stated that it would be helpful if we would designate which manner of taking the appeal was correct. We think that it was the intent of the framers of Rule 81 to provide that the new and improved appellate procedure should apply insofar as appropriate to proceedings such as that sub judice. For an analogy based upon the Criminal Appeals Rules see note 2 to the opinion in United States v. White, 322 U.S. 694, 697, 64 S.Ct. 1248. Cf. McCrone v. United States, 307 U.S. 61, 65, 59 S.Ct. 685, 83 L.Ed. 1108. Cf. also Perkins v. Endicott Johnson Corporation, 2 Cir., 128 F.2d 208, 226, 227. There is no question, however, in the case at bar as to whether the appeal was taken properly.

The Administrator contends that the Act requires the enforcement of the subpœna without a determination by the court that the employer is within the coverage of the Act. The respondent takes the position that in the absence of proof by the Administrator and a determination by the court that the respondent's business is within the purview of the Act, the execution of the subpœna would be unlawful; that the investigation in any event is unlawful because it is in violation of the rights guaranteed to the respondent by the constitutional amendments herein before referred to and also falls outside the power conferred upon Congress by the Commerce Clause, Art. 1, § 8, cl. 3. The respondent treats the proposed investigation as if it were an attempt at regulation and presents in respect to the issue of inspection every constitutional objection which it might assert to regulation under the Act. But an inspection of the records of a corporation is not regulation of the corporation even if information gathered by means of the investigation be employed subsequently as a basis for attempted regulation. Many of the arguments addressed to this court by the respondent would be addressed appropriately to the issue of whether the respondent was subject to the regulatory or penalty provisions of the Act. The court below, however, was concerned only with the question of inspection by the Administrator of the books and records specified in the subpœna.¹

The problem of the execution of a subpœna without proof of coverage by the Act of the corporation on which it is served is not one of original impression except insofar as the question may be affected by the fact that the respondent is engaged in publishing a newspaper. The question has been adjudicated by the Circuit Courts of Appeals for the First, Second, Fifth, Sixth, Seventh, and Eighth Circuits.² With the exception of the Circuit Court of Appeals for the Sixth Circuit and possibly the Circuit Court of Appeals for the Eighth Circuit these tribunals have held that the Administrator might issue a subpœna without proving that the respondent was within the coverage of the Act. In General Tobacco & Grocery Co. v. Fleming, 6 Cir., 125 F.2d 596, 140 A.L.R. 783, the Circuit Court of Appeals for the Sixth Circuit passed on the question of the Tobacco Company's coverage by the Act but concluded that it was not engaged in interstate commerce. The court thereupon reversed the order of the District Court executing the subpœna.

An analogous question was before the Supreme Court in Endicott Johnson Corporation v. Perkins, 317 U.S. 501, 63 S.Ct. 339, 340, 87 L.Ed. 424. In the cited case Mr. Justice Jackson stated that certiorari was granted "because of probable conflict with a holding of the Circuit Court of Appeals for the Sixth Circuit" in General Tobacco & Grocery Co. v. Fleming, supra. The Supreme Court, therefore, took cognizance of the Fair Labor Standards Act in the Endicott Johnson decision though that Act was not before it. The Act which was before the Supreme Court was the Walsh-Healey Public Contracts Act, 49 Stat. 2036, 41 U.S.C.A. § 35-45, and the specific question adjudicated was the right of the Secretary of Labor to issue a subpœna to compel the production of employment records she having reason to believe that the Walsh-Healey Act had been violated by the corporation. The Fair Labor Standards Act is applicable to raise labor standards generally while the Walsh-Healey Act was intended to improve labor standards in plants of corporations contracting with the government. A corporation by making a contract with the United States may voluntarily submit itself to the provisions of the Walsh-Healey Act but this seems immaterial in employing the analogy of the Endicott Johnson decision to the facts of the case at bar. It should be noted especially that the duties of the Secretary of Labor under the Walsh-Healey Act and those of the Administrator of the Fair Labor Standards Act are similarly administrative. In the Endicott Johnson decision the Supreme Court held that the District Court in declining to execute the subpœna had itself decided the question of coverage by the Act, a function which lay primarily within the field of the Secretary of Labor. Mr. Justice Jackson stated, 317 U.S. at page 509, 63 S.Ct. at page 343, 87 L.Ed. 424, "Congress sought to have the procurement officers advised by the experience and discretion of the Secretary rather than of the District Court. To perform her function she must draw inferences and make findings from the same conflicting materials that the District Court considered in anticipating and foreclosing her conclusions." Accordingly, the Supreme Court held that the District Court lacked authority to hear and determine the question of coverage and that it was the court's duty to order the enforcement of the subpœna upon the showing made by the Secretary of Labor. We consider the decision in the cited case as persuasive in determining the issues presented by the case at bar.

In the instant case the showing made by the Administrator is sufficient. Little doubt may be entertained that the respondent's business is within the definition of "Indust...