Walling v. Peavy-Wilson Lumber Co.

• Decision Date: 15 April 1943
• Docket Number: No. 213.,213.
• Parties: WALLING, Administrator of Wage and Hour Division, United States Department of Labor, v. PEAVY-WILSON LUMBER CO., Inc.
• Court: U.S. District Court — Western District of Louisiana

49 F. Supp. 846

WALLING, Administrator of Wage and Hour Division, United States Department of Labor, v. PEAVY-WILSON LUMBER CO., Inc.

No. 213.

District Court, W. D. Louisiana, Shreveport Division.

April 15, 1943.

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Irving J. Levy, Acting Sol., Mortimer B. Wolf, Asst. Sol., and Bessie Margolin, and Carroll A. Cahen, Attys., United States Department of Labor, all of Washington, D. C., for plaintiff.

R. F. Maguire and J. R. Wells, of Maguire, Voorhis & Wells, both of Orlando, Fla., John B. Files, of Shreveport, La., and James W. Peavy of Lufkin, Tex., for defendant.

PORTERIE, District Judge.

The following statement is to serve a dual purpose: a narrative of the case and a partial findings of fact.

Defendant is a corporation organized under the laws of the State of Louisiana, having its principal office in Louisiana within the jurisdiction of this court. It is engaged in the lumber manufacturing business at Holopaw, Osceola County, in the State of Florida, where it owns and operates a large sawmill, a planing mill, and all necessary appurtenances, and a lumber yard. It also owns timberlands located in Osceola County and Orange County, Florida.

The officers of defendant are: A. J. Peavy, Chairman of the Board; D. L. Handley, President; R. T. Moore, Vice-President; T. E. Trigg, Vice-President; S. G. Sample, Vice-President; J. S. Welsh, Secretary-Treasurer. There are 139 stockholders in defendant company. Its capital stock is $1,000,000.

In connection with its lumber-manufacturing operations in Florida, defendant employed, during the period from October 24, 1938, through October 31, 1941, an average of approximately 325 employees, exclusive of executive, office and company store employees. These employees have been and are engaged in various classes of work which include the felling of timber, transporting of logs from the timberlands to the manufacturing plant, and the different operations at the manufacturing plant. Approximately 200 are employed at the mill and about 125 are employed in log-cutting, skidding, right-of-way and track-laying operations in the woods.

During the period from October 24, 1938, through October 31, 1941, defendant's lumber sales amounted to between $800,000 and $900,000 annually. Substantial portions of the lumber manufactured by defendant are shipped by it to points outside the state of Florida. Some interstate shipments were made practically every day during the aforesaid period, and substantial amounts were shipped in interstate commerce every week during such period. During this three-year period defendant shipped directly out of the state a total of 12,458,296 board feet of lumber to some 26 states and to Ontario and Quebec, Canada, the invoice price of which, less freight, amounted to over half a million dollars ($532,202.00). Substantial additional amounts of lumber were produced for lumber dealers in Florida for subsequent shipment by such dealers to points out of the state of Florida.

During the period involved in this suit, defendant continuously manufactured its lumber with the intent or expectation that some unsegregated part of it would be shipped in interstate commerce. All employees of defendant employed in defendant's woods, sawmill, planing mill and shipping operations, and all employees engaged in any processes or occupations necessary to these operations, in and about Holopaw, Florida, have been engaged in this production of lumber, unsegregated quantities of which have been regularly transported, offered for transportation, or shipped to points outside the state of Florida by the defendant during every week in which defendant has operated since October 24, 1938, through October 31, 1941.

Holopaw, Florida, is, for all practical purposes, a company-owned town. There are some 265 tenant houses, a large general store, and several churches, mainly built with funds of the company, located in the vicinity of the sawmill and business office of defendant. Defendant has been operating its plant at Holopaw since February, 1934. The plant, including the sawmill, the power house, and other appurtenant buildings, together with some 200 tenant houses comprising the town, was purchased in February, 1934, from the J. M. Griffin Lumber Company at a total lump sum price of $82,500.

The J. M. Griffin Lumber Company in about the years 1924-1926 constructed on a four-hundred acre tract — contiguous to the original community — a sawmill and sawmill village which included some 270 dwellings for white and negro employees, boarding houses, hotels, a sawmill, planing mill, power plant, water and light plant, a general merchandising store building, and sundry appurtenant buildings. The property so constructed and developed by the J. M. Griffin Lumber Company was appraised as of December 1, 1926, by Coats and Burchard Company, a nationally known appraisal company, at a then reproductive value of $1,393,805.37.

The town of Holopaw is situated upon Florida State Highway No. 29, a paved highway leading directly from the city of Orlando through Holopaw to Melbourne and the East Coast of Florida. The community is located seventeen miles southeast of St. Cloud, the nearest town of any consequence. The community of Holopaw is served by three stores; the largest is that operated by Peavy-Wilson Lumber Company, a general merchandising store which has done an annual business with gross sales to $150,000 and which draws trade from as far as 25 miles; another is a general store operated by the Stevens Tie and Lumber Co. which is about a third the size of the Peavy-Wilson Lumber Co. store; and the third is a small store operated by J. M. Sullivan.

The employees of the company may, but are in no manner required to, rent dwellings from the company. They may trade at the company store but that is strictly a matter of choice. The small store operated by the railroad tie company has offered no serious competition to defendant's store, though all the laborers are free to purchase at the other stores, or at the city of Orlando and at St. Cloud, Kissimmee, the county seat, and elsewhere, and, also, are free to order goods from wherever they please. The company store carries a full assortment of merchandise and the prices are invariably not higher than elsewhere, not higher even than in the nearby city of Orlando, and ofttimes cheaper.

The Administrator's regulations, part 531, defining the term "reasonable cost" to the employer "of furnishing" the employee "with board, lodging, or other facilities" with respect to Section 3(m) of the Act, 29 U.S.C.A. § 203(m), were issued after an informal conference between Mr. Joseph Rauh, Jr., of the Wage and Hour Division, and certain individuals, arranged by Mr. Walter White, Assistant to the Chairman of the Business Advisory Council of the Department of Commerce, and with the consent of the Administrator of the Fair Labor Standards Act, 29 U.S.C. A. § 201 et seq. This informal conference was held in Washington, D. C., on October 17, 1938. It was attended by several individuals who, when acting in their official characters or capacities of employment, were connected with certain trade associations, which included two coal associations, the National Petroleum Association, the Textile Association, the Southeastern Railways Association, the American Mining Congress, the National Sand and Gravel Association, and the National Lumber Manufacturers Association. These individuals were invited to give of such knowledge as they might have with respect to the effect of the regulations on the businesses which might be affected. According to Mr. Walter White, who arranged the informal conference, those invited were expected to contribute such knowledge as they had of the industries to be influenced by the regulations. "They were told they were to come there to discuss this matter, but not in any way to commit any member of their association if they happened to be an association man." Under the terms of the invitation extended it was understood they were not to commit themselves or any organization or industry.

Mr. Henry Bahr, who was Assistant to the Secretary-Manager of the National Lumber Manufacturers Association, was in attendance at the informal conference. He was requested by Mr. Joseph Rauh, Jr., then an attorney on the staff of the General Counsel of the Wage and Hour Division, not to remove the draft of the regulations from the room nor to discuss the conference or the provisions of the proposed regulations with any of the companies in the lumber industry. It does not appear from the evidence in this case that any lumber manufacturer was ever advised of the regulations until after their adoption. The defendant is a member of the Southern Pine Association and the Southern Pine Association is a subscriber to the services of the National Lumber Manufacturers Association.

The Administrator's regulations provide a procedure whereby an employer might apply for a specific determination of the cost of board, lodging and other facilities furnished by him. It appears that defendant, while not making a formal demand for such determination, did request that the Administrator assist it in ascertaining the appropriate charge to be made as rental for dwellings and in the working out of an appropriate formula in operating the company store.

Upon the passage of the Fair Labor Standards Act, Mr. A. J. Peavy, then President and Executive Officer of Peavy-Wilson Lumber Company, Inc., instructed Mr. D. L. Handley, then Vice-President in charge of the operations of the plant, to comply with the Fair Labor Standards Act. The first contact that any representative of the company had with a representative of the Wage and Hour Law was in March of 1939 when Mr. Handley met Mr. Andrews, then Administrator of the Fair Labor...