West Kentucky Coal Co. v. Walling

• Decision Date: 12 February 1946
• Docket Number: No. 10044.,10044.
• Citation: 153 F.2d 582
• Parties: WEST KENTUCKY COAL CO. v. WALLING, Administrator of Wage and Hour Division, U. S. Dept. of Labor.
• Court: U.S. Court of Appeals — Sixth Circuit

153 F.2d 582 (1946)

WEST KENTUCKY COAL CO. v. WALLING, Administrator of Wage and Hour Division, U. S. Dept. of Labor.

No. 10044.

Circuit Court of Appeals, Sixth Circuit.

February 12, 1946.

James G. Wheeler, of Paducah, Ky. (James G. Wheeler, of Paducah, Ky., and Lucius E. Burch, Jr. and C. O. Franklin, both of Memphis Tenn., on the brief), for appellant.

Faye Blackburn, of Washington, D. C. (William S. Tyson and Bessie Margolin, both of Washington, D. C., Glenn Elliott, of Nashville, Tenn., and Faye Blackburn and Helen Grundstein, both of Washington, D. C., on the brief), for appellee.

Before ALLEN and MARTIN, Circuit Judges, and PICARD, District Judge.

ALLEN, Circuit Judge.

The District Court issued an injunction restraining the appellant from committing violations of the Fair Labor Standards Act, Title 29, U.S.C. § 201 et seq, 29 U.S.C.A. § 201 et seq. The principal questions presented are whether appellant's employees are engaged in commerce or in production of goods for commerce, and are exempt from the operation of the Act by reason of being employed in a retail establishment, within the meaning of § 13(a) (2) of the Act.

Appellant, a New Jersey corporation, owns and operates coal mines in Kentucky and with two of its subsidiaries distributes coal in Kentucky, Tennessee, Arkansas, Mississippi, and other states. It transports coal on its own railroad in Kentucky and on its barges on the Ohio and Mississippi Rivers. The instant controversy relates to appellant's sales outlet in Memphis, Tennessee, from which coal is distributed to Tennessee, Arkansas, Louisiana and Mississippi. Appellant has connected with its Memphis establishment two coal yards, an uptown office, a barge fleet on the Arkansas side of the river, a tugboat and equipment for loading and unloading coal, and elevators with power-driven machinery for screening and sorting coal. In this case we are not concerned with the operation of yard No. 2. About 35 persons are employed in yard No. 1 unloading, ordering, receiving and handling coal sent in from other states, or distributed outside of Tennessee, preparing it for use and supplying it to various consumers, including local manufacturers who use it on a large scale in the production of goods for interstate commerce.

As a basis for its holding that these employees were engaged in the production of goods for commerce, within Title 29, U.S. C., § 203(j), 29 U.S.C.A. § 203(j), the District Court made extensive findings of fact which reveal in substance that all coal distributed at Memphis comes from outside the state and is unloaded by appellant's Memphis employees who feed the coal into elevators for screening. All of the Memphis employees are under the supervision of the local manager. They are transferred at need from one job to another, certain of them working in turn on the steam shovel, the conveyor, the elevator, unloading from freight cars, acting as watchmen, performing services on the tug, maintaining the unloading and screening equipment and making truck deliveries. Substantial quantities of coal are sold to boats and barges operating in commerce on the Mississippi, and truck deliveries to concerns engaged in the production of goods for commerce constituted more than 50% of the total of truck deliveries for the period from January 1, 1943, to June 30, 1943.

The District Court's findings of fact are based upon substantial evidence and support its conclusions. Employees who unload extrastate goods are engaged in commerce Allesandro v. Smith, 6 Cir., 136 F.2d 75, 149 A.L.R. 382; Walling v. Consumers Co., 7 Cir., 149 F.2d 626, as are also employees participating through clerical work or otherwise in the receipt of coal from other states and in the handling and transporting of coal on extrastate orders. Walling v. Jacksonville Paper Co., 5 Cir., 128 F.2d 395, 398, affirmed and modified, 317 U.S. 564, 63 S.Ct. 332, 87 L.Ed. 460; Walling v. Mutual Wholesale Food & Supply Co., 8 Cir., 141 F.2d 331, 338, 339. Employees engaged in screening, processing and preparing goods for interstate distribution are engaged in the production of goods for commerce, for the term "produced" in the statute relates "to all steps, whether manufacturing or not, which lead to readiness for putting goods into the stream of commerce." Western Union Telegraph Co. v. Lenroot, 323 U.S. 490, 65 S.Ct. 335, 342. Moreover, more than 50% of appellant's coal is used in the manufacture of goods for commerce. It follows that appellant's employees who furnish coal for such use or engage in a process or occupation necessary for the use of coal in such production are covered by the Act. Walling v. Roland Electrical Co., 4 Cir., 146 F.2d 745; Reynolds v. Salt River Valley Water Users Ass'n, 9 Cir., 143 F.2d 863. The District Court correctly concluded that appellant's employees are engaged in commerce or in a process or occupation necessary to the production of goods for commerce and are covered by the Act unless exempted by its terms.

The most important question in the case is whether the appellant's employees are exempt from the operation of the Fair Labor Standards Act within the meaning of § 13(a) (2), Title 29, § 213(a) (2), 29 U.S. C.A. § 213(a) (2), which provides that sections 206 and 207 "shall not apply with respect to * * * any employee engaged in any retail or service establishment the greater part of whose selling or servicing is in intrastate commerce."

The Fair Labor Standards Act constitutes humanitarian and remedial legislation, Tennessee Coal, Iron & R. Co. v. Muscoda Local No. 123, 321 U.S. 590, 597, 64 S.Ct. 698, 88 L.Ed. 949, and any exemption from these provisions must be narrowly construed. A. H. Phillips, Inc. v. Walling, 324 U.S. 490, 493, 65 S.Ct. 807, 157 A.L.R. 876.

Appellant's intrastate sales for the sixmonth period preceding the trial constituted 69.52% of total sales. It urges that within the definition of "retail" generally accepted in the coal industry, as shown by definitions of the Solid Fuel Administration for War, the Bituminous Coal Division, the Office of Defense Transportation, the Office of Price Administration, and the testimony of witnesses long connected with the coal industry, the operation of the Memphis outlet is, without controversy, retail. These administrative offices and coal dealers in substance define a retail sale as being any sale of less than a carload lot of coal, and this record shows that more than 50% of the coal handled through the Memphis outlet is sold in less than carload lots, being distributed by truck.

The District Court, although concluding that the definition accepted by the coal industry and the governmental agencies might be considered by the court in determining whether or not a business comes within the retail exemption, held that the definition is not controlling, decided that the exemptions accorded retail establishments under the Act must be applied uniformly to all engaged in commerce or the production of goods for commerce, and that the appellant's Memphis outlet does not fall within the meaning of "retail establishment" under the statute.

The definition of retail used in the coal industry has existed over a number of years prior to the enactment of the Fair Labor Standards Act, and cannot therefore be said to have been devised in order to secure an exemption from the statute. However, we think the court correctly construed the statutory term under the facts in this case. The special trade meaning, though long established, is not controlling. Tennessee Coal, Iron & R. Co. v. Muscoda Local No. 123, supra, 321 U.S. 590, 602, 64 S.Ct. 698, 88 L.Ed. 949. The Administrator is not authorized to define the term "retail," since his only authority in the field of definition relates to other terms listed in § 13(a) (1) and § 13 (a) (10) of the Act, Title 29, § 213(a) (1) and (10) 29 U.S.C.A. § 213, (a) (1, 10). Therefore we do not construe his interpretative bulletin defining retail, but seek the congressional intent in the ordinary meaning of the words employed. Thus tested, appellant's very considerable transactions in Memphis reveal by the character of the trade carried on with reference to the quantity of goods sold to individual customers, the varying and non-uniform prices received, and the use made of the coal by those who purchase it, that the greater part of the selling of the Memphis outlet falls outside of the ordinary meaning of the word "retail." As defined by Webster, a retail sale is a sale "in small quantities or parcels * * * directly to the consumer." This is contrasted with wholesaling, in which the purpose of the customer is to resell the goods or to use them for business needs. 13 Encyclopedia of Social Sciences, 411. A test of wholesaling, as stated by Beckman and Engle in Wholesaling, Principles and Practice, is whether the purchaser is actuated solely by a profit or business motive in making the purchase, or by a desire to satisfy his own personal wants or those of his family or...