Wirtz v. Baldor Electric Company

• Decision Date: 31 December 1963
• Docket Number: No. 17770.,17770.
• Citation: 337 F.2d 518
• Parties: W. Willard WIRTZ, Secretary of Labor, Appellant, v. BALDOR ELECTRIC COMPANY et al., Appellees.
• Court: U.S. Court of Appeals — District of Columbia Circuit

337 F.2d 518 (1964)

W. Willard WIRTZ, Secretary of Labor, Appellant, v. BALDOR ELECTRIC COMPANY et al., Appellees.

No. 17770.

United States Court of Appeals District of Columbia Circuit.

Argued June 27, 1963.

Decided December 31, 1963.

Supplemental Opinion After Remand June 29, 1964.

COPYRIGHT MATERIAL OMITTED

Mr. Howard E. Shapiro, Atty., Dept. of Justice, with whom Asst. Atty. Gen. John W. Douglas, Messrs. David C. Acheson, U. S. Atty., Charles Donohue, Sol., Dept. of Labor, Alan S. Rosenthal, Atty., Dept. of Justice, Miss Bessie Margolin, Asst. Sol., Dept. of Labor, and Mr. William A. Lowe, Atty., Dept. of Labor, were on the brief, for appellant. Messrs. Frank Q. Nebeker, Gil Zimmerman and William H. Willcox, Asst. U. S. Attys., also entered appearances for appellant.

Mr. Samuel W. Murphy, Jr., New York City, of the bar of the Court of Appeals of New York, pro hac vice, by special leave of court, with whom Mr. Edward R. Kenney, Washington, D. C., was on the brief, for appellees. Mr. John W. Martin, Jr., Washington, D. C., also entered an appearance for appellees.

Before BAZELON, Chief Judge, and WASHINGTON and WRIGHT, Circuit Judges.

WASHINGTON, Circuit Judge:

The Secretary of Labor appeals from a District Court order setting aside his determination, under the Walsh-Healey Public Contracts Act, 49 STAT. 2036-39, 41 U.S.C. §§ 35-45, of the prevailing minimum wage in the electrical motors and generators industry.¹ The chief questions presented are whether the Secretary of Labor properly based his determination of the prevailing minimum wages in the industry on a broad survey conducted under his auspices, where at the same time (a) he declined to disclose at the hearing the underlying data on which the wage conclusions in the survey were based, and (b) uncontradicted evidence was submitted by the industry which cast serious doubt on the accuracy and reliability of the survey's results.

In the years immediately following the passage of the Walsh-Healey Act these questions could perhaps have been easily answered in the affirmative. In Perkins v. Lukens Steel Co., 310 U.S. 113, 60 S.Ct. 869, 84 L.Ed. 1108 (1940), the Supreme Court held that members of an industry to which the Secretary's minimum wage determination applied had no standing to challenge his action, that the Walsh-Healey Act "was not intended to be a bestowal of litigable rights upon those desirous of selling to the Government", and that the Act evinced a "lack of intention to create any rights for prospective bidders before a purchase is concluded." 310 U.S. at 127, 128, 60 S.Ct. at 877. As a result of the Perkins decision, the Labor Department's procedures in administering the Act were in general not subject to judicial review, and the Department eventually came to rely — as the basis for its minimum wage determinations — on the confidential surveys of prevailing wages conducted by its Bureau of Labor Statistics.²

In 1952, the Walsh-Healey Act and its administration came under fresh scrutiny by Congress. The Fulbright Amendment, 66 STAT. 308, 41 U.S.C. § 43a, enacted in that year, added Section 10 to the Act, the tenor and effect of which will be considered in Part I, immediately following, which deals with the central questions in the case, referred to at the beginning of this opinion.³

I.

Section 10 of the Walsh-Healey Act, added by the Fulbright Amendment, provides in pertinent part:

"(a) Notwithstanding any provision of section 4 of the Administrative Procedure Act, such Act shall be applicable in the administration of sections 1 to 5 and 7 to 9 of this Act.

"(b) All wage determinations under section 1(b) of this Act shall be made on the record after opportunity for a hearing. Review of any such wage determination * * * may be had within ninety days after such determination is made * * * by any person adversely affected or aggrieved thereby, who shall be deemed to include any manufacturer of, or regular dealer in, materials, supplies, articles or equipment purchased or to be purchased by the Government from any source, who is in any industry to which such wage determination is applicable."

The relevant portion of Section 7(c) of the Administrative Procedure Act, 60 STAT. 241, 5 U.S.C. § 1006(c), states:

"Except as statutes otherwise provide, the proponent of a rule or order shall have the burden of proof. * * * no sanction shall be imposed or rule or order be issued except upon consideration of the whole record or such portions thereof as may be cited by any party and as supported by and in accordance with the reliable, probative, and substantial evidence. Every party shall have the right to present his case or defense by oral or documentary evidence, to submit rebuttal evidence, and to conduct such cross-examination as may be required for a full and true disclosure of the facts."⁴

Section 10(e) (B) of the Administrative Procedure Act provides, insofar as here material, that upon review, courts shall "set aside agency action, findings, and conclusions found to be * * * (4) without observance of procedure required by law; (5) unsupported by substantial evidence in any case subject to the requirements of sections 7 and 8 of the Administrative Procedure Act * * *." See 60 STAT. 243, 5 U.S.C. § 1009(e) (B).

The suit presently under review was brought on the theory that under Section 10(e) (B) of the Administrative Procedure Act the District Court should set aside the Secretary's minimum wage determination for the industry because the administrative hearing did not provide the procedural safeguards conferred by Section 7(c) of the Act and the determination was not supported by reliable and substantial evidence. A description follows of the administrative hearing culminating in the wage determination.

Pursuant to Section 1(b) of the Walsh-Healey Act, supra footnote 1, the Department of Labor instituted an administrative proceeding for the purpose of determining minimum wages which prevail in two branches of the electric motors and generators industry — the fractional branch, producing equipment of less than one horsepower, and the integral branch, producing equipment of one horsepower and up. In connection with this proceeding, the Bureau of Labor Statistics ("BLS") of the Department of Labor undertook a survey by means of a questionnaire, designed to ascertain the number of establishments in the industry, the number of covered workers in each establishment, and the wages paid by each establishment.

The BLS questionnaire, which contained a pledge of confidentiality,⁵ was circulated to 775 establishments. The names of these establishments were primarily obtained from unemployment compensation insurance listings furnished in confidence by the several States to the Department of Labor.⁶ Establishments within the scope of the survey⁷ were asked to report data respecting total employment, total covered workers, and hourly earnings of covered workers⁸ for the payroll period ending nearest October 15, 1960.

After the answers had been received, BLS compiled six tables summarizing the wage data of 216 firms determined by it to be within the scope of the survey but not identified in the tables. Of these firms, 212 had answered the questionnaire circulated by BLS and the data as to the other 4 firms (which had declined to answer) was estimated.

After the tables had been compiled, a hearing to determine the prevailing minimum wages in the industry, pursuant to Section 10(b) of the Walsh-Healey Act, was scheduled before a Hearing Examiner. Copies of the BLS wage tables were furnished to the National Electrical Manufacturers Association ("NEMA," appellees' trade association) about five weeks before the hearing date.

Eight days before the hearing NEMA informed the Bureau that it had obtained from 61 companies, which had received the BLS questionnaire, copies of their answers and also independent data as to the wages paid by the companies; and that it (NEMA) had found discrepancies between the wage data given to it and the data reported to the Bureau. The Bureau examined the discrepancies cited and found that only two would affect the result. These lowered to some extent the original estimates in the tables as to prevailing minimum wages.

The day before the hearing NEMA applied to the Hearing Examiner for a subpoena duces tecum requiring the Commissioner of Labor Statistics to produce for inspection:⁹

(1) The completed questionnaire forms.

(2) A list of all establishments to which the BLS questionnaire was sent.

(3) A list of all establishments from which answers to the questionnaire were received.

(4) All the correspondence relating to the questionnaire.

In support of its application NEMA pointed out that on the basis of its own limited investigations there was a substantial possibility that the BLS questionnaire had been widely misunderstood, that the answers given contained significant errors, and that the documents requested were necessary to evaluate the BLS wage tabulations and to assist in cross-examination relating to their accuracy and reliability. Department counsel argued that disclosure would violate the pledge of confidence given to business firms and to States which had furnished their unemployment compensation lists, and would seriously impede the Bureau's efforts to obtain economic data in the future. The Hearing Examiner denied the subpoena application.

At the hearing, the Government introduced without objection the six wage tables. Mr. Samuels, the BLS witness who had supervised the survey, testified that without examining the answers tabulated he could not answer questions relating to names and specific types of company included. When counsel for NEMA asked Mr. Samuels to refresh his recollection by examining the answered questionnaires, the Secretary's counsel successfully objected. Counsel for NEMA thereupon unsuccessfully attempted to introduce affidavits by officials of several establishments stating that data...