Wirtz v. Edisto Farms Dairy

• Decision Date: 26 May 1965
• Docket Number: Civ. A. No. AC-1116.
• Parties: W. Willard WIRTZ, Secretary of Labor, United States Department of Labor, Plaintiff, v. EDISTO FARMS DAIRY, a Corporation, Edisto Dairies, a Corporation, Edisto Fleets, Inc., a Corporation, and Robert P. Kapp, Defendants.
• Court: U.S. District Court — District of South Carolina

242 F. Supp. 1

W. Willard WIRTZ, Secretary of Labor, United States Department of Labor, Plaintiff, v. EDISTO FARMS DAIRY, a Corporation, Edisto Dairies, a Corporation, Edisto Fleets, Inc., a Corporation, and Robert P. Kapp, Defendants.

Civ. A. No. AC-1116.

United States District Court E. D. South Carolina, Columbia Division.

May 26, 1965.

COPYRIGHT MATERIAL OMITTED

Charles Donahue, Sol., Beverley R. Worrell, Reg. Atty., Reuben S. Haslam, United States Dept. of Labor, for plaintiff.

N. Heyward Clarkson, Jr., Columbia, S. C., for defendants.

SIMONS, District Judge.

This action was brought by the Secretary of Labor to enjoin defendants from violating the provisions of Section 15 a 2 and 15 a 5 of the Fair Labor Standards Act, as amended, 29 U.S.C.A. § 201 et seq., hereinafter referred to as the Act. Section 15 a 2 declares unlawful a violation of the minimum wage or overtime provisions of the Act, 29 U.S.C.A. §§ 206 and 207, and Section 15 a 5 declares unlawful a violation of the record-keeping provisions of the Act 29 U.S.C.A. § 211 c. Jurisdiction of the court is conferred by Section 17 of the Act.

The complaint essentially alleges that defendants have violated the provisions of Section 15 a 2 and 15 a 5 with respect to employees who are, and have been, covered under the Act as follows: 1 By being employed in an "enterprise engaged in commerce or in the production of goods for commerce" within the meaning of Sections 3 r¹ and 3 s 3² of the Act, 29 U.S.C.A. § 203 r and 203 s 3; or 2 By being individually engaged in interstate commerce as a result of regular activities in ordering, receiving, handling or otherwise working on goods such as containers, orange juice and cottage cheese, moving in commerce from points outside the state of South Carolina.

Defendants are engaged in the business of purchasing, producing and distributing dairy products, orange juice, and cottage cheese. Defendant Edisto Farms Dairy is a South Carolina Corporation which has its principal office and place of business in Columbia, with branch offices in various locations throughout the state. Defendant Edisto Dairies was incorporated to protect the Edisto name and does not conduct business in its own name. Defendant Edisto Fleets, Inc., is owned by Edisto Farms Dairy, and leases, operates and maintains trucks and vehicles used by Edisto Farms Dairy in its operation. Defendant Robert P. Kapp owns 50% of the stock of Edisto Farms Dairy and Edisto Dairy, and is the chief executive officer of each of the defendant corporations.³ As such he has directed the corporate activities and has established pay policies and hourly schedules of employees.

Plaintiff contends that an investigation of defendants' operation by the Wage and Hour and Public Contracts Division of the Department of Labor conducted in January, 1962, conclusively showed that defendants employed retail route helpers at subminimum wages without recording hours worked, employed office employees without paying lawful overtime compensation and recording hours actually worked, and applied a quota system of hours respecting wholesale route helpers which did not credit them with actual hours worked, all in violation of applicable provisions of the Act. They further contend that defendants constitute an "enterprise" engaged in commerce within the meaning of Sections 3 r and 3 s 3 of the Act, and that, therefore, all of their employees have been covered by the Act since September 3, 1961, effective date of the above sections. Plaintiff also contends that, notwithstanding the enactment of Sections 3 r and 3 s 3, all of defendants' individual employees engaged in ordering, receiving, handling or otherwise working on goods such as containers, orange juice and cottage cheese, moving in commerce from points outside the state of South Carolina have been at all times prior and subsequent to September 3, 1961, engaged in interstate commerce and covered by the Act.

Defendants allege that Sections 3 r and 3 s 3 are unconstitutional and ineffective, and therefore defendants have never been lawfully subject to said provisions; that prior to the enactment of said provisions of the Act they were keeping all of the records and paying all wages required by the Act, as to those of its employees engaged in interstate commerce and not in an exempt status; and that only those employees engaged in ordering and handling cottage cheese and orange juice before these products "come to rest" in defendants' warehouse, are at the present time or ever have been engaged in interstate commerce and covered by the provisions of the Act. They further allege that the retail route helpers are exempt from the provisions of the Act, in any event, as outside salesmen, pursuant to Section 541.5 of the Code of Federal Regulations of the Department of Labor, 29 C.F.R. 541.5.

In order to determine whether defendants have violated the provisions of the Act, the following issues must be considered: 1 Are the 1961 amendments to the Act, which include Sections 3 r and 3 s 3, constitutional? 2 Do defendants constitute an "enterprise" under the said sections? 3 Do cottage cheese and orange juice "come to rest" in defendants' warehouse, so as to remove these products from interstate commerce? 4 Are defendants' retail route helpers exempt from provisions of the Act as "outside salesmen"? 5 Have defendants violated the monetary and record-keeping provisions of the Act? 6 If defendants are found to have been in violation of the Act in one or more particulars as asserted by plaintiff, should the court, under all the circumstances here presented, issue its injunction restraining defendants from future violations of the Act?

I

Are the 1961 amendments to the Act constitutional?

Defendants allege that the enactment of Section 3 s 3⁴ of the Act is an attempt by Congress to determine and establish what is interstate commerce by definition which it does not have the power to do. However, this court is unable to agree that said statute has this effect. The wording of the statute does not infer, as plaintiff maintains, that if an enterprise has some employees actually engaged in interstate commerce, then all employees are so engaged. Rather the statute provides that an enterprise is engaged in interstate commerce, if it has any persons handling, selling, or otherwise working on goods that have been moved in or produced for interstate commerce. The Congress was careful to retain the existing criteria of whether employees have "engaged in commerce" or "production of goods for commerce" as the test to determine whether an enterprise is subject to the Act. The basic test remains the actual type commerce engaged in by employees.

Although the concept of an "enterprise" engaged in commerce or in the production of goods for commerce is novel, the courts have consistently held that the Fair Labor Standards Act must be liberally construed and have far reaching application in order to effectively carry out the intent of Congress in enacting the legislation. In the early case of United States v. Darby, 312 U.S. 100, 61 S.Ct. 451, 85 L.Ed. 609, 1941, contesting the constitutionality of the Act, the United States Supreme Court said at 121, 61 S.Ct. at 460:

"Congress, having by the present Act Fair Labor Standards Act adopted the policy of excluding from interstate commerce all goods produced for the commerce which do not conform to the specified labor standards, it may choose the means reasonably adapted to the attainment of the permitted end, even though they involve control of intrastate activities. Such legislation has often been sustained with respect to powers, other than the commerce power granted to the national government, when the means chosen, although not themselves within the granted power, were nevertheless deemed appropriate aids to the accomplishment of some purpose within an admitted power of the national government."

However, in considering the fact that section 3 s 3 sets no standard for the number of employees who must be engaged in interstate commerce before an enterprise is deemed to engage in interstate commerce, it appears that the statute does go far towards invading the field of intrastate commerce where the provisions of the Act should not be effective. Indeed, legislative history of the amendments reflects that some members of Congress had serious doubts as to its constitutionality on grounds that it would afford coverage to some employees not connected in any way with interstate commerce.⁵

However, a statute is presumed to be constitutional and this presumption will prevail unless there is a "clear showing that it transgresses constitutional limitations." National Mut. Insurance Co. of Dist. of Col. v. Tidewater Transfer Co., 337 U.S. 582, 604, 69 S.Ct. 1173, 1183, 93 L.Ed. 1556 1949.

It has long been established that one who attacks the constitutionality of a statute assumes the burden of proving its unconstitutionality. Metropolitan Casualty Ins. Co. of New York v. Brownell, 294 U.S. 580, 55 S.Ct. 538, 79 L.Ed. 1070 1935; Queenside Hills Realty Co. v. Saxl, 328 U.S. 80, 66 S.Ct. 850, 90 L.Ed. 1096 1946.⁶ In Brownell the court said, 294 U.S. at 584, 55 S.Ct. at 540:

"It is a salutary principle of judicial decision, long emphasized and followed by this Court, that the burden of establishing the unconstitutionality of a statute rests on him who assails it, and that courts may not declare a legislative discrimination invalid unless, viewed in the light of facts made known or generally assumed, it is of such a character as to preclude the assumption that the classification rests upon some rational basis within the knowledge and experience of the legislators."

In Goldberg v. Ed's Shopworth Supermarket, 214 F.Supp. 783, D.C.La.1963, defendant contended that the enterprise provisions of the Fair Labor Standards Act were unconstitutional. The court there held that defendant had failed to cite any authority in support of...