Wirtz v. Tyson's Poultry, Inc., 18101.

• Decision Date: 20 January 1966
• Docket Number: No. 18101.,18101.
• Citation: 355 F.2d 255
• Parties: W. Willard WIRTZ, Secretary of Labor, United States Department of Labor, Appellant, v. TYSON'S POULTRY, INC., a corporation, and John Tyson, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

355 F.2d 255 (1966)

W. Willard WIRTZ, Secretary of Labor, United States Department of Labor, Appellant, v. TYSON'S POULTRY, INC., a corporation, and John Tyson, Appellees.

No. 18101.

United States Court of Appeals Eighth Circuit.

January 20, 1966.

Carin A. Clauss, Atty., U. S. Dept. of Labor, Washington, D. C., Charles Donahue, Solicitor of Labor, Bessie Margolin, Associate Solicitor, and Robert E. Nagle, Atty., Dept. of Labor, Washington, D. C., and Beverley R. Worrell, Regional Atty., U. S. Dept. of Labor, Birmingham, Ala., for appellant.

Courtney C. Crouch, of Crouch, Blair & Cypert, Springdale, Ark., for appellees.

Before VOGEL, Chief Judge, and BLACKMUN and GIBSON, Circuit Judges.

VOGEL, Chief Judge.

The sole question presented on this appeal is whether the employees of defendant-appellee Tyson's Poultry, Inc., came within the agricultural exemption of the Fair Labor Standards Act, 29 U.S. C.A. § 201 et seq. (hereafter Act) during the period in question, April 12, 1962, to June 1, 1963. Such exemption would permit appellees to avoid complying with minimum wage and overtime compensation provisions of the Act. The District Court held the exemption applicable. We affirm.

Appellee Tyson's Poultry, Inc., is an Arkansas corporation engaged in the processing and marketing of eggs. During the period in question it operated an egg assembly plant at Springdale, Arkansas. The employees at appellee's establishment worked at "assembling, grading, handling, sizing, candling, packing and shipping eggs". Appellee Tyson's Poultry, Inc., did not own or lease any farms but obtained its eggs from Poultry Growers, Inc., a corporation which, like Tyson's Poultry, Inc., is a wholly-owned subsidiary of Tyson's Foods, Inc. The individual defendant-appellee, John Tyson, is president of Tyson's Foods, Inc., as well as of the two subsidiary corporations.

By stipulation, it was established that of all the eggs produced at the Springdale plant during the representative month of April 1963 "* * * twenty-seven percent (27%) of such total production was procured from three independent growers under and pursuant to the Tyson Commercial Layer Contract."¹ Under this contract² Tyson furnished the contract growers all of the birds and supplies needed to maintain them. Further, Tyson supervised a scheduled egg pick-up program. The growers provided the premises, labor and certain equipment for the preservation of the birds. The District Court, through the Honorable John E. Miller, District Judge, specifically found the following:

"* * * Under that contract the Tyson Commercial Layer Contract set out at f.n. 2, supra, Poultry Growers, Inc., was required to furnish the hens, food, litter, medication and nest pads and to take the eggs that had been gathered from the nests by the owner of the farm. Title to the hens and all eggs produced was at all times vested in Poultry Growers, Inc. The contract grower furnished the house, utilities, and performed the day-to-day labor such as feeding and watering the flocks, cleaning the pens, and gathering the eggs."

He thereafter directs attention to the schedule of payments which Poultry Growers, Inc., was required to make for the use of the chicken houses, etc., and to the fact that the furnisher of the facility was to receive nothing for broken eggs. He found that under the contract the appellees controlled and made all important decisions regarding the production of eggs. It is obvious that the contract grower assumed no risk but merely furnished the house, labor, utilities and equipment and was paid therefor at a scale completely unaffected by the market. If the market on eggs went up, the appellees gained. If it went down, the loss was that of appellees. If the birds became ill or died or quit producing for one reason or another, the loss was that of appellees and not the contract grower. If the cost of feed or medication went up or down, the loss or gain was that of the appellees. The three contract growers merely followed instructions and gathered the eggs, being careful not to break them as they were not paid on the basis of broken eggs.

The Act at 29 U.S.C.A. § 213, Exemptions, provides in pertinent part:

"(a) The provisions of sections 206 dealing with minimum wages and 207 dealing with maximum hours of this title shall not apply with respect to —

* * * * * *

"(6) any employee employed in agriculture * * *."

29 U.S.C.A. § 203 provides:

"(f) `Agriculture\' includes farming in all its branches and among other things includes the cultivation and tillage of the soil, dairying, the production, cultivation, growing, and harvesting of any agricultural or horticultural commodites (including commodities defined as agricultural commodities in section 1141j(g) of Title 12), the raising of livestock, bees, fur-bearing animals, or poultry, and any practices (including any forestry or lumbering operations) performed by a farmer or on a farm as an incident to or in conjunction with such farming operations, including preparation for market, delivery to storage or to market or to carriers for transportation to market."

Title 29 CFR, Labor, § 780.166 provides, as to particular operations or commodities:

"Subject to the rules heretofore discussed, the following activities are, among others, activities that may be performed in the `preparation for market\' of the indicated commodities and may come within the exemption:

* * * * * *

"(d) Eggs. Handling, cooling, grading, candling, and packing."

The answer to the question of whether or not the work performed by the appellees' employees brings them within the purview of the agricultural exemption is, of course, not simple. The difficulties are pointed out by Mr. Justice Frankfurter in a separately concurring opinion in Farmers Reservoir & Irrigation Co. v. McComb, 1949, 337 U.S. 755, 770, 69 S.Ct. 1274, 1282, 93 L.Ed. 1672, rehearing denied, 338 U.S. 839, 70 S.Ct. 31, 32, 94 L.Ed. 513:

"Both in the employments which the Fair Labor Standards Act covers and in the exemptions it makes, the Congress has cast upon the courts the duty of making distinctions that often are bound to be so nice as to appear arbitrary in relation to each other. A specific situation, like that presented in this case, presents a problem for construction which may with nearly equal reason be resolved one way rather than another."

Unfortunately Congress was not able to anticipate every activity that might conceivably arise under the Act, such as that activity involved herein. As noted by Mr. Justice Clark in Maneja v. Waialua Agricultural Co., Ltd., 1955, 349 U. S. 254, 265-266, 75 S.Ct. 719, 726, 99 L.Ed. 1040:

"But in making the factual determination as to if a particular operation fell within the agricultural exemption, we must keep in mind that the question here presented is a limited one: is the * * * operation involved part of the agricultural venture? If it is agriculture, albeit industrialized and involving highly specialized mechanical tasks, we must hold it to be within the agriculture exemption. Thus we must add to the factors above some consideration of what is ordinarily done by farmers with regard to this type of operation. It is true that the word `ordinarily\' appeared in an earlier version of the exemption and was subsequently stricken, but the inquiry is nonetheless a pertinent one. It has a very direct bearing in determining whether the milling operation is really incident to farming."

Egg processing would seem to be an activity ordinarily done by the farmer and would thus qualify appellees for the agricultural exemption if appellees truly are the farmers herein.

Under the facts herein, we find no problem concerning the relationships among Tyson's Foods, Inc., its two subsidiary corporations, appellee Tyson's Poultry, Inc., and Poultry Growers, Inc., and appellee John Tyson, who is president of all three corporations. As stated by Judge Waterman in Wirtz v. Jackson & Perkins Co., 2 Cir., 1963, 312 F.2d 48, 50, there is

"* * * nothing in the language or history of the Fair Labor Standards Act to suggest that Congress intended the availability of the agricultural exemption to turn upon the technicalities of corporate organization within which farming operations or practices performed incidental thereto were conducted."

We are here concerned with a single and completely integrated farming operation carried on and headed up by appellees through their affiliated corporation, Poultry Growers, Inc. As found by the District Court, the appellees are farmers and are the ones who initiated the farming operations here involved. Without appellees the independent growers arguably would never have undertaken the initial and continuing cost of acquiring the birds and producing the eggs. The contract growers merely aid the appellees, who the District Court found to be the ones qualified to claim the agricultural exemption under the Act as to their employees engaged in the "handling, cooling, grading, candling and packing" of eggs.

This court, in Walling v. Rocklin, 8 Cir., 1942, 132 F.2d 3, was confronted with a somewhat similar situation also involving an ultimate fact determination under the Fair Labor Standards Act as to whether employees of a retail and wholesale floral shop qualified for the agricultural exemption where the flowers were originally raised by other employees of the defendant therein. In upholding the exemption, we stated, through the late Judge Gardner, at page 6 of 132 F.2d:

"Defendants contend and the trial court was of the view that they are engaged in the production of horticultural commodities as a single integrated unit, and that they are farmers within the meaning of the statute. The court found as an ultimate fact that the defendants including their employees at Pierce Street were exclusively engaged in agriculture. This finding should not be disturbed unless clearly erroneous. Rule 52(a), Federal Rules Civil Procedure, 28 U.S.C.A. following

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