Zehring v. Brown Materials, 151 Civil.

• Decision Date: 19 January 1943
• Docket Number: No. 151 Civil.,151 Civil.
• Court: U.S. District Court — Southern District of California
• Parties: ZEHRING et al. v. BROWN MATERIALS, Limited, et al.

48 F. Supp. 740

ZEHRING et al. v. BROWN MATERIALS, Limited, et al.

No. 151 Civil.

District Court, S. D. California, N. D.

January 19, 1943.

COPYRIGHT MATERIAL OMITTED

David Sokol, of Los Angeles, Cal., and David E. Peckinpah and L. N. Barber, both of Fresno, Cal., for plaintiffs.

Swaffield, Swaffield & Madden, by Joseph E. Madden, all of Long Beach, Cal., and James T. Barstow, of Fresno, Cal., for defendants.

HALL, District Judge.

The plaintiffs seek overtime wages, penalties, attorneys' fees and costs under the Fair Labor Standards Act of 1938, 29 U.S. C.A. § 201 et seq.

During the period of their employment they worked on the repair of tractors, drag lines, concrete mixing trucks, dipper sticks, dump trucks and other similar paraphernalia and equipment owned or operated by the defendant.

The defendant's business was described by its President as material dealer. It sold building materials such as rock, sand, cement, lime, brick, and similar things to the general public from its several yards or warehouses. It also sold rotary mud, which is sold only for use in drilling operations of oil wells. The defendant did excavating work and general contracting, such as excavating and grading public and private roads, levees, irrigation ditches and the like, but did no building construction. And while the defendant sold ready mixed concrete, it did not do any concrete construction work.

All of the material sold by plaintiff was used or consumed by the purchaser at the place where it was delivered by the defendant. None of it was sold for resale, or resold.

About 5% of defendant's gross business during the past three years (the period of plaintiff's employment) was the sale of drilling mud. And about 2% was the excavating and grading of private roads for oil companies in the Kettleman Hills, Belridge, or adjacent oil fields. The "biggest percentage" of defendant's business was "shovel and drag line work * * * building levees, and trying to control the storms and things of that nature."

No record was kept by the defendant (or the plaintiffs) of the time spent by any of the plaintiffs on each repair job, nor the work that was being done by the particular piece of machinery at the time of repair, i. e., whether the machinery was hauling materials for a road, an oil company, or a private house, for instance.

The plaintiffs claim that they are entitled to the additional wages and penalties because, assert the plaintiffs, they were employees engaged "in commerce," and "in the production of goods for commerce."

The defendant, denying this, also claims it is exempt under the provisions of Section 13(a) of the Act as a "retail or service establishment the greater part of whose selling or servicing is in intrastate commerce."

There are three elements to this exemption. The business must be "retail" (or "service"); it must be an "establishment;" and the greater part of that establishment's selling or servicing must be, "in intra-state commerce."

Generally speaking, a wholesaler is one who sells to another for resale, who in turn is a retailer in that he sells the object or article or thing to the person who consumes or uses it.

The prefix "re-" means "again," so that "re-tail" originally meant "tell-again." But usage now also accords the general meaning to be "sell-again." The essential distinction then between a wholesaler and a retailer is that the person buying from a retailer is the ultimate user or consumer of the article or commodity and does not sell it "again;" whereas, the one buying from a wholesaler buys only for the purpose of selling the article "again," in which event he is a retailer, or if he buys an ingredient or a part to produce goods for sale, he is not a retailer, but under the Act is a "producer of goods" Sec. 3(i), (j).

The defendant having sold its materials to those who consumed or used them, and who did not buy them to sell again was thus a retailer.

It operated from three offices or warehouses where it kept its materials stored. At one of them it had the repair shop. Hence, it must be regarded that it operated from an "establishment," as distinguished from a travelling salesman or a mere broker.

Were its sales "in intra-state commerce"?

It is necessary, here, to determine the meaning of this phrase as used in the Act.

No limitation is placed in the Constitution on what "commerce" is to be regulated by Congress, except the power to regulate commerce "among the several States." Article 1, § 8, cl. 3.

It was thought by John Marshall that this meant any commerce which "concerns more states than one."¹ But judicial interpretation of various acts from time to time seemed to narrow that concept to things which moved across state lines, or instrumentalities used in moving them. Later, this concept was broadened so as to include things which had an "effect" on the commerce which moved across state lines or the things which moved that commerce, but, with this limitation, the "effect" had to be real and immediate and not "remote." With the decisions, however, upholding the National Labor Relations Act, 29 U.S.C.A. § 151 et seq.,² the concept of the Constitutional grant again broadened to what its contemporary John Marshall had thought it meant.

It was in this "climate of opinion"³ that the Congress enacted the law here involved, and the Supreme Court sustained its constitutionality,⁴ and interpreted its scope.⁵

The Act in Section 3(b) uses the identical language of the Constitution, in defining "commerce," saying it "means * * * commerce * * * among the several States," thus giving rise to the question as to whether or not Congress did not intend to legislate "coextensive with the limits of the power of Congress over commerce."⁶ But the Supreme Court, taking their cue from the rest of the Act, and from "the context of the history of federal absorption of governmental authority over industrial enterprise,"⁷ has held otherwise. And it must be regarded as settled that the Act is not as broad in its regulation of commerce as the National Labor Relations Act, 29 U.S.C.A. § 151 et seq., or the Interstate Commerce Act, 49 U.S.C.A. § 1 et seq.⁸ And that the commerce—the interstate commerce — aimed at by the Fair Labor Standards Act is that commerce which moves across state lines, including the production of goods which normally are intended or expected to move across state lines, and necessary instrumentalities of movement, and not commerce which does not move or is normally not intended to move across state lines, even though it might affect or concern commerce among the states.⁹

The phrase "in intrastate commerce" hence, as used in this Act must mean commerce which does not move, or is normally not intended to move, across state lines.

None of the goods or materials sold by the defendant were "in" interstate commerce in the sense that they moved in inter-state commerce or travelled across state lines, or were produced or sold with that intention.

It must be concluded that the selling end of defendant's business was that of a retail establishment, the greater part of whose sales were in intra-state commerce.

That determination does not dispose of what the defendant described as the greater portion of its business, namely, the dragline work upon excavations, levees, and "trying to control the floods and storms" in Tulare lake and work of that nature. The question arises whether or not that is the business of a "service establishment."

Before deciding that question, consideration must be had as to whether or not the plaintiffs as employees of the defendant were engaged in commerce or produced goods for commerce, because if the defendant is not thus liable under the Act, it is immaterial whether or not that portion of his business was a service establishment.

The burden is upon the Petitioners to prove that they were engaged in the production of goods within the meaning of the Act, and that such production was for interstate commerce.¹⁰

Goods under the Act means "goods, * * * wares, products, commodities, merchandise, or articles or subjects of commerce of any character, or any part or ingredient thereof." Sec. 3(i).

It was evidently intended by Congress, judging from their language and not from any "divination" of which the plaintiff's counsel speaks, that "goods," as used in Sections 6 and 7 of the Act meant things which could be created or made, or the materials or ingredients for such things. Now, an irrigation ditch or a levee for an irrigation ditch (unless it were navigable, or directly connected with navigable waters) is strictly a local concern. It is not a thing which can be shipped in commerce or transported across state lines, nor is it a thing upon which other things can be moved in commerce among the States or across state lines. So, whether the building of levees and irrigation ditches to control the floods in Tulare Lake, is the business of a service establishment or not, it seems not to have been within the contemplation of Congress when it prescribed the maximum hours and minimum wages for the production of goods for commerce.

Nor did the defendant by such action become "engaged in commerce," as contemplated by Sections 6 and 7 of the Act so as to cover the plaintiffs. Commerce is...