Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.

MITCHELL v. S.A. HEALLY COMPANY

United States District Court, Northern District of Illinois, E.D


June 23, 1959

JAMES P. MITCHELL, SECRETARY OF LABOR, UNITED STATES DEPARTMENT OF LABOR, PLAINTIFF,
v.
S.A. HEALY COMPANY, A CORPORATION, DEFENDANT.

The opinion of the court was delivered by: Robson, District Judge.

The United States of America seeks to enjoin defendant from paying less than the statutory overtime wages to its employees*fn1 for hours over forty in a work week, pursuant to the requirements of the Federal Fair Labor Standards Act (29 U.S.C.A. § 201 et seq.). The defendant is a general contractor engaged in the construction of a new tunnel, which is to be a part of the Chicago Waterworks System. The parties have stipulated the facts and the cause is submitted for decision on briefs. The Court hereby adopts the stipulation of facts as its special findings of fact required by Rule 52(a) of the Federal Rules of Civil Procedure, 28 U.S.C.

The stipulation of facts reveals that the 79th Street tunnel, which defendant by contract of July 8, 1956, undertook to construct for the sum of $7,852,050, is to be 4.6 miles in length; that it is to be a 16-foot tunnel to extend from the filter plant reservoir in Lake Michigan at 79th Street in Chicago to connections with the existing State Street and Stewart Avenue tunnels; that the tunnel is being constructed to provide greater amounts of water for the City's increased population and for industrial use, the industrial use being 30% of the daily average pumpage; that the defendant's employees worked on the tunnel from July 16, 1956, and will continue to work on it until at least December, 1959.

The complaint is predicated on the allegation that

    "A substantial portion of the water supplied by
  the * * * water supply systems of the city of
  Chicago, has been and is being sold to and used by
  instrumentalities of interstate commerce, to
  facilitate such commerce, and has been and is being
  sold to and used by persons and firms engaged in the
  production of goods for interstate commerce, to
  facilitate such production of goods for interstate
  commerce."

The defendant's answer denies that its employees are engaged in commerce or in the production of goods for commerce, and accordingly contends the Act is inapplicable to its activities, which, on the contrary are alleged to be "limited wholly to the construction of new and distinct tunnels and shafts incident to a filtration plant."

The Fair Labor Standards Act prescribes rates of pay applicable to

    "* * * employees * * * engaged in commerce or in
  the production of goods for commerce * * *." 29
  U.S.C.A. § 206.

It defines "commerce" to mean

    "* * * trade, commerce, transportation,
  transmission or communication among the several
  States or between any State and any place outside
  thereof." Sec. 203(b).

It defines "produced" thus:

    "`Produced' means produced, manufactured, mined,
  handled, or in any other manner worked on in any
  State; and for the purposes of this chapter an
  employee shall be deemed to have been engaged in the
  production of goods if such employee was employed in
  producing, manufacturing, mining, handling,
  transporting, or in any other manner working on such
  goods, or in any closely related process or
  occupation directly essential to the production
  thereof, in any State." Sec. 203(j).

The wording of this last quoted provision was changed in 1949 by adding the words "closely related" and substituting the words "directly essential" for the word "necessary."

The Government quotes from the Report of the Majority of Senate Conferees at 95 Cong.Rec. 14875, indicative of Congressional intent, thus:

    "* * * employees repairing, maintaining, improving
  or enlarging the buildings, equipment, or facilities
  of producers of goods are within the coverage of the
  Act whether they are employed by the producer of
  goods or by someone else who has undertaken the
  performance of particular tasks for the producer."
  (Emphasis ours.)

The Department of Labor has issued an Interpretative Bulletin, Subpart B, Part 776,
*fn2 concerning the Construction Industry, which specifically states the principles concerning the coverage of the Act.

The stipulation of facts further reveals that the Chicago Water System is composed of 61 miles of water tunnels and 4,000 miles of water mains; that it has three districts: the North, Central and South, each with its own system of water cribs; that the Chicago area is 36 miles from north to south and 16 miles from east to west; that this water system serves not only Chicago, but 58 suburban communities and ten other consumers outside Chicago; that there are six cribs and one direct water intake at the South District filtration plant; that the water tunnels are dug through solid rock, 150 to 250 feet below the ground, and are conduits for "raw" water from the cribs and the filtration plant to the pumping stations, which in turn distribute the water through mains to the approximately half million consumer outlets and 44,000 fire hydrants; that the total average daily amount of water pumped in 1957 was 1,022,055,000 gallons, of which the South Water District pumped an average of 342,400,000 gallons daily to the 68th Street, Roseland and Western Avenue Pumping Stations; that 18% of the daily average pumpage of the Roseland and Western Avenue Pumping Stations supplies 38 companies, including packing houses, airplane engine manufacturers, automotive plants, farm equipment companies, beverage manufacturers, bakeries, surgical houses, machinery companies and railroads; that the 16-foot tunnel which defendant is building is horseshoe shaped and lined with concrete, and has 10-foot tunnel connections and accompanying shafts; that defendant employs about 205 employees in the work, and it is admitted that the employees work longer than a 40-hour week without overtime pay.

The stipulation of facts states in great detail the numerous and varied industrial firms served by the Chicago Water System. There can be no question that water is an essential part of the functioning of these companies in the production of goods for commerce, and to the instrumentalities engaged in commerce. The amount of water so consumed is very substantial although probably not the chief use of the water supplied by the Chicago System.

The abundance of litigation on the coverage of the Fair Labor Standards Act overtime pay provision demonstrates the difficulty of defining its precise limits. On an initial reading of the statute (subd. 203(j)) it seems clear and understandable, as are the several principles enunciated by all precedent. But the end result of the decisions, with a few exceptions, would refute this seemingly clear meaning.

The 1949 amendment, above noted, to that subsection, would corroborate a finding of Congressional intent to narrow further the scope of auxiliary occupations to be covered by the Act. The Court of Appeals for this Circuit so construed the effect of the amendment in Huke v. The Ancilla Domini Sisters, 267 F.2d 96.

There had grown up in the cases a demarcation (which seems to have lost caste since the Supreme Court case of Mitchell v. C.W. Vollmer & Co., Inc., 349 U.S. 427, 75 S.Ct. 860, 99 L.Ed. 1196) between employments covered and those not covered, depending upon whether the work was "new" construction or simply enlargement, repairs, or maintenance. "New" construction was not covered. This distinction was evolved generally in cases involving transportation, or the "engaged in commerce" clause of the section under consideration, rather than the clause involving "production of goods for commerce," here under consideration, although it has infrequently been applied in these cases as well. The very recent and extremely pertinent decision of the Fifth Circuit Court of Appeals in H.B. Zachry Co. v. Mitchell, 1959, 262 F.2d 546, rejects the two relevant Chambers' cases*fn3 on the ground that the courts there failed to differentiate between these two bases of the Act's coverage. It is clearly evident that the Interpretative Bulletin heretofore quoted also makes no distinction between the two clauses of the section so far as construction workers are concerned.

The following principles seem soundly established in Fair Labor Standards Act cases:

(1) Congress did not intend to make the scope of this Act coextensive with its power to regulate commerce.*fn4

(2) But within its coverage, the Act is to be construed liberally to apply to the furthest reaches consistent with Congressional direction.*fn5 The policy of Congressional abnegation with respect to occupations affecting commerce is no reason for narrowly circumscribing the phrase "engaged in commerce."*fn6

(3) The test is whether the work is so directly and vitally related to the functioning of an instrumentality or facility of interstate commerce as to be in practical effect a part of it rather than isolated, local activity.*fn7

(4) The question whether an employee is engaged in commerce is determined by practical considerations.*fn8

(5) Projects involving repair, extension, or relocation of existing facilities or instrumentalities of interstate commerce bring employees within the Act*fn9 as to those projects improving existing facilities.*fn10

(6) Mere separation of an occupation from the physical process of production does not preclude the application of the Act.*fn11

(7) But remoteness of a particular occupation from the physical process is a relevant factor in drawing the line.*fn12

(8) The applicability of the Act is dependent on the character of the employee's (not the employer's) work.*fn13

In the precedent involving workers, the following are some of the instances where employees have been held covered by the Act:

Draftsmen, fieldmen and office workers for an architectural and engineering firm designing public and industrial projects and military air bases in and out of the state;*fn14 employees producing road surfacing material, 85 1/2% of which was used on interstate roads;*fn15 field workers and bookkeeper for irrigation company;*fn16 employees constructing new lock and canal in Louisiana, which would form part of Intercoastal waterway, an alternate route to the existing lock and canal;*fn17 employees repairing washed-out bridge abutments;*fn18 employees raising and lowering bridges and maintenance and repair of bridge;*fn19 employees clearing site for dam;*fn20 local delivery men completing interstate shipment of merchandise;*fn21 building maintenance employees whose tenants principally engaged in production of goods for commerce;*fn22 employees producing materials to be used in construction of causeway and of plant to make materials;*fn23 employees making new reservoir and chlorinator house for water system,*fn24 and employees constructing new segment as replacement in city's water supply.*fn25

The following employees were held not within the Act:

Maintenance employees of typical metropolitan office (not manufacturers') building;*fn26 cooks for interstate railroad maintenance men;*fn27 and construction workers on new replacement dam for water system.*fn28

The basic issue of this controversy seems to be whether the coverage as to construction workers making an enlargement of a facility, which coverage has been read into the Act's provisions relating to employees "engaged in commerce," is also to be read into the following clause pertaining to employees "engaged * * * in the production of goods for commerce" or "in any closely related process or occupation directly essential to the production thereof." As stated by the Zachry opinion the reasons for not so extending the Act's coverage are that the 1949 amendment to the latter clause seemingly makes it more restrictive than theretofore, and the fact that the latter clause is itself one more step removed from interstate activity than employees "engaged in commerce" covered by the first clause. Or, to put it more specifically, a construction worker adding a new segment to a road is but one step removed from interstate transportation facility, whereas the one adding a new segment to a water system, is two steps removed, i.e., the water is transported therethrough to the facility which in turn uses it for interstate products.

As all the decisions repeatedly state, the line is a difficult one to draw. However, the precedent has so frequently included construction workers making repairs or enlargements and not simply completely new constructions into the coverage of the Act, that the Zachry decision does not represent the weight of authority. This conclusion is substantiated by the Senate Conferees Report intimating that employees making enlargement of facilities are within the coverage of the Act, and by the fact that the Secretary of Labor has so determined in his Interpretative Bulletin. If his interpretation is in conflict with the statute, it would be ineffectual. In view of the oft-repeated rule that the Act is to be construed liberally to apply to the furthest reaches consistent with Congressional direction, doubt is resolved in favor of the coverage of these employees by the Act. Supportive of this conclusion are the two Chambers decisions, quotations from which are set forth below.*fn29

An injunction will issue in accordance with the prayer of the complaint.


Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.