MCDANIEL ET AL v. CLAVIN

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District Court of Appeal, Second District, Division 2, California.

MCDANIEL ET AL. v. CLAVIN.

Civ. 13610.

Decided: August 28, 1942

Phillip W. Silver, of Los Angeles, for appellant. Henry Haves, of Los Angeles, for respondent.

Plaintiff commenced this action to recover overtime wages claimed to be due him by virtue of the provisions of the Fair Labor Standards Act of 1938, 29 U.S.C.A. § 201 et seq., on the theory that his erstwhile employer, the defendant, was engaged in interstate commerce during the period of plaintiff's employment, and that, therefore, he was employed in interstate commerce. From an unfavorable judgment plaintiff brings this appeal.

Findings were waived by the parties. It will therefore be assumed that there was sufficient evidence to support the implied findings and the judgment.

Plaintiff first entered the employ of defendant in November, 1937, as a truck driver. In that capacity he continued until January 20, 1940. The act in question (29 U.S.C.A. § 201 et seq.) became effective October 25, 1938. Section 207(a) thereof provides as follows:

“No employer shall, except as otherwise provided in this section, employ any of his employees who is engaged in commerce or in the production of goods for commerce––(1) for a workweek longer than forty–four hours during the first year from the effective date of this section, (2) for a workweek longer than forty–two hours during the second year from such date, or (3) for a workweek longer than forty hours after the expiration of the second year from such date, unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one–half times the regular rate at which he is employed.”

During the period of plaintiff's employment his duties consisted of driving defendant's trucks, delivering merchandise, cleaning chickens, cleaning the premises, opening cases of frozen poultry taken from the vaults of the Terminal Refrigerating Company and driving into the country in order to collect, transport and deliver such merchandise to the plant of defendant. Following the effective date of the act plaintiff worked long hours for defendant, his days ranging in length from ten to fourteen hours; but inasmuch as our decision is derived from a consideration of whether plaintiff was engaged in interstate commerce during his employment we shall indulge in no further comment upon the value of his services and the long, wearisome hours he worked in the execution of his tasks.

The basis of plaintiff's contention that he was employed in interstate commerce is the fact that defendant received by shipment through interstate commerce during the period from November 14, 1938, to March 12, 1940, slightly less than 81 tons of poultry, shipped to him from Iowa, Nebraska, Missouri, Texas, New Mexico and Utah, and that during the same period he shipped from California to New York three separate shipments of cold storage poultry aggregating eight and one–third tons, and to Arizona three separate shipments aggregating 1,347 pounds. Because of these shipments plaintiff contends that he was engaged in interstate commerce, although he could not remember having worked on more than one shipment that went to New York and one to Arizona. The merchandise imported by defendant from distant states was taken from the railway terminals and delivered to a cold storage warehouse for the account of defendant. Such refrigerated poultry was later transported by plaintiff from the refrigerating plant to defendant's place of business. He there opened the original packages, thawed them out, made them up into orders and delivered them to local retailers.

This, in brief, describes the nature of plaintiff's employment, from which he asks us to determine that his activities were in interstate commerce in contemplation of the Fair Labor Standards Act of 1938 and that he is entitled to compensation for overtime as provided by that act.

Commerce is defined by section 203(b) of the act to be “trade, commerce, transportation * * * among the several States or from any State to any place outside thereof.” From the authorities we learn that “commerce” is not confined to transportation only from one state to another, but it “comprehends all commercial intercourse between different states and all the component parts of that intercourse. * * * The commerce does not end with the transportation, but embraces as well the sale of the goods after they reach their destination and while they are in the original packages.” Dahnke–Walker Milling Co. v. Bondurant, 257 U.S. 282, 290, 42 S.Ct. 106, 108, 66 L.Ed. 239. On another occasion the same court said: “And what is or is not interstate commerce is to be determined upon a broad consideration of the substance of the whole transaction.” Federal Trade Commission v. Pacific States Paper Trade Ass'n, 273 U.S. 52, 47 S.Ct. 255, 258, 71 L.Ed. 534.

For the purpose of persuading us that his employment was interstate in character, plaintiff has reviewed a number of pertinent authorities dealing with the subject and earnestly urges that they are controlling in the instant case.

Where the manufacturer and distributor of motion picture films shipped its output from New York to Omaha, at which place the distributors in turn placed the films with exhibitors in Nebraska for display, the films were at all times in interstate commerce because “The intermediate delivery to the agency did not end and was not intended to end the movement of the commodity. It was merely halted as a convenient step in the process of getting it to its final destination.” Binderup v. Pathe Exchange, Inc., 263 U.S. 291, 44 S.Ct. 96, 99, 68 L.Ed. 308. In that case the rule was announced that where transportation has acquired an interstate character it continues at least until the load reaches the point where the parties originally intended that the movement should finally end. On the same principle it was held that the buying and selling of cattle in local stockyards, and the practices of the dealers and commission men who negotiate the purchase and sales of such livestock constitute a part of the interstate transportation and are indispensable to its continuity. “Such transactions cannot be separated from the movement to which they contribute and necessarily take on its character. * * * The sales are not in this aspect merely local transactions. They * * * do not stop the flow * * * being indispensable to, its continuity.” Stafford v. Wallace, 258 U.S. 495, 42 S.Ct. 397, 402, 66 L.Ed. 735, 23 A.L.R. 229.

It is also held that temporary stoppage of merchandise does not destroy the interstate character of the commerce. An importer of cocoanut oil from the Philippines, having its principal place of business in the state of New York, found it to be more economical to import large cargoes in steamer tanks. It thereupon established storage facilities at Point San Pablo, where it stored huge shipments purchased to fill its orders and not for indiscriminate sale. Under these circumstances the oil continued to be in interstate commerce during such storage. Philippine Ref. Corp. v. Contra Costa County, 24 Cal.App.2d 665, 76 P.2d 163. Where milk, having been purchased for transportation to distant markets, is stopped for the purpose of pasteurization and bottling, the temporary stoppage does not terminate the continuous flow of the stream or destroy the interstate quality of the commerce. Pennsylvania Co. v. Cincinnati & L. E. R. Co., D.C., 43 F.Supp. 5.

Plaintiff presents the foregoing and kindred authorities (Fleming v. Alterman, D.C., 38 F.Supp. 94; Drake v. Hirsch, D.C., 40 F.Supp. 290; Thompson v. Daugherty, 40 F.Supp. 279; Pickett v. Union Terminal Co., D.C., 33 F.Supp. 244; Pipal v. Grand Trunk R. R. Co., 341 Ill. 320, 173 N.E. 372) in support of his contention that he was engaged in interstate commerce during the period of his employment by defendant. But while these authorities clearly define the rule that governs in the situations described in the several cases, they do not apply to the facts at hand. All of such cases exemplify the principle that any object shipped by interstate transportation continues to be in interstate commerce until it comes to final rest at its ultimate destination. Also, they establish that merchandise on its way, stopped temporarily for processing or other purpose, continues during stoppage in interstate commerce, and any handling of it there is a labor in interstate commerce.

But the situation presented by the instant case does not come within any of the authorities relied upon by plaintiff. The rule applicable here may be stated as follows: When merchandise has been imported into California from other states by a merchant to meet the anticipated demands of his customers without specific orders therefor from such customers, and comes to rest in a warehouse in this state, it is no longer in interstate commerce after coming to rest. This statement of the rule is supported by many decisions that resound with finality. When chickens shipped from the Middle West to commission men in New York City were sold to a slaughter house operator who in turn trucked his poultry to his slaughtering house in Brooklyn to be there dressed and sold to retail merchants, the interstate character of the commerce, created by the acts of transporting the poultry from western states to the depots of “receivers” in New York, ended with the delivery of the poultry at the slaughter house in Brooklyn. A. L. A. Schechter Poultry Corp. v. United States, 295 U.S. 495, 55 S.Ct. 837, 79 L.Ed. 1570, 97 A.L.R. 947. It was there held that the decisions which deal with a stream of interstate commerce and with the regulations of shipments which are continuous do not apply in such transactions as that of the Schechter corporation, in whose custody the merchandise came finally to rest.

Where an oil company was engaged in the retail distribution of its products in Florida and imported its oil from other states and foreign markets by tankers and stored it in the reservoirs of the company for distribution to its various service stations as the demands of its business arose, it passed out of foreign and interstate commerce upon its delivery into such storage reservoirs. Atlantic Coastline Railroad Co. v. Standard Oil Co., 275 U.S. 257, 48 S.Ct. 107, 72 L.Ed. 270. Where a wholesale merchant imported eggs in quantity, uncrated them, candled and classified them according to grade in other boxes and sold them to the retail trade, they then ceased to be in the stream of interstate commerce and were subject to local taxation and other domestic regulation. Gerdert v. Certified Poultry & Egg Co., Inc., D.C., 38 F.Supp. 964. Where a lumberman made an occasional trip outside of Tennessee to bring in materials by truck, such trips were not sufficient to establish that he was engaged in interstate commerce. Whitson v. Wexler, (Chancery Ct. of Tenn.) 3 Labor Cases 60,859, par. 60,283. See, also, Gerdert v. Certified Poultry & Egg Co., Inc., supra. Where goods are uncrated by a wholesaler and the contents placed upon his shelves and commingled with the rest of his stock, they pass out of the stream of interstate commerce that instant. Serio v. Dee Cigar & Candy Co., (Circuit Ct. of Alabama) 4 Labor Cases 62,170, par. 60,734.

From the testimony of plaintiff herein it is clear that the poultry shipped from distant states to defendant was not resold by him in the original packages. We have been pointed to no instance of such a sale, neither have we been able to find one. On the contrary, the testimony of the plaintiff is that the frozen poultry was stored in refrigerators for the account of defendant and was thereafter taken to defendant's plant, opened, thawed and made into new packages for sale to the local trade. Each shipment of poultry made to defendant came to rest in his own plant or was stored for his account in a local refrigerator. The fact that in the seventeen months of plaintiff's employment after the act became effective defendant made but three shipments of poultry to New York and three to Arizona cannot characterize defendant as being engaged in interstate commerce. The reshipment of the poultry received by interstate transportation would not defeat the intrastate character of such reshipment within this state, even though it had been in the same cars. Atlantic Coastline Railroad v. Standard Oil Co., supra. Neither will sporadic or isolated shipments into other states in and of themselves constitute a merchant's business totally interstate in character or subject him to the requirements and penalties of the Fair Labor Standards Act.

Under the facts established defendant was not engaged in, nor did he have plaintiff employed in, the production of goods for interstate commerce. The doctrine of de minimis non curat lex applies. Gerdert v. Certified Poultry & Egg Co., Inc., supra. The amount of commerce involved is important. While the federal Constitution definitely vests Congress with the power to regulate interstate commerce in any amounts whatsoever, yet the rule of reason applied to the language of the act requires us to hold that Congress by fair implication intended to exclude commerce of inconsequential volume from its regulatory measures. Goldberg v. Worman, D.C., 37 F.Supp. 778. This must be so where the evidence discloses that the shipper was primarily engaged in an intrastate business. Whitson v. Wexler, supra.

But if the foregoing considerations were not sufficient to demonstrate that plaintiff is entitled to no benefit under section 207(a) of the act, still he appears to be definitely excluded therefrom by the language of section 207(c), which provides: “In the case of an employer engaged * * * in handling, slaughtering, or dressing poultry or livestock, the provisions of subsection (a), during a period or periods of not more than fourteen workweeks in the aggregate in any calendar year, shall not apply to his employees in any place of employment where he is so engaged.” By no system of computation can it be determined that plaintiff worked fourteen weeks in the aggregate in any calendar year of his employment in slaughtering poultry, or in preparing it, for shipment to other states. Neither did he drive, convey merchandise in or unload it from, his truck nor do other work at his “place of employment” in making such preparations. In the absence of finding or proof that he was engaged for such fourteen weeks in the aggregate in any calendar year in assisting in the preparation of the poultry to be shipped by interstate commerce, he is not entitled to recover for any overtime.

Moreover, if plaintiff had been engaged in interstate commerce by the activities described he could not recover by reason of the inhibition contained in section 213(b), which reads as follows: “The provisions of section 207 shall not apply with respect to (1) any employee with respect to whom the Interstate Commerce Commission has power to establish qualifications and maximum hours of service pursuant to the provisions of section 304 of Title 49 [of the Motor Carriers Act, 1935].” By section 304(a) (3), 49 U.S.C.A., § 204(a) (3) of the Motor Carriers Act of 1935 it is made the duty of the Interstate Commerce Commission: “To establish for private carriers of property by motor vehicle, if need therefor is found, reasonable requirements to promote safety of operation, and to that end prescribe qualifications and maximum hours of service of employees, and standards of equipment.” If plaintiff's hauling of merchandise from the railway depot to defendant's warehouse, thence to his wholesale plant and thence to his customers, places his labors in the category of interstate commerce employment, the quoted language of section 213(b) makes the provisions of section 207(a) inapplicable to plaintiff's case.

Plaintiff denies that section 213 (b) applies because the Interstate Commerce Commission has not taken jurisdiction; that it has neither prescribed nor promulgated regulations and maximum hours for the employees of plaintiff's class. But section 213(b) contains no provision that the Commission must have established requirements or prescribed qualifications or maximum hours of service of employees in order to make it applicable. It declares merely that section 207(a) does not apply in the case of any employee with respect to whom the Interstate Commerce Commission has power to establish maximum hours of service. The provisions of the Fair Labor Standards Act for maximum working hours of employees does not, by virtue of the provisions of section 213 (b), apply to those employees with respect to whom the Interstate Commerce Commission has power to establish maximum hours of service. Rozmus v. Jesse T. Davis & Sons, Inc., Sup., 23 N.Y.S.2d 821, 822; Gibson v. Glasgow, Tenn. Sup., 157 S.W.2d 814. In the Gibson case it was held that what is interstate commerce in contemplation of the Fair Labor Standards Act is likewise interstate commerce for purposes of the Motor Carriers Act. The truck driver, having made only deliveries from his employer's warehouse to points within Shelby county, was not engaged in interstate commerce and could not be exempted by section 213(b). It followed, necessarily, therefore, that he could not be entitled to the benefits of section 207(a) of the act. Likewise, the intrastate nature of Mr. Silver's employment excludes him from the jurisdiction of the Interstate Commerce Commission and at the same time deprives him of the benefits of the Fair Labor Standards Act.

Judgment affirmed.

MOORE, Presiding Justice.

McCOMB, J., and GOULD, J., pro tem., concurred.