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ACKERMAN v. REPUBLIC AVIATION CORP.

February 10, 1949

ACKERMAN et al.
v.
REPUBLIC AVIATION CORPORATION



The opinion of the court was delivered by: ABRUZZO

This action is brought by 26 plaintiffs under Section 16(b) of the Fair Labor Standards Act of 1938, 29 U.S.C.A. § 216, subdivision (b). This Act provides that the employer shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, or unpaid overtime compensation, as the case may be, and an additional equal amount as liquidated damages. The defendant is a corporation organized and existing under the laws of the State of Delaware. The plaintiffs were employed at the Farmingdale, Long Island, plant of the defendant. The action was originally commenced in the Supreme Court, Nassau County, but upon application of the defendant it was transferred to this Court upon the ground of diversity of citizenship. The 26 plaintiffs worked under various titles, under diverse classifications, and the gravamen of the complaint seeks to recover unpaid overtime compensation and liquidated damages such as penalties and attorneys' fees.

Throughout the period which is the subject of this litigation, this aviation corporation was engaged solely in the manufacture, production and assembling of the P-47 (Thunderbolts) airplane under Contract No. W535 ac-29279 (8356) with the United States Army Air Forces. These planes were used strictly as fighter aircraft. Before this contract was entered into with the United States Army Air Forces, the defendant manufactured what was known as the Republic 'Seabee,' a commercial type of plane. Throughout the period of employment of these plaintiffs, however, the proof indicates that none of these 'Seabee' type of plane was manufactured, and the work which the plaintiffs performed for which they now seek damages was solely under the contract just alluded to for P-47 (Thunderbolts).

The sum which these plaintiffs seek to recover is approximately $ 236,000, and the period involved is approximately from February, 1942, to V-J Day in August, 1945.

 Some of these plaintiffs were employed as expeditors or buyers, and for some period of time they acted in both capacities. Some were group leaders, and it is claimed that some were acting in the capacity of settlement administrators and tool analysts.

 In order to support the plaintiffs' claim of damages, it is necessary, first, for this Court to determine whether the defendant was engaged in the production of goods for interstate commerce, pursuant to the claim made in the complaint, paragraphs Third to Fifth, inclusive. The defendant sets up in its answer, paragraphs 1 to 3, inclusive, a denial of this contention. If the plaintiffs were not engaged, as claimed, in interstate commerce, or if they were not engaged in the production of goods for interstate commerce, the plaintiffs' claim of necessity must fall.

 The defendant sets up other defenses such as (1) that each of the plaintiffs was compensated on a salary basis of not less than $ 200 per month, and that the plaintiffs for the period of their employment were employed in a bona fide executive or administrative capacity within the meaning of Section 13 of the Fair Labor Standards Act, 29 U.S.C.A. § 213, and that each of them, therefore, is exempt from the benefits of the Act; (2) that the defendant's classification of each of the plaintiffs was made in good faith and in conformity with and in reliance upon administrative regulations, rules, orders, interpretations, and practice of the Wages and Hours Division of the United States Department of Labor, and that the defendant, therefore, would not be subjected to any liability or punishment for failure to pay overtime compensation to the plaintiffs; and (3) that, if it be found that the plaintiffs are entitled to overtime, no liquidated damages should be allowed by reason of the good faith on the part of the defendant in its classification of the plaintiffs. Portal-to-Portal Act, Sec. 11, 29 U.S.C.A. 260.

 It is, therefore, essential that I first review whether the plaintiffs were engaged in interstate commerce, or were engaged in the production of goods for commerce. The facts with relation to this particular issue seem not to be in dispute and may be briefly summarized as follows: From 1941 to 1945, the defendant was engaged exclusively and solely in making fighter aircraft for the United States Government and, as I said, they were known as P-47 (Thunderbolts) and were used in the various theatres of war. The defendant had no private business during this period. From early 1942 to the end of the war, these planes were produced under a cost-plus-a-fixed-fee contract with the United States Government (Exhibit 1). Under this contract, the fee of the defendant was fixed, but the cost of producing the airplanes was estimated. As a general rule, these airplanes were delivered to the Government at defendant's flying field at Farmingdale, Long Island, to which place the Government sent its own pilots to take delivery and fly them away to the various bases. There were times when the Government requested shipments by rail and when this request was made they were shipped f.o.b. Farmingdale under a government bill of lading. The defendant produced some 15,000 of these Thunderbolts and spare parts equivalent to 2,400 additional planes. The plaintiffs in performing their duty helped to expedite or bought the raw materials and parts used in the building of these Thunderbolts, and all of this work was done exclusively in connection with the production of these aircraft. The defendant at its peak employed some 16,500 at its Farmingdale plant. A major portion of the plant and facilities used by the defendant, to be exact about 98%, was owned by the United States Government. The buildings were occupied by defendant under a lease with the Defense Plant Corporation for a rental of $ 1.00 per year and the payment of taxes. These taxes were later reimbursed by the Government. The title to all material, parts, tools, machinery, equipment and supplies purchased pursuant to the cost-plus contract whenever located was in the Government. Some of the equipment furnished, to be installed in the airplanes, was sent to the plant by the Government. Representatives of the United States Army Air Forces were stationed at the defendant's plant and they consisted of a contracting officer, inspectors, accountants, auditors, and many others. The contract had a provision that all of the material and workmanship was subject to the inspection and tests by representatives of the Government, and the contracting officer had power to make changes in or additions to the specifications, could issue additional instructions, require additional work, or direct the omission of work covered by the contract. The Army representatives had power to review the purchase orders and approve the payrolls of the company and, particularly, the pay of the plaintiffs involved in this litigation. The defendant did not abandon what is known as the profit system for it did make some profit from these contracts, and some of the defendant's private buildings were used in the work necessary to be done in the assembling and making ready for delivery of these Thunderbolts.

 The plaintiffs claim that during all the time which is the subject of this cause of action the defendant was engaged in interstate commerce and cite various cases in support of their contention.

 The defendant claims that the production of fighter aircraft for the United States Government for war purposes was not interstate commerce within the meaning of Section 3, subdivision (i), of the Act, 29 U.S.C.A. § 203(i), citing other cases.

 If the cases uphold the defendant's contention as raised in this action, the plaintiffs' cause of action must fall. Whether defendant's defense is to be upheld depends upon the interpretation of the cases decided by the Circuit Courts of Appeal and the United States Supreme Court with respect thereto.

 Kennedy v. Silas Mason Co., 5 Cir., 164 F.2d 1016, was an action for overtime compensation under the Fair Labor Standards Act of 1938, and the theory of the action and the facts are comparable to the case at bar. The defendant constructed and operated an ordnance plant in Louisiana under the terms of a cost-plus-a-fixed-fee contract with the United States Government. The plaintiff and others similarly situated sued for overtime, penalties, and attorney's fees claimed to be due under the Fair Labor Standards Act of June 25, 1938, alleging that they had been employed in interstate commerce and in the production of goods for commerce, within the meaning of Title 29 U.S.C.A. Sec. 203. The defendant manufactured munitions of war for the Government. These munitions did not at any time go into or become a part of commerce as defined by the Fair Labor Standards Act. They were not manufactured for sale, nor were they ever intended for commercial purposes. It sold nothing in interstate commerce, it delivered nothing in interstate commerce, and shipped nothing except as an agent or instrumentality for the loading of munitions.

 When viewed in the light of the powers reserved to the Government under this cost-plus-a-fixed-fee contract, the decision of the Circuit Court held that the defendant was not an independent contractor. Transportation by the Government of munitions owned by the Government during war for use by its armed forces was not commerce within the meaning of the Fair Labor Standards Act.

 The Kennedy case distinguished Bell v. Porter, 7 Cir., 159 F.2d 117, certiorari denied, 330 U.S. 817, 67 S. Ct. 1092, 91 L. Ed. 1267. In the Porter case, the defendant was engaged in the manufacture of shells, explosives, and munitions for the armed forces, under a cost-plus-fixed-fee contract with the United States Government. The Government owned the buildings, but these buildings were maintained and operated by appellants as independent contractors. The Porter opinion concluded that the defendant-appellants had complete supervision of all employees, including the hiring and discharging of all employees, and maintained their own fire department in which appellees were employed as fire fighters. It will thus be seen that the Porter case is somewhat different than the Kennedy case.

 The Circuit Court of Appeals for the Fifth Circuit in the Kennedy case held that the plaintiffs were working directly under the supervision of the United States Government, that munitions were not a part of commerce within the meaning of the Act, and that in any event munitions were not 'goods' within the meaning of the Act. The Kennedy case, 334 U.S. 249, 68 S. Ct. 1031, was reviewed by the United States Supreme Court which vacated the judgment of the Circuit Court and remanded the case to the District Court for reconsideration and amplification of the record. The United States Supreme Court ...


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