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ADDISON v. HURON STEVEDORING CORP

December 14, 1950

ADDISON et al.
v.
HURON STEVEDORING CORP. AARON et al. v. BAY BRIDGE OPERATING CO., Inc.



The opinion of the court was delivered by: LEIBELL

The history of this litigation may be outlined as follows:

These two actions were brought under the Fair Labor Standards Act, Sec. 16(b), 29 U.S.C.A. § 216(b), for wages due for 'overtime', as that term was defined in Sec. 7(a) of the Fair Labor Standards Act of 1938, 29 U.S.C.A. § 207(a). Both actions were commenced by the filing of the complaints in this Court on October 4, 1945. They were consolidated for the purposes of trial by a stipulation and order of May 14, 1946. The claims of twenty plaintiff longshoremen (ten in each case), as typical of certain groups of claimants, were severed by stipulation June 17, 1946 and went to trial before Judge Rifkind on that date. He held for the defendants, the employing stevedores, 69 F.Supp. 956, except in certain comparatively minor items of the claims, page 961, relating to skill and cargo differentials, as to which additional proof was to be received and supplemental findings made. On appeal to the Court of Appeals, Second Circuit, the judgment for the defendants was reversed and the suits were remanded for the determination of the amounts due the plaintiffs in accordance with the opinion of the appellate court. 162 F.2d 665 at page 670. On a petition for a rehearing the appellate court stated, June 24, 1947, page 673:

 'The petition for rehearing is denied. Our decision remanding the suits should be interpreted to permit the district court to consider any matters presented to it under the Portal-to-Portal Act of 1947, 29 U.S.C.A. § 251 et seq. *fn1" We do not, however, determine the scope or validity of any portions of that Act, since those matters have not been argued on these appeals.'

 The defendants petitioned the United States Supreme Court for a writ of certiorari, which was granted November 10, 1947, 332 U.S. 814, 68 S. Ct. 155, 92 L. Ed. 391, 'On account of the importance of the method of computing the regular rate of pay in employment contracts providing for extra pay'. 334 U.S. 446 at page 459, 68 S. Ct. 1186, at page 1194, 92 L. Ed. 1502. Mr. Justice Reed wrote the opinion for the majority of the Court. 334 U.S. 446, 68 S. Ct. 1186. If affirmed the judgment of the Circuit Court of Appeals with a modification, in that the order of the Circuit Court of Appeals allowing the District Court to consider any matters presented to it by petitioners as a defense in whole or in part under the Portal-to-Portal Act was broadened 'so as to permit the District Court to allow any amendments to the complaint or answer or any further evidence that the District Court may consider just'. 334 U.S. at page 477, 68 S. Ct. at page 1203.

 The suits came on for a retrial on the remand on April 1, 1949 and on various dates thereafter, the last November 9, 1949. Meanwhile Public Law 177 of the Eighty-First Congress was approved by the President July 20, 1949; and on October 26, 1949 the Fair Labor Standards Act was amended by Public Law 393 which embodied in the Act itself the substance of Public Law 177, 29 U.S.C.A. § 201 et seq. The defendants' answers were amended and supplemented to include defenses under the Portal-to-Portal Act of 1947, and Public Laws 177 and 393 of the Eighty-First Congress. The period in suit before Judge Rifkind dated back to October 1, 1943, but the claims of the plaintiffs, by statement of their counsel, now cover only the period of October 15, 1943 to September 30, 1945.

 The collective bargaining agreement involved in these actions provided for a 'straight time' rate of pay of $ 1.25 per hour for work performed on general cargo from 8 A.M. to 5:00 P.M., exclusive of 12 noon to 1 P.M. It also provided as 'overtime', a rate of $ 1.87 1/2 per hour, which was arithmetically the equivalent of time and a half the 'straight time' rate. *fn2"

 Section 7(a) of the Fair Labor Standards Act of 1938, 29 U.S.C.A. § 207(a) provided:

 '(a) 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.'

 The forty hour statutory workweek was in effect during the period involved in this litigation (October 15, 1943 to September 30, 1945).

 The District Court held, 69 F.Supp. 956, that the 'regular rate' defined in the statute did not necessarily mean average rate; that the contract 'straight time' rate established by the collectively bargained agreement with the longshoremen's union was a 'regular rate' within the statute; and that the contract 'overtime' rate for general cargo (1 1/2 times the contract straight-time rate), met the requirements of the statute as to overtime.

 On appeal to the Circuit Court of Appeals, Second Circuit, 162 F.2d 665, that Court held that a 'regular rate' could not be established by contract or by a collectively-bargained agreement which did not comply with the provisions of the Statute as to regular rates, and that where the employee worked at varying hours and varying rates the 'regular rate' was determined by dividing the total wages actually paid to the employee in any one week by the total hours actually worked for his employer in that week. As an appendix to its opinion the Circuit Court of Appeals quoted certain of the District Court's Findings of Fact. (Findings Nos. 14 to 20 inclusive, 22, 25, 26, 30, 33 to 36 inclusive, and 41 to 46 inclusive)

 On appeal to the Supreme Court of the United States, 334 U.S. 446, 68 S. Ct. 1186 it was held that the 'regular rate' of pay is not established by an arbitrary label chosen by the parties but, as the Circuit Court of Appeals had held, was a fact to be determined from the evidence in accordance with the provisions of the statute. The Supreme Court held that as a general rule the 'regular rate' of pay was determined by dividing the weekly compensation by the hours worked.

 The Supreme Court expressed the view that the compensation which had been paid as contract 'overtime' to these plaintiffs was not the type of overtime required by the statute; that the contract overtime was in effect a shift or work differential and represented higher wages paid because of the nature of the work done or because of the time at which it was done. The following quotations from the Supreme Court's opinion states its holding in this respect:

 'Under the definition, a mere higher rate paid as a job differential or as a shift differential, or for Sunday or holiday work, is not an overtime premium. It is immaterial in determining the character of the extra pay that an employee has actually worked at a lower rate earlier in the workweek prior to the receipt of the higher rate. The higher rate must be paid because of the hours previously worked, for the extra pay to be an overtime premium.' 334 U.S.at page 466, 68 S. Ct.at page 1197.

 'Where an employee receives a higher wage or rate because of undesirable hours or disagreeable work, such wage represents a shift differential or higher wages because of the character of work done or the time at which he is required to labor rather than an overtime premium. Such payments enter into the determination of the regular rate of pay.' 334 U.S.at page 468, 68 S. Ct.at page 1198.

 'The statute commands that an employee receive time and one-half his regular rate of pay for statutory excess compensation. The contract here in question fails to give that compensation to an employee who works all or part of his time in the less desirable contract overtime hours.' 334 U.S.at page 470, 68 S. Ct.at page 1200.

 'As a matter of fact, regular working hours under a contract, even for an individual, has no significance in determining the rate of pay under the statute. It is not important whether pay is earned for work outside of regular working hours. The time when work is done does not control whether or not all or a part of the pay for that work is to be considered as a part of the regular pay.

 'We think, therefore, that this case presents no problems that involve determination of the regular hours of work. As an employment contract for irregular hours the rule of dividing the weekly wage by the number of hours worked to find the regular rate of pay would apply.' 334 U.S.at page 473, 68 S. Ct.at page 1201.

 'Under the contract we are examining the respondents' work in overtime hours was performed without any relation as to whether they had or had not worked before. Under our view of Sec. 7(a)'s requirements their high pay was not because of the disagreeable hours they were called to labor or because the contracting parties wished to compress the regular working days into the straight time hours as much as possible.' 334 U.S.at page 475, 68 S. Ct.at page 1202.

 Two formulas were set out by the Court with respect to the credit the employer might take in the computation of the amount due the employee for the hours worked in excess of forty:

 1. The credit may be equivalent to an amount computed by multiplying the number of hours worked in excess of forty by the 'regular rate' of pay for the entire workweek, determined as aforesaid;

 or

 2. The credit may be equivalent to an amount computed by multiplying the number of hours worked in excess of forty by the 'average rate' of pay for those hours in excess of forty.

 The Supreme Court stated, however, that on the record before it the first method of computing the credit appeared to be the reasonable one; but it left to the District Court, on the remand, the determination of the method to be used from such evidence as might be produced on the retrial. In a footnote to this statement (No. 34) the Supreme Court pointed out mathematically the inequity of using the second method of computation in certain cases, but noted that the Wage and Hour Administrator in Press Releases No. 1913 and No. 1913(a) had provided for the use of the second method, where the employer had computed the 'regular rate' on the number of hours worked in excess of forty. This same point had been discussed by the Circuit Court of Appeals, 162 F.2d 665 at pages 669-670 and rejected by it, for the reason that the evidence in these cases on the trial before Judge Rifkind did not indicate that the employer had so kept its records as to come within the language of the Administrator's ruling. The following is quoted from the Circuit Court's opinion, 162 F.2d at page 669: 'The Administrator's Press Release 1913 stated that theretofore, where an employee received more than one rate during a workweek, the Administrator had ruled that the employer must pay the employee an 'overtime rate of one and one-half his average hourly earnings for the entire week, computed by dividing the weekly earnings at both rates by the total number of hours worked in the week,' but that thereafter an employer would have an option, in the alternative, to compute the overtime rate at one and one-half times the rate at which the employee worked during the hours in excess of forty. However, this Release was later qualified by Press Release 1913A, which stated, 'In order to take advantage of this (revised) rule, the records of the employer must show which method of computing overtime compensation he had determined to follow.' Nothing in the evidence here indicates that either defendant so kept its records.'

 On the remand, it was still open to the employer to show from his records, if he could, that he had used the second method (that described in Press Releases Nos. 1913 and 1913(a)) to compute the 'regular rate'. But no evidence was offered on that point during the trial on the remand and the defendants fell back on the special defenses set forth in their answers as amended and supplemented.

 On April 1, 1949 at a pre-trial hearing the defendants were relieved of the stipulation previously signed, which had conceded that the plaintiffs were engaged in interstate commerce. The defendants then stipulated, with respect to plaintiff's prima facie case, that plaintiffs were employed by defendants during the period covered by the suit, and that the cargoes handled by plaintiffs had been transported to the State of New York from other states or foreign countries, or were transported from the State of New York to other states or to foreign countries. For reasons hereinafter stated I have concluded that the plaintiffs were engaged in interstate commerce as defined by the Fair Labor Standards Act.

 The defendants' answers as originally filed denied the material allegations of the complaint and set up three affirmative defenses: one, that plaintiffs were not covered by the Act; two, that the defendants complied with all the provisions of the Act; and three, that the New York State six-year statute of limitations applied with respect to all claims arising before that periods. The statute of limitations was later fixed by the Portal-to-Portal Act of 1947 at two years for claims under the Fair Labor Standards Act and the third defense is no longer urged. The first defense, if it related to the exemptions under Sec. 13 of the Act, has no application in view of the evidence. The second defense appears to be unnecessary in view of the denials in the answer.

 At the pre-trial hearing, after the remand, the defendants moved for leave to amend their answers by adding thereto certain affirmative defenses numbered fourth to eleventh. These additional defenses were : fourth, that a substantial amount of the cargo handled by defendants was in the possession of the ultimate consumer and was being shipped by and to the ultimate consumer, and such goods were not in commerce; fifth, that much of the cargo was owned by the United States or some sovereign power and was shipped by the United States or the sovereign power as an administrative or sovereign act, and not as a commercial transaction; sixth, that much of the cargo handled, owned and shipped by the sovereign power, was used in connection with the prosecution of a war. The seventh affirmative defense was withdrawn and need not be considered.

 The eighth affirmative defense is based upon an allegation that overtime premiums, such as were defined by the Supreme Court in this case and held to be a credit against overtime liability, were paid to plaintiffs. A ninth affirmative defense, similar to the eighth, was disallowed as repetitious.

 The tenth and eleventh affirmative defenses are based upon Sections 9 and 11, respectively, of the Portal-to-Portal act of 1947. 29 U.S.C.A. §§ 258, 260. The tenth defense alleges that the defendants in paying the plaintiffs, did so in good faith in conformity with and in reliance on certain administrative regulations, orders, rulings, approvals, or interpretations of an agency of the United States and administrative practices and enforcement policies of the agency. This defense, if established against any claim, is a complete bar under the express language of Sec. 9 of the Portal-to-Portal Act. The eleventh defense, based on Sec. 11 of the Portal-to-Portal Act, alleges that the defendants acted in good faith and that they had reasonable grounds for believing that by paying plaintiffs in the manner they did they were not violating the Fair Labor Standards Act. On such a showing the Court may refuse to allow liquidated damages on any claim not completely barred by Section 9 of the Portal-to-Portal Act.

 The case went to trial, after the remand, with the answers supplemented and amended as hereinabove summarized. Subsequently, on October 4, 1949, a further supplemental and amended answer was filed which pleaded as an additional affirmative defense Public Law No. 177, approved July 20, 1949, which contained provisions for crediting the employer, retroactively, with 'overtime' pay paid pursuant to a collective bargaining agreement, and for excluding such 'overtime' in determining the 'regular rate' of pay under the Fair Labor Standards Act. On November 9, 1949 the Court, at the request of the plaintiffs, received evidence which plaintiffs contended would show the unconstitutionality of Public Law 177. Briefs with proposed Findings were submitted in March 1950 and were thereafter supplemented by letters and memoranda.

 In the trial on the remand before me I have considered the relevant portions of the record of the trial before Judge Rifkind. I have made Findings of Fact and Conclusions of Law which are being filed herewith. They include some of the Findings of Fact made by Judge Rifkind which have been adopted in full or with modifications. *fn3" The additional evidence adduced before me concerned the issues presented by the special defenses. I shall now consider the special defenses pleaded in the defendants' answers as amended and supplemented.

 THE 'COMMERCE DEFENSE'.

 For their fourth, fifth and sixth affirmative defenses *fn4" the defendants plead that the plaintiffs were not engaged in 'commerce' or the 'production of goods for commerce', as those words are defined in Section 3 of the Fair Labor Standards Act, because in many instances the cargo handled by defendants was owned and in the physical possession of the ultimate consumer, was not in commerce, and was being shipped by and to the ultimate consumer; because the cargo was owned by the United States or some other sovereign power and was being shipped by the United States or another sovereign power as an administrative act of the sovereign and not as a commercial transaction; and because the cargo was shipped by such sovereign powers in the prosecution of a war in which they were engaged as combatants.

 A large part of the evidence presented by the defendants in support of these defenses related to the activities of the stevedoring companies under their Warshipsteve contracts with the War Shipping Administration; the nature of the cargoes handled by the plaintiffs, and their use in the prosecution of the war; the authority of the governmental agencies which were consignors and consignees of the cargo; and the extent of the control exercised by the War Shipping Administration over the defendant stevedoring companies. The facts found in relation to those contentions are set out in Findings of Fact Nos. 210 and 245 inclusive.

 Prior to May 8, 1950 there was a conflict of judicial opinion among the United States Circuit Courts of Appeals on the question of whether the employees of contractors, who were engaged by the United States on a cost plus fixed fee basis to produce and handle munitions and other war goods, were employees engaged in the production of goods for commerce within the meaning of the Fair Labor Standards Act. Reed v. Murphey, 5 Cir., 1948, 168 F.2d 257, remanded 1948 335 U.S. 865, 69 S. Ct. 105, 93 L. Ed. 410; Kennedy v. Silas Mason Co., 5 Cir., 164 F.2d 1016, remanded, 1948, 334 U.S. 249, 68 S. Ct. 1031, 92 L. Ed. 1347; Divins v. Hazeltine Electronics Corp., 2 Cir., 1947, 163 F.2d 100; Bell v. Porter, 7 Cir., 1947, 159 F.2d 117, certiorari denied 330 U.S. 813, 67 S. Ct. 1092, 91 L. Ed. 1267. See also Barksdale v. Ford, Bacon & Davis, Inc., D.C.E.D. Ark. 1947, 70 F.Supp. 690; Lasater v. Hercules Powder Co., D.C.E.D. Tenn. 1947, 73 F.Supp. 264, affirmed 6 Cir., 171 F.2d 263; McLaughlin v. Todd & Brown, Inc.,* N.D. Ill. 1948.

 On May 8, 1950 the Supreme Court decided three cases, Powell v. U.S. Cartridge Co. (Aaron v. Ford, Bacon & Davis, Creel v. Lone Star Defense Corp.), 339 U.S. 497, 70 S. Ct. 755, 94 L. Ed. 1017, in all of which the Circuit Courts of Appeals had held that the Fair Labor Standards Act did not apply to persons employed at a Government owned munitions plant, which was operated for the United States by a private contractor on a cost plus fixed-fee basis. The facts in each case were substantially the same. As stated by the Supreme Court in the Powell case, 339 U.S.at page 499, 70 S. Ct. at page 757, the contract between the Government and the contractor provided: ' * * * that the respondent would operate the Government's plant for the manufacture of certain types and quantities of small arms ammunition, that the Government would reimburse the respondent for its expenditures in such operation and, in addition, pay the respondent a fixed fee based upon the types and quantities of ammunition it supplied. The title to the site, plant, equipment and, in general, to the raw material, work in progress and finished munitions was to be in the Government. Most of the materials were to be supplied by the Government. The contract provided expressly for the reimbursement of the respondent's expenses for labor. The respondent, in turn, agreed to supply practically all services incident to the setting up of an efficient operating force and to the operation of the plant until the required ammunition had been produced. The respondent was made responsible for storing the materials, supplies and finished ammunition and for loading the ammunition on cars or other carriers in accordance with the Government's instructions. The ammunition generally was shipped by common carrier on Government bills of lading to military destinations outside of Missouri. The Government reserved large rights of supervision, auditing and inspection to be exercised through its 'Contracting Officer.' The employees, including the petitioners, were to be hired, assigned, directed, supervised, paid and discharged by the respondent. The contract stated expressly that all persons engaged in the work 'shall be subject to the control and constitute employees of the Contractor * * * .' It quoted all of the 'representations and stipulations' relating to employment directed by the Walsh-Healey Act. Under it the contracting officer (subject to a right of appeal) could require the respondent to dismiss any employee whom he deemed incompetent or whose retention 'is deemed' not to be in the public interest. The contract made no express reference to the Fair Labor Standards Act. However, in a booklet which was distributed by the respondent, each employee at the St. Louis Ordnance Plant was informed, among other things, that 'There will be eight hours in any working day, and forty hours will constitute a working week. * * * When production demands require a longer work day, or longer work week, the Company will pay the legal overtime rate as provided under the Walsh-Healey Act, and the Fair Labor Standards Act."

 The Supreme Court held that the defendant was an independent contractor operating the plant for the Government; that the employees were not employees of the Government; that they were engaged in the production of goods for commerce; that the transportation of munitions of the United States to destinations outside of the state of their production is 'commerce' within the meaning of the Fair Labor Standards Act, even though they were for use or consumption by the United States; and that munitions were 'goods' within the meaning of the Fair Labor Standards Act.

 In the cases at bar the Government did not have title to the property of the stevedores; it had not been requisitioned. And by the terms of the Warshipsteve agreements the longshoremen were employees of the defendant stevedores and the stevedores in turn were independent contractors. The cargoes described in Findings of Fact Nos. 228, 229, 243-245 were in some respects less characteristic of the term 'war materials' than the munitions involved in the Powell case. For the most part they were lend-lease supplies. But shipments of munitions were also handled by plaintiff longshoremen. The facts in the Powell case indicate that the supervision exercised by the Government over the work of the contractor, the manufacturer of munitions, was greater than that exercised by War Shipping Administration over the defendant stevedores in the instant cases. In my opinion, the Powell case is clearly decisive of the issues raised by the defendants in their Fifth and Sixth defenses and requires a dismissal of those defenses.

 With respect to the Fourth defense, that the goods were not goods in commerce because they were in the actual physical possession of the ultimate consumer (the United States) when the stevedoring services were rendered, the applicability of the Powell case seems equally clear. In the majority opinion it was stated: 'A. The 'transportation' of munitions of the United States to destinations outside of the state of their production is 'commerce' within the meaning of the Act. The Act applies to 'employees * * * engaged in commerce or in the production of goods for commerce.' The precise question here is whether the munitions were produced for 'commerce' when such production was for transportation outside of the state and for use by the United States in the prosecution of war, but not for sale or exchange.'

 And also: 'We believe that the crucial fact which establishes the coverage of the Act is the status of the munitions, as 'goods,' during the time they were being produced. The literal meaning of the exclusionary clause in Sec. 3(i), and that which best serves the purposes of the Act, is merely that, after the products shall have been delivered into the actual physical possession of their ultimate consumer, they then shall cease to be 'goods.' This retains the important effect that, thereafter, it is not a violation of Sec. 15(a)(1) for the ultimate consumer to transport the products outside of the state. This interpretation was adopted by the Wage and Hour Administrator. 1940 WH Man. 131, 133. It was readopted without change in the July, 1947, revision of the Administrator's Interpretations. 12 Fed.Reg. 4585, 29 C.F.R. § 776.7(h). 16 '

 The footnote (16) states in part: "The fact that products lose their character as 'goods' when they come into the actual physical possession of the ultimate consumer does not affect the coverage of the act as far as the employees producing the products are concerned. * * * All that the term 'goods' quoted above is intended to accomplish is to protect ultimate consumers, other than producers, manufacturers, or processors of the goods in question from the 'hot goods' provision of section 15(a)(1). This seems clear from the language of the statute. * * * "

 The longshoremen in the cases at bar had nothing to do with the production of the goods. They did not work for the contractor who produced the goods and they were not employees of the ultimate consumer. For an employee to be deemed 'engaged in commerce', as distinct from the 'production of goods for commerce,' his activities must be 'actually in or so closely related to the movement of the commerce as to be a part of it.' McLeod v. Threlkeld, 319 U.S. 491 at page 497, 63 S. Ct. 1248, at page 1251, 87 L. Ed. 1538. The longshoremen were employed by the stevedore in assisting in the transportation of the goods, and they were 'engaged in commerce' within the meaning of the Fair Labor Standards Act. Joseph v. Carter & Weekes Co., 330 U.S. 422 at page 426, 67 S. Ct. 815, 91 L. Ed. 993.

 Section 3(b) of the Fair Labor Standards Act of 1938 defined commerce as follows: "Commerce' means trade, commerce, transportation, transmission, or communication among the several States or from any State to any place outside thereof.'

 The defendants also argue that Congress never intended that incoming foreign shipments were to be covered by Section 3(b) of the Fair Labor Standards Act as enacted in 1938, which provided that commerce was 'transportation * * * from any State to any place outside thereof.' Section 3(b) of the Act, as revised by Public Law 393 and as effective January 25, 1950 provides that commerce is 'transportation * * * between any State and any place outside thereof'. The section in its revised form covers the handling of incoming cargoes from foreign ports. *fn5" Prior to the amendment, the Wage and Hour Administrator had held *fn6" that the exclusion of incoming cargoes from coverage was valid only when the imported goods were consumed within the state of importation, and that the exemption did not apply to goods which were destined to be transported and were subsequently transported across state lines after their arrival in a United States port. In most instances, the foreign cargoes handled by plaintiff longshoremen at the Port of New York were consigned to Governmental agencies and to persons outside the State of New York and subsequently transported to their destination. It would appear that the exclusionary clause of Section 3)i) of the Fair Labor Standards Act of 1938, affecting goods imported prior to January 1950, should be limited to those goods consumed within the state of importation. On that issue- the place of consumption of imported goods not consigned by shipping document to places outside the State- there is no proof in the record in this case on which any determination could be made. How much is involved is not shown and at best it would be small. It would have no effect on the claim of a longshoreman unless in the course of a week the cargoes he handled were practically all imported cargoes, intended for consumption within this State. The record indicates that any such engagement that was not in interstate commerce would be only occasional and spasmodic, not enough to affect the employees substantial engagement in commerce. Skidmore v. John J. Casale, Inc., 2 Cir., 160 F.2d 527 at page 530, certiorari denied 331 U.S. 812, 67 S. Ct. 1205, 91 L. Ed. 1832.

 The defendant, Bay Ridge, did the stevedoring work for Furness, Withy Co. Ltd, and was owned and controlled by that company. Almost all the ships involved used the shore installations of Furness, Withy & Co. at the Port of New York.6a Furness, Withy Co. operated vessels for the British government and the outgoing cargoes were nearly all destined for use by some agency or department of the British government. It cannot be reasonable claimed that the British government and its agencies, and the cargoes handled by Bay Ridge for its account, are in any different position as to the application of the Fair Labor Standards Act to the work of the longshoremen employed by Bay Ridge, than are the United States Government, its agencies and cargoes, and the longshoremen employed by Huron. Further, much of the space aboard the British vessels was used by the War Shipping Administration and United States agencies for lend-lease goods consigned to British or American agencies; and Bay Ridge rendered some stevedoring services to American ships for the War Shipping Administration or American steamship companies. After the Fall of 1942 practically all American ships had been requisitioned by the United States government. The Supreme Court's decision in the Powell case would apply to the longshoremen employed by both defendants.

 The defendants' Fourth defense is dismissed for the reasons hereinabove stated.

 The defense based on Section 9 of the Portal-to-Portal Act of 1947

 The defendants' tenth affirmative defense *fn7" pleads, as a complete bar to plaintiffs' claims, Section 9 of the Portal-to-Portal Act of 1947, 29 U.S.C.A. § 258, which provides that an employer shall not be liable for failure to pay overtime compensation under the Fair Labor Standards Act of 1938, as amended: 'if he pleads and proves that the act or omission complained of was in good faith in conformity with and in reliance on any administrative regulation, order, ruling, approval, or interpretation, of any agency of the United States, or any administrative practice or enforcement policy of any such agency with respect to the class of employers to which he belonged. Such a defense, if established, shall be a bar to the action or proceeding, notwithstanding that after such act or omission, such administrative regulation, order, ruling, approval, interpretation, practice, or enforcement policy is modified or rescinded or is determined by judicial authority to be invalid or of no legal effect.'

 Under this provision of the statute there are six elements which the employer has the burden of proving: That he acted (1) in good faith (2) in conformity with and (3) in reliance on (4) an administrative regulation, order, ruling, approval, interpretation, or administrative practice or enforcement policy of (5) any agency of the United States, (6) with respect to the class of employers to which he belonged. See Ferrer v. Waterman S.S. Co., D.C. Puerto Rico 1949, 84 F.Supp. 680; Burke v. Mesta Mach. Co., D.C.W.D. Pa. 1948, 79 F.Supp. 588; Jackson v. Northwest Airlines, D.C. Minn. 1948, 76 F.Supp. 121, reversed 8 Cir., 185 F.2d 74, where the courts have set forth the requirements in four categories. *fn8"

 Numerous cases have considered the provisions of Section 9 in varying factual situations, and some of the principles applied in the various cases are not reconcilable in all respects. Darr v. Mutual Life Ins. Co., 2 Cir., 1948, 169 F.2d 262, certiorari denied 335 U.S. 871, 69 S. Ct. 166, 93 L. Ed. 415; Rogers Cartage Co. v. Reynolds, 6 Cir., 1948, 166 F.2d 317, 3 A.L.R.2d 1090; Wells v. Radio Corp. of America, D.C.S.D.N.Y. 1948, 77 F.Supp. 964; Moss v. Hawaiian Dredging Co., D.C.N.D. Cal., 83 F.Supp. 528; Kam Koon Wan v. E. E. Black, Ltd., D.C. Hawaii 1948, 75 F.Supp. 553; Brueschke v. Joshua Hendy Corp., D.C. Calif. 1947; Kennedy v. Wigton-Abbot Corp., D.C.N.J. 1948, 80 F.Supp. 489; Blessing v. Hawaiian Dredging Co., 76 F.Supp. 556 and French v. McWilliams Dredging Co., N.Y. Sup. 1948, 195 Misc. 90, 88 N.Y.S.2d 838, reversing 191 Misc. 1022, 78 N.Y.S.2d 317 are all cases holding Section 9 to be a good defense, with fact situations similar in some respects to those in the instant case. On the other hand Reid v. Day & Zimmerman, D.C.S.D. Iowa, 1947, 73 F.Supp. 892, affirmed 8 Cir., 1948, 168 F.2d 356; Burke v. Mesta Mach. Co., D.C.W.D. Pa. 1948, 79 F.Supp. 588; Bauler v. Pressed Steel Car Co., D.C.N.D. Ill. 1948, 81 F.Supp. 172, affirmed 7 Cir., 182 F.2d 357; Hoffman v. Todd & Brown, Inc.,* D.C. Ind. 1948; Glowienke v. Hawaiian Dredging Co., D.C. Ill. 1948, 84 F.Supp. 678; Jackson v. Northwest airlines, *fn9" D.C. Minn. 1948, 76 F.Supp. 121; Ferrer v. Waterman Steamship Corp., D.C. Puerto Rico 1949, 84 F.Supp. 680; and Knudsen v. Lee & Simmons, Inc., D.C.S.D.N.Y. 1949, 89 F.Supp. 400 are all cases in which a Section 9 defense was rejected by the Court, and those cases contain one or some of the factual situations on which the defendants' counsel base their arguments in the instant case.

 But it is apparent from all of these cases that the good faith exercised by the employer must be of such a character that it can meet an objective test:- was his course of conduct innocently followed with an honest intention and was it pursued in the same manner as a reasonably prudent man would have acted under the same circumstances.

 The employer's conduct must also have been in conformity with an administrative rule or interpretation or policy of a governmental agency; i.e., it must be in accordance with the agency ruling or interpretation and must follow the agency's established policy. Further, the administrative ruling or interpretation or policy must actually have been relied on by the employer; i.e., he must have had knowledge of it and acted on it, so that it can be said to have influenced his conduct.

 In the cases cited above different types of agency action were considered by the courts in determining what constitutes the fourth requirement of Section 9, 'any administrative regulation, order, ruling, approval, or interpretation'. It is well settled the mere inspections of payrolls by field investigators of the Wage and Hour Division followed by a failure on their part or on the part of the Division to complain of the employer's practice is not sufficient to constitute a ruling or interpretation. *fn10" However, an actual non-enforcement policy by the Wage and Hour Administrator; *fn11" an approval of a contract or pay schedules of a directive in relation thereto, by the National War Labor Board, the Salary Stabilization Unit of the Treasury Department, having knowledge of the facts; *fn12" a circular letter issued by the Chief of a Bureau of the Navy; *fn13" an opinion letter by the Regional Attorney for the Wage and Hour Division; *fn14" - each of these has been held to be a ruling or interpretation of an agency of the United States within the meaning of Section 9.

 The plaintiffs seem to contend that the reliance mentioned in the statute must be on the ruling etc. of the administrative agency specifically charged with the administration of the Wage and Hour law, as distinguished from any contracting agency of the government. The board language of Section 9 does not lend itself to such a narrow construction. Section 9 uses the words- 'any agency of the United States'. Sections 9 and 10 of the Portal-to-Portal Act of 1947 clearly differentiate between rulings, interpretations, etc. made prior to May 14, 1947 and those subsequent thereto. The rulings, interpretations etc. made prior to May 14, 1947, on which the employer may claim to have relied, may be those of 'any agency of the United States' Sec. 9; but after May 14, 1947 the agency must be the Wage and Hour Division of the Department of Labor, and no other. Sec. 10(b) of the Portal-to-Portal Act of 1947.

 The decisions of the courts have noted this distinction and have not limited Sec. 9 of the Portal-to-Portal Act of 1947 to the rulings, interpretations etc. of the Wage and Hour Division. In Kenney v. Wigton-Abbott Corporation, D.C.N.J. 1948, 80 L.Supp. 489, 496 the Court held: 'The Portal-to-Portal Act itself does not define the term agency as used in Section 9. It speaks of an 'agency of the United States'. The Wage and Hour Act Administrator in an Interpretative Bulletin, (with which this court, in the circumstances of the instant suit, finds itself in accord), Title 29 Code of Federal Regulations, Chapter V, part 790, section 790.13, 29 C.F.R., 1947 Supp. Sec. 790.13, page 4417, states: 'But where the acts or omissions complained of occurred before May 14, 1947, the employer may show ...


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