Earl Warren: Number 33, Mitchell, Secretary of Labor, Petitioner, versus Oregon Frozen Foods Company et al. Ms. Margolin.
Bessie Margolin: Mr. Chief Justice, may it please the Court. The issues in this case concern two related exemptions from the overtime requirements of the Fair Labor Standards Act, as those exemptions apply to the processes of frozen vegetable. The first section, first exemption is to that of Section 7 (c) which insofar is pertinent here, provides for an exemption of for not more than 14 work weeks in a calendar year, for employment of employees in a place where the employer is engaged in the first processing of or in the canning or packing of perishable of seasonal fresh fruits or vegetables. The other section involved is the Section 7 (b) (3) which provides another overtime exemption also for not more than 14 work weeks, but limited to 12 hours a day and 56 a week, for any employee employed in an industry found by the administrator to be of a seasonal nature. Now the issues under both of this -- these exemptions turn on the same language because the administrator made his seasonal finding under Section 7 (b) (3) in the same language as the first processing language of Section 7 (c) and determined that the exemptions could be accumulated. I'll say that the issues turn on this -- the same language at least all the issues that were raised in the court below, the whole issue was about the meaning of the language, the first processing of perishable, of seasonal fresh fruits or vegetables as used in the statute in Section 7 (c) and the identical language as used in Section 7 (b) (3). For -- in the briefs of respondents and of amicus curiae, the National Association of Frozen Food Packers for the first time in this Court, a question is raised as to the validity of the administrator's seasonal finding under Section 7 (b) (3). We have filed -- petitioners filed a reply brief directed primarily to this issue and if time permits, I will come in on it later, but since the issues presented by the -- decided below and tried below and presented in the petition for certiorari related solely to the meaning of this language, I'll address myself primarily to -- to that question, to -- to that issue. The pertinent facts are not in dispute. As a matter of fact they were agreed to and incorporated by agreement in the District Court's pretrial order and by the way were the contentions and the issues. I'm not making too much of the point of that because we -- we think that the -- the new contention is -- is without merits, certainly not well taken, but there is some question as to whether it is -- is properly -- whether it has not been foreclosed by the stipulation of the parties at the pretrial order. The operations of -- of Oregon are described in these agreed facts. If the -- they have an active season, they're engaged in -- in freezing and package -- and packaging corn and carrots and on mixed vegetables -- mixed frozen vegetables. The active season for corn is about nine or 10 weeks from August 1st to August -- to October 10th and the active season for carrots is from about October 15 to December 1st, about six -- approximately six weeks. The process through which the -- the Oregon purchase that -- purchases the -- the crops during the harvested season and from nearby -- from nearby farm and it has -- has to immediately process them to stop the natural deterioration and -- and to put them into preservable form. The process includes the cutting and cleaning and otherwise preparing for blanching, a partial cooking process. And -- and this partial cooking process kills the enzymes which are responsible for our organic growth and the consequent rapid deterioration from natural causes. Then the -- the blanched vegetables are put through the freezing units and quick-frozen. After they've been quick-frozen in loose farm and this is done immediately on receipt of the -- of the vegetable, some of the vegetables are immediately packaged in consumer-sized containers. Normally, however, only a small part of the vegetables -- the frozen vegetables can be so packed immediately. Less than a third of the corn for example was packaged during the active season in 1954, I believe it was. The balance of the vegetables is packaged in large bulk, this is after they've been quick-frozen, in large bulk containers and placed in cold storage to be repackaged when the rest season ends. This can be and is spread out over many months and may continue through the following May even. In addition to the -- the freezing and the bulk packaging of the corn and carrots, Oregon also from December through -- I think in December and January for several months, mixed -- prepares a mixed vegetable, mixed frozen vegetable from its corn -- its own frozen corn and carrots and from -- mixed with peas and beans and lima beans, string beans and lima beans, which it purchases already frozen from other processors in Washington, California and Oregon. The -- during the active harvesting season, Oregon employs approximately 300 employees -- production employees for the processing of the corn and reduces that number at the end of the season to about 20 employees. For carrots during the active season, about 40 production employees are employed and that's reduced to about 20 at the end of the active season.
Potter Stewart: Do the -- do the seasons overlap? Could you tell us?
Bessie Margolin: The seasons -- I think they do not generally overlap. I'm not -- I don't think that that is clear on that. I believe sometimes these are -- I -- I assume are approximate dates that were agreed to. I don't think any question came up with that overlap.
Potter Stewart: How many weeks in each season? How many weeks in the corn season and how many in the carrots?
Bessie Margolin: From -- the dates are given and judging from the dates it's about eight to nine weeks -- nine to 10 weeks for the corn and about six weeks for carrots. There's some other evidence in the record which shows that the season for carrots is much less, but this must been the agreed statement, so I'm using those facts. Apparently, it -- it varies, but it was stipulated that this was approximately what the active season was.
Potter Stewart: And during those two periods, employment went up (Voice Overlap) --
Bessie Margolin: The Government conceded that during the active -- during the active period, the employees engaged in the freezing, in the -- the processing and the immediate packaging into --
Potter Stewart: Were exempt.
Bessie Margolin: -- were exempt. Engaged in -- in the immediate packaging into consumer sized packages are in the bulk containers were exempt.
William J. Brennan, Jr.: Well that was (Inaudible) 14 weeks -- second 14 weeks period?
Bessie Margolin: No. No, but we -- but our contention is that they're entitled to the exemption only for weeks when they're engaged in this first processing --
William J. Brennan, Jr.: Yes.
Bessie Margolin: -- operation.
William J. Brennan, Jr.: Yes. I understand from work force is defined from some 300 to 20, or something like that.
Bessie Margolin: That's right.
William J. Brennan, Jr.: Well, are we concerned here with the exemption as to the 20 only?
Bessie Margolin: If we're concerned, that's primarily our -- our concern, I presume. Although it may have kept some of the -- may be a gradual laying off of employees and maybe some of them were kept on after the -- the -- it maybe some periods in there where they were using some employees for non-exempt activities, when they would not be exempt.
William J. Brennan, Jr.: Well, I -- I just -- the heavier date when this so-called post processing period begins when they have time now to package for consumer use.
Bessie Margolin: Well there are -- there are -- there are some tables in the record which show -- show the weeks for which the Oregon claimed the exemption and the weeks where -- which we claimed this evidence to show which weeks we claim that they weren't entitled to it. They're rather confusing. I've tried to make something of them and I think that it's rather confusing because it doesn't correspond with the -- the agreement as to what the active season was. So I think the active season must vary on these -- on these matters. And -- I have started to make up a record of it and concluded that there was some explanation as to vary here, which wasn't in the record.
William J. Brennan, Jr.: But not as the Government's proof (Inaudible) I gather in this Court, which were the (Inaudible)
Bessie Margolin: We can see that during the active season when the crops are coming in, when there's a great influx of crops and they have to be immediately processed and they -- we -- and that the freezing process is -- the freezing process and the immediate repackaging, that continues operation until there's a break that that is a – exempt, but when there's a break, the subsequent operations are not that.
Earl Warren: We'll recess now. [Recess] Ms. Margolin you may proceed.
Bessie Margolin: The administrator's interpretation of this language of the exemptions, his long standing interpretation has been that this seasonal -- that it is a seasonal exemption limited to -- to the purpose of giving relief, the seasonal commodities during the peak season when prompt processing is essential for preservation of the crop and when the heavy influx during the short harvesting season can be handled only by working large quantities of labor for long hours and that it was not intended to exempt activities which could be extended around the year and where there was ample labor -- year round labor available to handle it. This position as we'll later it show, has been the long standing interpretation of the administrator and has received the approval of -- of Congress. So, it -- it is also, we believe, are clearly in accord with the original legislative purpose although we think it is unnecessary to examine very far into the original legislative purpose because it has clearly been approved by the subsequent legislative enactment of the 1949 Amendments under this Court's decisions construing those amendments. The purpose though, as explained in both the deliberations in the House and the Senate debates, was made plain that it was to be for these peak seasons to use the language of Senator Black, who was Chairman of the Senate Committee, the Committee was concerned with the necessity of excluding purely seasonal activities which cannot operate in any other way except by speeding up the work at a particular time. It was also equally concerned with not extending the exemption to related operations which didn't require of the exemption. We think that the very fact that there is such a reduction in the number of employees at the close of the active season in this case, indicates that the purpose of the exemption does not apply. There's other legislative history which we go into in our brief, particularly the -- the turning down of a -- an amendment which would have broadened this exemption, the so-called coffee amendment in the House, which was rejected by -- by the House for the narrower first processing language and for this -- it was specifically pointed out that the broader proposal, coffee proposal was -- was made because the first processing language might not include all operations leading to the final marketing. Now, the trial court took the position that the -- that the only reasonable interpretation of the first processing of fresh seasonal perishable or seasonal fresh fruits, was the operations leading up to a final finished product for market. We believe that the statute on its face, that the phrasing of the language of this statute, its context in -- in relation to other provisions of the statute, make it clear beyond doubt that the first processing as used in this section, did not -- did not intend and certainly it was not necessarily must be read as -- as going to the processing of a finished product for market. Some of the other exemptions specifically so provide and a number of them use the term, “processing,” as distinguished from first processing. So that the terms of the statute itself show that the first processing meant something different from processing, distributing and marketing. Whether if there were any -- if the statute were less clear and the original legislative purpose were less clear, we submit that what has happened in Congress since then, has result any doubt about it. Congress was, at an early date, made aware of the administrative interpretation. At the time of the -- of the 1949 Amendments, various proposals were made to amend both of these exemptions and they were -- hearings were held on them and although Congress did amend many other sections, it didn't amend either one of these exemptions except for -- in amount of detail not here applicable concerning buttermilk and left those sections intact and at that time, Congress was made fully aware of just how the administrator was interpreting Section 7 (c) and how he was applying Section 7 (b) (3). And we feel that apart from all of the other arguments of purpose in supporting the administrator's position in this case under both exemptions that the congressional approval at that time was sufficient to -- to resolve any possible doubt of its validity. I want to call particular attention to the fact that the -- in these various industry members that appeared at that time and at the hearings and to consider when these various proposals to amend sections -- these sections were -- were before Congress, they appeared at the hearings to oppose any -- any changes in these sections. And one of the representatives of the National Canners Association explicitly advanced the argument that they shouldn't be amended because the meaning of the exemptions had and I quote, “Become crystallized in administrative ruins, court decisions and industry understanding. And any unnecessary changes may open -- reopen the entire problem, disturb existing understanding of administrative interpretation and policy of enforcement and possibly put back the application of existing rules at least a decade.” Now, we have cited that, we haven't quoted it in our brief, but the National Frozen Food Packers Association also filed a statement at that time and they stated that they agreed and -- and approved of the statement of the National Canners Association. The fact of the matter is that -- that nobody, none of the industry members wanted any changes in these provisions, because they felt it would upset the long standing administrative interpretation.
William O. Douglas: Has it been contended at any point along the line that this was not the -- this -- even though it was not a first processing, it was a canning or packing of a perishable vegetable.
Bessie Margolin: Well, it's certainly not canning. Now --
William O. Douglas: Or packing.
Bessie Margolin: The packing is for the -- there's some confusion that is in the -- in respondent's brief. Packing is -- has all along been settled to be packing and -- of the vegetable -- fresh vegetable in its raw and natural state.
William O. Douglas: The statute is perishable.
Bessie Margolin: Perishable, seasonal and perishable fresh vegetables, packing of those.
William O. Douglas: Fresh -- fresh fruits or vegetables.
Bessie Margolin: And that's always been interpreted and generally accepted.
William O. Douglas: Was it raised below in the -- the lower courts didn't rule on this, did they?
Bessie Margolin: No. It was assumed and agreed that the only question here was, did these operations come in the first processing of -- of -- do they come within the terms of the first processing of perishable or seasonal fresh fruits and vegetables.
William O. Douglas: Has the administrator made any rulings to whether the frozen vegetables are perishable within the meaning of the statute?
Bessie Margolin: Oh, yes. He's ruled that perishable -- seasonal perishable fresh vegetables means vegetables in their raw and natural state, that when they've been frozen, they've been processed and what -- what -- is here, we're talking about the repackaging operations of the vegetables previously frozen.
William O. Douglas: I don't understand.
Bessie Margolin: He has -- he has also specifically ruled that -- that a -- a process -- packaging doing operations, subsequent operations on vegetables processed by someone else at another place of business, couldn't tack his operations onto the other processes, in order to take advantage of the exemptions. The -- his -- his interpretations in this respect have been -- were publicly announced in 1943. They were included in his regulations under Section 7 (b) (3) and is consistently adhered to it since then and as I say in 1949, we submit that if they secured the -- the gratification of Congress. On the -- we also contend that even if they weren't so clear that the administrator's interpretation is -- of the statutory language was -- were controlling, that at least as to the interpretation of that language in his own determination under the seasonal exemption of 7 (b) (3), it would be controlling under this Court's decisions. Now, respondents in the amicus curiae don't take issue with that argument, but they've come up with -- with the new argument I mentioned before. They -- they now assert -- now contend that the administrator had no authority under Section 7 (b) (3) to limit this seasonal determination to particular operations of an industry. We think that -- that argument is clearly without merit of -- even if it is properly raised at this time. The industry -- the definition of -- in first place, the -- the section -- the exemption is clearly not self-operating. It depends upon a finding by the administrator that the industry is of a seasonal nature. An industry is defined in the Act to mean a branch, trade, business, no -- no, trade business industry, any branch thereof and we believe that this definition is clearly flexible enough to permit the administrator to take out the seasonal parts of an industry and find that that is the branch and that that is seasonal. And that is what he has done since the beginning of the operation of this Act. He's done it for years. Those determinations have generally been accepted. They've been reported to Congress periodically. In 1949 the whole list of them were reported. It's shown on their face that most of them were done in terms of the operations and as a matter of fact, the particular determination in this case was upon the -- the application of the industry members. No objection was made to it. We went through formal hearings and it was published and objections were to be made within 15 days. No industry member made any objection. And they have been in effect since -- the particular determination here has been in effect since 1940. The respondents rely on a dictum and a decision of the Tenth Circuit a few years ago, which we think the Tenth Circuit was led to because of some -- of confusion and misapprehension as to just what our function -- our regulation, the general regulations of the administrator play. If it -- if it really meant to hold that the administrator could not validly issue such determinations limited to the operations that are seasonal, we submit that it was clearly erroneous and should be overruled and was gone into -- to that fully in our reply brief. If I may, I would like to reserve the rest of my time for rebuttal.
Earl Warren: You (Inaudible) -- Mr. Gallagher.
Martin P. Gallagher: Mr. Chief Justice, Honorable Members of the Court. Counsel has given you a picture of these two exemptions with which we are concerned with. I'd like to emphasize that they are two exemptions, they are not one exemption. We have first in our interpretation the rather broad exemption under 7 (b) (3). Our interpretation of that is that as a seasonal one, exemption based upon seasonality. It applies to an industry or a branch of an industry which is found to be found by the administrator as seasonal in nature. And if the administrator does find that an industry or branch of an industry is of a seasonal nature, it's our position that that broad exemption exempts all the related activities that are closely related to that industry or branch of an industry which is found to be seasonal. The other exemption with which we are concerned is a more narrower exemption, 7 (c). It is what we call a first processing exemption and it has to do and deals with directly, the particularly type of process that the employer is engaged in not generally, the type of industry that he's engaged in, but particular process. Therefore, by definition, it is a narrower exemption.
William O. Douglas: You do claim -- you do claim that a first processing cannot be a branch within the whole set of frequent --
Martin P. Gallagher: Yes Your Honor as they interpret it particularly. They have come on certainly a lot closer to be in a branch of an industry, if we included all the activities of first processing and if by our first processing, we would mean all those steps that are necessary from the reception of the vegetable to the final package of it, if that is first processing (Inaudible) be a branch of an industry.
William J. Brennan, Jr.: Are all of those presently exempt?
Martin P. Gallagher: Yes. Under this Act, all the steps from the reception of the corn to the final packaging of the corn and retail packages, if done, even in continuous process is considered to be first processing. Now, that's why we raise this question of two exemptions and that the first processing as interpreted by the Government that is just freezing corn and put it in a 64-cubic foot bins and put them in a cold storage, simply couldn't be a branch of an industry. Branch of an industry, we feel, should include all the steps that are necessary to have it -- give it some economic justification, some purpose, some end result. And certainly, there would be no end result or nothing accomplished simply by taking frozen corn and put it in cold storage. Therefore, that -- that in our opinion is not a branch of an industry but rather it is a part of a process of a branch of an industry. Now, so I should like to talk about exception 7 (c) that is the narrower one, as applied to the facts of this case. That is the first processing and at this plant that we're concerned with, there are two operating companies, both of them are parties to this litigation. This litigation started out by the Secretary of Labor to restrain Ore-Ida Potato Products Company and Oregon Frozen Food Company, from violating certain terms of the Act and asked for an injunctive relief. Before and during the trial, it became apparent and the Government proceeded that the -- all the activities, the Ore-Ida Potato Products were clearly exempt, no question about that. Now, these two companies are affiliated companies. They operate side by side from a parent company. Their freeze lines come down parallel, all the activities practically the same. They have potatoes peeled, sliced and blanched and then either blanched in steam or oil and then frozen and packaged. In the other lines we have identical situation. We have the corn and the carrots coming in it's washed and peeled and diced, steam-blanched to kill the enzymes, frozen and then packaged to the extent that it can be packaged during the harvest season. Now, either the correct interpretation of this operation would be that the primary purpose is to get all these corn in and freeze it in storage -- in bulk storage and then package it at leisure, if that was a correct outlet on this operation, then perhaps Government's position would be sound, but it's simply isn't that at all. The primary purpose -- the primary object of this corn operation is to get this corn in and get it into consumer sized package at the very earliest date possible. If it is a large year with large production, then it is impossible to get it all in consumer sized package during the harvest season. In a given date run, the lines operate all the products are put in to consumer sized package as physically possible. The balance of it is put in large 64-foot -- cubic foot containers in the (Inaudible) and put in the next room which is the storage room, zero storage room. That corn is brought out of the storage as fast as possible and put in the consumer sized package. And if there's a lull in the operation of the day, if the corn doesn't come in at night and the night crew is working, then these pallets are pulled out. It's all one operation. And as soon as the corn crates coming in at the end of the season, well that operation is continued. These pallets are pulled out of storage, taken to the packaging line, then are packaged. Now, a great deal of emphasis has been put on the reduction and force. Well that's obvious and it's very natural. It takes a great number of people to process this large quantity of corn. And is shocking the -- cutting the kernels from cob, or fixing the cobs and all that. It takes a lot of people to do that, but it doesn't take many people to run the package line. There are only two or three package lines and they accommodate approximately 20 people to the line, I think the reduction is to 40, which would indicate two lines. And those package machines operate directly from a freeze tunnel or from the bins. That's why there is a reduction. There -- I don't think there's any great significance and the reduction is simply because it takes a lot of people to process corn where it doesn't recommended people to package corn. Of course, we've got to increase our package and facilities and perhaps get all that done in harvest season, but that's a practical impossibility, financially and every other way, it be practically impossible.
Earl Warren: Did the operation continue uninterrupted straight through the -- the year until it's all processed?
Martin P. Gallagher: Yes Your Honor.
Earl Warren: Or -- or do -- do they have spurts and stops and so forth --
Martin P. Gallagher: No. the ideal situation is to have it all done during harvest season. In 1954, we couldn't do that.
Earl Warren: Yes.
Martin P. Gallagher: But as the season peters out of the end, where there're more of these bins pulled out and at the end of it, all these bins are pulled out continuously until it's all packaged. So in answer to your question categorically, it is one operation -- that's going right straight through until it's all put in consumer sized package. 1954 was a disastrous year, but 1955, we've reduced it down to 1000 acres from 3500 acres or 1000 acres and it was the hope of that year at least, this testimony is taken July of 1955, which was preceding harvest season with the hope of management there to getting all done during the harvest season.
Felix Frankfurter: When you say -- when you say it's all one operation to get an exceptional year --
Martin P. Gallagher: Yes.
Felix Frankfurter: -- the normal year, what gaps in time are there between the beginning (Inaudible) that is --
Martin P. Gallagher: Yes.
Felix Frankfurter: -- and the final consumer packaging, what gaps in time are there?
Martin P. Gallagher: There are no gaps in time particularly as to the commodity goes right straight through and into the consumers package. That is just a matter of an hour or so.
Felix Frankfurter: And we'll take -- take one lot or --
Martin P. Gallagher: Take one lot goes in the storage in (Voice Overlap) the 64-cubic --
Felix Frankfurter: Would you mind -- would you mind seeing that through?
Martin P. Gallagher: Yes. Let's take a 64-cubic foot of a corn, it's a cob corn, [Laughter] proceeds in the morning, it's process through the line, it's a matter of a very short time that goes through the process and probably an hour or so two, three hours, that -- then into the 64-cubic foot bin --
Charles E. Whittaker: Still on the cob?
Martin P. Gallagher: Still on the cob, that's -- I'm taking the cob as example, Your Honor. There -- the others in kernel would follow the same pattern. A 64-cubic foot of cob corn --
Potter Stewart: What is this processing that took for an hour or two hours?
Martin P. Gallagher: That would include taking the husk off and grading it, cutting the cob corn to size through the blanching period, steam blanch, through the freeze tunnels, and out the other end of the freeze tunnel, in to the 64-cubic foot --
Felix Frankfurter: And temporarily and physically, that's one continuous process.
Martin P. Gallagher: That's correct, Your Honor.
Felix Frankfurter: Thus far.
Martin P. Gallagher: Thus far.
Felix Frankfurter: Now, go on to that.
Martin P. Gallagher: Then the cubic -- the -- the bin goes into full storage which just across the package room, it's all in one building and into the storage. Now, from thereon, it will differ. Let's take the example of a night crew having a slack period of time. The corn is not coming in from the field. Perhaps it rained that day or something, so there's available time (Inaudible) learned in harvest season. That a cubic foot or the bin is brought back out of full storage perhaps that evening, that night, or the next day, whenever this factory comes, the corn from that pallet is then dumped into the packaging line and it comes down the package line as graded and sized. It's checked again for quality -- quality control goes through it all and put into consumer sized package.
Charles E. Whittaker: Is that all that's done? I assume the (Inaudible) taken off the cob.
Martin P. Gallagher: No. No, we leave it on the cob, Your Honor and --
Charles E. Whittaker: (Voice Overlap)
Martin P. Gallagher: Yes. In the -- oh, yes. So we're excellent, all through the year, people buy this cob corn in the market and --
Felix Frankfurter: It's frozen -- just frozen.
Martin P. Gallagher: Just frozen and they take it home and drop it in the boiling water for two or three minutes and it comes out, as professor says “The closest to corn on the cob,” that we pick off the stock in our own home garden.
Felix Frankfurter: Now, you freeze that, it -- the picture you've given me is that of an assembly line that (Inaudible) unbroken without any stoppage.
Martin P. Gallagher: This continues movement, Your Honor, yes.
Felix Frankfurter: What -- what -- how many hours is -- is the process (Voice Overlap) --
Martin P. Gallagher: From start to finish?
Felix Frankfurter: From beginning to the final packaging so that my Brother, Whittaker, can now eat frozen cob -- corn on the (Voice Overlap) --
Martin P. Gallagher: I'm guessing this a little bit, but I think a cob of corn starting out, coming into the plant from the farmers, from the time it hits the plant, I suspect to matter three or four hours.
Felix Frankfurter: The whole thing.
Martin P. Gallagher: The whole thing.
Felix Frankfurter: So then what about -- and there's some other things as to what is Ms. Margolin said I gather the following -- said I gathered she was talking about (Inaudible) wasn't she?
Martin P. Gallagher: Yes. We call it a mixed vegetable (Inaudible) I think it has red peppers in it, but its taste are the same and there again, the important thing in the --
Felix Frankfurter: That must be different from what you've just get this to?
Martin P. Gallagher: Yes. That's -- that's somewhat different because of the growing period and the harvesting time of the various vegetables. First, I presume peas would be the earliest things to be harvested, then green string beans and lima beans, corn and then carrots. Now, that is why we can't mix these vegetables during the harvest season of corn, because we don't have all the ingredients. We have to bring these ingredients in as we -- as they are frozen. If they are --
Felix Frankfurter: Well, then there is a break due to nature.
Martin P. Gallagher: Due to the nature of their -- some delay in the -- in the mixed vegetable pack.
Felix Frankfurter: And that the earlier vegetables were put in the storage until you get the (Voice Overlap) --
Martin P. Gallagher: Yes, we get -- we get our earlier vegetables because we can't grow them on (Voice Overlap) --
Felix Frankfurter: You put it that way. They're frozen whatever you call it.
Martin P. Gallagher: They're frozen --
Felix Frankfurter: Frozen.
Martin P. Gallagher: -- at a plant --
Felix Frankfurter: And put away in bins or something.
Martin P. Gallagher: And put it in bins or something and brought to us. And we --
Felix Frankfurter: They have to wait till the corn comes in.
Martin P. Gallagher: Then we have to wait until corn comes in. Actually, we have to wait if carrots to comes in, carrot is the last one. But -- I beg your pardon?
Charles E. Whittaker: If you don't put the corn on the side, you say --
Martin P. Gallagher: Oh no [Laughter] no, we keep the cob corn separate. We'll -- we -- we have the kernel corn and that goes to very much the same process. Now, on the different -- the obvious difference, after the corn is husked and cut, then it goes through the cutting machine and the whole kernel is cut from the cob. And then it goes down a belt and is blanched, steam-blanched to kill the enzymes, then it goes in the freeze tunnel on the continuous belt. And the belt is geared in timed so that when the corn comes on the belt this end of the tunnel and travels continuously all through and by time, it reaches the other end of the tunnel, it's a frozen kernel corn.
Charles E. Whittaker: Do I understand that corn (Inaudible) corn kernels when you cut off it.
Martin P. Gallagher: That's correct.
Charles E. Whittaker: Two processes.
Martin P. Gallagher: Two processes.
Charles E. Whittaker: One goes on the cob or if you do it at a later time, is to (Inaudible)
Martin P. Gallagher: That's correct.
Charles E. Whittaker: But to the other it (Inaudible) you take all, you mix it with other vegetables.
Martin P. Gallagher: Some -- some we mix as kernel corn. We sell kernel whole, kernel corn, just add such frozen.
Felix Frankfurter: Now do you sell any -- any frozen peas as such?
Martin P. Gallagher: No, we do not, Your Honor.
Felix Frankfurter: So the peas and the other -- and the beans or whatever, they have to wait for the belated corn and carrots?
Martin P. Gallagher: That's correct.
Felix Frankfurter: How long a wait is that?
Martin P. Gallagher: Up until about October.
Felix Frankfurter: I mean in --
Martin P. Gallagher: In time.
Felix Frankfurter: -- in time.
Martin P. Gallagher: Peas probably come off in July -- June or July and there would be that period of time for June and July until October.
Felix Frankfurter: But those peas whatever vegetables go into this (Voice Overlap) --
Martin P. Gallagher: String beans and lima beans.
Felix Frankfurter: The peas and the beans and the lima beans, they wait for corn and carrots, but while waiting, they're not employed -- they're not utilized or packaged for any independent use, except to wait for their companions and vegetables. Is that right?
Martin P. Gallagher: That's correct, Your Honor. So they're all joined in one package. And --
Earl Warren: And Mr. Gallagher, we get to the point where you've got all of your product in there, carrots are the last (Voice Overlap) --
Martin P. Gallagher: Carrots are the last.
Earl Warren: Are the last. Now how -- how long is it, after that until your whole -- whole harvest has been processed and is ready for the consumer in small packages?
Martin P. Gallagher: Just as soon as the carrots are frozen, they're diced carrots, then the mixing operation starts then.
Earl Warren: Yes.
Martin P. Gallagher: And it takes about, I think about two months to complete this mixture. I think, pretrial order says in December or January.
Earl Warren: December or January --
Martin P. Gallagher: December --
Earl Warren: -- it's all over.
Martin P. Gallagher: It's all over, for the mixed vegetables.
Earl Warren: Yes.
Martin P. Gallagher: In 1954, there was processing of -- of corn after that and is -- has been suggested here the -- 1954 was a disastrous year and there was packaging of corn. I think most of the next year throughout the August, as far as that's (Voice Overlap) --
Earl Warren: Disastrous in what way?
Martin P. Gallagher: Price wise.
Earl Warren: I beg your pardon?
Martin P. Gallagher: Price of the market.
Earl Warren: Oh, well, that you held that -- you held it up there for your customers to buy it before you (Voice Overlap) --
Martin P. Gallagher: In 19 -- in 1954, there just wasn't any market.
Earl Warren: I suppose -- I suppose you do the same thing now, if the market was (Voice Overlap) --
Martin P. Gallagher: No. Now, Mr. Chief Justice, we pack only on firm orders. We cut our production down to the firm orders. We have 30 -- we had 3500 acres of production in 1954 and after that, we cut it down to 1000 acres of corn.
Felix Frankfurter: But if you wait for the price that you want, you don't -- your workers on either the needs on either (Inaudible)
Martin P. Gallagher: No.
Felix Frankfurter: -- what do you with them, you lay them off?
Martin P. Gallagher: No. No, we -- we pack right straight through. Because now --
Felix Frankfurter: You -- you -- the process continues, but you withhold selling, is that it?3
Martin P. Gallagher: Yes, that's correct. Now, we have our own storage --
Earl Warren: (Voice Overlap) then what you call an unfortunate year is unrelated to our problem.
Martin P. Gallagher: I -- I think it is insofar that it extended the time of repackaging more normal.
Felix Frankfurter: (Voice Overlap) that the -- all that goes on, but you don't wait X weeks or months in order for repackage. If you do all that -- if you wait, can you put it on the market?
Martin P. Gallagher: We -- we wait --
Felix Frankfurter: Which is it -- which is it?
Martin P. Gallagher: We -- we don't wait to get in the package. As the testimony shows that the -- the --
Felix Frankfurter: The package is weighed.
Martin P. Gallagher: The package is weighed after the package.
Felix Frankfurter: But not the process.
Martin P. Gallagher: But not the process. The purpose of the process to get it in that consumer sized packages at the earliest possible time.
William J. Brennan, Jr.: Well that was in 1954 that you complete the last processing since (Inaudible)
Martin P. Gallagher: In the last packaging?
William J. Brennan, Jr.: Yes.
Martin P. Gallagher: I think that one clear up in the August, Your Honor, if I remember more at the trial.
William J. Brennan, Jr.: (Inaudible) in August.
Martin P. Gallagher: Of 1955
William J. Brennan, Jr.: Of the following year. You mean that this process of packaging generally (Voice Overlap) --
Martin P. Gallagher: No, no the packaging out of -- of bulk storage.
William J. Brennan, Jr.: Well --
Martin P. Gallagher: I thought that's what you're really trying to --
William J. Brennan, Jr.: I thought in line with Justice Frankfurter, a little different. Let's see if I can --
Martin P. Gallagher: Yes.
William J. Brennan, Jr.: I gather you have a lot of pallets of corn in cold storage.
Martin P. Gallagher: That's correct.
William J. Brennan, Jr.: That some of them just sit there until you get a better market and then when you found a better market, you then put them off the grinds and put them in consumer packages?
Martin P. Gallagher: Yes. That's -- that's substantially correct.
William J. Brennan, Jr.: Some of them waited there for months.
Martin P. Gallagher: Some of them waited months. It was a -- is the disastrous year, there was no market and whether they're all -- all labor package or not, I am not clear.
Felix Frankfurter: But if you didn't package till August 1955, my question a minute ago was -- what does working for (Inaudible) that is the packaging. There's nothing to package because you didn't pack it.
Martin P. Gallagher: Oh, they probably went over and work for our Ore-Ida, that's the companion company and these two lines down here --
Felix Frankfurter: On -- on something that (Inaudible)
Martin P. Gallagher: Potato -- potatoes, but the Government says potato question is -- is out of the case, now.
Felix Frankfurter: Well then, this question wouldn't arrive if there was no packaging done as one stage and what you contended as continuous process --
Martin P. Gallagher: That's correct.
Felix Frankfurter: -- because that stage wasn't reached.
Martin P. Gallagher: That's right.
William J. Brennan, Jr.: Well may I ask you this? Are you claiming an exemption for under the packaging done in August 1955 or the 1954 (Inaudible)
Martin P. Gallagher: Yes, we are. I'm not sure just weeks we claim. The record shows what particular weeks we did claim these exempts, where the extent of that time now, but theoretically, that would be correct. That we would -- could claim of -- the reason for that of course, is the Act says that these weeks can be taken at any time during the calendar year. It doesn't make any limitation there.
Felix Frankfurter: For that time as the -- as the season period-to-period, you're now talking about, not one continuous -- not first process. You claim exemption because it's within the -- what is it -- seven --
Martin P. Gallagher: Seven --
Felix Frankfurter: -- whatever (Voice Overlap) --
Martin P. Gallagher: 7 (c) or 7 (b) (3)
Felix Frankfurter: -- (3) brief --
Martin P. Gallagher: We -- we claim that --
Felix Frankfurter: We claim that's within (3), not that it's the first (Inaudible)
Martin P. Gallagher: That's correct and we claim under 7 (c) because it is first processing and I've been criticized here for the statements that the Government conceded this repackaging out of bins during the harvest season as I thought Government told us about was first processing, perhaps is wrong. But either it is first processing or it's in a normal situation, because you'd have this corn coming out of bins and that would not be first processing. It has at the same day, corn coming out of the freeze lines and that would be first processing.
William J. Brennan, Jr.: I gather you concede to the -- more than a year ago before you reach package -- consumer packaging, some of these (Inaudible) you'd have no basis --
Martin P. Gallagher: That's right. Our -- our year would end our exemptions and then would have 14 more weeks in the next year.
Felix Frankfurter: And you wouldn't claim if there's this long gap between putting it in the customs packages, you claim that comes under 7 (a) -- 7 (b) (3), you couldn't claim that it comes under (c) is that right?
Martin P. Gallagher: No, Your Honor. I think --
Felix Frankfurter: Would you come on the (c)?
Martin P. Gallagher: Also, -- or where there two exemptions. I mean we can --
Felix Frankfurter: I understand that.
Martin P. Gallagher: We can claim under 7 (c) --
Felix Frankfurter: Yes. What I want to know is this. Suppose you get your peas and your beans or your lima beans in and then there is a gap of two months or three months for one reason or other, for the either the corn or the (Inaudible) to come in and a further gap of not meeting of an undesirable market and therefore, not packaging. Are you claiming on the under (c) that no matter how long the interruption in these stages of processing so long as it's all the records from beginning to end to one half of compound or combined products and there's no intermediate use made of any of the constituents that that's all one process.
Martin P. Gallagher: That's all 7 (c) process.
Felix Frankfurter: That's what you claim.
Martin P. Gallagher: That's what we claim.
Felix Frankfurter: And the period in between make no difference except that it all goes through in one day or two days, the (Inaudible) is the fact that it's one continuous thing.
Martin P. Gallagher: Yes. It's all one continues thing. There's no differentiation to be made in the time element. This Act doesn't give any time element. The regulations don't give any time element. This is the first time we find this injection in here of the time element.
Felix Frankfurter: Well is this the first time this question has arisen?
Martin P. Gallagher: This precise question?
Felix Frankfurter: How do you account for that or at least --
Martin P. Gallagher: Well, I don't know.
Felix Frankfurter: It comforts me because this same situation must've arisen since the beginning of the Act.
Martin P. Gallagher: The only explanation I have for this coming up now is within my own recollection known familiarity with it would be that first time I've known that they've said that this limitation of first processing breaks off here at -- when we put them in bins. And it's -- I think it's generally an attempt of the wage and hour administration to limit these exemptions as much as possible and I think the intent of the Act is to extend these limitations. I think Congress was -- just as answered in giving the farmers these exemptions and these are important to the farmers as it were protecting the industrial worker. Now, on the other side, there's a --
Felix Frankfurter: Well except that the exception -- is an exception -- exception is an exception or exemption and therefore, limitation upon general purposes of the Act. They're not – they don't run in parallel columns.
Martin P. Gallagher: They don't run in parallel columns, but we feel that Congress was very interested in those exemptions for the benefit of the farmer. There're some economic considerations in this matter and that I think that are important. The question of whether or not, we can pay time and a half over time for this process is -- simply gets down to the point of -- frozen food industry operates on about two point something percent profit, margin of profit and paying overtime increase the cost of that would undoubtedly wipe out any profit in the industry. The frozen food industry, in this plant particularly, just cannot pay time and a half for processed labor. Now, we have one or two choices and we did take one choice that is the reduction of acreage, so that we could come closer to complying with this, using the Government's interpretation, but there again, we feel that that is a detriment to the farmer. Farmers like to produce this corn, it's a good crop and we have to pay time and a half, if we have to shorten our production down. To meet that, that means that there's probably 2500 acres of corn is now produced in Nassau County.
Felix Frankfurter: Have you any comment to make on this (Inaudible) narrative about the attitude of the industries or the position taken by the Government now sought (Inaudible)
Martin P. Gallagher: Well this is the first time that I have known that the interpretation that the Government is now given to first processing ends on this bulk freezing. Bulk freezing is somewhat new --
Felix Frankfurter: Well that (Inaudible) certainly kept in the last few years.
Martin P. Gallagher: No. It's -- goes back into the early 1950s.
Felix Frankfurter: (Voice Overlap) what?
Martin P. Gallagher: Early --
Felix Frankfurter: Then (Inaudible)
Martin P. Gallagher: 1951 or 1952. We know over there in 1954 because that's what we were doing. Now, we feel that industry's position on that is that they need the exemptions as they have always had them and they ought not to be cut down from further exemptions, (Voice Overlap) --
Charles E. Whittaker: Mr. Gallagher, do I correctly understand that you not only process corn that you produce and vegetables that you produce, but you also buy those produced by others already frozen?
Martin P. Gallagher: That's correct, Your Honor.
Charles E. Whittaker: Now, is there any difference in the manner of whether one has been processed over the other as respects those you buy from those you produce, they're frozen in each instance --
Martin P. Gallagher: They're both --
Charles E. Whittaker: -- are they?
Martin P. Gallagher: There are identical items. One is frozen in say for an example, the (Inaudible) and shipped down to us.
Charles E. Whittaker: All right. Now, has that man that did so processed his goods --
Martin P. Gallagher: I think --
Charles E. Whittaker: -- before you buy them?
Martin P. Gallagher: I think he is in the process of processing. He does -- he does the same thing we do. He gets his fresh vegetable in and he is processing for a consumer market, peas for an example. His object is to freeze the peas, put them in a consumer sized package and he does that, but in addition to doing that, we are able to buy in bulk from him a ton or tons of frozen peas. And it's our position that he has not finished his first processing at the time that he put those in bulk and sends them to us, that he is engaged in first processing until he gets his peas in a consumer sized package.
Charles E. Whittaker: Well he's done all he's ever going to do to --
Martin P. Gallagher: No.
Charles E. Whittaker: When he sold --
Martin P. Gallagher: In this particular lot that he has, what we buy from him he has, but the balance of what we buy from him are probably just an infinitesimal amount of his production and he's engaged in freezing peas to put in consumer sized package for the retail market, but in addition to that, he just diverts part of his production over to us.
Felix Frankfurter: But he has -- he does rely on his exemption under (c), has he?
Martin P. Gallagher: Well, undoubtedly, he has both exemptions.
Felix Frankfurter: Well, I mean he -- he has that and therefore as you are in there has already been a first processing.
Martin P. Gallagher: I think so, yes.
Felix Frankfurter: Therefore, you can't build on there, can you?
Martin P. Gallagher: Well, basically we're engaged in the processing of corn and carrots and the addition of these other things are somewhat incidental.
Potter Stewart: Your answer would have to be, I should think that you by partially processed.
Martin P. Gallagher: Partially processed (Voice Overlap) because our interpretation, it is a process until it -- consumer sized package. That's the end of the result.
Felix Frankfurter: But you -- they usually make of this partially processed commodity is for you to (Inaudible)
Martin P. Gallagher: Yes, that's right.
Bessie Margolin: I think Mr. Gallagher's description of the process and how the repackaging takes place shows a reason for the administrator's interpretation and because it -- it shows that there is not at all the same purpose for granting an overtime exemption for this subsequent repackaging, that there is for the peak season processing. While fresh corn for example must be processed within a matter of hours, frozen corn doesn't need to be removed for months. And is --
William J. Brennan, Jr.: (Inaudible)
Bessie Margolin: The regulation --
William J. Brennan, Jr.: (Voice Overlap) the process against ending with the bulk storage.
Bessie Margolin: That was in -- published in 1943. I think it goes back to before that time. I -- I think it doesn't relate particularly to cold storage. I may have misled you on that, but it states his interpretation of where the first processing ends.
William J. Brennan, Jr.: Well, don't take your time to find that.
Bessie Margolin: Well, it's quoted on page 22 of the petitioner's brief, “It's the first processing applies an employee who commenced his processing operations on a perishable commodity to which the Section 7 (c) for first processing applies. He is considered engaged in the first processing throughout each series of operations including byproduct operations which commence with such initial processing of the named commodity and have found as a continuous series,” I'm skipping a little, “Of operations during which the commodities remain perishable.”
William J. Brennan, Jr.: Do we have this -- anything like this, both in vegetable business or food industry?
Bessie Margolin: I don't think anything like this has come up before this in general acceptance of -- of the regulation and general acceptance of -- of the limitation to the peak season.
William J. Brennan, Jr.: But I mean the – dispose of vegetables is – is only a matter (Inaudible) of 10 years.
Bessie Margolin: It's been greatly increasing in the last decade and it's continuously increasing and that's why the reason for the issue is of such importance. It's not --
William J. Brennan, Jr.: Well what I'm trying to get at was whether in the 1943 the processing of frozen vegetables is --
Bessie Margolin: I think it was -- I think they were some at that day -- it wasn't -- it's nearly so limited as it was today.
Felix Frankfurter: Ms. Margolin, could one make a valid distinction between the processing described by Mr. Gallagher which is a continuous, uninterrupted assembly line, if I may use that to all that analogy and situations where there is a real temporal interruption of one moment or a minute?
Bessie Margolin: Well, the administrator has and I assume that for practical reasons, so if there's continuous process and uninterrupted, he is not going to try to break off the things that are -- are directly –
Felix Frankfurter: In this case --
Bessie Margolin: -- required for a -- because of the perishability factor, if they get them immediately into consumer pack -- packages in a -- in a continuous operation, he's not going to cut them off at the time it gets.
Felix Frankfurter: To gather the matter --
Bessie Margolin: Even though they might not need to do it then for seasonal reasons.
Felix Frankfurter: Is that by way of grace of the – of the -- is that a legal --
Bessie Margolin: Well, I think it's a practical interpretation of the -- of the Act. I think it's the -- who can say what is the first processing in the abstract. I mean this is something that is not merely a matter of semantics to make a practical application of -- of the purpose of the exemption.
Felix Frankfurter: Well I've got a question put here that so long as there is bulk – bulk of process or bulk storage, at that point, he's rather – rather perfectly good physical lines, if all of peas that have come in, all the corn is to be frozen, that's perfectly physical -- good easy physical line, what you say that –
Bessie Margolin: Well --
Felix Frankfurter: -- as a matter of construction, you could think if there's no such break as there was in 1954, it's outside of your regulation?
Bessie Margolin: Oh, I'm not sure I understand Mr. Gallagher's position there. They stated in the stipulation that they intended to continue these proceeds -- no repackaging in the future. And so I assume, it's going to continue to go on. Well, I understood him to say is that sometimes they like to get it, they can get it packaged in consumer packages. I think he made clear however that their -- their need to get it into consumer packages is not -- has not urgent by reason of any seasonal factors or perishability factors that in a preservable state when it's frozen and – and will last for months. As he have said some of the -- some of the corn didn't have to be repackaged of – wasn't repackaged for that nine months.
Felix Frankfurter: Well, why can't --
Bessie Margolin: And it's the -- it's the need to label it, put the firm one -- to get firm orders. It's they're – either their convenience or to meet the orders of their customers that they do the repackaging. That is not dictated by the perishability or seasonal pressures.
Felix Frankfurter: I'm not talking about perishability, but as far as the statute goes, there's nothing in that that to me makes a difference between not going into the last state because you haven't got any order in going into it because you think it will have orders. It -- it -- a process is continuing -- is the first process that every state where none of the prior stage is itself a salable commodity, what is there in the statute which says you can't wait till you have a promising market?
Bessie Margolin: That you can't wait until you have a promising market.
Felix Frankfurter: Yes.
Bessie Margolin: There's nothing in the statute that says that. There's something in the statute that should make it pretty clear that what Congress was interested in was relieving from overtime requirements because of -- of perishability and seasonal -- natural seasonal factors. That's -- that's all it was interested in. I think that appears from the language perishable or seasonal fresh fruits of vegetables. It appears from the language not more than 14 work weeks and by the way it says not more than notice that amicus curiae reads that as entitling them to the 14 work weeks.
Felix Frankfurter: Well I think perishable or seasonal refers to the -- to the process to which we subject --
Bessie Margolin: Well, I say these -- these --
Felix Frankfurter: -- the perishables that it doesn't relate to the first processing.
Bessie Margolin: Well, these -- these words of the exemption, I think, are indicative of what Congress had in mind and the legislative history shows that that is what -- what Congress had in mind. The --
Felix Frankfurter: Well even so it will bear on the fact that it ceases to be, although it's the continuous things from a commercial point of view and it's approximately that it's done in two days, but it's not a processes, because it's done in two weeks or two months.
William J. Brennan, Jr.: Ms. Margolin is there any significance to the fact that the fact that itself does first processing of these things during this period of – work periods of not more than 14 work weeks in the (Inaudible) in any calendar year. Is it your suggestion there that first processing might refer those in the (Inaudible) up to a year?
Bessie Margolin: Well, if there's a suggestion that you might have several seasons. I think in some – in some commodities, you do. They come in a different season, then you can take -- you can take it for -- for example they'll take – they'll take it for the first processing of corn at one season, for the first processing of carrots in another season. I think all I suggest is that you -- is that you – you – it may have different seasons.