Earl Warren: Number 278, James P. Mitchell, Secretary of Labor versus Joseph T. Budd et al. Ms. Margolin.
Bessie Margolin: May it please the Court. When the Court adjourned yesterday afternoon, I was making the point that the Waialua decision certainly held that the mere fact that a processor is processing only his own crop that that mere fact was not sufficient to make it a -- an operation or a practice that is really incident to farming, that the Waialua decision said that there were many other factors which were at least as pertinent and even more pertinent to the question of whether the operation is really an incident to farming. In connection in the -- in the Waialua case, the names and quite a few of those factors and summarize the factors which the -- which the administrator has repeatedly called attention to. Along those factors of course is the one as to whether farmers ordinarily carry on its operation. Other factors where the size of the farming is compared with the size that they -- of the industrial operation, the extent of industrialization. There are two factors that -- that the respondent here rely upon which I think are important to bring out in the factual background because respondents represent these -- these factors in a way quite differently from what we think the record shows. And I might say in explanation of the apparent difference in the statements the -- of the respondents and the statement of the facts in the Government's brief. These cases were really three cases or two cases but with three respondents. They were tried on or decided on motions and cross-motions for summary judgment and most of the evidence was in the form of affidavits. So, there has been some confusion as to whether a particular affidavit relates to all three respondents or whether it relates to just the one respondent who put it in. But I think that confusion was clarified by the trial court's finding that it was obvious from the record as a whole that all of these plants, all of -- three of them are pretty much alike in physical operation and in the process. The only difference being that two of them process only tobacco grown by themselves whereas the Budd plant admittedly purchases all the tobacco that it processes. So that the differences in our statement and the respondents' statement, I think, and they explained on that basis, respondents' attempt to say that certain facts that are in there as to King Edward like the equipment fact that there's no evidence on the record at all that King Edward requires any equipment. Then few pages later, it says Budd's plant is the same as King Edward's and so -- so Budd must not have had any equipment, when the fact is, as I pointed out yesterday, that respondent Budd itself put in the evidence, specifically put in the evidence that a tremendous amount of valuable equipment was required to operate one of its plant. Now, there are two other factors in the factual --
Stanley Reed: (Voice Overlap) the question of equipment really have any effect on --
Bessie Margolin: That is one -- certainly one of the factors as to whether how industrialized is the plant. It is certainly one of the factors. We don't say that's decisive but that's one of the factors to take into account. Certainly on the farming --
Tom C. Clark: What do -- what do they do with the equipment (Inaudible)
Bessie Margolin: Well, they -- it's -- it's largely humidifying and spraying and -- and machinery, drying and heating and controlling and thermometers, large thermometers. This -- I have described the process yesterday and it is fully described in the briefs and my time is so limited but there is -- it is clear that the -- the process, the fermentation process is a long one and requires continuos control --
Tom C. Clark: And the bulk (Voice Overlap) --
Bessie Margolin: -- and machinery of the bulk and -- and the machinery are quite extensive.
Tom C. Clark: Is that here or is that the (Inaudible)
Bessie Margolin: That's -- they have to spray it with water and quite -- there's as much addition of water, if not more addition of water than there is lost in the whole process. And --
Tom C. Clark: I don't think it is (Inaudible) or any of it is.
Bessie Margolin: I don't understand.
Tom C. Clark: I don't understand when you keep these (Inaudible)
Bessie Margolin: Well, the -- the -- the tobacco is up to -- keep the heat and keep the -- above generating the -- as a heat. I don't pretend to know too much about this, you have to have a huge bulk and it kind of -- it retains the heat and the fermentation occurs in that process. But it isn't a simple volunteering process that respondents attempt to represent it to be. It's quite different and requires as I say all this expensive, a tremendous industrial equipment and plant, it's a steam-heated plant and it has these sprays and the thermometers, these large thermometers. And there's no question if you read the description of the equipment in Budd's -- in Budd's request for an admission that this is quite an industrialized plant. Now, coming to the two factors which they also rely on and I think that their -- their brief also represents it in a way quite different from the record. The first is and the question of the interchange of employee, this Court said -- recognized that that might be a factor as the administrator has. Now, the respondent makes the statement that all of the employees and this plant are ordinary tobacco farm laborers. They just make that flat statement in the brief, page 7. I want to ask the Court to please put a question mark by that because there's nothing in the record that would support any such sweeping statement. There is a finding by the trial court that rested, by the way, not on evidence but on the fact that the Government never denied the repeated assertions of respondent that more than 50% of the workers in the plant -- that more than 50% of them also work part of the time on farms. Now, we say that that is no basis for the sweeping statement that this were -- that all these employees are farm laborers. And on the contrary, we think that the Court's finding in addition to the fact that it did not include all the worker, that the Court's finding is just as consistent with the conclusion that these were essentially industrial workers who sometimes also worked on farms. And this was apparently the view of the trial court because they found that they were not engaged in farming. So, there's no evidence that all in the record is to the relative amount of time the employees spend in the bulking plants and working on farms. And in the absence of that evidence, I don't think it can be assumed that they were more farm work laborers than they were bulking plant laborers. And I might remind the Court that this is the question of exemption which the Court has recognized that the burden of proof to prove that the conditions have been met as upon the employer claimed. Now, the other factor and as I pointed out that's just one factor, the interchange of employees we say is a factor. We think it's outweighed by all the other factors. The other factor is important because the Court of Appeals seems to have rested its decision to a considerable extent on it. And that relates to the statement in the Court of Appeals that the bulking process is essential to the marketing of this type of tobacco. The opinion doesn't state just what it means just whose market its talking about, but we say there is no basis in the record for respondents' repeated assertion that it had -- the assertion on pages 15 and 16 and I ask the Court put a question mark by those assertion, that this means that there is no market at an earlier stage for Type 62's backup, that it cannot be marketed until after it is bulked. Those are the statements in respondents' brief. If they're referring to the farmers market and the -- apparently, the implication there is that this is the farmers market. If they're referring to the farmers market, this is refuted specifically by the regular practice for both respondent Budd and King Edward to purchase this tobacco before it's bulked. They purchased it before it's bulked. Now, what King Edward does on the other two plants is not involved in this suit. Budd admittedly purchases all of the tobacco involved and King Edward purchases about two-thirds. The -- the 1951 figure shows that the total amount bulk in all three of its plants was -- two-thirds of it was purchased from other grower. Now, in these instances, the farmers certainly have a market for their tobacco before it's bulked, before it's processed. The farmer is finished with the tobacco when he takes it to the -- when he leaves it at the bulking plant and he has nothing to do with the bulking process unless he happens to be hired as one of the employees in the plant in which case I can assure you he would want to get the minimum wage. But so far as his capacity as a farmer is concerned, he has nothing further to do with the bulking process. Now, the price he will eventually receive for his product may be determined on the grade after the bulking. But he has disposed of it, definitely and irrevocably before the bulking process starts. Now, there's also other evidence in the record which shows pretty clearly we think that the bulking process in these cases is incident to the manufacture of cigars rather than incident to farming. For example, the record shows that the Budd plant is closely affiliated with the Budd Cigar Manufacturing Company or one of the husband members who's a respondent in this case is the president of the Budd Cigar Manufacturing Company which is at the same address -- the same address is the bulking plant, it's right next door and it has the same address. And over two thirds of the tobacco bulked at the Budd plant is sold to the Budd Cigar Manufacturing Company.
Speaker: I don't understand what (Inaudible)
Bessie Margolin: Well, the question is, is this an incident to farming or is it an incident to manufacturing? And we say that all the factors here militate in favor saying this is not an incident, a true incident to farming, this is really an incident to manufacturing. Now, the same is true -- a similar situation with King Edward. The record shows that King Edward is closely affiliated with the John Swisher & Son Cigar Company which is a well-known manufacturer of cigars. The King Edward Cigar, I think, is one that's most permanently known and Swisher is the president -- Carl S. Swisher is the president of the King Edward Company and King Edward sells over 50% of its tobacco to Swisher and company, the cigar manufacturers. We think that evidence is very significant in showing that this bulking process is more -- is done more than incident to the cigar manufacturing than it is on behalf of the farmer, that it's much closer to the manufacturing than it is to the farmer.
Stanley Reed: Well --
Bessie Margolin: Now --
Stanley Reed: -- do you -- do you say that so that Section 7 would --
Bessie Margolin: No, I'm not talking about Section 7.I'm talking about --
Stanley Reed: (Voice Overlap) about 13.
Bessie Margolin: -- to -- to clarify this -- when I referred to -- to the agricultural exemption, I'll refer to that as the farming exemption, 13 (a) (10) is the other one which is I referred to and I did confuse -- I didn't -- I was told subsequently that I confused the Section, Mr. Justice Reed, and I'm sorry. Section 13 (a) (10), I'll refer to as the area production exemption and the 13 (a) (6) are the agriculture -- the farming exemption. I've been talking about the farming exemption thus far. I'll come now to the area of production exemption. And I point out that Budd admits that it is not entitled to the farming exemption, it must come under the area of production exemption if it is entitled to an -- an exemption at all. And it also if King Edward -- respondent King Edward and May are not engaged in farming as we think -- as we think we've shown they are not, they too are interested in finding out whether they are under the area of production exemption. So, on the area of production --
Felix Frankfurter: (Voice Overlap) if we're with you on the -- on the branch of the case that you're about to enter, you don't have to worry about the others?
Bessie Margolin: Well, I -- I think that that is the most important issue here and I'm sorry I've taken so much time getting to it.
Felix Frankfurter: That was not my intention, I just want to know whether this isn't the most comprehensive.
Bessie Margolin: This is the most comprehensive and this is the thing that -- this is the question that's most important generally in the administration --
Felix Frankfurter: And it would take care of the whole -- of the cases, both cases.
Bessie Margolin: This would not necessarily take care of both cases unless you agree with us that King Edward and May are not engaged in farming. If you agree with us on that, this takes care of the -- of all three cases. Now, the area production definition is attacked on by respondents and by the amici on various grounds and I think that when the Court start digging into the grounds and I hope you will read what the administrator and it has the findings he made in -- when he first issued this definition as well as those he made in 1951 after he'd been in operation for four years when -- I think when you read that you will realize that it is an extremely difficult task. We've been struggling with it and trying awfully hard to do a fair job in taking into account the proper economic factors which this Court said we should in the Holly Hill case. Before I plunge into that, I just want to say that the effort in this definition which was issued about nine years ago was two years after the Holly Hill decision holding the other definition invalid. This was -- there was two years of hearings and then this redefinition was issued and every effort was made and it's fully explained in the administrator's findings to meet the geographic boundary guards and taking into account at the same time all of the complicated economic factors. Now --
Felix Frankfurter: (Inaudible) by understanding of a process -- of the administrative process, the hearings you speak of, were the hearings directed through a -- through a proposed regulation or were they hearings on the basis to which the regulation is framed?
Bessie Margolin: They were hearings --
Felix Frankfurter: Doesn't make any difference with (Inaudible)
Bessie Margolin: They were -- they were hearings on the basis of which it was framed, I think.
Felix Frankfurter: So there's a -- there was a hearing and on the basis of that, isn't it, it was framed?
Bessie Margolin: That's right.
Felix Frankfurter: It has not addressed themselves to a proposal which was before them, is that right?
Bessie Margolin: I -- my recollection is that he did not. Now, of course in the second hearings in the -- in 1951, there -- he did have this outstanding and so well, he was -- it was specifically directed to this and -- and all of the objections that are being raised by the amici and the respondents here, all those objections were placed before him and as a matter of fact, the specific recommendations they're making. The administrator delayed his decision after the 1951 hearings and these all appears in those 1951 finding. He delayed his decisions to thoroughly and carefully explore the feasibility of following out this suggestion. It wasn't just cast aside as the -- well, that -- that's something that we don't think we can do. He made -- he -- he investigated the Bureau of the Census data, the -- the Internal Revenue data. He made a special survey to see whether he could secure any data on which he could base criteria, which would consider -- which would enable him to distinguish between urban and rural area.
Felix Frankfurter: I don't -- I don't know because I don't recall. Does the statute define the kind of notice that could give -- give you before the promulgation of regulation as I say or is that known in the industry as a freight or whatever it's called.
Bessie Margolin: Oh, I think it's pretty well-known. He -- I'm sure he's -- there's no question here that he hasn't --
Felix Frankfurter: No, no, no. I --
Bessie Margolin: -- given the proper notice.
Felix Frankfurter: I just want to know what the process is (Voice Overlap) --
Bessie Margolin: Well, they -- it's -- it's -- they have public hearings and also a lot of private conferences. It isn't a formal adjudication procedure. But they fully follow the -- the pertinent parts of the Administrative Procedures Act and there's no -- I don't think anyone has raised any question as to notice --
Felix Frankfurter: I'm not raising (Voice Overlap) --
Bessie Margolin: Well, I'm not -- that's why --
Felix Frankfurter: (Voice Overlap)
Bessie Margolin: -- I would like to get on to the -- to the particular parts of this definition. The definition as we say does plainly follow the requirement that it be stated in geographic bounds. The two -- the two basic criteria are -- are one that the plant be located in -- within a particular mileage distance of the source of its commodities and that it be located in a rural area which is prescribed in -- for the purposes of this definition to be a town of not more than 2500 population. Now, the main attack -- the main attack has been on the selection of this 2500 population, although the amici here and I think respondents too assert that the administrative test is really one just of mapping out the areas where the crop is produced. I don't think I need to spend much time on that because in Traders Compress case, I think, clearly pointed out that this Court's decision in Holly Hill couldn't have meant that all the administrator was suppose to do was to mark out the production areas where the crop is produced. And I -- I don't believe that respondents themselves seriously rely on that. Mr. Todd, who represented the Traders Compress -- identified the Traders Compress case is the case which three years ago, the Tenth Circuit upheld this definition and this Court denied certiorari, there was no conflict at that time. Mr. Todd, who represented the Traders Compress, represents most of the amici here. He -- he put all of his -- his objections and criticisms before Congress in -- in 1948 and 1949 and Congress -- Congress declined to do anything about it. So, this is his third attempt to -- probably the third or fourth attempt to get something done by -- on the basis of the same data and the same proposal.
Stanley Reed: Does this Holly -- Holly Hill have a suggestion on the size of the county?
Bessie Margolin: Holly Hill has a suggestion which was made during the hearings -- during both hearings, as a matter of fact and during the 1951 hearing. They say that the -- it's -- the population shouldn't be controlling. There should be a flexible test of where -- where is the main source of income of the community. Is it essentially from agriculture or is it essentially from industries? The administrator went very, very thoroughly into the possibilities of that because superficially it sounds logical. They say that taking of a -- an inflexible population test that you -- you're going to get some communities which are really essentially rural but they have a population over 2500. And they say that's the case of Quincy. If I have time, I'd like to show how unreliable their -- their evidence is on their assertion that Quincy is just a little rural agricultural town. But the administrator --
Stanley Reed: I don't want to interrupt this. I don't recall in Holly Hill that it said the size of the town made any difference.
Bessie Margolin: Well, the Holly Hill was not concerned with that because they didn't decide --
Stanley Reed: (Voice Overlap) --
Bessie Margolin: -- there was at that time --
Stanley Reed: -- that it doesn't say it and where does the idea of a size of a town having anything to do with the company?
Bessie Margolin: Well, Holly Hill does say that and I might call your attention to the fact, Justice Reed, that at the time of the Holly Hill case, there had been in effect a definition just like this and that was involved in Holly Hill. And this Court did not pass on the validity of that rural area, I think less accurately called population test. We sometimes -- I believe, they refer to it as population test. I think it's more accurately called rural area test. If that rural area test was in the -- that definition which this Court said it was unnecessary to rule on at that time and -- but the Holly Hill decision did say -- did point out that -- that the legislative history showed that Congress intended some distinction between rural and -- and urban areas and I think you'll find the legislative history is full of that. Now, I'll come to one point on that because -- that respondents rely on -- particularly, because they say that the -- the legislative history on the difference between urban and rural community is in their favor and they refer to what I might call the Winchester colloquy between Senator Connally and Senator Schwellenbach. And they say in that -- they -- they claim, in fact the amici say that Senator Schwellenbach categorically stated that packing of apples in Winchester, Virginia would be exempt as within the area of production regardless of the fact that the population of Winchester was more than $10,000 -- 10,000 person. The short answer to this is -- and they rely very heavily on this, the amici and the respondents, the short answer is that -- that Senator Schwellenbach did not make this statement either categorically or otherwise. On the -- and on the contrary, he was most careful to qualify his -- his -- all of his statement with references to the -- he -- he say if they meet the conditions of the proposal. Now, if the Court will look at the colloquy, which is in our separate appendix on page 26 -- no, 62, Senator Connally asked, “Would not the effect of this amendment be to exempt all industrial warehouses in packing plants in the apple territory. There is no limit, the condition is that they are packing plants and if they are, they are exempt." Senator Schwellenbach answered, “If a packing plant is working upon fresh fruits and vegetables in their raw and natural state within the immediate production of the area, it would be exempt.” In other words, it is exempt if it meets the exemption, then when he comes -- then comes the question about the largest apple packing plant in the world in Winchester, Virginia and Senator Connally said, “That would be exempt, would it not?” And I call the attention to the fact that he didn't mention the population of Winchester. And this was Senator Schwellenbach's answer, “If the work is done in that plant, if it is as described in the amendment, it would be exempt." And in addition to the fact that Senator Schwellenbach carefully qualified his answers, he just said if they meet the condition. I call attention to the fact that if the proposal he was talking about at the time did not contain a provision for the definition by the -- by the administrator and in his (Inaudible), immediately thereafter, he had a colloquy with Senator Black. And Senator Black asked him specifically, “What about area? What would be the definition of area, would it be possible to define it more clearly?” And Senator Schwellenbach said, “I gave considerable thought to that. I do not believe it is possible and that is something which the Board, which is accused of receiving too much power, would have to decide it, would have to provide the definition.” Now, to be noted too that Senator Schwellenbach wasn't -- was not from the State of Virginia, he's from the State of Washington and there's no indication at all that he had any idea what the population of Winchester, Virginia was. And he certainly never said anything to indicate what he thought was of the population of the -- the proper standard to be applied. He said that would have to be left to the administrator. Now, finally, I might point out that Senator Schwellenbach was Secretary of Labor at the time this definition was issued and I think if Senator Schwellenbach had felt that it went beyond the authority of the administrator or that it was unreasonable that he would not have committed it to go into effect or to continue in -- in effect. If I may, I'd like to reserve a few remaining reason -- minutes for rebuttal.
Earl Warren: You may. Mr. Denbo.
Milton C. Denbo: May it please the Court. I'm going to present the argument for King Edward and Budd and Mr. Hughes will present the argument for the May Tobacco Company. At the outset, I should like to clarify, since there's -- there's been some confusion on this point precisely what the contentions here are. King Edward insists or contends that the employees and its packing plant in Quincy are within the exemption which Section 13 (a) (6) of the Act grants to employees employed in agriculture as that term is defined in Section 3 (f). The Budd Company, as Ms. Margolin has several times stated, does not claim that this exemption applies. If in fact the Court agrees with the holding of the court below that the agricultural exemption does apply to the packing plant of King Edward then that disposes of a case as far as King Edward is concerned. It is only if the Court disagrees with that contention that our next inordinate contention arises which is that under Section 13 (a) (10) of the Act, the employees and King Edward's packing plant are engaged in performing operations which are described in that Section, that the administrator's definition of area of production insofar as it contains a population limitation is unauthorized and that until the administrator does issue a valid definition excluding the employees at King Edward's packing plant, he's not entitled to the injunction in which he sought here in the District Court.
Speaker: May I ask you whether the area of production (Inaudible)
Milton C. Denbo: I was about to say that, Mr. Justice Harlan.
Speaker: (Inaudible)
Milton C. Denbo: That's true -- that's true. As Mr. Justice Harlan just stated for me, as far as Budd is concerned, the Section 13 (a) (10) exemption is the one which we claim applies to its employees and it's the only claim we have with respect to Budd. I'd like to state that so far as the Section 13 (a) (6) exemption is concerned contrary to a statement Ms. Margolin made yesterday that is an exemption only from the wage and hour provisions of the Act. It is true that there is also an exemption in another section of the Act from the child labor provisions for employees and agriculture when outside of school hours. That's in Section 13 (c) which is not involved in this case and serves a totally different purpose. There is no child labor problem involved here nor does the Section upon which we rely grant any exemption from the child labor provisions.
Stanley Reed: What -- what does a farmer do with a tobacco when he cuts them?
Milton C. Denbo: I'm about to state the facts in the King Edward case, sir, Mr. Justice Reed, if I may. Now, with this explanation as to our contentions, I would like now because I do not believe that the facts as to the operations of the packing plants here had been fully stated, set forth what we regard as the salient facts in the King Edward case. King Edward operates farms in the Gadsden County, Florida on which it grows under cheesecloth shade, United States Type 62 tobacco. This type of tobacco is grown only in three counties in Florida and in two adjacent counties in Georgia and nowhere else in the world except in -- in consequential amounts. When the tobacco leaves are harvested, they are carried immediately to curing barns located on the farm. There, they are hang on sticks to dry, permitted to absorb moisture and then re-dried. After the tobacco turns into a shade of brown, it is packed loosely in boxes and carried to King Edward's packing plant here involved, located in Quincy, about 13 miles from the farms.
Stanley Reed: How many days, weeks or months does the tobacco hang on the barn?
Milton C. Denbo: I don't believe the -- the record shows, Mr. Justice Reed, and I frankly don't know. It's four to six weeks, I believe. I don't think the record does indicate how long it hangs.
Stanley Reed: And it goes through its first curing in the barn?
Milton C. Denbo: It goes to a curing on the barn. I don't like to characterize it as the first curing because as I'll --
Stanley Reed: Of the -- of a curing.
Milton C. Denbo: Goes through a curing. I'll state in a moment. That's all part of a continuos process which results in this fermented tobacco. The -- when the tobacco arrives at the packing plant, it is piled in bulks on the floor. And in answer to a question to Mr. Justice Clark, whatever heating equipment there is in the plant is just equipment which heats the entire plant, not anything which is specifically in there to heat the bulks. The entire fermentation operation is just, as the Court of Appeals below found, a natural process. During a period of about two to four months, these tobacco leaves in the box are shifted about in order to air them and in order to make certain that the changes in the leaves throughout the bulk will be uniform. After they've been there for two to four months, they are sprayed with water to keep them pliable for handling. They are thereafter graded by hand and then re-bulked to dry out for a further period of two to four months after which they are valid for sale to the cigar manufacturer. Now, in King Edwards's case the only tobacco that it handles in this packing plant is tobacco it grows itself on its farms. As we see them, the -- there are several facts which I think should be emphasized. First, the transfer of the leaves from the barns, the packing plant, must be prompt in order to avoid any harm to the natural changes that are taking place in the leaf. The entire process of treating the leaf from the time it is hanged in the curing barns until the fermentation is completed in the packing plant is one continuos process of natural transformation within the leaf necessary to assure the desired color and appearance of the leaf. The process is a drying one accompanied by chemical changes which start at the barn and continue throughout the bulk sweating. There is no dividing point between the changes appearing at the two places. Second, the entire process is completed without adding any external or artificial element or stimulation. As I said a moment ago, the operation is entirely a natural way, only the temperature and humidity are regulated both at the barns and in the packing plant. Third, the bulk sweating and baling of a tobacco at the packing plant are customary and essential operations to prepare King Edward's tobacco for market. The Court of Appeals below so found and the record amply supports this finding. Ms. Margolin has a question to some of the assertions in our brief on this subject in a moment or two when I get into the legal argument, I shall answer some of the things she said. Fourth, the King Edward's packing plant operations are clearly not industrialized and the record does not show that the plant has extensive or expensive equipment. Now --
Tom C. Clark: Do they have other packing plants that they found here?
Milton C. Denbo: King Edward does have two other packing plants. The record shows they're not involved in this case, Mr. Justice Clark.
Tom C. Clark: (Inaudible)
Milton C. Denbo: They buy that after it's been cured on the -- in -- in barns on the farm.
Tom C. Clark: On the farm?
Milton C. Denbo: Yes.
Earl Warren: Did I understand you that there is no expensive equipment involved in this process?
Milton C. Denbo: I said there's no expensive -- the record doesn't show any expensive equipment involved in the King Edward packing plant. In this matter of actual fact, the District Court virtually so found.
Earl Warren: I thought that Ms. -- Ms. Margolin said that you insisted on the hearing that (Voice Overlap) --
Milton C. Denbo: She's talking about the --
Earl Warren: -- and that -- that they consented to us.
Milton C. Denbo: She's -- she was speaking about Budd. I'm talking about King Edward now.
Earl Warren: Well, how about Budd? Well, is there a --
Milton C. Denbo: As I -- I was going to get to that but I'll answer that right now, Chief Justice Warren. The -- the record does show that Budd does have equipment and it's characterized as expensive equipment and a request for admission that Budd made in which the Government answered yes. But when you examine that, you find that the only equipment they're talking about there is equipment for humidifying and temperature control. I'd like to read that, if I may.
Tom C. Clark: You say the minimum wage (Inaudible)
Milton C. Denbo: Are you talking about King Edward?
Tom C. Clark: Yes.
Milton C. Denbo: They were paying 75 cents an hour in the other client, yes.
Tom C. Clark: That's one of the --
Milton C. Denbo: Other than the one involved here.
Tom C. Clark: (Inaudible)
Milton C. Denbo: I beg you pardon?
Tom C. Clark: That's what the law requires (Inaudible)
Milton C. Denbo: That was the law -- what the law -- that was the requirement at the time, yes.
Tom C. Clark: It must be at the time (Inaudible)
Milton C. Denbo: No -- no. I was going to read to you --
Earl Warren: Yes, if you will please. Where do I find that?
Milton C. Denbo: It's on page 42 of the Budd record.
Earl Warren: Of what?
Milton C. Denbo: The record in the Budd case, each has the same --
Earl Warren: Oh, yes.
Milton C. Denbo: -- color but on --
Earl Warren: Yes.
Milton C. Denbo: -- on page 42.
Earl Warren: 42.
Milton C. Denbo: At the bottom of the page. It starts with the words, "That the bulking and handling to be successfully and efficiently and economically carried out requires a tremendously large amount of equipment, including a steam-heated packing house equipped with humidifying sprays, bulking platforms, casing machinery and sprays, thermometers and thermometer tubes, bulk covers, baling boxes and presses, wax paper, baling mats, packing, sorting and grading tables." Now, I -- I submit, Your Honor, that -- that is nothing more than a description of the humidifying machinery as the District Court said. The District Court had that before it and characterized this as machinery for humidifying and controlling the temperature of the plant.
Earl Warren: For the process, isn't it?
Milton C. Denbo: Oh, I won't deny that.
Earl Warren: Well, what is your point then?
Milton C. Denbo: My point is that I would hardly characterize a plant containing this type of equipment as a industrialized plant and on that very point I've --
Earl Warren: What was the purpose of your insisting that it be in the record that -- that you did have this very expensive machinery?
Milton C. Denbo: Chief Justice Warren, I'm unable to answer the question because I didn't handle this case for Budd in the District Court and I think it was probably uncalled for.
Earl Warren: Is there any difference between the Budd plant and the King plant in that respect?
Milton C. Denbo: So far as the record is concerned, it doesn't show what is in the King Edward plant. Of my own knowledge I think it is probably substantially the same.
Earl Warren: And then the judge say so in his --
Milton C. Denbo: The judge -- if you will look at his --
Earl Warren: -- opinion.
Milton C. Denbo: -- opinion which appears in -- it was King Edward record at page 76.
Earl Warren: King Edward, just what I'm (Inaudible)
Milton C. Denbo: In a supplemental opinion, he said -- I'm sorry, it's on page 75. He says, “This statement may be accurate as to the case made out by King Edward." Meaning in the statement that it doesn't have any equipment for appropriate humidification and curing the tobacco.
Earl Warren: Where is that page?
Milton C. Denbo: On page 75, Your Honor. If you'll notice there's a roman numeral II and then the next paragraph starts.
Earl Warren: Where?
Milton C. Denbo: Those are the King Edward record I'm talking about.
Speaker: (Inaudible)
Milton C. Denbo: Oh, yes. He said the statement may be accurate as to the case made out by King Edward but upon the whole record before the Court, it clearly and very definitely occurred that the packing houses are equipped with machinery for the appropriate humidification and curing the tobacco and no harm is done to King Edward by retaining this language in memorandum decision. I'd like to say also, Your Honor, that I don't regard the fact that the plant may be -- may have equipment as really of a great materiality in determining whether the agricultural exemption applies. This Court said as much in Waialua case. It said it in just those words that no matter how mechanized or industrialized the plant may be, it's still is within the exemption if it falls otherwise within the language and purpose of the exemption.
Earl Warren: Within the first process?
Milton C. Denbo: Within the language which is preparation for market, delivery to storage, delivery to market and delivery to carriers for transportation to market, examples of practices incidental to or in conjunction with farming operations.
Earl Warren: Well, it can be a practical --
Milton C. Denbo: Oh, yes. I recognized that the Court listed this as a possible factor in the Waialua decision. But it also specifically indicated that it would not be controlling by any means. In connection with this in very matter as to how industrialized these plants are, we referred in our briefs to various Department of Agriculture publications and I have deposited with the clerk for the Court's convenience two of these Department of Agriculture publications and I like to call attention to certain figures which appear on pages 49 and 84 of Circular 249 of the Department of Agriculture, which figures show quiet clearly how unskilled really the work involved here is and how these are hardly plants that one would characterize as huge industrialized plants like for example the sugar mill that was involved in the Waialua case. This is nothing like that whatsoever.
Earl Warren: Though size wouldn't -- likewise wouldn't be --
Milton C. Denbo: Size also as the Court said in that case.
Earl Warren: Might be a factor but not --
Milton C. Denbo: It is not controlling. Now, finally, as very material fact here is the fact that the employees at the packing plant are about the same as those who work earlier in the year in planting, growing, harvesting and barn curing the tobacco. Ms. Margolin is completely in error in stating that we erroneously said that in our -- in our brief. The record fully supports our statement to that effect. I'm not going to take the time of the Court to point out the particular places in the record which clearly support it, including findings of both the District Court upon which she relies heavily and similar finding of the Court of Appeals. But --
Sherman Minton: Well, do the District Court make findings of fact?
Milton C. Denbo: The District Court's findings of fact if any are included in its opinion, Mr. Justice --
Sherman Minton: Well, they've made them.
Milton C. Denbo: And it said --
Sherman Minton: And aren't we bound by them?
Milton C. Denbo: Well, I'm -- I'm perfectly happy to be bound by those findings.
Sherman Minton: Well, that's all I want to know. Why -- why are we circling around the record and try to waive the -- the facts here?
Milton C. Denbo: Well, the District Court said specifically that a majority of the -- of the workers in the packing plant work at other times of the year on the farms.
Earl Warren: Well, what does that mean? So far as whether their agricultural or industrial (Voice Overlap) --
Milton C. Denbo: Again, Mr. Chief Justice Warren, in the Waialua you'll refer to the factor of whether the employees interchange between the farms and the packing plant as a factor to determine the application of the exemption. It's only for that reason that I mentioned it.
Stanley Reed: And -- and held that so far as they work on the farm they were free as (Inaudible)
Milton C. Denbo: Oh, yes.
Stanley Reed: And so far as they work in the plant, processing plant, they were not, is that it?
Milton C. Denbo: That's what you held in -- in the Waialua case -- that was -- was held in the Waialua case. Now, directing myself to the exemption for agriculture or employees employed in agriculture, we submit that the language --
Stanley Reed: Well, what -- what section are you talking about?
Milton C. Denbo: I'm talking about Section (3) (f) now which defines agriculture.
Stanley Reed: (Voice Overlap) --
Milton C. Denbo: 3 (f). You'll find that set forth in -- on page --
Stanley Reed: I know. That is the one with (Voice Overlap) --
Milton C. Denbo: -- 95 of our brief.
Stanley Reed: But which section you're talking about?
Milton C. Denbo: I'm talking about Sections 13 (a) (6) and 3 (f), 13(a) (6) exempts employees employed in agriculture and Section 3 (f) defines the word agriculture. We submit the language, the legislative history, the controlling case law, including Waialua and the published and outstanding administrative interpretations of the Department of Labor all show that the employees of King Edward here when engaged at its packing plant in handling and preparing for market, only the tobacco which King Edward grows on its farms are exempted. Taking up first the statutory language, Section 3 (f), defining agriculture is divided into two distinct branches. The first branch sets forth what this Court is characterized as the primary meaning of agriculture, farming and all its branches, cultivation and tillage of the soil, production, cultivation, growing and harvesting of agricultural commodities. Then there is a second distinct branch, agriculture in which this Court has called the broader meaning. Agriculture includes practices whether or not themselves farming practices performed either by a farmer or on a farm as an incident to or in conjunction with farming operations including -- I should have said in conjunction with such farming operations, including preparation for market, delivery to storage, delivery to market, delivery to carriers for transportation to market. Now, King Edward is a farmer conducting the farming operation as listed in the statutory definition of producing, cultivating, harvesting and agricultural commodity. And so far as its packing plant activities are concerned of bulking, sorting and baling the tobacco, they, we submit, constitute practices performed by King Edward, a farmer as an incident to or in conjunction with its farming operations, particularly in the light of the facts that, first, it does this work only with respect to the tobacco it grows itself. Secondly, the activities of its packing plant employees as found below are essential to prepare the tobacco for market. And third, the preparation of the tobacco from the time it's first hung in the curing barn until the fermentation is completed and the packing takes place in the packing plant is one continuous and integrated process largely performed by the same employees who grow and harvest the tobacco on King Edward's farms. These operations, we say, come within the words preparation for market which appear in the statutory definition as an example of the incidental and conjunctive practices Congress meant to exempt.
Stanley Reed: Do you -- do you happen to know how a farmer that doesn't have a packing plant -- where he sells his tobacco?
Milton C. Denbo: Oh, yes. This very record has such a case, Mr. Justice Reed. He sells it to a packing plant. Budd is such --
Stanley Reed: No, no.
Milton C. Denbo: -- a packing plant.
Stanley Reed: How does he sell it? Does the packing plant man go out to his farm?
Milton C. Denbo: No. You mean the basis on which the sellers made? The record here is silent --
Stanley Reed: Well --
Milton C. Denbo: -- on that.
Stanley Reed: -- I'm -- I'm familiar with other kinds of tobacco where they're sent into a warehouse and they're sold at the warehouse.
Milton C. Denbo: That's as to the auction warehouse which I'm going to deal with. Yes, that takes place in -- places like (Inaudible) like Kentucky. Most of the tobacco in this country is sold that way but not this particular tobacco. Here, the -- the record doesn't show and I'm advised by the people in the industry that the farmer may make an arrangement in advance with a particular plant, under which that plant will finance him or he doesn't need financing. He'll have the tobacco prepared and he'll carry it to the packing plant and they may take that tobacco on a 50/50 basis with him or they may take that tobacco and for a fee, sweat it for him and then return it to him or they take it, they grade it, determine what the price will be, pay in that price after deducting certain expenses and that's that. It's not in -- in a variety of ways. They don't normally, as I'm told, send people around on farms to look over the -- that the -- the crop as it's grown.
Stanley Reed: The farmer hauls it in and makes (Voice Overlap) --
Milton C. Denbo: The farmer takes then himself.
Tom C. Clark: You mean, really that is processing (Inaudible)
Milton C. Denbo: No.
Tom C. Clark: When do you -- when do you grade?
Milton C. Denbo: You grade it after it's been docked in the packing plant. There's a finding to that effect in this record, Mr. Justice Clark --
Stanley Reed: Have you --
Milton C. Denbo: -- the Court of Appeals so said.
Stanley Reed: (Inaudible)
Milton C. Denbo: Yes, the Court of Appeals said so on page 92 of the King Edward record. The Court of Appeals said primarily because it cannot be graded until it's been processed. There's no market as an earlier stage for this type of tobacco.
Tom C. Clark: (Inaudible)
Milton C. Denbo: No. They sometimes do that, Mr. Justice Clark, as -- as matter of fact. That is not the usual practice. When a man brings in his tobacco, these tobacco experts, I'm advised, can tell immediately if it looks like a very outstanding crop. If it does, they'll pay him off immediately. The usual practice is to pay him after the tobacco has been graded. That's not in the record. It's not in the record -- I -- at all. The fact that he's paid after it's been graded. There's nothing in the record on this subject at all. This operation, I repeat, of preparing this tobacco in the packing plant, we feel quite strongly, falls within the example given in the statute of incidental and conjunctive practices of a farmer, namely, preparation for market. We say that preparation for market with respect to Type 62 tobacco must mean the operation here, they, being the preparatory operations upon this tobacco before it's marketed by King Edward. Now, on the question of -- of whether in fact these operations are essential to prepare the tobacco for market, I might say first that so long as we establish that in fact King Edward is doing this work upon its tobacco in preparing it for market, I don't think it makes too much difference whether in fact this work can be characterized as -- as essential to get the tobacco ready for market. But the fact remains that in this very record we have findings that this is customary and essential work to prepare King Edward's tobacco fro market. Moreover, the District Court, upon which Ms. Margolin relies so heavily, itself called this work preparation for market. In the King Edward record at page 59, the District Court said, "The process of growing, harvesting and drying this tobacco in the barns on the farms where the tobacco was grown and in bulking, curing and preparing the tobacco for market in the packing house was the same as that generally outlined heretofore." They called it --
Speaker: How do you -- how do you distinguish? I don't want to interrupt you but I ask -- I'd like to hear before you get down -- sit down. How do you distinguish the Waialua case?
Milton C. Denbo: I'm going to come to that in just -- just a couple of moments, Your Honor, Mr. Justice Harlan. I realized yesterday you said that you thought -- you asked Ms. Margolin --
Speaker: (Voice Overlap) --
Milton C. Denbo: -- you asked Ms. Margolin.
Speaker: -- are there -- on the short end of that decision. I'm interested (Inaudible)
Milton C. Denbo: I might also say on this question of whether this work is essential to prepare the tobacco for market. This comprehensive agriculture definition goes far beyond readying something for market, the language upon which the Government relies in this supplemental appendix they filed from a Department of Agriculture publication, which publication, I might add, may or may not have any application to the case here. We don't know. It certainly can't be permitted to impeach findings which appear in the record with respect to this particular case and operation. But that comprehensive language goes way beyond readying for market. It includes such things as delivery to market, delivery to carriers who catch fish in the market, things that take place up to the point where the farmer disposes of his product. Now, the legislative history of this agricultural exemption, we submit, fairly and reinforces the conclusion that these operations are within the statutory language. Congress started with a very broad definition of agriculture and as it worked its way through, the bill worked its way through the passage, the exemption was made more and more inclusive. Congress made a claim that it wished to exempt such “processing” operations, it used that word processing in such operations as (Inaudible) bottling, apple packing, cotton ginning, hog slaughtering when performed by the farmer upon his own produce and it also made a claim that it desired that result regardless of the exemption status under the Act of processing done by an independent plant separate from the grower. It enacted Section 13 (a) (10) to deal with that latter situation, and I'll come to that shortly. I would just like to say this further word about the legislative history. I don't believe that any legislative history could be much clearer on congressional intent to exempt such operations as we have here -- as is this legislative history and its fully reviewed in the -- in our brief. I come now to the cases and I'll take up the question of the Waialua case right away. We submit that the only two decisions of the Court dealing with this agricultural exemption, namely, the Farmers Irrigation case and the Waialua decision show that the operations here are exempt and for these reasons. The factors which the Court emphasized in the Waialua case are largely present here. The Court there indicated that virtually all forms of quasi industrial processing upon agricultural commodities other than sugar milling are enumerated in Section 13 (a) (10) and if they are enumerated there, the implication of the decision was there within the agricultural exemption when performed by the farmer upon his own products. And as we'll show, the operations that take place here are among those enumerated in 13 (a) (10). This is not like sugar milling which is not in 13 (a) (10). The operations here are handling, packing, storing and drying in agricultural commodity. King Edward's growing operation is substantial and it's not a mere façade for in otherwise industrial operation. The product resulting from King Edward's operations is fermented tobacco leaf which involves only natural changes in the leaf which -- this differs from milling sugar cane which transfers that cane by a manufacturing process. And here, the same employees work on the farm and on the packing plant and they're not typical factory workers but largely -- but unskilled farmer -- laborers largely engaged in manual work, the packing plant operation is not industrialized. These are all the factors the Court -- virtually all of the factors the Court emphasized in Waialua as being pertinent to a determination of whether the exemption applies but it doesn't. Now, we say they're present here even though they were absent in Waialua. Now, the Government argues that there is no exemption under this agricultural exemption if the operation is not exempt under Section 13 (a) (10) and they say the operations here are not exempt under 13 (a) (10). Therefore, they're not within the agricultural exemption. Well, to this we reply that, first, the operations here are among those enumerated in 13 (a) (10) and secondly, the statements upon which the Government relies in the Waialua case are applicable only to sugar milling which this Court recognized was a unique boarder line case and those statement cannot be given the sweeping construction for which the Government contends. For example, you have ginning of cotton which is an operation except under Section 13 (a) (10) if performed within the area of production. Well, obviously, there are some gins that are not within the area of production and that doesn't mean, certainly, that a farmer who gins his own cotton isn't within the agricultural exemption. This Court said otherwise and Waialua said that such a farmer was. But the Government's argument would mean that that person is not exempt because there are always some cotton gins that are not within the area of production and therefore they're -- the operation is sometimes not exempt under 13 (a) (10). We think that the Court in Waialua meant to apply the -- its decision there to sugar milling, a unique border line case, I repeat to use the language of the -- of this Court and not generally to the type of situation we have involved here. Now, the Government recognized in this very record. It -- it's been relying upon admissions and requests for admissions and in this very record it admitted that the all embracing agricultural exemption didn't depend upon the 13 (a) (10) exemption for independent operators and it repeated that in testimony before Congress as late as 1949. Finally, with respect to the administrative interpretations that are published and outstanding by them, they're -- they're original interpretation specifically exempted the operation we have here when performed by a farmer upon his own product and it's never been changed. This case represents their effort to change it. It's never been changed. It was in effect on the date of the 1949 amendments and were repeated in general terms by the Department of Labor to the House Labor Committee in hearings preceding the 1949 amendments. The Government has no support and those amendments are otherwise aren't overturning this interpretation of almost 17 years standing. This is like the hauling of sugarcane that was involved in Waialua, where their initial interpretation exempted it, they tried to say they had changed it and this Court said they had not, this is precisely the same. The original interpretation which has never been changed until they brought this case was that these operations are exempt. I turn now to the Budd case and to the argument on Section 13 (a) (10) which applies both to King Edward and Budd if the Court does not -- of the view that King Edward falls within the agricultural exemption. The facts of Budd's packing plant operation are very much the same as those of King Edward. The major difference is that Budd does not grow its own tobacco rather it gets tobacco from farmers in the locality within a radius of about 30 miles. The -- we've already gone through the matter of what the record shows with respect to the equipment in Budd's plant. The employees there do work earlier in the year harvesting and barn curing the tobacco which they thereafter handle at Budd's packing plant. Now, the exemption under Section 13 (a) (10) applies to employees who meet three requirements. First, they must perform the operations which are described in that Section. Secondly, they must be performing those operations for market. And thirdly, they must be performing them in the area of production as defined by the administrator. As to the first two requirements, the Court of Appeals held that they were satisfied and as to the third requirement, the Court of Appeals -- well, the plants do satisfy the definition as to mileage, limit their distance from farms where the tobacco is grown but they don't satisfy the population requirement. The Court of Appeals held that that requirement was invalid as applied here. So far as the for market of limitation is concerned, the Government does not deny that the packing plant operation --
Felix Frankfurter: Do that -- so far as applied here, what do that (Inaudible)
Milton C. Denbo: Are you talking about the area production --
Felix Frankfurter: You said $2500 (Inaudible) invalid so far as applied here.
Milton C. Denbo: I don't mean anything but, Mr. Justice Frankfurter, other than that was --
Felix Frankfurter: Well, are there -- well, there's some special circumstances --
Milton C. Denbo: Yes. But --
Felix Frankfurter: -- but a suggestion that this is a dairyman's drink so far as this (Inaudible)
Milton C. Denbo: No. But the Court of Appeals did say in a footnote that the facts of this case were such as to show the peculiar inappropriateness of the 2500 population limitation.
Felix Frankfurter: (Voice Overlap) --
Milton C. Denbo: I beg your pardon?
Felix Frankfurter: -- mistake, that's what I'm -- that is -- it is to that that my question is directed to. The implications so far as applied here means it might be applied elsewhere, it would be all right, is that it?
Milton C. Denbo: It's very possible.
Felix Frankfurter: Well, then -- then with an expert, what the -- what is the peculiar which would make a validly -- roughly the sum 2500 population there, it was not in reference to this.
Milton C. Denbo: Well, I was not going to jump into that -- at this point, but I shall do so.
Felix Frankfurter: If you say so far as applied --
Milton C. Denbo: I'll do that, Mr. Justice Frankfurter.
Felix Frankfurter: -- it requires that this -- there's some ad hocness about this.
Milton C. Denbo: Well, I don't necessarily mean any ad hocness but I do think that it's very possible that a 2500 population limitation might be valid in some circumstances with respect to certain agricultural commodities, not here.
Felix Frankfurter: Well, it isn't sufficient to show that the general rule otherwise valid, every classification is a little bit like the (Inaudible), it -- it was the only situation where you'll be dealing with a difficulty. It isn't enough to show that in this case wherein (Inaudible) or an unfairness or a hardship or call it what you will --
Milton C. Denbo: No. I'm not going to --
Felix Frankfurter: (Voice Overlap) burden.
Milton C. Denbo: I'm not -- I'm not saying --
Felix Frankfurter: (Voice Overlap) in this case, you're not arguing that?
Milton C. Denbo: No. I'm arguing that --
Felix Frankfurter: (Voice Overlap) about this.
Milton C. Denbo: -- there were no -- within no rational meaning of the term "area of production” in this limitation apply here.
Felix Frankfurter: What do you (Inaudible) -- what you say here, you reply -- you imply here that we have to imply your statement.
Milton C. Denbo: Well, let me --
Felix Frankfurter: Is it here or is there -- is -- is your argument that administrative cannot draw a line as 2500 because they only go on less or more. Here -- when you say here, I want to know why here rather than somewhere -- in some other case. What does -- what is there about here that this was from there?
Milton C. Denbo: Well, let me give you the facts as to --
Felix Frankfurter: Well, it's your argument if you -- if you will tell me the facts, make it appear that there's something peculiar about this case --
Milton C. Denbo: Yes.
Felix Frankfurter: -- which however it may be true that he may classify referrinf to a record of 25 -- a population of 2500 in this case, it would be something so arbitrary it is not to be within the rule-making power, is that your case?
Milton C. Denbo: Yes.
Felix Frankfurter: All right. I just want to know your argument.
Milton C. Denbo: As a matter of fact, the administrator himself in his area of production definition recognized the necessity for varying mileage distances depending upon various agricultural commodities in various operations. For tobacco, the mileage distance is 50 miles, for ginning cotton, its 10 miles. It maybe -- not exactly learned about these various mileages but this is the idea and for fruits and vegetables, 15 miles. Also, he has varying tolerances for the periphery around cities or towns of varying population. Now, in view of certain facts, I'll -- I'd like to call attention to in a moment, we insist that there is the same necessity for deviating from his inflexible 2500 population test as there was by his own recognition for deviating from any absolute mileage limitation with respect to all commodities.
Felix Frankfurter: Is there -- is there any escape clause in -- in this regulation --
Milton C. Denbo: No.
Felix Frankfurter: -- as to other commodities? Are there other commodities?
Milton C. Denbo: No, they all --
Felix Frankfurter: That they all give a fix -- they all (Voice Overlap) --
Milton C. Denbo: 2500 applies to all of them.
Felix Frankfurter: All right.
Milton C. Denbo: That's right. Now --
Felix Frankfurter: What you're saying is that if he said 2500 to exempt something or rather that it will be all right, is that it?
Milton C. Denbo: Well, I -- I can suggest various alternatives to how he might define this term.
Felix Frankfurter: (Voice Overlap) some alleviation for a particular hard situation.
Milton C. Denbo: There must some alleviation for a hard situation --
Felix Frankfurter: All right.
Milton C. Denbo: -- as is this one. Now, I'd like to call attention to a map of ours on page 76 of our brief which is not our map but a map we produced from a Department of Agriculture publication which --
Earl Warren: The King -- King Edward (Voice Overlap) --
Felix Frankfurter: King Edward brief.
Earl Warren: Page 76?
Milton C. Denbo: Not -- not the record. It's our brief.
Earl Warren: I beg your pardon.
Milton C. Denbo: We reprinted a map from a Department of Agriculture publication which we think shows pretty plainly how the town of Quincy is in the very heart of the growing of Type 62 tobacco. It's a small agricultural community is this town of Quincy, 60% of all of the -- of this type of tobacco which is grown within 30 miles of Quincy is packed in plants in Quincy, largely by the same employees who grow it, in this small compact area around Quincy is the only locality in the United States for this tobacco has grown. The principal source of cash income in Quincy is the raising of Type 62 tobacco and 50% of the wage earners in the area actually reside on farms. We think that these facts and this Department of Agriculture map show plainly that Quincy is in the very heart of the area of production of Type 62 tobacco and that the administrator should have allowed some deviation from his inflexible 2500 population test just as he allowed it in other respects with respect to different mileages in different sizes of towns.
Felix Frankfurter: The regulation applies to all types of tobacco, doesn't it?
Milton C. Denbo: It applies to all agricultural commodities.
Felix Frankfurter: Well, it doesn't -- it doesn't mean to allow this type or class of -- this Type 62, but you say it's an (Inaudible)
Milton C. Denbo: Yes, and that -- precisely, Mr. Justice Frankfurter. I say that it should -- the regulation here should provide a -- a deviation from 2500 and our facts establish that beyond per venture. The administrator himself recognized that a population test was not necessary at one time. In the original regulations, he had no population test and from 1941 to 1947, he had no population test. In a short time between 1939 and 1940 he had it then he dropped it because it resulted in inequalities and discriminations and he reinserted it only after this Court's decision in Holly Hill.
Speaker: What you're really saying is that while population may be a factor, it cannot in itself be -- be subject to the -- across the Board regulation?
Milton C. Denbo: That's right -- that's right. Now, let me say this --
Speaker: Which is saying that the regulation is invalid?
Milton C. Denbo: I beg your pardon, Mr. --
Speaker: Which is saying that the regulation is invalid?
Milton C. Denbo: Well, I'd like to say that that particular limitation is an unauthorized limitation. He isn't authorized to put it in just that way across the Board without allowing this flexibility in circumstances such as we have here where it's perfectly clear.
Felix Frankfurter: Is there any machinery -- is there any provision under -- either explicit statutory provisions or administrative practice whereby the administrator, the Secretary of Labor could on appropriate presentation, however, he formally may if they were to (Inaudible) and make an exception.
Milton C. Denbo: Well, you can petition for an amendment under their regulations, Your Honor, but they had never considered individual applications.
Felix Frankfurter: But under (Voice Overlap) --
Milton C. Denbo: No -- no. It wasn't done here.
Felix Frankfurter: -- they had never --
Milton C. Denbo: They had never considered that particular kind of an application over there. They do this on an industry wide basis.
Felix Frankfurter: What I want to know is has the power to make certain exemptions.
Milton C. Denbo: Oh, I think he has power to do it.
Felix Frankfurter: And as -- as to petition or application to make for this (Inaudible)
Milton C. Denbo: It would be fruitless in this case.
Felix Frankfurter: Pardon me?
Milton C. Denbo: It would be fruitless in this case, Your Honor, because by their own statements, they don't regard this operation as falling within 13 (a) (10) for other reasons. Their very -- their hearing officer who held the last hearings on the area of production regulations said that an example of a misunderstanding is the proposal of the one group of cigar tobacco processors who appeared at the hearing and they're talking about our group. It was stated on their behalf that in the bulking operation overtime does not constitute a problem. Their appearance was directly toward the minimum wage exemption under 13 (a) (10). The courts have reviewed and approved the administrator's position that the bulking of cigar leaf tobacco was not among the operations enumerated in 13 (a) (10). Under these circumstances, regardless of the definition of area of production, the administrator is without authority to consider employees engaged in bulking exempt, as to that we say they're wrong of course. That's one of our arguments here, but it would be totally fruitless to make any such application to him because that's his position.
Felix Frankfurter: And I suppose -- suppose it would be sustained on that and then that it is -- suppose your -- your position is exactly that.
Milton C. Denbo: Well, then we're out.
Felix Frankfurter: No, I don't mean on the 2500. On the other point from this.
Milton C. Denbo: You mean that we'd -- aren't bulking?
Felix Frankfurter: What?
Milton C. Denbo: I mean that bulking is not under 13 (a) to where -- we're out of court then.
Felix Frankfurter: Well, then I (Inaudible) on 2500?
Milton C. Denbo: But -- but, Your Honor, if we're not doing something which is in 13 (a) (10), it doesn't make any difference as to whether we're within the area of production or not.
Felix Frankfurter: Well, then suppose you're in it. Suppose you have sustained (Inaudible)
Milton C. Denbo: I have my very grave doubts that we could ever get any such relief at the Department of Labor.
Felix Frankfurter: You mean you wouldn't exercise his power?
Milton C. Denbo: That's precisely what I am saying, Your Honor.
Felix Frankfurter: That doesn't deny that he has (Voice Overlap) --
Milton C. Denbo: No. I think he has the power, certainly. I wouldn't --
Felix Frankfurter: (Voice Overlap) --
Milton C. Denbo: -- be arguing this otherwise.
Felix Frankfurter: He doesn't deny that he may make a rigid -- make -- make what you call a rigid rule subject to alleviation.
Milton C. Denbo: I agree with what you say, Your Honor.
Felix Frankfurter: All right. Very well (Inaudible)
Milton C. Denbo: I -- I don't think he would exercise this authority.
Felix Frankfurter: He can't?
Milton C. Denbo: He can but he wouldn't.
Felix Frankfurter: But -- but --
Milton C. Denbo: Our -- our --
Felix Frankfurter: Your argument is if there is power to make a grant for petition and if generalized classification is made which wouldn't (Inaudible) certainly Congress can make $2500 -- 2500 population provision, couldn't they?
Milton C. Denbo: Oh, yes. I think it probably will.
Felix Frankfurter: Very well. And the question is whether that part has been delegated, should one find it has been delegated or simply didn't (Inaudible) with hardship and that power for alleviation and that takes care of it under the -- this representative.
Milton C. Denbo: If it were exercised, Your Honor.
Felix Frankfurter: All right. They mustn't exercise the power they've got?
Milton C. Denbo: Well, I -- [Laughs] I would like to turn over the balance to Mr. Hughes.
Earl Warren: Yes, Mr. Hughes may -- Mr. Hughes.
Mark F. Hughes: May it please Your Honors. I appear for the May Tobacco Company and perhaps I should be happy at the fact that up to this point there's been practically nothing said about May Tobacco Company. However, that may be I -- in the short time alloted, I want to make clear the reasons why on the record in the May case we fall within the agricultural exemption. The agricultural exemption is the exemption appearing in Section 3 (f), that is to say 3 (f) defines agriculture and may I interpose by saying it doesn't define farming, it defines agriculture which is a much broader term and if an employee is employed in agriculture then under the Section 13 (a) (6), he is exempt from the wage and hour provisions of the law. Now, we filed a separate brief and our brief is the white covered smaller brief and appearing at page 7 of that brief is the relevant statutory provision which I shall come to in just a moment. But I wish first to emphasize that there were two records as must be apparent to Your Honors from the fact that you're dealing with two separate transcripts of record. These cases were consolidated by the District Judge solely as a matter of his convenience but the records are different and in his opinion he says so in so many words. He says that the facts as to the King Edward case and as to the May case, which is my case, are quite different from those in the Budd case. Now, I stress the fact that we are intervenors only in the King Edward case and that the record before Your Honors on this motion for summary judgement so far as we are concerned are the moving and opposing affidavits on our particular motion. Now, coming to the factual situation, let me say this that if we -- if we establish the fact under Section 3 (f) that we are within the exemption then it is unimportant, in fact, you don't even reach the question as to whether the exemption provided by Section 13 (a) (10) applies to us. And so in our brief, we have briefed only that one point and we have relied entirely upon the brief of Budd and King Edward for the proposition that we are also covered by the Section 13 (a) (10) exemption and we simply adopt their argument. Now, quickly on the facts --
Earl Warren: I -- I don't understand why you should come under Section 3 (f). You also don't have to show you come under 13 -- what?
Mark F. Hughes: (a) (10)?
Stanley Reed: (a) (6)?
Mark F. Hughes: 13 (a) (6)? Well, we-
Stanley Reed: Or -- or (10)?
Mark F. Hughes: Well, no. Well, we say we do come under Section 13 (a) (6), Your Honor.
Stanley Reed: Yes. Well, all I'm saying is this is -- (f) is nothing but a definition of what is made (Voice Overlap) --
Mark F. Hughes: That -- that is correct and we --
Stanley Reed: -- the mere fact that you're engaged in agriculture, it doesn't take you out unless you come within one of the others.
Mark F. Hughes: No, sir. In our -- our principal point --
Stanley Reed: I don't (Voice Overlap) --
Mark F. Hughes: -- our principal point is this, that May's employees who worked in its packing plant are engaged in agriculture as agriculture is defined in Section 3 (f) of the Act and because they are engaged in agriculture, they are exempt under Section 13 (a) (6) of the Act because Section 13 (a) (6) of the Act says in so many words that an employee employed in agriculture is exempt from the wage and hour provisions of the Act. So, it is to that proposition that -- and that alone that our brief is directed and I want briefly to give you our factual situation because it's important. May owns its own farms in Gadsden County. May owns only one packing plant and I use the word “packing plant” advisedly because that's what it is and that's what it has always been known as and that's how it's referred to in the record. At -- May only does the bulking of its own tobacco in its own tobacco plant. May does not do any bulking and by that I mean the process which Mr. Denbo has described, the piling and re-piling. It does not perform any of those functions on anybody else's tobacco, only its own tobacco. Now, I repeat also that the -- what occurs here and it's been loosely referred to as processing is nothing but a curing operation, the tobacco is picked, it's first put in the curing barns, the tobacco barn as we know it where it remains for a while and then is transferred immediately to the packing plant. And this packing plant, what is it? It's been referred to as a highly industrialized operation. Well, what it amounts to is, it -- it is a heated enclosure and in that heated enclosure, all that happens is that these people who perform the -- the functions on the farm of tilling the soil and picking the tobacco also perform this function and all that they do is to put this into piles of 3500 to 4000 pounds of tobacco and after those piles have settled for a while, they pull them apart again and re-pile them so that what was inside comes to the outside and so that there is an even distribution of temperature and an even curing of the tobacco. But the big point, Your Honors, is that from the time it's picked until the time it emerges from that packing plant for sale, it is still tobacco leaf. It has changed from green to brown but it's still tobacco. It has -- had no manufacturing process to which it has been subjected. It hasn't been stemmed. It hasn't been cooked. In short, nothing has been done to it except to aid the natural process of curing and it's no different than the ripening of an apple or the ripening of a tomato. And so, I want to implant that on Your Honors minds. That's what the record says. There can't be any possible question about it as far as the May Company is concerned and I now turn -- and I would like, Your Honors, to parse with you in point one of our brief, the language of the agricultural exemption. And I repeat, it's an exemption of agriculture and it's not an exemption of farming. It's a much broader term. And what does -- what does Section 3 say? It exempts farming in all its branches including the tillage of the soil plus something else and what is that plus something else? It's any practices performed by a farmer and here's a farmer, that's all we are and it's conceded that the operation up to the time it leaves the curing barn to go the packing plant. It's conceded that up to that point we're within the exemption. But at that point, where -- these are practices performed by a farmer as an incident to and in conjunction with the farming operations and what are they in this case including preparation for market. Now, in our case, the May record, the record is transparently clear and the Court found that what was done here was essential for the marketing of our tobacco. And our tobacco is not sold until all that process has been completed at which time we sell it to cigar manufacturers who use it for cigar wrapper.
Felix Frankfurter: What acreage is it? What (Voice Overlap) --
Mark F. Hughes: 100 acres is --
Felix Frankfurter: (Inaudible)
Mark F. Hughes: Yes. So, I say, Your Honor, under the plain language of the Act, we are covered. Now, I come to Waialua and, Your Honor, Waialua is not -- this is not an a fortiori case. Waialua as we construe it and properly read supports us because as I read Waialua, the big thing that bothered the majority of this Court was that there was an actual manufacturing operation involved. In that case, the sugar cane was actually milled. It was subjected to a machining process. As a result of which, it was transformed into two other substances, namely, raw sugar and molasses. Now, I say you can't fail to read the case without coming to the conclusion that that was the big factor that influenced the majority and even then, they said that it was a borderline case. In addition to that, the majority opinion listed seven factors and it said, “These are the factors you use in -- in trying to measure whether a thing is farming or isn't farming. And it's the totality of those factors, not one alone that counts but the totality of them." And in that case, the -- as I remember it, Waialua failed to meet three of the seven tests. Here, we meet them all and I'm not going to take the time because I haven't got it to spell them out except to say that on pages 10 and 11 of our brief, we very tersely describe with record references how we meet every single one of those tests. And I say to Your Honors now that if May is not exempt, then the language practices performed by a farmer as an incident to or in conjunction with such farming operations including preparation for market as that appears in Section 3 (f), I say that that is -- is rendered meaningless. If Your Honors say that we aren't covered by that, then I can't conceive of any kind of agriculture that would be covered by it. Now --
Stanley Reed: That probably depend on what is preparation for market?
Mark F. Hughes: Pardon me, sir?
Stanley Reed: That depend on the phrase "preparation for market?"
Mark F. Hughes: Yes, sir, it does. And I -- I remind, Your Honor, that in our case, there is a finding that it was essential for market. Mind you, the statute doesn't say that it has to be essential if -- even if it were desirable it would suffice. But there's a finding here that what's done in our packing plant which is nothing more than controlling humidity and temperature so that the leaf goes through this natural transformation. That is all by way of preparation for market because we don't sell until all that has been done and the -- and the cigar manufacturer doesn't buy from us until that's been done.
Stanley Reed: Well, that was true with Waialua too?
Mark F. Hughes: Yes, sir.
Stanley Reed: And what I have in mind is that -- as I understand the -- the records here is they -- this tobacco could have been marketed completely away from the farm without going through this process, it's -- it's in the packing plant.
Mark F. Hughes: Well, Your Honor, the record is that in our case it -- it is the -- the packing plant is 10 miles away from the farm --
Stanley Reed: And (Voice Overlap) --
Mark F. Hughes: -- but that -- that's just happenstance actually.
Stanley Reed: Certainly, what the other farmers, perhaps a majority of them, take their tobacco from their farms and deliver to the processing plant after it has gone through the first of the curing process?
Mark F. Hughes: Yes, sir. That's -- that's throw -- true but that's not --
Stanley Reed: So, at that time, all tobacco could be sold, ready for the market.
Mark F. Hughes: Well, it -- it could be. But we have put it this way. If we did not have our own packing plant, we of course could have -- have either sold or made arrangements with some other packing plant to take this tobacco of ours and pile it and re-pile it, this pure --
Stanley Reed: And I (Voice Overlap) --
Mark F. Hughes: -- pure and simple manual operation that it doesn't involve any industrialization whatever, the simplest kind of manual labor.
Stanley Reed: I recognize the distinction you made in Waialua that there the sugar cane was priced, but also other sugar cane farmers could have sold their sugar cane before it is priced and take it to the processing plant and just take it to the farming houses.
Mark F. Hughes: Well, I'm -- I'm not sure that I have caught the flavor of Your Honor's question, but I -- I do concede that --
Stanley Reed: (Voice Overlap) --
Mark F. Hughes: -- I do concede that if we didn't have a packing plant, we could have had our -- had our tobacco processed by others, in which event, I think if we had those people who got it would come within the Section 13 (a) (10) exemption. But our case isn't that case. We do our own bulking and I repeat --
Tom C. Clark: (Inaudible)
Mark F. Hughes: What the statute says, "Including preparation for market.” It doesn't say that -- that you must -- in other words, it's not a mandatory provision here. The statute says that it suffices, if that is what you do to prepare it for market and there's no question --
Felix Frankfurter: That didn't draw it merely by the earth, is it?
Mark F. Hughes: Exactly, yes, sir. Yes, sir. Well, Your Honors, I -- I'm afraid I've trespassed on Your Honors time. I --
Earl Warren: Yes, you were.
Mark F. Hughes: -- I have some other points, I've made them in the brief, but I'll have to rest on the brief.
Earl Warren: Ms. Margolin.
William O. Douglas: Ms. Margolin, what do you say (Inaudible)
Bessie Margolin: Where we said that bulking might be -- might be among the things that --
William O. Douglas: What is the distinction of that, has that been modified?
Bessie Margolin: Well, it -- it has not been specifically modified and I think that's what -- where some of the confusion has come in. It was issued way in 1939 and -- and even in that bulletin if Your Honor will recall, it is stated that an operation done on a farm or where the product is processed, the process is just processing his own product, even though it's off the farm, it might be agriculture. And among the examples giving -- given was bulking. That has caused us a lot of headaches just like the original interpretation we put out and we gave an example, sugar milling, if it were done by the employer just on his own crop. After the Bowie case and -- and the administrator to that extent is responsible for some of the confusion and I think the Court probably realizes by now that this is an extremely complex and difficult subject area and it's extremely widespread and we had made our mistakes frankly too. But after the Bowie case came out, we did come out specifically and say with respect to sugar milling that apparently the administrator went too far in saying that the mere fact that the farmer or that the processor was just processing his own crop, put him into agriculture, we said that -- that we went too far. Well, we've also said the same thing about bulking. Now, we haven't -- we -- we have put in our supplemental appendix and I don't want to take too much time to go over this because I want to get to the point on the legislative history of area of production, but we put in our supplemental appendix the context of the decision -- of the opinions of the administrator that respondents rely on. And the Court will find that in every one of those cases, he has qualified it carefully by saying, “If you meet these conditions." The conditions which this Court set forth in the Waialua opinion in addition to other conditions which this Court says are also pertinent. In every -- in every one of these opinion since the Bowie case in relation to canning and vegetable and in relation to tobacco. The administrator has been very careful to -- not say that they would be engaged in agriculture. He's been very careful to say if you meet these tests and I think you'll see in the context that that -- that he has been careful to say that, although he may have been originally responsible for some of the confusion. Now, to come back to the area of production thing, I think that Justice Frankfurter has pointed out that this is a regulation of general application applies to numerous industries, operations on over 300 -- more than 300 commodities and necessarily it may not -- any definition, a regulation may not operate in every particular case to carry out the full intent of Congress, assuming that that intent is as clear as respondent seem to think. But the fact that it might operate in a particular case under those circumstances certainly wouldn't invalidate it. As a matter of fact, as this Court said in Holly Hill, that that is precisely the thought of -- of standard that have to be left to the administrator and not to the diversities and inevitable contingencies or the other way around, contingencies and inevitable diversity of particular litigated cases. That the simple answer to this thing, to this whole question and there is a simple and decisive answer and the Court does not need to concern itself with all the headache the administrator has had trying to see what is the feasible definition. And by the way, respondents' proposals have been very seriously considered by the administrator and if the Court will read our supplemental appendix setting forth the findings of the hearing officer which were adopted by the administrator, you will see how carefully and thoroughly the administrator has explored just as precisely their suggestion here that he look into the income and try to determine and he considers specifically whether it would be feasible to have an escape clause. Well, it was obvious that there's not enough data or -- or there's simply not the data available, any reliable data and everyone would be coming in to ask for the escape clause and he had no data on which to -- to base the decision which would have an escape clause.
Felix Frankfurter: Ms. Margolin, as we -- do you have anything in your brief that you haven't read or in the record which gives the dollar expense of this business? What -- what this amounts to?
Bessie Margolin: I doubt it. Very seriously, this record is -- is quite meager as -- as the Court realizes by this time because it was done on motions for summary judgement and cross-motion. But I come now to the simple answer. There is a simple and decisive answer to this area of production question and that is that Congress has ratified in 1949 amending act. The -- this definition has been before Congress repeatedly -- repeatedly and all of the same criticisms that are made here were made to Congress. In fact, the administrator and the secretary themselves, these excessive administrators and secretary have told Congress that -- that we're not satisfied with this definition. We've knocked ourselves out trying to get one that would not result in -- in inequity. We don't think it can be done if we're -- if we're limited to geographic boundary that there bound to be some inequity. And Congress, although repeatedly asked to these -- through these other things, decided not to do anything. They have declined specific proposals. They have declined specific proposals by Mr. Todd and in 1949, when the proposal was made to transfer this authority to the Secretary of Agriculture, they declined to do that. They went ahead and enacted several other amendments, many other amendments because they reviewed the Fair Labor Standards Act comprehensively and there was a proposal to amend Section 13 (a) (10). Some people wanted the area of production exemption taken out entirely. Others wanted it translated -- function transferred to the Secretary of Agriculture but Congress and its -- the legislative history on that is in our supplemental appendix. They decided that for a variety of reasons because of the complexity of the subject and their interest in enacting other amendments at that -- at that time. They decided to -- to leave the law as it was and it -- that was specifically said so in the House Manager's report in reporting why they had adopted the Senate version. And it was -- they just specifically decided and they put in this express provision when they enacted the other amendments. They put in this Section (c) -- 16 (c) provision which expressly kept in effect any regulation order, interpretation of the administrator in effect at the time at the -- on the effective date as to the language on the effective date of the amendment -- of the amending act. There's no question that this definition was in effect on the effective date of the 1949 amending act and that it -- it was not inconsistent with anything in that Act because that -- it has been specifically left unchanged, Section 13 (a) (10) and the definition.
Speaker: And this was -- it was after the administrative regulations?
Bessie Margolin: 1949 amendment. Oh, yes, it was after the --
Speaker: The 1946, this was --
Bessie Margolin: This is 1946. So, there's no question that it was in effect that they considered it and they deliberately decided that they would leave --
Speaker: (Voice Overlap) --
Bessie Margolin: -- the status of things as they were. Everyone wants some improvement of this and we hope someday we'll get it from the legislature --
Speaker: But where -- where is --
Bessie Margolin: -- but it is a legislative question.
Speaker: Where -- where is the language you speak of?
Bessie Margolin: The language of 16 (c)?
Speaker: Of the new Act? As I understand it -- I understood you to say that 1949 is what you --
Bessie Margolin: It's --
Speaker: -- call a specific approval?
Bessie Margolin: The -- the language of that Act is Section 16 (c) and it is quoted in our brief.
Speaker: 16 (c), I could get it from --
Bessie Margolin: Yes. It specifically keeps in effect any regulation order or interpretation of the administrator in effect on the effective date of the Act and this was in effect. And I say that is the simple answer, although I don't want it -- I don't want to have it inferred that we agree with everything that respondents -- or much of anything that they said about the operation of this standard in their particular case. And I might say that so many questions have developed which I -- during the oral argument which I think it might be helpful if we filed a reply brief and if the Court would permit it, I'd be glad to try to clarify some of these questions that have come up during the oral argument in the reply brief.
Earl Warren: You may, Ms.--
Bessie Margolin: Thank you, sir.
Milton C. Denbo: Chief Justice Warren, in view of the fact, the respondents -- I mean the Government does not filing its reply brief when according to the rules they should have. I wonder if we might have some time to respond to whatever they might say within that very short time.
Earl Warren: How long would it take you, Ms. Margolin?
Bessie Margolin: Well, about -- with -- like at least a week if I may because of the problem of printing and --
Earl Warren: Well, we -- we get rather late in turn, Ms. Margolin.I --
Bessie Margolin: Well --
Earl Warren: I -- I think maybe we can find this one through, one you're your briefs, all of that (Inaudible)
Bessie Margolin: Well, if there are just few matters which I think I could get up in the -- in two or three days.
Earl Warren: Well, if we'll get them up in a couple of days.We'll give counsel a couple of days.You may have a couple of days.
Speaker: May I ask Ms. Margolin, if she proposes to do that in (Inaudible)
Earl Warren: Yes.
Bessie Margolin: Well, I think there is one item that I might on that.
Speaker: (Inaudible)
Earl Warren: If so, you may have -- you -- you may answer also.
Milton C. Denbo: We have the two days after she files hers.
Earl Warren: Exactly, yes.
Milton C. Denbo: Thank you.
Speaker: Well, Ms. Margolin, I now have the 16 (c) on page 35 of your brief. It seems to say that all the regulations except those that are inconsistent with the provisions of the Act.
Bessie Margolin: With this Act. They are talking about the 1949 amending act.
Speaker: And did they amend?
Bessie Margolin: They're talking about the Act they were then enacting which was -- which was a pretty comprehensive act amending quite a few provisions of the Fair Labor Standards Act.
Speaker: So far as -- why do you say they're talking about that, shouldn't they amend the original Act?
Bessie Margolin: Well, I -- I -- because they referred in other point to the -- they referred in other point to the 1938 Act. So, they -- they must, at that point, be referring to this Act, the 1949 Act.
Speaker: Is there any --
Bessie Margolin: I think we had this --
Speaker: -- order or regulation --
Bessie Margolin: -- discussion when the question first came up in connection with the (Inaudible) case and --
Speaker: In effect --
Bessie Margolin: -- I think --
Speaker: -- under the provisions of the Fair Labor Standards Act, shall remain in effect. So that's before the new one was passed except to the extent that it may be inconsistent with the provisions of this Act.
Bessie Margolin: Of this Act. That's right. And so, the first part of sentence is referring to the -- all the regulation's interpretation under the 1938 Act shall remain in effect except to the extent inconsistent to this Act. I don't think they referred to this Act.