Document: 339 U.S. 497 70 S.Ct. 755 94 L.Ed. 1017 POWELL et al.v.UNITED STATES CARTRIDGE CO. AARON al. v. FORD, BACON & DAVIS, Inc. CREEL LONE STAR DEFENSE CORPORATION. Nos. 96, 79, 58. Argued and Submitted Dec. 8—9, 1949. Decided May 8, 1950. Mr. Thomas Bond, St. Louis, Mo., for petitioners R. M. Powell others. Bessie Margolin, Washington, D.C., the United States, as amicus curiae, by special leave of Court. June P. Wooten, Little Rock, Ark., Julia Rhoda Aaron Messrs. Pat Coon, Dallas, Tex., C. Kennedy, Texarkana, Roy Creel William L. Marbury, Baltimore, Md., respondents. Robert H. McRoberts, respondent Cartridge Co. Otto Atchley, Lone Star Defense Corporation. E. McHaney, Jr., Ford, Bacon Davis, Justice BURTON delivered opinion 1 The question in each these cases is whether Fair Labor Standards Act 1938, amended,1 applies to a person employed, private contractor at Government-owned munitions plant operated under cost-plus-a-fixed-fee contract made with States. We hold that does apply but we do not reach validity individual claims based upon it. 2 This issue was argued here Kennedy Silas Mason Co., 334 249, 68 1031, 92 1347. We, however, remanded case withheld decision issue, awaiting more solid basis findings. page 257, 1034, Each instant presents such basis. 3 No. 96 (The Case). 4 In December, 1940, States contracted Company, herein, 'an independent no wise an agent Government' on operate Government's Louis Ordnance Plant Missouri.2 stated it authorized July 2, 1940.3 It provided would manufacture certain types questities small arms ammunition, Government reimburse its expenditures operation and, addition, pay fixed fee quantities ammunition supplied. title site, plant, equipment general, raw material, work progress finished be Government.4 Most materials were supplied Government. expressly reimbursement respondent's expenses labor. respondent, turn, agreed supply practically all services incident setting up efficient operating force until required had been produced. responsible storing materials, supplies loading cars or other carriers accordance instructions. generally shipped common carrier bills lading military destinations outside Missouri. reserved large rights supervision, auditing inspection exercised through 'Contracting Officer.' employees, including petitioners, hired, assigned, directed, supervised, paid discharged respondent. persons engaged 'shall subject control constitute employees Contractor * *.' quoted 'representations stipulations' relating employment directed Walsh-Healey Act.5 Under it, contracting officer (subject right appeal) could require dismiss any employee whom he deemed incompetent whose retention 'is deemed' public interest. express reference Act. However, booklet which distributed informed, among things, 'There will eight hours working day, forty week. When production demands longer week, Company legal overtime rate Act, Act.' (Emphasis supplied.) 5 59 employed safety department plant. They alleged that, they entitled received. sued District Court Eastern Missouri recover pay, plus liquidated damages attorney's fee. denied liability many grounds, those did event, recovery After trial, entered judgment favor total sum $246,251.44 (twice amount claimed), $24,625 costs. moved new trial so Portal-to-Portal 1947,6 adopted five days before Court's judgment, might applied issues. motion appealed. While appeal pending Appeals Eighth Circuit, this supra, announced. thereupon heard reargument issues raised case. Sitting en banc, reversed held Plant. 8 Cir., 174 F.2d 718. All seven judges exclusion Four also joined opinion, 726, stating given discretion Secretary War determine what regulations should applicable privately plants his adoption rendered inapplicable contract. merits granted certiorari. 338 810, 57. 6 79 7 substantially same case, relates Arkansas arises summary pleadings, supporting affidavits, admissions fact answers interrogatories. into July, 1941, comparable, present purposes, 1,278 number, handlers, processors explosives, who claimed additional compensation approximately 35 minutes before, 30 after, their scheduled answered three grounds—that kind covered are within coverage because virtue 1947, event. rendering Barksdale F.Supp. 690. Without passing contentions, there because, processing assembling like conditions, 'in goods commerce' meaning Circuit affirmed, 730, authority 9 supra. 337 955, 69 1533. 58 DP from Fifth cases. Texas pleadings affidavits. Here Plant, near Texas, owned comparable material features several hundred capacities truck drivers, lift-fork operators, loaders unloaders. Their used munitions, shells, bombs, detonators ordnance items. products furnished instructions destinations, usually Texas. due them Quoting court gave affirmed. 171 964. record agency Government, commerce 923, 1170. 10 filed brief here, support limited now us. 11 I. Petitioners Were Not Employees Within Meaning 12 If excludes coverage.7 A similar defense presented claim respondents contractors agencies representing binding principal petitioners. 13 contract, provision following case: 14 'Article I—E—Authority Contractor. 15 'In carrying out Title I things necessary convenient about closing down part thereof, (but to) hereunder, (who shall Contractor), 16 replete references 'employees Contractor' 'persons Contractor.' 17 contained clause: 18 III—A—Status 19 'It understood performance Government.' Such provisions persuasive recognized respective contractors. argue, context times, contracts practice deprive statements ordinary meaning. find, contrary, sources evidence correctly state true relationship between 20 For example, find reflection fundamental policy refrain, much possible, doing own manufacturing use, possible (in munitions), experience mass genius organization American industry outstanding world.8 essence called private, rather than public, opperation war plants. purpose shines clause 'Whereas, desires have Contractor, basis, make preparations said training personnel excluding procurement supervision installation facilities (to done, contractor's parent corporation, Western Company); plant; 21 simple ordered done governmental well ownership. To so, weakened our system free enterprise. relied foundation general industrial supremacy ultimate victory depend. light, deliberately sought insure 22 great projects built almost inevitable largely essential supervise closely specifications standards established These incidents program not, prevent placing managerial responsibility 23 employer worker appears only terminology has quoted. substantial obligation respondent-contractors train forces, job assignments, fix salaries, meet payrolls, comply workmen's laws Social Security requirements 'to covenient *.'9 24 insertion representations set forth was, itself, recognition status 25 petitioner-employees disavow, briefs, them. duties imposed employers. That performed vital policy. light considerations, conclude respondents, form substance, employers Act.10 II. Engaged Production Goods Commerce 26 Before discussing definitions assigned words 'commerce' 'goods,' helpful examine whole time adoption. during depression. purposes.11 further expounded them.12 primary Congress regulate interstate such. eliminate, rapidly practicable, substandard labor conditions throughout nation. raise living without curtailing earning power. Roland Electrical Walling, 326 657, 669—670, 66 413, 418, 419, 90 383. appropriate place beneficial application Act's danger reduced loss business. fail materially if producers tremendous volume wartime destined transportation. 1941—1945 major source employment. Wages factor fixing 27 A. 'transportation' commerce.'13 precise produced when transportation use prosecution war, sale exchange. 28 Section 3(b) contains definition 'commerce': '(b) 'Commerce' means trade, commerce, transportation, transmission, communication State thereof.' 52 Stat. 1060, 29 U.S.C. § 203(b), U.S.C.A. 203(b). exercise constitutional power 'To foreign Nations, U.S.Const. Art. I, Cl. 3. repeatedly include shipments such, merely articles intended sale, exchange trading activities.14 exempted producing leading even exemptions. On included, terms, 31 view merit interpretation exclude consumption, distinguished 32 B. 'goods' argue though 3(i) defines 'Goods' follows: '(i) (including ships marine equipment), wares, products, commodities, merchandise, subjects character, ingredient after delivery actual physical possession consumer thereof producer, manufacturer, processor 1061, 203(i), 203(i). 33 Respondents language thereafter, prior consumer. original jurisdictional fact—that transportation—of covering effect later then cease 34 believe crucial establishes being literal exclusionary 3(i), best serves purposes consumer, 'goods.' retains important violation 15(a)(1)15 transport state. Wage Hour Administrator. 1940 WH Man. 131, 133. readopted change revision Administrator's Interpretations. Fed.Reg. 4585, C.F.R. 776.7(h).16 hold, therefore, delivery, subsequent shipment, benefits take either 'commerce.' otherwise restrict arbitrarily inconsistently broad purposes. 36 III. Are Mutually Exclusive. 37 one year National Industrial Recovery Act17 declared unconstitutional. Schechter Poultry Corp. 295 495, 55 837, 1570, 97 A.L.R. 947. Seeking wages kept narrow field assured constitutionality. prescribed furnishing supplies, exceeding $10,000, less minimum determined prevailing locality. permitted excess day 40 week,18 male years age, female age convict contractor, manufactured fabricated unsanitary, hazardous dangerous health employees. 38 1938 passed nearly two next Congress. different broader approach. restricted contracts. sponsor bill carry suggestions President message 81 Cong.Rec. 4960, 4961 (1937). message, said: '* protect interests people propose admitted commerce. rudimentary decency regarded contraband ought allowed pollute channels trade.' 39 bold sweeping terms.19 Breadth mission. Its scope terms universality amply enough projects. Where exceptions made, specific. included 'any employer' 3(e), defined cover corporation employing contracts, while excluding, employer, 'the political subdivision State, *' 3(a) (d). devoted listing exemptions specific classes seaman, air II Railway 45 §§ 181—188, agriculture. 204 Motor Carrier 1935, 49 304,20 exemption maximum hour 7. Part Interstate 1—27. Sich specificity strengthens implication thus exempted, remain includes affirmative statement relation laws: 41 'Relation Other Laws 42 'Sec. 18. No order thereunder excuse noncompliance Federal law municipal ordinance establishing wage higher workweek lower child justify standard reducing him increasing maintained shorter 1069, 218, 218. 43 above discloses congressional awareness overlaps federal legislation affecting standards. enactments collateral An amendment 1942, possibility.21 Similarly, 1947 indicated contractors, protected Act.22 44 Despite statutes define overlapping areas, contend construed mutually exclusive. There presentation instances, where compliance makes impossible other. demonstration impossibility determining, instance, applying requirement satisfying both. presented, considered analysis effects Acts, excerpts Manual Instructions Administration Contracts (War Department, Office Chief Ordance, 1941). published appendix forthright treatment detailed suggested solutions practical aspects supplementary Acts impressive. 46 some, probably most, 'prevailing wages' advantageous times review.23 hand, remedial procedure earlier 47 applicability us therefore preclude supplementary. 48 IV. Neither nor Action Taken Pursuant Excludes Applicability 1940,24 uniqueness Department concurring below case.25 contains, cannot interpret granting, executive officers exclude, fully recently 50 temporary clarification contractmaking existing law, noted, elimination hazards, making grants emergency President. referred advertising. adopted, negotiated advertising competitive bids. suspended limitations e.g., approval estimates appropriations undertaking construction buildings, 1(a), restrictions leasing, 1(b), assignment personnel, 2(b), number serviceable aircraft, 3, civil service 4(a), 653. suggestion suspension anything violate 51 single latter revealing floor Senate Senator Wagner, author containing reference: 'A arisen—and simply remove ambiguity—as definitely purchase result advertising, 53 Unless anomalous situation: bidding wages, is, (under Act), applied, whereas another negotiations, paid, flat (the Act). situation opportunity exploitation, since paying some instances percent 75 Healey-Walsh am sure want invite exploitation.' 86 7924 (1940). 54 See also, 7839—7843, H.R.Rep.No.2685, 76th Cong., 3d Sess. contentions weight Statement Policy issued Navy Departments 1942,26 convincing refutation foregoing conclusions. accordingly, amended, reliance 56 cause consideration errors asserted reviewed court. 57 58, Corporation, judgments Courts causes proceedings conformity opinion. Judgments remanded. DOUGLAS CLARK took 60 FRANKFURTER, JACKSON joins, dissenting. 61 just situations long series give sympathetic controversy involving relations capitalist real Army conceived, formulated, administered scheme mate riel Division administers short, resistance vast Treasury issue. decided manifested most emphatic way stretched extent sophistical argumentation can stretch commonsensical way.1 Fine distinctions statute hardly avoided. hew close line marked facts caution propositions decide concrete particularly heeded dealing enactment framed categories having diverse conflicting contents. begs purport solve particular problem invoking category. 62 heedful really about; mindful about. varieties cost-plus-fixed-fee otherwise. What involved provide 'through selected qualified commercial manufacturers.'2 713, U.S.C.App. 1171(b), U.S.C.A.Appendix, 1171(b). 63 nature interrelationship put proper perspective. cases, findings Inc., detailed, discussion center 64 war—detonators, percussion elements, artillery primers, fuses, boosters powder fuses. reservation immediate designated Ordnance. Munition quotas officials stage checked rules promulgated well. terminable 'normal factors go profit lacking.' Departments' Governing Government-Owned, Privately Operated Plants (1942), digested CCH Law Serv. 24,862 seq. connection Ninety-five per cent directly; remainder obtained purchases point origin, shipment payment tax. equipment, process Finished lading. 65 costs used. electric power, telephone, teletype telegraph itself directly, traveling business tax-free tickets. At advance money—expenses available funds. forbade agreements 'which, Navy, restricting hampering output.' Although hire 'subject Contractor,' retained approve disapprove dismissal 'incompetent interest.' key Contracting Officer approved submitted employee's previous proposed salary, qualifications experience. salary rates changes approval, audited cards payrolls witnessed neither dead letter formality. Proposed scales rejected Department. 67 Work specifically 2036, seq., enacted invalidated, directing 'Government along lines tending maintain purchasing achieved N.R.A.' S.Rep.No.1157, 74th 1st (1935). S.Rep.No.1193, (1935); H.R.Rep.No.2946, 2d (1936). end, 1(b) requires industries groups currently locality articles, furnished.' Provision inter alia, hours, 'not one-half basic hourly rate.' liable underpayment benefit underpaid employees.3 Two became 'engaged commerce.' 1062, 1063, 206, 207, 207. 16(b) gives action against unpaid equal damages. shall, addition awarded plaintiff allow reasonable defendant, action.' holds irrespective whatever sums recovered suits. As 254, 1033, 1347, sense, nominal today's alone, 'conservative estimate suit, exclusive costs, $500,000.00.' estimated 1946 stake 'existing suits potential may aggregate exceed $250,000,000, reimbursable contractor.'4 creates drain imputing Act—and course possibly foreseen arrangements here—the intention, effect, open huge amounts 'liquidated damages,' fees. absence shred indicate contemplated countenanced bring myself attribute desire double burden fisc. Certainly salient justification abstract function. Our decisions thing clear Act: labels parties attach classifications statutes. Rutherford Food McComb, 331 722, 1473, 91 1772; Walling Portland Terminal 330 148, 150, 639, 809; McComb McKay, 164 40; cf. Mine Workers, 258, 285, 286, 677, 691, 692, 884. disregard guidance wisdom construing dynamic code designation 'employers' decisive. Again, bare never self-applying especially inconclusive unprecedented character. economic incidence aptly characterized Policy: 'The units created unique.' unique heed admonition perverting mechanically unintended contexts.' Farmers Reservoir Irrigation 755, 764, 1274, 1279. elsewhere many-hued meanings derive put. 71 doubt, suggested, guide reading aim 2(a), eliminate detrimental maintenance health, efficiency, well-being workers.' But fit suit negatives concern welfare deprives protection consonant humane motives underlying proof civilized statute, nonsupervisory classifications. degree exerted over rates, audit presence withhold payments sue departure specified compensate aggrieved safeguards assure fair dealing. 72 interpreted administratively charged formulation Army, supports position here. Correspondence Attorney General 1944 shows initial reluctance defended inapplicability stem lack conviction defense. Rather, feared successful assertion significant implications Relations 'result impairment jurisdiction Board doubt cast jurisdiction.' fear engendered unresourceful advice lawyer subjection collective-bargaining Wagner applicable. advice, concluded interest served preserving embodied expense abandoning attacks Comp.Gen. 277. 'administrative interpretation' departments, acting concession statute's expedient step utilizing gloss ambiguous legislation. 73 every phase operations plants, specifying manufactured, methods production. dominant respect policies, phases hiring firing, compensation. investment entirely Government's, bore risks operation. workers, wanting characteristic normal employer-employee relation. protective see attributing intention fiscal consequences nor, assumption, desired Cf. Wittek, 346, 1108. Since 'employer' inapplicable. 74 considerations call affirmance grounds advanced sustaining below, least commended themselves Appeals. 1060 1266, 615—616, 756, 87, 446, 910—920, 201 219, (Supp. III) 201—217, c. 219. 100 giant Those option So utilize management resources nation minimize encroachment structure, both chose course. Lichter 742, 767—768, 1294, 1307, 1308, 1694. Out 143 billion dollars 1941 1946, billions cost-plus Hearings Subcommittee Committee Judiciary S. 70, 80th 422—423, 624—626 (1947). quotation text 505, 760, infra. 712—714, 1171, 1172, 1172. Article III—F, that: completed manufacture, Ammunition Likewise, site work, storage purchased tools, machinery, reimbursed hereof, vest bear risk vested relieve contract.' Adopted 30, 1936, 2036 84—90, 216, 251—262, 251—262. Act— '(d) 'Employer' directly indirectly *. '(e) 'Employee' employer.' 203(d) (e), 203(d, e). review development industry, 234 758—766, 1303, workers explain relationships established, employee. manual 'Your Job Plant.' opens 'Every prospective read describing Company's procedure.' describes company 'Our Employees.' says production, City maintaining civic enterprise, establishment conducive happiness man woman plant.' explains financial final analysis, your come income taxes collected you citizens. managing adds 'When dissenting Judge Hutcheson 1016, 1019—1020, reasoning accord decision: 'Here elaborate designed 1020. Curry 314 14, 48, 9, Alabama King Boozer, 1, 43, were, sales taxes. 2. (a) hereby finds existence, (1) instrumentalities spread perpetuate States; (2) burdens flow commerce; (3) constitutes unfair method competition (4) leads disputes burdening obstructing (5) interferes orderly marketing correct practicable power.' 202, 202. spreading lowering prices attempt limit solely markets. announced 'labor (§ note 11, supra.) concerned widespread existence conditions. reached regulation forcefully dissent Holmes Hammer Dagenhart, 247 251, 277—281, 529, 533, 534, 1101, 649, Ann.Cas.1918E, 724. upheld constitutionality Darby, 312 100, 115—117, 451, 457, 458, 85 609, 132 1430. Stone speaking significant. extended proscribed general: 'While prohibition indubitably conceded prohibit noxious Lottery Case, (Champion Ames, 188 321, 492); Hipolite Egg 220 45, 364, 364; Hoke (227 308, 281, 523, L.R.A., N.S., 906, Ann.Cas.1913E, 905); stolen Brooks 267 432, 345, 699, 1407; kidnapped persons, Gooch 297 124, 395, 80 522, intoxicating liquor goods, traffic forbidden destination. Kentucky Whip Collar Illinois Central 299 334, 277, 270. 'Whatever motive purpose, infringe plenary conferred Clause. Subject limitation, obvious product, stop toward transporting it.' pages 113, 115, 117, 456, 458. legislative history 668—669, n. 5, See. 6. Every (certain wages). except section, employ (longer hours). 206(a) 207(a), 206(a), 207(a). E.g., Edwards California, 160, 164, 119; 522; Thornton 271 414, 585, 1013; Hill, 248 420, 143, 337; Caminetti 242 470, 192, 442, L.R.A.1917F, 502, Ann.Cas.1917B, 1168. South-Eastern Underwriters Ass'n, 322 549, 1162, 88 1440; Bell Porter, 159 118—119. 15. unlawful person— '(1) transport, offer ship, deliver, sell knowledge intended, section (minimum wages) (maximum hours), 16. Any willfully violations fine imprisonment six months, 1068, 215(a)(1) 216(a), 215(a)(1), 216(a). 'Irrespective container manufacturer act. lose character affect act far concerned. containers clearly time, term accomplish consumers, producers, manufacturers, 'hot goods' 15(a)(1). seems statute. intend permit avoid transports State. Thus, building boat purchaser boatyard built, intends, hopes, reason sail State.' 776.7(h). 195. amended 1942 adding following: 'Provided, subsection (c) agreement pursuant paragraphs (b) 'Fair 1938'.' 35(c), 35(c). relate collective bargaining consecutive workweeks exempting charges usual applied. Pyramid Ispass, 695, 954, 1184; Levinson Spector Service, 931, 1158; Southland Gasoline Bayley, 319 44, 917, 87 1244; Overnight Transport Missel, 316 572, 1216, 1682; Trucking Ass'ns, 310 1059, 84 1345. 18, 'Section 1. judicially long-established customs, practices, thereby creating wholly unexpected liabilities, immense retroactive operation, results arising interpretations stand, (9) cost heretofore hereafter various departments unreasonably increased Public seriously affected consequent contracts; declares arisen arise aforesaid, (except damages) Bacon-Davis national welfare, defense, aid, protect, foster 84—85, 251(a), 251(a). 1949 amendments increase cents hour, demonstrate, growing importance 206(a)(1), 202 (1). 718, 726—730. emphasized counsel Much Regulations—Army: Procurement Instructions, 9,101.1, 9,104.3, 9,104.4, 9,105.2 9,105,3. found placed Jewell Ridge Coal Local 6167, 325 161, 89 1534; Anderson Mt. Clemens Pottery 328 680, 1187, 1515; Bay Operating Aaron, 1186, 1502; Brooklyn Savings Bank O'Neil, 324 697, 895, 1296, misconceived 84, 251 seq.; 20, 1949, 207(e)(1, 2), (f); Amendments 910, 919, III), 213, 216. enter installations 2(a) 8(b) 28, 1940. 1152(a)(1), 1158(b), 1158(b). provides: 'Any money America stipulations brought name thereof. deductions, rebates, refunds, underpayments deposit account Labor, recovered.' acted utmost good faith attorneys' fees severe impact large, unforeseen nonreimbursed fixed-fee receiving annual $420,000 manifest.

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