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Bowles v. Biberman Bros. Inc.

decided as amended december 6 1945: September 21, 1945.


Author: Biggs

Before BIGGS, GOODRICH, and McLAUGHLIN, Circuit Judges.

BIGGS, Circuit Judge.

The Administrator of the Office of Price Administration sued Biberman Bros., Inc., pursuant to Section 205(a) and (e) of the Emergency Price Control Act of 1942, as amended, 50 U.S.C.A.Appendix § 925(a) and (e), for injunctive relief and for treble damages. The Administrator alleges that Biberman, a manufacturer of dresses, violated Section 4(a) of the Act, 50 U.S.C.A.Appendix § 904(a), because it failed to comply with Maximum Price Regulation No. 287, 7 F.R. 10460, as revised and amended.*fn1 In substance the Administrator charges that Biberman sold dresses at prices in excess of the maximum prices prescribed for women's and misses' dresses sold by manufacturers other than at retail because it included in its minimum allowable costs for its price lines, as "direct labor costs," the amount of a wage increase of 8 1/2% actually paid by it under the circumstances set out hereinafter. The case falls into two parts: (1), was the defendant under the Regulations entitled to charge the wage increase into its direct labor costs, and (2), if it was not was there an actual price ceiling which the defendant violated?

The case was tried to the court and at the conclusion of the plaintiff's case the defendant moved to dismiss the action, reserving the right to proceed to its defense if the motion was denied. See Rule 41(b) of the Federal Rules of Civil Procedure, 28 U.S.C.A. following Section 723c. The court below granted the motion and dismissed. Since the dismissal was without specification to the contrary, the dismissal operated as an adjudication of the merits of the controversy.The Administrator has appealed.


The defendant gave its employees an 8 1/2% wage increase, and as we have stated, included the increase in its costs of manufacturing as direct labor costs. If the raise is includable in direct labor costs, the plaintiff concedes that there has been no violation of the Act. Conversely the defendant admits that if the increase may not be included in such costs it has violated Section 30(a)(10) of the Regulation.*fn2

For some years prior to June, 1943, the defendant, as a member of the Philadelphia Waist and Dress Manufacturers' Association, paid its employees wages according to rates indicated by three contracts entered into by the Association respectively with certain unions on September 12, 1940.*fn3 The contracts provided also that in case of any dispute as to wages the decision of the Impartial Chairman should bind the parties.

In June, 1943, a dispute as to rates of pay arose between the defendant and its employees and the union representing the latter. The employees contended that the manufacturers had eliminated or decreased the manufacture of their lower priced items and had shifted their business to higher price lines. The employees claimed that in accordance with the practice of the industry, persons working on higher priced merchandise are entitled to a higher rate of pay. The dispute was referred to Dr. Jacob Billikopf, the Impartial Chairman, pursuant to Clause 44 of the contract.

Dr. Billikopf rendered his decision on June 28, 1943, in which he stated in part, "The union demands a 15% flat increase in wage rates and wage scales to compensate for the entire market shift. This the Association strongly opposes." The Chairman concluded that Clause 44 of the collective agreement required an adjustment of wage scales and wage rates and allowed an 8 1/2% increase.

The Administrator contends that the defendant was not entitled to include the wage increase in its direct labor costs for two reasons: (1) because the contract between the Association and the Union under which the Chairman rendered his decision for the wage increase was not the kind of collective bargaining contract designated in Section 30(a)(10) in that it did not provide for an "unconditional" wage increase; and, (2) because the Chairman erred in his construction of Clause 44 by concluding that it did. It is not our function, we think, to review the decision of the Impartial Chairman. We assume that he was right. But even so, that alone will not bring the wage increase within the terms of Section 30(a)(10).

The Administrator held the wage increase not to be within the purview of the Regulation and informed the defendant to this effect on September 11 and November 3, 1943. Turning to Clause 44 of the contract, it is clear that the Administrator's ruling was correct and that the provision in question does not require unconditionally an increase in wages in a fixed amount. On the contrary, it merely authorizes an increase in wage rates with reference to other contracts not specifically identified and not in evidence. While the collective bargaining contracts containing Clause 44, under which the Impartial Chairman acted were dated September 12, 1940, nearly two years prior to the critical date, July 1, 1942, specified in the Regulation, the defendant's difficulty lies in the fact that Clause 44 does not contain any express provision for a wage increase subsequent to the date of the contracts in any fixed amount or per cent.The clause refers to the governance of the defendant's employees' wages "on garments or articles * * * other than those for which this agreement is intended * * * by the provisions of the Union agreements in the respective industries for such other garments or articles". The Chairman gave this clause an effect as if it provided: "If a member of the Association shifts from low price lines to high price lines, the member must pay an increase in wages because higher rates are paid by those manufacturers who manufacture higher price lines as required by their union contracts."

The record contains no union agreement which might be incorporated by reference into Clause 44 to bring that clause within the purview of Section 30(a)(10). The Administrator takes the position that there is none, but it is not necessary to pass on this issue. It is obvious that while the Chairman's decision as of June 28, 1943, did provide for an unconditional increase of wage rates at the fixed amount of 8 1/2%, he arrived at this result by approximating the wage shift to higher price lines in the entire industry.It appears from the Chairman's opinion that whereas for some manufacturers the shift would warrant a 15% increase in wages as contended by the Union, in others it would not. The Chairman, therefore, ordered the 8 1/2% wage increase as a median increase. The increase could have been either higher or lower. It was merely a mediative result. The Chairman's conclusion and directive were binding upon the defendant and the defendant's employees but not upon the public or upon its representative, the Administrator. The fact that the defendant had to pay, and in fact did pay, the increase is immaterial to the issue before us.We conclude that the increase was not such a one as to come within the purview of Section 30(a)(10) and, therefore, may not be included as part of the defendant's direct labor costs. It follows that the defendant had no right insofar as the Price Control Act and the Regulations promulgated thereunder are concerned to compute the wage increase as a factor in its minimum allowable costs in determining the price of its commodities.


We will endeavor to deal now with the question of whether the defendant exceeded the price ceiling. MPR 287 was designed to establish maximum price ceilings for certain types of apparel including women's outerwear of the kinds manufactured by the defendant. Flat price ceilings are not used for these articles. This is due in part to the fact that the exact items manufactured during the "basing" or price-fixing period are no longer manufactured because of changing styles.*fn4 The Administrator has established maximum prices by reference to costs of manufacture. Conversely, this compels manufacturers to spend a stated minimum amount in manufacturing a garment to be sold at a stated price line. The margin of profit is thus frozen. MPR 287 originally restricted the manufacturer to those price lines which he had sold between certain dates comprising the basing period hereinbefore referred to. The manufacturer was required to prepare a "pricing chart" covering this period which showed for each of the price lines at which the manufacturer sold garments, his direct labor and materials costs and the amount of his profit. The profit figure is reduced arbitrarily to 90% of its total.*fn5 All figures are reduced to percentages and the ...

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