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Walling v. McCrady Const. Co.

July 23, 1946

WALLING, ADM'R OF WAGE AND HOUR DIV., U.S. DEPT. OF LABOR,
v.
MCCRADY CONST. CO.



Author: Mclaughlin

Before EDGERTON, GOODRICH, and McAUGHLIN, Circuit Judges.

McLAUGHLIN, Circuit Judge.

This is an appeal from a decision of the District Court*fn1 granting an injunction against violation of the wage and hour provisions of the Fair Labor Standards Act.*fn2

The litigation originally involved some fifty-eight contracts classified under six heads: 1. Public highways, roads and bridges. 2. Motor carrier terminal facilities. 3. Telephone facilities. 4. Railroad facilities. 5. Industrial plant facilities. 6. Loading ore and stone. The motor carrier and the ore and stone matters have now been conceded by the appellant as coming within the statute as are certain other of the contracts having to do with repair work.*fn3

The first group of contracts concerned appellant's employees working on public roads, streets and bridges. The jobs included removal of old paving and replacement thereof with new; curbing, sidewalk and drainage construction; relocation of a portion of a county road, new bridges in different locations from the old with new approaches to one of them and widening a street. The particular highways, roads and streets were either United States highways or connected with them or other interstate highways. They were all accessible to and used to a substantial extent by interstate traffic, by vehicles engaged in the pickup and delivery of mail express and freight (a substantial portion of which moves in interstate commerce) and in the transportation of goods in process of production for interstate commerce.

The telephone work had to do with lowering certain facilities to conform to new street grade, relocating and regrading an underground conduit and construction of a new conduit (a small portion of the latter used the old construction). The lines involved were regularly used for interstate telephonic communication.

The railroad projects consisted of removal of an old railroad bridge and partial building of a new one, repairing a roundhouse, putting in foundations for a new signal tower and foundations and subflooring for a new maintenance building and storehouse. The railway for which this work was done is a public service corporation engaged in general railroad transportation. A substantial amount of the freight it carries originates at or is destined for points outside Pennsylvania.

The industrial facilities are foundations for new units of existing plants, with and without drainage and superstructure, foundations for machinery, plant roads, parking lots, sidewalk, trench, drainage ditch, cutting back a hillside, removing cinders, filling in a foundation, extension stream drainage pipe, new sewer, new crib wall, new siding, new underpass and new roadbed for a new siding. The three industrial establishments for which this work was performed ship their products in interstate commerce and were all going concerns during the periods of the contracts.

Appellant's employees on these various contracts consisted of foremen, timekeepers, drivers, bricklayers, operators of cranes and other machines, laborers, watchmen and the like. The special classes of employees are of no importance here as the parties have agreed that the rights for claims of particular workmen would not be adjudicated. They were not compensated in accordance with Section 15(a)(2) of the Fair Labor Standards Act of 1938. The District Court held that those employees in the road jobs were engaged in interstate commerce and in the production of goods for interstate commerce.Those on the telephone and railroad facilities were found employed in interstate commerce. The industrial groups were considered to be engaged in production of goods for interstate commerce.

Since the road, telephone and railway contracts are governed by the same general theory with reference to the application of the Fair Labor Standards Act they can be discussed together. Appellant asserts that work on public roads, streets and bridges is not within the legislative intent of the Fair Labor Standards Act.It bases this primarily on lack of specific reference to those items in the legislative history of this very general statute. It also urges that an independent contractor so engaged is the alter ego of the governmental unit by which he is employed and while it does not actually claim that it comes within Section 3(d) of the Act which excludes from the definition of "employer" the "United States or any State or political subdivision of a State," it does say that the exclusion itself is indicative of the Congressional intention not to interfere with such matters as these, on the theory that they are within the scope of local governments and their functions.*fn4 It attempts unsuccessfully we think, to distinguish the leading case of Overstreet v. North Shore Corporation, 318 U.S. 125, 63 S. Ct. 494, 87 L. Ed. 656. There the point was whether employees of a privately owned toll bridge corporation, operating a draw bridge on a road used in interstate commerce over a stream similarly used, came under the Act. The Supreme Court quoting from Walling v. Jacksonville Paper Co., 317 U.S. 564, 63 S. Ct. 332, 87 L. Ed. 460 said at page 128 of 318 U.S. 125, 63 S. Ct. 494, 496, 87 L. Ed. 656:

"It is clear that the purpose of the Act was to extend federal control in this field throughout the farthest reaches of the channels of interstate commerce'. And in determining what constitutes 'commerce' or 'engaged in commerce' we are guided by practical considerations."

Concluding that such work was covered by the Act the Court said at page 129 of 318 U.S. 125, 63 S. Ct. 494, 497, 87 L. Ed. 656:

"Vehicular roads and bridges are as indispensable to the interstate movement of persons and goods as railroad tracks and bridges are to interstate transportation by rail. If they are used by persons and goods passing between the various States, they are instrumentalities of interstate commerce. Cf. Covington & Cincinnati Bridge Co. v. Kentucky, 154 U.S. 204, 218, 14 S. Ct. 1087, 1092, 38 L. Ed. 962. Those persons who are engaged in maintaining and repairing such facilities should be considered as 'engaged in commerce' even as was the bolt carrying employee in the Pedersen case, supra, [Pedersen v. D.L. & W.R. Co., 299 U.S. 146, 33 S. Ct. 648, 57 L. Ed. 1125] because without their services these instrumentalities would not be open to the passage of goods and persons across state lines. And the same is true of operational employees whose work is just as closely related to the interstate movement."

Appellant contends that this decision is confined to holding that privately owned toll roads are within the Act because in McLeod v. Threlkeld, 319 U.S. 491, 63 S. Ct. 1248, 1250, 87 L. Ed. 1538, the opinion states that "Employees engaged in operating and maintaining privately owned toll roads and bridges over navigable waterways are 'engaged in commerce'. Overstreet v. North Shore Corp., 318 U.S. 125, 63 S. Ct. 494, 87 L. Ed. 656, etc." As seen, the McLeod decision simply mentions that the facts in Overstreet involved a privately owned road. It does not purport to limit that decision's above quoted general language to such privately owned toll roads and bridges ...


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