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Farmer v. Philadelphia Electric Co.

March 12, 1964

EUGENE FARMER, APPELLANT
v.
PHILADELPHIA ELECTRIC COMPANY, APPELLEE.



Author: Ganey

Before McLAUGHLIN, KALODNER and GANEY, Circuit Judges.

GANEY, C. J.: This is an appeal from an order of the District Court dismissing the complaint. Since diversity of citizenship of the parties does not exist here, the threshold question is whether that court had jurisdiction under 28 U.S.C.A. § 1331(a).*fn1 The case appears to be the first of its kind in the Federal courts.

In substance the complaint, filed September 13, 1962, makes the following averments: By an Executive Order, duly issued pursuant to the Constitution and enabling legislation of Congress, and by rules and regulations concerning procurement duly promulgated by the General Services Administration, it is provided that all government contracts shall contain a provision setting forth that "in the performance of the work under the contract, the contractor will not discriminate against any employee during employment . . . because of race, creed, color, or national origin. . . ." Since 1951, the defendant entered into certain contracts containing a nondiscrimination clause with the United States. In November of 1954, plaintiff was injured while working as a lineman for the defendant. The latter, after assigning him to light work duty for awhile in accordance with its prior announced policy, ordered him to return to lineman duty although he was physically unable to perform that type of work. When he declined to report to work as a lineman, the defendant terminated his employment on August 18, 1958. Paragraph 13 of the complaint states:

"13. Defendant has failed and neglected to perform the condition of the said contract with the United States of America in that it has discriminated against the plaintiff because of his race and color in refusing to place plaintiff upon light duty status while it has tendered such permanent status to employees of white color or of the Caucasian race."

Claiming a federal right as a third-party beneficiary of certain contracts between the United States and defendant, he demands compensatory and punitive damages from defendant for physical and emotional injury, loss of job opportunity, loss of constitutional rights and of his natural rights as a human being, as a result of defendant's discriminatory action.

The first Executive Order that we could find requiring contracting agencies of the Government to use a nondiscrimination provision in contracts was No. 8802 issued by Franklin D. Roosevelt on June 25, 1941, 6 F.R. 3109 (June 1941). This Order announced the policy of the Government to encourage full participation in the national defense program by all citizens of the United States, regardless of race, creed, color, or national origin. It ordered "All contracting agencies of the Government of the United States shall include in all defense contracts hereafter negotiated by them a provision obligating the contractor not to discriminate against any worker because of race, creed, color, or national origin; . . ." The Order also set up in The Office of Production Management a Committee of Fair Employment Practices whose function was to receive and investigate complaints of discrimination in violation of the provisions of the Order and take appropriate steps to redress grievances which it found to be valid, and make recommendations to the President and to Government agencies measures deemed necessary by it to effectuate the provisions of the Order. Executive Order 8802 was amended on May 27, 1943, by Executive Order 9346, 8 F. R. 7183 (May 1943). This Order reaffirmed the policies of its predecessor and created a new Committee on Fair Employment Practices in the Office of Emergency Management with the power to promulgate rules and regulations and conduct hearings. It required all Governmental contracting agencies to include in contracts thereafter negotiated or renegotiated a provision obligating the contractor not to discriminate against any employee or applicant for employment because of race, creed, color or national origin. At the end of World War II, the Committee's existence was terminated.

In order to improve the means for obtaining compliance with the nondiscrimination provisions in Government contracts, Harry S. Truman, on December 3, 1951, signed Executive Order 10308, 16 F.R. 12,303 (December 1951), 3 CFR, 1949-1953 Comp., 837. This Order made the head of each contracting agency of the Government primarily responsible for obtaining compliance with the nondiscrimination provisions of the contract and required him to take appropriate measures to bring about compliance. It also established the Committee on Government Contract Compliance to make recommendations with a view toward the prevention and elimination of discrimination.*fn2

On August 13, 1953, Dwight D. Eisenhower issued Executive Order 10479, 18 F.R. 4899(August 1953), 3 CFR, 1949-1953 Comp., 961. This Order continued the policy of the previous one by imposing upon the head of each contracting agency the primary duty of obtaining compliance with the nondiscrimination provisions and required each agency to set up a procedure for the investigation of complaints and report to the Committee the action taken with respect to all complaints made or referred to it. It replaced the Committee on Government Contract Compliance with the Government Contract Committee and gave it authority to make recommendations to the President and the contracting agencies, and to receive complaints of alleged violations and transmit them to the appropriate agencies in accordance with agency procedure for handling such complaints. By Executive Order 10557, approved on September 3, 1954, 19 F.R. (September 1954), 3 CFR, 1954-1958 Comp., 203, the contracting agencies were required to include in Government contracts provisions recommended by the Committee on Government Contracts.*fn3 With exceptions not relevant here most Government contracts made during the effective period of this Order contained the nondiscrimination provision set forth therein.

Executive Order 10925, signed by John F. Kennedy on March 6, 1961, 26 F.R. 1977 (March 1961), 3 CFR, 1961 Supp., 86, abolished the Government Contract Committee, established the President's Committee on Equal Employment Opportunity, and greatly expanded the nondiscrimination provisions which are to be included in most government contracts entered into after the effective date of the Order.*fn4 The latter requires the Committee to adopt such rules and regulations and issue such orders as it deems necessary and appropriate to achieve the purpose of the Order, and empowers it to receive and cause to be investigated complaints by employees and prospective employees alleging discrimination contrary to the contract provisions of the clause. It spells out, for the first time, sanctions and penalties and the conditions under which they are to be imposed by the Committee or appropriate contracting agency upon contractors who have failed to comply with the provisions of the Order; and it also provides for the issuance of a certificate of merit to employers engaging in work under Government contracts if their practices conform to the purposes of the Order. It continues the policy of holding the contracting agencies primarily responsible for obtaining compliance by the contractor pursuant to the terms of the Order and the rules and regulations and orders of the Committee.

Regulations concerning the nondiscrimination provisions have been promulgated by the Governmental contracting agencies.*fn5 Nearly all Government contracts executed after the effective date of Executive Order 10925 contain the nondiscrimination provisions of that Order.*fn6 One of the regulations states that all Government contracts in effect prior to Executive Order 10925 (March 6, 1961), and not modified by the inclusion of the nondiscrimination provisions of that Order "shall be administered in accordance with the nondiscrimination provisions of the prior applicable Executive Order."

Plaintiff asserts that the matter in controversy here arises under the Constitution or laws of the United States within the meaning of 28 U.S.C.A. § 1331(a). This assertion is not frivolous. Under the holding of Bell v. Hood, 327 U.S. 678, 685 (1946), and Wheeldin v. Wheeler, 373 U.S. 647, 649 (1963), we must conclude that on the face of the complaint the District Court had jurisdiction.

Does the matter here arise under the Constitution or laws of the United States within the meaning of 28 U.S.C.A. § 1331(a)? Among other reasons, the Constitution and its amendments were adopted to limit the exercise of certain powers by Governmental officials, both National and State, so that certain individual rights would not be disturbed by them. However, the complaint does not assert any claim against anyone acting under, or color of, Governmental authority, but one against a private corporate employer. Hence the matter in controversy is not one arising under the Constitution.

Does it arise under the laws of the United States?*fn7 Plaintiff maintains that the authority to issue the applicable executive orders in question stems from subsections (a) and (c) of § 205 of the Federal Property and Administrative Service Act of 1949. There are instances when the President issues proclamations and orders, and governmental agencies promulgate rules and regulations, pursuant to a mandate or a delegation of authority from Congress. In such instances the proclamations, orders, rules and regulations have the force and effect of laws.*fn8 Subsections (a) and (c) of the Federal Property and Administrative Service Act of 1949, 63 Stat. 389, 40 U.S.C.A. § 486(a) and (c) provide:

"(a) The President may prescribe such policies and directives, not inconsistent with the provisions of this Chapter, . . . Chapter 4 of Title 41 . . . as he shall deem necessary to effectuate the provisions of said chapters, which policies and directives shall govern the Administrator and ...


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