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WIRTZ v. F.M. SLOAN

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF PENNSYLVANIA


March 4, 1968

W. Willard Wirtz, Secretary of Labor, United States Department of Labor, Plaintiff,
v.
F.M. Sloan, Inc., Defendant

Marsh, D.J.

The opinion of the court was delivered by: MARSH

MARSH, D.J..

The plaintiff, Secretary of Labor, seeks to enjoin the defendant, F.M. Sloan, Inc., from violating the minimum wage, the overtime, and the record keeping provisions of the Fair Labor Standards Act of 1938, as amended, 29 U.S.C.A. § 201 et seq. The plaintiff also seeks to restrain the defendant from the further withholding of payment of minimum wage and overtime compensation allegedly due from the defendant to five employees of the defendant in the total amount of $2,314.42 as a result of the alleged violations of the Act. This court has jurisdiction of the parties and the subject matter pursuant to 29 U.S.C.A. § 217.

 The defendant is a Pennsylvania corporation having its principal office and place of business in Murrysville, Westmoreland County, Pennsylvania. During the period from December 13, 1964 to April 17, 1966, it was engaged in the production of natural gas produced by twenty-six wells owned or leased by it. During this period all the natural gas produced from defendant's gas wells was sold and delivered to The Peoples Natural Gas Company, a Pennsylvania corporation. *fn1" The gas was sold and delivered by defendant to Peoples on a continuous, daily basis from the defendant's pipeline into a People's pipeline. The defendant's gas wells formerly belonged to Peoples; the defendant is required by agreement to sell its entire output to Peoples.

 The gas purchased by Peoples from the defendant coalesces with much larger amounts produced from wells belonging to Peoples and other producers and is transported in Peoples' pipeline.

 A large percentage of the gas in Peoples' pipeline is distributed daily to the mills of Braeburn Alloy Steel Company at Braeburn, Pennsylvania, and Allegheny-Ludlum Steel Corporation at Brackenridge, Pennsylvania, which produce steel products. Approximately 95% of the gas delivered to those mills is utilized in producing steel products. Approximately 85% to 90% of the steel products of these two mills is shipped out of Pennsylvania on a daily basis.

  Although it is impossible to trace any particular cubic foot of gas produced from defendant's wells into the steel mills, I find that the defendant had reasonable ground to have contemplated and expected that a substantial portion of its gas, like that produced by Peoples and by other producers, which flowed through the Peoples' pipeline, would most probably enter the pipelines of the steel mills. I do not believe it is essential to coverage that any particular cubic foot of defendant's gas should be so traced. *fn2"

 The defendant employed Robert Schweinsburg between the period commencing on April 19, 1964 and ending on January 31, 1966, at the rate of $1.00 per hour for a total of 2,449 straight-time hours and 181 1/2 overtime hours (in excess of 40 hours in a workweek) for which the employee is entitled to $634.94 in back wages for violations of §§ 6 and 7 of the Act (Pretrial Stipulation, III-G, H, I and K; plaintiff's Exhibits 6 and 7).

 Throughout the period of his employment, Robert Schweinsburg worked at the defendant's pumping station checking gauges and motors of the gas pumping equipment each hour on the hour and recorded the various readings of the ten or so pieces of machinery immediately subsequent to each reading, and also added oil to certain machinery.

 Schweinsburg worked approximately five to ten minutes each hour in performing the aforesaid work. For the remainder of the hour he did work in his employer's pine tree nurseries, in a hot house tending bulbs and plants; he dug up pine trees, loaded cord wood on trucks, and did other odd jobs.

 Defendant employed Harry C. Shaffer between the period commencing on September 12, 1964 and ending on April 17, 1966, at the rate of $1.00 per hour for a total of 3,173 straight-time hours and 342 1/2 overtime hours (in excess of 40 hours in a workweek), for which the employee is entitled to $836.06 in back wages for violations of §§ 6 and 7 of the Act (Pretrial Stipulation, III-G, H, I and K; plaintiff's Exhibits 5 and 8).

 Throughout the period of his employment, Harry C. Shaffer read and checked the gauges on the production machinery on an hourly basis and recorded the readings on company records. He also added oil to certain machinery, checked valves, and kept the office clean.

 Defendant employed Andrew Osloskey between the period commencing on April 19, 1964 and ending on April 17, 1966, at the rate of $1.00 per hour for a total of 666 straight-time hours, for which the employee is entitled to $166.50 in back wages for violations of § 6 of the Act (Pretrial Stipulation, III-G, H, I and K; plaintiff's Exhibits 3 and 4).

 Throughout the period of his employment, Andrew Osloskey read and checked the gauges on the production machinery on an hourly basis and recorded the readings on company records and also added oil to certain machinery.

 Defendant employed William J. Creighton between the period commencing on March 13, 1966 and ending on April 17, 1966, at the rate of $1.00 per hour for a total of 146 straight-time hours, for which the employee is entitled to $36.50 in back wages for violations of § 6 of the Act (Pretrial Stipulation, III-G, H, I and K; plaintiff's Exhibits 1 and 2).

 Throughout the period of his employment, William J. Creighton read and checked the gauges on the production machinery on an hourly basis and recorded the readings on company records. He also added oil to certain machinery. In the summer he cut grass and trees on his employer's premises.

 Defendant employed Hugh Torrance between the period commencing on April 19, 1964 and ending on April 17, 1966 (Pretrial Stipulation, III-G, H) at the rate of $425 per month (Pretrial Stipulation, III-J) at an average of 49 hours per week for 71 workweeks (plaintiff's Exhibit A), for which the employee would have been entitled to $640.42 in back wages for violations of § 6 of the Act (plaintiff's Exhibit 9). Hugh Torrance is now deceased, having died on August 22, 1966.

 Throughout the period of his employment, Hugh Torrance was the foreman or supervisor of the other employees mentioned above.

 The defendant did not record the hours worked each workday and each workweek by employee Hugh Torrance (plaintiff's Exhibit A).

 The defendant assumes that Shaffer, Osloskey and Creighton, like Schweinsburg, worked in gas production only five or ten minutes each hour and such is de minimis (Tr., p. 19). Even if this assumption be correct, in my opinion the de minimis doctrine does not apply to regular and recurring work, and such need not be substantial timewise. *fn3"

 I find that the duties of the aforementioned employees were performed on a regular and recurring basis and were important and necessary for the production of gas from defendant's gas wells. I conclude that these employees were engaged in activities closely related and directly essential to the production of steel products shipped in interstate commerce on a continuous, daily basis. 29 U.S.C.A. § 203(j). *fn4"

 The defendant relies on Kaferle v. Fredrick, 360 F.2d 536 (3d Cir. 1966) contending that the factual situation therein "is directly analogous to the present factual situation". I am not so persuaded. The factual differences are substantial. I think there was an immediate tie between the considerable production of steel for commerce in the mills of Allegheny-Ludlum Steel Company and the Braeburn Alloy Steel Company and the activities of defendant's employees in producing the gas upon which, merged with other gas, the steel plants depended. Cf. 29 CFR 776.19. In Kaferle the sales of coal made by the broker to the steel companies engaged in commerce were "isolated" and "insubstantial", whereas, here, all defendant's gas was sold daily to Peoples, and Peoples transmitted large quantities of gas daily to the steel companies.

 It seems to me that Kaferle, apropos sales to an intermediary, is not a decision promulgated as a general proposition of isolated local activity. *fn5" When the entire output of defendant's gas wells is delivered daily into Peoples' pipeline, the sales are "substantial" and not "isolated"; and when Peoples' pipeline is directly connected with the pipelines in the steel mills, I think the requirements that the work of defendant's employees be closely related and directly essential to the process of interstate production of steel have been met.

 After all, without gas the steel companies could not produce steel products for interstate commerce. Thus, the defendant's employees are engaged in a process or occupation which is a directly essential part of an integrated system for the production of steel products. The character of these employees' activities bring them within the restricted scope of the Act as amended in 1949. And to the extent that its employees are closely related and directly essential to the production of steel for commerce, the employer is itself so engaged. The work of supplying gas to steel mills is so directly, closely and vitally related to the functioning of those mills engaged in interstate commerce, as to be in practical effect a part of commerce rather than an isolated local activity. Moreover, "within the tests of coverage fashioned by Congress, the Act has been construed liberally to apply to the furthest reaches consistent with congressional direction." Mitchell v. Lublin, McGaughy & Asso., 358 U.S. 207, 211, 3 L. Ed. 2d 243, 79 S. Ct. 260 (1959).

 Under the facts disclosed, in my opinion it is immaterial that defendant sold its gas to Peoples instead of directly to the steel mills. For as stated in Schulte Co. v. Gangi, 328 U.S. 108, 121, 90 L. Ed. 1114, 66 S. Ct. 925 (1946):

 

"Mere separation of the economic processes of production for commerce between different industrial units, even without any degree of common ownership, does not destroy the continuity of production for commerce. Producers may be held to know the usual routes for distribution of their products."

 See also, Wirtz v. Intravaia, 375 F.2d 62 (9th Cir. 1967). Cf. Mitchell v. Jaffe, 261 F.2d 883 (5th Cir. 1958), wherein defendant sold scrap steel to local distributor who sold the scrap to local steel mills engaged in interstate commerce. It was held that defendant's employees were covered by the Act.

 Since the defendant violated the minimum wage provisions of the Act by failing to pay to four of its employees the minimum rate required, and by failing to pay three of its employees time and one-half their regular hourly rate of pay for hours worked in excess of forty in a workweek, the plaintiff is entitled to an injunction restraining the defendant from the further withholding of the total amount of $2,314.42 due to the five employees for minimum wage and overtime compensation. The plaintiff is also entitled to interest on the accrued wages owed to employees at the rate of 6% from the median point of each employee's employment.

 This opinion shall be deemed to embody findings of fact and conclusions of law required by Rule 52, Fed. R. Civ. P., 28 U.S.C.A.

 An appropriate order will be entered.

 Order of Court

 AND NOW, to-wit, this 4th day of March, 1968, IT IS ORDERED that the plaintiff shall, within 20 days of the date hereof, submit to the court a judgment, approved by defendant as to form, enjoining the defendant from violating §§ 6, 7 of the Fair Labor Standards Act of 1938, as amended, and enjoining the defendant from continuing to withhold unpaid minimum wages and overtime compensation due under the Act in the amounts set forth in the foregoing Opinion, together with interest at 6% from the median point of each employee's period of employment involved to the date of this order, plus costs.


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