Skidmore v. John J. Casale, Inc., 160 F.2d 527 (2d Cir. 1947)

*528 Before LEARNED HAND, AUGUSTUS N. HAND and FRANK, Circuit Judges.

Writ of Certiorari Denied April 28, 1947. See 67 S. Ct. 1205.

The defendant, John J. Casale, Inc., is engaged in the business of leasing motor-trucks for haulage to business concerns in and about New York City. Rentals for the trucks include the cost of maintaining and repairing them, and storing them, when not in use, in garages owned and operated by the defendant. Plaintiffs, with the exception of Olton, who worked as a porter in one of the garages (and Johnson, who was non-suited below and who has not appealed), performed various duties requisite to the maintaining and repairing of the trucks at the seven garages owned by the defendant. They may be categorized as maintenance men, mechanics and mechanics' helpers. Customarily, the trucks were driven by the employees of the lessees. It was assumed for the purpose of this case that defendant is not a carrier of any kind.

The district court found that defendant's trucks were used by a number of its customers in haulage of commodities in interstate or foreign commerce, to a substantial extent both in terms of mileage and dollar amount and quantity of such goods. It found that this use was regular and recurrent and not sporadic. A pretrial stipulation covering two (subsequently extended to include three) of defendant's garages stated that 15 to 25% of the use of trucks serviced and kept at these garages was use in interstate commerce; evidence was produced at the trial in support of that stipulation. As to three of the garages not covered by the stipulation, the trial judge was satisfied that the evidence presented warranted a finding that the overall interstate use of defendant's trucks proceeding from those garages was substantial. He made no specific finding as to the percentage of use in interstate commerce, but pointed out that a 1941 investigation by defendant's officers had indicated that the amount of interstate use of its trucks was approximately 23%. The evidence as to the trucks housed in the seventh garage, located at 107th Street was extremely meagre. However, there was testimony concerning at least one of the trucks kept there, that leased by the Dannemiller Coffee Company; it appears that it was used at fairly regular intervals to make pickups of coffee at piers, and at times to deliver shipments to railway and steamship terminals for shipment in interstate commerce. This amounted to 10% more or less of its overall use by the Dannemiller Company. Despite this testimony, the trial judge found that no evidence had been offered concerning the trucks housed in the 107th Street garage, and dismissed the complaint as to plaintiff, Dodson, who worked there.

*529 No evidence was introduced to show any division of labor as between trucks used in interstate commerce and those not so used. Nor was there any analysis made of the amount of time that each man spent on trucks used in interstate shipments. The trial judge found that each of the trucks was returned regularly to its garage and was serviced daily by defendant's employees at that garage. Some of the work necessary to keep the trucks in condition was done each night, the rest regularly and recurrently. "The work on the trucks used in interstate commerce was not sporadic. It was constant and steady."

The trial judge concluded that all the plaintiffs, with the exception of Olton, Johnson and Dodson, were engaged in interstate commerce within the meaning of the Fair Labor Standards Act, and entered judgment accordingly for unpaid overtime compensation and liquidated damages in the amount of $18,630.40. Plaintiff Jordan's recovery was limited to exclude the period during which he was employed at the 107th Street garage. Plaintiffs were also awarded an additional sum of $7,000 as a reasonable attorney's fee in the action. In awarding the attorney's fee, the district court did not take into consideration a contract between the plaintiffs and their attorneys, which provided that the attorneys should be paid one-third of any recovery plus any attorney's fee that should be awarded.

The defendant Casale has appealed generally from plaintiffs' recoveries. Cross-appeals have been taken by plaintiffs Olton and Dodson from the non-suit as to each of them, by Jordan in so far as his recovery was limited, and by all plaintiffs from the judgment fixing the attorney's fees at $7,000. The opinion of the district court is reported in 66 F. Supp. 282.

H. R. Korey, of New York City (Emanuel Tacker, of New York City, of counsel), for appellees.

Charles E. Cotterill, of New York City (Irwin D. Davidson, of New York City, of counsel), for appellant.

FRANK, Circuit Judge.

1. The first question is whether the court below was correct in its conclusion that the successful plaintiffs in this action were engaged in interstate commerce within the meaning of the Fair Labor Standards Act. Section 7 of the Act, 29 U.S.C.A. § 207, provides that overtime compensation must be given by an employer to "any of his employees who is engaged in commerce or in the production of goods for commerce." As it is conceded that the plaintiff-employees are not engaged in the production of goods, we limit our inquiry to the scope of the words "engaged in commerce." Defendant argues that its employees could not reasonably be said to be engaged in commerce, since defendant itself is not. To answer this contention we must review the recent Supreme Court cases dealing with the matter. In Overstreet v. North Shore Corp., 318 U.S. 125, 63 S. Ct. 494, 87 L. Ed. 656, the employer, a private corporation, owned and operated a tollbridge, located wholly within the State of Florida, which accommodated a substantial amount of interstate traffic. The employees in question maintained and operated the bridge. The court found that their work on an "instrumentality of interstate commerce" was so closely related to the interstate movement that they were "employed in commerce." It went on to say (318 U.S. p. 132, 63 S. Ct. 494, 499), that it was immaterial whether or not the corporation itself might be said to be engaged in commerce, since the nature of the employees' activities, not that of the employer, is the determinative factor. See also Walling v. Jacksonville Paper Co., 317 U.S. 564, 571, 63 S. Ct. 332, 87 L. Ed. 460; Pedersen v. J. F. Fitzgerald Construction Co., 318 U.S. 740, 742, 63 S. Ct. 558, 87 L. Ed. 1119; McLeod v. Threlkeld, 319 U.S. 491, 63 S. Ct. 1248, 87 L. Ed. 1538. The recent decision in Boutell v. Walling, 327 U.S. 463, 66 S. Ct. 631, is most closely analogous to the instant case. The employees of the Boutell Service Company were employed at a large garage where they were engaged in the servicing of transportation equipment used exclusively in interstate commerce. The only essential distinction between the Boutell case and the instant case is the amount of work done on vehicles travelling in interstate commerce. But in Walling v. *530 Jacksonville Paper Co. it was said (317 U. S. at pages 571, 572, 63 S.Ct. 337), "If a substantial^[1] part of an employee's activities related to goods whose movement in the channels of interstate commerce was established by the test we have described, he is covered by the Act." It follows, we think, that the distinction between "all" and a "substantial amount" is of no importance, and that therefore the holding in the Boutell case that the employees were "engaged in commerce," though their employer was not so engaged, is decisive here.

This does not mean that all the employees at the defendant's garages are within the protection of the Act. In the Boutell case there was no question as to the amount of work done on vehicles used in interstate commerce; here it is apparent that not all the work done was work on trucks used interstate. The language quoted above from Walling v. Jacksonville Paper Co. seems to us to require that a substantial amount of the work of each employee must be related to interstate commerce. In Mabee v. White Plains Publishing Co., 327 U.S. 178, 66 S. Ct. 511, it was held that the shipment of one-tenth of 1% of the output of a newspaper publisher was sufficient to justify the classification of the publisher-employer as a producer of goods for commerce. The Court then pointed out (pp. 184, 185) that it was still necessary to have a finding as to whether the individual employees were actually engaged in the production of goods for commerce, citing the passage from Walling v. Jacksonville Paper Co. which we have quoted above. From this it would appear that while a minimal amount of production for shipment interstate will suffice for the purpose of classifying the employer, nevertheless it must be shown that the work of the individual employee which relates to that minimal amount forms a substantial amount of all the work done by that employee. In the instant case, where there is no showing that the work on trucks used interstate was segregated from work done on trucks not so used, it is necessary to determine whether the trucks were substantially used interstate in order to determine whether a substantial portion of the individual employee's time was related to interstate commerce.

As to all the garages except the 107th Street garage, the trial judge found that the interstate use of the trucks there housed was substantial. We think that the evidence justified the finding. Appellant argues that substantial use means at least 20% of the aggregate. We do not agree. Nothing in the Act requires any such percentage. The cases^[2] which applied the Administrator's standard of 20% for determining whether a substantial portion of any building is devoted to production for interstate commerce are not pertinent here.

There was no evidence that the work on the trucks used in interstate commerce was separate from that on trucks used only intrastate, and it appears that all the employees worked on all the trucks housed at the garages in which they were employed. The trial judge found that the work on these trucks was constant and not sporadic; and it was proper for him to infer, as he did, that each of the employees spent a substantial amount of time on trucks used in interstate commerce. Guess v. Montague, 4 Cir., 140 F.2d 500, 504; Walling v. Mutual Wholesale Food & Supply Co., 8 Cir., 141 F.2d 331. True, Walling v. Jacksonville Paper Co. (supra) gives no definition of "substantial" in this context; but we think it is the converse of "insubstantial" or "unimportant." Cf. Mid-Continent Petroleum Corp. v. Keen, 8 Cir., 157 F.2d 310, 316, in which one-half hour a week was held to be "substantial," and Southern Cal. Freight Lines v. McKeown, 9 Cir., 148 F.2d 890, cert. den. 326 U.S. 736, 66 S. Ct. 48, in which 7% of the employee's activities was held "substantial."

The trial judge made no finding as to the amount of work done on vehicles used in interstate commerce by those of the plaintiffs employed at the 107th Street garage. Any such finding was precluded by his mistaken understanding that no evidence *531 had been offered as to any interstate use of trucks kept at that garage. Since the record contains evidence indicating that there was some such use, we must reverse and remand for a finding as to the extent of that use, and whether it was sufficient to bring the employees who worked at that garage within the Act.

The suit was properly dismissed as to Olton, the porter, who took care of the washrooms and lockers in one of the garages. An employee is engaged in interstate commerce if his activities are "so intimately related to interstate commerce `as to be in practice and in legal contemplation a part of it'"; Overstreet v. Northshore Corp., supra, 318 U.S. at page 130, 63 S.Ct. at page 498. In McLeod v. Threlkeld, 319 U.S. 491, 63 S. Ct. 1248, 87 L. Ed. 1538, it was held that a cook, working for an independent contractor who had contracted to feed the maintenance of way employees of an interstate railroad, was not so closely connected with interstate commerce as to come within the test set out above. We do not see that a porter working in a garage where interstate vehicles are serviced is any less remote from interstate commerce than was the plaintiff in McLeod v. Threlkeld.^[3]

The only remaining question is the reasonableness of the attorney's fee. We have considerable doubt as to the validity of the contingent fee agreement; for it may well be that Congress intended that an employee's recovery should be net, and that therefore the lawyer's compensation should come solely from the employer. But that question is not before us. The question here is whether the amount exacted from the employer is reasonable; the employer has no concern with the fee-relations between the employees and their counsel. We think the award of $7,000 was reasonable.

Reversed and remanded as to the 107th Street garage and those of the plaintiffs affected thereby; otherwise affirmed.

Affirmed in part; reversed and remanded in part.

L. HAND, Circuit Judge (concurring).

Were it not for the passage relied upon by my brothers from Walling v. Jacksonville Paper Co.,^[1] I should have said that, as soon as an employee was shown to be "engaged in interstate commerce" to any extent whatever, he was entitled to the protection of the Act. In that regard I should distinguish between him and an employee who was "engaged in the production of goods for commerce"; the second has a remoter relation to "commerce" than the first, and it is reasonable to require of him the devotion of more of his time to "commerce." But, once an employee was proved to be "engaged in commerce," I should have thought that the case ended. For that I should particularly rely upon Mabee v. White Plains Publishing Co.,^[2] a fortiori because that decision concerned whether an employer was "engaged in the production of goods for commerce." And I am left still more in doubt, because the passage on which we are relying did not relate to the real issue which the court was deciding in Walling v. Jacksonville Paper Co., supra,^[3] but was thrown out in passing. Nevertheless, the qualification, "substantial," was mentioned as though the law was already so settled, and although the supporting citation was a decision^[4] touching the "production of goods for commerce" and not engagement "in interstate commerce," I do not feel free to disregard it. Therefore, as to the 107th Street Garage I yield my own judgment and join in sending back the case as to the employee there employed.

[1] Emphasis added.

[2] Callus v. 10 East 40th St. Building, Inc., 2 Cir., 146 F.2d 438; Fleming v. Post, 2 Cir., 146 F.2d 441, 158 A.L.R. 1384.

[3] Mornford v. Andrews, 5 Cir., 151 F.2d 511 is not in point. There the plaintiff was a porter in a bus terminal, which was itself an "instrumentality of commerce."

[1] 317 U.S. 564, 571, 572, 63 S. Ct. 332, 87 L. Ed. 460.

[2] 327 U.S. 178, 66 S. Ct. 511.

[3] 317 U.S. 564, 63 S. Ct. 332, 87 L. Ed. 460.

[4] Kirschbaum Co. v. Walling, 316 U.S. 517, 62 S. Ct. 1116, 86 L. Ed. 1638.