Borden Co. v. Borella

325 U.S. 679, 65 S. Ct. 1223, 89 L. Ed. 1865, 1945 U.S. LEXIS 2673
Supreme Court of the United States·Decided June 18, 1945·No. 688·Published·Cited by 112 cases

Opinions

Me. Justice Murphy

delivered the opinion of the Court.

Once again, as in Kirschbaum Co. v. Walling, 316 U. S. 517, we are required to consider the application of the Fair Labor Standards Act of 19381 to employees engaged in activities relating to the maintenance and operation of a building.

In the Kirschbaum case we held that the Act does apply to such employees working in a loft building in which large quantities of goods for interstate commerce are physically produced. In the instant case, the porters, elevator operators and night watchmen in question work in a 24-story office building in the business district of New York City. The building is owned and operated by the petitioner, the Borden Company, which is a New Jersey corporation engaged in the business of manufacturing milk products and other food products. Petitioner occupies approximately 17 of the 24 floors and 58% of the total rentable area. The remainder of the office space is leased to various tenants, none of which was found by the District Court to produce, manufacture, handle, process or in any other manner work on any goods in the building.2

Petitioner has manufacturing plants and factories in both the United States and Canada and its products are sold in large volumes throughout this and other countries. These establishments are admittedly engaged in the production of goods for interstate commerce. The heart of [681]*681this industrial empire, however, lies in the central office building in New York City. Here the entire enterprise is supervised, managed and controlled.

In this building the directors meet and the corporate officers conceive and direct the policies of the company. Although geographically divorced from the manufacturing plants, employees working in this building dictate, control and coordinate every step of the manufacturing processes in the individual factories. By means of direct teletype wires, they maintain detailed and meticulous supervision of the plants, the local superintendents exercising discretion only in the conduct of routine matters. While no products are actually processed or sold in the building, the purchase of raw materials and supplies, the methods of production, the amounts to be produced, the quantity and character of the labor, the safety measures, the budgeting and financing, the legal matters, the labor policies and the maintenance of the plants and equipment are all directed from this building. Such are the activities of petitioner’s central office which is maintained, serviced and guarded by the respondent employees.

The respondents brought this suit against petitioner to recover overtime compensation and liquidated damages, plus reasonable counsel fees. The District Court denied relief, holding that they were not entitled to the benefits of the Act under the rule of the Kirschbaum case.3 52 F. Supp. 952. The Second Circuit Court of Appeals reversed the judgment. 145 F. 2d 63. We took the case because [682]*682of the asserted conflict with the decision of the Tenth Circuit Court of Appeals in Rucker v. First National Bank, 138 F. 2d 699, and because of the importance of the issue as to the application of the Kirschbaum doctrine to such facts as are here presented.

Under § 7 (a) of the Act, overtime compensation must be paid to all employees “engaged in commerce or in the production of goods for commerce.” As to the latter category of employees it is unnecessary that they directly participate in the actual process of producing goods inasmuch as § 3 (j) provides that “for the purposes of this Act an employee shall be deemed to have been engaged in the production of goods if such employee was employed . . . in any process or occupation necessary to the production thereof, in any State.” Our problem thus is to determine whether the respondent maintenance employees are engaged in a process or occupation necessary to the production of goods for commerce so as to come within the ambit of § 7 (a).

The Kirschbaum casé made it clear that the work of maintenance employees in a building where goods were physically manufactured or processed had “such a close and immediate tie with the process of production for commerce, and was therefore so much an essential part of it, that the employees are to be regarded as engaged in an occupation 'necessary to the production of goods for commerce.’ ” 316 U. S. at 525-526. The maintenance of a safe, habitable building, with adequate light, heat and power, was deemed necessary to the production of goods for commerce. See also Walton v. Southern Package Corp., 320 U. S. 540; Armour & Co. v. Wantock, 323 U. S. 126. The only distinction between this and the Kirsch-baum case lies in the fact that here the employees work in a building where production of goods is administered, managed and controlled rather than carried on physically. We hold, however, that this distinction is without eco[683]*683nomic or statutory significance and that it cannot form the basis for concluding that the respondent employees are engaged in occupations unnecessary to the production of goods for commerce.

In an economic sense, production includes all activity directed to increasing the number of scarce economic goods. It is not simply the manual, physical labor involved in changing the form or utility of a tangible article. Such labor is but an integral part of the coordinated productive pattern of modern industrial organizations. Equally a part of that pattern are the administration, management and control of the various physical processes together with the accompanying accounting and clerical activities. Economic production, in other words, requires planning and control as well as manual labor.4 He who conceives or directs a productive activity is as essential to that activity as the one who physically performs it. From a productive standpoint, therefore, petitioner’s executive officers and administrative employees working in the central office building are actually engaged in the production of goods for commerce just as much as are those who process and work on the tangible products in the various manufacturing plants. And since the respondent maintenance employees stand in the same relation to this production as did the maintenance workers in the Kirschbaum case, it follows that they are engaged in occupations “necessary” to such production, thereby qualifying for the benefits of the Fair Labor Standards Act.

[684]*684We find nothing in the Act militating against this conclusion. Sections 7 (a) and 3 (j) both speak of production without attempting to limit its meaning to physical labor. Section 3 (j) in particular defines the term “produced” not only in the physical sense of manufacturing, mining and handling but also in the more general sense of producing or “in any other manner” working on goods. In the absence of any contrary evidence we are unable to assume that Congress used the term in other than its ordinary and comprehensive economic sense.

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Borden Co. v. Borella, 325 U.S. 679, 65 S. Ct. 1223, 89 L. Ed. 1865, 1945 U.S. LEXIS 2673 (1945).

325 U.S. 679 (Borden Co. v. Borella) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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