MITCHELL, SECRETARY OF LABOR, v. BUDD ET AL.
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT.
Argued February 29 - March 1, 1956.
Decided March 26, 1956.
The Secretary of Labor sued under 17 of the Fair Labor Standards Act to enjoin respondents from violating the minimum wage and record-keeping provisions of the Act with respect to employees working in their tobacco-bulking plants in Quincy, Florida, which has a population in excess of 2,500. The bulking process takes from 4 to 8 months, requires a large amount of equipment, and substantially changes the physical properties and chemical content of the tobacco. Most farmers in the region have their tobacco processed by others. Two of the respondents process only tobacco grown on their own farms and the third processes only tobacco grown by others. Held: Respondents are not exempted by 13 (a) (10) or 13 (a) (6) from the minimum wage and record-keeping provisions of the Act. Pp. 474-482.
114 F. Supp. 865, affirmed.
Bessie Margolin argued the cause for petitioner. With her on the brief were Solicitor General Sobeloff, Stuart Rothman and James R. Billingsley.
Milton C. Denbo argued the cause for J. T. Budd, Jr. & Co. et al., respondents. With him on the brief was Philip Levy. [350 U.S. 473, 474]
Mark F. Hughes argued the cause and filed a brief for the May Tobacco Co., respondent.
Briefs of amici curiae urging affirmance were filed by John H. Todd, M. Richard Garstang and Joseph O. Parker for the National Grange et al., and Martin Burns and Allen Lauterbach for the American Farm Bureau Federation.
MR. JUSTICE DOUGLAS delivered the opinion of the Court.
These are actions brought by the Secretary of Labor under 17 of the Fair Labor Standards Act, 52 Stat. 1060, 63 Stat. 910, 29 U.S.C. 201, to enjoin respondents from violating the minimum wage, 6, and record-keeping provisions, 11, of the Act. The employees concerned work in tobacco-bulking plants operated by respondents in Quincy, Florida, which has a population in excess of 2,500. Respondents claim these employees are exempt from the Act. The District Court ruled against the respondents. 114 F. Supp. 865. The Court of Appeals reversed. 221 F.2d 406. We granted certiorari, 350 U.S. 859 , because of the importance of the problems presented and of the apparent conflicts between the decision below and Tobin v. Traders Compress Co., 199 F.2d 8, and Maneja v. Waialua Agricultural Co., 349 U.S. 254 .
The processing operations involve U.S. Type 62 Sumatra tobacco, a leaf tobacco used exclusively for cigar wrappers. This type of tobacco requires special cultivation. It is grown in fields that are completely enclosed and covered with cheesecloth shade. The leaves of the plant are picked in stages, as each matures. The leaves are taken immediately to a tobacco barn, located on the farm, where they are strung on sticks and dried by heat. Before the drying process is completed, the leaves are allowed to absorb moisture. Then they are dried again. There is some fermentation at this stage. But the treatment [350 U.S. 473, 475] in the tobacco barns is essentially a drying operation during which the moisture content is reduced to between 10% and 25%.
At the end of the drying operation, the leaves are packed in boxes and taken from the farm to a bulking plant for further processing. At the bulking plant, the leaves are placed in piles, known as "bulks," aggregating from 3,500 to 4,500 pounds of tobacco. This is the "sweating" or fermentation process which requires carefully controlled regulation of temperature and humidity. Proper heat control includes, among other things, breaking up the bulk, redistributing the tobacco, and adding water. Proper fermentation or aging requires the bulk to be reconstructed several times. The bulking process lasts from four to eight months, after which the tobacco is baled. The bulking process requires a large amount of equipment, including a steam-heated plant, platforms, thermometers, bulk covers, baling boxes and presses, baling mats and packing, sorting and grading tables. The bulking process substantially changes the physical properties and chemical content of the tobacco, improving the color, increasing combustibility, and eliminating the rawness and harshness of the freshly cured leaf.
The overwhelming majority of farmers in the region in litigation in this case have their tobacco processed by others. In that region there are 300 farmers who grow this type of tobacco. Of these, only 9 maintain and operate bulking plants; and only 5 maintain and operate bulking plants processing tobacco grown only by themselves. It appears that bulking cannot be economically done by the ordinary small farmer growing less than 100 acres. Of the 300 farmers in the present group, 80% grow less than 25 acres per year, while the majority grow from 1 1/2 to 10 acres a year.
Respondent Budd grows no tobacco itself and confines its operations to processing the tobacco grown on 263 [350 U.S. 473, 476] acres by 52 farmers. Budd employs about 108 workers for bulking, sorting, grading, and baling tobacco.
Respondent King Edward processes in the bulking plant involved in this litigation only tobacco produced on farms operated by it. (It has two other bulking plants that process tobacco purchased from other growers.) The bulking plant involved here is about 13 miles from King Edward's farms. A majority of the 120 employees in the bulking plant also work on King Edward's farms.
May has its own bulking plant and processes there only the tobacco which it grows on its own farms. This plant is about 10 miles from the farms. The employees, who work the farms, work in the bulking plant, being transported back and forth by May. Seventy are employed in the bulking plant.
Area of Production. - Section 13 (a) of the Act creates several exemptions from the minimum wage and maximum hours provisions of the Act. One of those exemptions contained in 13 (a) (10) includes:
The Court of Appeals, following its earlier decisions in Jenkins v. Durkin, 208 F.2d 941, and Lovvorn v. Miller, 215 F.2d 601, held that the regulation was invalid. It concluded that once "geographic lines of the area of production have been established, the act makes the exemption effective within that area," and that any qualification by reason of size of the town where the establishment is located is invalid. 215 F.2d, at 603. For that conclusion the Court of Appeals found comfort in Addison v. Holly Hill Fruit Products, Inc., 322 U.S. 607 .
Holly Hill involved one of the alternative definitions of "area of production." That alternative defined "area of production" in geographic terms and then added another standard - whether the employee was in an establishment having no more than seven employees. We held that ". . . Congress did not leave it to the Administrator to decide whether within geographic bounds defined by him the Act further permits discrimination between establishment and establishment based upon the number of employees." Id., at 616. We said that the phrase "area of production" had "plain geographic implications" with which the size of a plant within the area was not consistent. Id., at 618. That definition, therefore, was struck down. But its alternative, substantially the one that is involved here, was not passed upon. In fact, we reserved decision in Holly Hill as to whether the population criterion, now presented for decision, was valid. Id., 610.
We think the present regulation is a valid definition of "area of production." We think it valid by the standard we used in Holly Hill. In that case we said that ". . . `area' calls for delimitation of territory in relation to the complicated economic factors that operate between agricultural labor conditions and the labor market of enterprises concerned with agricultural commodities and [350 U.S. 473, 478] more or less near their production." Id., at 613-614. The aim of Congress was to exempt employees "employed in agriculture," 13 (a) (6), and those engaged in agricultural enterprises in the "area of production," 13 (a) (10). That meant drawing a line between agricultural enterprises operating under rural-agricultural conditions and those subject to urban-industrial conditions. An individual working in an agricultural packing plant on the edge of Los Angeles is in a strikingly different environment from one doing the same work in a small town in the heart of Kansas. Nearness to a large city has relation to the problem of the Administrator in making his definition. For the proximity of the plant to a metropolitan center, like the size of the town where the plant is located, may make the decisive difference between an agricultural and an urban environment. 2 Likewise, nearness of the plant to its supplies cannot be considered an irrelevancy. For "area" is understandable in terms of nearness and [350 U.S. 473, 479] farness. Distance is an important factor in any formula which seeks to treat more or less as a unity labor on farms and labor in agricultural enterprises in the "area of production." 3 [350 U.S. 473, 480]
No definition of "area of production" could produce complete equality, for the variables are too numerous. The Administrator fulfills his role when he makes a reasoned definition. See Gray v. Powell, 314 U.S. 402, 411 . On no phase of this problem can we say that the Administrator proceeded capriciously or by the use of inadmissible standards. Experts might disagree over the desirability of one formula rather than another. It is enough for us that the expert stayed within the allowable limits. We think he did here and that the definition of "area of production" under 13 (a) (10) is a valid one.
Agriculture. - The Court of Appeals held that the employees in the bulking plants of King Edward and May were exempt under 13 (a) (6) which covers "any employee employed in agriculture." It relied on the broad definition of "agriculture" contained in 3 (f) of the Act which provides, in relevant part, that the term "includes farming in all its branches and among other things includes . . . any practices (including any forestry or lumbering operations) performed by a farmer or on a farm as an incident to or in conjunction with such farming operations, including preparation for market, delivery to . . . market or to carriers for transportation to market." The work in the bulking plants, the court ruled, was "preparation for market" within the meaning of 3 (f).
The exemption of 13 (a) (6) read with 3 (f) covers large operators as well as small ones, as we recently said in Maneja v. Waialua Agricultural Co., supra, at 260. It also includes "extraordinary methods" of agriculture as well [350 U.S. 473, 481] as the more conventional ones. Id., at 261. The question in the Waialua case was whether sugar milling was included in the agriculture exemption of 13 (a) (6). We said that it was necessary to look to all the facts surrounding the process to determine whether that process was incident to farming. Id., at 264-265. We held that sugar milling was not, even when done by the grower. We think like considerations indicate that in this case the agriculture operation does not extend through the bulking plants but ends, as the District Court ruled, with the delivery of the tobacco at the receiving platform of the bulking plant. That is the "delivery . . . to market" within the meaning of 3 (f) of the Act.
It is true that King Edward and May are farmers and process in their bulking plants only the tobacco they raise. It is also true that many employees who work their farms also work in their bulking plants. These are heavily stressed as indicia that bring the bulking plants into the agriculture exemption. But there are two other factors which in our view tip the scales the other way.
First, tobacco farmers do not ordinarily perform the bulking operation. As already mentioned, of the 300 farmers who grow this type of tobacco in this area, only 9 maintain and operate their own bulking plants. The remaining farmers have their crops processed by others. The bulking operation is for the most part divorced from the cultivation of tobacco and from the drying operation in the tobacco barns on the farm. The bulking process for the most part is a separate processing stage.
Second, the bulking operation is a process which changes the natural state of the freshly cured tobacco as significantly as milling changes sugar cane. As indicated above, the bulking process changes and improves the leaf in many ways and turns it into an industrial product. What we said in Waialua concerning sugar milling is apt here: a process that results in such important changes is [350 U.S. 473, 482] "more akin to manufacturing than to agriculture." 349 U.S., at 265 .
The judgments of the Court of Appeals are reversed and those of the District Court affirmed.
(a) An individual shall be regarded as employed in the "area of production" within the meaning of section 13 (a) (10) of the Fair Labor Standards Act in handling, packing, storing, ginning, compressing, pasteurizing, drying, preparing in their raw or natural state, or canning of agricultural or horticultural commodities for market, or in making cheese or butter or other dairy products:
[ Footnote 2 ] On this phase of the problem the Administrator said in his findings dated December 18, 1946:
[ Footnote * ] The references were to 39 Stat. 356, 40 Stat. 1200.
[ Footnote 3 ] On this phase of the problem the Administrator said: