This is an appeal in a suit filed in behalf of one hundred or more employees of the Bethlehem Steel Company to recover overtime pay and liquidated damages under' the Fair Labor Standards Act, 29 U.S.C.A. § 201 et seq. There is no allegation or con
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tention that plaintiffs were not paid the minimum wages prescribed by the act, with time and half for overtime, if regard be had to contract, custom or practice; but recovery is asked solely on the ground that plaintiffs were required to be on the premises of defendant before and after working time for the purpose of changing clothes and walking to and from the place where the work was carried on. The contention of plaintiffs is that this time spent on defendant’s premises must be counted as working time under the Fair Labor Standards Act and that overtime compensation must be computed with respect thereto, reliance being placed upon the decisions of the Supreme Court in Tennessee Coal Co. v. Muscoda Local,
While the case was pending in the court below, Congress passed the Portal-to-Portal Act of May 14, 1947, 29 U.S.C.A. § 251 et seq., taking away the right to recover in such case, except for an activity compensable under the express provisions of a contract or by custom or practice, and depriving the Courts of the United States of jurisdiction thereof. A motion was made to dismiss the complaint on the ground that it failed to state a case upon which relief could be granted or of which the court had jurisdiction because it failed to allege contract, custom or practice as a basis of compensation.
The District Judge offered plaintiffs an opportunity to amend the complaint to plead contract, custom or practice within the meaning of the statute if they desired to amend; but they declined to do so, contending that its provisions prescribing such •conditions of recovery with respect to existing causes of action were unconstitutional. The judge then held the act cоnstitutional and dismissed the action. Seese et al. v. Bethlehem Steel Co., D.C.,
The Fair Labor Standards Act 29 U.S. C.A. § 201 et seq., is a statute enacted by the Congress under the Commerce Clause of the Constitution, Art. 1, § 8, cl. 3. United States v. Darby
In the three portal to portal cases referred to above, the Muscoda case, the Jewell Ridge case and the Mt. Clemens Pottery case, the Supreme Court decided that the work week prescribed by the act should be construed to include preliminary and incidental activities of the employee, such as walking to work on the employer’s premises, changing to work clothes etc. The effect of this construction was to give rise to a flood of claims against employers
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with respect to matters which up to that time had not been regarded by either employer or employee as compensable or as having any relation to the length of work week prescribed by the act. The Judiciary Committee of the House found that between July 1, 1946, and January 31, 1947, there were 1913 cases involving claims of this sort filed in the federal courts alone, that 398 of these did not claim specific amounts and that the remainder claimed a total of $5,785,204,606.00. Significant was the fact that 62% of these suits were filed during the last month of the seven months period considered. Not only did these suits threaten ruin to numerous employers throughout the country (who under the decisions of the Supreme Court could not make binding settlements with the claimants even with respect to the liquidated damages involved, Brooklyn Sav. Bank v. O’Neil,
In passing the Portal-to-Portal Act of May 14, 1947, Congress, as a part of the act, carefully set forth the facts upon which its action was based and appraised their effect upon interstate commerce and other matters as to which it possessed governmental power, in the following language:
“The Congress hereby finds that the Fair Labor Standards Act of 1938, as amended, has been interpreted judicially in disregard of long-established customs, practices, and contracts between emрloyers and employees, thereby creating wholly unexpected liabilities, immense in amount and retroactive in operation, upon employers with the results that, if said Act as so interpreted or claims arising under such interpretations were permitted to stand, (1) the payment of such liabilities would bring about financial ruin of many employers and seriously impair the capital resources of many others thereby resulting in the reduction of industrial operations, halting of expansion and development, сurtailing employment and the earning power of employees; (2) the credit of many employers would be seriously impaired; (3) there would be created both an extended and continuous uncertainty on the part of industry, both employer and employee, as to the financial condition of productive establishments and a gross inequality of competitive conditions between employers and between industries; (4) employees would receive windfall payments, including liquidated damages, of sums for activities performed by them without any expectation of reward beyond that included in their agreed rates of pay; (5) there would occur the promotion of increasing demands for payment to employees for engaging in activities no compensation for which had been contemplated by either the employer or employee at the time they were engaged in; (6) voluntary collective bargaining would be interfered with and industrial disputes between employees and employers and between employees and employees would be created; (7) the courts of the country would be burdened with excessive and needless litigation and champertous practices would be encouraged; (8) the Public Treasury would be deprived of large sums of revenues and public finances would be seriously deranged by claims against the Public Treasury for refunds of taxes already paid; (9) the cost to the Government of goods and services heretofore and hereafter purchased by its various departments and agencies would be unreasonably increased and the Public Treasury would be seriously affected by consequent increased cost of war contracts; and (10) seriou's and adverse effects upon the revenues of Federal, State, and local governments would occur.
“The Congress further finds that all of the foregoing constitutes a substantial burden on commerce and a substantial obstruction to the free flow of goods in commerce.
*61 “The Congress, therefore, further finds and declares that it is in the national public interest and for the general welfare, essential to national defense, and necessary to aid, protect, and foster commerce, that this Act be enacted. * * * ”
The-pertinent portions of the Portal-to-Portal Act, granting relief from the provisions of the Fair Labor Standards Act in so far as they permit recovery of portal to portal pay, and denying to the courts of the United States jurisdiction to entertain claims .based thereon, are аs follows:
“(a) No employer shall be subject to any liability or punishment under the Fair Labor Standards Act of 1938, as amended, * * * (in any action or proceeding commenced prior to or on or after the date of the enactment of this Act), on account of the failure of such employer to pay an employee minimum wages, or to pay an employee overtime compensation, for or on account of any activity of an employee engaged in prior to the dаte of the enactment of this Act, except an activity which was compensable by either—
“(1) an express provision of a written or nonwritten contract in effect, at the time of such activity, between such employee, his agent, or collective-bargaining representative and his employer; or
“(2) a custom or practice in effect, at the time of such activity, at the establishment or other place where such employee was employed, covering such activity, not inconsistent with a written or nonwritten contract, in effect at the time of such activity, between such employee, his agent, or collective-bargaining representative and his employer.
“(d) No cou'rt of the United States, of any State, Territory, or possession of the United States, or of the District of Columbia, shall have jurisdiction of any action or proceeding, whether instituted prior to or on or after the date of the enactment of this Act, to enforce liability or impose punishment for or on аccount of the failure of the employer to pay minimum wages or overtime compensation under the Fair Labor Standards Act of 1938, as amended, * * * to the extent that such action or proceeding seeks to enforce any liability or impose any punishment with respect to an activity which was not compensable under subsections (a) and (b) of this section.” 29 U.S.C.A. § 252.
There can be no doubt that in passing this act Congress gave the most careful consideration to the question of its constitutionality. See H.R. 2157 80th Cong. 1st Sess.; S.Rep.No.48, 80th Cong. 1st Sess. See also opinion of Dean Bates 93 Cong.Rec. pp. 2306 et seq. Its constitutionality has been upheld by the Circuit Court of Appeals of the Sixth Circuit (Rogers Cartage Co. v. Reynolds 6 Cir.
The first contention requires but brief notice. It is true that the effect of the act is to take away rights held by the courts to arise under a statute as they have interpreted it; but this is done, not by the exercise of judicial but of legislative power. When the Fair Labor Standards Act was interpreted by the Supreme Court as requiring computation in the work week of time consumed in walking to work and other preliminary activities, this was just as though the original act contained express provision to that effect; and, when Congress passed the sections of the statute here under consideration, the effect was to repeal the original statute to the extent of that coverage and deny to the federal courts jurisdiction to entertain a suit based thereon. This doеs not in any manner affect adjudications already made, nor does it attempt to direct the courts in the exercise of judicial power. All that it does is to define rights, i. e., to amend or limit the effect of a prior statute so as to take away a cause of action given by it. Ackerman v. J. I. Case Co., D.C.,
“It is undoubtedly true that, in our system of goverment, the law-making power is vested in Congress, and the power to construe laws in the course of their administration between citizens, in the courts. And it may be conceded that Congress cannot, under cover of giving a construction to an existing or an expired statute, invade private rights, with which it could not interfere by a new or affirmative statute. But where it can exercise a power by passing a new statute, which may be retroactive in its effect, the form of 'words which it uses to put this power in operation cannot be material, if the purpose is clear, and that purpose is within the power.”
The question raised under the Fifth Amendment is that the statute takes property without due process in that it strikes down vested rights under existing contracts. The answer is that even rights arising out of contract cannot fetter Congress in the exercise of a power granted it by the Constitution, and that the rights stricken down by the statute are not rights arising оut of contract at all, but rights created by statute as an incident of the statutory regulation of commerce. The Portal-to-Portal Act of May 14, 1947, like the Fair Labor Standards Act which it modified and amended, was an exercise by Congress of the power to regulate interstate and foreign commerce; and it is well settled that the exercise of such power is not invalidated even by the fact that its effect is to destroy rights under valid existing contracts. Such was the holding in Addyston Pipe & Steel Co. v. United States,
In North American Co. v. Securities & Exchange Commission,
“This broad commerce clause does not operate so as to render the nation powerless to defend itself against economic forces that Congress decrees inimical or destructive of the national economy. Rather it is an affirmative power commensurate with the national needs. It is unrestricted by contrary state laws or private contracts. * * *
“We need not attempt here to draw the outer limits of this plenary power. It is sufficient to reiterate the well-settled principle that Congress may impose relevant conditions and requirements on those who use the channels of interstate commerce in order that those channels will not become the means of promoting or spreading evil, whether of a physical, moral or economic nature. Brooks v. United States267 U.S. 432 , 436, 437,45 S.Ct. 345 , 346,69 L.Ed. 699 ,37 A.L.R. 1407 . This power permits Congress to attack an evil directly at its source, provided that the evil bears a substantial relationship to interstate commerce. Congress thus has power to make direct assault upon such economic evils as those relating to labor relations, National Labor Relations Board v. Jones & Laughlin Corporation,301 U.S. 1 ,57 S.Ct. 615 ,81 L.Ed. 893 ,108 A.L.R. 1352 ; Polish Nat. Alliance v. National Labor Relations Board,322 U.S. 643 ,64 S.Ct. 1196 ,88 L.Ed. 1509 ; to wages and hours, United States v. Darby, supra [312 U.S. 100 ,61 S.Ct. 451 ,85 L.Ed. 609 ,132 A.L.R. 1430 ]; ’to market transactions, Stafford v. Wallace258 U.S. 495 ,42 S.Ct. 397 ,66 L.Ed. 735 ,23 A.L.R. 229 ; Chicago Board of Trade v. Olsen262 U.S. 1 ,43 S.Ct. 470 ,67 L.Ed. 839 ; and to monopolistic practices, Northern Securities Co. v. United States, supra [193 U.S. 197 , 353, 354,24 S.Ct. 436 , 463, 464,48 L.Ed. 679 ], * * * Once it is established that the evil concerns or affects commerce in more states than one, Congress may act. ‘The framers .of the Constitution never intended that the legislative power of the nation should find itself incapable of disposing of a subject-matter specifically committed to its charge.’ In re Rahrer140 U.S. 545 , 562,11 S.Ct. 865 , 869,35 L.Ed. 572 .”
Very much in point is the decision of the Supreme Court of Texas in National Carloading Corporation v. Phoenix-El Paso Express, Inc.,
What we are dealing with in the case at bar is the regulation by Congress of wages and hours in interstate commerce. The Fair Labor Standards Act did not provide payment for employees engaged in that commеrce but means by which wages might be regulated through application of maximum and minimum standards. When it was learned that this instrument of regulation was about to be used in such way as to injure the very commerce that it was designed to help, it is idle to say that Congress was without power to amend it in such way as to avoid the evil that was threatened.
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We do not mean to say, of course, that the limitations of the Fifth Amendment do not apply to the exercise of a power granted Congress by the Constitution; but the inquiry is, not whether vested rights or rights under existing contracts have been interfered with, but whether or not the power has been exercised arbitrarily or unreasonably under the circumstances. Not even in the exercise of the commerce power may Congress take one man’s property and give it to another or arbitrarily strike down rights arising under contract; but nothing of that sort is involved here. The claims to portal to portal pay stricken down by the act were not based on contract, custom or practice, for suсh claims were expressly excepted from its provisions. What was taken away was the right to recover on claims of purely statutory origin, claims given by statute not as compensation for labor performed but as a means of regulating wages and hours of work in interstate coipmerce. Missel v. Overnight Motor Transp. Co.,
Looked at in another way, all that Congress has done by the legislation here under consideration is to validate the contracts and agreements bеtween employer and employee which were invalid under the Fair Labor Standards Act by reason of the interpretation placed by the Supreme Court upon that act; and the authority of the legislative body to validate voluntary transactions which at the time they were entered into were by statute invalid or illegal has been repeatedly upheld. West Side Belt R. Co. v. Pittsburgh Const. Co.,
Plaintiffs rely upon such cases as Steamship Co. v. Joliffe,
There is nothing in the result accomplished by the statute upon which it can be condemned as an unreasonable exercise of the commerce power by Congress. As a matter of fact, all that it does is prevent employees reaping an unexpected windfall from an unexpected court decision. In another situation where parties were about to be enriched by unexpected profits resulting from another decision, Congress passed the “windfall” tax act of 1936, Revenue Act of 1936, Title III, § 501(a) (1), 26 U.S.C.A.Int.Rev.Code, § 700(a) (1), taking 80% of the windfall for the government by way of retroactive taxation. We held the tax valid in White Packing Co. v. Robertson, 4 Cir.,
Since the provisions of sec. 2(a) of the act, striking down portal to portal claims not based on contract, custom or .practice are valid, there can be no question as to the validity of sec. 2(d) denying jurisdiction to the courts to entertain the claims. Kline v. Burke Const. Co.,
For the reasons stated the judgment appealed from will be affirmed.
Affirmed.
Notes
Burfeind v. Eagle-Picher Co. of Texas, D.C., 71 E.Supp. 929; Story v. Todd Houston Shipyard Co., D.C.,
