Bayside Enterprises, Inc. v. National Labor Relations Board – Oral Argument – November 10, 1976

Media for Bayside Enterprises, Inc. v. National Labor Relations Board

Audio Transcription for Opinion Announcement – January 11, 1977 in Bayside Enterprises, Inc. v. National Labor Relations Board

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Warren E. Burger:

Well will hear arguments next in number 1267 Bayside Enterprises against the Labor Board.

Mr. Levenson you may proceed whenever you are ready.

Alan J. Levenson:

Thank you Mr. Chief Justice.

Mr. Chief Justice, may it please the court.

My name is Alan Levenson and I am from Portland Maine.

I am here today representing Bayside Enterprises. Inc.

Bayside is a poultry industry located in Waldo County up in Belfast, near Belfast, Maine.

The contention of Bayside and this involves six feed drivers, the drive poultry trucks, which are these specialized trucks that deliver grain.

These poultry drivers are exempt from the National Labor Relation Act as agricultural labors.

The National Labor Relations Act and Agricultural Labors makes reference to — because of an act of Congress in 1946 and the Appropriations Act it is referenced to 3F of the Fair Labor Standards Act.

In my brief, I have set out 3F and all of this discussion today is on page three and all of this discussion today revolves around 3F.

Now, this 3F has been discussed many times before this court, particularly in Farmers Agricultural Company and what it says is that to be exempt, you have to either fall into a primary classification or a secondary classification of farming.

Now, in the poultry industry, it makes specific reference to the question of raising poultry.

So, when I talk about the primary definition of agriculture here, I will be talking about raising poultry.

The secondary definition talks about incidental tour conjunction with farming when performed by a farmer or on a farm.

So, I will have to be talking about farmer or on a farm an incidental conjunction with farming.

There is also a phrase preparation from market, which is in the 3F which also has some consideration and some courts have hints to exemption on that point.

The outline of my argument is that Bayside itself being a vertically integrated poultry organization comes within the definition of primary agriculture because it is a producer and that the feed delivery drivers are within the secondary definition of agriculture because of their work being incidental to in conjunction with farming.

I will also talk in terms of a possible alternative argument that the feed poultry drivers are on the farm within the meaning of that, those words.

To summarize the arguments, the choice here, the feed poultry drivers are either one, directly in farming.

Two, incidentally to connected with farming or three, not connected with farming at all.

I will be talking about the first two choices and I will leave the third choice to my opponent.

Briefly, I will like to talk to you about the facts of the case and just a little bit of sketch about the poultry industry.

Bayside is a singular enterprise.

It produces and markets poultry up in Waldo County Maine.

Although, there are two Corporations, there is a central management that makes all the decisions of the poultry company from one what is called from the cradle to the grave to raising poultry.

The company is made up of several components.

There is, besides the main office, there is a breeding hatchery with the several farms connected to it, a commercial hatchery with eleven farms connected to it, there is a feed mill, there is the feed delivery operation which we are talking about here.

There is a 119 contract farms which I will go into the contract later.

Bayside itself owns seven farms.

Alan J. Levenson:

There is a processing plant with trucks to pick up the poultry from the farms and deliver it to the processing plant.

Briefly, this is how it works out.

The company has a Geneticist who makes the decisions as to what type of poultry they should grow.

They have been very successful because they have reduced the time it takes to grow from a broiler from 16 weeks to about 9 weeks and they make such decisions as how to grow a chicken with white meat or how to speed up its maturity and things like that.

You see, it’s a very valuable, integrate part of the business of raising chickens.

Well, after they decide that, they may breed flocks to produce the eggs.

Then, they take the eggs and they hatch them till they are one day old.

Then, they take and they place these one day old broilers on these contract farms.

While they are doing that, they have a feed mill and they are making feed for the broilers which changes according to age.

They change it at least four times and if the flock is unhealthy, then they change it more times than that.

Then they have this feed delivery system which I will talk about later that delivers the feed from the feed mill to the processing plant, no, from the feed from the feed mill to the contract farms.

Then, while the poultry is on the farms and the poultry stays on the farm for about nine weeks when they take it off.

They have these feed crews that go on to the farm and they vaccinate, blood test, debeak and all the things that you do to keep up the health and well-being of the poultry.

After the flock leaves, the farm crews go and they clean the poultry farms of the contract farmers and while this is all going on, this is all being directed by a Broiler Department Manager who directs the Supervisors, the forest farm Supervisors that check the farmers and then there is a farm crew.

He decides what age to market the flock and what sizes of the birds are marketable and then he sends out the crew from the processing plant who catches, coops and loads the birds for transport to the processing plant.

The processing plant processes the birds and markets them to a dealer or a chain or some intermediate third party.

Now, all of this that Bayside is doing is typical of what’s going on in the poultry industry.

It’s a typically integrated broiler producing marketing firm.

Warren E. Burger:

When you say this typical of this particular industry, do you — would you distinguish that from large commercial farming operations generally, as they have changed from the old traditional patterns?

Alan J. Levenson:

Well, I am going to be very cautious here about talking about any other industry than poultry.

I can talk about the poultry industry that this is all of the evidence and the marketing reports that are filed with this court talks about poultry and they say that 95% of the chickens that are eaten today are coming from a vertically integrated producer of one kind or another and that’s what I say, I cant talk about cattle or anything else.

Now, the other point I would like to make is that nearly all the broilers today are produced by integrated broiler firms and that this development has gradually arisen.

Now, what used to happen in the past, there used to be individual processing plants and individual feed mills and then there was individual delivery systems and as the farm and the poultry industry gradually evolved, each of these firms developed so that gradually, it became a concentration so that each one of these took in all the attributes of one firm.

What I am saying is that basically, there are four elements; I mean big substantial components of — this type of vertically integrated.

They are the feed mill, the processing plant, the hatcheries and the producers, the contract growers.

Gradually, they all came together under one management and basically, they are all interdependent on each other and the management is like a bundle of sticks and they are all held together and the thing that holds them together is the management that’s making all the decisions as to what’s going to happen.

Well, as a result of this development, the fact that is important to me it seems that there really is no significant live broiler market today.

You can’t go and raise chickens and sell them to anyone.

All of these farmers are connected to some type of broiler organization.

Now that becomes critical when I talk about the part of the processing plant to this whole operation.

Alan J. Levenson:

They are all marketed as ready to cook broilers by an integrated company.

Now, the argument of Bayside is because of this type of operation, that it is Bayside and vertically integrated operators like Bayside, that are in effect the operators, the producers within the contemplation of the statutes, they are the farmers and basically that argument breaks down into four elements.

First of all, the company is the one that initiates the production process, it is the one that invests in both production and marketing of poultry, it is the one that controls all the marketing, production and poultrying and fourthly, it is the one that actively participates in the management of the flock and the poultry husbandry.

Now, this position is sustained by two major cases in the poultry industry and one is Tyson poultrying and the other is NLRB versus Strain.

Now, there are other cases that sustain my position, but the discussion, the rational is set out in those two cases.

Tyson was an egg producer and Strain was a chicken, poultry farmer like this one.

The contrary argument is that it is the contract farmers that are raising the poultry and that they should be considered the farmer and that has a ring of simplicity in it because the chickens are on the contract farms.

When the Court in Strain took this under consideration, they framed the issue this way, does the fact that the integrator uses independent growers, destroy its claim to having raise the bird or is the integrator more akin to the purchaser of the bird.

The court then reviewed the same factual type of situation that I have described and said, “Even though the raising of the birds was shared with independent growers, Strain’s activity were more nearly that of one engaged in raising poultry than a purchaser or a jobber.”

When Tyson took up the same situation, it said, “We are here concerned with the single completely integrated farming operation.”

Tyson is the farmers and they are the ones who initiated the farming operations here in (Inaudible) without the appellees that is Tyson, the independent growers arguably would never have undertaken the initial and continuing cost of acquiring the birds and producing the eggs, the contract growers merely aid the appellees who are the farmers.

So, the issue drawn is, is a company like Bayside, a middle man, is it somebody that is kind of buying the chickens from the farms, is it somebody that is a purchaser, a distributor or something like that and the argument has been made many times and the rational and Strain really talked about are Rosebush case, they said, no, it was not — I mean the Rosebush case that they decided was more of a middle man because they were buying it, they were only buying things that were marketable or a purchaser or something like that.

Well, all of this gets down to the core of the question or what some people feel the core is, the risk of loss.

Who is taking the risk of this type of operation between the farmers on the farm and the vertically integrator that is supervising all of this?

Well, that involves the contract itself; the contract guarantees the farmer a specific rate per week depending upon the size of the house.

He then gives it an additional bonus depending on his production as compared to other Bayside contract farmers.

Bear in mind that Bayside owns the flocks at all time and that the chickens are a perishable commodity.

The point that I would like to make, is that the payments to the grower have no relationship to the market price that Bayside eventually gets from it.

Whatever happens, the farmer gets a certain guarantee payment and then he does participate in a bonus depending on anybody else.

Now, this can work out several ways because bear in mind there are two markets involved, one is the feed market, the grain that you have to buy and the other is the large market, I mean the process market that you have to sell.

So, it is quite conceivable that the man, who is the farmer can receive a profit from his operation and then that same chicken can go out, be processed and sent to market and the vertically integrator can lose money and the reason for that is because the cost of grain can be more expensive than the cost of selling the bird.

It seems to me that some what critical.

On the discussion of this at the trial level, we talked a lot about who has the risk of loss and I was trying to prove that we had all the risk of loss, but there is no question it seems to me that some of the risk of loss, are if a man has — well, if a man is employing other people, he would invest some money, so he would make less money then he would otherwise, but there is a case on this that has been pointed out to me about ducks.

In the Tax Court, and it is called Maple Leaf Farms 64, 438, Tax Court What they say there is that the risk is really unequal, in other words, a man who is a farmer, in this type of situation with a contract can really gage the kind of loss he is going to — if there is going to be a loss, he is kind of gage what kind of money he is going to get in advance.

While, the person who is the vertically integrator has to deal with markets that are unveiled that you never know what you going to get and that kind of is a critical factor in talking about who is really running the farm and who is not running the farm.

Potter Stewart:

The Tax Court decision, that is not in your brief.

Alan J. Levenson:

No, no, it was decided in 1975 and it is just pointed out that…

Potter Stewart:

Could you give us the citation again.

Alan J. Levenson:

It is 64 Tax Court 438 and one of the citations that says on page 451, of that case, it says, obviously this was talking about duck grower.

Obviously the grower also pores some risk of loss from the growing process, example, nonpayment for condemned ducks and out of pocket cost the labor, but on balance, we believe that the petitioner, integrator assumed a risk of loss from the growing process of sufficient magnitude to satisfy this element of the farmer formula.

Alan J. Levenson:

One need not bear all the risk of loss to be considered a farmer, and they said also there is another case of an integrated egg producer Garth (ph) and that is 56 Tax Court 610.

If you just turn to the appendix of the petition for certiorari, you will find the contract itself, what we are talking about.

Now, under the pamphlet that the government was kind enough to provide us, entitled the Main Poultry Industry on page 13, they say that this type of contract is called a straight payment type contract rather than a share the profit type.

If only the southern growers have a share the profit type and the main people have a straight payment type, I do not rely on that to say that the southern growers are not integrators, I am just saying that there is a slight difference between the two, it would still be applied the same way.

Potter Stewart:

How in this case are the farmers compensated, they have given a straight payment an addition, a bonus if, what the chickens are of a certain quality and size?

Alan J. Levenson:

Well, if you turn to the next page A24.

Potter Stewart:

A24 of what?

Alan J. Levenson:

A24 of the petition for certiorari, appendix 24.

Potter Stewart:

Thank you.

Alan J. Levenson:

Under Section B guaranteed a broiler grower.

Basically what happens is they are paid, a certain rate per foot of their house, the bigger house they have, the more money they get per week.

It comes out to about a cent or a cent and a quarter a week, they get paid.

The payment sometimes is after the flock is processed, but that is the guarantee they have given.

Now, the bonus is made up of the — they take all the flocks that are processed over a certain time and they see, they can pair one flock with the other and see how the farmers did this against each other and they give a bonus to the farmers who did the best, that is basically what is going on, it is somewhat complicated structure how they do it, but that is basically what is happening.

William H. Rehnquist:

Does the bonus depend in anyway on the price obtained?

Alan J. Levenson:

No, absolutely not, the bonus depends upon how these people did…

William H. Rehnquist:

Cost wise…

Alan J. Levenson:

No, no, not cost wise in terms of weight.

William H. Rehnquist:

In terms of quality and/or weight, weight reflects quality and the non bonus payment does not depend in anyway on what was obtained in the market for the bird?

Alan J. Levenson:

No, not at all, it depends on how bigger poultry house they have.

Potter Stewart:

What if the chickens that die who takes the risk of that.

Alan J. Levenson:

The chickens die, the risk of loss is on the company because the company owns the chicken.

Potter Stewart:

Owns the chicken, but was if they die as a result of the negligence of the farmer?

Alan J. Levenson:

Well, you just do not use him next time.

Potter Stewart:

You just get another contractor next time.

Alan J. Levenson:

Now, however talking about this contract that I have before you, I like to point out to you that the integrator provides the chicks, the feed, the medication, the fuel and the litter.

Now, the significance of providing the chicks in this case, it seems to be very important because you can easily see it if you were providing — you had an egg business because then the product would be the egg and you were producing, you were giving the farmer chicken and out you come with an egg.

What you are getting here is you are getting the meat itself so, that the farmer, so, that the product really isn’t the chicken, it’s the meat.

Now, the significance of that is it is the equivalent of giving a corn farmer 40 acre of land and says go raise corn because the product will ultimately be corn.

Here, you are giving them the chickens, they go raise meat and you will get ultimately, processed meat.

Alan J. Levenson:

What I am saying is, it is not just the ownership of the birds that’s important in this relationship.

I think it is very important, the fact that the product is the meat itself.

Now, as part of this contract on A (26) of this, the grower under (1) agrees to follow the instructions of the Bayside Supervisor in the care and the maintenance of the flocks.

It’s on page A (26–10).

Potter Stewart:

Thank you.

Alan J. Levenson:

Of the same contract.

In other words, when we talk about the growers’ obligation, that grower obligates himself by contract to follow the instruction of the Bayside Supervisor in the care and the management of the flocks.

On A (27), he also agrees to allow Bayside to remove the flocks from the farm at any time.

That’s on number 11.

Back to A (26) on 4 that contract farmer agrees to have no poultry other than Bayside’s on the farm during the period of this contract.

So, he is restricted, he cannot have anybody else’s poultry except Bayside’s and number four well, he guarantees to use only those materials supplied by Bayside for the purposes of feeding and maintaining birds under this contract.

So, my point is that this is another disability than when a grower enters into this contract with the integrator that he undertakes.

Now, the point is that the grower himself, if you look at the growers’ position in this, he isn’t the type of typical independent producer.

He does not own the feed, he does not purchase or own the chicks, he does not decide what type of birds he wants to grow or what type of feed he wants to feed them.

He does not decide when to market the flock, he does not receive a market price when the flock is taken, he has no obligation to transport the feed to his farm, nor catch coupon deliver the mature birds at the processing plant.

He must follow direction of the Bayside Broiler department Manager, field supervisors and farm crews and he does not vaccinate, blood test, debeak and he bears only his secondary responsibility for the health of the flock and treatment if it is sick.

Byron R. White:

Would there be any question about the exemption if there was full integration in the sense that the company didn’t make arrangements with growers but did it itself?

Alan J. Levenson:

Well, I don’t think – see, if you are talking to a person who doesn’t think there is any question….

Byron R. White:

I know, I know, I understand that.

Alan J. Levenson:

Well, if the flock….

Byron R. White:

Well let me ask you the question in another way, maybe you would not have time to answer before lunch but, what’s the — perhaps you could explain that I have missed it — why does a company arrange its affairs this way?

Is there some obvious tax advantage or some liability advantage or…

Alan J. Levenson:

I suppose….

Byron R. White:

And this was not an accident.

Alan J. Levenson:

Well, I suppose this whole thing….

Byron R. White:

The way of doing business has evolved for a reason, that’s what I mean.

Alan J. Levenson:

Well, I suppose the whole thing has evolved because the fact instead of dealing from one….

Warren E. Burger:

You can respond to that at 1 o’clock.

Alan J. Levenson:

Thank you.

Warren E. Burger:

You have about six minutes remaining.

Alan J. Levenson:

Thank you.

I will try and use them wisely.

When last we broke for dinner you asked me the question as to how this all happened.

Well,…

Byron R. White:

What is the business reason for it?

Alan J. Levenson:

Well, this book that supplied you Dynamic Factors and Vertically Commodity Systems on page….

Byron R. White:

That would be very informative….

Alan J. Levenson:

No, on Page 40 there is this sentence, “The change forces and responding decisions which have brought the broiler system to its present position represent a fascinating example of an evolvement, of an evolving, energetic, free enterprise system.

To a large extent, change has occurred through a series of decisions each of which created a small incremental changes, but whose cumulative effect has been substantial.

Byron R. White:

I agree with you that, let us just say what is this, but why do you suppose, at least they still would have a choice of doing it themselves or doing it this way?

Alan J. Levenson:

The problem of this business is the risk.

The risk is terrible, probably three out of four years you lose money.

Byron R. White:

So, if the risk is part of it, does risk shifting matter to the grower?

Alan J. Levenson:

The risk is on both of the….The risk is — the poor farmer who tries to buy the grain and raise chicks has taken a terrible risk.

It gives him the advantage of a guaranteed type of….

Byron R. White:

But, it also I suppose for all sorts of — for no purpose are these farmers employees of your client.

Alan J. Levenson:

Well….

Byron R. White:

Are they?

Alan J. Levenson:

I don’t think they are employees.

Byron R. White:

Yes, then for any other purposes for which it might be important.

They are not employee.

Alan J. Levenson:

They don’t pay social security or things like that.

No they….

Byron R. White:

And they don’t withhold or….

Alan J. Levenson:

No, they not, but what I do say is the….

Byron R. White:

How about Court liability?

Alan J. Levenson:

What is that?

Byron R. White:

How about Court liability?

Alan J. Levenson:

Court liability.

Byron R. White:

Is your client liable for any torts that might be committed by these farmers?

Alan J. Levenson:

I think in the contract it says something about the fact that they will be liable if anybody gets hurt in their own farms.

So, to that extent I think then there is no question about it, they have independence.

The question is about do they have enough independence to be considered a producer or who is the producer, who is the middleman here, I mean that’s the issue.

There is one other point that I would like to refer you to and that’s the Administrative Regulations that the Department of Labor puts out of the Wage and Hour Division.

In 780.125(B) there they take up the business about the words, ‘raising a poultry’ and it says, the raising of poultry includes the breeding, hatchery, propagating, feeding and general care of poultry all those things that Bayside is doing.

Now, the other part of this argument that the First Circuit was particularly attracted to was the processing plant.

They seem to take the position that because so many people are in processing nearby, the whole things takes on a commercial coloration.

Now, the answer to that argument it seems to me is in Maneja.

They make the distinction about processing, there is an agricultural processing and there is a manufacturing processing and they say that this distinction is if the product actually changes its composition.

In Maneja at page 268 agricultural function, there is a manufacturing function saying there must be a change in the product.

Now, this very issue about poultry has been clarified in the case here East Texas Motor Freight Lines versus Frozen Food Express and that’s a 351 U.S. 49 and there they had a Frozen piece of poultry and then they said that a frozen and fresh dressed piece of poultry retains a continuing, substantial identity.

So, the point I am making is that is a fact that….

Thurgood Marshall:

But I (Inaudible) When you go into processing plants you lose three things, your head, your insides and your feathers.

Alan J. Levenson:

That’s true.

Thurgood Marshall:

We know that don’t we?

Alan J. Levenson:

What I am saying to you is….

Thurgood Marshall:

And he stopped growing didn’t they?

Alan J. Levenson:

That’s true.

What I am saying….

Thurgood Marshall:

once you get to the processing plant that is it.

Alan J. Levenson:

What I am saying is that, for the purposes of this type of classification, they regard them as not as a cooked chicken or as a string bean that is cooked in a dish or something or in a can or something like that.

For this type of purpose, evidently this Court has made the finding at least in the Freight Lines case that it is the continuing substantial identity.

What I am saying is these days, because everybody is vertically integrated, not to market the thing, you have got to market it, dressed and frozen.

Thurgood Marshall:

But these independent contractors are the ones who grow the chicken.

Alan J. Levenson:

Well, you must understand when you say….

Thurgood Marshall:

Is that right?

Alan J. Levenson:

No, no that isn’t right.

Thurgood Marshall:

What does your client do to grow on?

Alan J. Levenson:

Well, it is a great many things.

The first of all, a part of the growing process is to figure out what kind of bird you are going to grow, second of all is to breed the eggs then you have got to take them on to the farm, then you have got to have your farm crews that goes on and vaccine them.

Alan J. Levenson:

You are actually getting into the type of growing procedure.

I mean you are really are participating.

Thurgood Marshall:

But does growing occur on the independent contractors’ farms.

Alan J. Levenson:

The only thing that happens on the independent contractors’ farms…

Thurgood Marshall:

Is the chicken grows.

Alan J. Levenson:

The only thing that happens is that from nine days old, he goes from one day old to nine weeks old.

But in the process, the decision for that chicken is being made by man who is head of the poultry division of the company.

What to feed it.

When you are talking about these truck drivers and you are talking about the grower you know what he does, he pushes a lever and out there is an auger that outcomes the feed.

That is his total contribution to the growing of a chicken.

Thurgood Marshall:

He does not clean up the pan?

Alan J. Levenson:

No, under the contract Bayside…

Thurgood Marshall:

How do they get clean?

Alan J. Levenson:

What?

Bayside has a farm crew that sends right into the pans that cleans them out.

That’s part of the deed.

What do you think.

No, when you take them out.

Thurgood Marshall:

I am talking about during the nine week period.

Alan J. Levenson:

Oh, during the nine week period look, I ascertain…

Thurgood Marshall:

During the growing period.

Alan J. Levenson:

The Strain case…

Thurgood Marshall:

I like the word grow, would you doubt?

Alan J. Levenson:

I am not addressed to any word here.

The question is the substance of the situation then evidently, what even Strain says is they are participating in the growing process.

Could I…

Warren E. Burger:

You wanted to save anything for rebuttal?

I think we have cross examines your good picture.

Alan J. Levenson:

I would like,could I…

Warren E. Burger:

Would you like to say?

Warren E. Burger:

We will add three minutes to your time and then add three minutes to your opponent’s time.

Alan J. Levenson:

Thank you.

Warren E. Burger:

Mrs. Shapiro.

Harriet S. Shapiro:

Mr. Chief Justice, may it please the Court.

This case requires this Court to interpret the agricultural exemptions to the National Labor Relations Act and that exemption is set out on Page 2 of our brief and it involves three separate categories.

First, it exempts actual farming operations including the raising of poultry.

Second, it also exempts other activities by a farmer that are incidental to his farm operations and third, it exempts activities which are out of farm and incidental to that farm’s operations.

Now, particular…

Byron R. White:

Now, the chicken farmer said he has owned the truck and send the truck over to a feedmill owned by somebody else and whole feed back.

That would be incidental to farming, I suppose would not it?

Harriet S. Shapiro:

Yes, it probably would.

Petitioner’s claim is that the truck drivers here that take the feed from petitioner’s feedmill to the grow-out farms are exempt under the second part of the definition that is that there are activities by a farmer which are incidental to the operation of that farm.

So, to support his claim, petitioner must show first that Bayside is a farmer and second, that the work of the feed truck drivers is incidental to Bayside’s farm operations.

So, in response to Mr. Justice White’s question it wouldn’t be enough for this Court to decide contrary to our position that Bayside as a whole is a farmer in relation to its growers.

You would also have to decide whether the feedmill operation was an incident to that farming and it still have another question, if you decided the feedmill operation was not incident to the farming, the question would be whether the truck drivers’ work intrudent to the feedmill or to the farm.

Byron R. White:

I do not — if those are getting drifted into bayside of the farm to raise the chickens themselves.

Harriet S. Shapiro:

No, as a matter of fact, Bayside does own certain – they do own the hatcheries and the breeder farms and the people that are working on those farms are within the primary exemption but…

Byron R. White:

The truck drivers running back and forth between the various plans and those particular farms.

Harriet S. Shapiro:

No, then in that situation you would have to decide whether the truck drivers were incidental to the feedmill operation or to the farm operation.

Byron R. White:

I thought you had already said that here’s a farmer that owns the trucks that goes to the feedmill.

Harriet S. Shapiro:

Yeah, but your hypothetical I thought was that if the feedmill truck was that he owned the truck.

Byron R. White:

You mean it might, if a farmer sends his truck to an independent feedmill his truck drivers are exempted, but if he had zoned the feedmill do they earn?

Harriet S. Shapiro:

You have to get back to the statute.

William H. Rehnquist:

Well, Mrs. Shapiro, let me add a question along with just so, what is it in the statute that requires, that permits even the compartmentalization that you insist on, that you have to say in its capacity as a feedmill operator and the capacity as a breeder farmer and that sort of thing?

Harriet S. Shapiro:

I think it’s a necessary implication in the statute because the statute sets up these various categories.

The first is primary farming and second, the statute recognizes that a farmer has incidental operations and also may have non-incidental operations.

That is why it says incidental farm operations are within the agricultural exemption, but non-incidental farm operations are not.

So, you have got to compartmentalize.

Warren E. Burger:

your analysis has the ring of the set of regulations.

Are there any regulations that support these compartments that you have made?

Harriet S. Shapiro:

Yeah, this is — what we are talking about is an exemption that is brought into the National Labor Relations Act by the Appropriations Acts which say that this definition in the Fair Labor Standards Act is to be used in the National Labor Relations Act.

William J. Brennan, Jr.:

But Mrs. Shapiro definitely the wording of 3(f) of the 1938 Act, Fair Labor Standards Act has not changed has it?

Isn’t that the same as it was originally?

Harriet S. Shapiro:

Yes.

William J. Brennan, Jr.:

But the Appropriations Acts reincorporated in the National Labor Relations Act almost annually do not they?

Harriet S. Shapiro:

Yes.

William J. Brennan, Jr.:

Do the regulations taken to account at all of these differences in methods of farming?

Harriet S. Shapiro:

well, there is a Fair Labor Standards Act that the regulations that I am referring to are under the Fair Labor Standards Act.

William J. Brennan, Jr.:

Yeah, I appreciate that.

Are they carried into the works of agricultural employee for the purposes of the National Labor Relations Act?

Harriet S. Shapiro:

That is certainly the way you use —

William J. Brennan, Jr.:

The handling has been —

Harriet S. Shapiro:

The National Labor Relations Board interpreted…

William J. Brennan, Jr.:

And have the regulations been revised that much?

Harriet S. Shapiro:

I guess they have been.

I don’t know that they have been, I mean I don’t think that the regulation that we rely on in our brief is exactly in 1938.

William J. Brennan, Jr.:

Do the regulation defends themselves to this form of farming operations directly?

Harriet S. Shapiro:

Yes, they certainly do.

We referred to them in our brief and so the labor department feels that the companies like Bayside are not to be considered farmers for the purposes of the Fair Labor Standards Act.

William J. Brennan, Jr.:

The board follows that interpretation?

Harriet S. Shapiro:

Board certainly follows that interpretation.

The only other point about the question of that Mr. Justice White raised before lunch is that if this Court should agree that Bayside’s relationships with its grow-out farmers make it a farmer, then neither the Board nor the Court below addressed, saw the case that way.

So, that they didn’t reach the question that you would have to reach then about whether the operations of the truck drivers were incidental to the farm operation as thus defined and it would probably be inappropriate to send the case back for consideration of that question.

Our primary argument is that Bayside as a whole is not a farmer instead, it is complex integrated company that contracts with farmers.

It does run a limited farming operation itself the hatcheries and the breeder farms and does have some purely industrial operations.

Potter Stewart:

an enterprise that does run that limited farming operation itself.

You can see that the employees engaged in that activities are exact as agricultural laborers.

Harriet S. Shapiro:

Certainly do, yes.

The feedmill is on our view is one of the industrial operations and the work of the feedmill truck drivers is incidental to that operation.

That’s why we have to believe they are not within the agricultural exemption.

William H. Rehnquist:

Does the feedmill sell to anybody except Bayside people?

Harriet S. Shapiro:

Yes, it does.

William H. Rehnquist:

It did so as commercial and the people have no connection with it?

Harriet S. Shapiro:

It sells to a group of farmers who are connected with another integrated poultry companies that doesn’t have its own processing plant.

William H. Rehnquist:

Then it is independent of Bayside?

Harriet S. Shapiro:

Independent of Bayside.

Harry A. Blackmun:

Even today?

Harriet S. Shapiro:

I believe that that was at the time of the Board decision; I think that Bayside’s brief says that they no longer do.

Harry A. Blackmun:

It seems to me I recall something on the papers to the effect that that has been done away with.

Harriet S. Shapiro:

Yeah, I think that’s correct.

John Paul Stevens:

Mrs. Shapiro, if your opponent is right on what is a farm and if you are right on the point that the drivers are incidental to the feed mill operation…

Harriet S. Shapiro:

Right.

John Paul Stevens:

What employees would we be fighting about?

Harriet S. Shapiro:

Well, you would still have to decide in that case whether the feedmill operation is incidental to Bayside’s farm operation.

We would still be fighting about the truck drivers.

John Paul Stevens:

Oh, I see, because if you could, what if the feedmill operation is incidental to a farm, would it then follow the drivers who are engaged in working in incidental department?

Harriet S. Shapiro:

If you felt that Bayside was a farmer, that the second part of the definition which is what we really are arguing about here, it says to get in to that exemption, you have to be both – the activity has to be by a farmer and also, it has to be incidental to that farmer’s farm operations.

John Paul Stevens:

I am asking the question just a little differently, if we concluded that the feedmill was an industrial operation and not incidental farming, but if the growing was farming by Bayside, would there be any employees that would be fighting about than these drivers?

I mean, is the whole fight just over these drivers or there are other employees that are involved in any way?

Harriet S. Shapiro:

Well, this particular fight is over these drivers.

I suppose if you took Bayside’s argument that they are as a whole, they are an agricultural enterprise, the next case you would have would be the feedmill employees, the processing plant employees and then you would have to decide whether the processing plant was incidental.

John Paul Stevens:

I see.

Harriet S. Shapiro:

You do have to decide if you accept their argument.

You do have to decide whether the feedmill is incidental, but only in relation to them.

William J. Brennan, Jr.:

Mrs. Shapiro the regulation which you referred at Page 18 of your brief 78126, does that description that goes back to 1961 I gather doesn’t it?

That insert with the bulletin, that’s the wage in our division.

Does that description precisely fit the facts of this case?

Harriet S. Shapiro:

That’s a – yes, I think it does.

Bayside’s claim is that they are not a feed dealer and processor and that the first statement limits the description.

They certainly, do produce feed and they do process and the description of the typical kind of an operation that’s in the body of this regulation fits exactly what we question was.

William J. Brennan, Jr.:

Well, my next question is that the — this of course is a wage in our division, interpretive bulletin, has it been followed and adopted by the National Labor Relations Board in any cases?

Harriet S. Shapiro:

Well, yes, in the National Labor Relation Board…

William J. Brennan, Jr.:

In addition to this one, I mean?

Harriet S. Shapiro:

This case is the result of a fairly long-term of…

William J. Brennan, Jr.:

Well, really what I am trying to get at is, remember we didn’t get these briefings so just the other day so, I haven’t had a chance to study this so, as I would like.

What I am trying to find out is, has that actual regulation been applied by the National Labor Relations Board, because you make an argument that this has entitled a great way in interpreting the statute since this is the agency charged with this type of Statute, but what’s unique about this is this interpret of bulletin is on a National Labor Relations Board book.

It’s a wage in our division board.

Harriet S. Shapiro:

That’s…

William J. Brennan, Jr.:

So, my question is has the board applied this regulation in any other case?

Harriet S. Shapiro:

They have done so consistently.

William J. Brennan, Jr.:

And are they cited in your brief?

Harriet S. Shapiro:

Yes, I have put it on 11.

Our argument basically, is that the growers are the farmers and Bayside is not.

Our brief examines the terms of Bayside’s agreements with the growers to show why in our view, the growers are independent farmers in terms of the risks they bear and the capital investments required and the type of supervision they receive.

Again, I think that the practical answer to Mr. Justice White’s question is that the one of the reasons for this arrangement is that it does permit Bayside to share the risks.

It also avoids Bayside having to have the capital investments which are very substantial in the…

Byron R. White:

And it avoids having to treat them as employees?

Harriet S. Shapiro:

And that’s the point I want to emphasize here…

Byron R. White:

And then, let me ask you, I go back to – suppose a farmer is growing chickens and he is sending his own truck out to get feed to bring it back.

Now, the statute exempts farming as things that are part of farming.

Now, why wouldn’t during feed, what could be more integral to the operation of growing chickens and then feeding them?

I mean, you are not going to grow many chickens unless you feed them.

So, why wouldn’t you say that, calling your feed to your chickens is a part of farming, not incidental it’s just part of farming?

Harriet S. Shapiro:

The answer to that in the case, the Farmers Irrigation Company case the interpret of this same language.

The situation there was that there was an association of farmers that provided water to the – to irrigate the individual farmer’s crops and the argument there was made as you say, water is essential to growing crops.

You can’t grow crops unless you have water.

In the same way here, but the Court said no the statute talks about actual farming and that the actual farming means the growing of the crops and actual farming means the growing of the chickens.

Byron R. White:

Let’s suppose that you are a chicken grower and you hire 30 people to unload the feed trucks and actually go out and feed the chickens, is that part of farming?

Harriet S. Shapiro:

Yes, that’s…

Byron R. White:

Alright, now suppose the farmer who instead of hiring his own employees to feed the chickens for him, contracts with the chicken feeder and they send their employees in and they feed the – do exactly the same thing as his employees used to do, that’s also a part of farming actually.

Harriet S. Shapiro:

Well, that is in the third part of the exemption which…

Byron R. White:

Oh no, I am just suggesting, why isn’t that part of farming?

If it was yesterday why isn’t it today?

They are exactly the same activity.

Harriet S. Shapiro:

When the statute was enacted, the argument was made that, threshers who in the same — at one point farmers did their own threshing.

Byron R. White:

If you take farming apart, nothing is farming.

It’s all incidental.

Warren E. Burger:

40 years ago Mrs. Shapiro or 60 perhaps, were all these things done by what they called the hired hands and used the team horses and a wagon instead of modern truck and maybe a uniform?

What’s the fundamental difference in his function, from the hired man of that day, to this person that Justice White was describing?

Harriet S. Shapiro:

Well, as long as the operation is the basic part of farming, the growing of the chickens, the raising of the crops, then it doesn’t make any difference what the scale of the operation is or…

Warren E. Burger:

Yes, the court said that in several cases…

Harriet S. Shapiro:

Yes, but when the statute was enacted, the Congress was concerned that the basic definition of agriculture would not include people who were not farmers and were not working for farmers, but were doing essential farm operations.

Warren E. Burger:

A big commercial farm might have and validly does have today a lot of this very sophisticated equipment to the point where they might have their own machine shop to repair them whereas again, 50 years ago the man who would ram the steam rig also repaired it off season.

Are these men who maintain this machinery on the modern commercial farm?

Are they – which category do you say they are in?

Harriet S. Shapiro:

They are working for a farmer on operations that are incidental to his farm operations.

They are not growing the crops, they are not raising the livestock, but they are performing necessary incidental operations by the farmer.

Warren E. Burger:

How do you distinguish them from the gentleman that Justice White was describing?

Harriet S. Shapiro:

The man who is not working for the farmer but is sent into the farm, working for someone else while is not working for the farmer and as I said, the third exemption covers people who are not working for the farmer but are working on the farm, so the Mr. Justice White’s man who is working for an independent company, but working on the farm is within the third exemption.

Not necessarily.

Thurgood Marshall:

Well, there were two types of trucks, one big one would bring 20 tons of seed bags then little trucks would deliver it around within the farm, would those little ones be alright?

Harriet S. Shapiro:

Who is driving them?

Are they people…

Thurgood Marshall:

No, one may have ten trucks owned by the farm.

Harriet S. Shapiro:

And the truck drivers are — the little truck drivers are employed by the farm?

Thurgood Marshall:

Are they engaged in farming?

Harriet S. Shapiro:

They are in the secondary part.

They are not engaged in the primary part.

They are engaged in the secondary part.

Thurgood Marshall:

Once again, the big truck as a little truck?

Thurgood Marshall:

Is that right?

Harriet S. Shapiro:

No, the person who drove the little truck on to the farm was he employed by the farmer?

Thurgood Marshall:

Yeah, the little truck driver is employed by the farm and the big truck driver is employed by Bayside.

Harriet S. Shapiro:

Okay, that the big truck driver is not employed by somebody who is – he is not employed by a farmer and he…

Thurgood Marshall:

I can’t get it, is that employment what decides it?

Harriet S. Shapiro:

That’s a part of what decides it.

If he is employed by a farmer, in order to be within, the little truck drivers whether they are employed by Bayside or by anybody else, if they are working entirely on the farm then they are within the third exemption.

Thurgood Marshall:

Well, suppose if the Bayside was delivering the tanks of water, any difference?

Harriet S. Shapiro:

No, the tanks, Bayside, if Bayside…

Thurgood Marshall:

Well, do all farms raise chickens without water?

Harriet S. Shapiro:

It is, that’s exactly what the Farmers Irrigation Company said, it is hard to raise crops without water, it’s hard to raise chickens without water, but the exemption, the primary exemption is for actual farming operations and delivering water or delivering feed is not part of the primary exemption.

It’s an incidental necessary operation.

William H. Rehnquist:

But in the Farmers Ditch Company, the Ditch company that was claiming under the exemption did absolutely no farming itself, did it?

Harriet S. Shapiro:

All it did was provide an essential service and Bayside does no farming itself.

They contract for other people to do the farming.

William H. Rehnquist:

Well, you can see that some – they do some farming and then they go in the brief.

Harriet S. Shapiro:

That’s right, but certainly the feed truck, these feed truck drivers don’t deliver feed to those farms…

Byron R. White:

But the Waialua Company didn’t control the farming operation either.

The farming wasn’t done in accordance with their specifications and under their direction.

Harriet S. Shapiro:

Well, that’s true, but our claim as we explain in the brief is that the kind of control…

Byron R. White:

I know you claim is valid and enough.

Harriet S. Shapiro:

Well, and that the kind of control the Bayside exercises are not enough and one of the reasons for that we didn’t emphasize in our brief but I think is really quite important, is that if you look at the terms of the agreement between Bayside and its farmers, Bayside has set up very specific specifications about the product.

It provides the product and it indicates how they want the product grown, but it says nothing about the labor side of it.

It doesn’t say anything about wages, it doesn’t say anything about hours, it doesn’t say anything about fringe benefits, it certainly doesn’t say anything about the types of unsatisfactory performance that are going to lead to terminations of relationship.

Although, it apparently contemplates that the farmers are going to hire employees, it doesn’t say anything about the conditions…

William H. Rehnquist:

Well, doesn’t that suggest, almost a lessor-lessee relationship that you are asking for a certain property and certain conditions from the lessor and you don’t care how he goes about providing it?

Harriet S. Shapiro:

That’s precisely what it suggests and it’s — the reason that I think that it’s important is because what the National Labor Relations Act exemptions are concerned with is that the farmer should be free to set the conditions of employment of his workers without complying with the National Labor Relations Act and that’s what Bayside is not doing.

William H. Rehnquist:

But if it is a lessor-lessee relationship doesn’t that strengthen Bayside’s claim that if rather than the contract farmers is doing the farming, if Bayside had simply leased land from the same contract farmers and agreed to pay them at the same rate for their land, clearly Bayside will be doing that farming wouldn’t it?

Harriet S. Shapiro:

If they have employees that were doing the farming, but they don’t, what they have is a, what they have is basically, a requirement’s contract.

They have got, they have set fairly specific specifications for the product, they have supplied the raw materials, they say this is the way we want the raw materials put together and we will pay you for the results of your efforts, but how you put the product together, whether you hire people to do it and if you do, under what terms you hire people to do it, that’s of no concern to us and it is on the basis of that kind of an agreement that they are seeking to avoid the requirements of the National Labor Relations Act as regards the employees that they have where they do set the terms and conditions of their employment.

Harriet S. Shapiro:

The part of the essence of their arrangement with their contract farmers is that they are out of the very area that the National Labor Relations Act is concerned with.

Bayside’s argument that the statutory exemption covers those who contract for others to do the actual farming ask the Court to expand the statutory definition beyond its plain meaning and beyond the decisions of the Court interpreting the statute.

The stretching is not required either for practical business reasons or to treat employers and employees fairly.

The statutory definition is quite precise.

Congress didn’t simply exempt agricultural labors and leave it to the Courts to define agriculture.

It spelled out what it meant.

It included farming and all its branches but only those incidental non farming operations performed by the farmer, that is by someone engaged in actual farming.

As I pointed out, the Court held in Farmers Irrigation Company that an association of farmers that supplies irrigation water to its member farmers is not itself a farmer for purposes of the exemption.

Supplying of necessary services to farmers does not make you a farmer.

So, even though Bayside supplies necessary materials to the farmer and pays him for the results of his efforts, Bayside is not the farmer.

Warren E. Burger:

I get a feeling Mrs. Shapiro that the Government’s position as you articulated is that when the total farming operation became subdivided and compartmentalized resembling the methods of modern business in order to achieve greater efficiency that somehow or other the more efficient function loses its character as farming.

Harriet S. Shapiro:

No it’s not.

It’s certainly we are not arguing that integration makes it lose its character.

All we are saying is that when you have got a complex company, what you have to do is look at what its doing and look at the nature of the contract with the growers.

We are not certainly arguing that as a whole, it is not a farm.

We agree that there are parts of it that are farming.

All we are saying is that in its relationships with the growers it is contracting with farmers.

Certainly, you can imagine situations in which Bayside would have its own farms like the sugar companies do.

There is no, it’s not the modernization of it that is the problem, it is the form that that has taken.

Thurgood Marshall:

Well, Mrs. Shapiro suppose Bayside had owned all of these farms and operated them, they would still be under the same legislative decision, would not they?

Harriet S. Shapiro:

If they owned and operated all these farms then as I said before, then you would have to decide whether the feedmill was incidental to the operations of the farm.

Thurgood Marshall:

Well, I am asking you would it be?

Harriet S. Shapiro:

Well, that is, the record here I do not think is complete enough, then you go to the questions in…

Thurgood Marshall:

In my record is, if Bayside has a hundred farms which they run, operate, finance, own, pay taxes on, etcetera and the feedmill and everything else is just the same.

Would those trucks be in the farming business or the processing business?

Harriet S. Shapiro:

Well, in order to answer that question you would have to look at the relationship between the Bayside’s farming operation and the feedmill’s and the Waialua case tell us – maze out certain questions that you asked in order to determine whether the feedmill is incidental to Bayside’s farming operations.

Thurgood Marshall:

The only difference in my hypothetical is, that Bayside owns the farms and operates, that is the only difference.

Everything else is different.

Where were those trucks the process or farm?

Harriet S. Shapiro:

They would be incidental – our position is that they would be incidental to the feedmill, but once you – that is I think quite clear.

Harriet S. Shapiro:

Then, the next question is, is the feedmill incidental to Bayside’s farm operations?

Now, the Court below and in our brief we discussed the question of whether the feedmill is incidental to the very limited farm operations that we agree that Bayside is involved in.

That is one question.

Your question would be whether the feedmill is incidental to the much larger farm operations that Bayside would be involved in your case and that is – you are having it incidental to a different unit and that is a different question.

Lewis F. Powell, Jr.:

Does it make any difference in this case that the feedmill was owned by a subsidiary?

Harriet S. Shapiro:

No, the Court – the board found and the Court agreed that it was one unit.

Lewis F. Powell, Jr.:

Does it make any difference that a small percentage of the feedmill’s product was sold to outsiders?

Harriet S. Shapiro:

No, it really does not.

Lewis F. Powell, Jr.:

So, it would be the same if the feedmill, say were owned directly and were located on property owned by Bayside and just entire — but went for this chicken farming operations?

You still have the issue in your view as to whether or not the work of the truck drivers was incidental to a farming function.

Harriet S. Shapiro:

Whether Bayside’s relationship with the contract growers is really makes them a farmer.

The only two points I wanted to emphasize in addition are that there is no practical business reasons which require treating Bayside as a unit.

In fact, some of the Bayside’s truck drivers are unionized, represented by the union, so they clearly are under the National Labor Relations Act, Bayside does not contend otherwise.

Potter Stewart:

What function do they perform or do they have?

Harriet S. Shapiro:

Those are the truck drivers that go onto the farms and get the chickens and take them to the processing plant.

They belong to the same bargaining union as the members of the processing plant.

Potter Stewart:

And there has never been a claim to their agricultural work?

Harriet S. Shapiro:

No, so this…

Potter Stewart:

And they are employees, they are not independent contractors?

Harriet S. Shapiro:

Oh yeah, they are employees and the other point I wanted to make was that there is no considerations of fairness that require you to find these truck drivers, agricultural workers.

We certainly – our point is that, people that are performing similar work, the agriculture – the workers on Bayside’s own farms and any employees of the growers are clearly, they are doing the same kind of work, they are both are agricultural workers, they are both within the exemption.

Bayside also has a – the truck driver that delivers the feed to the independent farms, he is not an agricultural worker.

He is doing the same kind of work as these truck drivers here are.

So, fairness considerations, they should be treated the way people are working during some of their work.

Thank you.

Warren E. Burger:

Alright, well, Mrs. Shapiro you have few minutes left to…

Alan J. Levenson:

Thank you Your Honor.

In my presentation in chief, I never got to the question about incidental to in conjunction with farming and I would like to do it right now.

In the regulations of the Fair Labor Standards Act, I would like to make reference to you for a future research, 780.1578 and that says, “In case of transportation to farm of materials of supplies, it seems clear, that transportation to the farm by the farmer of materials and supplies for using his farming operations such as seed, animal or poultry feed, farm machinery or equipment would be incidental to the farmer’s actual farming operation.”

Now, in Maneja which they have quoted, that is 349U.S.262, similarly the exemption clearly covers the transportation of farm implements, supplies and field workers too in from the fields.

Alan J. Levenson:

In Farmers Reservoir, which Mrs. Shapiro quote’s is saying that is not incidental to in conjunction with farming.

I dispute that entirely.

Turn at 337 U.S. 766, it is speaking about the delivery of water to the head gates of farms by irrigation company workers, “It is equally clear that it does constitute a practice performed as in incident to or in conjunction with farming.

The irrigation company workers were not exempt however, because the delivery was not by a farmer or in a farm.”

Abbott Farms, 487, 904 holds the production in high and incidental to in conjunction with poultry is farming.

Where it expresses our (Inaudible) of the farms 372, 584, 589, Footnote 4, movement of food and workers to the fields has significance in purpose only in making it possible for the harvesting activities to take place.

What I am saying, if you own an individual feedmill and you have got truck drivers permit, those truck drivers are incidental to in conjunction with the mill, makes sense, but if you own three million chickens all over the farms, you are trying to raise chickens, you are not trying to raise deliver feed.

With regard to the, how the feedmill works, one-third of the production went to an independent feed company at the time they brought the thing.

It does not go to it now, but the feed that goes to the farms, only if driven by Bayside drivers to Bayside farms, they connect it up at the feedmill, they pour it in the truck, they drive to it and they unload it at the farms.

These days, what is feeding the chicken?

The guy who is deciding who is – what the feed that chicken is extremely important, because he is deciding how to change the feed every minute or the third.

One more thing, I have left out this business on our farms.

In modern day farming, you got at least four separate elements, you have got the hatcheries, you have got the poultry processing plant, you have got the feedmill and you have got the poultry growers.

What is the farm?

I contend the farm is everything.

Every element of that thing is on the farm.

What is the driver doing?

He is driving from the feedmill to the contract farms.

That leaves open the question, what about the highways, driving back and forth in that highway, that is the weakness in the idea, that is addressed by the case of NLRB versus Olaa Sugar, 242 F.2, at Page 717, “It is common knowledge that even small farms are frequently bisected by public roads, even small farm operators frequently owner operated non-contiguous field reached only by public roads.”

If such a farmer send his truck driver to Hull Hay, built in a distant field to be stacking of the farm building, the operation would not seize to be an agriculture one, even if the employee make some use of the public road in his trip.

That this be true in the case of a full small farmer, the case should also be true here.

You have also got this case of Brannon versus Sugar growers, 486 F.2, 1011, those who were cooks, they were cooking in a labor camp and, “They held that they were on as farm as much as you could be on a farm, given the fact you were in the labor camp.”

What I am saying is the primary purpose of this statute is if you are in agriculture, well now-a-days, that is agriculture and they just would not recognize this when they take and they combine all these elements into one that you are back to the original farm and doing everything.

Now, you have got the whole thing doing everything.

Now, the question that Maneja raises and the reason that I am not saying that this is primary farming, is for some reason Maneja says, this transportation of a truck from a field is secondary farming.

Olaa Sugar questions that you can not understand why that is not part of the harvesting operation.

I say to you quite frankly and I have never understood why it is not part of raising poultry.

It is not incidental to, it is direct poultry and that is the issue to me.

I was exempt either one or the other, but I never considered that I was not exempt.

My time has run out, thank you.

Warren E. Burger:

Thank you counsel, the case is submitted.