RESPONDENT: Whitaker House Cooperative, Inc.
LOCATION: Mapp's Residence
DOCKET NO.: 274
DECIDED BY: Warren Court (1958-1962)
LOWER COURT: United States Court of Appeals for the First Circuit
CITATION: 366 US 28 (1961)
ARGUED: Mar 30, 1961
DECIDED: Apr 24, 1961
Facts of the case
Media for Goldberg v. Whitaker House Cooperative, Inc.
Audio Transcription for Oral Argument - March 30, 1961 in Goldberg v. Whitaker House Cooperative, Inc.
Number 274 Arthur J. Goldberg, Secretary of Labor, Petitioner, versus Whitaker House Cooperative, Incorporated, et al.
Mr. Chief Justice, may it please the Court.
This case presents a question of the application of the Fair Labor Standards Act of two homeworkers in an industry with a history as old as the Act itself, of various efforts to avoid the application of the Act to its homeworkers.
In terms of the facts to this specific case, the question is whether such homeworkers in this industry and similar industries, by joining a cooperative which was initiated and sponsored and -- and in no material essentials managed and is continuing to be so managed by their former employers are transformed into independent self-employed producers, so as to remove them from the regulation of the Act.
The courts below held that since the cooperative and that as found by the trial court, it was a bona fide member controlled cooperative.
That this was petition to distinguish this case from all previous cases in which comparable devices to avoid the Act that had been condemned.
There is no doubt of the past status of these homeworkers as employees subject to the Act.
They and similar homeworkers have throughout the years, consistently been so considered.
And not only have the -- the courts, prior to the decision below in the instant case, refused to sanction all the passed devices and attempts designed to exclude these homeworkers from the scope of the Act, but repeated efforts to secure exemption by specific legislation have failed throughout the years.
The courts -- the -- the courts below didn't know what this legislative background and expressly discarded the broad definitions of employment under this Act as being not very helpful.
The opinions on their face show that very little attention was paid to why these homeworkers have been regarded as employees within the scope of this Act and -- or to the background which led to the plain legislative intent to include them within the scope of the broad coverage of the statutory definitions.
The -- instead of looking at the purposes of the Act and at the homeworker -- the history of the homeworker problem in this industry, the court -- the courts below dealt with this -- the issue in this case, as if it were simply a rather technical question as to who controlled this -- this cooperative, which by the way, was organized as a separate legal entity, was incorporated and had the status of a legal entity.
The courts below -- the trial court phrased -- directed their attention to who could -- who controlled the cooperative?
Did -- may -- may have fallen into confusion because there was also and still is a question in this case as to whether or not, the whole cooperative was not simply a sham or cloak to disguise the operations of -- of individual former employers of homeworkers.
But the position of the Government is that whether or not, this was such as a sham and even if the employees -- the homeworkers were given some bone fide voice in the operation of the cooperative, they are nonetheless, still employees of the cooperative and its managing officials under the definitions of the -- the broad definitions of this Act, which includes any person acting directly or indirectly in the interest of an employer and person includes or individual partnership, association, corporation or any organized group of corporations.
Now, we submit that the cooperate -- the cooperative certainly fits into that broad definition and that as a separate legal entity under the decisions of this Court, it -- it is -- it is the employer of the homeworkers, whether or not they are also bona fide -- whether or not, they also have bona fide membership rights and interest.
Now the courts below distinguished this decision -- this Court's decision.
They recognized and both courts stated that it's clear that a cooperative can have employees, but they said that the employ -- the homeworkers were not simply employees.
They -- they were members in that their membership interest was identical with their interest as -- as workers and that since their interest as members and producers were the same, they were in effect, self-employed.
We submit that this reasoning is inconsistent with this Court's decisions and that there's nothing in the -- even the technical common law, which would support the conclusion that the membership rights in a separate entity of this type are inconsistent with the workers being also employees.
I think -- I think this was well illustrated in the rhetorical questions asked by -- put by Judge Aldrich in his dissent below, when he asked that if a union were given a voice in management, would its members cease to be employees and if an employee acquires stock in a company does he cease to be an employee?
The -- even in applying the control test, the courts below I think misconceived even conventional technical concepts of -- of the control that has any relevance to the question of an employment relationship.
They concentrated on the -- on whether or not, the homeworkers controlled the operation of the cooperation instead of inquiring into who controlled whether the management of the cooperative control -- did not control the members as workers.
And we submit that the extent to which control is relevant to the determination an -- of an employment relationship under this Act, that surely the control exercised over the workers, the members as workers, is much more significant and pertinent than what control they might have exercised over the cooperation as members.
That the status of these homeworkers as workers has remained unchanged since the organization of this cooperative, is perhaps best illustrated by a look at the past history of the Maine -- of the Maine managing officials of this cooperative, Mrs. Whitaker who has been the general manager through - since the organization of the cooperative and admittedly participated actively in its organization.
When was that, Ms. Margolin?
In July 1957.
She, prior to that time for some years prior to that time, had employed that most of this Maine -- the homeworkers from Maine, they are now 200 members of the -- of the cooperative.