United States v. W. M. Webb, Inc.

PETITIONER: United States
RESPONDENT: W.M. Webb, Inc., et al.
LOCATION: United States District Court for the Eastern District of Louisiana

DOCKET NO.: 63
DECIDED BY: Burger Court (1969-1970)
LOWER COURT: United States Court of Appeals for the Fifth Circuit

CITATION: 397 US 179 (1970)
ARGUED: Nov 17, 1969
DECIDED: Mar 03, 1970

ADVOCATES:
Erwin N. Griswold - Solicitor General for the Petitioner
Joseph J. Lyman - For the Respondent

Facts of the case

W.M. Webb and other commercial fishing companies owned fishing boats that, according to established custom, were manned by independently contracted captains and crew. The company that owned each vessel was responsible for equipping it and hiring a captain, who then hired a crew. At the completion of each shipping expedition, the boat docked at a fish-processing plant, where the captain and crew were paid based on the volume of their catch. There was no guarantee that they would be paid if they did not catch fish. The commercial fishing companies determined at which plants the boats would dock and generally in what areas they would fish. The captain and the crew were responsible for the day-to-day running of the boats and expeditions.

The commercial fishing companies paid employers’ taxes under the Federal Insurance Contributions Act and the Federal Unemployment Tax Act and claimed refunds for the taxes due on the earnings of the captains and crews. They then sued for the refunds in district court, which held that the companies were entitled to the refunds. The district court held that the captains and crews were not “employees” for the purposes of the statutes because the amount of control the companies exercised over the boats was not enough to create an employer-employee relationship. The U.S. Court of Appeals for the Fifth Circuit affirmed.

 

Question

Are boat captains and crewmen in independent boats engaged in contractual agreements with commercial fishing companies “employees” of those companies under the Federal Insurance Contributions Act and the Federal Unemployment Tax Act?

Media for United States v. W. M. Webb, Inc.

Audio Transcription for Oral Argument - November 17, 1969 in United States v. W. M. Webb, Inc.

Warren E. Burger:

United States against Webb and others.

Mr. Solicitor General.

Erwin N. Griswold:

Mr. Chief Justice and may it please the Court.

This is a federal tax case involving the application of the Social Security Old Age Tax and the Federal Unemployment Tax to the owners of ships with respect to captains and crew members who fish off the South Atlantic Coast and the Gulf of Mexico for Manhattan.

Manhattan are a frequently encountered fish which is not regarded as edible by humans, but which is caught in large quantities and processed into fish meal and fish oil which are used primarily for fertilizer or for feeding poultry and other livestock.

The case comes here on a writ of certiorari to the United States Court of Appeals for the Fifth Circuit.

The statutory provisions involved are set forth in the appendix to the Government's brief at pages 39 to 41.

Before stating the facts, it will be helpful I think to put the precise terms of the statute before the Court.

The Old Age Tax is imposed by Section 3111 of the Internal Revenue Code and is in terms at equal to the following percentage of the wages paid by him with respect to employment.

And then in Section 3121, the term wages is defined.

Now, wages means all remuneration for employment and then in 3121 (d), there is a definition of the term employee to include any individual who under the usual common law rules applicable in determining the employer-employee relationship has the status of an employee.

In this setting out in our brief of the statutory provisions, we omitted one at this point which may have some conceivable application.

It is in Section 3121 (b) (4) and it provides that employment shall not include services performed by an individual on or in connection with a vessel, not an American vessel or in connect or in connection with an aircraft, not an American aircraft, if (a) the individual is employed on and in connection with such vessel or aircraft went outside the United States and (b) such individual is not a citizen of the United States or the employer is not an American employer.

Now, that's entirely an exclusionary provision.

It leaves only the inference that it was intended to apply to American citizens employed on American vessels by -- owned by American owners --

William J. Brennan, Jr.:

Mr. Solicitor General, you said that was (b) (4) or (d) (4)?

Erwin N. Griswold:

That is (b) (4).

William J. Brennan, Jr.:

Thank you.

Erwin N. Griswold:

3121 (b) (4) contains a negative pregnant that Americans employed on American owned vessels are covered.

I would say as Mr. Lyman will remind you that that is still subject to the definition of employment or employee in Section 3121 (d).

Now, that's the Old Age Tax, there is also an Unemployment Insurance Tax.

The Old Age Tax you will recall is imposed on both the employer and the employee with the employer under obligation to withhold the employee's share and pay over the total to the treasury.

The Unemployment Tax is imposed only on the employer and there again, it is imposed at a percentage of the total wages paid by him during the calendar year with respect to employment.

This appears on page 40 in the appendix to our brief.

The term wages is defined to mean all remuneration for employment.

And again, we have the term employment defined here saying there's somewhat more complicated manner.

Employment is defined as any service performed -- any service of whatever nature performed after 1954 by an employee for the person employing him; (b) on or in connection with an American vessel and then you come to the end of that at the top of page 41, except and this gets very involved because this exception I'm about to state is then subject to an exception itself, except service performed by an individual in or as an officer or a member of the crew of a vessel while it is engaged in the catching, harvesting, cultivating or farming of any kind of fish, shellfish and so on and here's the next exception, except (b) service performed on or in connection with a vessel of more than ten tons.

So they take out all fishing, but then they except from that take out service on vessels of more than ten tons.

And all of the vessels involved in this case were of more than ten tons so that it comes within the exception to the exception and thus is included in the definition of employment.

But again, it's subject to the provision in Section 3306 (i) that for purposes of this chapter, the term employee includes an officer of a corporation, but does not include any individual who under the usual common law rules applicable in determining the employer-employee relationship has the status of an independent contractor or (2) any individual who is not an employee under such common law rules.