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DURKIN v. PET MILK CO

October 20, 1953

DURKIN
v.
PET MILK CO.



The opinion of the court was delivered by: John E. Miller, District Judge.

This cause was tried on September 2 and 3, 1953, to the Court upon the pleadings, the ore tenus testimony of witnesses and the exhibits to their testimony, together with requests for admissions filed by the plaintiff herein and the defendant's response thereto, and interrogatories propounded by plaintiff and the defendant's answers thereto, and briefs submitted by both parties, and upon consideration of the same the Court now makes and files herein its Findings of Fact and Conclusions of Law, separately stated:

Findings of Fact

I.

The plaintiff is the Secretary of the United States Department of Labor and brought this suit in his official capacity.

The defendant is a corporation organized and existing under and by virtue of the laws of the State of Delaware, with a permit to do and doing business in the State of Arkansas, and owns, maintains and operates a place of business, manufacturing plant and offices near Siloam Springs, Arkansas, within the Western District of Arkansas.

The plaintiff is seeking a judgment permanently enjoining and restraining the defendant, its officers, agents, servants and employees from violating sections 6, 11(c), 15(a)(1), 15(a)(2) and 15(a)(5) of the Fair Labor Standards Act of 1938, as amended, 29 U.S.C.A. §§ 206, 211(c), 215(a), (1, 2, 5).

II.

The defendant is engaged in the operation of a milk processing plant and in the manufacture of canned and evaporated milk at its plant located near Siloam Springs, Arkansas, and in the operation of milk receiving stations located in Paris and Huntsville, Arkansas. Defendant does not own or maintain a dairy herd and does not produce any raw milk but instead all milk used by defendant in the operation of its plant and in the production of canned and evaporated milk is purchased from farmers and dairymen located along designated milk routes extending in and around Siloam Springs, Paris and Huntsville, Arkansas. Most of the raw milk is hauled to the plant, or to the receiving stations, by the persons whose status is involved in this case. The terms, "milk haulers" and "milk route owners", are used to describe these persons. The milk which is hauled to the receiving stations at Paris and Huntsville, Arkansas, is thereafter dumped, weighed, cooled, stored, and then loaded by defendant's employees into tank trucks owned by defendant and operated by its own employee-drivers, who transport the raw milk to the company's plant at Siloam Springs for further processing.

III.

The defendant normally employs from approximately eighty-one to about one hundred and two persons in operating its said business and manufacturing plant at Siloam Springs. This number includes the employees within the plant, supervisory personnel, and fieldmen with headquarters at said plant, but excludes the persons whose status is in issue in this proceeding. There is no complaint that the defendant violates the Fair Labor Standards Act with respect to its admitted employees.

All of defendant's admitted employees as well as those engaged in hauling milk to defendant's plant and receiving stations and not admitted to be employees are regularly engaged in manufacturing, transporting, and otherwise in the production of goods for commerce each workweek. It is primarily those persons who are engaged in hauling the raw milk collected from farmers and dairymen throughout the area in question to defendant's plant and receiving stations that are involved in this action.

IV.

Most of the raw milk used in the operation of defendant's plant at Siloam Springs is transported in trucks from the farms and dairies on which it is produced to defendant's plant by the persons described as "milk haulers" or "milk route owners". Each of these milk haulers operates a numbered route along which the raw milk is received from the various individual producers who have agreed to sell their milk to defendant. Some of the raw milk used by defendant is hauled to its plant by individual producers who transport their own milk. All the milk is bought by defendant from the various producers at a price set by defendant, F.O.B., its plant at Siloam Springs, subject to the milk being accepted by it as meeting certain standards of quality and cleanliness set by the Evaporated Milk Association. The purchase price for the raw milk is posted by the company at its plant at periodical intervals, and is subject to seasonal and other market fluctuations.

A milk hauler transports raw milk from the producers to defendant's plant and receiving stations, and returns the empty milk cans to the producers and when requested by the producer he will deliver supplies to the patrons residing along his route.

V.

In the same area from which defendant's plant at Siloam Springs draws its supply of raw milk, there are other companies in the same or similar business which compete with defendant for the purchase of raw milk. Among these competitors are Carnation, Borden, Kraft, Milnot, Meadow Gold, various Grade A dairies, and others.

VI.

The defendant's plant at Siloam Springs was built and commenced operations in 1944. Prior to that date, the company maintained a receiving station at Siloam Springs, from which the raw milk was transported in company-owned tank trucks to its plant at Neosho, Missouri. The basic method of operation by which the company obtains its supply of raw milk has been the same since 1944, and for many years prior thereto. This method is followed in substantially the same manner by defendant in other parts of the country, and has been the general practice and custom of this industry throughout its history.

Defendant for many years has employed persons referred to as fieldmen who are trained by education and experience in the development and care of dairy cattle and herds and in the economical production of high-quality and sanitary raw milk. Defendant has assisted the farmers and dairymen residing in the area in the economical production of high-quality milk through these fieldmen and by making available to them for purchase top-quality bulls. By this program and by working with the farmers and dairymen through these fieldmen defendant has increased the source of supply of raw milk in the area from virtually nothing at the beginning of its operations to that sufficient to supply all its present needs. In this manner defendant has insured itself an adequate supply of milk without maintaining its own dairy herd.

VII.

The testimony of the numerous haulers who were witnesses at the trial, the testimony of other witnesses, and the stipulations regarding the testimony of witnesses who were not called, established the following pattern of activity in the origin and operation of the milk routes:

When the defendant entered the area, the farmers were solicited to sell their milk to it. At first the individual producers would bring their own milk to the defendant's receiving stations or plant; then, as both the number of producers and the volume of milk increased, one producer would buy a truck and agree with neighboring producers to haul the milk to defendant. In this way, the various routes became established and acquired general boundaries based not on fixed geographical limits, but rather on the location of the particular producers who had agreed to sell their milk to defendant and contracted with a particular hauler for that transportation service. The route structures developed with the growth of the milk production in the region and, although the particular route boundaries were not fixed by defendant, they were observed by it and for convenience were designated by a number. The ownership of the routes by the individual haulers was recognized by the defendant and producers.

The operation is carried on without written contracts between the parties. The business has been conducted so uniformly for all these years in the area that the practice and custom are well established and understood by all concerned without the requirement of written contracts. The hauler has no contract of any kind, either written or oral with defendant. The hauler has an oral contract, either expressed or implied, with each individual producer on his route by which the hauler agrees to pick up and transport the raw milk to defendant's plant, or to the purchaser to whom the farmer desires to sell his milk. The producer agrees with the hauler on the hauling charge for this service and authorizes the defendant, or other purchaser, to deduct this charge from the check which is issued in payment for the milk. The hauling charge is a rate per 100 pounds of milk accepted at the plant. The form of check which defendant issues to the producer in payment for the milk was offered in evidence as defendant's Exhibit 3. The face of the check shows the deductions made by defendant for the hauling charge, transportation tax, and any other deductions authorized by the producer. Payment for the milk purchased is made every fifteen days, and at the same time, defendant issues a separate check in the amount of the hauling charge payable to the route owner. The payment to the route owner is on a form of check illustrated by defendant's Exhibit 3; this check is in the same form as the check used for the purchase of milk, but is different from the check used by defendant for its labor payroll. (See defendant's Exhibit 5.)

VIII.

The individual hauler has no fixed time set either by defendant or by the producers for picking up and delivering the raw milk to defendant's plant. This is governed by the distance of the route from the plant, the number of producers on the route, the volume of milk, and the hauler's judgment as to the best time for arrival at the plant in order to avoid congestion in unloading his truck onto the conveyor. Any undue delay in delivering the raw milk to the plant increases the likelihood of the milk becoming sour and being rejected by the defendant as unfit. Defendant does not pay for all milk delivered to its plant but only for the milk which is accepted by it. If the milk fails to meet the standards of quality set by the Evaporated Milk Association, ...


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