1. The Fair Labor Standards Act is applicable to employees of a
wholesale paper company who are engaged in the delivery, from
company warehouses within a State to customers within the same
State, after a temporary pause at such warehouses, of goods
procured outside of the State upon prior orders from, or pursuant
to contracts or understandings with, such customers. P.
317 U. S.
2. Such goods retain their character as goods in interstate
commerce until finally delivered to the customer, and they are not
divested of that character by the temporary pause at the warehouse,
or by the fact that the company regards them as stock in trade, or
by the circumstance that title to them passes to the company upon
their delivery at its warehouse. P. 317 U. S.
3. As to the company's business in other goods procured from
outside of the State and delivered from the warehouses to customers
within the State -- it being claimed that such business is "in
commerce" within the meaning of the Act because the customers form
a fairly stable group whose needs can be anticipated with
considerable precision -- the evidence lacks that particularity
necessary to show that the status of the goods in question was
different from that of goods acquired and held by a local merchant
for local disposition. P. 317 U. S.
4. That a wholesaler whose business is intrastate is in
competition with wholesalers doing interstate business is of no
significance in determining the applicability of the Fair Labor
Standards Act, since that Act does not extend to activities
"affecting" commerce, but only to such as are "in" commerce. P.
317 U. S.
5. That the Fair Labor Standards Act is applicable to a
wholesaler who makes purchases of goods outside of the State,
though selling intrastate exclusively, is not to be implied from
the exception from the Act, by §§ 13 (a)(1) and 13(a)(2), of
employees of retailers. P.
317 U. S. 571
Page 317 U. S. 565
6. The applicability of the Fair Labor Standards Act doe not
depend on whether a wholesaler's business is wholly interstate, but
rather on the character of the employee's activities. P.
317 U. S.
128 F.2d 395 affirmed.
p. 615, to review the reversal of a
judgment in a suit brought by the Wage and Hour Administrator to
enjoin violations of the Fair Labor Standards Act.
MR. JUSTICE DOUGLAS delivered the opinion of the Court.
This is a suit brought by the Administrator to enjoin respondent
from violating provisions of the Fair Labor Standards Act. 52 Stat.
1060, 29 U.S.C. § 201 et seq.
Respondent is engaged in the
wholesale business, distributing paper products and related
articles. Its business covers a large area embraced within a number
of states in the southeastern part of the country. The major
portion of the products which it distributes comes from a large
number of manufacturers and other suppliers located in other states
and in foreign countries. Five of respondent's twelve branch houses
deliver goods to customers in other states, and it is not contended
that the Act does not apply to delivery employees at those
establishments. The sole issue here is whether the Act applies to
employees at the seven other branch houses which, though constantly
receiving merchandise on interstate shipments and distributing
Page 317 U. S. 566
it to their customers, do not ship or deliver any of it across
Some of this merchandise is shipped direct from the mills to
respondent's customers. Some of it is purchased on special orders
from customers, consigned to the branches, taken from the steamship
or railroad terminal to the branches for checking, and then taken
to the customer's place of business. The bulk of the merchandise,
however, passes through the branch warehouses before delivery to
customers. There is evidence that the customers constitute a fairly
stable group, and that their orders are recurrent as to the kind
and amount of merchandise. Some of the items carried in stock are
ordered only in anticipation of the needs of a particular customer
as determined by a contract or understanding with respondent.
Frequently, orders for stock items whose supply is exhausted are
received. Respondent orders the merchandise and delivers it to the
customer as soon as possible. Apparently many of these orders are
treated as deliveries from stock in trade. Not all items listed in
respondent's catalogue are carried in stock, but are stocked at the
mill. Orders for these are filled by respondent from the
manufacturer or supplier. There is also some evidence to the
general effect that the branch manager, before placing his orders
for stock items, has a fair idea when and to whom the merchandise
will be sold, and is able to estimate with considerable precision
the immediate needs of his customers even where they do not have
contracts calling for future deliveries.
The District Court held that none of respondent's employees in
the seven branch houses in question were subject to the Act. The
Circuit Court of Appeals reversed. Jacksonville Paper Co. v.
128 F.2d 395, 397. (1) It held that employees who are
engaged in the procurement or receipt of goods from other states
are "engaged in commerce" within the meaning of § 6(a) and § 7(a)
of the Act. (2) It also held that, where
Page 317 U. S. 567
respondent "takes an order" from a customer and fills it outside
the state and the goods are shipped interstate "with the definite
intention that those goods be carried at once to that customer, and
they are so carried, the whole movement is interstate" and the
entire work of delivery to their final destination is an employment
"in commerce." Those were the only types of transactions which the
court held to be covered by the Act.
The Administrator contends, in the first place, that, under the
decision below, any pause at the warehouse is sufficient to deprive
the remainder of the journey of its interstate status. In that
connection, it is pointed out that, prior to this litigation,
respondent's trucks would pick up at the terminals of the
interstate carriers goods destined to specific customers, return to
the warehouse for checking, and proceed immediately to the
customer's place of business without unloading. That practice was
changed. The goods were unloaded from the trucks, brought into the
warehouse, checked, reloaded, and sent on to the customer during
the same day or as early as convenient. The opinion of the Circuit
Court of Appeals is susceptible of the interpretation that such a
pause at the warehouses is sufficient to make the Act inapplicable
to the subsequent movement of the goods to their intended
destination. We believe, however, that the adoption of that view
would result in too narrow a construction of the Act. It is clear
that the purpose of the Act was to extend federal control in this
field throughout the farthest reaches of the channels of interstate
commerce. [Footnote 1
] There is
Page 317 U. S. 568
(apart from the exemptions contained in § 13) that, once the
goods entered the channels of interstate commerce, Congress stopped
short of control over the entire movement of them until their
interstate journey was ended. No ritual of placing goods in a
warehouse can be allowed to defeat that purpose. The entry of the
goods into the warehouse interrupts, but does not necessarily
terminate, their interstate journey. A temporary pause in their
transit does not mean that they are no longer "in commerce" within
the meaning of the Act. As in the case of an agency (cf. De
Loach v. Crowley's Inc.,
128 F.2d 378), if the halt in the
movement of the goods is a convenient intermediate step in the
process of getting them to their final destinations, they remain
"in commerce" until they reach those points. Then there is a
practical continuity of movement of the goods until they reach the
customers for whom they are intended. That is sufficient. Any other
test would allow formalities to conceal the continuous nature of
the interstate transit which constitutes commerce.
Secondly, the Administrator contends that the decision below
excludes from the category of goods "in commerce" certain types of
transactions which are substantially of the same character as the
prior orders which were included. Thus, it is shown that there is a
variety of items printed at the mill with the name of the customer.
It is also established that there are deliveries of certain goods
which are obtained from the manufacturer or supplier to meet the
needs of specified customers. Among the latter are certain types of
newsprint, paper, ice cream cups, and cottage cheese containers.
The record reveals, however, that the goods in both of these two
categories are ordered pursuant to a preexisting contract or
understanding with the customer. It is not clear whether the
decision of the Circuit Court of Appeals includes these two types
of transactions in the group of prior orders which it held
Page 317 U. S. 569
were covered by the Act. We think they must be included.
Certainly they cannot be distinguished from the special orders
which respondent receives from its customers. Here also, a break in
their physical continuity of transit is not controlling. If there
is a practical continuity of movement from the manufacturers or
suppliers without the state, through respondent's warehouse and on
to customers whose prior orders or contracts are being filled, the
interstate journey is not ended by reason of a temporary holding of
the goods at the warehouse. The fact that respondent may treat the
goods as stock in trade or the circumstance that title to the goods
passes to respondent on the intermediate delivery does not mean
that the interstate journey ends at the warehouse. The contract or
understanding pursuant to which goods are ordered, like a special
order, indicates where it was intended that the interstate movement
should terminate. Numerous authorities are pressed on us for the
contrary view and for the conclusion that, when the goods enter the
warehouse, they are no longer "in commerce." But, as we stated in
Kirschbaum Co. v. Walling, 316 U.
, 316 U. S.
-521, decisions dealing with various assertions of
state or federal power in the commerce field are not particularly
helpful in determining the reach of this Act.
Finally, the Administrator contends that most of the customers
form a fairly stable group, that their orders are recurrent as to
the kind and amount of merchandise, and that the manager can
estimate with considerable precision the needs of his trade. It is
therefore urged that the business with these customers is "in
commerce" within the meaning of the Act. Some of the instances to
which we are referred are situations which we have discussed in
connection with goods delivered pursuant to a prior order,
contract, or understanding. For the reasons stated, they must be
included in the group of transactions held to be "in commerce." As
to the balance, we do not think
Page 317 U. S. 570
the Administrator has sustained the burden which is on a
petitioner of establishing error in a judgment which we are asked
to set aside. We do not mean to imply that a wholesaler's course of
business based on anticipation of needs of specific customers,
rather than on prior orders or contracts, might not at times be
sufficient to establish that practical continuity in transit
necessary to keep a movement of goods "in commerce" within the
meaning of the Act. It was said in Swift & Co. v. United
States, 196 U. S. 375
196 U. S. 398
that "commerce among the states is not a technical legal
conception, but a practical one, drawn from the course of
business." While that observation was made a propos
constitutional scope of the commerce power, it is equally apt as a
starting point for inquiry whether a particular business is "in
commerce" within the meaning of this Act. We do not believe,
however, that, on this phase of the case, such a course of business
is revealed by this record. The evidence said to support it is of a
wholly general character, and lacks that particularity necessary to
show that the goods in question were different from goods acquired
and held by a local merchant for local disposition.
In this connection, we cannot be unmindful that Congress, in
enacting this statute, plainly indicated its purpose to leave local
business to the protection of the states. S.Rep. No. 884, 75th
Cong., 1st Sess., p. 5; 83 Cong.Rec. 75th Cong., 3d Sess., Pt. 8,
p. 9169. Moreover, as we stated in Kirschbaum Co. v. Walling,
pp. 316 U. S.
-523, Congress did not exercise in this Act the full
scope of the commerce power. We may assume the validity of the
argument that, since wholesalers doing a local business are in
competition with wholesalers doing an interstate business, the
latter would be prejudiced if their competitors were not required
to comply with the same labor standards. That consideration,
however, would be pertinent only if the Act extended to businesses
or transactions "affecting commerce."
Page 317 U. S. 571
But, as we noted in the Kirschbaum
case, the Act did
not go so far. It is urged, however, that a different result
obtains in case of wholesalers. The argument is based on the fact
that the Act excepts from § 6 and § 7 "any employee employed in a .
. . local retailing capacity" (§ 13(a)(1)) and "any employee
engaged in any retail or service establishment the greater part of
whose selling or servicing is in intrastate commerce." § 13(a)(2).
Since retailers are excluded by reason of these express provisions,
it is thought that the inclusion of wholesalers should be implied.
There is, however, no indication in the legislative history that,
but for the exemption of retailers, it was thought that all
movement of goods from manufacturers to wholesalers and on to
retailers would be "in commerce" within the meaning of the Act,
where the wholesalers and retailers were in the same state. It is
quite clear that the exemption in § 13(a)(2) was added to eliminate
those retailers located near the state lines and making some
interstate sales. 83 Cong.Rec. 75th Cong., 3d Sess., Pt. 7, pp.
7281-7282, 7436-7438. [Footnote
] And the exemption for retailers contained in § 13(a)(1) was
to allay the fears of those who felt that a retailer purchasing
goods from without the state might otherwise be included.
Hence, we cannot conclude that all phases of a
wholesale business selling intrastate are covered by the Act solely
because it makes its purchases interstate. The use of the words "in
commerce" entails an analysis of the various types of transactions
and the particular course of business along the lines we have
The fact that all of respondent's business is not shown to have
an interstate character is not important. The applicability of the
Act is dependent on the character of the employees' work.
Kirschbaum Co. v. Walling, supra,
Page 317 U. S. 572
p. 316 U. S. 524
If a substantial part of an employee's activities related to goods
whose movement in the channels of interstate commerce was
established by the test we have described, he is covered by the
Act. Here, as in other situations (Kirschbaum Co. v. Walling,
p. 316 U. S.
), the question of the Act's coverage depends on the
special facts pertaining to the particular business. The Circuit
Court of Appeals remanded the cause to the District Court so that
new findings could be made and an appropriate decree be framed.
Whether additional evidence must be taken on any phase of the case
so that a decree may be drawn is a question for the District Court.
We merely hold that the decision of the Circuit Court of Appeals,
as construed and modified by this opinion, states the correct view
of the law. As so modified, the judgment below is
See, for example,
the statement by Senator Borah,
speaking for the Senate Conferees on the Conference Report,
". . . if the business is such as to occupy the channels of
interstate commerce, any of the employees who are a necessary part
of carrying on that business are within the terms of this bill,
and, in my opinion, are under the Constitution of the United
83 Cong.Rec. 75th Cong., 3d Sess., Pt. 8, p. 9170.
Joint Hearings, Senate Committee on Education
and Labor, House Committee on Labor, 75th Cong., 1st Sess., on S.
2475 and H.R. 7200, Pt. 1, p. 35.