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Raymond J. Donovan Secretary of Labor United States Department of Labor v. Frezzo Brothers Inc.

decided: May 20, 1982; As Amended June 1, 1982.

RAYMOND J. DONOVAN,*FN* SECRETARY OF LABOR UNITED STATES DEPARTMENT OF LABOR
v.
FREZZO BROTHERS, INC., AND FREZZO, GUIDO, INDIVIDUALLY AND AS A CORPORATE OFFICER AND FREZZO, JAMES, INDIVIDUALLY AND AS A CORPORATE OFFICER. APPELLANTS



ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF PENNSYLVANIA

Before Gibbons, Sloviter and Becker, Circuit Judges.

Author: Gibbons

Opinion OF THE COURT

Frezzo Brothers, Inc. (Frezzo), appeals from a permanent injunction directing it to pay overtime wages to its employees under the Fair Labor Standards Act (FLSA), 29 U.S.C. § 201 et seq. (1976).

On January 17, 1979, the Secretary of Labor filed a complaint against Frezzo Brothers, alleging that it had violated the FLSA by failing to pay overtime wages to employees engaged in the process of preparing compost for growing mushrooms and by failing to maintain records as required by the FLSA. Frezzo contended that employees in its mushroom composting operation were exempt from the FLSA's overtime pay requirements, pursuant to a statutory exemption for employees employed in agriculture. 29 U.S.C. § 213(b)(12) (Supp.1980).*fn1 After a three day trial on January 19, 20 and 21, 1981, which included a tour of Frezzo's operation, the parties reached a consent judgment regarding the alleged record keeping violations. As to the overtime pay claim, the District Court on June 12, 1981 concluded that the preparation of mushroom compost was not agriculture within the meaning of the FLSA. The District Court based this conclusion on its finding that preparation of mushroom compost is neither cultivation or tillage of the soil; the production, cultivation, growing and harvesting of an agricultural commodity; nor a practice incident to farming. The District Court permanently enjoined Frezzo from violating the overtime compensation provisions of the FLSA and directed it to pay $67,363.01 in back wages and interest to its employees. On July 20, 1981 Frezzo appealed. We affirm.

I.

Frezzo's business consists of two operations-production and sale of mushroom compost, and mushroom growing. The two operations are physically separate and done by two different groups of employees. The process of growing commercial mushrooms consists of several distinct steps. Mushrooms are grown in the dark in concrete block "mushroom houses." Mushrooms do not manufacture their own food, and therefore must be grown in compost, a medium which provides nutrients. Once mushroom compost is prepared, it is placed in the mushroom houses on wooden beds and then pasteurized. Following pasteurization, mushroom spawn is injected into the mushroom compost. Once the spawn is injected, it is allowed to run through the growing medium. A casing layer is then applied, which dramatically increases mushroom yields. Within several weeks, harvesting of the mushroom crop begins.

Mushroom compost is produced over a two week period from a variety of materials, including horse and chicken manure, corn-cobs, hay and cocoa shells. Once the raw materials are assembled, they are moved with a front end loader into a compost turning machine. Water is added, and approximately every three days the pile is turned. Heat is generated by the micro-flora present in the compost pile and the temperature ranges from 140 to 170 degrees. Near the end of the composting, gypsum is added to increase aeration and reduce greasiness, reduce the Ph level, retain nitrogen in the pile and to act as a nutrient for the mushrooms. During the two weeks of the composting process, the raw materials are biologically, physically and chemically changed into Frezzo's product-mushroom compost. Frezzo sells ninety percent of the compost it produces to other mushroom growers and retains ten percent for its own use.

The sole issue before the court on this appeal is whether Frezzo's production of mushroom compost constitutes agriculture within the meaning of the exemption to the FLSA. If it does, then Frezzo's employees engaged in compost production are not entitled to collect premium overtime pay.

II.

The FLSA broadly defines agriculture as including "farming in all its branches," which in turn includes the "cultivation and tillage of the soil, dairying, the production, cultivation, growing and harvesting of any agricultural or horticultural commodities ... and any practice performed by a farmer or on a farm as an incident to or in conjunction with such farming operations...." 29 U.S.C. § 203(f).*fn2 This definition is divided into two parts: "primary" agriculture, which includes all activities which are actually farming, and "secondary" agriculture, which includes activities incident to or in conjunction with the primary farming operation of a particular farmer. Farmers Reservoir & Irrigation Co. v. McComb, 337 U.S. 755, 762-63, 766 n.15, 69 S. Ct. 1274, 1278, 1280, 93 L. Ed. 1672 (1949).

Frezzo contends that the District Court erred as a matter of law in concluding that mushroom compost is neither soil nor an agricultural commodity and therefore not primary agriculture.*fn3 Attempting to draw an analogy between traditional green crop farming and mushroom growing, Frezzo argues that mushroom compost serves the same function as the earth in which crops are grown, and just as plowing and preparing a seed bed is farming, so is the preparation of mushroom compost. We reject this analogy and agree with the District Court that, although mushroom growing is a type of farming, the production of mushroom compost is a preliminary activity which manufactures a product that is then used in farming.

A.

The District Court concluded that the proper inquiry in determining whether preparation of mushroom compost fits within the statutory language of "cultivation and tillage of the soil" is whether mushroom compost is itself soil. 433a. Relying on the administrative interpretation of that phrase contained in 29 C.F.R. § 780.110, the District Court decided that Congress meant the term "soil" to have its regular meaning of earth, dirt or the ordinary material in which growing occurs. 439a. The regulation defines cultivation and tillage of the soil as including "all the operations necessary to prepare a suitable seedbed, eliminate weed growth, and improve the condition of the soil." Thus, the regulations state, grading or leveling land, removing rock or adding fertilizer are all included, but other operations such as the production and distribution of fertilizer are not. Id. Frezzo argues that since mushrooms are concededly an agricultural commodity, and since the Department of Labor's regulations divide agricultural commodities into two classes, products of the soil and domesticated animals, the Department of Labor must have interpreted the Congressional use of the word "soil" to encompass more than earth or dirt. The Secretary of Labor on the other hand, argues that mushroom compost is a "soilless" growing medium. We agree with the Secretary that preparation of mushroom compost does not constitute the cultivation and tillage of the soil.

Although there is a certain surface logic to Frezzo's position, it is too narrowly constructed. First, the section of the administrative regulations relied upon by Frezzo nowhere states that products of the soil and domesticated animals are the two sole categories of agricultural commodities. Bean sprouts, like mushrooms, are an obvious example of an item considered by the Secretary to be an agricultural commodity and yet fitting into neither category. See 29 ...


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