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SHULTZ v. TWIN CITY FOODS

June 1, 1970

George P. Shultz, Secretary of Labor, U.S. Department of Labor, Plaintiff
v.
Twin City Foods, Inc., Defendant


Beeks, D. J.


The opinion of the court was delivered by: BEEKS

This is an action brought by the Secretary of Labor to enjoin Twin City Foods, Inc. (Twin City) from continuing to claim entitlement to overtime exemptions under § 7(c) *fn1" and § 7(d) *fn2" of the Fair Labor Standards Act for employees engaged in packaging vegetables previously frozen in bulk containers. Twin City will continue to claim said exemptions and will continue to fail to pay the premium compensation required by § 7(a)(1) *fn3" of the Act for overtime work by such employees unless enjoined from violating the Act by this Court. These exemptions are claimed only during the processing season, which is that period when perishable agricultural commodities are being received by Twin City for processing.

 Twin City is a Washington corporation engaged in freezing fresh fruits and vegetables. It operates a freezing and packing plant at Ellensburg, Washington, where it freezes and packs corn, carrots, peas, and lima beans, and mixes and packs mixed frozen vegetables. The frozen vegetables are sold to more than 500 retailers and institutional buyers. Approximately 95 percent of the vegetables frozen and packed by defendant are shipped to customers outside the State of Washington.

 All fresh vegetables received are initially blanched, cooled, and graded, after which they are conveyed by a moving belt through a freezing tunnel. Those portions of the resulting frozen pack which are to be initially packaged in ready-for-sale packages are then packaged and cased and the cases are moved to the cold storage warehouse. The balance of the frozen product is placed in bulk containers of 1,700 to 2,000-pound capacity. The bulk containers, or "totes," are then moved to the cold storage warehouse. The cold storage warehouse has a holding capacity of 25 million pounds.

 Approximately 15 percent of the fresh vegetables processed are initially frozen in consumer size or other ready-for-sale packages. Approximately 85 percent of the fresh vegetables processed are initially frozen in bulk quantities and are subsequently taken out of cold storage and packed in consumer size or other ready-for-sale packages.

 A single day's pack may involve as many as thirty or more separate variations of packaging and labeling requirements.

 The design capacity of the freezing equipment is 32,000 pounds of product per hour. Two ten-hour shifts per day are a normal freezing operation during the processing season. During the processing season, the plant has frequently frozen between 450,000 pounds to 550,000 pounds of product in a day. The packaging space can accommodate two packaging lines into final package form and one discharge line of frozen product into bulk containers. Packaging lines which package into final package form cannot operate at a combined capacity as would be required to package the output of the freezing operation.

 The packaging and labeling lines are run steadily, but, because of the product and packaging variations involved, cannot put the product into final package form as rapidly as the product is discharged from the freezing belts or tunnels.

 Frozen vegetable products in bulk containers awaiting packaging and labeling, as employed in the industry and at defendant's plant, are not in a final salable form or condition. Sale and shipment of the frozen vegetable product requires that it be packaged, labeled and cased, all as required or specified for the particular type of pack and by the particular buyer.

 The section 7(c) and the section 7(d) exemptions were claimed during the period the plant was receiving fresh produce for processing as to (1) all employees engaged in the blanching, sorting, grading, packing, and freezing of fresh vegetables in ready-for-sale packages or in bulk, and (2) those employees directly and primarily engaged in packing vegetables previously frozen and stored in bulk.

 The packing procedures and requirements applicable to the plant in question are typical of industry practices in the processing of frozen vegetable products.

 The question relating to packaging from bulk has been clearly decided under the Act as it stood prior to the 1966 amendments in Mitchell v. Oregon Frozen Foods Co., 145 F. Supp. 157 (D. Ore., 1956). *fn4" Oregon Frozen Foods held that deferred packaging from bulk, even beyond the end of the processing season, was an activity eligible for the seasonal and first processing exemptions.


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