Goldberg v. Whitaker House Cooperative, Inc./Dissent Whittaker

Mr. Justice WHITTAKER, with whom Mr. Justice BRENNAN and Mr. Justice STEWART join, dissenting.

It is clear and undisputed that the Fair Labor Standards Act does not apply in the absence of an employer-employee relationship. Here, upon what seems to me to be ample evidence, the District Court found that the cooperative was created and is being operated as a true cooperative under the laws of Maine, 170 F.Supp. 743, and, on appeal, the Court of Appeals approved those findings. 1 Cir., 275 F.2d 362. Unless those findings are clearly erroneous, they must be accepted here. Fed.Rules Civ.Proc., 52(a), 28 U.S.C., 28 U.S.C.A. Accepting them excludes any notion that the cooperative was formed or availed of as a 'device' to circumvent the Act. It is not seriously contended here that these findings of the two courts below were 'clearly erroneous,' but rather the Government's principal contention is that the bona fides of the cooperative are immaterial.

Doubtless, even a true cooperative may have employees. But surely a true cooperative does not automatically become the 'employer' of its 'members' in the commonly understood sense of those terms, nor, hence, in their sense as used in subparagraphs (d) and (e) of § 3 of the Act, 29 U.S.C. § 203(d) and (e), 29 U.S.C.A. § 203(d, e). Something more is required. For the Act to apply, the cooperative must in a fair sense 'employ' its 'members.' Like the two courts below, I think it may not fairly be said, on this record, that there is any evidence that the cooperative ever did 'employ' its 'members,' or suffer or permit them to work for it. Instead, the evidence shows, as the two courts below found and as I read it, that each member worked for herself-in her own home when and as she chose-toward the production of knitted articles which she marketed through her cooperative, receiving immediately 'an advance' thereon, and ultimately-after payment of her portion of the cooperative's 'expenses' and setting up its 'necessary depreciation (and capital) reserves'-the balance of the proceeds of sale would 'be distributed (to her) according to the percentage of work (she) submitted to the Cooperative for sale.' Like the two courts below, I fail to see in this any element of employment by the cooperative of its members.

If, as seems practically inevitable in the light of the Court's judgment, the cooperative must now be dissolved, will not its assets, including its 'depreciation (and capital) reserves' as well as its 'excess receipts,' have to be refunded to its members 'according to the percentage of work submitted (by them respectively) to the Cooperative for sale,' and not according to their memberships or investments, just as required by the Maine statute and the cooperative's articles? This seems wholly inconsistent with any notion that the members were employees of the cooperative or that they were suffered to work for it, or that it bought or paid them for their knitted articles.

On the basis of the amply supported findings of the two courts below, it seems reasonably clear that the cooperative never did 'employ' its 'members,' and inasmuch as the Act does not apply in the absence of an employment relationship, I think the judgment of the two courts below is consonant with the facts and the law and should be affirmed.