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            Title Cruz v. Chesapeake Shipping, Inc.

 

            Date 1991

            By

            Subject Other\Dissenting

                

 Contents

 

 

Page 1

60 of 64 DOCUMENTS

ERNESTO C. CRUZ, VICTORINO A. DOMINGO, ZALDY N. BANTILIAN, LEONARDO J. ESPIRITU, WILFREDO D. JEQUINTO, JUAN S. TERENCIO, SEVERIANO S. GASATAYA, JR., ROBERTO A. ALEJADO, VICENTE B. SOLANO, CESAR B. DEL ROSARIO, RENATO M. SANTIAGO, ERLITO R. VISTAR, RICHARD B. CELOSO, CIRILO R. PACHECO, ANTONIO T. TANIO-AN, ARMANDO C. EREDIANO, PASCUALITO R. AMISTOSO, ROMEO D. BARDALO, JOSE C. CONCHA, MIGUEL A. GOMEZ, JR., ROMEO B. ENRIQUEZ, JAIME M. INOVEJAS, MORENO T. JESUS, RAYMUNDO B. ARVESU, FAUSTINO T. PIEDAD, JR., RENATO O. CANAFRANCA, RICARDO D. BOBIS, ANGEL L. BONOTAN, ANTONIO V. SORIANO, CELSO A. TORNO, BENJAMIN G. PUNZALAN, RUFINO M. CASTILLO, GEORGE P. ALARCON, WILFREDO G. PASOQUIN, BEATO V. BAUTISTA, FERNANDO O. LEGAREJOS, JENNIFER M. OFELAS, ALFRED L. BRICIA, ELIODORO C. ALOJADO, FELICISIMO D. ABUBO, WILFREDO T. DELA PENA, ROMEO A. ALIMODO, JR., FERNANDO D. MABUTAS, ISABELITO J. BORJA, MAGPURI H. RAMOS, JR., RODOLFO A. FRANCISCO, MANOLITO R. GALANG, GLORETO A. AQUINO, MERVIN VILLANUEVA, DANDY D. CABALO, RONILO J. PEREZ, RODITO G. NACIONAL, JUAN C. ISLES, ARTURO M. LONTAJO, ROMEO D. DIMALANTA, DANIEL J. MACEDA, RONALD P. GAMO, JACOB QUIRANTE II, ROBERT C. ALAMAR, VINCENTE SILAN, ANTONIO O. MONTEMAYOR, ZOSIMO E. DUQUE, ELISERIO PAROHINOG, ALEX P. OBLEFIAS, ARTHUR A. NAVARRO, MAXIMILLIANO S. PARAISO, ALEXANDER A. SAN GABRIEL, MARIO LEE V. IMBONG, RENE D. AYUKIL, ROSSELER B. VERGARA, EDGAR B. VILLARANTE, JIMMY G. HARESCO, GODOFREDO C. OLIVER, JR., DANILO R. ROCO, PEDRO TIONGZON, RUBEN A. DATINGALING, TEODORO S. BERNAL, VICTORIO L. AGUILAR, MARIO S. MANOSCA, EDUARDO F. DE LOS SANTOS, JAIME N. MACATIVO, JR., ERWIN L. OYAO, MELQUIADES L. GALLOSO, JR., EFREN B. GAVINO, TIRSO R. RACZA, JR., JOSE M. SAGANA, MODESTO T. BANOGON, TEDDY C. TEFORA, HENRITO S. ALONSAGAY, LUIS J. ORTIZ, ROGELIO R. ORTIZ, CARLITO MAPRANGALA, CHARLIE T. SANSAET, ERNESTO B. JAVIER, REYNALDO A. CABACUNGAN, MANUEL D. OLIVO, ILLUMINADO M. PATAL, RAFAEL D. PEREZ, ONOFRE S. RODRIGUEZ, JR., JORGE P. DELA CRUZ, MARTIN F. CRUZ, JR., SALVADOR BALANE, ROGELIO CEREZO, SR., ROGER J. DALUMPINES, FRANCISCO P. SUELO, REYNALDO G. CADAOAS, MARCELO T. BEE, JORGE Y. VILLAROJO, NERLITO L. DE JESUS, NOEL A. DELOSO, MARION CALDERON, JR., FLORO M. BAUTISTA, JR., RUFINO CAPITLE, EMILIO A. FERNANDEZ, RICARDO G. ANTONIO, EDWARD A. MARTY, AMADOR C. ISLES, SEVERO ACUPAN, GEMSON C. BOONGALING, DANILO AGAZA ANTONIO, JOSE CASIGURAN GULLIAB, JR., CARLOS PADERNAL VILLANUEVA, JOSE LIM ABUTIN, ROBERTO BELEY ANDAYA, PEDRO B. NUNEZ, SABINO NINEL MARTINEZ, DANILO D. JAVIER, ALEJANDRO SOSA ORTEGA, RICARDO S. GUARTILLA, ROMEO L. MOLAR, ANASTACIO B. MAGSINO, EFRAIM SUAREZ, MELCHOR PINEDA, R. C. CEREZO, SR., MAXIMO P. PINEDA, ANTONIO G. GEMOTO, RIZAL O. SALEM, EDISON MAMBURAM, JERSON R. DELA CERNA, JUNIO P. DEQUITO, PACIFICO B. CATU, RUDOLFO I. TIANA, CARLITO A. BANO, REYNALDO M. CUSTODIO, REYNALDO R. BAUTISTA, MODESTO GRACIOSA, FERNANDO I. ALIVIA, LAURO A. BUENAFLOR, ELMO M. LALIC, CLAUDIO C. VARZUELO, MAXIMO G. TAPALLA, JR., BENVIENIDA BORNASAL, MERITO A. DIALINO, ALEX O. FORTUNADO, GERALDINE V. NICOLAS, HERCULANO R.

GALLENTES, GERONIMO V. FRANCISCO, GERARDO L. ROA, GEORGE I. LOPEZ, DIVINA R. SAA, AMELIA T. CORDOVA, WILFREDO P. BANGCUYO, ANDELINO T. MARZAN, DANILO E. DELALUNA, bIRENEO R. SARNO, RODOLFO T. DACQUEL, ELMER P. UNICA, ANTONIO M. DELOS SANTOS, DANILO T. BONITOLLO,

932 F.2d 218, *; 1991 U.S. App. LEXIS 8147, **;

118 Lab. Cas. (CCH) P35,475; 30 Wage & Hour Cas. (BNA) 455

WILLIAM CALIP, JR., GUERRERO M. OPAO, EDUARDO D. JARDIN, GIBSON P. ROBERTO, JR., VINCENTE E. FLORES, NAPOLEON ARROYO, MARIO FERMIN, FULGENCIO B. CERDENA, RONALDO C. OLARTE, ABNER C. RODRIQUEZ, DANILO R. ALBAYDA, JESUS BAYANI G. TORRES, SERGIO N. SALUDO, REYNALDO ILAO, GERARDO M. DELA CRUZ, AMADOR C. VILLACIN, NICANOR W. ARANCON, JR., LUISITO R. SALAZAR, EDUARDO A. NARCISO, MARCELO EUGENIO, NESTOR DE JESUS, MANUEL B. LIM, KENNETH V. JALLORINA, SALVADOR A. BALAGTAS, RODITO L. RUBION, ERNESTO MANALANSAN, CARLO A. ENCARNACION, DOMINGO B. BACABAC, MARIO M. CASTILLO, SEVERINO Z. SAMSON, RODRIGO L. MURILLO, NOEL A. PAPANGO, OSCAR P. VILLANUEVA, ROGER T. DEL ROSARIO, VICENTE MARINAS, SAMUEL C. ATIENZA, TEOFILO ARELLANO, CARLIE D. ALVAREZ, ALFREDO M. TALUB, RAMON M. HENSON, LEOPOLDO MERCOLITA, RAMON P. TOLENTINO, GENARO M. ANCIANO, DIODORO B. DALAGUAN, DANILO B. ESTROSOS, ANTHONY G. APOSTOL, ALFREDO S. CORCINO, JESUS PORTUGAL, JR., ASER S. SALAC, SR., ROBERT S. GEVERO, MACARIO L. ABION, CALIXTO S. APIT, GEORGE CABALUNA, SERGIO T. CALIMBAS, SERGIO T. CALUMBAS, JOSE T. INTON, ALFREDO LUCAS, CARLOS C. RAMIREZ, ROLAND L. VENTURA, Appellants v. CHESAPEAKE SHIPPING INC.; GLENEAGLE SHIP MANAGEMENT CO., INC.; KUWAIT OIL TANKER COMPANY; KUWAIT PETROLEUM CORPORATION; KPC (U.S. HOLDINGS) INC.; SANTA FE INTERNATIONAL CORP.; NAESS SHIPPING (HOLLAND) B.V. OF AMSTERDAM

No. 90-3390

UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT

932 F.2d 218; 1991 U.S. App. LEXIS 8147; 118 Lab. Cas. (CCH) P35,475; 30 Wage & Hour

Cas. (BNA) 455; 1991 AMC 2017

January 7, 1991, Argued

April 29, 1991, Filed

Page 2

PRIOR  HISTORY:              **1    Appeal  from  the  United States District Court for the District of Delaware;  D.C. No. 89-00366.

DISPOSITION:

Affirmed.

CASE SUMMARY:

PROCEDURAL POSTURE: Plaintiffs, Philippine sea- men, appealed a judgment of the United States District Court for the District of Delaware, which granted sum- mary judgment to defendant shipping companies in a suit under the Fair Labor Standards Act (FLSA), 29 U.S.C.S.

§ 201 et seq., which alleged that the temporary reflagging of defendants' vessels under the United States flag entitled them to minimum wages and benefits.

OVERVIEW:  Plaintiffs,  Philippine  seamen,  filed  suit

against  defendant  shipping  companies  under  the  Fair Labor Standards Act (FLSA), 29 U.S.C.S. § 201 et seq., alleging that the temporary reflagging of defendants' ves- sels under the United States flag entitled them to minimum wages and benefits. The district court granted defendants' motion for summary judgment, and plaintiffs appealed. A fractured court affirmed. The court held concurrently that under choice of law principles United States law did not apply to plaintiffs and, alternatively, that plaintiffs were not engaged in commerce nor employed by an enterprise engaged in commerce under the terms of FLSA.

OUTCOME: The court affirmed the district court's grant of summary judgment to defendant shipping companies on a claim under the Fair Labor Standards Act brought by plaintiffs, Philippine seamen, alleging that the tempo- rary  reflagging  of  defendants'  vessels  under  the  United States flag entitled them to minimum wages and benefits because United States law did not apply or, alternatively, the plaintiffs were not engaged in commerce.

932 F.2d 218, *; 1991 U.S. App. LEXIS 8147, **1;

118 Lab. Cas. (CCH) P35,475; 30 Wage & Hour Cas. (BNA) 455

Page 3

LexisNexis(R) Headnotes

Civil  Procedure  >  Summary  Judgment  >  Summary

Judgment Standard

HN1  Under Fed. R. Civ. P. 56, summary judgment can be granted only if is shown that there is no genuine issue as to any material fact and that the moving party is enti- tled to a judgment as a matter of law. The facts must be viewed in the light most favorable to the party opposing the motion.

Civil Procedure > Appeals > Standards of Review > De

Novo Review

HN2  The appellate court is required to apply the same test for summary judgment the district court should have used  initially.  The  appellate  court's  review  of  the  legal question of whether a party is entitled to recover under the Fair Labor Standards Act, 29 U.S.C.S. § 201 et seq., is plenary.

Labor  &  Employment  Law  >  Wage  &  Hour  Laws  > Coverage & Definitions

HN3  To be covered by the Fair Labor Standards Act,

29 U.S.C.S. §201 et seq., seamen must meet a two-part requirement. First, the seamen must be engaged in com- merce  or  employed  by  an  enterprise  engaged  in  com- merce.  Second,  the  seamen  must  be  employed  on  an American vessel.

Labor  &  Employment  Law  >  Wage  &  Hour  Laws  > Coverage & Definitions

HN4   An  American  vessel  is  precisely  defined  in  29

U.S.C.S. § 203(p) as including any vessel which is docu- mented or numbered under the laws of the United States. Labor  &  Employment  Law  >  Wage  &  Hour  Laws  > Coverage & Definitions

HN5  The Fair Labor Standards Act (FLSA), 29 U.S.C.S.

§201 et seq. defines "in commerce" to include only those economic activities which touch the United States at some point.   29 U.S.C.S. § 203(b) of the FLSA defines com- merce as trade, commerce, transportation, transmission, or communication among the several States or between any State and any place outside thereof.   29 U.S.C.S. §

203(c) defines state as any state of the United States or the District of Columbia or any territory or possession of the United States.

Labor  &  Employment  Law  >  Wage  &  Hour  Laws  > Coverage & Definitions

HN6  See 29 U.S.C.S. § 206(a).

Labor  &  Employment  Law  >  Wage  &  Hour  Laws  > Coverage & Definitions

HN7  Enterprise is defined as the related activities per- formed, either through unified operation or common con- trol, by any person or persons for a common business pur-

pose, and includes all such activities whether performed in one or more establishments or by one or more corporate or other organizational units including departments of an establishment operated through leasing arrangements, but shall not include the related activities performed for such enterprise  by  an  independent  contractor.  To  be  consid- ered an enterprise under the Fair Labor Standards Act, 29

U.S.C.S. § 201 et seq., the corporations must satisfy each of three elements:  the business must be (1) engaged in related activities; (2) under unified operation or common control; and (3) have a common business purpose.

Labor  &  Employment  Law  >  Wage  &  Hour  Laws  > Coverage & Definitions

HN8  The term "related activities" is defined as auxiliary and service activities such as central office and warehous- ing activities and bookkeeping, auditing, purchasing, ad- vertising and other services including all activities which are  necessary  to  the  operation  and  maintenance  of  the particular business. C.F.R. § 779.206.

Labor  &  Employment  Law  >  Wage  &  Hour  Laws  > Coverage & Definitions

HN9  An enterprise engaged in commerce or in the pro- duction of goods for commerce is defined as an enterprise that has employees engaged in commerce or in the pro- duction of goods for commerce,  or that has employees handling, selling, or otherwise working on goods or ma- terials that have been moved in or produced for commerce by any person.  29 U.S.C.S. §§ 203(s)(1), (A)(i).

COUNSEL:

Joseph E. Mayer, Esq., Argued, Stephen M. Koslow, Esq., Quasha Wessely & Schneider, Washington, District of Columbia, Attorneys for Appellants.

T.S.L. Perlman, Esq., Argued, Eugene P. Miler, Esq., Fort  &  Schlefer,   Washington,   District  of  Columbia, Attorneys for Chesapeake Shipping, Inc., Gleneagle Ship Management Co., Inc., and Kuwait Oil Tanker Co. S.A.K. Michael   M.   Johnson,   Esq.,   Argued,   Baker   & Hostetler,  McCutchen  Black,  Los  Angeles,  California, Michael   B.   McCauley,             Esq.,        Palmer,    Biezup   & Henderson, Wilmington, Delaware, Attorneys for Kuwait Petroleum   Corporation   and   Santa   Fe   International

Corporation.

JUDGES:

Cowen, Alito, and Rosenn, Circuit Judges.   Cowen, Circuit Judge,  concurring in the judgment only.   Alito, Circuit Judge, dissenting. Cowen, J., Circuit Judge, con- curring.  Alito, Circuit Judge, dissenting.

OPINIONBY:

932 F.2d 218, *; 1991 U.S. App. LEXIS 8147, **1;

118 Lab. Cas. (CCH) P35,475; 30 Wage & Hour Cas. (BNA) 455

Page 4

ROSENN

OPINION:

*219     OPINION                ANNOUNCING     THE JUDGMENT OF THE COURT

ROSENN, Circuit Judge

This appeal, arising in the context of the unanticipated juxtaposition of foreign policy decisions with domestic regulation of

932 F.2d 218, *220; 1991 U.S. App. LEXIS 8147, **1;

118 Lab. Cas. (CCH) P35,475; 30 Wage & Hour Cas. (BNA) 455

Page 5

*220   employee working conditions, presents the novel question of whether the temporary reflagging of former Kuwaiti oil tankers under the United States flag renders the Fair Labor Standards Act,  29 U.S.C. § 201, et seq.

("FLSA"   **2   or "the Act"), applicable to foreign sea- men  employed  on  ships  operating  entirely  outside  the United  States.  In  1987,  as  a  result  of  the  hazards  the Iran-Iraq war posed to neutral shipping operations in the Persian Gulf,  eleven Kuwaiti vessels were reflagged to gain the protection of the United States. The plaintiffs,

228 Philippine seamen employed on these vessels, claim that the reflagging, which required compliance with ex- tensive United States maritime statutes, entitled them to minimum wages and benefits under FLSA. n1

n1 Seamen are exempted from the overtime pro- visions of FLSA by section 213(b)(6).

The  United  States  District  Court  for  the  District  of Delaware granted defendants' motion for summary judg- ment, holding that under choice of law principles, United States law did not apply to these seamen, or alternatively, that  these  seamen  were  not  engaged "in  commerce"  as required by FLSA and that the vessels came under the foreign territory exemption of FLSA. Plaintiffs appealed. We affirm the judgment of the district **3  court because Judge Cowen believes that under choice of law principles United States law did not apply to the plaintiffs and I be- lieve that the plaintiffs were not engaged in commerce nor employed by an enterprise engaged in commerce under the terms of FLSA.

I.

A.  Reflagging Requirements

By  1986,  the  Iran-Iraq  war,  which  began  in  1980, was threatening to disrupt neutral shipping operations in the Persian Gulf. Ironically,  in light of the recent Iraqi invasion of Kuwait, Kuwait's assistance to Iraq in its war with Iran placed their shipping operations particularly at risk. The Iranian Government had intensified its efforts to intimidate Kuwait in an attempt to prevent Kuwait from supporting Iraq through financial assistance and use of its ports.

To  gain  the  protection  of  the  United  States  Navy while transporting oil and oil products in and from the

Persian Gulf, Kuwait approached the United States and proposed  that  eleven  Kuwaiti  tankers  be  reflagged  un- der the United States flag. The President, after consulting with the Secretary of Defense, the Secretary of State, and the National Security Advisor, granted Kuwait's request. Kuwaiti Tankers:  Hearings before the House Committee on   **4   Merchant Marine and Fisheries, 100th Cong.,

1st Sess., 40 (1987) (hereinafter Hearings).

Three  issues  arose  with  regard  to  the  reflagging: compliance with United States maritime laws requiring American ownership, adherence to safety regulations, and fulfillment of manning requirements. Congress required that American-flag vessels be owned by an entity such as

a corporation established under the laws of the United States or of a State, whose pres- ident  or  other  chief  executive  officer  and chairman  of  its  board  of  directors  are  citi- zens of the United States and no more of its directors are noncitizens than a minority of the number necessary to constitute a quorum

. . . .

46 U.S.C. § 12102. Upon reflagging, the law required that ownership of the vessels be transferred to a United States entity.  The  defendant,  Chesapeake  Shipping  Inc.,  was chartered on May 15, 1987, under the laws of Delaware for  the  specific  purpose  of  satisfying  this  statutory  re- quirement.

United States maritime laws also required that the re- flagged tankers be brought into compliance with marine safety laws and regulations. The Coast Guard granted a one-year grace period to comply with Coast Guard safety regulations **5    and a two-year grace period to meet dry-docking requirements.

Finally, 46 U.S.C. § 8103 compelled that the reflagged vessels  satisfy  certain  manning  requirements.  Section

8103 required that the ship's master and radio officers be United States citizens. Presently, section 8103(b)(1) also requires that each unlicensed seaman be a United States citizen or an alien lawfully admitted to the United States for permanent residence with a limitation of twenty-five percent placed on the

932 F.2d 218, *221; 1991 U.S. App. LEXIS 8147, **5;

118 Lab. Cas. (CCH) P35,475; 30 Wage & Hour Cas. (BNA) 455

Page 6

*221  number of aliens. However, at the time the Kuwaiti tankers were reflagged, section 8103(b) permitted "the use of non-United States citizen crew members while each vessel is engaged on a foreign voyage and does not call at a United States port." n2

n2 Some of the members of Congress expressed dismay  at  the  Hearings  that  the  Kuwaiti  tankers would  be  allowed  to  be  manned  by  non-United States  citizens.  For  example,  Mr.  Lent  inquired whether they were "missing a golden opportunity for our country in not insisting that the Kuwaitis in this situation utilize American crew people?" Mr. Lent expressed concern that a foreign crew would add  to  the  danger  posed  to  American  naval  ves- sels  guarding  them  due  to  the  difficulty  in  com- munication.  (Hearings  at  46).  Others  were  con- cerned  that  "the  Coast  Guard's  liberal  interpre- tation  of  the  manning  laws  could  have  a  disas- trous effect on United States jobs if other operators take  advantage  of  this  loophole  to  evade  United States manning laws." Id. at 10. These concerns re- sulted in the above-mentioned amendment to sec- tion 8103 which eliminated the foreign-to--foreign exception to United States citizen manning require- ments.  See  Commercial  Fishing  Industry  Vessel Anti-Reflagging  Act  of  1987,  Pub.   L.  100-239,

101 stat. 1778 (1988). On February 9, 1988, two days  before  the  new  law  was  to  take  effect,  the Secretary  of  Defense  asked  the  Coast  Guard  to waive the 11 reflagged vessels' compliance with the more stringent manning requirements. The Coast Guard granted the waiver,  thereby permitting the continued operation of the reflagged vessels with U.S. citizen masters and radio officers, but foreign crews.  In  National  Marine  Engineers'  Beneficial Association  v.  Burnley,  684  F.  Supp.  6  (D.D.C.

1988),  the  court  upheld  the  waiver  as  within  the authority of Secretary of Defense.

**6

Pursuant to this foreign-to--foreign port exception to the  manning  requirements  and  the  agreement  between Kuwait and the United States that the reflagged tankers would not call at United States ports, the vessels were per- mitted to retain their crew of unlicensed seamen recruited in the Philippines and could replace those seamen with other foreign nationals. These Philippine crewmen are the plaintiff-appellants in this action who claim that they are

entitled to the minimum wages and benefits provided by

FLSA.

B.  The Plaintiffs

Plaintiffs consist of 228 Philippine seamen who were crewmembers of the eleven Kuwaiti tankers during the time  that  the  vessels  were  reflagged  under  the  United States flag. All 228 are Philippine citizens and residents. They  came  from  the  Philippines  to  the  Persian  Gulf, signed on vessels there, and served tours of duty of sev- eral months. Upon completion of their tours of duty, the seamen were flown back to the Philippines. None have ever entered the United States.

The seamen were hired through the efforts of Naess Shipping   B.V.   of   Amsterdam   ("Naess").   n3   Naess, a   crewing   contractor,   is   a   Netherlands   corporation. The  Philippine  government  required  Naess  to  negoti- ate   **7                 with  the  Philippine  Overseas  Employment Administration ("POEA"), an agency of the Philippines Ministry   of   Labor   and   Employment,   in   hiring   the Philippine seamen. Under Philippine law, no foreign em- ployer may hire Philippine workers for overseas employ- ment except through the POEA.

n3 Naess is not a defendant in this suit; plain- tiffs dropped Naess as a defendant in their Third Amended Complaint.

The Philippine government established the POEA to promote and develop overseas employment opportunities and to afford protection to Philippine workers and their families. The POEA has promulgated extensive rules and regulations controlling overseas employment to accom- plish these objectives. It registers seamen seeking jobs, prescribes standard employment contracts for them, ap- proves their wages, and requires that 80% of their earn- ings be sent home. The POEA regulates advertisement and placement, contract processing and travel documentation, the filing of grievances, and provides worker assistance and welfare services.

Naess and **8    the Associated Marine Officers & Seamen's Union of the Pacific, a Philippine labor union, negotiated the plaintiffs' wages. The POEA verified and approved the individual contracts. The contracts also re- quired  the  POEA's  prior  approval  of  any  alterations  or changes in the contract and that all rights and obligations of the parties to the contract would be governed by the laws of the Republic of

932 F.2d 218, *222; 1991 U.S. App. LEXIS 8147, **8;

118 Lab. Cas. (CCH) P35,475; 30 Wage & Hour Cas. (BNA) 455

Page 7

*222  the Philippines, international conventions, treaties and covenants wherein the Philippines is a signatory. The labor contract for these Philippine seamen granted POEA

"original and exclusive jurisdiction over any and all dis- putes  or  controversies  arising  out  of"  the  contract  and that  all  claims  would  be  exclusively  resolved  through the established grievance procedure, the POEA, and the Philippine Court of Justice, in that order.

C.  The Defendants

The   defendants   consist   of   a   number   of   corpo- rations   involved   in   the   ownership   and   management of  the  eleven  vessels.  Three  American  corporations were   named   as   defendants:   Chesapeake   Shipping Inc.   ("Chesapeake");   Gleneagle   Ship   Management Company, Inc. ("Gleneagle"); and Santa Fe International Corporation ("Santa Fe"). Two Kuwaiti corporations are also   **9    defendants:   Kuwait  Oil  Tanker  Company

("KOTC") and Kuwait Petroleum Corporation ("KPC").

(See appendix A for Organizational Chart).

KPC,  a  corporation  which  is  wholly  owned  by  the Kuwaiti Government, is at the apex of the corporate struc- ture. It wholly owns both KOTC and Santa Fe. n4 KOTC, in turn,  wholly owns Chesapeake. Gleneagle is a com- pletely independent corporation.

n4 Santa Fe is actually directly owned by KPC

(US  Holdings)  which  in  turn  is  owned  by  KPC. KPC (US Holdings) was initially named as a de- fendant, but was dismissed from the case by stipu- lation.

Prior to the reflagging, KOTC owned the eleven ves- sels. As stated above, KOTC, to satisfy the United States ownership requirement, created Chesapeake as its wholly owned subsidiary. In consideration for all of Chesapeake's stock,  KOTC  transferred  title  to  the  eleven  vessels  to Chesapeake.  Upon  transfer  of  the  title  of  the  eleven tankers  to  Chesapeake,  Chesapeake  immediately  time- chartered  them  back  to  KOTC.  KOTC,  in  turn,  time- chartered at least one of the **10   tankers to KPC.

Chesapeake also chartered an American flagged and crewed vessel named the Ocean Wizard (later replaced by  the  Ocean  Runner)  from  Belmont  VLCC,  Inc.  for the transport of petroleum and petroleum products in the Persian Gulf. By chartering these vessels, Chesapeake in- sured that even if American "legislative problems" forced it to deflag its eleven tankers, it would "retain U.S. naval presence with the 'Ocean Wizard' on the basis of that ves- sel being on a shuttle between Kuwait and Khor Fakkan." This vessel engaged in the same trading patterns as the eleven reflagged vessels.

As required by law, a majority of Chesapeake's offi- cers and directors were United States citizens. Most of Chesapeake's officers and directors were also officers of defendant Santa Fe,  the Delaware corporation acquired by KPC in 1983. The rest of Chesapeake's officers and directors were also officers and directors of KOTC.

Santa Fe entered into a management service agree- ment  with  Chesapeake,   under  which  Santa  Fe  con- tracted to perform administrative,  accounting,  and pro- fessional services for Chesapeake. Santa Fe also prepared Chesapeake's United States tax returns and oversaw the vessels' compliance **11   with our maritime laws.

KOTC also entered into a management services agree- ment with Chesapeake. Pursuant to the agreement, KOTC undertook to provide certain "principal services" includ- ing legal services regarding observation of United States laws,  e.g.,  maritime,  corporate  and  labor,  for  which  it, like Santa Fe,  would receive a $6,000 monthly fee and reimbursement of expenses.

Gleneagle,  another  Delaware,  but  wholly  indepen- dent,  corporation,  also  contracted  with  Chesapeake  to manage the reflagged vessels. It is the American affili- ate of a worldwide vessel management group and has the approval  of  the  Maritime  Administration  of  the  United States Coast Guard to manage any American-flag vessel. Gleneagle assumed the responsibility of providing the re- quired American masters and radio officers and arranged for their hire, transportation, and payment. The manage- ment

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*223    agreement  also  delegated  other  responsibilities to Gleneagle, such as providing supplies, fuel, victuals, repairs, customs entry and exit clearances, insurance, and crew members, but by a co-terminous sub-management agreement,  Gleneagle  re-delegated  these  functions  to KOTC.  KOTC  continued  to  recruit  Philippine  seamen through **12    the same manning agents it had previ- ously used, including principally Naess.

To   facilitate   the   duties   assumed   by   KOTC   di- rectly  from  Chesapeake  and  indirectly  from  its  sub- management  agreement  with  Gleneagle,  KOTC  set  up a  "field  office"  in  Paramus,  New  Jersey.  KOTC  rented this  space  from  A.B.S.  Worldwide  Technical  Services

("Abstech").  In  connection  with  the  mandated  safety and  docking  modifications,  between  January  1988  and

1989, KOTC purchased $3,907,356 in supplies and equip- ment  from  United  States  suppliers  which  were  deliv- ered to points outside the United States. KOTC charged Chesapeake for  all  the  expenses  it  incurred  from  these activities.

D.  The Shipping Operations

Following  their  reflagging,  the  eleven  vessels  con- tinued to operate uninterruptedly in their former shipping routes under the protection of a United States Navy escort in the carriage of petroleum and its products between the Persian Gulf and Europe, the Mediterranean and the Far East.  The  vessels  maintained  telecommunications  with Santa Fe in California and Gleneagle in Texas through a satellite communication system administered by Inmarsat and its American company, Comsat. Chesapeake paid for these services.

None **13   of the reflagged vessels ever called at a United States port pursuant to the Kuwait-United States agreement. Because these vessels were granted temporary waivers  from  drydocking  and  safety  requirements,  the condition of no American port call was imposed to avoid

"skew ing "  or  "having  an  adverse  impact  on  the  mar- ketplace."  Hearings  at  87-88.  However,  during  August of  1989,  $2,811,444  of  cargo  from  one  of  the  vessels was transhipped to American oil companies in the United

States.

In the spring of 1989, KOTC repurchased six of the reflagged vessels and documented them as Kuwaiti ves- sels. The foreign crews of the five vessels that retained their United States registry were replaced with American seamen in all licensed and unlicensed positions.

II.

The district court granted defendants' motion for sum- mary judgment based on three grounds. First, the court held that under a choice of laws analysis, American law did not apply and the plaintiffs had alleged only a viola- tion of American law. Second, the court held that FLSA did not apply to these seamen because they were not en- gaged in commerce, nor did the defendants constitute an enterprise engaged in commerce. Finally, the court held that **14   the Philippine seamen were not entitled to the protection because they came under the foreign workplace exception found in section 213(f) of FLSA.

HN1  Under Fed. R. Civ. P. 56, summary judgment can be granted only if is shown that "there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." The facts must be viewed in the light most favorable to the party opposing the motion.  Bechtel v. Robinson, 886 F.2d 644,

647 (3rd Cir. 1989). HN2  This court is required to apply the same test the district court should have used initially. Goodman  v.  Mead  Johnson  &  Co.,  534  F.2d  566,  573

(3rd  Cir.  1976),  cert.  denied,  429  U.S.  1038,  97  S.  Ct.

732,  50  L.  Ed.  2d  748  (1977).  In  the  present  case,  the facts are undisputed. Our review of the legal question of whether the plaintiffs are entitled to recover under FLSA is plenary.

A.  Applicable Law

Before turning to the statutory interpretation of FLSA, the threshold question of whether FLSA is at all applica- ble to the situation at hand must be answered. The district court held that under choice of law principles, American law did not govern the

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*224    dispute  and  that  because   **15    the  plaintiffs had alleged only a violation of American law, summary judgment should be granted for the defendants.

The district court employed a choice of law analysis using  the  principles  established  in  Lauritzen  v.  Larsen,

345 U.S. 571, 97 L. Ed. 1254, 73 S. Ct. 921 (1953) and

Hellenic Lines Ltd. v. Rhoditis, 398 U.S. 306, 26 L. Ed. 2d

252, 90 S. Ct. 1731 (1970). In Lauritzen and Hellenic, the Supreme Court considered the applicability of the Jones Act, 46 U.S.C. § 688, which at that time provided that "any seaman who shall suffer personal injury in the course of his employment may, at his election, maintain an action for damages at law . . . ." The Court noted that if the Jones Act were read literally, Congress had "extended our law and opened our courts to all alien seafaring men injured anywhere in the world in service of watercraft of every foreign nation." Lauritzen, 345 U.S. at 577.

Such  all-encompassing  language,  the  Court  noted, presented a problem of statutory interpretation of decid- ing whether the Congress intended the Jones Act to be applied to foreign events or transactions. The Court con- cluded that:

Congress could not have been unaware of the necessity  of  construction   **16     imposed upon courts by such generality of language and was well warned that in the absence of more definite  directions  than are  contained in the Jones Act it would be applied by the courts  to  foreign  events,  foreign  ships  and foreign seamen only in accordance with the usual doctrine and practices of maritime law.

Lauritzen, 345 U.S. at 581. Thus, the Jones Act did not provide any limitation as to its application, thereby ne- cessitating the use of choice of law principles governing maritime tort claims.

Congress, in enacting FLSA, explicitly considered the reach of the Act. Unlike the Jones Act, whose literal in- terpretation would apply to seamen injured everywhere in the world, Congress has limited the applicability of FLSA to seamen and other employees by imposing certain re- quirements. HN3  To be covered by FLSA, seamen must

meet a two-part requirement. First, the seamen must be engaged "in commerce" or employed by an "enterprise engaged in commerce." See 29 U.S.C. § 206(a). Second, the  seamen  must  be  employed  on  an  American  vessel. See 29 U.S.C. § 213(a)(14). If the plaintiffs in the present case meet FLSA's two prong requirement and no statu- tory exemption **17   applies, then they are entitled to the protection of FLSA. To hold otherwise would be to conclude that Congress' power to legislate is subject to the courts' invocation of choice of law principles.

The Supreme Court's analysis in Vermilya-Brown Co., Inc. v. Connell, 335 U.S. 377, 93 L. Ed. 76, 69 S. Ct. 140

(1948), illustrates this proposition. There, the Court con- sidered the question of whether FLSA covered employees working on a United States base in Bermuda. The Court held that the leased base area was a "possession" of the United  States  within  the  meaning  of  FLSA  and  that  it was the intent of Congress in its use of "possession" to have the Act apply to employees of American contractors engaged in the construction of military bases on foreign territory under a leasehold of the United States. Although Congress' subsequent amendment of FLSA to specifically exclude such territories from coverage altered the Court's conclusion, n5 the case is still instructive in that the Court analyzed the question in terms of statutory interpretation and not choice of law.

n5 In 1957, Congress amended FLSA so that section 213(f) provided that "sections 206, 211 and

212 of this title shall not apply with respect to any employee whose services during the workweek are performed within a foreign country or within terri- tory under the jurisdiction of the United States other than the following:  a State of the United States; the District of Columbia; Puerto Rico; the Virgin Islands;  outer  Continental  Shelf  lands  defined  in the Outer Continental Shelf Lands Act; American Samoa; Guam; Wake Island; and the Canal Zone."

A more recent Supreme Court decision also demon- strates  that  the  extraterritorial  application  of  a  federal statute is a matter of statutory **18   interpretation rather than choice of law analysis. In EEOC v. Arabian American Oil Co., 111 S. Ct. 1227, 113 L. Ed. 2d 274 (1991) al- though

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*225    it did not concern foreign nationals as here, the Court held that Title VII of the Civil Rights Act of 1964 was  not  applicable  to  United  States  citizens  employed abroad  by  American  employers.  Title  VII,  similar  to FLSA,  subjects  employers  to  its  terms  if  the  employer is "engaged in an industry affecting commerce." slip op. at 4. The Supreme Court defined its task as "determining whether Congress intended the protections of Title VII to apply to United States citizens employed by American employers  outside  of  the  United  States."  Slip  op.  at  2. That task, held the Court, was "a matter of statutory con- struction."  Id.  Indeed,  the  Court  did  not  even  consider approaching the question in terms of choice of law. n6

**19

n6  Interestingly,  the  concurring  opinion  cites EEOC v. Arabian American Oil Co. as support for the  proposition  that  a  choice  of  law  analysis  is appropriate here. This conclusion confuses statu- tory interpretation and conflict of law analysis. The Court noted that had Congress intended Title VII to apply extraterritorially, then Congress would have had addressed the subject of conflicts with foreign laws. Slip op. at 11. In no way did the Court hold that one looks to choice of law principles in deter- mining whether a federal statute applies overseas.

Thus, the applicability of FLSA is a matter of statu- tory  interpretation  rather  than  choice  of  law  analysis. See also, Windward Shipping (London) Ltd. v. American Radio  Ass.,  415  U.S.  104,  39  L.  Ed.  2d  195,  94  S.  Ct.

959 (1974) (In determining whether the National Labor Relations Act applied to unions picketing foreign ships employing foreign nationals, the Supreme Court analyzed question in terms of whether the activities complained of were activities "affecting commerce" within the meaning of the Act and not under choice of law principles.)  and McCulloch v. Sociedad Nacional, 372 U.S. 10, 9 L. Ed.

2d 547, 83 S. Ct. 671 (1963)   **20   (same). B.  Statutory Requirements

As originally passed, FLSA exempted from both min- imum  wage  and  overtime  requirements  "any  employee employed as a seaman." See 29 C.F.R. § 783.28. In 1961,

Congress amended FLSA to bring seamen employed on American vessels under the Act. Section 13(a)(14) was amended so that the minimum wage and overtime pro- visions  did  not  apply  to  "any  employee  employed  as a  seaman  on  a  vessel  other  than  an  American  vessel."

HN4  American vessel is precisely defined in 29 U.S.C.

§ 203(p) as "including any vessel which is documented or numbered under the laws of the United States." n7

n7 Use of the word "includes" is a term of en- largement and not a word of limitation. The term may apply to vessels that do not fall within the il- lustrations  given,  for  instance,  vessels  plying  the purely  internal  waters  of  a  State  if  the  seamen are "engaged in commerce or in the production of goods for commerce." 29 C.F.R. § 783.42.

The eleven reflagged tankers squarely meet the defi- nition of an American vessel provided   **21   in FLSA. These  eleven  vessels  were  documented  under  the  laws of  the  United  States  so  that  they  were  permitted  to  fly the  American  flag.  The  plaintiffs  also  meet  the  defini- tion of seamen:  the employees perform "service which is rendered primarily as an aid in the operation of such vessel as a means of transportation." 29 C.F.R. § 783.31. Thus, the plaintiffs have met one prong of the two prong requirement for seamen to come under FLSA.

B.(1) The "In Commerce" Requirement

The second requirement that the Filipino seamen em- ployed  on  the  eleven  reflagged  tankers  must  meet  is the "in commerce" requirement of FLSA.   29 U.S.C. §

206(a). The "in commerce" requirement is widely used as a prerequisite to the application of many federal statutes. FSLA uses the term more narrowly than other statutes,

"Congress, by excluding from the Act's coverage employ- ees whose activities merely 'affect commerce,' indicated its intent not to make the scope of the Act coextensive with its power to regulate commerce." Mitchell v. Lublin, McGraughy & Associates,  358 U.S. 207,  211,  3 L. Ed.

2d 243, 79 S. Ct. 260 (1959), citing Kirschbaum Co. v. Walling,  316  U.S.  517,  523,  86  L.  Ed.  1638,  62  S.  Ct.

1116 (1942). Although over the years Congress **22

has expanded the scope

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*226    of  FSLA's  application  n8  and  the  Act  is  to  be applied to "the furthest reaches consistent with congres- sional  direction,"  Mitchell,  358  U.S.  at  211,  Congress' intention that FSLA be limited to remedying labor con- ditions of workers employed in and living in the United States or specifically designated territories has remained unchanged.

n8 The greatest expansion of the coverage of FLSA occurred in 1961 when Congress amended the Act to extend FLSA protection to employees of "enterprises engaged in commerce." 29 U.S.C. §

206(a). See section (b)(2) of opinion.

The language of FLSA and its legislative history show that  Congress  intended  the  Act  to  establish  minimum wage and maximum hour standards for workers employed in the domestic economy. n9 Congress' express purpose in passing FLSA was to protect a substantial portion of the national work force from sub-standard wages and exces- sive hours which endangered the national health and well- being and, as a result, "the free movement **23  of goods in interstate commerce." Brooklyn Savings Bank v. O'Neil,

324 U.S. 697, 706, 89 L. Ed. 1296, 65 S. Ct. 895 (1945). Congress  found  that  the  channels  and  instrumentalities of commerce were being used to "spread and perpetuate such labor conditions among the workers of the several States . . ." and therefore enacted FLSA in 1938 for the purpose of rectifying labor conditions which were detri- mental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well- being of workers.  29 U.S.C. § 202 (emphasis supplied).

n9  Similarly,  other  federal  statutes  governing employee  working  conditions  have  been  denied extraterritorial  application.  See,  e.g.,   Windward Shipping Ltd. v. American Radio Assn.,  415 U.S.

104,  39  L.  Ed.  2d  195,  94  S.  Ct.  959  (1974)

(Respondents' picketing of foreign vessels employ- ing foreign crewmembers docked at a United States port did not "affect commerce" within the meaning of the National Labor Relations Act); Foley Bros., Inc.  v.  Filardo,  336  U.S.  281,  93  L.  Ed.  680,  69

S. Ct. 575 (1949) (Eight Hour Law does not apply to a contract between the United States and a pri- vate contractor for construction work in a foreign

country); Independent Union of Flight Attendants v. Pan American World Airways, Inc., 923 F.2d 678

(9th Cir. 1991) (Railway Labor Act does not ap- ply to purely foreign flying); and Cleary v. United States Lines, Inc., 728 F.2d 607 (3d Cir. 1984) (Age Discrimination in Employment Act does not apply to Americans employed outside the United States by American employers).

**24

Thus, HN5  FLSA defines "in commerce" to include only those economic activities which 'touch' the United States at some point. Section 203(b) of FLSA defines com- merce as "trade, commerce, transportation, transmission, or communication among the several States or between any  State  and  any  place  outside  thereof."  29  U.S.C.  §

203(c) defines State as "any State of the United States or the District of Columbia or any Territory or possession of the United States."

In 1957, in reaction to the Supreme Court's decision in  Vermilya-Brown  Co.,  Inc.  v.  Connell,  335  U.S.  377,

93 L. Ed. 76,  69 S. Ct. 140 (1948), Congress amended FLSA to specify which United States territories were to be covered by FLSA. Congress amended the Act so that section 213(f) provided an exemption for work performed in a foreign workplace. (See footnote 5 for complete text of section 213(f)). In so doing, Congress noted that the Act was obviously "designed to apply to a United States economy, and its application  to overseas areas is usu- ally  inconsistent  with  local  conditions  of  employment, the level of the local economy, the productivity and skills of indigenous workers, and is contrary to the best inter- est of the United States and **25    the foreign areas." Senate Rep. No. 987, reprinted in 1957 U.S. Code Cong.

& Admin. News 1756-57.

Seamen  thus  present  an  unusual  case  because,  un- like  other  workers  potentially  covered  by  FLSA,  their services  very  often  are  not  rendered  within  the  United States or one of the enumerated territories. The unique- ness  of  the  seamen's  situation  accounts  for  the  lack  of precedent for analyzing when commercial activities are sufficiently "domestic" to trigger application of FLSA. As shown above, however, a demonstrable connection to the American

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*227  economy is critical to a finding of FLSA coverage. n10

n10  The  dissent  contends  that  "seamen  on American vessels do not have to satisfy any com- merce requirement whatsoever." Dissent typescript at 8. This is contrary to the plain language of the statute. HN6  Section 206(a) provides that:

Every  employer shall  pay  to  each  of his employees who in any workweek is engaged in commerce or in the pro- duction  of  goods  for  commerce,  or is employed in an enterprise engaged in  commerce  or  in  the  production  of goods  for  commerce,   wages  at  the

specified rates.

29  U.S.C.  §  206(a)  (West  Supp.  1990)  (empha- sis  added).  The  dissent,  however,  would  have  us create  an  ambiguity  in  the  statutory  language  by tracing its evolution to its present form. Not only is this a novel theory of statutory construction, i.e. the courts are free to ignore the plain language of a statute as it exists today as long as an ambiguity can be detected in its history, it is also unsupported by the legislative history.

The dissent argues that the old form of the statute did  not  require  seamen  to  fulfill  the  commerce requirement.  In  1961,  when  Congress  amended FLSA to eliminate the exclusion of seamen as well as other employees, Congress provided in subsec- tion  206(b)  that  these  newly  covered  employees would receive a gradual pay increase. The dissent argues that because this subsection does not itself mention the commerce requirement, these employ- ees  were  not  required  to  meet  that  requirement. However,  subsection  206(a)  states  the  "in  com- merce" requirement and a restatement in (b) would be redundant.

Moreover,  this  argument  proves  too  much.  This subsection applied to all employees newly covered by the 1961 amendments, not just seamen. The dis- sent's interpretation leads to the untenable position that  all  employees  brought  under  the  Act  by  the

1961  amendments  were  not  required  to  meet  the commerce requirement. Finally, the legislative his- tory is devoid of any discussion to make a special exemption from the commerce requirement for sea- men. Statements such as "seamen on American  vessels . . . will be covered by the minimum wage re- quirements" do show, as the dissent points out, that

"Congress assumed that the commerce requirement

would pose no obstacle for seamen on American vessels." (Dissent typescript at 8). But this is all the statement shows. It does not show a Congressional intent to apply the minimum wage provision to sea- men who, because of the unusual circumstances of this case, fail to satisfy the commerce requirement. Indeed,  the  language  of  FLSA  and  its  legislative history, as discussed in the text above, demonstrates Congress'  concern  with  limiting  FLSA's  applica- tion to domestic working conditions.

**26

The  first  argument  that  plaintiffs  make  as  to  why these seamen should be considered to have been engaged

"in commerce" within the meaning of FLSA is that the American flagged vessels constitute American territories and thus any trade they engage in is trade between a ter- ritory  of  the  United  States  and  a  foreign  country.  This argument is not persuasive for two reasons.

First, if this theory is carried to its logical conclusion, the  result  is  that  these  seamen  are  denied  coverage.  If the American-flagged vessels are considered American territories,  then  the  employees  of  these  vessels  would be exempted from coverage under the foreign workplace exemption found at 29 U.S.C. 213(f). American-flagged vessels are not on the list of United States territories cov- ered by FLSA. n11

n11 See footnote 5 for a complete listing of the territories covered by FLSA.

Second, the premise that a vessel flying the American flag,  even though temporarily a flag of convenience,  is a  floating  piece  of  American  territory  for  all  purposes wherever **27   it may sail is untenable. "Flags of con- venience" are a comparatively new phenomenon devel- oped  after  the  conclusion  of  World  War  II  by  certain non-traditional maritime countries for economic reasons. The  state  whose  flag  was  flown  exercised  "minimum control  over  the  activities  and  operations  of  these  ves- sels." E. Osieke, Flags of Convenience Vessels:  Recent Developments, 73 Am. J. of Inter. Law 604. It is generally understood among nations engaged in maritime practice that the state whose flag is flown exercises control over matters such as qualification of masters and officers of the ship, safety of the seas, discipline aboard the vessel, and  investigations  into  instances  of  navigation  causing destruction of life or serious physical damage. The law of the flag state over the ship in these matters is applied

"on the pragmatic basis that there must be some law on shipboard and  that it cannot change on every change in the waters." Lauritzen v. Larsen, 345 U.S. 571, 585, 97 L.

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Ed. 1254, 73 S. Ct. 921 (1953).

Thus, the concept of the "flag as a floating territory"

is a legal fiction constructed under maritime law for the practical operational

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*228     reasons  stated  above.  Although  this  legal  fic- tion  "is   **28    undoubtedly  true  for  some  purposes," Patterson  v.  Bark  Eudora,  190  U.S.  169,  176,  47  L. Ed.  1002,  23  S.  Ct.  821  (1903),  it  is  not  an  inflexible rule. "We must move with the circumspection appropriate when this court is adjudicating issues inevitably entangled in the conduct of our international relations." Romero v. International Terminal Operating Co., 358 U.S. 354, 383,

3 L. Ed. 2d 368, 79 S. Ct. 468 (1959). To woodenly ap- ply this legal fiction to the case at hand, thus expanding the doctrine "to the extent of treating seamen employed on such a ship as working in the country of its registry is quite impossible." Scharrenberg v. Dollar SS Co., 245

U.S. 122, 127, 62 L. Ed. 189, 38 S. Ct. 28 (1917). It would serve none of the purposes and goals of FLSA as will be shown infra.

Plaintiffs  next  argue  that  the  seamen  are  engaged in commerce or in an enterprise engaged in commerce because of Chesapeake's substantial commercial activity within the United States. Plaintiffs look to Chesapeake's activities in connection with the reflagging --  the char- tering of a United States-crewed and flagged vessel, the purchase of supplies and equipment from United States suppliers,  and  telecommunications  maintained  between the vessels **29    and the United States --  as activity constituting "commerce" within the meaning of FLSA. Prior to the reflagging, no one could seriously argue that the shipping operations of KOTC were engaged "in commerce" within the meaning of FLSA. Accordingly, the  argument  that  these  seamen  were  engaged  in  com- merce  must  necessarily  turn  on  the  claim  that  the  ar- rangements  made  to  comply  with  United  States  law  in connection with the reflagging transformed this entirely foreign  shipping  operation  into  one  engaged  in  United

States commerce as defined by FLSA.

The transfer of ownership of the vessels to a United States corporation, Chesapeake, did not convert this ship- ping  enterprise  into  one  engaged  in  commerce  within the terms of FLSA. The issue of whether an employee

is engaged in commerce should be decided by applying practical standards rather than technical terms.  Mitchell v.  C.W.  Vollmer  &  Co.,  349  U.S.  427,  429,  99  L.  Ed.

1196,  75 S. Ct. 860 (1955). The technical formality of transferring the vessels to an American corporation for political purposes in no way altered the entirely foreign character of the shipping operations or the duties of the seamen. "Congress deemed the activities of the individual

**30   employees, not those of the employer, the control- ling factor in determining the proper application of the Act." Mitchell v. Lublin, McGaughy & Assoc., 358 U.S.

207, 213, 3 L. Ed. 2d 243, 79 S. Ct. 260 (1959) (emphasis supplied).

After the reflagging, the nature of the work and the duties  of  the  seamen  in  question  continued  as  before. Generally,  "relevant  for  flag  of  convenience   consider- ations   .  .  .   is   the  nationality  of  the  ultimate  owner." B.A. Boczek, Flags of Convenience 169 (1962). Here, it is Kuwait. The vessels were immediately time-chartered back to KOTC, the former owner. The waters they plied, the ports at which they docked, and the goods they trans- ported did not change. None of the ships ever docked in an American port as a result of the American flags they carried. The goods being transported, oil and petroleum products, never entered the United States, other than an isolated cargo of oil that was eventually transhipped to the United States. Although there is no de minimis require- ment for application of FLSA, the contact with interstate commerce must be regular and not an isolated incident. Mabee  v.  White  Plains  Publishing  Company,  327  U.S.

178, 181, 90 L. Ed. 607, 66 S. Ct. 511 (1946);   **31

Marshall v. Victoria Transportation Company, Inc., 603

F.2d 1122, 1124 (5th Cir. 1979). Other than a change in the flag these ships carried, the reflagging had absolutely no impact on the lives and work of these seamen. Indeed, Congress exacted a promise from Kuwait that the vessels would remain in "foreign trade" so that the waiver of dry- docking and other requirements did not "skew the mar- ketplace." Hearings at 87-88. As such, the reflagging did not bring these

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*229   seamen within commerce as defined by FLSA. B.(2) Enterprise Liability

Plaintiffs also contend that the defendants constitute an enterprise engaged in commerce. The first step in de- termining whether there is liability under FLSA due to the  existence  of  an  enterprise  engaged  "in  commerce" is ascertaining  which  of the defendants --  Chesapeake, Gleneagle, Santa Fe, KOTC, and KPC -- constituted the enterprise. HN7  Enterprise is defined as:

the   related   activities   performed   (either through  unified  operation  or  common  con- trol) by any person or persons for a common business purpose, and includes all such ac- tivities  whether  performed  in  one  or  more establishments or by one or more corporate or other organizational **32   units includ- ing departments of an establishment operated through leasing arrangements, but shall not include the related activities performed for such enterprise by an independent contrac- tor . . . .

29  U.S.C.  §  203(r)  (emphasis  supplied).  Thus,  to  be considered  an  enterprise,  the  corporations  must  satisfy each of three elements: the business must be (1) engaged in related activities (2) under unified operation or com- mon control and (3) have a common business purpose. Donovan v. Easton Land & Development, 723 F.2d 1549,

1551 (11th Cir. 1984).

The district court assumed that all the defendants con- stituted an enterprise. Although the facts underlying this conclusion are reviewed under the clearly erroneous stan- dard of review, the legal conclusion that these defendants constitute an enterprise is subject to plenary review.  Ram Construction Co., Inc. v. American States Insurance Co.,

749 F.2d 1049, 1053 (3rd Cir. 1984).

Under  FLSA's  definition,  Gleneagle,  the  indepen- dent Delaware corporation responsible for providing sup- plies, fuel, victuals, repairs, customs entry and exit clear- ances, insurance, and other services for the operation of

the   **33              vessels,  cannot  be  considered  part  of  the enterprise.  The  plaintiffs  themselves  acknowledge  that Gleneagle  is  "wholly  independent  of  the  KPC  family." Indeed,  the  plaintiffs  could  not  claim  otherwise;  there exists no affiliation between Gleneagle corporation and the other defendants. Gleneagle is simply "a worldwide vessel management corporation" that has contracted its services  to  Chesapeake.  As  an  independent  contractor, it cannot be considered part of an enterprise and there- fore the activities of Gleneagle cannot be considered as contributing to the commercial activity by Chesapeake in the United States. Moreover, Gleneagle re-delegated its duties, with the exception of providing radio masters, to KOTC.

Likewise,  Santa  Fe,  a  Kuwaiti-owned  corporation chartered under United States law, cannot be considered part of the enterprise. Although Santa Fe appears to meet the first two requirements of "related activities" and "com- mon control", it fails to meet the third requirement that Santa  Fe  and  Chesapeake  be  in  pursuit  of  a  "common business purpose."

HN8  The term "related activities" is defined as "aux- iliary  and  service  activities  such  as  central  office  and warehousing  activities  and  bookkeeping,               **34      au- diting,  purchasing,  advertising and other services . . . . including all activities which are necessary to the opera- tion and maintenance of the particular business." C.F.R.

§ 779.206. Santa Fe entered into a management contract to perform administrative,  accounting,  and professional services for Chesapeake. Under the above definition,  it appears  that  these  activities  would  be  considered  "re- lated." Santa Fe also appears to be under "common con- trol" with Chesapeake. Santa Fe is wholly owned by KPC. Chesapeake is wholly owned by KOTC which, in turn, is wholly owned by KPC. Thus, both Chesapeake and Santa Fe are under common control of KPC. In addition, most of Chesapeake's officers and directors were also officers of Santa Fe.

However,  plaintiffs make no showing that Santa Fe and Chesapeake are engaged in a "common business pur- pose." Although Santa Fe does perform "related activi- ties," something more is required under

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*230  the Act to render them engaged in a common busi- ness purpose. Otherwise, the third requirement would be superfluous. "There must be more than a common goal to make a profit to satisfy the common business purpose re- quirement." Donovan, 723 F.2d 1549, 1553. **35  Santa Fe  was  incorporated  in 1983,  years  prior  to  the  reflag- ging, and consequently must have served some purpose other  than  providing  auxiliary  services  to  Chesapeake. The plaintiffs do not provide any information as to the nature of Santa Fe's business or any argument as to why Santa Fe's business purpose has been common with that of Chesapeake's. Moreover, these services were performed in furtherance of an entirely foreign shipping operation. As such, and on this record, Santa Fe cannot be considered part of the business enterprise with Chesapeake.

Having determined that only Chesapeake can be con- sidered part of the enterprise, n12 we must next determine whether  Chesapeake  is  an  enterprise  engaged  in  com- merce. HN9  An "enterprise engaged in commerce or in the production of goods for commerce" is defined as an enterprise that "has employees engaged in commerce or in the production of goods for commerce, or that has em- ployees handling, selling, or otherwise working on goods or  materials  that  have  been  moved  in  or  produced  for commerce by any person . . . ." 29 U.S.C. § 203(s)(1) and

(A)(i). The main purpose of the 1961 amendment adding enterprises engaged "in commerce" was to extend FLSA

**36   coverage to "employees mainly in large retail and service  enterprises."  1961  U.S.  Code  Cong.  &  Admin. News 1621 (reprinting Senate Report No. 145).

n12 The activities of KOTC and KPC, Kuwaiti corporations conducting their business in Kuwait, are not "in commerce" and thus cannot be seen as part of an enterprise engaged in commerce under FLSA.

Although  FLSA's  original  definition  of  "in  com- merce"  focused  on  whether  the  employees  themselves were engaged in commerce, the definition of enterprise

focused on the business entity itself.  Donovan v. Scoles,

652 F.2d 16, 18 (9th Cir. 1981), cert. denied, 455 U.S. 920,

71 L. Ed. 2d 460, 102 S. Ct. 1276 (1982). The amendment extending coverage to enterprises engaged in commerce provided FLSA protection to two groups of employees. The first prong of the definition (an enterprise that has employees engaged in commerce) extended coverage to all the co-workers of employees covered by the original version of FLSA. The second prong ("including employ- ees handling,  selling,  or otherwise **37    working on goods or materials that have been moved in or produced for commerce by any person") extends FLSA protection to employees of an enterprise that uses goods that have moved through interstate commerce. Donovan v. Scoles,

652 F.2d at 18.

Plaintiffs  argue  that  the  chartering  of  the  United States-flagged and crewed vessel renders Chesapeake an enterprise engaged in commerce. Chesapeake chartered the vessel, the Ocean Wizard (later replaced by the Ocean Runner), to ensure that it would "retain U.S. naval pres- ence"  in  the  Gulf  even  if  "legislative  problems"  forced the deflagging of the eleven tankers. However, the Ocean Wizard  and  the  Ocean  Runner  engaged  in  exactly  the same trading patterns as the rest of the Chesapeake fleet. The  use  of  these  ships  was  indistinguishable  from  the eleven reflagged vessels and therefore, these vessels were not engaged "in commerce" within the terms of the FLSA for the same reasons. The course these vessels sailed, the ports  at  which  they  docked,  and  the  goods  they  trans- ported  were  entirely  foreign  and  outside  of  the  United States geographically and outside of its economy.

Plaintiffs  also  argue  that  the  purchase  of  supplies and   **38             equipment  from  American  suppliers  ren- ders Chesapeake susceptible to FLSA requirements. Once again, however, the purpose of the enterprise amendment was to extend FLSA protection to workers employed in the  domestic  economy.  Congress  tied  the  coverage  of workers employed in service and retail industries to the use  of  goods  traveling  through  interstate  commerce  so that Congress

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*231   would not exceed its constitutional power derived from the commerce clause.

Under plaintiff's rationale, a company chartered under an American state law that purchased goods in the United States would be an enterprise engaged in commerce and thus  be  required  to  comply  with  FLSA.  Normally,  this would be true. Here, however, we have an extraordinarily unique  situation.  In  the  present  case,  Chesapeake  pur- chased the supplies solely to bring the eleven vessels into compliance with Coast Guard regulations and not in the production of goods or the performance of services for interstate  commerce.  Compliance  with  these  safety  re- quirements was necessary for reflagging, a decision en- tirely motivated by political reasons. Once the retrofitting of the ships was accomplished, purchase of United States supplies ceased. As such,   **39   the purchase of equip- ment and supplies used to bring these ships into compli- ance with safety regulations did not transplant what was essentially a foreign shipping operation into a domestic operation within the intent and purpose of the FLSA. n13

n13  Likewise,  the  telecommunications  main- tained between the eleven vessels and the United States  did  not  render  this  enterprise  engaged  in commerce  within  the  terms  of  the  FLSA.  These communications were purely internal to the busi- ness  and  thus  incidental  to  its  operations.  See Stevens v. Welcome Wagon International, Inc., 390

F.2d 75, 77 (3rd Cir. 1968). As such, the present sit- uation is distinct from the employees discussed in the Wage and Hour Division Public Domain Letter, dated  April  11,  1966,  who  were  engaged  in  the business of internation satellite communications.

Flying the American flag is a necessary but not suffi- cient condition for seamen to obtain the benefits of FLSA. Here, the American flag flew to give notice that these ves- sels  were  entitled   **40    to  the  military  protection  of the United States. Such symbolism is not a valid substi- tute for involvement in the American economy within the meaning of FLSA. Plaintiffs' counsel invites the court to

adopt a highly technical reading of FLSA in support of a  conclusion  which  flies  in  the  face  of  common  sense, maritime practice, and Congress' intent in passing FLSA. Kuwait reflagged these eleven ships to obtain the military protection of the United States. All incidental corporate restructural activity with the United States was mandated by the reflagging, a purely political act. The United States' offer of military protection to these vessels is a far cry from exerting its jurisdiction to dictate the wages this shipping operation must pay to its foreign employees who never performed any work on American soil or territory des- ignated  by  the  Act,  and  who  were  not  engaged  in  the performance of service relating to goods produced in the United States.

The purpose behind Congress' explicit exclusion of ships flying foreign flags was presumably to avoid inter- ference in the delicate field of international relations by imposing domestic labor law on foreign ships employing foreign nationals at **41  foreign wages. Although these eleven ships flew the American flag, the goods they car- ried, the trading patterns in which they engaged, and the seamen they employed were entirely foreign. The plain- tiffs' contract of employment, negotiated by a Philippine labor union and approved by POEA, was a carefully and validly  drawn  document  granting  the  POEA  exclusive jurisdiction over any and all disputes arising out of the contract. Without serving any interests or concerns of the United States, we are asked to brush aside this contract. We cannot read into FLSA "an intent to change the con- tractual provisions made by these parties. For us to run interference in such a delicate field of international re- lations there must be present the affirmative intention of Congress explained. It alone has the facilities necessary to make fairly such an important policy decision where the possibilities of international discord is so evident and retaliative action so certain." Benz v. Compania Naviera Hidalgo, 353 U.S. 138, 147, 1 L. Ed. 2d 709, 77 S. Ct.

699 (1957). To hold that these seamen are entitled to a minimum wage calculated to maintain a minimal living standard  in  the  United  States  would  be  an  astonishing circumvention **42   of Congressional intent and a po- tential source of friction between the

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*232   United States and the foreign countries involved. We hold that foreign seamen employed on vessels en- gaged in foreign operations entirely outside of the United States,  its waters and territories do not become subject to FLSA when their vessels are transitorily reflagged un- der the United States flag and transferred to a corporation chartered under the laws of an American state and im- mediately leased back to the foreign operating company, even though, to comply with American maritime safety laws, it initially purchased some goods moving in inter-

state commerce in the United States. n14

n14 Having held that the plaintiffs were not en- gaged "in commerce" within the meaning of FLSA, we do not reach the question of whether the district court erroneously held that the plaintiffs were not entitled to FLSA protection because the eleven ves- sels came under the foreign workplace exemption of 213(f). We do note, however, that a vessel trav- eling  from  foreign  port  to  foreign  port  is  not  in itself determinative of whether a ship is engaged

"in commerce." The amicus brief, filed by District No.  1-MEBA/NMU  of  the  AFL-CIO,  raises  the concern that American seamen employed on ships

plying foreign waters will not be covered by FLSA. However, if these ships are "in commerce," these seamen will be covered by the terms of FLSA.

**43

III.

In sum, because I believe that the plaintiffs were not engaged in commerce nor part of an enterprise engaged in commerce within the meaning of FLSA and because Judge Cowen concurs in the judgment, the judgment of the district court will be affirmed.

APPENDIX A ORGANIZATIONAL CHART

KPC  Kuwaiti  Corporation  wholly  owned  by  the

Kuwaiti Government

SEE APPENDIX IN ORIGINAL

CONCURBY:

COWEN

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CONCUR:

*233    COWEN, Circuit Judge,  concurring in the judgment only.

I would affirm the district court's order granting sum- mary judgment **44  to defendants. Unlike my brethren, though, I do not reach the question of whether the Fair Labor  Standards  Act,  29  U.S.C.  §  201-219  ("FLSA"), entitles plaintiffs to minimum wages and other benefits. Rather, I write separately because choice of law princi- ples preclude the application of American law in the first place.

A  series  of  United  States  Supreme  Court  decisions governs  the  choice  of  law  analysis  in  admiralty  cases. Hellenic Lines Ltd. v. Rhoditis, 398 U.S. 306, 26 L. Ed.

2d 252, 90 S. Ct. 1731 (1970); Romero v. International

Terminal Operating Co., 358 U.S. 354, 3 L. Ed. 2d 368,

79 S. Ct. 468 (1959); Lauritzen v. Larsen, 345 U.S. 571,

97 L. Ed. 1254, 73 S. Ct. 921 (1953). The Lauritzen triad establishes an eight-factor balancing test to determine if a sufficient American interest exists to justify the applica- tion of American law to an admiralty dispute.  DeMateos

v.  Texaco,  Inc.,  562  F.2d  895,  900-01  (3d  Cir.  1977). Those eight factors, not all of which should be accorded equal weight, are: (1) the place of injury; (2) the country of  the  ship's  flag;  (3) the  allegiance  or domicile  of the injured seamen; (4) the allegiance of the shipowner; (5) the place of contract; (6) the inaccessibility   **45   of a foreign forum; (7) the law of the forum; (8) and the defen- dant's base of operations.  Matute v. Procoast Navigation Ltd., 928 F.2d 627, 631-32 (3d Cir. 1991). A court must evaluate these factors with an eye towards the national interest at stake.  Hellenic Lines Ltd. v. Rhoditis, 398 U.S. at 309; Matute v. Procoast Navigation Ltd., 928 F.2d at

631-32.

Applying  the  Lauritzen  test  to  the  facts  of  this case,  I  conclude,  as  did  the  district  court,  that  foreign law  controls.  n1  Two  factors  favor  the  application  of American law to this matter. Most importantly, the ships on which the plaintiffs worked flew the American flag. n2

Additionally, the American forum entertaining this matter has an interest in drawing the parties under the control of its law. But these factors are of limited significance;  as the

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*234   district court stated, the overriding American in- terest in reflagging the tankers was the safeguarding of

"United States security and foreign policy objectives in the  Persian  Gulf."  Cruz  v.  Chesapeake  Shipping,  Inc.,

738 F. Supp. 809, 817 (D. Del. 1990). This interest would hardly be served by the application **46   of American labor law.

n1 Because the issue is not before us, I express no opinion as to what nation's laws would apply to this dispute.

n2 Plaintiffs argue that the law of the flag dic- tates our choice of law. In other words, plaintiffs be- lieve that because the ships on which they worked were  American  ships,  American  law  must  apply to their claims. This contention is totally without merit. If the Supreme Court had wished the ship's flag to be the only consideration in choosing the applicable law, it would not have required analysis of seven other factors. While the country of the flag may be an important consideration, it is not the only one.

All  other  Lauritzen  factors  point  in  opposite  direc- tions.  Plaintiffs'  domicile  is  the  Philippines,  which  is also where the employment contracts were negotiated and signed. Provisions in the employment contracts stated that disputes arising under the contracts are to be resolved in Filipino forums pursuant to Filipino law. Since the place of contract was the Philippines,   **47   that nation might have been the place of injury. Conceivably, the place of injury could also have been one of the foreign countries where the plaintiffs were paid.

The  defendants,  for  the  most  part,  owe  their  alle- giances to Kuwait. Similarly, defendants' base of opera- tions is Kuwait. Weighing all contacts, then, it becomes apparent that American interests are so insignificant that American law cannot be exported to this case. n3

n3  This  calculus  would  obviously  have  been different had the American contacts been more sig- nificant. For example, if the seamen were domiciled in  the  United  States,  American  law  would  likely have applied. But the Filipino seamen in this in- stance  did  not  even  set  foot  in  the  United  States during  their  employment.  They  were  not  paid  in the United States. The ships on which they worked sailed exclusively from foreign port to foreign port, never once docking in an American port. American law cannot apply in these circumstances.

However,  my brethren take the position that choice of law analysis   **48   is inappropriate in this instance because Congress, in formulating the relevant provisions of  the  FLSA,  has  made  the  choice  of  law  for  us.  I  re- spectfully disagree. The Supreme Court has recognized that  the  Lauritzen  triad  was  "intended  to  guide  courts in the application of maritime law generally." Romero v. International Terminal Operating Co., 358 U.S. at 382. As Judge Rosenn noted,  though,  if the legislature "'has actually addressed itself to the choice of law problem, the courts . . . must give effect to its intentions.'" Lauritzen v. Larsen, 345 U.S. at 579 n.7 (quoting Cheatham and Reese, Choice of the Applicable Law, 52 Col. L. Rev. 959, 961

(1952)).  n4  But  Congress  has  not  "actually  addressed"

choice of law in the FLSA.

n4  Of  course,   any  choice  of  law,   whether performed  by  the  legislature  or  the  courts,  must comport  with  strictures  of  the  fifth  amendment. DeMateos v. Texaco, Inc., 562 F.2d at 900-01.

A  recent  Supreme  Court  decision   **49    provides guidance in determining when Congress has dictated to us a choice of law. In EEOC v. Arabian American Oil Co.,

111 S. Ct. 1227, 113 L. Ed. 2d 274 (1991) ("Aramco"), the Court held that Title VII's provisions do not extend to American citizens employed abroad by American em- ployers. It is well-established that all congressional leg- islation is presumed to apply only within the territorial jurisdiction  of  the  United  States.  Id.  at          (slip  op.  at

3). The court stated that this presumption could only be overcome if the party seeking protection of American law demonstrates a "clearly expressed" and "affirmative" con- gressional intent to the contrary. Id. Petitioners, unable to offer any "specific language" indicative of congressional intent,  id. at      (slip op. at 6),  relied on inferences de- duced  "from  boilerplate  language  which  can  be  found in any number of congressional acts." Id. at     (slip op. at 5). These inferences produced no more than "plausi- ble" interpretations of Title VII which were matched by equally plausible interpretations presented by the respon- dents. Id. Thus,  the Court concluded that the petitioner employees failed **50   to meet their burden of showing the clearly expressed congressional intention necessary to overcome the presumption of territoriality. Significantly, the Court reached its decision only after remarking that

"had  Congress  intended  Title  VII  to  apply  overseas,  it would have addressed the subject of conflicts with for- eign laws and procedures." Id. at               (slip op. at 11).

The reasoning of Aramco should control our dispo- sition of this issue. If Congress had intended to resolve conflicts between the FLSA and other nations' labor laws in favor of American law, it was required to

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*235   draft the FLSA in a manner which affirmatively and clearly expressed such intent. This, Congress did not do. The relevant provision of the FLSA, 29 U.S.C. § 206, does not address choice of law in "specific language;" in- deed, it is silent on the matter. To mine any nugget of con- gressional intent, we must resort to "boilerplate language" which, as Judge Alito concedes, "does not definitively re- veal whether Congress intended to specify a choice-of-- law rule." Typescript Op. of Judge Alito at 2. Given these observations, it cannot be said that Congress has affirma- tively and clearly expressed its intent to make **51   a choice of law. n5

n5 Judge Alito's argument that the legislative history of the FLSA supplies the requisite indicator of Congressional intent is unavailing for the same reasons. Nowhere is there a passage in the legisla- tive history specifically directed toward choice of law. Moreover, the Aramco Court's refusal to dis- cuss the legislative history of Title VII, despite a dissenting opinion which relied on that history ex- tensively, would suggest that legislative history is irrelevant in our analysis.

Absent a clearer indication of intent from Congress, I am convinced that a choice of law analysis in this case is required. Because that analysis reveals the inappropriate- ness of applying American law, I would affirm the district court's order granting summary judgment.

DISSENTBY:

ALITO

DISSENT:

ALITO, Circuit Judge, dissenting.

The majority affirms the decision of the district court holding  that  the  plaintiffs  in  this  case,  foreign  seamen on American-flag ships engaged in trade between foreign ports, were not covered by the minimum **52  wage pro- vision of the Fair Labor Standards Act (FLSA), 29 U.S.C.

§ 206. The district court concluded:  first, that American law did not apply under choice-of--law principles taken primarily from cases involving the Jones Act, 46 U.S.C.

§  688;  second,  that  neither  the  seamen  nor  the  enter- prises that employed them were engaged in "commerce" within the meaning of the FLSA because their activities lacked sufficient connection with the United States; and third, that the seamen were excluded from coverage by the "foreign workplace exemption," 29 U.S.C. § 213(f), which applies to employees who labor "in a workplace

within a foreign country." Because Congress, in my view, clearly  intended  for  the  FLSA's  minimum  wage  provi- sion to apply to all seamen on all American-flag ships, I respectfully dissent.

I: CHOICE OF LAW

A.            In  determining  whether  the  FLSA's  minimum wage provision governs the present case, we must first ex- amine Congress's intent. When Congress dictates a choice of law by statute, courts must of course comply. See, e.g., Lauritzen  v.  Larsen,  345  U.S.  571,  579  n.7,  97  L.  Ed.

1254, 73 S. Ct. 921 (1953); Restatement (2nd) Conflict of

Laws § 6(1) (1971).

Analysis of Congress's intent in enacting **53   the relevant provisions of the FLSA must, in turn, begin with the  statutory  language.  If  statutory  language  is  unam- biguous, it must be followed absent exceptional circum- stances.  Demarest v. Manspeaker, 498 U.S. 184,               112

L. Ed. 2d 608, 59 U.S.L.W. 4047, 4049, 111 S. Ct. 599

(1991); Russello v. United States, 464 U.S. 16, 20, 78 L. Ed. 2d 17, 104 S. Ct. 296 (1983). n1

n1 In EEOC v. Arabian American Oil Co., 113

L. Ed. 2d 274, 59 U.S.L.W. 4225, 4226, 111 S. Ct.

1227 (1991) (citation omitted), the Supreme Court invoked  the  canon  of  statutory  construction  that legislation is presumed not to apply "beyond places over which the United States has sovereignty or has some measure of legislative control" unless a con- trary intent appears. Because the United States has sovereignty  over  American-flag  vessels  (see  dis- senting typescript at 7), this canon of construction does not apply here.

B.  The statutory language relevant to the choice-of-- law issue appears in 29 U.S.C. § 206(a), which provides in pertinent part as follows:

Every employer shall pay to each of his employees **54   who in any workweek is engaged in  commerce  or  in  the  production of  goods  for  commerce,  or  is  employed in an enterprise engaged in commerce or in the production of goods for commerce, wages at the following rates: . . .

(4)  if  such  employee  is  employed  as  a seaman on an American vessel, not less than

a specified amount.

This  language  does  not  definitively  reveal  whether

Congress intended to specify

932 F.2d 218, *236; 1991 U.S. App. LEXIS 8147, **54;

118 Lab. Cas. (CCH) P35,475; 30 Wage & Hour Cas. (BNA) 455

Page 22

*236   a choice-of--law rule. On the one hand, the lan- guage of Section 206(a)(4) may plausibly be construed as a statutory directive to apply American law (the FLSA minimum  wage  provision),  thus  precluding  application of nonstatutory choice-of--law principles. In other words, the language of Section 206(a)(4) may in effect be read as follows:  "every employer shall pay to each of his em- ployees," in a commerce-related job the FLSA minimum wage "if such employee is employed as a seaman on an American vessel."

On the other hand, the language of Section 206(a)(4) may also be reasonably interpreted as leaving open the choice-of--law  question,  thus  necessitating  the  applica- tion of nonstatutory choice-of--law principles. Under this interpretation,  Section  206(a)(4)  would  merely  specify the minimum wage rate **55   for seamen on American vessels in those instances in which the choice of American law is appropriate. In other words, the language of Section

206(a)(4)  may  in  effect  be  construed  as  follows:   "ev- ery employer shall pay to each of his employees," in a commerce-related job, minimum wages at certain rates, and "if such employee is employed as a seaman on an American vessel," the rate must be "not less than a spec- ified  amount ."  Because  I  believe  that  the  language  of Section 206(a)(4) does not foreclose either of these inter- pretations, examination of the relevant legislative history is proper.

C.  Unlike the statutory language, the legislative his- tory of the FLSA makes clear that Congress intended for the minimum wage requirement to apply to all seamen on all American vessels. The evolution of the minimum wage  provision,  29  U.S.C.  §  206(a),  is  particularly  in- structive.  Before  1961,  Section  13(a)  of  the  FLSA,  29

U.S.C. § 213(a) (1958 ed.), excluded all seamen from the coverage of the minimum wage provision. n2 In 1961, the exclusion was narrowed to seamen on foreign vessels. n3 At the same time, the minimum wage provision, 29

U.S.C. § 206(b) (1958 ed.), was also amended to read in pertinent **56   part as follows (Pub. L. 87-30, sec. 5(b),

75 Stat. 65 (1961)):

Every employer shall pay to each of his employees  who  in  any  workweek  .  .  .  (ii) is  brought  within  the  purview  of  this  sec- tion  by  the  amendments  made  to  section

13(a) of this Act by the Fair Labor Standards Amendments  of  1961,  wages  at   specified rates .

n2 29 U.S.C. § 213(a) (1958 ed.) provided: The  provisions  of  sections  206

minimum wage  and 207 overtime  of this  title shall not apply with re- spect  to  .  .  .  (14)  any  employee  em- ployed as a seaman . . .

n3  Section  13(a)  was  amended  to  read  as follows:

The  provisions  of  sections  6   29

U.S.C. § 206  and 7 29 U.S.C. § 207

shall not apply with respect to --

. . .

(4)  any  employee  employed  as  a seaman  on  a  vessel  other  than  an American vessel.

Pub. L. 87-30, sec. 9, 75 Stat. 65 (1961).

This  language  made  clear  that  the  minimum  wage requirement  was  meant  to  apply  to  all  seamen  on  all American vessels. All such seamen were "brought within the  purview  of   the  minimum  wage  provision   by  the

1961        **57      amendments  to  section  13(a)  of  the

FLSA ," and therefore employers were required to pay the FLSA minimum wage to all such seamen.

The  current  version  of  the  minimum  wage  require- ment, 29 U.S.C. § 206(a), which is susceptible to the two interpretations discussed above, dates from the Fair Labor Standards Amendments of 1966, Pub. L. 89-601, 80 Stat.

830, sec. 301. As the relevant House and Senate Reports stated,  however,  this  amendment  was  not  intended  "to make  any  substantive  change,  but  rather  merely  rear- ranged the order of the provisions of the . . . act." H.R. Rep.  No.  1366,  89th  Cong.,  2d  Sess.,  at  43  (1966);  S. Rep. No. 1487,  89th Cong.,  2d Sess. 1966 U.S. Code Cong. & Admin. News 3002, 3034 . Thus, the evolution of the minimum wage provision plainly shows that this provision was meant to apply to all seamen on American ships.

The  congressional  reports  issued  at  the  time  of  the

1961  amendments  fortify  this  conclusion.  The  Senate

Report  stated  (S.  Rep.  No.  145,  87th  Cong.,  1st  Sess.

1961 U.S. Code Cong. & Admin. News at 1628

932 F.2d 218, *237; 1991 U.S. App. LEXIS 8147, **57;

118 Lab. Cas. (CCH) P35,475; 30 Wage & Hour Cas. (BNA) 455

Page 23

*237     (emphasis  added)):   "The  committee  bill  cov- ers for minimum wage but not for overtime seamen on American-flag vessels." Subsequently, the Report added

**58   (id. at 1851-52) (emphasis added):

The   present   act   in   section   13(a)(14) provides  an  exemption  from  its  minimum wage  and  overtime  provisions  for  all  sea- men. Under the bill all seamen will continue to be exempt from the overtime provisions. However, seamen on vessels documented or numbered under the laws of the United States will  be  covered  by  the  minimum  wage  re- quirements.

Identical language appeared in the House Report. H.R. Rep. No. 75, 87th Cong., 1st Sess. 13-14 (1961). See also id. at 5, 36. Similarly, the Conference Report (Conf. Rep. No.  327,  87th  Cong.  1st  See,   1961  U.S.  Code  Cong.

& Admin. News 1706, 1710  (emphasis added)) stated:

"The Senate Amendment  and the conference substitute

(Secs. 13(a)(14) and 13(b)(6)) change the complete ex- emption contained in the present law for all seamen to provide minimum wage coverage for seamen on American vessels."

In  sum,  the  legislative  history  manifests  an  unam- biguous congressional intent to provide minimum wage protection for all seamen on American vessels. This con- gressional intent would be thwarted if the FLSA's cov- erage of seamen on American vessels depended, as the district  court  held,  on  a  weighing  of  the  eight  factors

**59   relevant to the choice of law in Jones Act cases. n4

n4   These   factors,   which   were   set   out   in Lauritzen v. Larsen, 345 U.S. at 583-93, are:  the place of act, the allegiance or domicile of the sea- man, the allegiance or domicile of the shipowner, the place of the employment contract, the accessi- bility of a foreign forum, the law of the forum, and the shipowner's base of operations.

If the application of the FLSA's minimum wage provision depended on a case-by--case weighing of these eight factors,  the obligations of shipowners and the rights of seamen under the FLSA would often be uncertain. While shipowners and seamen may not need to be able to predict with great ac- curacy whether American law will govern if a sea- man is hurt and sues for personal injuries under the

Jones Act, shipowners and seamen must be able to predict with some degree of certainty whether the FLSA minimum wage must be paid. The Lauritzen test,  however,  makes  such  predications  nearly  as difficult as possible. Not only does this test require a weighing and balancing of no fewer than eight factors, but some of the individual factors tend to produce shifting results totally unsuited for deter- mining  coverage  of  a  minimum  wage  provision. For  example,  since  "the  place  of  the  act"  is  one of the factors, a seaman might slip into and out of the  coverage  of  the  FLSA  as  he  sailed  from  one destination to another. And since "the law of the forum" is another factor, a seaman's entitlement to the FLSA minimum wage might depend upon the court in which he brought suit. As the legislative history shows, Congress did not intend such results.

**60

II: COMMERCE

A.   The FLSA minimum wage provision applies to employees who are "engaged in commerce" or "employed in  an  enterprise  engaged  in  commerce."  29  U.S.C.  §

206(a)(4).  Under  the  FLSA,  "commerce"  is  defined  as

"trade, commerce, transportation, transmission, or com- munication among the several States or between any State and  any  place  outside  thereof."  29  U.S.C.  §  203(b).  A

"State" is defined as "any State of the United States or the District of Columbia or any Territory or possession of the United States." 29 U.S.C. § 203(c).

The  meaning  of  the  FLSA  "commerce"  require- ment,  29  U.S.C.  §  206(a)(4),  is  ambiguous  as  applied to American vessels engaged in trade between or among foreign ports. On the one hand, the term "commerce" in

29 U.S.C. 206(a) may be interpreted not to include trade between or among foreign ports. Such trade is not, in the most literal sense, trade "among the several States or be- tween any State and any place outside thereof." 29 U.S.C.

§ 203(b).

On the other hand, I am not convinced that a somewhat less literal interpretation may be rejected without closer scrutiny. In defining "commerce" to include trade between any State, Territory, or possession and any foreign **61  place,  Congress  seems  to  have  intended  in  essence  to define "commerce" to include trade between the United States (which consists of all the States, Territories, and possessions) and any foreign

932 F.2d 218, *238; 1991 U.S. App. LEXIS 8147, **61;

118 Lab. Cas. (CCH) P35,475; 30 Wage & Hour Cas. (BNA) 455

Page 24

*238   place. Vessels flying the American flag have long been regarded "as part of the territory of the  nation." Patterson v. Bark Eudora, 190 U.S. 169, 176, 47 L. Ed.

1002, 23 S. Ct. 821 (1903); see also Lauritzen v. Larsen,

345 U.S. 571, 585, 97 L. Ed. 1254, 73 S. Ct. 921 (1953); Ross v. McIntyre, 140 U.S. 453, 477, 11 S. Ct. 897, 35

L. Ed. 581 (1891); Restatement of the Foreign Relations Law of the United States § 501 (1987). (Indeed, the ves- sels involved in the present case were permitted to fly the American flag precisely for the purpose of invoking this principle and thereby deterring potential attacks). Thus, the transfer of goods between an American-flag vessel and a foreign place may reasonably be regarded as trade between the United States and a foreign place and thus as

"commerce" under the FLSA.

Because  the  statutory  language  relating  to  "com- merce" may reasonably be construed in either of the ways noted above, examination of the legislative history is jus- tified.

B. The legislative history clearly shows that Congress

**62  assumed the "commerce" requirement would pose no obstacle for seamen on American vessels. Once again, the language Congress adopted in the 1961 FLSA amend- ments ending the exclusion of seamen on American ves- sels is critical. As previously noted, the minimum wage provision was amended in 1961 to read in pertinent part as follows (Pub. L. 87-30, sec. 5(b), 75 Stat. 65 (1961)): Every employer shall pay to each of his

employees  who  in  any  workweek  .  .  .  (ii) is  brought  within  the  purview  of  this  sec- tion  by  the  amendments  made  to  section

13(a) of this Act by the Fair Labor Standards Amendments  of  1961,  wages  at   specified rates .

Under this statutory language in the 1961 amendment, seamen on American vessels did not have to satisfy any commerce requirement whatsoever. Every employer was required to pay the FLSA minimum wage to every em- ployee brought within the coverage of the minimum wage

provision by the amendments to section 13(a), and all sea- men on American vessels fell within that category.

The "commerce" test currently included in 29 U.S.C. §

206(a) resulted from the 1966 technical amendment noted earlier; but as previously discussed, that technical amend- ment was not intended to effect **63    any substantive changes. See dissenting typescript at 5. Thus, the legisla- tive history reveals that Congress never contemplated that seamen on American vessels would be denied minimum wage coverage based on a "commerce" requirement.

In light of Congress's clear intent in enacting the 1961 and 1965 FLSA amendments, I am persuaded that "com- merce" under the FLSA should be construed to include trade,  commerce,  transportation,  transmission,  or  com- munication between an American vessel and any place outside thereof. This interpretation is consistent with the statutory language and effectuates Congress's unmistak- able intent.

III: FOREIGN WORKPLACE EXEMPTION

A.   The  "foreign  workplace  exemption,"  29  U.S.C.

§ 213(f),  excludes from FLSA coverage those employ- ees "whose services during the workweek are performed in a workplace within a foreign country." This language may reasonably be construed not to apply to seamen em- ployed on American ships, since an American Vessel may be regarded as part of the United States. Interpreting this language to apply to seamen on American vessels is more dubious. Conceivably Congress might have regarded an American ship as "a workplace within a foreign country"

**64   while the vessel was docked in a foreign port or sailing in foreign territorial waters. But this interpretation would  apparently  mean  that  seamen  on  American  ves- sels would lose and regain FLSA coverage as their ships passed between the high seas and foreign waters.

In any event, the legislative history already explored leaves no doubt that the foreign workplace exemption was not intended to apply to seamen on American ships. As previously  shown,  the  congressional  committee  reports issued in connection with the 1961 FLSA amendments disclosed

932 F.2d 218, *239; 1991 U.S. App. LEXIS 8147, **64;

118 Lab. Cas. (CCH) P35,475; 30 Wage & Hour Cas. (BNA) 455

Page 25

*239   that Congress intended to provide minimum wage coverage for all seamen on American vessels. See dissent- ing typescript at 5. Moreover,  these reports specifically noted that fully half of the seamen on American vessels were  employed  on  deep-sea  vessels.  S.  Rep.  No.  145, supra, 1961 U.S. Code Cong. & Admin. News at 1652 ; H.R.  Rep.  No.  75,  supra,  at  14.  Congress  surely  real- ized that many such vessels spent considerable periods of time in foreign ports and territorial waters. Yet Congress expressly indicated that it intended to provide minimum

wage  coverage  for  seamen  on  American  deep-sea  ves- sels and gave no indication that it wished to limit **65  that coverage to time not spent in foreign ports or waters. Thus, I am convinced that an American vessel should not be  regarded  as  a  "workplace  within  a  foreign  country" under 29 U.S.C. 213(f).

In conclusion, I believe that the FLSA minimum wage provision applies to all seamen on all American ships. I would therefore reverse the decision of the district court.

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