Brennan v. Freeman

365 F. Supp. 721, 21 Wage & Hour Cas. (BNA) 376, 1973 U.S. Dist. LEXIS 11110
CourtDistrict Court, D. Minnesota
DecidedNovember 13, 1973
DocketNo. 3-73-Civ.-68
StatusPublished

This text of 365 F. Supp. 721 (Brennan v. Freeman) is published on Counsel Stack Legal Research, covering District Court, D. Minnesota primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Brennan v. Freeman, 365 F. Supp. 721, 21 Wage & Hour Cas. (BNA) 376, 1973 U.S. Dist. LEXIS 11110 (mnd 1973).

Opinion

MEMORANDUM AND ORDER

DEVITT, Chief Judge.

The issue here, shaped by cross motions for summary judgment, is whether employees of a local liquor store which purchases its supplies intrastate, after movement in interstate commerce, are governed by the overtime and record keeping provisions of the Fair Labor Standards Act. We conclude, based on a reading of the law in the light of its legislative history, the practical construction of the statutes, and decided cases on the issue, that the employees are covered by the law.

Plaintiff sues to enjoin defendants from violating the overtime and record keeping provisions of the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. § 215(a)(2), (5), and for an order restraining defendants from withholding payment of overtime compensation to their employees.

Jurisdiction exists. 29 U.S.C. § 217.

In view of defendants’ admission that the annual dollar volume of sales of their establishment for the years 1971 through 1973 has been in excess of $250,000, the exemption to coverage contained in section 13(a)(2) of the Act is inapplicable,1 unless defendants’ retail liquor establishment fails to qualify as an “enterprise engaged in commerce” within the meaning of section 3(s). 29 U.S. C.A. § 203(s) (Supp.1973).

Defendants are partners engaged in doing business as Otto’s Liquor, a retail liquor establishment located on Sibley Memorial Highway in Mendota, Minnesota. During the period since June 24, 1971, the defendants have employed a number of persons to order, purchase, pay for, receive, unload, handle, store, sell or otherwise work on the various alcoholic and non-alcoholic beverages sold in their store. Defendants contend that all of the beverages sold by them are received exclusively from distributors located within the State of Minnesota. For purposes of this motion, the Court will assume the truth of this contention. We also may assume that all of the beverages sold by defendants are sold for use within the State of Minnesota. In response to plaintiff’s request for admissions, defendants, on the basis of information and belief, acknowledge that a substantial portion of the goods sold in their store have been received by local distributors from points . outside the State of Minnesota. But assuming the interstate origin of the goods the fact of obtaining them solely from local distributors does not preclude Fair Labor Standards Act coverage.

Prior to 1961, only those employees who themselves engaged in commerce or in the production of goods for commerce were subject to the minimum wage-maximum hour provisions of the Fair Labor Standards Act of 1938. The 1961 amendments to the Act extended coverage to include all employees of an “en[723]*723terprise” if it had any employees “engaged in commerce or in the production of goods for commerce.”2 3 In addition, a sweeping definition of “enterprise engaged in commerce or in the production of goods for commerce” was added. Such an enterprise was defined to include an enterprise having employees engaged in “handling, selling, or otherwise working on goods that have been moved in or produced for commerce by any person . . . ”3

It is difficult to see how defendants doing business as Otto’s Liquor escape qualification as an “enterprise.” See 29 U.S.C.A. § 203(r) (Supp.1973).4 The crucial determination is whether this enterprise is “engaged in commerce” within the meaning of section 203 (s).

A careful reading of the legislative history of the 1961 amendments reflects that it was the apparent intent of Congress to extend Fair Labor Standards Act coverage to retail enterprises located in one state which “purchase or receive goods for resale . . . [which] move or have moved in commerce from other States.” [Emphasis added] Senate Report No. 145, 2 U.S.Code Cong, and Admin.News (87th Cong., 1st Sess., 1961) p. 1664.5 The Senate Report went on to explain this extension of coverage as follows:

“The committee bill proposes to exend coverage to employees of retail or service enterprises engaged in commerce or in the production of goods for commerce that meet certain other tests, such as the volume-of-business test. Even if engaged in commerce, a retail or service enterprise would bé covered only if it has purchased or received goods for resale that move or have moved across State lines which amount in total annual volume to $250,000 or more. This provision on inflow volume applies to employees employed. by retail or service enterprises (who are in the final stages of the flow of interstate commerce from the producer or manufacturer to the ultimate consumer) a principle essentially the same as that embodied in the phrase ‘production for commerce’ as applied to employees of manufacturing concerns (who are the initial stage of the flow of interstate commerce). Under the inflow limitation on coverage contained in the committee bill, goods amounting to $250,000 a year must be purchased or received for resale and have moved across State lines at some stage in the flow of commerce to the retailer.” [Emphasis added].

Senate Report, supra, at p. 1645. Senators Goldwater and Dirksen in their minority report appear to have construed the proposed amendment to section 203(s) in a similar manner. See 2 U.S. [724]*724Code Cong, and Admin.News (1961) at 1689-1691.

Labor Department regulations interpreting the phrase “goods that have been moved in . commerce” provide:

“For the purpose of section 3(s) [29 U.S.C. § 203 (s) ], goods will be considered to ‘have been moved ... in commerce’ when they have been moved across State lines before they are handled, sold, or otherwise worked on by the- employees. It is immaterial in such a case that the goods may have ‘come to rest’ within the meaning of the term ‘in commerce’ as interpreted in other respects, before they are handled, sold, or otherwise worked on by the employees in the enterprise. Such movement in commerce may take place before they have reached the enterprise .... Thus, employees will be considered to be ‘handling, selling, or otherwise working on goods that have been moved in commerce’ where they are engaged in the described activities on ‘goods’ that have moved across State lines at any time in the course of business, such as from the manufacturer to the distributor. . . . ” 29 C.F.R. § 779.242 (1972). [Emphasis added].

Such administrative interpretations are entitled to great deference. See, e. g., Griggs v. Duke Power Co., 401 U.S. 424, 434-435, 91 S.Ct. 849, 854-855, 28 L.Ed.2d 158 (1971).

Furthermore, section 203(s) has been judicially construed to cover enterprises dealing in goods acquired intrastate after movement in interstate commerce. See Wirtz v. Melos Construction Co., 408 F.2d 626 (2d Cir. 1969); Brennan v. Ventimiglia, 356 F.Supp. 281 (N.D.Ohio 1973); Irby v. Davis, 311 F.Supp. 577 (E.D.Ark.1970); Shultz v. Deane-Hill Country Club, Inc., 310 F.Supp.

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Related

Maryland v. Wirtz
392 U.S. 183 (Supreme Court, 1968)
Griggs v. Duke Power Co.
401 U.S. 424 (Supreme Court, 1971)
Shultz v. Deane-Hill Country Club, Inc.
310 F. Supp. 272 (E.D. Tennessee, 1969)
Wirtz v. Mayer Construction Co.
291 F. Supp. 514 (D. New Jersey, 1968)
Brennan v. Ventimiglia
356 F. Supp. 281 (N.D. Ohio, 1973)
Hodgson v. Hatton
348 F. Supp. 895 (S.D. Texas, 1972)
Shultz v. Union Trust Bank of St. Petersburg
297 F. Supp. 1274 (M.D. Florida, 1969)
Irby v. Davis
311 F. Supp. 577 (E.D. Arkansas, 1970)

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Bluebook (online)
365 F. Supp. 721, 21 Wage & Hour Cas. (BNA) 376, 1973 U.S. Dist. LEXIS 11110, Counsel Stack Legal Research, https://law.counselstack.com/opinion/brennan-v-freeman-mnd-1973.