Marshall v. Truman Arnold Distributing Co.

640 F.2d 906, 24 Wage & Hour Cas. (BNA) 1217
CourtCourt of Appeals for the Eighth Circuit
DecidedFebruary 12, 1981
DocketNos. 80-1423, 80-1424
StatusPublished
Cited by2 cases

This text of 640 F.2d 906 (Marshall v. Truman Arnold Distributing Co.) is published on Counsel Stack Legal Research, covering Court of Appeals for the Eighth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Marshall v. Truman Arnold Distributing Co., 640 F.2d 906, 24 Wage & Hour Cas. (BNA) 1217 (8th Cir. 1981).

Opinion

FLOYD R. GIBSON, Senior Circuit Judge.

This case involves the application of the minimum wage and overtime provisions of the Fair Labor Standards Act (FLSA), 29 U.S.C. §§ 201-219 (1976), to the operators of gasoline service stations subject to restrictive lease agreements from the Truman Arnold Distributing Company, a gasoline distributor. The United States District Court for the Western District of Arkansas1 found the lessees to be employees within the meaning of the FLSA. The court, in a forty-six page memorandum opinion, enjoined the company from further violations and awarded back pay to those individuals able to demonstrate underpayment. The Secretary of the Department of Labor appeals the findings of the District Court with regard to the denial of a back pay award to eight individuals who did not testify concerning their hours of employment. The Secretary also appeals the District Court’s (1) allowance of a credit for living quarters at four of the stations; (2) failure to enjoin Truman Arnold individually; and (3) finding that an employee was also a supervisor and thus exempt from the FLSA. The company cross-appeals the District Court’s finding that the lessees and their employees were employees under the FLSA. We affirm the District Court on all issues except the court’s denial of back pay to the individuals who did not testify at trial. On that issue we reverse and remand for an evidentiary hearing on the extent of the hours worked by the individuals, in order to determine the proper back pay, if any, which is owing to them.

Definition of “employee”

The District Court found the lessees to be employees within the meaning of the FLSA, 29 U.S.C. § 203(e)(1). The Act itself, however, provides little guidance concerning the limits of the employer-employee relationship.2 See Rutherford Food Corp. v. McComb, 331 U.S. 722, 728, 67 S.Ct. 1473, 1475, 91 L.Ed. 1772 (1947). The determination of the relationship depends “upon the circumstances of the whole activity.” Id. at 730, 67 S.Ct. at 1476. The District Court made the following finding of fact with regard to the lessees:

When we examine the relationship between Truman Arnold Distributing Company and the 25 so-called lessees, we find that they were employees, not independent contractors. Truman Arnold Distributing Company had the right to control the details of how each lessee ran the station. Truman Arnold Distributing Company did not exercise its control with respect to the firing and hiring of assistants by each lessee, but it exercised its control in many other and more important ways. Truman Arnold Distributing Company controlled the hours of operation, the prices to be charged for the major items sold at the station, the physical appearance of the stations and the daily management of money. By controlling these details of the operation of each station, it was, in effect, controlling how each lessee used his or her assistants. The mere fact that Truman Arnold Distributing Company allowed each lessee to determine whom it would hire as a station helper does not change the fact that Truman Arnold Distributing Company exercised almost complete dominion over every detail of each station.

We cannot say that this finding is “clearly erroneous.” See Fed.R.Civ.P. [909]*90952(a); United States v. United States Gypsum Co., 333 U.S. 364, 395, 68 S.Ct. 525, 541, 92 L.Ed. 746 (1948). Essentially, the lessee of the station provided only his labor or services. In return, he or she received a minimum guaranteed payment and a small percentage commission on the amount of gasoline sold. The risk of profit or loss, as well as managerial discretion, remained in the control of the company. The District Court did not err in finding an employer-employee relationship.3

The company also argues that the District Court erred in finding the employees or attendants hired by the lessees to be also employees of the company. While the lessees did hire the attendants, the company’s use of an intermediary to employ workers does not insulate the company from the provisions of the FLSA. See Tobin v. Anthony-Williams Manufacturing Co., 196 F.2d 547, 549-50 (8th Cir. 1952). The attendants hired by the lessees were as much “an integrated part of” the company’s retailing operation, id. at 550, as the lessees were themselves. We find no error, and dismiss the company’s cross-appeal.

Credit for living quarters

The Secretary contends that the District Court erred in granting a $300 per month credit to four lessees who were provided with living quarters at four non-24hour gasoline stations. The $300 figure was arrived at by using the value specified in the lease agreement. The District Court found that the Secretary was not able to present sufficient evidence that the true value of the quarters was other than “the agreed price of $300.00 per month.” Furthermore, the court found the quarters to be a desirable feature and that some of the lessees considered them to be attractive.

The Secretary does not contest these findings, but argues that the quarters were for the primary benefit of the company in that they deterred crime and vandalism. Therefore, he argues that the imputed rent should not be included in computing wages. See 29 C.F.R. § 531.3(d)(1) (1979). The District Court found the quarters to be the result of a voluntary contractual negotiation between the parties. There is no doubt that the company gained some incidental benefit from the lessee living on the premises of the station. We cannot say, however, that the primary benefit was not to the tenant. In addition, the District Court’s assigning the value of $300 per month to the living quarters cannot be found to be clearly erroneous, given the value assigned to the quarters in the contract. Undoubtedly the living quarters would be more attractive or beneficial to some lessees than to others. The lessee was free to accept or reject the employment contract. In the absence of a finding by the trial court of overreaching by the company, the contractual value will not be set aside.

Denial of the injunction against Truman Arnold as an individual

The District Court dismissed Truman Arnold as an individual from the action on the basis that he neither dealt with the lessees during the time for which back pay was being sought nor did he have any current dealings with them. There is no dispute over the company’s financial ability to sustain any fines or to comply with the injunction. The Secretary does argue that [910]*910Arnold should be enjoined personally because of the possibility that he may change the corporate structure of the gasoline distributorship in order to avoid the injunction. Appellant’s brief at 38. We find this possibility extremely speculative and remote. The trial court did not abuse the discretion it may exercise in issuing or refusing to issue an injunction. See Marshall v. Van Matre,

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Bluebook (online)
640 F.2d 906, 24 Wage & Hour Cas. (BNA) 1217, Counsel Stack Legal Research, https://law.counselstack.com/opinion/marshall-v-truman-arnold-distributing-co-ca8-1981.