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LESSER v. SERTNER'S

June 10, 1947

LESSER
v.
SERTNER'S, Inc., et al.



The opinion of the court was delivered by: LEIBELL

This is a suit for overtime compensation under Sec. 7 of the Fair Labor Standards Act, 29 U.S.C.A. 207. The defendant is engaged in the business of cleaning, processing, renovating and repairing upholstered furniture, draperies, curtains, rugs and carpets and did a gross business of between $ 120,000 and $ 130,000 a year in 1941 to 1943 inclusive. Plaintiff was a receiving and shipping clerk. He physically handled sorted, routed, recorded, wrapped and labeled the merchandise and assisted in loading and unloading trucks. For a time he also helped clean furniture both at defendant's loft and at the place of business of customers. Defendant had about twenty employees.

The Findings of Fact, which are being filed herewith, describe in detail the nature and extent of defendant's business and the type of work performed by plaintiff as an employee. The Conclusions of Law dismiss the special defenses of the defendant, claiming exemption under Sec. 13(a)(2) of the Act 29 U.S.C.A. 213(a)(2), and award judgment to the plaintiff for overtime compensation, plus liquidated damages and a reasonable attorney's fee. Sec. 7.

 The calculation of the overtime compensation due to the plaintiff under Sec. 7 of the Act, 29 U.S.C.A. 207, is made in Findings of Fact Nos. 34 to 58. Since the evidence clearly established lack of good faith on the part of the defendant, a deliberate violation of the Act, an allowance of 100% liquidated damages is proper. Sec. 16(b), as amended May 14, 1947, 29 U.S.C.A. 216(b). The attorney's fee allowed is about 20% of the recovery, in a case involving numerous issues.

 The applicability of the provisions of the Fair Labor Standards Act with respect to the minimum wages and maximum hours set forth in Secs. 6 and 7 of the Act, 29 U.S.C.A. 206, 207, rests upon the character of the work performed by the employee. If he is engaged in commerce or in the production of goods for commerce he is covered by the Act. Overstreet v. North Shore Corp., 318 U.S. 125, 63 S. Ct. 494, 87 L. Ed. 656. If only part of an employee's work as to that part of the employer's business is considered in deciding whether the employee is entitled to be benefits of Secs. 6 and 7 of the Act. That is the clear import of the language in Skidmore v. John J. Casale Co., 2 Cir., 1947, 160 F.2d 527, 530, where the court said: ' * * * it would appear that while a minimal amount of production for shipment interstate will suffice for the purpose of classifying the employer, nevertheless it must be shown that the work of the individual employee which relates to that minimal amount forms a substantial amount of all the work done by that employee.'

 Although the cleaning of rugs, draperies and furniture for an ultimate consumer who is a householder using them in his home, would not be classed as the production of goods for commerce, in view of Phillips v. Star Overall Dry Cleaning Laundry Co., 2 Cir., 149 F.2d 416, and Roland Electrical Co. v. Walling, 326 U.S. 657, 66 S. Ct. 413, 90 L. Ed. 383, nevertheless such services when performed for furniture dealers and trade shops, who resell the cleaned merchandise in interstate commerce, would be classed as the production of goods for commerce. About 1/2% of defendant's business was work done for furniture dealers and about 2/3% was for trade shops. About 8% of defendant's business is performed for decorators who are billed directly and who sell the article cleaned to others or use it for display. All of that work passed through plaintiff's hands as the receiving and shipping clerk.

 Window cleaners and painters employed to work in a loft building have been held to be engaged in the production of goods for commerce, where the tenants of the loft building are so engaged. Kirschbaum v. Walling, 316 U.S. 517, 62 S. Ct. 1116, 86 L. Ed. 1638. (Martino v. Michigan Window Cleaning Co., 327 U.S. 173, 66 S. Ct. 379, 90 L. Ed. 603). There would seem to be the same basis for a ruling that those who clean and renovate the furnishings of department stores or commercial concerns engaged in handling and selling goods in interstate commerce should be similarly classified. The fact that an outside company, such as the defendant, and not the department store or the commercial business hires and employees rendering such services, would not prevent the application of the rule. Fleming v. Arsenal Building Corp., 2 Cir., 125 F.2d 278 and Roland Electrical Co. v. Walling, 326 U.S. 657, 66 S. Ct. 413, 90 L. Ed. 383. About 1/2% of defendant's business was done on the furnishings and equipment of department stores; and about 7% for commercial consumers such as hotels, banks, restaurants and others.

 In the Roland Electrical Co. case Mr. Justice Burton discussed the definition of 'commerce', 'goods' and 'produced' as contained in Sec. 2 of the Act, 29 U.S.C.A. 203, and stated, 326 U.S.at pages 663 and 664, 66 S. Ct.at page 416, 90 L. Ed. 383: 'This does not require the employee to be directly 'engaged in commerce' among the several states. This does not require the employee to be employed even in the production of an article which itself becomes the subject of commerce or transportation among the several states. It is enough that the employee be employed, for example, in an occupation which is necessary to the production of a part of any other 'articles or subjects of commerce or any character' which are produced for trade, commerce or transportation among the several states. This does not require that the occupation in which he is employed be indispensable to the production under consideration. It is enough that his occupation be 'necessary to the production.' There may be alternative occupations that could be substituted for it but it is enough that the one at issue is needed in such production and would, if omitted, handicap the production.'

 The plaintiff herein, as one of the defendant's employees, was engaged in performing services that were so clsoely related to the movement of commerce as to be a part thereof. Walling v. Jacksonville Paper Co., 317 U.S. 564, 63 S. Ct. 332, 87 L. Ed. 460. His duties in relation to the shipping of rugs in interstate commerce required several hours of his working time each day, a substantial part of all the work performed by the plaintiff. All of the rugs which defendant received at its place of business for cleaning were in turn picked up by the Lincoln Rug Co. of Newark, New Jersey, and transported to Newark, where the actual work of cleaning was performed by the Lincoln Co., as a subcontractor of the defendant. Plaintiff, in addition to receiving the rugs from defendant's trucks at defendant's place of business, after they had been picked up from customers, tagged, made a record thereof, and arranged the rugs so that they could be picked up by Lincoln Rug Co.'s trucks. He also assisted in loading the rugs on to the Lincoln Rug Co. truck and in unloading them when they were returned to the defendant by the Lincoln Co., after they had been cleaned.

 Rugs shipped by a cleaning establishment in New York to a subcontractor in New Jersey to be cleaned and returned, are goods in interstate commerce. Secs. 3(b) and 3(j) of the Act. Phillips v. Star Overall Dry Cleaning Laundry Co., supra. An employee of a New York corporation, a substantial part of whose services are regularly and directly related to recording and assembling the rugs, wrapping and tagging them, and assisting in loading them on to the New Jersey corporation's truck which transported the rugs to the New Jersey cleaning plant, is engaged in commerce and is covered by the maximum hours provision of the Fair Labor Standards Act, Secs. 3 and 7, 29 U.S.C.A. 203 and 207.

 If an employee is engaged in 'commerce or in the production of goods for commerce' under Secs. 6 and 7 of the Act then the provisions thereof are applicable to him unless there exists an exemption under Sec. 13 of the Act which withdraws him from the scope of the Act. The defendant asserts as a special defense that Sec. 13(a)(2) of the Fair Labor Standards Act provides an exemption which makes Section 7 inapplicable to the plaintiff herein.

 Section 13(a)(2) of the Act, 29 U.S.C.A. 213(a)(2), provides: 'The provisions of sections 206 and 207 of this title shall not apply with respect to * * * (2) any employee engaged in any retail or service establishment the greater part of whose selling or servicing is in intrastate commerce; * * * .'

 The greater part of the defendant's business is furnishing services. That alone, however, does not bring defendant's employee, the plaintiff, within the exemption. A definition and explanation of the term 'service establishment' is set forth in Interpretative Bulletin No. 6 issued by the Wage and Hour Division of the Department of Labor, June 1941, in Paragraphs 22 and 23 thereof:

 '22. The term 'service establishment' as used in section 13(a)(2) may be considered to include generally that large miscellaneous assortment of business enterprises which are similar in character to retail establishments, but which may not be accurately classified as such. Such an interpretation is suggested by the manner in which Section 13(a)(2) is drafted. Service and retail establishments are considered in the same sentence and the same criterion of intrastate commerce is made applicable to both.

 '23. Many of the characteristics outlined above with respect to retail establishments are helpful in determining whether a given establishment is a service estalblishment within the meaning of section 13(a)(2). Service establishments are usually local in character, are usually open to the general consuming public and usually render a service to private individuals for direct consumption. The service is usually purchased in small quanties for private ...


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