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October 21, 1980

Ray MARSHALL, Secretary of Labor, United States Department of Labor, Plaintiff,
Gloria BAKER, Individually, d/b/a Sparrowbush Apartments; William J. Magee, Individually, Defendants

The opinion of the court was delivered by: FOLEY


In the period immediately following the successful completion of the American Revolution of 1776, the unity among the States which had been forged through their common dedication to that noble cause was eroded by a parochial pursuit of commercial self-interest. Indeed, the inability of the national government to alleviate this source of discord has been identified as the single most important factor exposing the inadequacy of the Articles of Confederation.

There can be little doubt that as serious as the deficiencies and as inadequate to the requirements of a unified nation as the Articles were, it was upon the incapacity of Congress to manage the commercial affairs of the Confederation that the movement to reorganize the government rested. In the absence of the problem of commerce ... there would have been no Federal Convention and no Constitution.

 P. Smith, The Shaping of America 50 (1980). The remedy prescribed by the Constitutional Convention of 1787 comes to us as U.S.Const. art. I, § 8, cl. 3, empowering Congress "[to] regulate Commerce with foreign Nations, and among the several States, and with the Indian Tribes."

 One hundred and fifty years after the ratification of the Constitution, Congress addressed the problem of the existence of labor conditions detrimental to the general well being of working men and women. Invoking its power conferred by the commerce clause, it promulgated the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. §§ 201-219 (FLSA). It is with the extent to which Congress sought to include within the statute businesses largely local in nature, and whether in so doing it has transgressed the limits of its authority, that this litigation is concerned.

 Plaintiff Ray Marshall, Secretary of the United States Department of Labor, commenced this action against defendants Gloria Baker, doing business as Sparrowbush Apartments, and William J. Magee, for alleged violations of the FLSA. Defendants have moved, pursuant to Fed.R.Civ.P. 56, for summary judgment dismissing the complaint on the grounds that 1) plaintiff has failed to state a claim upon which relief can be granted, and 2) defendants are not within the purview of the FLSA. Plaintiff resists summary disposition in defendants' favor, and has cross-moved, under Rule 56 as well, "for partial summary judgment as to subject matter jurisdiction".

 I conclude that Congress intended the Act to apply to businesses such as defendants', and that as so applied Congress has not exceeded its constitutional power under the commerce clause. It is further my judgment that the Secretary's motion is procedurally inappropriate. Both defendants' motion for summary judgment of dismissal and plaintiff's cross-motion for partial summary judgment are therefore denied.


 Defendant Gloria Baker resides in Scarsdale, New York. She conducts business under the name of Sparrowbush Apartments, located in Latham, New York, and is engaged in the management and control of that residential complex. Defendant William J. Magee has an office in Cohoes, New York, and is the managing agent of Sparrowbush Apartments.

 Plaintiff charges defendants with several violations of the FLSA, the provisions of which are allegedly applicable to their management of Sparrowbush, and brings this action to secure their compliance. Specifically, plaintiff alleges that since August 29, 1976, defendants have violated 29 U.S.C. §§ 206 and 215(a)(2) by paying their employees less than the minimum hourly wage; that defendants have violated 29 U.S.C. §§ 207 and 215(a)(2) by failing to compensate employees, for time worked in excess of 40 hours per week, at rates at least one and one-half times the regular rates; that defendants have violated 29 U.S.C. §§ 212 and 215(a)(4) by employing child labor in excess of the maximum number of hours permitted; and that defendants have violated 29 U.S.C. §§ 211(c) and 215(a)(5) by failing to maintain adequate and accurate records of some of their employees and of their wages, hours, and other conditions of employment. The prayer for relief seeks judgment permanently enjoining defendants from violating the enumerated sections of the statute.

 The essence of defendants' position is that inasmuch as Sparrowbush is not an "[enterprise] engaged in commerce or in the production of goods for commerce" as defined by 29 U.S.C. § 203(s), the FLSA does not apply to their management of the complex. In support of their motion for summary judgment, defendants submitted the affidavit of William J. Magee.

 Magee affirms that all of Sparrowbush's one hundred and forty-four apartments are used for residential purposes. No manufacturing or other commercial activity, apart from management of the complex itself, is conducted on the premises. The project has three regular employees, a superintendent and two maintenance men, all of whom live on the grounds. From time to time, the project employs high school boys through the local youth employment service to cut grass and to assist in snow removal. Sparrowbush has an operating budget of approximately $ 27,500 per month. More than 97% of that sum goes for intangibles (i. e., mortgage payments, taxes, insurance, water and sewer charges, repairs, office expenses, and labor), while less than 3% is used to purchase tangible personal property. The items which the complex does purchase include light bulbs, cleaning chemicals, paints, floor finishing chemicals, replacement lock sets, panes of glass, refrigerator and stove parts, nails, screws, paint rollers, and glazier's putty.

 In opposition to defendants' motion, plaintiff submitted an affidavit of Samuel L. Weitman, Albany Area Director of the United States Department of Labor. Weitman supervised the investigation of defendants for possible violations of the FLSA. That investigation revealed that defendants regularly purchase goods that have been manufactured outside New York, either directly from an out-of-state supplier or from an in-state supplier following movement of the goods in interstate commerce. Examples of these purchases include an average of $ 400 per year over a two year period for repair parts for Cadet lawn mowers originating in Baltimore, Maryland and Chicago, Illinois; approximately $ 175 per month over a two year period for blower assemblies, heat exchangers, and compressors originating in Indianapolis, Indiana; approximately $ 80 per month over a two year period for cleaning machines and plumbing repair parts originating in McKees Rock, Pennsylvania; and approximately $ 78 per month over a two year period for appliance parts originating in Ferndale and Troy, Michigan and Chattanooga, Tennessee. In addition, during a twelve month period, $ 2,572.35 was spent on janitorial products and supplies which originated in and were purchased directly from Cleveland, Ohio.

 Defendants concede the accuracy of this data for purposes of their motion. They argue that, even accepting the foregoing as true, Congress never intended to include within the FLSA a business such as theirs. Moreover, they argue that should it be decided that the statute does apply to them, then as so construed the FLSA is unconstitutional.


 A. Defendants' Motion for Summary Judgment

 Defendants' position raises questions of both statutory interpretation and constitutionality. The former will be entertained first, since only if it be decided that the FLSA applies to defendants' apartment complex need ...

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