Gray v. Swanney-McDonald, Inc.
| Citation | 436 F.2d 652 |
| Decision Date | 01 February 1971 |
| Docket Number | No. 24476,24504.,24476 |
| Parties | Otto D. GRAY, etc., et al., Plaintiffs-Appellants, v. SWANNEY-McDONALD, INC., Defendant-Appellee. William LAWMAN, Plaintiff-Appellant, v. SWANNEY-McDONALD, INC., Defendant-Appellee. |
| Court | United States Courts of Appeals. United States Court of Appeals (9th Circuit) |
Fred J. Martino, Beverly Hills, Cal., for appellants.
G. G. Baumen, Los Angeles, Cal., for appellee.
Laurence H. Silberman, Solicitor of Labor, Bessie Margolin, Associate Solicitor, Carin Ann Clauss and Donald S. Shire, Washington, D. C., amici curiae.
Before CARTER, HUFSTEDLER, and TRASK, Circuit Judges.
Appellants, 12 tow truck drivers, appeal from the dismissal of their action against Swanney-McDonald, Inc., seeking to recover overtime compensation to which they claim entitlement under section 7(a) (1) of the Fair Labor Standards Act, 29 U.S.C. § 207(a) (1). Appellants contend that the district court erred in holding that Swanney-McDonald was exempted from coverage of the Act by 29 U.S.C. § 213(a) (2) and in holding that part of their claims were barred by limitations. Appellees respond that the district court correctly decided both issues, but that it need not have decided either had the court not erred in finding that appellant's work was in interstate commerce.
We first take up appellee's contention that the appellants were not engaged in interstate commerce and thus were not subject to the Act. Swanney-McDonald, Inc., is a California corporation having its principal place of business in Los Angeles where it operates an automotive tow service garage providing tow service and emergency road service for disabled motor vehicles in the greater Los Angeles area. Appellants were the drivers who did the actual towing and road servicing. Among the areas they serviced were a number of Interstate and U.S. Highways making up the freeway system of Los Angeles. On rare occasions calls were made out of this area, and on even rarer occasions calls were made out of state. The total number of such calls constituted less than one percent of appellee's business.
The servicing of traffic moving on interstate highways is a significant part of interstate commerce, but, appellee argues, its employees spent so little time doing that work that the interstate aspect of their duties was de minimis. The district court thought not, and we agree. The provision of towing and road services for the national highway system is essential to the free flow of traffic on that system. The fact that such services are a small part of appellee's business renders them no less important to interstate commerce. Even if appellee's contribution to interstate commerce was, by itself, quite small, we cannot ignore the cumulative effect that the many small companies in appellee's position have upon commerce between the states. By regularly servicing vehicles on the Interstate and U.S. Highways, appellee has become part of an industry the cumulative effect of which upon interstate commerce is substantial. Congress intended the Fair Labor Standards Act to cover such an industry, which necessarily means that the Act covers each and every member of that industry. The only way to regulate the whole is to regulate each discrete part. The fact that any given, or every given, company's contacts with interstate commerce are extremely small is irrelevant. 1
Beyond the requirement that the employees of the business in question be engaged in interstate commerce, the Fair Labor Standards Act contains a specific exemption for "retail or service establishments" which meet certain requirements as to the volume and source of their business. Retail or service establishments are defined as any establishment "75 per centum of whose annual dollar volume of sales of goods or services (or of both) is not for resale and is recognized as retail sales or services in the particular industry * * *." 29 U.S.C. § 213(a) (2). Appellants do not challenge appellee's right to an exemption if the appellee can qualify as a retail or service establishment. They contend that the district court's implied finding that appellee was such an establishment was clearly erroneous because appellee did not prove that no more than 25 percent of its business was for resale. The issue turns on the nature of the business done for the National Auto Club and for local automobile repair shops. During the years in question, appellee towed cars for members of the National Auto Club and charged the Club directly. The Club did not bill its members directly for that charge, but absorbed it as part of its overhead. Similarly, appellee towed disabled vehicles to repair shops that did not in turn charge the vehicle's owner directly, but absorbed the cost as overhead. Appellee seizes upon this business practice to argue that these transactions are not sale of services for resale. The district court apparently adopted that argument;2 we do not. Particularly persuasive is the decision of the Fourth Circuit in Mitchell v. Sherry Corine Corp., 264 F.2d 831, cert. denied (1959) 360 U.S. 934, 79 S.Ct. 1453, 3 L.Ed.2d 1546. The issue was whether or not the sale of meals to airlines was not for resale because the airlines did not directly charge the passengers for the meals. The court held that the meals were for resale, emphasizing the economic reality that the cost of the meals was reflected in the price paid for the ticket. Appellee's situation is identical: The cost to the Auto Club and to the repair shops of appellee's towing services was not a gift to their customers; the cost was passed on in the form of increased membership fees and repair rates and resold as surely as if it had been part of an itemized bill. Therefore, unless appellee can establish on remand that these items constituted 25 percent or less of the...
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Ketchum v. City of Vallejo
...seeking relief on behalf of named Plaintiffs for the benefit of similarly situated unnamed plaintiffs. See Gray v. Swanney-McDonald, Inc., 436 F.2d 652, 655 (9th Cir. 1971) (a collective action is an action brought by an employee or employees for and on behalf of himself or themselves and o......
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Dunlop v. State of Rhode Island, Civ. A. No. 74-24.
...and other employees similarly situated,6 and is not a "collective" action within the meaning of 29 U.S.C. § 256. Gray v. Swanney-McDonald, Inc. (9th Cir. 1971), 436 F.2d 652, cert. denied 402 U.S. 995, 91 S.Ct. 2173, 29 L.Ed.2d 161; Deley v. Atlantic Box & Lumber Corp. (D.N.J. 1954), 119 F.......
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...is when is an action a "collective or class" action within the meaning of [section] 16 of the FLSA? (11) In Gray v. Swanee-McDonald, Inc., 436 F.2d 652 (9th Cir. 1971), the Federal Appellate Court for the Ninth Circuit held that an FLSA action does not fulfill that definition merely because......