Gangi v. DA SCHULTE

• Citation: 53 F. Supp. 844
• Parties: GANGI v. D. A. SCHULTE, Inc.
• Decision Date: 28 December 1943
• Court: U.S. District Court — Southern District of New York

53 F. Supp. 844

GANGI v. D. A. SCHULTE, Inc.

District Court, S. D. New York.

December 28, 1943.

Isadore Entes, of New York City (Abraham E. Jacobs, of New York City, of counsel), for plaintiffs.

Ernst, Gale, Bernays, Falk and Eisner, of New York City (Edwin A. Falk and Abraham Friedman, both of New York City, of counsel), for defendant.

RIFKIND, District Judge.

Plaintiffs were employees of the defendant, engaged in the operation and maintenance of a twenty-three story, loft building located at 571/581 Eighth Avenue, in the Borough of Manhattan, in the City of New York. They have brought this action to recover from their employer liquidated damages for violation by the employer of the provisions of Section 7 of the Fair Labor Standards Act of 1938, 29 U.S.C.A. § 207.

The period during which the violation is alleged to have occurred is October 24, 1938 to February 5, 1942. It has been stipulated that on or about September 24, 1942, the employees received an amount equal to the unpaid over-time compensation to which they would have been entitled if they were subject to the provisions of the Act except for the amount of liquidated damages as provided in Section 16, 29 U.S.C.A. § 216.

Defendant denies that plaintiffs were engaged in commerce or in the production of goods for commerce. Affirmatively, defendant pleads the defenses of accord and satisfaction and release in addition to a number of other affirmative defenses, which need not now be considered since they were stricken out on motion.

If the defenses of accord and satisfaction and release are sufficient in law and are established by the proof, the complaint must be dismissed and the other issue in the case will not require resolution.

There is no substantial dispute as to the facts. Shortly after the decision of the United States Supreme Court in A. B. Kirschbaum Co. v. Walling, 316 U.S. 517, 62 S.Ct. 1116, 86 L.Ed. 1638, decided June 1, 1942, the defendant's district manager was approached by one Johnson, Union shop steward, with a request for consideration of the employees' claim for overtime compensation. The defendant's district manager took the position that the employees of the building were not covered by the provisions of the Act on the ground that the tenants of the building were largely contractors who performed labor for New York manufacturers.

About a week later, the defendant's district manager again spoke to Johnson and told him that the defendant's officers were satisfied that no additional compensation was payable to the employees and that they would not pay any. Johnson responded that he would communicate that decision to his fellow employees, all of whom were members of the Union with which the defendant had a closed shop agreement.

Johnson was succeeded in the office of shop steward by plaintiff, Gangi, and in August, the latter informed the district manager that the building employees demanded over-time compensation plus liquidated damages and that, unless the defendant paid an amount, so calculated, to each of the employees, they would institute suit. The district manager responded that he would report the decision of the employees to his superiors. Several weeks later, the district manager reported to Gangi that the defendant denied liability under the Act but, in order to avoid litigation, it was prepared to pay unpaid over-time compensation without liquidated damages. Gangi replied that he would submit the proposal to his fellow employees and the next day reported that the proposal was accepted.

On September 24, 1942, the district manager sent for Gangi and told him that he had checks covering unpaid over-time compensation and a form of release which he asked him to sign. Gangi replied that before he would sign the release he must seek advice. He went away and communicated by telephone with the Wage & Hour Administration and with an official of the Union. He returned, signed the release, delivered it, and accepted the check. The other employees did likewise. Gangi testified that he was fully authorized to conduct these negotiations and to consummate the agreement on behalf of his fellow employees, who are coplaintiffs in this action.

The release, which was signed by each of the plaintiffs, read as follows: "The undersigned, an employee of D. A. Schulte, Inc., in premises 575 Eighth Avenue, New York City, does hereby acknowledge receipt of the sum of $........ as payment in full of all sums, if any, which may be due to the undersigned by said D. A. Schulte, Inc., by reason of the Federal Wage & Hour Act, and the undersigned does hereby release said D. A. Schulte, Inc., from any other further obligations in connection therewith."

Gangi, who testified on behalf of the plaintiffs, gave every evidence of being able, intelligent, and well-informed. Nothing has been suggested to impugn the integrity of the release except the public policy underlying the Act.

Neither before the commencement of the action, nor since, has any one of the plaintiffs paid back or tendered to the defendant the amount received by him upon the execution and delivery of the release.

In order to understand the nature of the controversy or dispute between the plaintiffs and the defendant during the summer of 1942, some additional facts should be mentioned which have a bearing upon the issue of coverage. It appears that the building is tenanted by many persons who serve the dress manufacturing industry. The latter industry, in the City of New York, seems to be organized along the following lines. The dress manufacturer purchases the fabrics and other materials which go into the production of a dress, and usually has the material cut in accordance with his own designs. He maintains a showroom and sales force for the exhibition and sale of his wares. He does not manufacture the dress. The actual work of fabrication is performed by a number of contractors of whom there are several varieties. One variety consists of so-called dress contractors. They employ a force engaged in sewing garments. The second variety consists of contractors who pleat, trim and stitch. Their work is performed upon the garments either before or after they are handled by the dress contractor, as the designs permit. A third variety consists of those who fabricate belts and similar accessories. All the contractors get the fabrics from the...