Andrews v. Montgomery Ward & Co.

• Decision Date: 22 November 1939
• Docket Number: No. 864.,864.
• Citation: 30 F. Supp. 380
• Court: U.S. District Court — Northern District of Illinois
• Parties: ANDREWS, Administrator of Wage and Hour Division, United States Department of Labor, v. MONTGOMERY WARD & CO., Inc., et al.

30 F. Supp. 380

ANDREWS, Administrator of Wage and Hour Division, United States Department of Labor, v. MONTGOMERY WARD & CO., Inc., et al.

No. 864.

District Court, N. D. Illinois, E. D.

November 22, 1939.

George A. McNulty, Gen. Counsel, Irving J. Levy, Asst. Gen. Counsel, both of Washington, D. C., and Alex Elson, Regional Atty., and Lee K. Beznor, both of Chicago, Ill., for plaintiff.

John A. Barr, R. F. Walker Smith, and Stuart S. Ball, all of Chicago, Ill., for defendant.

HOLLY, District Judge.

Elmer F. Andrews, Administrator of the Wage and Hour Division of the United States Department of Labor, has filed his petition herein praying that an order be issued directed to Montgomery Ward & Co., Inc., a corporation, and Stuart S. Ball, Secretary of Montgomery Ward & Co. Inc., to show cause why they should not be required to appear before the Commissioner, or one of the officers designated by him, at such time and place as the court might direct and there produce the books, papers and documents described in a subpœna theretofore issued. The subpœna commanded the respondents to produce at the time and place therein named any and all of the reports and records entitled by respondents "Gross Earnings Report" containing all entries pertaining to wages paid to respondents' employees employed in its mail order branch at Kansas City, Missouri, for the period beginning with the week ending October 27, 1938, to and including April 11, 1939, both inclusive, together with the time clock cards for each of said employees for said period, and records showing the number of hours scheduled for each of the departments of said branch at Kansas City, Missouri, for the same period and the number of hours actually worked by each of said departments during said period.

Petitioner averred that the respondent is a corporation with its principal executive offices in Chicago, Illinois, and is engaged in a general merchandising business through nine mail order houses, three retail pools, six hundred retail stores and one hundred fifty order offices for mail order business located in all but one of the forty-eight states; that the Kansas City plant, consisting of the mail order house and a retail store, is the second largest of respondent's plants; that at least 80% of the goods and merchandise received by said branch is shipped from sources from without the state; that it supplies merchandise to about sixty-five retail stores of respondent situated in the State of Missouri as well as five other states; that sales are made directly to consumers in the various states, the net sales during the year 1936 totalling $16,000,000, and that respondent is in these and other ways an employer of employees engaged in Interstate Commerce, or in the production of goods for Interstate Commerce, within the meaning of the Fair Labor Standards Act of 1938, 29 U.S.C.A. §§ 201-219.

Petitioner further averred that the respondent, Stuart S. Ball, as secretary of Montgomery Ward & Co., is a resident of Illinois within the jurisdiction of this Court.

It is further set forth in this petition that the Administrator, having reasonable grounds to believe that the respondent, Montgomery Ward & Co., had been and was in its said business violating the provisions of Sections 7, 11(c), 15(a) (1), 15(a) (2), 15(a) (3) and 15(a) (5) of the act as well as regulations issued thereunder, designated certain persons as officers of the Wage and Hour Division pursuant to Section 11(a) of the Act to investigate and gather data regarding wages and hours and other conditions and practices of employment in the respondent's said place of business, and such other matters as would be necessary and appropriate to determine whether respondent had violated the provisions of the Act; that pursuant to said designation the said agents requested respondents for the books and records relating to earnings and hours of the employees of respondent, Montgomery Ward & Co., in its said mail order house in Kansas City, Missouri, but the request was refused, whereupon the administrator, having found that there was reasonable ground for believing that respondent was violating the aforesaid provisions of the Act, executed an order that investigation be made to determine whether Montgomery Ward & Co. or its various agents or employees had violated or were violating any of the provisions of the Act or regulations promulgated pursuant thereto and authorized certain persons as officers of the Wage and Hour Division, and each of them, to investigate and gather such data, enter and inspect such plants and such records and perform all other duties authorized in said order.

A subpœna duces tecum was issued, duly executed by said Administrator requiring respondents to appear before Alex Elson, regional attorney and officer of the Wage and Hour Division, at a time therein specified, and produce the books and papers heretofore referred to, which said subpœna was duly served upon the above respondents, said Stuart S. Ball, being secretary of Montgomery Ward & Co., and in charge and having custody and control of said books, papers and documents called for by the subpoena, but said respondents, though appearing, refused to produce the books, papers and documents called for by said subpœna though the said books, papers and documents are essential to the Administrator for the purpose of determining the amount of earnings of the employees and whether said employees have received the wages required by the Act.

It is further averred in the petition that at the time respondents appeared before said Alex Elson it was stated in their behalf that the company did not have a record of hours actually worked by each of the departments in the Kansas City Mail Order House which statement was accepted by the Administrator, and the Administrator is not asking that a record showing the hours actually worked by each of the departments of the Kansas City Mail Order House for said period be produced.

The respondents filed an answer in which they set up as a defense that the subpoena called for the production of books, papers and documents for all employees employed in the Kansas City Mail Order House of Montgomery Ward & Co. which included employees who are not engaged in commerce or the production of goods for commerce as these terms are defined by the Fair Labor Standards Act of 1938, employees who are engaged in purely intrastate activities, including those who are employed in bona fide local retailing capacities, and employees who are employed in bona fide administrative and executive capacities; that none of the books, papers and documents called for by the subpœna furnish any proper basis for determining which of the employees in the Kansas City Missouri Mail Order House are exempt from the operation of the Fair Labor Standards Act of 1938, nor do they contain or disclose sufficient facts from which it can be ascertained which of the employees at said mail order house are exempt from the operation of the Fair Labor Standards Act of 1938.

The respondent, Stuart S. Ball, set up as a separate defense that he did not have custody of the books, papers or documents set up in the subpœna. Other defenses are set up which are not necessary to note for the purpose of this opinion, the gist of the answer being that the books, papers and documents called for by the subpœna are not necessary or appropriate to determine whether respondent, Montgomery Ward & Co., has violated the provisions of the Fair Labor Standards Act as set forth in the petition and that the subpœna constitutes an unreasonable search and seizure against which respondents are protected by the Fourth Amendment to the Constitution of the United States, U.S.C.A.

It is further urged that the Fair Labor Standards Act is unconstitutional in that it would operate to deprive respondent, Montgomery Ward & Co., of property without due process of law.

Attached to the answer is a motion to quash the subpœna on the same grounds set up in the answer.

The provisions of the Fair Labor Standards Act of 1938, U.S.C.A. Title 29, Ch. 8, §§ 201-219, so far as applicable to this case, are set forth in the margin.¹

The Act provides for a minimum wage for employees engaged in interstate commerce of not less than twenty-five cents an hour for the first year from the effective date of the Act and that during such period the working week shall be no longer than forty-four hours. For the purpose of the enforcement of the act there was created in the Department of Labor a Wage and Hour Division, with an official known as the Administrator at its head. The Administrator is given power through himself or his designated representatives to investigate and gather data regarding the wages and hours and other conditions and practices of employment in any industry subject to the Act as he may deem necessary or appropriate to determine whether any person has violated any of the provisions of the Act and every employer is required to keep such records of the persons employed by him and of the wages and hours of employment, and preserve such records for such periods of time, and make reports therefrom to the Administrator as he shall prescribe by regulation or order as necessary and appropriate for the enforcement of the provisions of the Act. And for the purpose of any hearing or investigation provided for in the act, the provisions of sections 49 and 50 of Title 15, U.S. Code, 15 U.S.C.A. §§ 49, 50, relating to the attendance of witnesses and the production of books and papers are made applicable to the jurisdiction of the Administrator. Employees employed in a bona fide executive, administrative, professional or local retailing capacity, or any employee the greater part of whose selling or service is intrastate commerce are exempted from the provisions of the Act. It is made an offense, punishable by fine or imprisonment or both, to transport, ship or deliver or sell in interstate commerce...