Bogash v. Baltimore Cigarette Service

• Decision Date: 17 December 1951
• Docket Number: No. 6325.,6325.
• Parties: BOGASH et al. v. BALTIMORE CIGARETTE SERVICE, Inc.
• Court: U.S. Court of Appeals — Fourth Circuit

193 F.2d 291 (1951)

BOGASH et al. v. BALTIMORE CIGARETTE SERVICE, Inc.

No. 6325.

United States Court of Appeals Fourth Circuit.

Argued November 8, 1951.

Decided December 17, 1951.

Ellis Peregoff, Baltimore, Md. (Gilbert I. Friedel, Baltimore, Md., on brief), for appellants.

Bessie Margolin, Asst. Solicitor, Washington, D. C. (William S. Tyson, Solicitor, William A. Lowe, Washington, D. C., and Sylvia S. Ellison, Washington, D. C., and Ernest N. Votaw, Regional Atty., United States Department of Labor, Philadelphia, Pa., on brief), for the Secretary of Labor as amicus curiae.

Robert F. Skutch, Jr., and Leroy W. Preston, Baltimore, Md. (J. C. Merriman and Weinberg & Green, all of Baltimore, Md., on brief), for appellee.

Before SOPER and DOBIE, Circuit Judges, and MOORE, District Judge.

SOPER, Circuit Judge.

This suit was brought by Murray Bogash, Jack Frank and Jules Finkel to recover from the Baltimore Cigarette Service, Inc., a Maryland corporation, unpaid overtime compensation for the period between July, 1947 and July 5, 1950 and liquidated damages which they claimed to be due under the Fair Labor Standards Act of 1938, as amended, 29 U.S.C.A. § 201, &c. The company defended on the ground, among others, that the business was a retail or service establishment, as defined in Section 13(a) (2) of the Act, and hence its employees were not covered by the wage and hour provisions contained in Sections 6 and 7 of the Act. The District Court accepted this view and dismissed the suit.

The company was engaged in the business of selling cigarettes at retail from automatic vending machines owned and placed by it in 700 to 800 localities in Baltimore City and elsewhere in the State of Maryland. The machines were placed in restaurants, taverns and retail stores under contract to pay the owners thereof an agreed consideration, usually based on a percentage of the sales. The company retained title to the machines.

The company purchased the machines and the cigarettes from manufacturers outside the state. It purchased matches furnished to buyers with the cigarettes within and outside the state. It maintained an office in a converted residence at No. 844 Park Avenue in Baltimore at which it had a stock room for supplies and a place to keep the machines pending delivery to the retail locations. Employees of the company secured locations and contracts for the installation of the machines, and route men brought the supplies from the office and warehouse to the machines and brought back the money to the central office.

The president of the company was Louis Bogash. His brother, Murray Bogash, one of the plaintiffs, was called sales manager. It was his duty to secure locations and negotiate contracts for the operation of the machines. Every third week he checked out the supplies to the route men¹ at the central office and warehouse. He received a salary of $70 per week, a generous expense account and the use of an automobile.

Jules Finkel, one of the plaintiffs, was a nephew of Louis Bogash, the president. His duties were to superintend the unloading of the vending machines at the warehouse, when received from outside the state, to deliver, install and repair machines at the retail locations, and to remove them when locations were discontinued. Occasionally he acted as substitute for and performed the duties of a route man. Periodically he checked out the supplies to route men at the central office and warehouse. His salary ranged from $75 to $90 per week.

Jack Frank, one of the plaintiffs, was the brother-in-law of Louis Bogash, the president. He was called the manager and was in charge when the president was absent. His duties were to check the delivery of vending machines and cigarettes into the warehouse. He filled the bins from which the route men drew their supplies and received the money, amounting to about $4500 per day, which the route men brought in from the machines. He also kept an inventory of the cigarettes. He received a salary of $80 per week.

During the period of their employment the plaintiffs made no request for and had no expectation of receiving pay for overtime service. They were closely connected with the president by ties of blood or marriage and worked together harmoniously until his death on April 29, 1950. At this time they expected advancement or promotion from the Rowe Corporation, the parent New York Company, and when their hopes were not realized they left their employment on July 5, 1950 and participated in the establishment of a competing business. Litigation followed in which they were enjoined from prosecuting the new business on the ground that their actions violated restrictive agreements that they had made with the defendant company. Subsequently they instituted the pending suit.

It is conceded that the business of the company consists of selling cigarettes at retail, and hence it would seem that it is a "retail or service establishment" within the literal terms of Section 13(a) (2) of the Act, as amended, since 75 per cent. of the sales are not for resale and more than 50 per cent. of the sales are made within the State of Maryland. Indeed all of its sales are at retail and within the state. Nevertheless it is contended by the plaintiffs and by the Secretary of Labor, appearing as amicus curiae, that the central office and warehouse of the company are not part of a retail establishment, but constitute a wholesale establishment whose employees are covered by the Act in the same manner as the employees who operate the central warehouse of an interstate chain store system. It is said that all of the plaintiffs were engaged in wholesale operations since Murray Bogash procured retail outlets, Finkel handled and delivered the machines to the...