Brennan v. Apartment Communities Corporation

Decision Date22 May 1973
Docket NumberCiv. A. No. 4435.
Citation360 F. Supp. 1255
PartiesPeter J. BRENNAN, Secretary of Labor, United States Department of Labor, Plaintiff, v. APARTMENT COMMUNITIES CORPORATION, a corporation, and Frank E. Aceirno, Individually and as an Officer of the said corporation, Defendants.
CourtU.S. District Court — District of Delaware

Ralph F. Keil, U. S. Atty., Alan S. Yoffie, Asst. U. S. Atty., Wilmington, Del., and Michael D. Shapiro, United States Dept. of Labor, Philadelphia, Pa., for plaintiff.

Arthur J. Sullivan, and Edward M. McNally, Morris, James, Hitchens & Williams, Wilmington, Del., for defendants.

OPINION

EDWIN D. STEEL, Jr., District Judge:

This action was brought against Apartment Communities Corporation and Frank E. Acierno, individually and as an officer of the corporation, by the Secretary of Labor to compel future compliance with Sections 6, 7, 11, 15(a)(2) and 15(a)(5) of the Fair Labor Standards Act of 1938 as amended, 29 U.S.C. § 201 et seq. The action seeks to enjoin defendants from violating these sections and from withholding any back wages if the same should be found to be due. Cross motions for summary judgment, based upon the unverified pleadings, and a stipulation of facts have been filed. No dispute exists about any material fact.

Jurisdiction to decide the controversy exists under 29 U.S.C. § 217.

Defendants are engaged in the ownership, rental and management of apartment house complexes. Those complexes material to this action are set forth below, together with the dates on which they came under the control and ownership of the defendants:

Arundel Apartments Limestone Road Wilmington, Delaware Purchased by defendants in March 1972 Lancaster Court Apartments Lancaster Avenue Wilmington, Delaware Purchased by defendants in November 1971 Haverford Place Limestone Road Wilmington, Delaware Purchased by defendants in June 1971 Towne Court Apartments Newark, Delaware Built by defendants over a period of approximately four years, with completion of construction in early 1971 Harbor House Apartments Claymont, Delaware Built by defendants over a three year period with construction completed in early 1971

In addition, in January 1972 defendants leased and since then have operated 640 South Avenue Apartments in Ridley Park, Pennsylvania. These six apartment complexes comprise 1,561 rental units.

The defendant's annual dollar volume of business was in excess of the statutory minimum at all times material to this action.

The above described business activities of the defendants were and are related and performed through unified operation and common control for a common business purpose.

Defendants' main office is located in Independence Mall, Concord Pike, Wilmington, Delaware. Aceirno is and at all relevant times was president and sole stockholder of Apartment Communities Corporation, and has acted directly and indirectly in its interest in relation to its employees and has been solely responsible for the employment practices of the corporate defendant.

29 U.S.C. §§ 206 and 207 require that every employer pay certain minimum wages to each of his employees "who in any workweek is engaged in commerce or in the production of goods for commerce, or is employed in an enterprise engaged in commerce or in the production of goods for commerce. . . ." 29 U.S.C. § 211 requires an employer covered by the Act to keep records of the wages paid to and hours worked by his employees. Plaintiff alleges and defendants deny that these provisions have been violated. In short, defendants claim that they are not covered by the Act.

The specific question which the parties have stipulated is:

". . . whether defendants have employees handling or working on goods that have been moved in or produced for commerce within the meaning of section 3(s) 29 U.S.C. § 203(s), which goods have not been delivered into the actual physical possession of the ultimate consumer within the meaning of section 3(i)29 U. S.C. § 203(i)." (Pretrial Order, ¶ E)

29 U.S.C. § 203(s) defines "enterprise engaged in commerce or in the production of goods for commerce" as meaning:

"an enterprise which has employees engaged in commerce or in the production of goods for commerce, including employees handling, selling, or otherwise working on goods that have been moved in or produced for commerce by any person,"

and which meets either a minimum annual dollar volume of business or is engaged in one of several specifically enumerated businesses. Defendants have stipulated that the required annual dollar volume of business was met.

29 U.S.C. § 203(i) defines "goods" as meaning:

"goods (including ships and marine equipment), wares, products, commodities, merchandise, or articles or subjects of commerce of any character, or any part or ingredient thereof, but does not include goods after their delivery into the actual physical possession of the ultimate consumer thereof other than a producer, manufacturer, or processor thereof."

29 U.S.C. § 203(b) defines "commerce" as follows:

"`Commerce' means trade, commerce, transportation, transmission, or communication among the several States or between any State and any place outside thereof."

The employees whose activities are critical to this decision are (1) maintenance workers, and (2) office personnel.1 Members of each of these classes are employees, § 203(e), employed by the defendants, § 203(g), who are employers, § 203(d), and the activities of defendants constitute an enterprise, § 203(r).

Maintenance Employees

Defendants employ maintenance men in and about the apartment complexes. Each is assigned to a separate apartment complex and works exclusively for that complex. These maintenance men, at all times material hereto, have purchased and are purchasing cleaning supplies, such as soap, mops and brooms, from hardware stores located near each apartment. They also purchase occasional supplies of paint, paint brushes, hammers, nails, screws, screwdrivers, and similar implements. These employees charge such purchases directly to the corporate defendant. The goods so purchased generally have origins outside the state in which they are purchased.

Defendants' maintenance men clean apartments at the end of each tenancy. They caulk windows, clean ovens, carpets, and bathrooms, and occasionally do minor touch-up painting in the case of leaks or cracks. Major painting is subcontracted to independent contractors.

Defendants' maintenance men also perform minor plumbing repairs, such as unblocking lines or drains or changing washers. Major plumbing work is sub-contracted to an independent contractor.

All electrical repairs are performed by electrical contractors. Heating repairs are undertaken by the Delmarva Power & Light Company in the case of gas heat burners and the Gulf Oil Corporation in the case of oil heat burners.

Defendants' maintenance men perform occasional minor carpentry work, for example, the replacement of shelves or base boards. Major carpentry work is sub-contracted out.

Defendants' maintenance men also clean sidewalks and parking lots, cut grass and shrubs, and perform other related functions commonly done by apartment maintenance personnel.

At the outset the parties are at odds concerning the interpretation of § 203(s). They differ as to the meaning to be attributed to the words "including employees handling . . . or otherwise working on goods." Plaintiff contends that Congress intended that employees "handling . . . or otherwise working on goods" should be covered by the Act regardless of whether they did so "in commerce or in the production of goods for commerce", which are the words of § 203(s) immediately preceding the "including" clause. He argues that when the "including" provision was added to the Act in 1961 (and substantially reenacted in 1966),2 Congress intended to supplement the traditional definition of "in commerce or in the production of goods for commerce" by extending its meaning to the handling or working on goods in one state which had theretofore been moved interstate or been produced in another state. In his view, whether or not the activity of the employees was performed "in commerce or in the production of goods for commerce" within previously recognized concepts was immaterial.

On the other hand the defendants argue that Congress intended that the "handling . . . or otherwise working on goods" clause should have significance only if such activity was performed by employees engaged "in commerce or in the production of goods for commerce" as theretofore understood. In this view the meaning of the "including" clause is dominated by and subordinate to the "in commerce" and "in the production of goods for commerce" language which immediately precedes it.

It is not necessary to settle this point. Even though the interpretation of § 203(s) urged by plaintiff be accepted, the activities of defendants' maintenance employees are beyond the coverage of the Act. Section 203(s) refers to employees handling or otherwise working on "goods". Section 203(i) defines "goods" (see text supra). Prior to the time when the articles in question came into possession of defendants' employees they constituted "goods" as so defined. After they were delivered into the actual physical possession of the employees, however, they were in the possession of the defendants for whom the employees were acting. Defendants were the "ultimate consumers" and under § 203(i) the articles then ceased to have the status of "goods" (provided the defendants, the "ultimate consumers", were not "producers, manufacturers, or processors" of the goods).3 The cleaning materials and supplies acquired by defendants' employees were paid for by defendants. They were used by the employees in the performance of their duties as agents for defendants. From the time of their acquisition by defendants they were withdrawn from further traffic and sale, and moved no farther. They were then at the...

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    ...Inc., 390 F.2d 75, 78 (3d Cir.1968) (interstate postal communications do not constitute commerce); Brennan v. Apartment Communities Corp., 360 F.Supp. 1255, 1262 (D.Del.1972) (interoffice transactions do not constitute commerce); see also Billeaudeau v. Temple Associates, 213 F.2d 707 (5th ......
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    ...and plumbing fixtures purchased from Philadelphia suppliers was $3185.64 in 1973." In an earlier case, Brennan v. Apartment Communities Corporation, 360 F. Supp. 1255 (D.Del.1973)1, this Court had before it the question whether the Act applied to the owner of several apartment complexes who......
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