Brennan v. Clark, Civ. A. No. 74-0256-R.
| Citation | 408 F. Supp. 962 |
| Decision Date | 12 December 1975 |
| Docket Number | Civ. A. No. 74-0256-R. |
| Parties | Peter J. BRENNAN, Secretary of Labor, v. James J. CLARK and Patrick Clark. |
| Court | U.S. District Court — Eastern District of Virginia |
William B. Cummings, U. S. Atty., Richmond, Va., Alan J. Davis, Dept. of Labor, Philadelphia, Pa., for plaintiff.
William H. Willcox, Marshall F. Berman, Gall, Lane & Powell, Washington, D. C., Charles Witthoefft, Richmond, Va., for defendants.
This cause of action is before the Court for determination on the merits. The parties waive the right to call witnesses or present oral testimony and agree to a decision on the record, that is on the pleadings, stipulations of fact, discovery and exhibits.
Plaintiff Secretary of Labor is proceeding under the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. § 201 et seq. hereinafter the Act. Defendants Mr. and Mrs. James J. Clark, as co-owners of a restaurant establishment, are accused of violating the Act's minimum wage, overtime wage, work records and child labor requirements. Id. Jurisdiction is invoked pursuant to 29 U.S.C. § 217, and defendants concede properly so (Stipulation Plaintiff 2).
Defendants admit that if they come under the provisions of the Act they would be guilty of the violations alleged, except perhaps the child labor charge. (Stipulations 43-45). Hence both parties agree the real issue is whether defendant's business is subject to the Act's provisions. Pertinent to this query, the following facts have been stipulated by the parties.
On 26 September 1973 defendants leased from Parker Oil Company hereinafter Parker a restaurant known as "Simmons Truck Terminal Restaurant" located in a building and on property owned by Parker. The property has 150 yards of road frontage on U.S. Highway 360, not a primary tourist road, near Keysville, Virginia, a town of about 3,000 persons. The restaurant occupies the North eighty percent of the building; a Union 76 truck stop, owned and operated by Parker occupies the remaining twenty percent. Each establishment has its own front entrance but a door inside the building connects the two for customer use.
Parker's truck stop is not a "full service" truck stop as the term is known in the industry. It is limited to sales of diesel fuel and gasoline, the repair of truck tires and minor sales of oil, flashlight batteries and soft drinks from vending machines. At all times material to this action the truck stop's annual gross volume of business has been in excess of $250,000, the majority of customers consisting of truckers. It is open for business every day around the clock, manned by approximately ten employees who work on a two shift basis.
The restaurant employs approximately 16 persons. It is also open continuously but operates on a three shift basis.
There is no interchange of employees or common supervision between the truck stop and the restaurant. Defendants maintain their own business books, records, and bank accounts wholly apart from Parker's business. The only business connection between defendants and Parker, outside the lease itself, is an informal agreement that the employees of each establishment are entitled to a slight discount on purchases made from the other's business.
The majority of the restaurant customers has consisted of truckers. When defendants first began operations on 1 October 1973 some 80% to 90% of their customers were truckers. Since 1 January 1974 sales to customers other than truckers have increased to where they now comprise some 35% to 40% of defendants' customers. The annual dollar volume of business from all customers has never reached $250,000. Broken down on a daily average, sales are approximately 1/3 higher on weekends.
Defendants heavily rely upon word of mouth advertising, both among truckers and the Keysville area general public. They also have advertised by maintaining two billboards on Highway 360, a sign in the centerfield at Keysville, Virginia, ballpark,1 an ad in the county sheriff's calendar, and a running ad in the local high school basketball game programs.
Defendants, upon taking over the restaurant, initiated an open seating policy as opposed to having seats reserved for truckers. Defendants' employees, as part of their regular duties handle, sell or otherwise work on foods, goods or supplies that have moved in interstate commerce from points outside Virginia.
The parties are also in agreement as to many of the laws relevant to the facts herein. A truck stop, such as Parker's, with a gross annual business exceeding $250,000 comes under all the provisions of the Act. 29 C.F.R. § 779.317; see, e.g., Hodgson v. J. W. Lyles, Inc., 335 F. Supp. 128 (D.Md.1971), aff'd, 468 F.2d 625 (4th Cir.1972). A service establishment, such as a restaurant, grossing less than $250,000 is entitled to exemption from the Act's minimum wage and overtime wage regulations. 29 U.S.C. § 213(a)(2). An exempt establishment also does not have to keep records otherwise required by 29 U.S.C. § 211(c). See, e.g., General Tobacco and Grocery Co. v. Fleming, 125 F.2d 596 (6th Cir.1942).
Thus, if defendant's restaurant is found to fit into the category of establishments that qualify for the section 213(a)(2) exemptions then, at most, it could only be subject to liability for the child labor violation which the Court here and now finds to be de minimus and moot.
The Wage-Hour Administrator has ruled that food service facilities which are part of a truck stop do not qualify for the exemptions. Wage-Hour Administrator's Opinion Letters of June 6, 1968; July 18, 1969; December 7, 1972. However, he has further ruled that a restaurant, even though located on the same property or in the same building as a truck stop, may nevertheless be found to be a "separate establishment" entitled to the aforementioned exemptions. 29 C.F.R. § 779.305. So the dispositive question is whether defendants' restaurant is a part of the truck stop or a "separate establishment."
With regard to this question the Administrator promulgated a series of opinion letters in 1968 establishing that a restaurant located at a truck stop may be regarded as a separate establishment if it meets the test set out in 29 C.F.R. § 779.305, which regulation was originally designed to define when a leased department in a department store is to be regarded as a separate establishment. The requirements are: 1) physical separation; 2) functional separation; 3) separation of work forces; and 4) separate books and records.
In response to the need for clearer guidelines expressed by the truck stop industry, the above position was reiterated and clarified in an Opinion Letter of 7 December 1972 on "Truck Stop Food Service" and in the Labor Department Field Operations Handbook of which portion relating to truck stop restaurants was revised at that time.
Section 21ct03(c) of the revised Field Operations Handbook explains the criteria by which the Administrator determines whether the "functional separation" requirement is met:
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