Brennan v. Southern Productions, Inc.

• Decision Date: 15 April 1975
• Docket Number: No. 74-1897,74-1897
• Citation: 513 F.2d 740
• Parties: 22 Wage & Hour Cas. (BN 233, 76 Lab.Cas. P 33,233 Peter J. BRENNAN, Secretary of Labor, United States Department of Labor, Plaintiff-Appellee, v. SOUTHERN PRODUCTIONS, INC., Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 740

513 F.2d 740

22 Wage & Hour Cas. (BN 233, 76 Lab.Cas. P 33,233

Peter J. BRENNAN, Secretary of Labor, United States

Department of Labor, Plaintiff-Appellee, v. SOUTHERN PRODUCTIONS, INC., Defendant-Appellant.

No. 74-1897.

United States Court of Appeals, Sixth Circuit.

April 15, 1975.

William Lamar Newport, Gullett, Steele, Sanford, Robinson & Merritt, Val Sanford, Nashville, Tenn., for defendant-appellant.

Marvin Tincher, Regional Atty., Dept. of Labor, Nashville, Tenn., Donald S. Shire, John K. Light, U. S. Dept. of Labor, Carin Ann Clauss, Jacob I. Karro, William J. Kilberg, Washington, D. C., for plaintiff-appellee.

Before WEICK and LIVELY, Circuit Judges, and O'SULLIVAN, Senior Circuit Judge.

WEICK, Circuit Judge.

The Secretary of Labor brought an action in the District Court to enjoin Southern Productions, Inc., a Tennessee corporation, from violating the minimum wage, overtime, and record-keeping provisions of the Fair Labor Standards Act, as amended, and from withholding wages due certain employees of Southern Productions under the Act.

The case was heard by the District Court without a jury. The District Court adopted findings of fact and conclusions of law and entered an injunction granting the relief sought by the Secretary. Southern Productions appealed. We affirm.

Southern Productions operated an establishment in Louisville, Kentucky for approximately eight weeks during the summer of 1972. The sole issues in this case are whether the said operations of Southern Productions come within either the exemption created by § 13(a)(2) of the Act, as amended, 29 U.S.C. § 213(a) (2), applying to certain retail or service establishments, or the exemption created by 13(a)(3) of the Act, as amended, 29 U.S.C. § 213(a)(3), with respect to certain amusement or recreational establishments. ¹

The parties stipulated that more than 50% of the establishment's annual dollar volume of sales was made within Kentucky; that the establishment's annual dollar volume of sales was less than $250,000; and that none of the establishment's sales were for resale. The parties further stipulated that the establishment did not operate for more than seven months in any calendar year, and that its average receipts for any six months of such year were not more than 331/3% of its average receipts for the other six months of the year.

Southern Productions agreed that if § 13(a)(2) or (3) of the Act did not apply to the employees of its Louisville, Kentucky establishment, then it owed those employees $7,500, and the injunction asked by the Secretary should issue.

Southern Productions produces country music shows in various cities and states. Mr. John Bodin, president and principal shareholder of Southern Productions, testified that he arranges tours for the shows that Southern Productions produces and promotes. He testified:

Generally at least three or four months ahead of a tour, I will make a decision with some of my other staff participating as to what particular cities we would like to play. Let's say we might have an area through one or two states of fifteen to twenty cities and we will determine which cities we would like to play in. Then we will or I will contact the booking agency such as Atlas Artists which participated in this contract with their talent, and find out if certain specific artists are available for those dates which fall within the budget that we have predetermined that we will spend on each date that we are going to play.

Then we will send out the contracting agent, once we have secured in advance the talent that we know we will have, and he goes in and starts contacting these various organizations in these various cities and explains to them who the talent will be coming in and what the basic concept is of our contract that we are trying to sell to them and consummate this.

(A. 69-70)

On April 24, 1972 Southern Productions' contracting agent negotiated a contract with the Jefferson County Policeman's Association of Louisville, Kentucky. ² The contract provided that Southern Productions would produce two performances of its Kenny Price Show in Louisville, Kentucky, on August 5, 1972. Southern Productions was allowed to use the Jefferson County Policeman's Association's good will and name in promoting the show, and the profits were to be divided equally between the parties. Southern Productions guaranteed to hold the Policeman's Association, its officers and members, free from any liability or losses whatsoever in connection with the show.

In early June, 1972 a promotional coordinator employed by Southern Productions was sent to Louisville. He rented a storefront office and had several telephones installed, in the name of the Policeman's Association. A sign in the window identified the office as the "Jefferson County Policeman's Association Show Headquarters." Eventually eighteen telephones, all in the name of the Policeman's Association, were installed for use in promoting ticket sales.

The show headquarters employed telephone workers, ticket deliverers, and other office personnel. Many of the workers were paid less than the minimum wage and overtime provisions of the Fair Labor Standards Act required for workers covered by the Act. These workers were employees of Southern Productions, for the purposes of this case.

The telephone workers were assigned pages of the telephone directory for their calls to be made. In accordance with information on cards which the promotional coordinator gave to each telephone worker, the telephone workers told people whom they called that the proceeds of the show were to benefit the Policeman's Association.

Basically they called businesses during the day and residences during the evening. Mr. Bodin, president of Southern Productions, testified that generally about fifty per cent of such ticket sales were made to businesses. Almost all of the ticket sales were made in advance, through the show headquarters.

The shows were performed on August 5, 1972 at Louisville's Memorial Auditorium which has a seating capacity of approximately 1765. Neither performance played to a full house, although advance ticket sales had been many times the capacity of the auditorium. ³

Mr. Bodin testified that in the case of such benefit programs experience had shown that only one in every seven tickets sold would be used, and advance ticket sales were made in accordance with this experience. About 85% of the tickets sold were not used.

Most of the shows produced by Southern Productions are sponsored by organizations such as the Jefferson County Policeman's Association. Although each individual establishment, such as the establishment created in the instant case to promote ticket sales for the Jefferson County Policeman's Association Show, exists only for approximately eight weeks, the total operations of all of Southern Productions' establishments are on a year-round basis.

It is settled that exemptions from the Fair Labor Standards Act " are to be narrowly construed against the employers seeking to assert them and their application limited to those establishments plainly and unmistakably within their terms and spirit." Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392, 80 S.Ct. 453, 456, 4 L.Ed.2d 393 (1960); Fletcher v. Grinnell Bros.,150 F.2d 337, 340 (6th Cir. 1945). The employer has the burden of proving that it is within the terms and spirit of the exemption which it claims. Mitchell v. Kentucky Fin. Co., 359 U.S. 290, 291, 79 S.Ct. 756, 3 L.Ed.2d 815 (1959).

Whether employees are within an exemption from the provisions of the Act is primarily a question of fact. The District Court's findings of fact cannot be set aside unless they are clearly erroneous. Hodgson v. Klages Coal & Ice Co., 435 F.2d 377, 382 (6th Cir. 1970).

Although the rulings, interpretations and opinions of the agency are not binding on the Courts, they do constitute "a body of experience and informed judgment to which courts and litigants may properly resort for guidance." Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S.Ct. 161, 164, 89 L.Ed. 124 (1944). Southern Productions has not challenged the rulings and interpretations with respect to the exemptions; it argues that under the statute and the rulings it is entitled to the exemptions for employees of its Louisville establishment.

I

§ 13(a)(2) of the Act.

The first step in determining whether the "retail or service establishment" exemption applies, is to ascertain whether the concept of retail selling of goods or services exists with respect to the establishment in question. The establishment must be part of a business or industry to which the "retail concept" applies. Idaho Sheet Metal Works, Inc. v. Wirtz, 383 U.S. 190, 202, 86 S.Ct. 737, 15 L.Ed.2d 694 (1966); 29 C.F.R. § 779.316. ⁴

Southern Productions claims that the business of its Louisville establishment was analogous to the business of a theater which is listed in 29 C.F.R. § 779.320 as an establishment to which the retail concept may apply. We disagree.

Southern Productions regarded its contract with the Jefferson County Policeman's Association as its basic sale. Under this contract the Policeman's Association assumed no risk of loss. Basically, Southern Productions sold to the Policeman's Association a fund-raising opportunity in exchange for half of any profits and for permission to use the Policeman's Association's good will and name in promoting ticket sales.

The evidence indicates that the establishment was primarily engaged in the solicitation of contributions to the Policeman's Association. Prospective purchasers were told that the proceeds of the show were to benefit the Policeman's Association. The show headquarters sold approximately seven times the seating capacity of Memorial Auditorium. Most tickets were neither sold nor purchased for admission to the show, but as contributions to the Policeman's Association.

Mr. Charles Jennings, promotional coordinator for...