Brock v. Louvers and Dampers, Inc.

• Decision Date: 01 May 1987
• Docket Number: No. 85-4004,85-4004
• Citation: 817 F.2d 1255
• Parties: 28 Wage & Hour Cas. (BN 133, 88 A.L.R.Fed. 871, 106 Lab.Cas. P 34,906 William E. BROCK, Secretary of Labor, Plaintiff-Appellee, v. LOUVERS AND DAMPERS, INC. d/b/a Bel-Wood Country Club and Ted Stacy, Defendants-Appellants.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 1255

817 F.2d 1255

28 Wage & Hour Cas. (BN 133, 88 A.L.R.Fed. 871,

106 Lab.Cas. P 34,906

William E. BROCK, Secretary of Labor, Plaintiff-Appellee, v. LOUVERS AND DAMPERS, INC. d/b/a Bel-Wood Country Club and Ted Stacy, Defendants-Appellants.

No. 85-4004.

United States Court of Appeals, Sixth Circuit.

Argued Feb. 12, 1987.

Decided May 1, 1987.

Elizabeth W. Boncella, U.S. Dept. of Labor, Cleveland, Ohio, Linda Jan S. Pack (argued), William J. Stone, Washington, D.C., for defendants-appellants.

Sidney Weil, Mark Wasserman (argued), Cincinnati, Ohio, for plaintiff-appellee.

Before MARTIN, NELSON and BOGGS, Circuit Judges.

BOGGS, Circuit Judge.

This case requires us to decide whether the seasonal "amusement or recreational establishment" exemption to the minimum wage and overtime provisions of the Fair Labor Standards Act of 1938 ("FLSA") requires that such establishments be open to the general public. The Secretary of Labor brought suit in district court to force Bel-Wood Country Club, a private for-profit golf club in Morrow, Ohio, to comply with the minimum wage and overtime provisions of the FLSA. By consent of the parties, the case was tried to final judgment before a United States Magistrate, with direct appeal to this court pursuant to 28 U.S.C. Sec. 636(c)(3). The magistrate held that Bel-Wood was not entitled to the seasonal recreational or amusement exemption because it was not open to the public. Bel-Wood appeals that judgment.

After consideration of the FLSA, its legislative history, and the 1966 amendments, we conclude that Congress did not intend to incorporate a public accessibility requirement into the amusement or recreational exemption. We therefore reverse the magistrate's order and remand to the district court for further proceedings to determine whether Bel-Wood meets the seasonality requirement of the exemption.

Bel-Wood operates eight to ten months of the year, depending on the weather. Its primary business is golf, although the facilities include tennis courts, a swimming pool, and a dining facility. Bel-Wood employs a seasonal greens crew and greens superintendent, and seven full-time and seven part-time food and drink employees.

Bel-Wood's membership was limited to 305 members. It solicited members through newspaper advertisements in local papers in March 1984, in which it described the club as "private" and "open exclusively to members and their guests." The golf course was available for use by local organizations on Mondays by special arrangement. Prospective members were requested to have a current member sponsor them, but sometimes applicants were admitted without a sponsor. Ted Stacy, the president of Louvers and Dampers, determined who would be approved for membership. No person who was able to pay the membership fees and dues was ever refused membership. Initiation fees ranged from $200 to $1,500 and annual dues ranged from $250 to $1,100 depending on the type of membership.

The amusement-recreation exemption at issue is codified at 29 U.S.C. Sec. 213(a)(3):

(a) The provisions of Sec. 206 [minimum wage] ... and Sec. 207 [overtime compensation] of this title shall not apply with respect to--

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(3) any employee employed by an establishment which is an amusement or recreational establishment ... if (A) it does not operate for more than seven months in any calendar year or (B) during the preceding calendar year, its average receipts for any six months of such year were not more than 33 1/3 per centum of its average receipts for the other six months of such year....

The magistrate determined that the exemption was available only to establishments that were open to the general public, basing this interpretation on the purpose of the act, the legislative history, and the administrative interpretation by the Labor Department.

The FLSA was passed in 1938. It was designed to eliminate labor conditions detrimental to the maintenance of the minimum standard of living necessary for the health, efficiency, and general well-being of workers. 29 U.S.C. Sec. 202(a). Exemptions under the FLSA are to be construed narrowly against the employer asserting them. Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 392, 80 S.Ct. 453, 456, 4 L.Ed.2d 393 (1960); Hamblen v. Ware, 526 F.2d 476, 477 (6th Cir.1975). The employer has the burden of proving entitlement to the exemption. Arnold, supra, 361 U.S. at 394, 80 S.Ct. at 457; Brennan v. Southern Productions, Inc., 513 F.2d 740, 744 (6th Cir.1975).

Over the years, Congress expanded the scope of the act to include millions of workers not originally protected under the act. Certain groups of employees were exempted at the same time. The original version of the exemption at issue here was enacted in the Fair Labor Standards Amendments of 1961. Pub.L. No. 87-30, 75 Stat. 71 (1961). Certain types of retail or service establishments were exempted, including hotels, motels, restaurants, movie theaters and seasonal amusement or recreational establishments. The Senate Committee Report described the provision:

(c) Amusement and recreational establishments operating on a seasonal basis.--A similar exemption, without regard to the annual sales volume of the enterprise, is provided for employees of amusement and recreational establishments operating on a seasonal basis. These establishments are typically those operated by concessionaires at amusement parks and beaches and are in operation for 6 months or less a year.

S.Rep. No. 145, 87th Cong., 1st Sess., reprinted in 1961 U.S.Code Cong. & Admin.News at 1620, 1647-48.

"Amusement or recreational establishment" was not defined in the statute itself, but the regulations drawn from the legislative history provide the following definition:

"Amusement or recreational establishments" as used in section 13(a)(3) are establishments frequented by the public for its amusement or recreation.... Typical examples of such are the concessionaires at amusement parks and beaches.

29 C.F.R. Sec. 779.385.

Public accessibility has been held to be essential to the retail and service exemption. Futrell v. Columbia Club, Inc., 338 F.Supp. 566, 571 (S.D.Tenn.1971); Shultz v. Deane-Hill Country Club, Inc., 310 F.Supp. 272, 278 (E.D.Tenn.1969), aff'd per curiam, 433 F.2d 1311 (6th Cir.1970). The courts in these cases relied on the Administrator's opinions holding that private clubs are not retail establishments because they lack public accessibility, Wage and Hour Opinion Letter No. 655, CCH Labor Law Reporter p 30,646 at 42,047 (September 5, 1967); Wage and Hour Opinion Letter No. 983, CCH Labor Law Reporter p 30,526 at 41,929 (April 23, 1969); Wage and Hour Opinion Letter No. 968, CCH Labor Law Reporter p 30,506 at 41,907 (March 19, 1969), and on Labor Department regulations stating that retail or service establishments must be open to the general public to qualify for the exemption. 29 C.F.R. Secs. 779.318, 779.319.

Those cases do not dispose of the issue in this case, however. They are concerned with interpreting Congressional intent as to the meaning of the concept of a "retail" establishment. They determine that public accessibility is necessary to the "retail concept," but the relevant distinction is between retail and wholesale establishments. Distinguishing between public and private establishments is only a means to that end.

In 1966, the exemption for amusement and recreational establishments was revised and taken out of the retail and service exemption. Pub.L. No. 89-601, Title II, Sec. 201, 80 Stat. 833-838 (1966); S.Rep. No. 1487, 89th Cong., 2nd Sess. reprinted in 1966 U.S.Code Cong. & Admin.News 3002, 3030. "The current wording seems to have been intended to establish criteria for seasonality, and--by eliminating the 'retail and service' language--to make plain that employees of seasonal amusement or recreational companies generally are exempt." Marshall v. New Hampshire Jockey Club, Inc., 562 F.2d 1323, 1329 (1st Cir.1977).

Bel-Wood argues that the requirement of public accessibility applies only to the retail concept of the retail and service exemption, and should not be carried over into the now separate seasonal amusement-recreational exemption.

The Wage and Hour Administrator, however, has continued to interpret Sec. 13(a)(3) as exempting only those establishments that are open to the general public. Wage and Hour Opinion Letter No. 655, supra, states that private golf clubs are not entitled to the retail and service exemption of Sec. 13(a)(2), and goes on to state that:

[T]he section 13(a)(3) exemption for certain amusement or recreational establishments meeting the specific tests of seasonality cannot be utilized by private clubs. The legislative history makes it clear that this exemption was intended for the typical amusement or recreational establishment which is frequented by the public for its amusement or recreation.

Letter No. 983, supra, addresses private country clubs and repeats the same statement.

The Secretary argues that authoritative administrative constructions should be given the deference to which they are entitled. United States v. Turkette, 452 U.S. 576, 580, 101 S.Ct. 2524, 2527, 69 L.Ed.2d 246 (1981). The magistrate stated that "opinions issued by the Administrator of the Wage and Hour Division, U.S. Department of Labor, while not binding upon the Court, constitute a body of experience and informed judgment and are entitled to great weight. Boutell v. Walling, 327 U.S. 463 [66 S.Ct. 631, 90 L.Ed. 786] (1946); Skidmore v. Swift & Co., 323 U.S. 134 [65 S.Ct. 161, 89 L.Ed. 124] (1944); Hamblen v. Ware, 526 F.2d 476 (6th Cir.1975)."

While it is true that courts accord great weight to administrative interpretations of their enabling statutes, the authority of those interpretations remains persuasive and...