Credit Service, Inc. v. Fleming

• Decision Date: 25 January 1967
• Docket Number: No. 22701.,22701.
• Citation: 372 F.2d 143
• Parties: CREDIT SERVICE, INC., Appellant, v. Philip B. FLEMING, Administrator of the Wage and Hour Division, United States Department of Labor et al., Appellees.
• Court: U.S. Court of Appeals — Fifth Circuit

372 F.2d 143 (1967)

CREDIT SERVICE, INC., Appellant, v. Philip B. FLEMING, Administrator of the Wage and Hour Division, United States Department of Labor et al., Appellees.

No. 22701.

United States Court of Appeals Fifth Circuit.

January 25, 1967.

Thomas H. Anderson, Charles J. Crowder, and Shutts & Bowen, Miami, Fla., for appellant.

Bessie Margolin, Assoc. Sol., Robert E. Nagle, Atty., Charles Donahue, Sol. of Labor, Joel Chasnoff, Atty., Dept. of Labor, Washington, D. C., Beverley R. Worrell, Regional Atty., for appellees.

Before TUTTLE, Chief Judge, and BROWN and GODBOLD, Circuit Judges.

TUTTLE, Chief Judge:

This is an appeal from a judgment of the trial court determining that all of the employees of appellant are engaged in commerce within the provisions of the Fair Labor Standards Act of 1938, as amended, 29 U.S.C.A. § 201 et seq., and adjudging appellant in civil contempt to be purged by payment of amounts representing the difference between compensation paid to employees and the required minimum wages under the Act.

The record developed upon the trial warranted a finding by the trial court of the following facts:

Although the action is continuing in the name of Credit Service, Inc., Credit Bureau of South Florida, Inc., hereinafter referred to as Credit Bureau or Company, became the successor in interest to Credit Service, Inc., and is and has been since June, 1957, a Florida corporation engaged in the collection, sale and dissemination both within and without the State of Florida of credit data and credit reports concerning the financial standing, credit history and debt paying reputation of persons applying for credit with various retail stores or companies, financial institutions and credit card companies. O. H. Overholser has been the president of Credit Bureau of South Florida, Inc., and in this capacity has regularly supervised, directed and controlled the business affairs and operation of Credit Bureau and its predecessor Credit Service, Inc.

During the period since June 27, 1962, Credit Bureau has been engaged in the collection of credit information and the transmission thereof to customers, some of them residing outside of Florida, either orally, by telephone communication or by means of written reports. The furnishing of such information to out of state customers occurred regularly and on a continuing basis. Approximately 6% of appellants' annual sales for 1962 were for out of state customers. Approximately 11% of appellants' business in 1963 was with out of state customers. Among the Company's principal customers located outside the State of Florida which regularly obtained credit reports, both oral and written, were American Express Company, New York; Credit Bureau of Greater Kansas City, Kansas City, Mo.; American Oil Company, Atlanta, Ga., and Gulf Oil Company, Atlanta, Ga.

It is not seriously disputed that in the operation of Credit Service Bureau the appellants were substantially engaged in commerce or in the production of goods for commerce within the meaning of the Act. Tilbury v. Rogers, 123 F.Supp. 109, aff'd Tilbury v. Mitchell, p. c. 220 F.2d 757, 5 Cir., 1955, cert. den. 350 U.S. 839, 76 S.Ct. 77, 100 L.Ed. 748. However, the application of the Act must be determined on the basis of the duty performed by the individual employees. A. B. Kirschbaum v. Walling, 316 U.S. 517, 62 S.Ct. 1116, 86 L.Ed. 1638.

One part of the operation was set apart for the so-called "verbal girls," whose duties were to receive requests for credit information by local telephone and obtain it by means of telephone calls, primarily, but not always, from local sources in the Miami area. The information thus obtained was written down on a sheet of paper and forwarded to a typist for preparation of written reports, some of which were destined for out of state delivery. After the report was forwarded, the information collected by the verbal girls became a part of appellants' permanent files and was available for future use should subsequent requests be received for that particular credit subject. In many cases, when the customer (whether within or without the State of Florida) requested immediate advice, the verbal girls would place telephone calls to the customer and give this advice directly to the customer. The verbal girls did not have long distance telephone connections in their area of operation, nor did they actually write any letters for delivery nor did they do any mailing.

In May, 1941, Philip B. Fleming, then Administrator of the Wage and Hour Division, instituted in the district court for the Southern District of Florida, a civil action to enjoin Credit Service, Inc. from violating the minimum wage and overtime requirements of the Fair Labor Standards Act. This action was the source of this present litigation. On May 5, 1941, the trial court entered a consent judgment permanently enjoining Credit Service, Inc. from violating any of the provisions of the Act. Upon application by the Government for a citation for contempt of court for alleged violation of the court's order in 1953, the trial court made a finding Number 4 as follows: "Defendant's Avena, Beach, Collins, Daniels, Demetry, Driane, Hatcher, Jaskula, Pastoriza, Pettennude, Pettit, Sharpe, Smith, Spurling, Villapiano, Acebal and Mitchell, while employed in the verbal report department, took telephone requests from business organizations within the State of Florida, checked existing files, secured additional information from points within the State of Florida, and gave verbal credit information reports to business organizations within the State of Florida." Based on this finding by the court, the trial judge then held "the employees named in Paragraph 4 of the Findings of Fact were not engaged in `commerce'" within the meaning of the Fair Labor Standards Act of 1938, as amended. The trial court dismissed the motion for adjudication of contempt.

Now, again, on May 19, 1964, the Secretary of Labor further petitioned the court to adjudge Credit Bureau and the president Overholser in civil contempt, to modify and enlarge the judgment in order to change the language of the original judgment with respect to the amounts of the hourly wages, prospectively only, and to restrain and enjoin Credit Bureau and Overholser from witholding payment of back wages found by the court to be due their employees.

There followed a full hearing by the trial court, as a result of which the court made the finding, already stated above, to the effect that the employees of the verbal department, contrary to the finding as to the activities of the girls of that department in 1953, obtained credit information "primarily, but not always, from local sources in the Miami area." The Court also found that the information obtained was written down on a sheet of paper and forwarded to a typist for preparation of written reports, "some of which were destined for out of state delivery." Then, too, the findings included a statement that "the information collected by the verbal girl became a part of defendant-respondent's permanent files and was available for future use should subsequent requests be received for that particular credit subject." Moreover, the Court found that "in many cases, when the customer (whether within or without the State of Florida) requested immediate advice, the verbal girls would place telephone calls to the customer and give its advice directly to the customer." (All emphasis added.)

There can be no substantial contention now that this business was not engaged in commerce and in production of goods for commerce. Nor can it be argued, as attempted by appellant, that it is a retail or service establishment and thus exempt. See Western Union Tel. Co. v. Lenroot, 323 U.S. 490, 65 S.Ct. 335, 89 L.Ed. 414, and Public Building Authority of City of Birmingham v. Goldberg, 5 Cir., 298 F.2d 367.

The only serious question presented here is raised by appellant's contention that the earlier finding by Judge Holland, sitting as district judge in 1953, to the effect that the named girls when working in the "verbal department" were not "engaged in commerce within the meaning of the Fair Labor Standards Act of 1938, as amended," was res judicata with respect to the status of the different employees now engaged in the "verbal department."

While it is obvious that the principle of res judicata does not apply, since the issue today is the activities of an entirely different group of people from those who were referred to by name in the earlier judgment, we are to consider whether any species of collateral estoppel precludes the new determination on this subsequent hearing. For a discussion of these principles see Commissioner of Internal Revenue v. Sunnen, 333 U.S. 591, 68 S.Ct. 715, 92 L.Ed. 898; United States v. International Building Co., 345 U.S. 502, 73 S.Ct. 807, 97 L.Ed. 1182; Hyman v. Regenstein, 5 Cir., 258 F.2d 502, 509-511; United States v. Burch, 5 Cir., 294 F.2d 1.

Here, it is clear from a comparison of the findings of fact made in the Court's 1953 judgment, and the findings of fact made by the trial court in the pending case that nothing said relative to whether the verbal girls were in commerce in 1953 throws any light upon the question whether the verbal girls performing the acts found in 1962 and 1963 are in commerce. Thus, the 1953 decision in no way precludes the ascertainment of the true facts in the present proceedings. What has been done now is that the District Court, in the 1964 proceedings, has found that the appellant has failed to pay minimum wages as prescribed by the Act to persons which it finds, based on the evidence which it was permitted to credit, brought them within the protection of the law.

The trial court denied the application of the Secretary for an adjudication of criminal contempt and also dismissed the civil contempt proceedings except to the extent necessary to permit the collection by the Secretary for the...