Dickenson v. United States

• Decision Date: 06 January 1966
• Docket Number: No. 19039.,19039.
• Citation: 353 F.2d 389
• Parties: Edgar W. DICKENSON, Jr., Appellant, v. UNITED STATES of America, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

353 F.2d 389 (1965)

Edgar W. DICKENSON, Jr., Appellant, v. UNITED STATES of America, Appellee.

No. 19039.

United States Court of Appeals Ninth Circuit.

November 18, 1965.

Rehearing Denied January 6, 1966.

Morris Sankary, Sankary, Sankary & Horn, San Diego, Cal., for appellant.

Francis C. Whelan, U. S. Atty., Thomas R. Sheridan, Asst. U. S. Atty., Chief, Criminal Sec., Elmer Enstrom, Asst. U. S. Atty., Los Angeles, Cal., for appellee.

Before CHAMBERS and BARNES, Circuit Judges, and McNICHOLS, District Judge.

CHAMBERS, Circuit Judge:

Dickenson, a San Diego auto parts dealer, was convicted of six counts under an information charging him with violations of the Fair Labor Standards Act of 1938, 52 Stat. 1060, 29 U.S.C. § 201 et seq. The charges concerned payment of wages to several employees.

We summarize:

1. Count one charged that Dickenson filed with the wage and hour administrator false receipt forms with respect to wages due workers Madrigal, Roberts and Martinez. In a stipulated civil contempt decree,¹ Dickenson had previously agreed to certain amounts due the three laborers.

2. Count two charged that Dickenson, between August 12, 1959, and August 12, 1961, did pay less than a dollar an hour to employees Cesena, Martinez, Rubalcava and Zertuche for work.

3. Count three charged that he worked the same four employees over forty hours a week during the same period mentioned in count two without paying them a dollar and a half an hour for overtime.²

4. Count four charged that for the same period he kept false records showing that the four employees named in count two worked less hours than they actually worked.

5. Count five, for the same period, charged that he failed to make, preserve and keep records for the various weeks of the period.

6. Count six charged that during the same period Dickenson transported, offered for transportation, or sold into "commerce" automobile parts and scrap on which employees had worked without having received the wages required under the act.

Throughout the charges the element of "commerce" as defined by the act³ was stated and repeated.

After conviction, essentially the sentence was:

1. On count one, a fine of $1,000, probation and a direction to pay the three named employees certain amounts.

2. On count two, a fine of $1,000, probation, and a direction to pay the four employees mentioned in the count certain amounts.

3. On counts three and four, the same concurrent probation already provided in counts one and two.

4. On counts five and six, a fine of $1,000 on each count.

We do not have any inconsistent verdicts here, but we do think that consistency probably required an identical finding of guilty or not guilty on all of the counts two to six inclusive. As indicated, count one had a different set of facts.

We deal here with the Fair Labor Standards Act as it existed at the time of the alleged offenses.

Of course, the interstate commerce clause of the Constitution has grown and grown, but the Fair Labor Standards Act, while growing from time to time in sweep, has never reached as to inclusiveness the permissible sweep on interstate and foreign commerce. Generally, the act has dealt with goods "in commerce," interstate or foreign, and not with "affecting." And it has exceptions, such as the retail one with which we must deal here.

A business may have many facets, but under the act only the interstate-foreign commerce employees come under it.⁴ And such employees may be in such commerce for one pay period one week and out the next.⁵ Also, if a retail business meets the percentage test imposed, there may be some interstate-foreign commerce, and the employees working in the interstate-foreign aspect may not get the wages otherwise ordered by the act.

At the time of the alleged offenses, the act required, if applicable, the payment of a dollar an hour for the first forty hours of work in a week and a dollar and a half an hour for overtime.

It is quite obvious that Dickenson, percentagewise, was on the borderline of whether he was entitled to the retail exemption.

In pertinent part, Section 13(a), the retail exemption, provided:

"SEC. 13(a) The provisions of sections 6 and 7 the amounts to be paid as a minimum shall not apply with respect to — (2) any employee employed by any retail or service establishment, more than 50 per centum of which establishment\'s annual dollar volume of sales of goods or services is made within the State in which the establishment is located. A `retail or service establishment\' shall mean an establishment 75 per centum of whose annual dollar volume of sales of goods or services (or both) is not for resale and is recognized as retail sales or services in the particular industry."

It is settled that in a civil case the government must prove the work was done in commerce (interstate or foreign) or in the production of goods for it, but then, once coverage is proved, the defendant employer must prove by a preponderance of the evidence that he was a retailer under the act, meeting the percentage tests for exemption. Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 80 S.Ct. 453, 4 L.Ed.2d 393. Defendant acquiesced in instructions placing the same burden (by a preponderance of the evidence) upon him here.

We think the government concedes that Dickenson met the 50 per cent test, but the disagreement is over the 75 per cent test of section 13(a), supra.

As to coverage, the dollar volume of scrap sold to other dealers as "commerce" (on which the employees with whom we are concerned worked) is very, very small. The three years of scrap sales were as follows:

1959, $285.25, or 3/10 of one percent of sales;

1960, $145.95 or 1/10 of one percent of sales;

1961, $84.65 or 1/10 of one percent of sales.

The defendant says over and over again that this was de minimis and that he only sold the scrap (not salable as parts) to get rid of it so he could bring other old cars onto his lot to salvage parts. The government contends that not only cutting up the scrap and taking the scrap to the dealer for shipment was "commerce," but that all the acts of removing parts for sale helped prepare the ultimate product, scrap, and, ergo, this was producing goods. We do not decide that point either way, deeming it not necessary. The cases seem to stand for the proposition that one must know that there are a lot of other suppliers of scrap and probably a lot of other little ones like Dickenson, thus the whole picture is to be considered, and that a lot of little ones with underpaid wages could change the movement of goods in commerce.⁶ As the case law has built up, de minimis does not mean much.

It is quite likely that Dickenson's employees named in the indictment were only engaged in the "commerce" during a few pay periods of the whole time mentioned in the information. But there again the law seems to be settled that, once shown to be in commerce, the employer's burden is to show in the pay periods thereafter that the employees were not in commerce.⁷

The defendant is convinced that his sales tax returns to the state of California, either alone or plus estimates of certain non-taxable sales, showed that clearly he had 75% of retail sales and thus the retailer's exemption took him out of coverage.

The act does not define, ipso facto, retail except to say that "it is not for resale and is recognized as retail sales * * * in the particular industry."⁸

Obviously, a state sales tax statute would not be conclusive. But with a jury in the box to the side of the bench, the trial judge must come up with a definition. We set forth as Appendix A the trial court's definition, which we consider well done.

The defendant had an expert who looked over the business and gave his opinion of the operation and concluded the business was within the exemption. But the jury was free to disregard the expert.⁹

We are satisfied that under the circumstances there was a jury question as to whether the whole business of Dickenson was a retail one under the act. If it was, the employees would lose their coverage.

Assuming coverage and no exemption, there was adequate evidence to sustain the verdict on all counts.

Some particular discussion is required on count one. That involved the prior stipulated civil decree wherein Dickenson was ordered to pay amounts to Madrigal, Roberts and Martinez. Not shown on the face of the prior civil decree to pay is the fact, which turned up in the criminal trial, that Dickenson claimed the three employees were indebted to him for advances for all or part of the amounts specified for overtime wages. So, he says, he insisted on "his" offsets and took receipts in full from the employees.

On count one, the court did not tell the jury that the stipulated decree in the prior civil contempt case established for all purposes or any purpose that the defendant was in non-exempt commerce and did not tell the jury that the defendant had no right to make the deductions. There is a good argument that such would have been proper. But we do not pass on it.

The court instructed the jury that the stipulated decree was an admission by Dickenson, but no attempt was made to call it a conclusive admission. As instructed, the jury, as to count one, was free to find the defendant not in commerce and that the offsets not disclosed to the court in the first case actually existed, and therefore acquit him on count one. The instructions peculiarly applicable to count one were very favorable to the appellant.

On the issue of the justification of the offsets, the evidence was sharply divided. Obviously, the jury believed Dickenson spoke not the truth. Quite possibly this belief influenced the jury in appraising his testimony on the other counts.

The defendant objects to a number of instructions given and the failure to give others. We have examined all of the objections. Many of the objections now made were not made to the trial court. Therefore, our review of them is...