Fleming v. Alterman

• Decision Date: 02 April 1941
• Docket Number: No. 2250.,2250.
• Citation: 38 F. Supp. 94
• Parties: FLEMING, Administrator of Wage and Hour Division, United States Department of Labor, v. ALTERMAN et al.
• Court: U.S. District Court — Northern District of Georgia

38 F. Supp. 94

FLEMING, Administrator of Wage and Hour Division, United States Department of Labor, v. ALTERMAN et al.

No. 2250.

District Court, N. D. Georgia, Atlanta Division.

April 2, 1941.

Gerard D. Reilly, Sol., Irving J. Levy, Asst. Sol., in charge of litigation, Wage and Hour Division, Abner Brodie, Bessie Margolin, and Erwin B. Ellmann, all of Washington, D. C., and Geo. A. Downing, Regional Atty., of Atlanta, Ga., for plaintiff.

Edgar Watkins & Allan Watkins, of Atlanta, Ga., as Amici Curiae.

Geo. & John L. Westmoreland, of Atlanta, Ga., for defendants.

RUSSELL, District Judge.

This is a suit brought by the Administrator of the Wage and Hour Division of the United States Department of Labor, hereinafter called the Administrator, seeking an injunction to restrain the defendants, Alterman Brothers, a partnership, hereinafter called Alterman, from violating Sections 15(a) (2) and 15(a) (5) of the Fair Labor Standards Act of 1938, U. S.C.A., Title 29, § 201 et seq.

Alterman, a partnership of three brothers, conducts a wholesale grocery business in Atlanta, Georgia, handling a general line of staple groceries, including canned fruits, paper products, sugar, cereals, flour, soaps, candy, gum and tobaccos. The line of goods handled by it includes hundreds of popular brands which are manufactured by hundreds of concerns located in all parts of the United States. More than ninety (90%) per cent of these products (stated in defendants' answers to the interrogatories propounded by plaintiff under Rule 33, Federal Rules of Civil Procedure, 28 U.S.C.A. following section 723c, to be ninety-nine and one-half (99½%) per cent) are manufactured and originate outside the State of Georgia, such as canned goods, canned fruit juices and vegetables, milk paper products, soaps, teas, tobaccos, chewing gum, packaged flours, coffee, sugar, and candy, from several canners and processors in Indiana, Wisconsin, Tennessee, Florida, Illinois, California, Missouri, New York, Pennsylvania, New Jersey, North Carolina, Alabama, and Louisiana.

Among these products are two brands of canned foods packed for Alterman in Indiana and there labelled with the label "Packed for Alterman Brothers," put in cases and periodically trucked by the packing company from Indiana to Alterman's warehouse in Georgia. Alterman also has the exclusive right to distribute in the Atlanta area certain canned fruits under a designated label packed by a company in California, and has a similar exclusive agency for the distribution of designated labelled peas, packed in Wisconsin.

Shipments from out of the State arrive daily at Alterman's warehouse by means of all the common agencies of interstate transportation. Some goods are shipped by rail direct to the spur track and unloading dock at the back door of Alterman's place of business. Transports of interstate truck lines and out-of-State manufacturers' trucks arrive daily at the unloading platform with goods manufactured in numerous other States. Other consignments are picked up by Alterman's trucks from pool cars, freight stations, or the warehouses of brokers or manufacturers' agents in Atlanta.

Alterman's receiving clerk estimates that approximately thirty-five (35%) per cent of their merchandise comes to their warehouse by the carrier truck lines and the manufacturers' trucks, thirty (30%) per cent comes by freight cars switched on to Alterman's spur track by the interstate railroads and approximately thirty-five (35%) per cent is picked up by defendants' own trucks from pool cars, freight stations or warehouses of brokers and manufacturers' agents. Defendants are billed by and remit to the out-of-State sellers for all shipments originating out-of-State, though orders are usually taken in Atlanta.

In 1938 Alterman's gross sales amounted to $794,963.86, and in 1939 they amounted to $871,492.60. About sixteen (16) workers, including warehousemen, truck drivers, office workers and salesmen, are employed. Defendants' place of business is a three-story building, and the second floor by reason of topographical conditions is at ground level, and at this place all goods are unloaded from trucks and cars. All delivery trucks of Alterman are loaded at the front of the building by means of a chute from the second floor, by which the outgoing merchandise is sent down.

All goods as unloaded are immediately moved into the warehouse in the packages or containers in which they arrive, and placed in separate assigned stock piles for each type or brand of goods, and all but a very small portion of the goods move through the warehouse and are delivered to Alterman's customers in the same package, bag or carton in which they are received. Sales from a "broken stock room" are very small, and in general it is exceptional for a merchant to order less than a full case or carton.

Alterman's sales are made by salesmen, who go regularly from place to place on fixed routes taking orders for future delivery, and which are delivered by trucks along regular fixed routes. Alterman has been in the wholesale grocery business in Atlanta for about seventeen (17) years, and the great majority of its customers have been purchasing from defendants regularly for many years, seventy-five (75%) per cent of the present customers being on defendants' books as customers two years ago. These customers are visited by salesmen each week and deliveries are made at least once weekly on a regular schedule and delivery truck routes.

Witnesses who do the purchasing for Alterman testified that experience has shown them about how many orders will come in each week in the usual course of trade, so that the amount of such orders can be anticipated. The stock of goods in the warehouse corresponds substantially to the amounts necessary to fill recurring orders received in the usual course of trade, and the records of sales indicate that Alterman's customers generally purchase the same items in much the same quantities at regular recurring intervals.

Alterman's business requires rapid turnover and profit is made only when the goods move out to the retailer. The longer any particular item remains in stock, the lesser profit may be anticipated from its sale. It is essential that there be a minimum of delay in the movement of the goods to the retailer. The actual speed with which commodities move through the warehouse varies with the particular type of goods, or brand, and with various circumstances.

If a stock pile of particular items is low or exhausted, such item may be unloaded from the incoming truck or freight car and immediately placed on an outgoing truck to fill an order already obtained. Numerous items are "turned over" within a week or ten days, so that within that time all of the product in stock has been moved out and new stock received by shipment to maintain the average stock pile. Thus an item with a two-weeks turnover period will be completely renewed and shipped out twenty-six (26) times in one year. Some items have a slower turnover, but the average rate of turnover for all products is about ten (10) times per year.

Some times an item of stock is purchased several months in advance, but most items remain in the warehouse no longer than necessary to match up orders which are coming in from continually recurring sources along well-defined and certain routes. It is not necessary for defendants to keep a larger stock on hand, for most items handled can be secured within a week or ten days from the out-of-State manufacturers, and many items can be shipped over night, if ordered by telegraph or long-distance telephone.

In the conduct of the business, orders frequently come in for goods the stock of which is exhausted, and defendants must make the purchases from out of the State to fill such orders, and in such instances they are placed on trucks for delivery almost immediately upon arrival.

Defendants distribute their goods in a well-defined territory and along certain routes, the radius being about fifty (50) to seventy (70) miles, in which they have approximately five hundred (500) customers who are retail grocers in Georgia who place continually recurring orders for the same products, ordering either by brand name or by description or from samples. They also do business with hotels and restaurants, and various State and Federal institutions, and much of this type of business is secured through bids for long-term contracts specifying the size and kind of products to be furnished. These products are packed in larger than ordinary sized containers, and must be purchased to fill these contracts.

Occasional drop shipments are made to customers, that is, shipments made direct from the manufacturer to the customer who has given his order to Alterman, and who pays Alterman for the goods. Other wholesale grocers competing with Alterman have territory of practically the same size, and as a consequence wholesalers both within and without the State operate in the same territory, though the competition is not always between the same merchants. Such trading areas are not restricted by State lines, but are influenced by highways, freight zones, distances, and other factors affecting distribution costs.

Wholesalers competing directly with Alterman also receive the bulk of their goods from outside of the State in which they are located and some, generally depending upon location, ship goods into other States. Retailers in Georgia near the State line are served by wholesalers in adjoining States, and some Georgia wholesalers serve customers in adjacent States. Defendants compete with out-of-State wholesalers and with Georgia wholesalers who sell out-of-State.

Wholesale grocers compete primarily on a price basis, and labor costs constitute a large portion, some thirty (30%) to fifty (50%) per cent, of total operating expenses, and a wholesaler paying lower wages than his competitor, or reducing his labor costs by longer hours of work, translates...