Freudenberg v. Harvey

• Decision Date: 09 October 1973
• Docket Number: Civ. A. No. 73-1668.
• Citation: Freudenberg v. Harvey, 364 F.Supp. 1087 (E.D. Pa. 1973)
• Parties: Janet FREUDENBERG v. Carole HARVEY, Individually and trading as CCW Harvey Personnel Consultants.
• Court: U.S. District Court — Eastern District of Pennsylvania

364 F. Supp. 1087

Janet FREUDENBERG v. Carole HARVEY, Individually and trading as CCW Harvey Personnel Consultants.

Civ. A. No. 73-1668.

United States District Court, E. D. Pennsylvania.

October 9, 1973.

John W. Walter, Philadelphia, Pa., for plaintiff.

Robert C. Ozer, Blank, Rome, Klaus & Comisky, Philadelphia, Pa., for defendant.

MEMORANDUM AND ORDER

FOGEL, District Judge.

Plaintiff, Janet Freudenberg, has brought this action against Carole Harvey, individually and trading as "CCW Harvey Personnel Consultants", for alleged violations of the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. § 201 et seq.

Plaintiff alleges that her employment by defendant as a counsellor from March 1, 1971 until January 13, 1972, required her to interview and place prospective job applicants, and that her own responsibilities "were an integral part of the interstate business of defendant, within the meaning of the Fair Labor Standards Act, and were necessary for the sale of goods in interstate commerce." She alleges that during the period of her employment she was paid less than the statutory minimum wage provided in 29 U.S.C. § 206, and did not receive overtime pay as provided in 29 U.S.C. § 207; hence, she seeks to recover unpaid compensation, as well as liquidated damages, counsel fees and costs, pursuant to the provisions of 29 U.S.C. § 216(b).

Defendant has not answered the complaint, but has filed instead a motion to dismiss under Rule 12(b) of the Federal Rules of Civil Procedure, contending that the Court lacks jurisdiction over both the person of the defendant and the subject matter of the action. The sole issue raised by defendant in her motion and brief in support thereof is the applicability of 29 U.S.C. § 213(a) (2), which exempts certain employers from the minimum wage and overtime pay provisions of the Fair Labor Standards Act. Defendant claims her business falls within the exemption created by § 213(a) (2).

The allegation of lack of personal jurisdiction has not been pursued by defendant; in any event, there appears to be no basis for this assertion, since defendant concedes that she does business in the Commonwealth of Pennsylvania. The record of service of process by the United States Marshal shows that defendant was personally served at her place of business at 1700 Market Street, Philadelphia, Pennsylvania. These facts satisfy the requirements for personal jurisdiction over defendant. Pennoyer v. Neff, 95 U.S. 714, 24 L.Ed. 565 (1877). This clearly frivolous defense is therefore rejected summarily.

Defendant's second basis for her motion to dismiss is lack of jurisdiction over the subject matter. She argues this Court is without jurisdiction on the ground that her business falls within the exemption established by 29 U.S.C. § 213(a)(2) which excludes certain employers from the minimum wage and overtime pay provisions of the Fair Labor Standards Act.

Section 213(a)(2) provides as follows:

§ 213. Exemptions

(a) The provisions of section 206 (except subsection (d) in the case of paragraph (1) of this subsection) and section 207 of this title shall not apply with respect to —

* * * (2) any employee employed by any retail or service establishment (except an establishment or employee engaged in laundering, cleaning, or repairing clothing or fabrics or an establishment engaged in the operation of a hospital, institution, or school described in section 203(s) (4) of this title), if more than 50 per centum of such establishment's annual dollar volume of sales of goods or services is made within the State in which the establishment is located, and such establishment is not in an enterprise described in section 203(s) of this title or such establishment has an annual dollar volume of sales which is less than $250,000 (exclusive of excise taxes at the retail level which are separately stated). A "retail or service establishment" shall mean an establishment 75 per centum of whose annual dollar volume of sales of goods or services (or of both) is not for resale and is recognized as retail sales or services in the particular industry.

Plaintiff counters by asserting that this Court's jurisdiction is founded upon 29 U.S.C. § 216(b) and 28 U.S.C. § 1337.

29 U.S.C. § 216(b) provides as follows:

§ 216. Penalties; civil and criminal liability; injunction proceedings terminating right of action; waiver of claims; actions by Secretary of Labor; limitation of actions; savings provision * * * (b) Any employer who violates the provisions of section 206 or section 207 of this title shall be liable to the employee or employees affected in the amount of their unpaid minimum wages, or their unpaid overtime compensation, as the case may be, and in an additional equal amount as liquidated damages. Action to recover such liability may be maintained in any court of competent jurisdiction by any one or more employees for and in behalf of himself or themselves and other employees similarly situated. No employee shall be a party plaintiff to any such action unless he gives his consent in writing to become such a party and such consent is filed in the court in which such action is brought. The court in such action shall, in addition to any judgment awarded to the plaintiff or plaintiffs, allow a reasonable attorney's fee to be paid by the defendant, and costs of the action. The right provided by this subsection to bring an action by or on behalf of any employee, and the right of any employee to become a party plaintiff to any such action, shall terminate upon the filing of a complaint by the Secretary of Labor in an action under section 217 of this title in which restraint is sought of any further delay in the payment of unpaid minimum wages, or the amount of unpaid overtime compensation, as the case may be, owing to such employee under section 206 or section 207 of this title by an employer liable therefor under the provisions of this subsection.

Section 216(b) creates a right of action in favor of certain employees to recover (1) unpaid minimum wages and overtime compensation; (2) liquidated damages; (3) counsel fees and (4) costs of the action. Such an action may be maintained in "any court of competent jurisdiction", a phrase which includes any state court of general jurisdiction. Hargrave v. Mid-Continent Petroleum Corporation, 36 F.Supp. 233 (E.D.Okl.1941). The jurisdiction of the United States district courts, however, is limited by the Constitution and laws of the United States, and thus § 216(b) standing alone is not sufficient to confer subject matter jurisdiction. A specific grant of subject matter jurisdiction is necessary, and this grant is found in 28 U.S.C. § 1337, which confers original jurisdiction upon the district courts over "any civil action or proceeding arising under any Act of Congress regulating commerce * * *." Since the Fair Labor Standards Act is an act of Congress regulating commerce, United States v. Darby, 312 U.S. 100, 61 S.Ct. 451, 85 L.Ed. 609 (1941), the district courts have jurisdiction of actions brought under § 216(b) without regard to the citizenship of the parties or the amount in controversy. Robertson v. Argus Hosiery Mills, 121 F.2d 285 (6th Cir. 1941). Thus the issue in the present case is whether the action "arises under" the Fair Labor Standards Act. If so, this Court has jurisdiction under 28 U.S.C. § 1337.

Defendant's argument that the exemption of § 213(a) (2) deprives this Court of jurisdiction over the subject matter stems from her failure to distinguish between a decision on jurisdictional grounds and an adjudication on the merits. Plaintiff alleges that defendant is in breach of a duty to her created by statutes of the United States, 29 U.S.C. §§ 206, 207, which require certain employers to pay a minimum wage and overtime compensation to their employees. Another statute of the United States, 29 U.S.C. § 216(b), permits an aggrieved employee to bring suit for recovery of the unpaid amounts. Defendant denies that she is in breach of any duty owed to plaintiff, and sets up as a defense an exemption created by still another statute of the United States, 29 U.S.C. § 213(a)(2). Defendant is thus claiming that plaintiff has no right to recovery, a claim which goes to the merits of the cause and not to the jurisdiction of the Court.

The controlling principles with respect to this issue are set forth in the leading case of Bell v. Hood, 327 U.S. 678, 66 S. Ct. 773, 90 L.Ed. 939 (1946).

There, Mr. Justice Black, speaking for the Court, stated:

Before deciding that there is no jurisdiction, the district court must look to the way the complaint is drawn to see if it is drawn so as to claim a right to recover under the Constitution and laws of the United States. * * *

Jurisdiction, therefor, is not defeated as respondents seem to contend, by the possibility that the averments might fail to state a cause of action on which petitioners could actually recover. For it is well settled that the failure to state a proper cause of action calls for a judgment on the merits and not for a dismissal for want of jurisdiction. Whether the complaint states a cause of action on which relief could be granted is a question of law and just as issues of fact it must be decided after and not before the court has assumed jurisdiction over the controversy. If the court does later exercise its jurisdiction to determine that the allegations in the complaint do not state a ground for relief, then dismissal of the case would be on the merits, not for want of jurisdiction. * * *

* * * Whether the petitioners are entitled to recover depends upon an interpretation of the statutes and constitutional provisions involved in the case. Thus the right of the petitioners to recover under their complaint will be sustained if the Constitution and laws of the United States are given one construction and will be defeated if they are given another. For this reason the district court has jurisdiction. Bell v. Hood, s

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