Hodgson v. HYATT REALTY AND INVESTMENT COMPANY, INC.

Decision Date30 January 1973
Docket NumberC-140-S-71.,No. C-139-WS-71,C-139-WS-71
Citation353 F. Supp. 1363
CourtU.S. District Court — Middle District of North Carolina
PartiesJames D. HODGSON, Secretary of Labor, United States Department of Labor, Plaintiff, v. HYATT REALTY AND INVESTMENT COMPANY, INC., a corporation, and Chestley Julian Hyatt, Individually, Defendants, North Carolina Department of Motor Vehicles, Party Defendant. James D. HODGSON, Secretary of Labor, United States Department of Labor, Plaintiff, v. Garvis W. HAMILTON and Mrs. Garvis W. Hamilton, Individually, and trading and doing business as N. C. Motor Vehicle License Agency, Defendants, North Carolina Department of Motor Vehicles, Party Defendant.

COPYRIGHT MATERIAL OMITTED

Beverley R. Worrell, Dept. of Labor, Atlanta, Ga., for plaintiff.

James W. Armentrout, Winston-Salem, N. C., for Hyatt Realty and Chestley Julian Hyatt.

Benjamin D. McCubbins, Salisbury, N. C., for Garvis W. Hamilton and wife.

William W. Melvin, William B. Ray, Asst. Attys. Gen., Raleigh, N. C., for N. C. Dept. of Motor Vehicles.

MEMORANDUM OPINION

HIRAM H. WARD, District Judge.

The Secretary of Labor (Secretary) instituted these actions, pursuant to the Fair Labor Standards Act (Act), 29 U. S.C. § 201 et seq., seeking to enjoin defendants from violating the minimum wage, overtime and recordkeeping provisions of the Act, and to restrain them from withholding back wages owed to their employees. Defendant Hyatt Realty and Investment Company, Inc., (C-139-WS-71), and the defendants Hamiltons, d/b/a N. C. Motor Vehicle License Agency, (C-140-S-71), operate the business of issuing license plates for the State of North Carolina in the Counties of Forsyth and Rowan, respectively. The North Carolina Department of Motor Vehicles (Department) petitioned and was permitted to intervene as a party defendant.

By agreement of the parties, the cases were consolidated and it was stipulated that the issues of individual coverage (whether the employees are engaged in commerce or in the production of goods for commerce) and enterprise coverage (whether the employees are employed by an enterprise engaged in commerce or the production of goods for commerce), being common to all of the parties and the only issues in which the State defendant has any interest, should first be heard and determined by the Court.

The original defendants, during the times herein complained of, were parties to commission contracts with the Department for the issuance of registration (license) plates and registration cards under the provision of N.C.G.S. § 20-63(h). Prior to July 1, 1971, the commission paid by the State was 27¢ per plate and since that date, 30¢ per plate. The total monies collected by the defendants were deposited by them each day to the account of the Treasurer of North Carolina in a local bank designated by him. At the end of each month, the State sent to the defendants their respective checks for the past month's commissions. The monies collected by the defendants were compensatory taxes for the use and privileges of the public highways of the State. The State Treasurer credited the monies to the highway fund (N.C.G.S. 20-97) with the exception of one dollar for each vehicle, which was credited to the account of the State Board of Education Driver Training and Safety Education (N.C.G.S. 20-88.1).

The State of North Carolina issues some three and one-half million (3,500,000) license plates annually, all of which are manufactured within the State by the North Carolina Department of Corrections. Registration plates and registration certificates are issued at the Department's place of business in Raleigh and at the ninety-seven places of business located at various places over the State through the commission contractors, two of whom are the original defendants here.

The commission contractors furnish their own facilities and hire their own employees. The Department supplies the registration plates and necessary forms for use by the commission contractor, together with instructions as to procedure for completion of any and all forms involved, and bookkeeping and reporting requirements. In general, duties of the defendants, as commission contractors (sometimes referred to as license agencies), involve the issuance of registration plates for four (4) different categories of vehicles—renewal, new vehicles, transfers from another state, and transfer of ownership by residents. The activities performed at the license agencies, in issuing plates, are as follows:

(a) RENEWALS: In Decenber of each year the Department mails a renewal card to the registered owner1 of each vehicle. This card consists of two parts—an application and a registration certificate. The owner must complete the required liability insurance information on the reverse side of the application and sign his name certifying that such information is correct. He then presents the card to the license agency and pays the required tax. If the employee of the commission contractor finds that the application card is properly completed and executed, he stamps the license plate number on both the application and certificate. He gives the license plate and registration certificate to the owner and retains the application part of the card. The license agency daily deposits all tax monies collected in a local bank account in the name of the Treasurer of North Carolina. The agency compiles a list of names and addresses matching the license plate issued to each vehicle. It forwards to the Department each day this list, application cards, and duplicate deposit slip for the day's receipts.

(b) NEW VEHICLE PURCHASES: The purchaser of a new vehicle can obtain a license plate from the commission contractor.2 In that case, he must fill out and submit a manufacturer's certificate of origin assigned to him, an application for title (MVR-1 form), and proof of insurance coverage. Upon payment of the tax, he receives a license plate and a temporary registration card which has his license plate number stamped on it. The license agency includes the transaction on its daily report list and sends it and the certificate of origin, application for title and proof of insurance to the Department. The Department issues the title to the proper person (see footnote 1) and also mails the registration card to the owner. This card replaces the temporary one issued by the agency.

(c) TRANSFER OF REGISTRATION TO NORTH CAROLINA FROM ANOTHER STATE: The owner presents his out-of-state title, application for North Carolina title, and proof of insurance to the agency. Upon payment of the appropriate tax, he receives a license plate and a temporary registration card which has his license number stamped on it. The agency includes the transaction in its daily report list and sends it and the out-of-state title, application for title and proof of insurance to the Department. The Department issues the title to the proper person and also mails the registration card to the owner. In addition, the Department mails the out-of-state title to the issuing state for cancellation.

(d) TRANSFERS BY RESIDENTS: When a vehicle registered in North Carolina is sold by the owner to another North Carolina resident, the seller completes a bill of sale section on the certificate of title; the new owner completes another section applying for a new title and certifies that liability insurance is in effect. The agency then follows the procedure described above, and finally the Department issues a new title and registration certificate to the proper persons.

In all of the above-described transactions, if the vehicle is subject to a lien, the Department records the lien on the title and mails the title to the lienholder rather than the owner. Some of the lienholders are located outside the State of North Carolina.

No motor vehicles are manufactured in North Carolina. Consequently, all manufacturers' certificates of origin move across state lines before reaching the ultimate North Carolina owner.

In some instances, such as the issuance of special plates of a personalized nature (N.C.G.S. § 20-81.3), only the Department handles the transaction.

It is stipulated that approximately eighty per cent of all renewal license plates are issued by commission contractors. Total money collected by the defendant Hamiltons during the calendar years 1969, 1970 and 1971 exceeded $500,000. Money collected by the defendant Hyatt Realty and Investment Company, Inc., exceeded $1,000,000 during 1969 and 1970. Neither defendant received as much as $250,000 commission for any yearly period. Hyatt has not been a commission contractor since February 18, 1971.

The licensing materials obtained directly by the Department and those sent to the Department by the commission contractors become part of a permanent record. The information is also stored in a computer. Thus, a complete list of all vehicles registered, the owner's name and address, and the license plate number is compiled and maintained by the Department. These records are open to the public. (N.C.G.S. § 20-43). At one time, the Department permitted the public to come in and personally inspect the records. Due to the increase in volume of the records it is physically impossible to allow personal inspection, so the Department now furnishes the requested information and charges the inquirer its costs in providing the service. Public agencies, such as law enforcement agencies, can receive the information without charge.

At least one out-of-state company each year obtains a complete list of motor vehicle registrations in North Carolina from which it prepares statistical data such as city-by-city and county-by-county analysis of the type, make and model of all vehicles registered. Other out-of-state firms purchase lists for use as a mailing list. Information is supplied to out-of-state law enforcement agencies upon request.

The Department makes a random check of the owners'...

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6 cases
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    ...Inc., 390 F. 2d 75, 77 (3rd Cir. 1968); Chambers Const. Co. v. Mitchell, 233 F.2d 717, 722 (8th Cir. 1956); Hodgson v. Hyatt Realty, 353 F.Supp. 1363, 1373-1374 (M.D.N.C.1973), aff'd sub nom. Brennan v. Hyatt Realty, 489 F.2d 754 (4th Cir. 1974); Wirtz v. Sherman Enterprises, Inc., 229 F.Su......
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    ...Zorich v. Long Beach Fire Dept. and Ambulance Service, Inc., 118 F.3d 682, 686 (9th Cir.1997) (citing Hodgson v. Hyatt Realty & Inv. Co., Inc., 353 F.Supp. 1363 (M.D.N.C.1973)). 2. It is true, of course, that a defendant wishing to controvert every allegation in the complaint may do so by a......
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