Hodgson v. KATZ AND BESTHOFF,# 38, INC.

• Decision Date: 15 November 1973
• Docket Number: Civ. A. No. 18122.
• Citation: 365 F. Supp. 1193
• Parties: James D. HODGSON, Secretary of Labor, United States Department of Labor v. KATZ AND BESTHOFF, #38, INC., a corporation.
• Court: U.S. District Court — Western District of Louisiana

365 F. Supp. 1193

James D. HODGSON, Secretary of Labor, United States Department of Labor v. KATZ AND BESTHOFF, #38, INC., a corporation.

Civ. A. No. 18122.

United States District Court, W. D. Louisiana, Alexandria Division.

November 15, 1973.

Richard F. Schubert, M. J. Parmenter, William E. Everheart, Sol. of Labor, U. S. Dept. of Labor, Dallas, Tex., for plaintiff.

Henry J. Read, Daniel Lund, Montgomery, Barnett, Brown & Read, New Orleans, La., for defendant.

NAUMAN S. SCOTT, District Judge:

This is an action brought by the Secretary of Labor (Secretary) pursuant to § 17 of the Fair Labor Standards Act of 1938, 29 U.S.C. § 201 et seq. (Act), seeking to enjoin the defendant, Katz & Besthoff #38, Inc. (K & B) from allegedly violating the provisions of §§ 15(a)(2) and 15(a)(5) of the Act, and to restrain any withholding of payment of overtime compensation found to be due defendant's employees under the Act.

This action was filed by the Secretary on July 25, 1972. K & B has admitted that since July 25, 1969, it has been a corporation engaged in the operation of a drug store in Alexandria, Louisiana, and that it is a wholly owned corporate subsidiary of Katz & Besthoff, Inc., a corporation with its main office located in New Orleans, Louisiana. Further, defendant has admitted that during the period since July 25, 1969, it has been an enterprise engaged in commerce or in the production of goods for commerce within the meaning of § 3(s)(1) of the Act.

I.

Section 17 of the Act, the jurisdictional authority asserted by the Secretary for instituting this action, reads in part as follows:

"The district courts . . . shall have jurisdiction, for cause shown, to restrain violations of Section 15, including in the case of violations of Section 15(a)(2) the restraint of any withholding of payment of . . . overtime compensation found by the court to be due to employees under this Act . . .."

We have jurisdiction over the subject matter of this case. It is well settled that the provisions of § 16(b) and § 16(c) of the Act are not to be read in pari materia with the provisions of § 17, Hodgson v. Ewing, 451 F.2d 526 (5th Cir. 1971); Hodgson v. Wheaton Glass Co., 446 F.2d 527 (3rd Cir. 1971); Shultz v. Mistletoe Express Service, 434 F.2d 1267 (10th Cir. 1970); that employees are not proper parties in a § 17 action brought by the Secretary of Labor, Hodgson v. Brookhaven General Hospital, 436 F.2d 719 (5th Cir. 1970); Hodgson v. Board of Commissioners of County of Miami, 69 L.C. ¶ 32, 771 (W. D.Ind.1972); and that the consent of the employees is not a jurisdictional prerequisite for a § 17 action, Hodgson v. Humphries, 454 F.2d 1279 (10th Cir. 1972); Wirtz v. Novinger's, Inc., 261 F.Supp 698 (M.D.Pa.1966); Wirtz v. English, 245 F.Supp. 628 (D.C.Kan. 1965); Jones v. American Window Cleaning Co., 210 F.Supp. 921 (E.D.Va. 1962); Wirtz v. Lockhart, 230 F.Supp. 823 (N.D.Ohio 1964); Wirtz v. Wimpy, 48 L.C. ¶ 31, 525 (M.D.Fla.1963); Shultz v. Spot Cash Tire & Appliance of Columbus, Mississippi, Inc., 62 L.C. ¶ 32, 306 (N.D.Miss.1970).

II.

The Secretary contends that during the period from July 25, 1969 through June 27, 1971, K & B willfully violated the overtime provisions of § 7 of the Act by compensating its cashiers for their employment in excess of 40 hours in a work week at a rate of pay which was less than one and one-half times the regular rate at which they were employed; that defendant compensated its cashiers for their work on the basis of a scheduled number of weekly work hours and ignored (for overtime pay purposes) any time worked by such employees outside such scheduled hours. Defendant denies liability and contends that no cashier in its employ has accumulated working time for which overtime compensation is due. Defendant alleges that any work performed by its cashiers either before or after their scheduled work hours for which they were not compensated constituted non-compensable preliminary or postliminary activities and as such was subject to the statutory exemptions of the Portal-to-Portal Act of 1947 (29 U. S.C. § 254) and to the de minimis rule established in the jurisprudence.

Section 7 of the Act (29 U.S.C. § 207) provides that no employer covered by the Act shall employ any employee for a work week longer than 40 hours unless such employee receives compensation for his employment in excess of 40 hours at a rate not less than time and one-half his regular hourly rate. In 1946 the United States Supreme Court in the case of Anderson v. Mt. Clemens Pottery Co., 328 U.S. 680, 66 S.Ct. 1187, 90 L.Ed. 1515 (1946), found that under this provision employees were engaged in compensable activity for time spent walking to work on the employer's premises after punching in and that time necessarily spent in preliminary activities after arriving at their places of employment must also be compensated.¹

In response to the Mt. Clemens decision, Congress passed the Portal-to-Portal Act of 1947 (29 U.S.C. § 251 et seq.). The congressional declaration of findings and policy are relevant to the Act's interpretation and application. Section 1 of the Act (29 U.S.C. § 251) states, in part:

"(a) The Congress hereby finds that the Fair Labor Standards Act of 1938, as amended, has been interpreted judicially in disregard of long established customs, practices and contracts between employers and employees, thereby creating wholly unexpected liability, immense in amount and retroactive in operation, upon employers with the results that, if said Act as so interpreted or claims arising under such interpretations were permitted to stand, . . . (4) employees would receive windfall payments, including liquidated damages, of sums for activities performed by them without any expectation or reward beyond that included in their agreed rates of pay (5) there would occur the promotion of increasing demands for payment to employees for engaging in activities no compensation for which had been contemplated by either the employer or employee at the time they were engaged in; . . .."

It was further declared that the Act was necessary to meet "existing emergency and to correct existing evils." 29 U.S.C. § 251(b).

The exemption created by Section 4 of the Portal-to-Portal Act (29 U.S.C. § 254) is the provision most pertinent to the instant case and the one passed in direct response to the Mt. Clemens decision. Section 4 of the Portal-to-Portal Act provides that no overtime compensation shall be due for:

"(1) Walking, riding, or traveling to and from the actual place or performance of the principal activity or activities which such employee is employed to perform; and

(2) activities which are preliminary to or postliminary to said principal activity or activities,

which occur either prior to the time on any particular workday at which such employee commences, or subsequent to the time on any particular workday at which he ceases, such principal activity or activities."

After the passage of the Portal-to-Portal Act, the United States Supreme Court interpreted the Section 4 exemptions in Steiner v. Mitchell, 350 U.S. 247, 76 S.Ct. 330, 100 L.Ed. 267 (1956), and set forth the test to be applied for determining whether an activity is preliminary or postliminary to the principal work activities of the employee.

"We, therefore, conclude that activity performed either before or after the regular work shift, on or off the production line, are compensable under the Portal-to-Portal provisions of the Fair Labor Standards Act if those activities are an integral and indispensable part of the principal activities for which covered workmen are employed . . .." 350 U.S. 256, 76 S.Ct. 335, 100 L.Ed.2d 273.

The Supreme Court left for the lower courts to decide as each case is presented whether the facts are such that the activities for which overtime pay is sought comes within the integral and indispensable tests for purposes of applying the Portal-to-Portal Act exemptions. Blum v. Great Lakes Carbon Corp., 418 F.2d 283 (5th Cir. 1969); Mitchell v. Southeastern Carbon Paper Co., 228 F. 2d 934 (5th Cir. 1955).

A case decided under the Portal-to-Portal Act exemptions practically on all fours with the instant case is E. I. DuPont De Nemours & Co. v. Harrup, 227 F.2d 133 (4th Cir. 1955). In Harrup the claimants were cashiers in the defendant cafeteria. When beginning a shift, they were required to be present a sufficient length of time in advance to receive and count the sum of $200 and to receive the information, if any, which the predecessor had to communicate. The Court found that this activity involved up to 10 minutes daily. In no instance was any cashier docked for being "late" during this preshift time even though strict account was kept of regular shift time and adjustments for noncompliance were made. The Court held that under the Portal-to-Portal Act, these activities ". . . were clearly preliminary to the principal activities for which the cafeteria cashiers were employed and paid." 227 F.2d 136. See also Carter v. Panama Canal Co., 314 F. Supp. 386 (D.C.1970), aff'd 150 U.S. App.D.C. 198, 463 F.2d 1289 (1972).

By virtue of the mere passage of the Portal-to-Portal Act, there is legislative recognition that most if not all forms of employment involve some preliminary and postliminary activities for which compensation is not due nor expected. Every preliminary and postliminary activity which the Act exempts is related to the employee's employment. However, merely because such activity regularly, even daily, precedes the entrance by the employee upon his principal activity, does not make such activity an integral and indispensable part of the employee's principal activities. It is clear from a reading of the Act that the most significant factor is the principal activity at the actual place of performance. Thus in Harrup, the principal activity was checking out customer purchases and the actual place of performance was at the cash register and...