Mahoney v. Mahoney, Civ. A. No. 3266.

• Decision Date: 14 September 1960
• Docket Number: Civ. A. No. 3266.
• Citation: 186 F. Supp. 636
• Parties: Leah MAHONEY v. Roberta Bryant MAHONEY, d/b/a Chattanooga Telephone Secretarial Service.
• Court: U.S. District Court — Eastern District of Tennessee

186 F. Supp. 636

Leah MAHONEY v. Roberta Bryant MAHONEY, d/b/a Chattanooga Telephone Secretarial Service.

Civ. A. No. 3266.

United States District Court E. D. Tennessee, S. D.

September 14, 1960.

Morgan & Hunter, Chattanooga, Tenn., for plaintiff.

John I. Foster, Jr., Chattanooga, Tenn., for defendant.

DARR, Chief Judge.

This suit was brought by plaintiff under section 16(b) of the Fair Labor Standards Act seeking to recover minimum and overtime wages claimed under sections 6 and 7.¹

In October, 1954, the defendant set up in her home the Chattanooga Telephone Secretarial Service, which she attended herself for some eighteen months. This was a telephone answering service and was operated by obtaining customers whose telephones were connected with her answering service office and receiving and transmitting telephone messages. By September, 1956, she had thirty odd customers.

The plaintiff and defendant married brothers.

In 1956 the defendant offered to the plaintiff a position with the answering service and, in addition to a salary, the right of the plaintiff to live in the house where the service was located. The plaintiff began working September 6, 1956 and quit January 6, 1958. Her working hours were during the night.

During the time in question the defendant had an average of approximately eighty customers, about two-thirds of these were for night calls only. The daytime customers paid $12 monthly for each phone and the others paid $16. The defendant had some three or four customers across the line in Georgia (Greater Chattanooga) and numerous long distance calls came through the service. Many of these interstate communications and messages came through at a time when plaintiff was on duty. The defendant did not have more than two employees and the office of the service was located in a dwelling house in a residential area of Chattanooga.

The plaintiff's work was in commerce while employed by the defendant and the plaintiff is entitled to recover unless the defendant's business was exempt under section 13(a) (2) of the Act.²

So far as can be found there are only two cases concerned with the exemption of a telephone answering service under section 13(a) (2) and both have held that the exemption does not apply. Mitchell v. Telephone Answering Service, Inc., D.C., 183 F.Supp. 607; Bloemer v. Ezell, D.C., 112 F.Supp. 814.

Prior to the 1949 amendment to the Act there was no statutory definition of a "retail or service establishment". The 1949 amendment to section 13(a) (2) did away with the "business test" rule as an element in defining a retail or service establishment. Under the 1949 amendment there is now a statutory definition.

The Supreme Court in an opinion announced February 23, 1960, in the case of Arnold v. Ben Kanowsky, Inc., 361 U.S. 388, 80 S.Ct. 453, 456, 4 L.Ed.2d 393, had this to say concerning the present definition of a "retail or service establishment": In 1949 Congress substituted a three-part definition for this provision. Any employee employed by a retail or service establishment is to be exempt if more than 50% of the establishment's annual dollar volume of sales is made within the State, if 75% of its annual sales volume is not for resale, and if 75% of its annual sales volume is recognized within the industry as retail sales. * * * The three conditions of § 13(a) (2) are explicit prerequisites to exemption, not merely suggested guidelines for judicial determination of the employer's status."

Many courts seem to lump in together (in discussing exemption) a "retail or service establishment", as did the Court in Arnold v. Ben Kanowsky, Inc., supra, in the definition quoted. In that case there was a retail establishment but in this case there is a service establishment. The exemptions in section 13(a) (2) have to do with three kinds of businesses: (1) Retail establishment; (2) service establishment; and (3) both retail and service establishments. If there can be said to be a sale of services, it is quite certain there cannot be a retail sale of services or a retail service. All authorities define retail in connection with commodities.

There is no dispute concerning the defendant's business having more than 50% annual dollar volume of income made within the state and having more than 75% whose annual dollar volume of services is not for resale. The only question is whether defendant's business is known in the industry as a "service".

As the word "service" is generally used (performing work for the benefit of another), it is quite plain that a telephone answering service is known in the industry as a service, but this is not a definition of a "service" under the Act. By reason of the rule noscitur a sociis, the Supreme Court has pointed out the meaning of "service" as used in the Act, "This makes it appropriate to restrict the broader meaning of `service' to a meaning comparable to that given the narrower term `retail'." Roland Electrical Co. v. Walling, 326 U.S. 657, 675, 66 S.Ct. 413, 421, 90 L.Ed. 383. This case not only defines the...