Marshall v. Elks Club of Huntington, Inc.

• Decision Date: 08 December 1977
• Docket Number: Civ. A. No. 73-102-H.
• Citation: 444 F. Supp. 957
• Court: U.S. District Court — Southern District of West Virginia
• Parties: Ray MARSHALL, Secretary of Labor, Plaintiff, v. ELKS CLUB OF HUNTINGTON, INC., a corporation, Individually and doing business as Lodge # 313 Benevolent and Protective Order of Elks, and Lodge # 313 Benevolent and Protective Order of Elks, Defendants.

444 F. Supp. 957

Ray MARSHALL, Secretary of Labor, Plaintiff, v. ELKS CLUB OF HUNTINGTON, INC., a corporation, Individually and doing business as Lodge # 313 Benevolent and Protective Order of Elks, and Lodge # 313 Benevolent and Protective Order of Elks, Defendants.

Civ. A. No. 73-102-H.

United States District Court, S. D. West Virginia.

December 8, 1977.

COPYRIGHT MATERIAL OMITTED

William J. Kilberg, Dept. of Labor, Washington, D. C., Marvin M. Tincher, Thomas L. Rasnic, U. S. Dept. of Labor, Nashville, Tenn., John A. Field, III, U. S. Atty., Charleston, W. Va., for plaintiff.

Robert H. Burford, Beckett, Burford & James, Huntington, W. Va., Edward W. McCabe, Nashville, Tenn., for defendants.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

HADEN, District Judge.

This civil action was instituted by the Secretary of Labor on September 26, 1973, under the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. § 201, et seq. (hereinafter referred to as the Act), alleging that the Defendants violated certain provisions of the Act and the regulations issued pursuant thereto. Plaintiff seeks judgment permanently enjoining and restraining the Defendants from violating the provisions of the Act, including the restraint of the withholding of payment of any unpaid back wages due the employees of the Defendants. The Defendants deny that they are subject to the provisions of the Act.

There is no substantial issue of fact in conflict between the parties. An extensive stipulation of facts was filed. The only issue before the Court is whether the Defendants are subject to the provisions of the Act.

This action came on for trial before Chief Judge Knapp of this Court, sitting without a jury, on December 18, 1975. The case was reassigned to this Judge for disposition. The Court, having considered the complete record in this case, including the exhibits, pleadings, depositions, stipulations and oral testimony, and the memoranda and arguments of counsel, hereby makes the following findings of fact and conclusions of law:

FINDINGS OF FACT

1. The Plaintiff in this action is Ray Marshall, Secretary of Labor, successor to John T. Dunlop, resigned, and is duly empowered to administer and enforce the Fair Labor Standards Act, as amended.

2. Defendant, Lodge 313 Benevolent and Protective Order of Elks (hereinafter the Lodge), is an unincorporated association existing under and by virtue of the laws of the State of West Virginia. The Defendant, Elks Club of Huntington, Inc. (hereinafter the Club), is a corporation incorporated in the State of West Virginia. The principal location of both the Club and the Lodge is 1015 Fourth Avenue, Huntington, Cabell County, West Virginia, within the jurisdiction of this Court.

3. The Defendants have employed and are employing many employees in and about their aforesaid place of business in regularly ordering, receiving, storing, handling, selling and otherwise working on food, beverages, goods, supplies and materials, produced by and received from sources outside the State of West Virginia.

4. Plaintiff seeks back wages from the Defendants for the period beginning September 26, 1970, until November 30, 1974. Prior to September 26, 1970, Defendants were aware that Plaintiff contended that the provisions of the Fair Labor Standards Act were applicable to them, but the Defendants have always denied that coverage of the Act extended to them.

5. Prior to April 1, 1971, the Club and the Lodge did not have a combined annual dollar volume of sales or receipts in excess of $250,000 (exclusive of excise taxes at the retail level which are separately stated). Subsequent to April 1, 1971, the Defendants had a combined annual dollar volume of sales or receipts in excess of $250,000 (exclusive of excise taxes at the retail level which are separately stated). Neither the Club nor the Lodge had separate sales or receipts amounting to as much as $250,000 at any time material since April 1, 1971. At all times since prior to September 26, 1970, the annual dollar volume of sales made or business done by the Benevolent and Protective Order of Elks of the United States (hereinafter BPOE) has been substantially in excess of $1,000,000.

6. The Lodge is a local lodge of the BPOE, and, as such, is a part of a national fraternal organization which was incorporated on June 19, 1895, in the District of Columbia. The administrative body of the BPOE is known as the Grand Lodge. The membership of the Grand Lodge consists of the Exalted Rulers of all local lodges, past Grand Exalted Rulers in good standing, past Exalted Rulers in good standing, officers, members of committees and District Deputy Grand Exalted Rulers. An Exalted Ruler is the highest elected officer of a local lodge.

7. The purposes of the organization as stated in the Preamble to its Constitution are:

"To inculcate the principles of Charity, Justice, Brotherly Love and Fidelity; to promote the welfare and enhance the happiness of its members; to quicken the spirit of American patriotism; to cultivate good fellowship; to perpetuate itself as a fraternal organization, and to provide for its government . . .."

8. The activities of the Lodge are fraternal, social and charitable. Its receipts are from dues, initiation and affiliation fees, social activity charges, interest on deposits and charitable contributions by members earmarked for specific purposes. The Club is engaged in the business of operating a private bar and restaurant. Its receipts are from sales to members and their guests, interest on deposits and rent from the Lodge. Members in good standing of the Lodge are also members of the Club. Suspension from the Lodge results in automatic suspension from the Club, but suspension from the Club does not result in suspension from Lodge activities.

9. The Club and Lodge occupy the same premises, with certain areas of the building designated as "Lodge" activity areas and other areas as "Club" activity areas. The Club and Lodge have the same telephone listing, the same utility bills, a common entrance into the facilities, common service entrance, and the same bylaws. The Club and Lodge hold a single Consumers' Sales and Service Tax Certificate of Registration from the State of West Virginia. The Club and Lodge file a single income tax return, which return is filed on a Department of Treasury, Internal Revenue Service Form 990 return. This is a tax return which can be filed only by an organization exempt from income tax as a nonprofit organization under section 501(c) of the Internal Revenue Code. The Club and Lodge use the same "Employer Identification Number" for income tax purposes, and the Club issues all W-2 Forms to employees, including employees who are supposed to be employees of the Lodge. The budget of both the Club and the Lodge is voted on and approved at a meeting of the Lodge.

10. According to the By-Laws of the Lodge at Article IX, the operation, control, management and ultimate authority of all Club activities are subject to the control of the Lodge membership. Audit reports show that the Lodge's audit committee files a combined report of the audit performed on the Club and Lodge business. The Club and Lodge have common insurance policies which insure both Defendants from losses as specified in the policies.

11. On October 21, 1971, and February 8, 1973, the Lodge members voted to transfer from the Lodge's accounts to the Club's checking account $15,000.00 and $20,000.00, respectively. These transfers were made so that the Club could pay its bills. The audit reports filed annually by the Lodge lists all property including stocks, bonds, real estate, furniture and fixtures as property of the Lodge.

12. The "Membership Control Manual" issued by the Grand Lodge BPOE, states:

At page 8, "It is the fraternal duty of the Lodge in the jurisdiction of which the `stray' Elk lives to offer him the hand of fellowship and to invite the `stray' Elk to participate in both the Club and Lodge activities. This program, if enthusiastically followed by a Lodge, will not only prevent many `stray' Elks from dropping their membership but also will produce many excellent members for the Lodge."

At page 22, "After Lodge closes, the new member's proposer or a friend assigned by the Committee on Indoctrination, should take the Brother into the Club rooms and see that he is introduced to as many of the members present as possible. He should meet the steward and have an explanation of the various card games played or other social activities enjoyed by the members. This evening, and the next few meeting nights, will largely determine the new member's attendance habit. If he is made to feel at home and real part of his Lodge, he will likely attend Lodge frequently and be an enthusiastic worker. This part of the indoctrination program cannot be stressed too strongly."

13. The day-to-day activities of the Club are under the supervision and conduct of its Board of Directors. The Board of Directors of the Club and the Board of Trustees of the Lodge have been the same persons since March 22, 1974. Prior to that date, the Board of Directors of the Club consisted of the Lodge's Exalted Ruler and Esteemed Leading Knight (the Lodge's principal officers), three members at large from the Lodge and a chairman and secretary who were also Lodge members. The Board of Directors of the Club are elected at Lodge meetings from time to time as vacancies occur. Under the present bylaws, the Lodge members elected as trustees of the Lodge, the Exalted Ruler and Esteemed Leading Knight become the Board of Directors of the Club without formal election. The Board of Directors of the Club and the Board of Trustees of the Lodge meet separately and on different nights.

14. Jackie S. Maynard, bookkeeper, regularly performs work for both the Club and the Lodge and is compensated by both. The duties of Mrs. Maynard on behalf of the Club include checking petty cash each day, making bank...