Marshall v. Whitehead, No. 75-6-Civ-Ft.M-Y.

CourtUnited States District Courts. 11th Circuit. United States District Court of Middle District of Florida
Writing for the CourtGEORGE C. YOUNG
Citation463 F. Supp. 1329
PartiesRay MARSHALL, Secretary of Labor, United States Department of Labor, Plaintiff, v. Howard WHITEHEAD and James Whitehead, Defendants.
Docket NumberNo. 75-6-Civ-Ft.M-Y.
Decision Date19 May 1978

463 F. Supp. 1329

Ray MARSHALL, Secretary of Labor, United States Department of Labor, Plaintiff,
v.
Howard WHITEHEAD and James Whitehead, Defendants.

No. 75-6-Civ-Ft.M-Y.

United States District Court, M. D. Florida, Fort Myers Division.

May 19, 1978.


463 F. Supp. 1330
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463 F. Supp. 1331
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463 F. Supp. 1332
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463 F. Supp. 1333
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463 F. Supp. 1334
James H. Woodson, Counsel for Employment Standards, Dept. of Labor, Atlanta, Ga., for Department of Labor

George E. Allen, Allen, Knudsen, Swartz, DeBoest, Rhoads & Edwards, P.A., Fort Myers, Fla., for defendants.

MEMORANDUM OPINION

GEORGE C. YOUNG, Chief Judge.

This action is brought by the Secretary of Labor, under Section 17 of the Fair Labor Standards Act, 29 United States Code, Section 217, to enjoin the defendants, Howard

463 F. Supp. 1335
Whitehead and James Whitehead, doing business as Whitehead Farms, from allegedly violating the overtime1 and record keeping provisions2 of the Act, and to restrain the defendants from withholding wages and compensation allegedly due certain employees. The Court has jurisdiction of the parties and the subject matter of this action pursuant to 29 United States Code, Section 217

The matter was tried before the Court without a jury solely on the issue of whether defendants' employees are covered under the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. Sections 201, et seq. As established by pretrial order of the Court, if the Court's determination upon the evidence presented on the liability issue is that defendants are covered by the Act, then a subsequent hearing will be held for presentation of evidence concerning the remaining issues of whether defendants also violated the record keeping provisions of the Act, whether the violations were willful, and to establish the amounts of overtime compensation owed to defendants' employees.

Basically, the defendants conduct a local fill dirt operation, hauling and dumping fill dirt obtained from local borrow pits, base rock, and other materials to contractors, developers, and other individuals for use on various construction projects. The defendants also perform clearing, spreading, and grading services in connection with their fill dirt operations.

In the course of their operations, the defendants employ individuals as mechanics, truck drivers, equipment operators (pan, loader, grader, dragline), mechanic's helpers, laborers and a bookkeeper. The parties stipulated that for the time period under consideration, the defendants' employees received and handled locally purchased petroleum products, including gas and oil, and mechanical parts used in the maintenance and repair of the vehicles and equipment used in defendants' business, which had travelled in interstate commerce.

The action arises under Section 7(a)(1) of the Act which prohibits an employee working more than 40 hours in a workweek unless the employee is paid time and one-half for the hours worked in excess of 40. Specifically, the issue for resolution in the liability phase of this case is whether the defendants' operation constitutes an enterprise engaged in commerce or in the production of goods for commerce.

For the greater part of the time period involved in this case,3 the relevant statutory provisions provided as follows:

Section 203(r) defines:

"`Enterprise' as the related activities performed (either through unified operation or common control) by any person or persons for a common business purpose."

Section 203(s) defines:4

"`Enterprise engaged in commerce or in the production of goods for commerce' as an enterprise which has employees engaged in commerce or in the production of goods for commerce, including employees handling, selling, or otherwise working on goods that have been moved in or produced for commerce by any person, and which . . . is an enterprise . . . whose annual gross volume of sales made or business done is not less than $250,000 . . ."

Section 203(b) defines:

"`Commerce' as trade, commerce, transportation, transmission, or communication among the several States or between any State and any place outside thereof."
463 F. Supp. 1336

Section 203(i) defines:

"`Goods' as goods (including ships and marine equipment), wares, products, commodities, merchandise, or articles or subjects of commerce of any character, or any part or ingredient thereof, but does not include goods after their delivery into the actual physical possession of the ultimate consumer thereof other than a producer, manufacturer, or processor thereof."

Section 203(j) defines:

"`Produced' as produced, manufactured, mined, handled, or in any other manner worked on in any State; and for the purposes of this chapter an employee shall be deemed to have been engaged in the production of goods if such employee was employed in producing, manufacturing, mining, handling, transporting, or in any other manner working on such goods, or in any closely related process or occupation directly essential to the production thereof, in any State."

The parties stipulated that for each of the years in question in this case, the defendants' operations had gross business done in excess of $250,000. Moreover, the defendants admitted in the pretrial stipulation, and the Court finds also from the evidence at trial, that at all times since June 1, 1972, the defendants have been through unified operation and common control, engaged in the performance of related activities for a common business purpose. Defendants' operations therefore constitute an "enterprise" within the meaning of Section 3(r) of the Act.

The initial question for determination by the Court therefore is whether the defendants' enterprise had employees engaged in commerce or in the production of goods for commerce within the meaning of Section 3(s) of the Act for the various time periods involved. As this Court construes the effect of the statutory language, resolution of this question depends upon the time period under consideration.

I. POST 1974 AMENDMENTS

The Secretary alleges continuing violations of the provisions of the Act by defendants for the entire period from June 1, 1972 through the filing of this action on January 27, 1975. Of critical importance to the determination of whether defendants' operation constituted an "enterprise engaged in commerce or in the production of goods for commerce" by virtue of employing persons who were engaged in commerce or the production of goods for commerce within the meaning of Section 3(s) of the Act, is the date of May 1, 1974—the effective date of the 1974 amendments5 to the F.L.S.A.

As amended in 1974, Section 203(s) reads:6

"`Enterprise engaged in commerce or in the production of goods for commerce' means an enterprise which has employees engaged in commerce or in the production of goods for commerce, or employees handling, selling, or otherwise working on goods or materials that have been moved in or produced for commerce by any person . . . ." (emphasis added)

The Secretary contends that as a result of the 1974 amendments, the activities of certain of defendants' employees in handling petroleum products, tires and mechanical parts used in fueling, lubricating and maintaining defendants' trucks and equipment, which, although purchased locally, previously moved in interstate commerce, are sufficient to give rise to the application of enterprise coverage to defendants' operations subsequent to the effective date of the amendments. Consequently, plaintiff contends that even if the materials are "consumed" by defendants in their business, subsequent to May 1, 1974, defendants are clearly subject to the overtime and record keeping provisions of the act and liable for violations thereof. Dunlop v. Industrial America Corp., 516 F.2d 498, nn. 8, 9 (5th Cir. 1975); Brennan v. Jaffey, 380 F.Supp. 373, 377-79 (D.Del.1974).

463 F. Supp. 1337

The defendants attempt to rely on the "ultimate consumer" exception in the definition of "goods"7 to remove them from coverage under the expanded definition of "enterprise engaged in commerce or production of goods for commerce" in Section 3(s), contending that all such materials used are for use solely by defendants and are not passed on to any customers. Brennan v. Jaffey, 380 F.Supp. 373 (D.Del.1974). This however, fails to take into consideration the specific addition of the words "or materials" in the broadened definition of enterprise contained in the amended Section 3(s).

The effect on employers of the modification of Section 3(s) was clearly defined by the district court in Brennan v. Jaffey, 380 F.Supp. 373 (D.Del.1974) wherein the court stated:

"In the absence of any enlightenment as to what Congress intended to accomplish in 1974 when it amended Section 203(s) to include `materials', the amendment would be ambiguous at best. Nowhere in the Act are `materials' defined in express terms. Section 203(i), however, defines `goods' to include `articles or subjects of commerce of any character'. This broad definition seemingly encompasses `materials' and equates `goods' and `materials' as meaning the same thing. However, the Senate Report of the Fair Labor Standards Amendments of 1974, Sen. Rep. No. 93-690, 93d. Congress, 2d Sess., purports to explain why `materials' was written into Section 203(s) in 1974 at p. 17:
`The bill also adds the words "or materials" after the word "goods" to make clear the Congressional intent to include within this additional basis of coverage the handling of goods consumed in the employer's business, as, e. g., the soap used by a laundry. The "handling" language was added based on a retrospective view of the effect of substandard wage conditions.' . .
The 1974 Report . . . is of considerable significance in ascertaining what was intended when the amendment became effective May 1, 1974, by inserting the word `materials' in Section 203(s). It clearly
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11 practice notes
  • Cruz v. Chesapeake Shipping Inc., Civ. A. No. 89-366-JLL.
    • United States
    • United States District Courts. 3th Circuit. United States District Court (Delaware)
    • May 17, 1990
    ...Inc., 603 F.2d 1122, 1124 (5th Cir.1979); Donovan v. Micro-Chart Co., 653 F.Supp. 1159, 1163 (S.D.Ohio 1986); Marshall v. Whitehead, 463 F.Supp. 1329, 1358 (M.D.Fla. 1978). There is no evidence in the record showing that the enterprise of transporting oil from the Middle East to Europe and ......
  • Diaz v. Jaguar Restaurant Group, LLC, Case No. 08-22317-CIV.
    • United States
    • United States District Courts. 11th Circuit. United States District Courts. 11th Circuit. Southern District of Florida
    • June 22, 2009
    ...consumer limitation, for enterprise coverage purposes, were not as relevant after the 1974 Amendments. See Marshall v. Whitehead, 463 F.Supp. 1329 (M.D.Fla.1978) (Young, J.). With apologies to the reader, we quote the discussion liberally here to develop the context and demonstrate how well......
  • Archie v. Grand Cent. Partnership, Inc., No. 95 CIV. 0694(SS).
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • March 18, 1998
    ...1982); Marshall v. Davis, 526 F.Supp. 325 (M.D.Tenn.1981); Marshall v. Baker, 500 F.Supp. 145 (N.D.N.Y.1980); Marshall v. Whitehead, 463 F.Supp. 1329 The Report states: In addition to expanding coverage, the bill amends section 3(s) by changing the word Page 530 "including" to "or" to refle......
  • Donovan v. Kentwood Development Co., Inc., Civ. A. No. J-81-708.
    • United States
    • United States District Courts. 4th Circuit. United States District Court (Maryland)
    • June 29, 1982
    ...it based on the legislative report cited above. Brunner, 668 F.2d at 751-52; Davis, 526 F.Supp. at 326-31; Marshall v. Whitehead, 463 F.Supp. 1329, 1336-38 (M.D.Fla.1978). The legislative history is brief concerning the reason for the 1974 amendment but rather clear that Congress intended t......
  • Request a trial to view additional results
11 cases
  • Cruz v. Chesapeake Shipping Inc., Civ. A. No. 89-366-JLL.
    • United States
    • United States District Courts. 3th Circuit. United States District Court (Delaware)
    • May 17, 1990
    ...Inc., 603 F.2d 1122, 1124 (5th Cir.1979); Donovan v. Micro-Chart Co., 653 F.Supp. 1159, 1163 (S.D.Ohio 1986); Marshall v. Whitehead, 463 F.Supp. 1329, 1358 (M.D.Fla. 1978). There is no evidence in the record showing that the enterprise of transporting oil from the Middle East to Europe and ......
  • Diaz v. Jaguar Restaurant Group, LLC, Case No. 08-22317-CIV.
    • United States
    • United States District Courts. 11th Circuit. United States District Courts. 11th Circuit. Southern District of Florida
    • June 22, 2009
    ...consumer limitation, for enterprise coverage purposes, were not as relevant after the 1974 Amendments. See Marshall v. Whitehead, 463 F.Supp. 1329 (M.D.Fla.1978) (Young, J.). With apologies to the reader, we quote the discussion liberally here to develop the context and demonstrate how well......
  • Archie v. Grand Cent. Partnership, Inc., No. 95 CIV. 0694(SS).
    • United States
    • United States Courts of Appeals. United States Court of Appeals (5th Circuit)
    • March 18, 1998
    ...1982); Marshall v. Davis, 526 F.Supp. 325 (M.D.Tenn.1981); Marshall v. Baker, 500 F.Supp. 145 (N.D.N.Y.1980); Marshall v. Whitehead, 463 F.Supp. 1329 The Report states: In addition to expanding coverage, the bill amends section 3(s) by changing the word Page 530 "including" to "or" to refle......
  • Donovan v. Kentwood Development Co., Inc., Civ. A. No. J-81-708.
    • United States
    • United States District Courts. 4th Circuit. United States District Court (Maryland)
    • June 29, 1982
    ...it based on the legislative report cited above. Brunner, 668 F.2d at 751-52; Davis, 526 F.Supp. at 326-31; Marshall v. Whitehead, 463 F.Supp. 1329, 1336-38 (M.D.Fla.1978). The legislative history is brief concerning the reason for the 1974 amendment but rather clear that Congress intended t......
  • Request a trial to view additional results

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