Mitchell v. Bekins Van & Storage Company

• Decision Date: 01 March 1956
• Docket Number: No. 14618.,14618.
• Citation: 231 F.2d 25
• Parties: James P. MITCHELL, Secretary of Labor, United States Department of Labor, Appellant, v. BEKINS VAN & STORAGE COMPANY, a Corporation, Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

231 F.2d 25 (1956)

James P. MITCHELL, Secretary of Labor, United States Department of Labor, Appellant, v. BEKINS VAN & STORAGE COMPANY, a Corporation, Appellee.

No. 14618.

United States Court of Appeals Ninth Circuit.

March 1, 1956.

Stuart Rothman, Sol., Bessie Margolin, Asst. Sol., Sylvia S. Ellison, Eugene R. Jackson, Attys., Dept. of Labor, Washington, D. C., Kenneth C. Robertson, Regional Atty., Dept. of Labor, San Francisco, Cal., for petitioner.

Lucien Shaw, William French Smith, Gibson, Dunn & Crutcher, Los Angeles, Cal., for appellee.

Before STEPHENS, FEE and CHAMBERS, Circuit Judges.

CHAMBERS, Circuit Judge.

Bekins pays its employees at its Alameda warehouse in downtown Los Angeles on a basis of 48 hours per week without overtime for work in excess of 40 hours per week. The Secretary of Labor says this is wrong and seeks overtime pay for the employees at this one warehouse because of its high percentage of interstate business at this one place considered alone. Bekins replies that the Alameda warehouse is one of five scattered warehouses in downtown Los Angeles which it operates as a unit known as the East Los Angeles Division. If the one warehouse classifies as an "establishment," the Secretary of Labor is right.¹ If the "establishment" is Bekins unit of five warehouses, he is wrong, because more than half of the total business of the five warehouses is local, intrastate, a service, and possibly retail.

The district court ruled in favor of Bekins and the secretary has appealed.

For a full understanding of the case, one should read the findings of fact and conclusions of law of the district court which are hereinafter set forth as an appendix to this opinion.

For reversal, the secretary relies principally upon Phillips, Inc., v. Walling, 324 U.S. 490, 65 S.Ct. 807, 89 L.Ed. 1095. That was the case of overtime pay for the warehouse employees in one warehouse which received groceries in interstate commerce and distributed them to some of the company's chain stores in Massachusetts and Connecticut. The wage provisions of the Federal Fair Labor Standards Act were held to be applicable and the employees not within any exception.

Naturally, if the Phillips case is apposite, this court must follow it. But, to this court, (and it may be oversimplification to say so) it seems that the rationale of the Phillips case lies in the fact that the warehouse function historically had been that of independent wholesalers or wholesalers independent of retail grocers. The impact of the act was not to be avoided by setting up of an "integration" of wholesale and retail functions. Phillips warehousemen should have the same protection the warehousemen have in warehouses not integrated with the retail selling operation.

This court does not believe Phillips to be necessarily controlling and affirms the trial court. If Phillips holds that if a business is in separate buildings, each building is necessarily an establishment then, of course, this court is wrong. It hardly seems though that Phillips goes that far.

Here the defendant's pattern of business with central control at one of the area warehouses existed before the adoption of the act. No one suggests that Bekins has adjusted its business to try to get around the act. The unit of operation of Bekins seems to be the "division." Doubtless, the secretary would not take the position he does here if the buildings were side by side, although separate. It does not seem unreasonable to consider the five warehouses, generally in downtown Los Angeles within a limited radius, as one establishment.

Geography may well play quite a role. Probably, if the buildings were to be found scattered in San Diego, Los Angeles, Long Beach, Pasadena, Santa Barbara, Bakersfield, San Bernardino, and Riverside (with central control at one office) the trial court's conclusions would be clearly erroneous.

To this court, an important factor here is that if it were not for financial or capital problems and the necessity of using what one has, it would be quite feasible to conduct, and Bekins probably would conduct, the business of the five warehouses in one central warehouse under one roof.

This court believes that, although there is no real dispute on facts, the trial court still was entitled to appraise the facts and make a determination as to which facts really pointed to "one establishment" and which pointed to "separate establishments."

The decision here is simply that it is possible for one business located in several buildings, neither contiguous nor widely scattered, to be one establishment and that the proprietor's unit of operation and control may be considered, in a case like this one, in determining what is an establishment.

Here the trial court found one establishment. The proprietor's historical unit of operation and control were considered. His natural business policy was given weight by the trial court. However, these factors were not used mechanically or given conducive force. These were some of the shadings in a problem of fact.

This court does not join the district court in chiding the Secretary of Labor for bringing the action when the individuals concerned are members of a strong union, the Teamsters, presumably able to protect the men. Bekins and the Teamsters cannot get together and set aside the positive policy of the act.

Affirmed.

Appendix.

Findings of fact and conclusions of law of district court.

"Findings of Fact

"(1) Plaintiff does not contend that any of defendant's warehouses either in the East Los Angeles Division or elsewhere fail to meet the tests of exemption as a retail or service establishment within the meaning of Section 13(a) (2) of the Fair Labor Standards Act, as amended, except only the Alameda warehouse. 22

"(2) The East Los Angeles Division of defendant, including Alameda, is a single establishment within the meaning of section 13(a) (2) of the Fair Labor Standards Act (29 U.S.C., sec. 213(a) (2)), the business activities of which are to be considered together as a unit, and as such an establishment, more than 50 percentum of its annual dollar volume of sales of goods or services is made within the state in which it is located and 75 percentum of its annual dollar volume of sales of goods or services (or of both) is not for resale and is recognized as retail sales or services in the particular industry. Such tests are not met in the case of the Alameda warehouse considered separately.

"(3) All of the employees of defendant's East Los Angeles Division, including those at Alameda, are employed by a retail or service establishment which qualifies with the requirements of section 13(a) (2) of the Fair Labor Standards Act (29 U.S.C., sec. 213(a) (2).

"(4) Defendant is, and has been since 1950, and long prior thereto, a California corporation, having its principal office and place of business located at 1335 South Figueroa Street, Los Angeles, California. The business of defendant includes the moving and storage of household goods, the moving of used office equipment and furniture, the moving of complete offices, stores and commercial and industrial operations, rug cleaning, fur storage, rental of office and building space and storage of commercial goods. Defendant owns approximately 20 per cent of the stock of Bekins Van Lines Co., which is a motor common carrier of household goods throughout the United States.

"(5) Defendant operates 36 warehouses which are grouped in 19 divisions or districts in various cities within the State of California, and at each warehouse employees are regularly engaged in the storage, cartage, packing and shipping of household goods, and each is used as a terminal point for the moving by motor van of household goods both locally and for long distances. All of said warehouses except one regularly engage in the receiving, storing and delivery of commercial goods. Ten of them have railroad sidings. Substantial quantities of the goods handled, packed and stored by defendant at its various warehouses have been, and are being, received from points in other states and outside the United States and have been, and are being, handled, packed, shipped, delivered, transported, and offered for transportation to points in other states and outside the United States.

"(6) The business of defendant was commenced in 1895 in Los Angeles, California. Thereafter, the company grew and expanded principally with respect to moving and storage of household goods until in 1945 it was operating moving and storage warehouse businesses with warehouses in the principal cities in the State of California.

"(7) In 1946 and thereafter until the present time, defendant continued rapid expansion and growth of its business and facilities. It built approximately twenty new warehouses or warehouse additions during that period in many cities in California. It attempted to provide warehouse facilities by new construction to serve rapidly growing and expanding residence neighborhoods.

"(8) In connection with its expansion from its beginning until the present time, it has been the policy of defendant to decentralize its management to the maximum extent possible. It is defendant's belief that moving and storage service can best be provided at its numerous warehouses through a local organization at the various locations which has full responsibility for all phases of the service provided. Defendant has therefore divided its warehouses into 19 divisions or districts, each of which has a district manager in charge who is responsible for all of its operations. In the Los Angeles 24 area, defendant has such district offices in its East Los Angeles Division, its Hollywood District, Beverly Hills District, Compton-Lynwood District, Glendale District, Wilmington District, which includes Hermosa and Redondo; Inglewood District, Long Beach District, San Fernando Valley District, Pasadena District, Santa Ana District and Santa Monica District. The...