Mitchell v. Birkett
| Decision Date | 07 May 1960 |
| Docket Number | Civ. A. No. 1507. |
| Citation | 183 F. Supp. 291 |
| Parties | James P. MITCHELL, Secretary of Labor, United States Department of Labor, Plaintiff, v. M. L. BIRKETT and J. M. Birkett, Individually, and as a Partnership d/b/a The Photo Shop, Defendants. |
| Court | U.S. District Court — Western District of Arkansas |
Earl Street, Regional Atty., Truett E. Bean, Trial Atty, U. S. Dept. of Labor, Dallas, Tex., for plaintiff.
Bethell & Pearce, Fort Smith, Ark., for defendants.
This is an action by the Secretary of Labor to recover wages for five employees of the defendants allegedly due under provisions of the Fair Labor Standards Act of 1938, as amended. 29 U.S.C.A. § 201 et seq. Jurisdiction of this action is conferred upon the court by Section 16(c) of the Act and by 28 U.S.C.A. §§ 1337 and 1345.
It is admitted that the employees were engaged in interstate commerce and in the production of goods for interstate commerce while employed by the defendants during the period in question, and that they were not paid in accordance with the minimum wage and overtime provisions of the Act. As a defense to the action the defendants contend that their business operation was exempt from coverage under the Act by the "retail exemption provision," 29 U.S.C.A. § 213(a). As an additional defense the defendants allege that the action is barred by Section 9 of the Portal-to-Portal Act of 1947, 29 U.S.C.A. § 251 et seq., because of the defendants' good faith reliance upon an official interpretation of the Act by the Administrator.
The complaint was filed October 14, 1959, and includes claims for wages due under both the minimum wage and the overtime provisions of the Act. The Secretary seeks to recover such wages for the period from July 1957 to July 1959. The case was tried to the court without a jury on January 22 and 23, 1960. Briefs have been received from the parties and have been considered along with the testimony and exhibits thereto. The court now files its Findings of Fact and Conclusions of Law, separately stated.
The individual defendants, M. L. Birkett and J. M. Birkett, are brothers, and prior to 1949 became interested in photography. During 1949 Fort Chaffee, a United States Army installation on the outskirts of Fort Smith, Arkansas, was reactivated. The defendants submitted a bid to the Post Exchange for the right to operate the photography concession on the Post. This bid was accepted, and the defendants opened and began the operation in strict accordance with the terms of such a concession. After a few months, Fort Chaffee was deactivated by the Army and the concession was closed. Shortly after the start of the Korean conflict in 1950 the Post was again reactivated and the defendants reopened their photography concession.
The business of the concession was confined to taking pictures of military groups, making portraits of soldiers, and receiving exposed film for processing and printing. The defendants did not have facilities in their shop for developing and printing roll film, and accordingly sent such film to a concern in Memphis, Tennessee, for processing. In 1953, the Post Exchange Officer demanded that the defendants provide one-day service in processing roll film for the soldiers. This necessitated the defendants' acquiring photo-finishing equipment. The quarters provided by the Army on the Post were not large enough to house such equipment and additional space on the Post was not available. Therefore, in 1953 the defendants rented additional space in the City of Fort Smith and installed the required photo-finishing equipment therein. In addition, the Fort Smith location stocked cameras and camera equipment which the Fort Chaffee concession was prohibited from selling. Both locations operated under the name "The Photo Shop," and both were owned and operated by the defendants as partners. The Fort Smith operation has always been located in retail shopping areas and is open for business to the general public.
All roll film turned in at the Fort Chaffee concession by soldiers was processed in the Fort Smith shop. Film was also processed there for the general public. In addition, film was processed on a wholesale basis for some 50 drug stores located in and around Fort Smith and including some stores in Oklahoma. The drug stores so involved collected exposed roll film from its customers and delivered it to the Fort Smith shop where it was processed and returned to the drug stores. The drug stores received a discount from the shop and were thereby able to make a profit on the transaction. Such sales to drug store accounts constituted sales for resale.
The photo concession located at Fort Chaffee was managed by J. M. Birkett while M. L. (Milton) Birkett managed the Fort Smith shop. As an added convenience to military personnel on the Post, boxes for exposed film were placed in each Post Exchange. The soldiers could place exposed roll film, along with a designated developing charge, in sacks provided by the defendants and then deposit the sacks in the locked boxes. The film was picked up daily and processed at the Fort Smith location and returned the following day to the individual soldiers. This type sale is designated on the sales analysis hereafter discussed as "Fort Chaffee Sales (PX)." Such sales were not sales for resale.
Financial records of the Fort Chaffee concession were kept separate from the Fort Smith shop, and the Fort Chaffee concession was charged monthly for the film processed by the Fort Smith shop. This was required by the provisions of the defendants' contract with the Post Exchange under which the Post Exchange received a specified percentage of the gross profits of the concession as rent on the building and for the license to do business on the Post. Also, all records concerning the consession operation were required to be available for Government audit.
During the period in question, July 1957 to July 1959, the major portion of the income of the defendant partnership was derived from the operation of the concession at Fort Chaffee. The sales made by the Fort Chaffee concession were sales to individual soldiers and were not sales for resale.
The Fort Smith shop sold all types of camera equipment and supplies. The vast majority of such sales were to individual customers, although occasionally some camera equipment was sold to drug store accounts at a discount. The Fort Smith store likewise did much retail photo developing and finishing for its retail customers, and in addition had photographers available to take pictures at weddings, parties, etc. This latter function is designated as "commercial" in the sales analysis hereafter quoted and was not a sale for resale.
All roll film received by the Fort Smith location for processing was returned in one day. The volume of photo finishing performed by the defendants varied with the season and even with the days of the week. The heaviest volume of business was concentrated during the summer months and during holiday seasons. Likewise, Monday and Tuesday of any week produced a higher volume of business due to customers taking pictures on weekends.
The employees involved in this suit were all employed by the defendants at the Fort Smith location between July 1957 and July 1959. Some of them were employed during the entire period, and others worked only a portion of the time. Two of the employees still work for the defendants. All of the affected employees have made written requests to the Secretary of Labor to bring this action on their behalf. Some of the employees concerned in this action operated the photo-finishing equipment in the rear of the shop, while others were employed in the front of the store to wait on the customers. The duties of those who worked in the front of the store included preparing colored film for shipment to processing laboratories in New York and in Oklahoma. Admittedly, all of the affected employees were engaged in interstate commerce or in the production of goods for interstate commerce. All of the employees concerned in this case were paid by the week, and were not paid in accordance with the minimum wage and overtime provisions of the Fair Labor Standards Act.
A customary work week was 48 hours, consisting of six 8-hour days. There was conflict in the testimony as to whether the employees were sent home early during slack periods, but in view of the result reached in the case it is not necessary for the court to make detailed findings as to the number of hours worked each week by the complaining employees.
The concession at Fort Chaffee and the shop at Fort Smith were component parts of the business enterprise. They were owned by the same partnership, and salesmen working for the defendants solicited business for both establishments. The primary reason for the establishment of the Fort Smith operation was to provide space for processing film turned in at the Fort Chaffee concession. The Fort Chaffee concession could not have operated without the Fort Smith shop. The two locations were operated as a single integrated business venture with each being dependent upon the other during the period involved in this lawsuit.
The fiscal year of The Photo Shop is from July 1 to June 30. The following figures reflect the sales of The Photo Shop, including the Fort Chaffee concession, for the periods indicated:
Fiscal 1957 Fiscal 1958
(July 1957- (July 1958-
Retail Sales Breakdown June 1958) June 1959)
Commercial (taking pictures
of weddings, etc.) 0 $ 762.78
Cameras and equipment
(sales to consumers) $ 7,525.99 16,588.17
Film and flash bulbs
(sales to consumers) 4,950.84 8,048.64
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...two-year period prior to the filing of a complaint. (Hodgson v. Behrens Drug Company, supra, 475 F.2d 1041, 1050; Mitchell v. Birkett (W.D.Ark.1960) 183 F.Supp. 291, 296; see Shandelman v. Schuman (E.D.Pa.1950) 92 F.Supp. 334, 335.) Likewise, the state Fair Employment Practice Act (§ 1410 e......
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Mitchell v. Birkett
...which incorporates findings of fact and conclusions of law, and fully sets out the facts and the court's view of the law, is reported at 183 F.Supp. 291. The complaint, filed October 14, 1959, sought wage adjustments for the period from July, 1957, to July, 1959. Defendants' operation chang......