Richter v. Barrett

• Decision Date: 18 February 1949
• Docket Number: No. 9641.,9641.
• Parties: RICHTER v. BARRETT.
• Court: U.S. Court of Appeals — Third Circuit

173 F.2d 320 (1949)

RICHTER v. BARRETT.

No. 9641.

United States Court of Appeals Third Circuit.

Argued November 5, 1948.

Decided February 18, 1949.

Benjamin A. Katz, of Philadelphia, Pa., for appellant.

Roy Pressman, of Philadelphia, Pa., for appellee.

Before BIGGS, Chief Judge, and McLAUGHLIN and KALODNER, Circuit Judges.

McLAUGHLIN, Circuit Judge.

This is an appeal from a judgment in favor of the employer on appellant's amended claim for $1,452.60 unpaid overtime compensation, an equal amount of liquidated damages, and a counsel fee, pursuant to Section 16(b) of the Fair Labor Standards Act of June 25, 1938, 52 Stat., 1060, 1069, 29 U.S.C.A. § 216(b). The lower court held that appellant was an executive under the provisions of Section 541.1 of the Regulations of the Administrator of the Wage and Hour Division of the Department of Labor and consequently excluded from the coverage of the Act. It is not now disputed that the employee was engaged in interstate commerce and that the appellant was engaged in the production of goods for interstate commerce.

Though the testimony was confusing and sharply contradictory in many respects, there was evidence to support the following general outline. On March 6, 1944 appellee was the owner of a Philadelphia janitor supply business. His principal establishment was on Sansom Street, but he also used a garage property on Chancellor Street about 400 feet from the Sansom Street address. Through his business he had contacts with various war plants and had obtained some machine shop work from them. This consisted of bending tubing and the like, which he had been having done for him by somebody in New York. Then, he said, "Mr. Richter came into the picture." Richter had been superintendent of maintenance at Brewster Aircraft. Barrett said he gave him $65 a week to start, raising this to $75 within two weeks, although this latter is disputed. For about ninety days Richter was busy trying to obtain tools and going around with Barrett seeking business. By late May or early in June work was started in the garage. According to Barrett, all during the period that the work continued in the garage, Richter had two full time men under him, except "just in the beginning", and on occasion had three or four. Barrett said that Richter's work was strictly supervision, that he "did not employ Richter to do manual labor." In December 1944 the shop moved to larger quarters on Haverford Avenue. John Ford, a witness on behalf of the appellant who was hired by Richter and who worked at both Chancellor Street and Haverford Avenue, in response to the court's question as to how many men were employed on machine work in the Haverford Avenue plant, said, "* * * about seven, maybe, or more on production work."

The evidence leaves no real doubt as to appellant's authority to hire or fire the other production employees. On cross examination he was asked, "Did you hire or fire employees who worked under you?" He answered, "With Mr. Barrett's knowledge, yes. I never fired anybody." Richter undoubtedly did considerable manual labor himself, but in addition the testimony is substantial that he was in charge of the operations of the machine shop both at Chancellor Street and later at Haverford Avenue.¹ There is evidence that Barrett visited the shop daily and that Richter talked with him frequently on the telephone. Barrett, however, knew nothing about the work itself. His main job was developing the business. Two executive employees of Barrett in his janitor supply business said they were in the shop frequently. One of them bent tubes on occasion after Richter had shown him how. The other, who was in charge of Barrett's janitor supply warehouse which was also located at the Chancellor Street premises, said that his understanding of Richter's position was that "he was on the same scale with me, the boss in charge * * * of the shop." The record does not reveal that these employees ever interfered with Richter's area of production.

On or about July 12, 1945 Richter refused to permit a mechanic named Daubner to work on a lathe. He quarreled with Barrett over this and because of it severed his connection with the enterprise immediately thereafter. He then sued Barrett in a Pennsylvania state court, alleging his agreement with Barrett was a partnership and that his salary was an advance pending an accumulation of funds. The action resulted unfavorably to Richter, the court holding that the agreement between Barrett and Richter did not constitute a partnership. The present litigation followed. As the trial court noted, "The plaintiff's testimony and, for that matter the whole thing, must be read in the light of the plaintiff's original belief that the relationship between him and the defendant was a partnership."

Whether Richter is within the terms of the Fair Labor Standards Act depends upon Section 13 of that statute, 29 U.S.C.A. § 213, Subsection (a) (1), which reads:

"(a) The provisions of sections 206 and 207 of this title shall not apply with respect to (1) any employee employed in a bona fide executive, administrative, professional, or local retailing capacity, or in the capacity of outside salesman (as such terms are defined and delimited by regulations of the Administrator)".

The applicable regulation of the Administrator of the Wage and Hour Division of the Department of Labor is contained in W & H Regulations, page 10, and that reads:

"Section 541.1 — Executive.

"The term `employee employed in a bona fide executive * * * capacity' in Section 13(a)(1) of the act shall mean any employee —

"(A) whose primary duty consists of the management of the establishment in which he is employed or of a customarily recognized department or subdivision thereof, and

"(B) who customarily and regularly directs the work of other employees therein, and

"(C) who has the authority to hire or fire other employees or whose suggestions and recommendations as to the hiring or firing and as to the advancement and promotion or any other change of status of other employees will be given particular weight, and "(D) who customarily and regularly exercises discretionary powers, and

"(E) who is compensated for his services on a salary basis at not less than $30 per week (exclusive of board, lodging, or other facilities), and

"(F.) whose hours of work of the same nature as that performed by non-exempt employees do not exceed 20 per cent of the number of hours worked in the workweek by the non-exempt employees under his direction; provided that this subsection (F) shall not apply in the case of an employee who is in sole charge of an independent establishment or a physically separated branch establishment."

The "Report and Recommendations of the Presiding Officer at Hearings Preliminary to Redefinition", Wage and Hour Division, with reference to paragraph (F) of the above regulation suggested the ...