Shultz v. Arnheim and Neely, Inc.
| Citation | 324 F. Supp. 987 |
| Decision Date | 06 October 1969 |
| Docket Number | Civ. A. No. 67-1202. |
| Parties | George P. SHULTZ, Secretary of Labor, United States Department of Labor, Plaintiff, v. ARNHEIM AND NEELY, INC., a corporation, Defendant, and The Institute of Real Estate Management of the National Association of Real Estate Boards, Intervener. |
| Court | U.S. District Court — Eastern District of Pennsylvania |
COPYRIGHT MATERIAL OMITTED
Louis Weiner, Regional Solicitor U. S. Department of Labor, Philadelphia, Pa., Richard L. Thornburgh, U. S. Atty., Pittsburgh, Pa., for plaintiff.
Eugene B. Strassburger, Jr., Strassburger & McKenna, Pittsburgh, Pa., for defendant.
Frank L. Seamans, Eckert, Seamans & Cherin, Pittsburgh, Pa., for intervener.
By his Complaint, plaintiff, Secretary of Labor of the United States Department of Labor, seeks injunctive relief to enjoin alleged violations of Sections 15 (a) (2) and 15(a) (5) of the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. §§ 215(a) (2), 215(a) (5).
Defendant, Arnheim and Neely, Inc., is a Pennsylvania corporation engaging in real estate management, brokerage sales, real estate appraisals, insurance sales, and miscellaneous other real estate management activities. It answered the Complaint denying salient allegations thereof.
On January 17, 1968, the Institute of Real Estate Management of the National Association of Real Estate Boards filed a motion to intervene as a defendant under Rule 24 of the Federal Rules of Civil Procedure, Fed.R.Civ.P. 24. On January 13, 1969, "by agreement of the parties," the Court granted the Motion "* * * with the understanding that litigation will not be extended beyond the facts relating to the business operations of defendant Arnheim and Neely, Inc. during the relevant period." Intervener answered the Complaint on January 17, 1968, denying salient allegations thereof.
On December 19, 1968, the parties filed a lengthy Stipulation hereinafter abbreviated "Stip." 1.1 On March 20, 1969, plaintiff moved for summary judgment "* * * on the ground that the stipulation of the parties filed herein and the pleadings show that no genuine issue of material fact exists * * * and that the plaintiff is entitled to judgment as a matter of law." On April 9, 1969, defendant and intervener moved for summary judgment asserting lack of a contested factual issue and demanding judgment as a matter of law.2
According to the Stipulation, defendant, since January 1, 1963, has managed nine buildings in the Greater Pittsburgh area.3 Stip. ¶ 204 Defendant owns none of these buildings. Stip. ¶ 2084 Its rentals and sales are performed by approximately fourteen employees on defendant's payroll. Stip. ¶ 210 The case at bar concerns "persons employed in maintenance, custodial and operational activities at the buildings managed by the defendant. * * *" Stip. ¶ 2
The Stipulation sets forth issues formulated from the pleadings. Stip. ¶ 18 This Opinion will review these issues of law so tendered.
"Are the various persons employed in maintenance, custodial and operational activities at the buildings managed by the defendant `employees' of the defendant within the meaning of the Act?" Stip. ¶ 2
Paragraph 303 of the Stipulation asserts:
"In the management and maintenance of the managed properties, Arnheim and Neely, Inc., at all times acting pursuant to their contracts with the building owners, engages in the following:
a) Arnheim and Neely, Inc. hires all labor and employees required for the operation and maintenance of the managed premises. The hiring and pay of the building superintendents are occasionally subject to approval of the building owners.
b) Arnheim and Neely, Inc. discharges all labor and employees required for the operation and maintenance of the managed premises.
c) Arnheim and Neely, Inc. supervises all labor and employees required for the operation and maintenance of the managed premises.
d) Arnheim and Neely, Inc. provides a managerial person (separate and apart from the building superintendent) in regard to most, if not all of the managed properties.
e) Arnheim and Neely, Inc. schedules the hours to be worked by all persons engaged at the managed properties.
f) Arnheim and Neely, Inc. determines the rates of pay of all employees engaged at the managed properties, subject to approval of building owners without exception. * * *
g) Arnheim and Neely, Inc. determines the method of payment of all persons engaged at the managed properties, subject to union agreement, if any.
h) Arnheim and Neely, Inc. establishes fringe benefits for all persons engaged at the managed properties, subject to owner's approval.
i) Arnheim and Neely, Inc. negotiates union contracts in regard to those persons engaged at the managed properties who are union members. * * *
j) Arnheim and Neely, Inc. prepares the payroll for all persons engaged at the managed properties.
k) All persons engaged at the managed properties are paid by means of Arnheim and Neely, Inc. checks, drawn on the appropriate owner's account.
l) Persons on Arnheim and Neely, Inc's sic staff are assigned managerial responsibility for one or more of the particular buildings.
m) Arnheim and Neely, Inc., through its staff manager or through the building superintendent, assigns the persons engaged at the buildings to the various required duties and supervises the performance thereof.
n) Promotions or reductions in rank and increases or decreases in pay as to the persons engaged at the managed buildings are determined by Arnheim and Neely, Inc., subject to owner's approval.
o) Arnheim and Neely, Inc. makes legal deductions, including Income Tax, Social Security, etc., from the pay checks of all persons engaged at the managed buildings.
p) The `Contract for Management' (Exhibit 1 to the Stipulation) provides, with respect to the managed buildings, `that all employees shall be deemed the employees of the OWNER and not the AGENT.'"
Elsewhere in the Stipulation, it is asserted that "each building owner has separate employer's identification numbers for federal, state, and city payroll taxes." Stip. ¶301(g)
Section 3 of the Fair Labor Standards Act defines the following terms:
* * * * * *
"(d) `Employer' includes any person acting directly or indirectly in the interest of an employer in relation to an employee * * *." 29 U.S.C. § 203(d).
"(e) `Employee' includes any individual employed by an employer." 29 U.S.C. § 203(e).
In Greenberg v. Arsenal Bldg. Corp., 50 F.Supp. 700 (S.D.N.Y.1943), aff'd per curiam 144 F.2d 292 (2 Cir. 1944), rev'd in part on other grounds sub nom Brooklyn Sav. Bank v. O'Neil, 324 U.S. 697, 65 S.Ct. 895, 89 L.Ed. 1296 (1945), where suit was brought against a building rental agent, both the District and the Circuit Court held the defendant to be an "employer" within the meaning of the Act.5
Viewed broadly, the relationship described in the Stipulation between defendant and the employees comports with the statutory standard of employer-employee. See United States v. Silk, 331 U.S. 704, 67 S.Ct. 1463, 91 L.Ed. 1757 (1947). It remains only to review certain aspects peculiar to this relationship to determine whether or not they require a contrary determination.
In Bartels v. Birmingham, 332 U.S. 126, 67 S.Ct. 1547, 91 L.Ed. 1947, 172 A.L.R. 317 (1947), band leaders resisted liability to their musicians on the grounds, inter alia, that the leaders' contracts with ballroom operators specified that the musicians were to be regarded as employees of the operators rather than of the leader. The agreements also required filing of various social security taxes by the operators. Notwithstanding these features, the Supreme Court, reversing the Circuit Court's judgment, held the leaders liable.
The sole remaining element to be considered is the reservation by the owners of a right to review certain of defendant's determinations regarding the management of its building. It may well be that these provisions vest the owners with certain control over the employees. However, the Act recognizes the concept of joint employment. Mitchell v. John R. Cowley & Bro., Inc., 292 F.2d 105 (5 Cir. 1961); Wirtz v. Hebert, 368 F.2d 139 (5 Cir. 1966); Mid-Continent Pipe Line Co. v. Hargrave, 129 F.2d 655 (10 Cir. 1942). Although the proprietors of the individual buildings may perhaps be deemed employers, Wirtz v. Columbian Mutual Life Ins. Co., 246 F.Supp. 198, 201 (W.D.Tenn.1965), this circumstance does not foreclose treating defendant as an employer within the meaning of the Act.
Defendant contends that Congress' adoption of the "enterprise" formula in 1961 requires a new test for determining the employer-employee relationship. We cannot agree. The Fair Labor Standards Amendment of 1961, Pub.L. 87-30; 75 Stat. 65 (U.S.Code Cong. & Adm.News 1961, p. 71 et seq.), changed the bases of the prior provision limiting coverage to employees "engaged in commerce or in the production of goods for commerce" and provided coverage to all employees in an "`enterprise' engaged in commerce or production for commerce." Maryland v. Wirtz, 392 U.S. 183, 185, 186, 88 S.Ct. 2017, 20 L.Ed.2d 1020 (1968). The 1961 amendments were unaccompanied by any modification in the definition of "employee", "employer" or "employment."6 The decisional law reflects no change in the pre-1961 principle utilized for determining the employer-employee relationship.
Defendant relies on the statement in Bartels v. Birmingham, supra: "* * * In the application of social legislation employees are those who as a matter of economic reality are dependent upon the business to which they render service." 332 U.S. 130, 67 S.Ct. 1550. It contends that the business to which they render service is the building rather than plaintiff.
The statement in Bartels must be interpreted in the light of the judicial history construing the term "employee." As described in Illinois Tri-Seal Products, Inc. v. United States, 353 F.2d...
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