Shultz v. Blaustein Industries, Inc.
| Decision Date | 18 January 1971 |
| Docket Number | 20251.,Civ. No. 20250 |
| Parties | George P. SHULTZ, Secretary of Labor, United States Department of Labor, v. BLAUSTEIN INDUSTRIES, INC., a corporation. George P. SHULTZ, Secretary of Labor, United States Department of Labor, v. CHARLES STREET DEVELOPMENT CORPORATION. |
| Court | U.S. District Court — District of Maryland |
COPYRIGHT MATERIAL OMITTED
Marshall H. Harris, Deputy Regional Sol., U. S. Dept. of Labor, Phila., Pa. (Charles Donahue, Sol. of Labor, Louis Weiner, Regional Atty. and Daniel W. Teehan, Atty. U. S. Dept. of Labor, on brief), for plaintiff.
John S. McDaniel, Jr., Morton A. Sacks, and Cable, McDaniel, Bowie & Bond, Baltimore, Md., for defendants.
In these companion actions, which have been consolidated for trial and heard by the court without a jury, the Secretary of Labor seeks to enjoin the defendants from alleged violations of the Fair Labor Standards Act, as amended, 29 U.S.C.A. § 201, et seq., by failing to pay to building service employees the minimum wages and overtime required by the Act. The respective defendants are (in No. 20251) Charles Street Development Corp. (CSDC), owner-operator of the Blaustein Building in Baltimore, and (in No. 20250) Blaustein Industries, Inc. (B Ind.), owner-operator of the Davison Chemical Building, also in Baltimore.
The Government argues that the employees engaged in the maintenance and operation of the respective buildings are covered by the Act on one or more of the following bases:
I. That the employees are covered because the great majority of the space in both buildings is occupied by tenants engaged in the production of goods for commerce within the meaning of the Act, and the building service employees are engaged in a closely related process or occupation directly essential to the production of such goods.
II. That several classes of individual employees are covered because of their individual activities, without regard to the tenancy of the building.
III. (A) That CSDC, in the operation of the Blaustein Building, is itself an "enterprise" within the meaning of § 3(s) (3) of the 1961 amendments to the Act; and (B) that B Ind., together with CSDC or American Trading and Production Corp. (Atapco), or both, constitute an "enterprise" within the meaning of § 3(s) (3) of the 1961 amendments, and the Davison Chemical Building is an "establishment" of that enterprise.
IV. That each defendant constitutes an "enterprise" within the meaning of § 3(s) (1) of the 1966 amendments to the Act, effective February 1, 1967.
Defendants deny that any of their employees are covered under any of the provisions of the Act. They have, however, been paying overtime and minimum wages to their employees since July 1, 1970, when Article 100, § 81 of the Annotated Code of Maryland took effect.
Points I and II, dealing with "traditional" coverage, are controlled by the familiar provisions of §§ 6 and 7 of the Act, as amended from time to time, 29 U.S.C.A. §§ 206 and 207, and by § 3(j), as amended in 1949, 29 U.S.C.A. § 203 (j). See note 5, below. Points III and IV, dealing with the "enterprise" concept, require a consideration of the 1961 and 1966 amendments to the Act, which will be discussed under the heading "Enterprise Coverage", below.
Elaborate stipulations have been filed in both cases, and some testimony has been taken. There is no dispute about any of the historical facts, and they will be set out summarily herein.
1. Charles Street Development Corporation (CSDC), defendant in No. 20251, owns and operates the Blaustein Building, a 26-story office building, located at One North Charles Street, Baltimore, Maryland. It also owns other real estate in Baltimore, some improved and some unimproved.
At all relevant times until May 1, 1968, the capital stock of CSDC was owned 25% by American Trading and Production Corporation (Atapco), 25% by Blaustein Industries, Inc. (B Ind.), defendant in No. 20250, and 50% by the McCloskey family. On May 1, 1968, Atapco and B Ind. each acquired one-half of the McCloskey stock in CSDC. The officers and directors of CSDC are also officers, directors and employees of Atapco, and some of them are also officers and/or directors of B Ind.
2. B Ind. is a Maryland corporation which owns and operates the Davison Chemical Building, a multi-story office building, located at 101 North Charles Street. At all relevant times, Jacob Blaustein and his descendants owned all the stock of B Ind., except certain shares of preferred stock owned by charitable foundations. Until April 1, 1970, B Ind. owned and operated a radio station in Omaha, Nebraska. It also owns a substantial part of the stock of CSDC. See Finding 1, above. All of the officers and directors of B Ind. are also officers and/or directors of Atapco.
3. Atapco is a Maryland corporation which is engaged in various activities, including: (a) the ownership and operation of tank vessels engaged in the worldwide transportation of petroleum, petroleum products, other liquid materials and grain; (b) the exploration for and production of oil and gas in the United States and Canada; (c) the ownership and operation of three manufacturing plant divisions, with plants and/or operating headquarters in Ohio, New Jersey and Wisconsin; (d) the ownership and operation directly or through subsidiaries of real estate projects or interests therein in various parts of the United States, including an office building in Los Angeles, California, an interest in an office building in San Diego, California, garden apartments in Dallas, Texas, and Baltimore County, Maryland, a motel in Atlanta, Georgia, and a high-rise apartment (under construction) in Virginia; and (e) the management of interests in other corporations. Both the maritime oil and gas manufacturing and the real estate operations of Atapco have annual gross receipts substantially in excess of $1,000,000.
Atapco owns a substantial stock interest in CSDC. See Finding 2 above. Some of Atapco's officers, directors and employees are officers, directors and employees of CSDC and B Ind. All of the capital stock of Atapco is owned beneficially by descendants of the late Louis Blaustein (father of Jacob) and certain charitable foundations.
Atapco leases two floors in the Blaustein Building, at which it has many more than two employees, substantially all of whom have been engaged either in interstate commerce or in a closely related occupation directly essential to the production of goods for interstate commerce. At all pertinent times, Atapco has provided accounting and administrative services, including the maintenance of books of account, issuance of checks and preparation of tax returns for B Ind. and CSDC, which pay service fees to Atapco.1
4. The Blaustein Building is occupied by about 50 tenants. American Oil Company leases six floors containing more than 60,000 sq. ft. of rentable space. Seven tenants—Atapco, Crown Central Petroleum Company, Bethlehem Steel Corporation, VanSant, Dugdale & Co. (an interstate advertising agency), Union Trust Company of Maryland, Chesapeake and Ohio Railway Co., and Ernst & Ernst—each lease one or two floors, plus, in some instances, parts of other floors. Those eight tenants account for some 70% of the space and of the rentals. The other tenants lease parts of floors ranging in size from 2% to one-tenth of 1% of the total rentable area. With few exceptions, all leases provide that the premises are leased for use as "Business Offices". Annual rental income is in excess of $1,000,000.
5. Approximately 82½% of the rental income2 received by CSDC from the rental of space in the Blaustein Building is received from concerns which are either engaged in interstate commerce or in the production of goods for commerce. The parts of the building occupied by those concerns are utilized for various purposes, including corporate headquarters, regional or district sales offices, airline ticket offices, a branch office of a brokerage firm, and a branch office bank. Employees of these concerns who work in the Blaustein Building are regularly engaged in such activities as preparing reports and maintaining records with respect to interstate transactions, sending reports and communications to and receiving reports and communications from persons outside the State of Maryland, and other actions with respect to the interstate activities of their employers. There is no manufacturing or other production of goods at the Blaustein Building except the preparation and mailing of reports and other correspondence, contracts, checks, insurance policies, airline tickets, invoices and other documents.
6. Under the terms of the leases between CSDC and the various tenants, CSDC furnishes heat, air conditioning, electric power for lighting and other purposes, water, elevator service, cleaning service and maintenance, including periodic painting and replacement of light bulbs. CSDC has about 59 employees. The amount of goods produced outside Maryland and purchased by CSDC for use in maintaining the building and for use by the tenants is substantial.
7. The employees of CSDC at the Blaustein Building fall into the following categories:
(a) Charwomen engaged in cleaning specific floors or portions of floors, including tenants' offices. They regularly remove large amounts of trash,3 which is placed in the hallway outside the elevator, where it is picked up by porters, baled and sold by CSDC to Dixie Waste Paper Co. Some five tons of trash paper are removed from the Blaustein Building each week by Dixie, which sells it to the Chesapeake Paperboard Co. The paper is put into hydropulpers, water is added, impurities removed, and approximately 60% of the resulting paperboard is sold to out-of-state buyers.
(b) Porters, who carry the waste paper and other trash downstairs. They also regularly and recurrently carry electric light bulbs and other supplies from the dock to the lower level,...
To continue reading
Request your trial
-
Brennan v. Wilson Building, Inc.
...step in the actual transportation of the goods to points outside the state." 124 F.2d at 572 n.5. Accord, Schultz v. Blaustein Industries, Inc., 321 F.Supp. 998, 1008 (D.Md.1971) ("elevator operators * * * who regularly and recurrently carried postmen delivering mail and persons delivering ......