Shultz v. Hasam Realty Corp.
| Decision Date | 05 August 1970 |
| Docket Number | No. 69-818-Civ.,69-818-Civ. |
| Citation | 316 F. Supp. 1136 |
| Parties | George P. SHULTZ, Secretary of Labor, United States Department of Labor, Plaintiff, v. HASAM REALTY CORP. and Irving Cowan, Defendants. |
| Court | U.S. District Court — Southern District of Florida |
Beverley R. Worrell, Regional Solicitor, U. S. Dept. of Labor, Atlanta, Ga., for plaintiff.
Alfred Aronovitz, Miami, Fla., Warren J. Kaps, New York City, for defendants.
The Secretary of Labor brought this non-jury action to enjoin Hasam Realty Corp., a Delaware corporation, and Irving Cowan, an individual, from violating the provisions of Section 15(a) (2) of the Fair Labor Standards Act of 1938, as amended, 29 U.S.C. § 215(a) (2), hereinafter referred to as the Act, to restrain the defendants from withholding payment of minimum wages and overtime compensation due defendants' employees under the Act, and to recover interest and costs. The parties agreed in the pretrial stipulation that the plaintiff does not seek recovery of back wages which might have been due prior to June 27, 1967. Diplomat Hotel, Inc., State Nine Development Corporation, and Samuel Friedland, originally defendants in this cause, were dismissed by stipulation of all parties at the early stages of the trial. The Court has jurisdiction of the cause pursuant to Section 17 of the Fair Labor Standards Act, 29 U.S.C. § 217 and 28 U.S.C. §§ 1337 and 1345.
The parties have stipulated that the employees enumerated by class in the joint pretrial stipulation are employed "in an enterprise engaged in commerce or in the production of goods for commerce" within the meaning of Sections 3(r) and 3(s) (1) of the Fair Labor Standards Act, 29 U.S.C. §§ 203(r), 203 (s) (1), as amended by the Fair Labor Standards Amendments of 1961. The embodiment of the enterprise for purposes of this litigation is the defendant Hasam Realty Corp., a Delaware corporation which owns, operates and controls certain facilities, as follows:
(a) Diplomat East (hotel) 3515 South Ocean Drive City of Hollywood Broward County, Florida (b) Diplomat West (motel) 3514 South Ocean Drive City of Hollywood Broward County, Florida (c) Diplomat Inn, a/k/a Diplomat Golf and Racquet Club (motel) 1701 East Hallandale Beach Blvd (East of Diplomat Parkway) City of Hallandale Broward County, Florida (d) Diplomat Country Club (clubhouse and golf course) 1701 East Hallandale Beach Blvd (West of Diplomat Parkway) City of Hallandale Broward County, Florida (e) Diplomat Presidential Country Club (clubhouse and golf course) 19650 N. E. 18th Avenue Dade County, Florida These facilities are advertised to the public by the defendants as the "Diplomat Resorts and Country Club, Holly-wood-By-The-Sea, Florida." Defendants' Exhibit No. 1, consisting of a binder containing promotional literature, at page 8 describes the Diplomat Resorts as follows:
The Diplomat offers three distinctive types of accommodations. The regal Diplomat East overlooks the sparkling ocean. The lovely Diplomat West cuddles casually on the Inland Waterway. The informality of the Diplomat Golf and Racquet Club is the golfer's favorite. These accommodations will respond to all of your expectations. Whether you select the East * * * the West * * * or the Golf and Racquet Club—all of the magnificent facilities of the entire resort are available for your pleasure.
The function, operation and offering of these facilities is designed to preserve the distinctive character of each.
The first building constructed by the defendant enterprise was the Diplomat West, located west of Highway A-1-A. Originally opened in December 1957, this building was a 150 room, two story motel located on the Intracoastal Waterway. Sometime in 1965, a four story addition was added to the Diplomat West. The Diplomat West is designed for guests with families interested in casual living, and is equipped with kitchenettes, a supervised children's playground, and a teens' rumpus room. The rates at the Diplomat West are generally higher than at the Diplomat Inn, and lower than at the Diplomat East.
At the same time the Diplomat West was opened, the original golf course was opened one to one and one-fourth miles away at the Diplomat Country Club, located on the west side of the Diplomat Parkway. At that time, business was not as good as today, and the hotel accepted a limited number of annual memberships from local residents. Since that year, no additional local members have been solicited or accepted, but the original members have been permitted to renew such annual membership. By initially combining local memberships with guests, the original golf course has been at capacity since the first year of operation.
In 1958 the eight story Diplomat East, located on the Atlantic Ocean east of Route A-1-A, was opened. It is currently the largest facility offering rooms to guests. The room rates are the highest of the three facilities offering rooms, and it contains the majority of banquet and meeting rooms. The Diplomat East houses night clubs featuring nationally known entertainers, and has leased departments including a ladies shop, a men's shop, a drug store, a candy—flower shop, shoe shop, an art gallery, a beauty shop, and a barber shop. All executive offices of the defendant corporation are located in the Diplomat East.
The next building to be completed was the Convention Hall, adjacent to the Diplomat East and connected to it by a covered bridge. This building was completed in 1959.
In 1960, the Diplomat Golf and Racquet Club, formerly known as the Diplomat Inn, was opened. This facility is located on the original golf course near the tennis court, one and one-quarter miles by automobile from the Diplomat West. The distance by Intracoastal Waterway and Lake Villa is slightly less. The Inn is on the east side of the Diplomat Parkway, approximately 500 feet from the Diplomat Country Club located on the west of the Diplomat Parkway.
The next facility to be completed was the Presidential Country Club and Golf Course, opened in 1963. This facility is located approximately five miles south of the main Diplomat complex, and is the only Diplomat facility located in Dade County. It is not accessible by waterway. At the time this facility was built, there was no land available for a golf course adjacent to the Diplomat East, Diplomat West, Diplomat Golf and Racquet Club, and Diplomat Country Club. It was built to accommodate an increasing number of motel and hotel guests, particularly during the winter rush season. At the present time, a third golf course location west of the Florida Turnpike and the City of Miramar, in Broward County, is being contemplated.
Thus, the motel, hotel, and recreational facilities operated by defendants grew as defendants built a successful business. And the business, in turn, has increased as the property expanded. As the business has grown, the sales and volume of business have increased. For example, the anuual dollar volume of sales done by the defendant corporation commencing January 1, 1966, and for each year thereafter was as follows:
9/30/66 $10,335,023
9/30/67 11,162,457
9/30/68 12,397,551
9/30/69 12,550,335
There is presently under construction a 16 story oceanfront tower located near the Diplomat East which will provide an additional 327 rooms. At the present time, the combined total of motel and hotel rooms is 850 rooms.
In describing the room facilities at the three different locations (West, East, and Inn), Irving Cowan, President and Chief Executive Officer of the Diplomat, testified that the guests of the Inn are generally those people who want to be closer to the sports facilities and within walking distance to the clubhouse and the tennis courts without taking their own car or the shuttle bus. On the other hand, the West generally attracts more of the family clientele, particularly families with children. Both the Inn and the West have a less formal atmosphere than the Diplomat East.
Pricing of rooms follows the same pattern. Rates depend upon accessibility to a central area which the guests may want to visit. The rates depend upon the desirability of size of room, whether the room has a balcony, and whether the room has a kitchenette. For example, rooms with kitchenettes are available only at the Inn and the West, while terrace balconies are available only at the East on rooms facing the ocean.
In enacting the Fair Labor Standards Act, Congress declared that the existence of labor conditions detrimental to the maintenance of a minimum standard of living necessary for health, efficiency and general well being of workers burdens commerce, constitutes an unfair method of competition, and leads to labor disputes burdening and obstructing commerce. The purpose of the Fair Labor Standards Act, which establishes minimum wage and overtime compensation rates, is to eliminate such adverse conditions. 29 U.S.C. § 202. Accordingly, Courts have consistently held that the burden of proving an exemption from the protection of the Act is upon the employer-defendants. Idaho Sheet Metal Works, Inc. v. Wirtz, 383 U.S. 190, 86 S.Ct. 737, 15 L.Ed.2d 694 (1966); Acme Car & Truck Rentals, Inc. v. Hooper, et al., 331 F.2d 442 (5 Cir. 1964); Acme Tire and Battery Co., Inc. v. Wirtz, 330 F.2d 116 (5 Cir. 1964).
Minimum wage and overtime compensation standards are specified by Sections 6(a) and 7(a) (1) of the Act, 29 U.S.C. §§ 206(a), 207(a) (1). There can be no question but that the defendants are "employers" within the meaning of 29 U.S.C. §§ 206(a), 207(a) (1) and 203(d), and that they employ "employees" in an "enterprise engaged in commerce or in the production of goods for commerce" within the meaning of 29 U.S.C. §§ 203(r) and (s). They are therefore covered by the wage and hour provisions of the Act unless they can establish entitlement to an exempt status.
Defendants seek exemption from the overtime...
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