Usery v. Mohs Realty Corp.
| Decision Date | 16 November 1976 |
| Docket Number | No. 76-C-14.,76-C-14. |
| Parties | W. J. USERY, Jr., Secretary of Labor, Plaintiff, v. MOHS REALTY CORPORATION, a corporation, doing business as Ivy Inn Motor Hotel, and GNH, Inc., a corporation, doing business as Ivy Inn Restaurant, Defendants. |
| Court | U.S. District Court — Western District of Wisconsin |
COPYRIGHT MATERIAL OMITTED
Herman Grant, Regional Sol. of U. S. Dept. of Labor by Mark L. Shapiro, Chicago, Ill., for plaintiff.
Bakken & Feifarek by Paul S. Taylor, Madison, Wis., for defendant Mohs Realty Corp.
Johnson, Bieber & Swingen by Daniel G. Sandell, Madison, Wis., for defendant GNH, Inc.
This is a civil action brought by the Secretary of Labor under § 17 of the Fair Labor Standards Act (), 29 U.S.C. § 217 (1975), to enjoin defendants from violating its minimum wage and overtime provisions and to require the payment of back wages to defendants' employees. The Secretary asserts that defendant Mohs' motor inn operation and defendant GNH's adjoining restaurant and banquet facilities are subject to the Act's "enterprise" coverage provisions, 29 U.S.C. § 203(s)(1), because the component activities are "related" and "performed through unified operation or common control for a common business purpose" so as to constitute a single enterprise within the meaning of 29 U.S.C. § 203(r) (1975).1 The defendants contend that the motor inn operation and adjoining restaurant and banquet facilities are not a single enterprise under § 203(r) and that neither of the two operations when taken alone has a sufficient annual gross volume of sales to subject it to the enterprise coverage provisions of the Act.
Defendant GNH has moved for summary judgment,2 arguing that GNH and Mohs were not a single enterprise under § 203(r) and that GNH did not come within the enterprise coverage provisions of § 203(s)(1) when considered alone. Defendant Mohs has moved for summary judgment, arguing essentially the same themes as GNH. In response to these motions, the plaintiff has moved for partial summary judgment on the ground that the uncontroverted facts show that the defendants are and have been since May 22, 1972, a single enterprise within the meaning of § 3(r) of the Act, 29 U.S.C. §§ 201 et seq. (1975).
On the basis of the affidavits, stipulations, answers to interrogatories, and responses to requests for admissions and requests for the production of documents submitted by the parties in support of their various motions, I find that there is no genuine issue as to the material facts set forth hereinafter under the heading "Facts."
Defendant Mohs owns and operates the Ivy Inn Motor Hotel in Madison, Wisconsin. The Ivy Inn is a two-story building containing motel rooms, a restaurant, cocktail lounge, and banquet rooms. From 1957 to 1963, Mohs itself operated all the motel hotel facilities. From 1963 to 1972, Mohs continued to operate the motel and banquet facilities but leased the restaurant and cocktail lounge for operation by lessees. These lessees were individuals not associated with GNH, Inc.
On May 22, 1972, Mohs leased the restaurant, cocktail lounge, and banquet facilities and equipment (including the stove, refrigerator, dishwashers, furnishings, fixtures, utensils, barware, chinaware, glassware, silverware and other items) to GNH. GNH does business as the "Ivy Supper Club and Lounge." The original term of the lease was July 1, 1972, to June 30, 1975, with an extension thereafter on a year-to-year basis which is now in effect.
The lease contains the following pertinent terms:
A. Under paragraph IV(D), GNH shall operate a restaurant and bar on the demised premises although the lease does not provide that such a use shall be the exclusive use. However, because of the physical layout of the building and the lease requirement that a bar and restaurant be installed on the leased premises, it would be difficult if not impossible to use the leased premises for any additional purpose.
B. GNH must keep the restaurant open during the breakfast, lunch, and dinner hours seven days a week under paragraph V(R). Further, GNH must keep the bar open during the lunch hour and during the early and late evening hours seven days a week. There is no explicit statement in the lease that these hours are designed for the convenience of the motel guests. The bar and restaurant may be kept open for more than these minimum hours.
C. GNH shall "not refuse to accommodate patrons of the Ivy Inn Motor Hotel in its facilities at any time during its normal hours of operation" although GNH must operate its facilities so as to provide at least one bar area and one restaurant facility for the general public during the hours described in B above.
D. GNH shall "not retain any employees ... whose conduct shall jeopardize the name and reputation of the PREMISES and more particularly the Ivy Inn Motor Hotel." Mohs has the right to insist upon the correction of such conduct or the immediate discharge of the GNH employee engaging in such conduct if it is not corrected.
E. GNH pays ten percent of its gross sales as monthly rent to Mohs. Mohs has the right to examine GNH's books of account for this purpose upon reasonable notice.
F. Motel guests can charge food or drinks on their room bills. In general, Mohs collects cash for these charges and remits it to GNH although Mohs does not guarantee payment for unpaid room service bills. Room service deliveries are made only by employees of GNH.
G. Mohs retains the right to maintain the pictures in the bar and restaurant and to remove them at any time at its option. GNH is not to clean the pictures.
H. Mohs is required to provide background music in the restaurant, banquet rooms and bar. Also, Mohs must provide trash removal service. GNH is required to pay Mohs one-half of the cost of these services.
I. GNH may not change the decor in the restaurant, banquet rooms, or cocktail lounge without the prior approval of Mohs and Mohs has the right to insist that the decor in the restaurant, banquet rooms, and cocktail lounge be in the same style as utilized in the motel.
J. Customers of all parts of the motor inn (restaurant, lounge, banquet facilities and motel rooms) share a common, undifferentiated parking lot. Customers may park in any part of the lot, as there are no designated areas for motel guests as distinct from restaurant customers although under some circumstances Mohs may set aside up to fifty percent of the parking spaces for their overnight guests. GNH's employees are prohibited from parking in the lot.
K. The liquor license of the cocktail lounge runs with the premises and is held by the lessee as an incident of the lease. The license was issued to GNH's predecessor as lessee and transferred to GNH as lessee. In order to protect Mohs, GNH pledges all of its stock to secure and guarantee the continued maintenance of the license on the cocktail lounge premises. In the event of any default or termination of the lease, GNH agrees to surrender and transfer the license to Mohs.
L. GNH also covenants not to compete in the restaurant, catering or bar business within fifteen miles from the Ivy Inn during the term of the lease or for ninety days thereafter. The express purpose of this covenant is to ensure that the liquor license remains on the premises and "to protect the Lessor Mohs from the loss of banquet and party business which it is presently doing in its facilities being leased hereunder to the Lessee GNH."
M. GNH may not assign or sublet the lease without Mohs' permission.
N. In accordance with the lease provisions requiring that signs, names and other advertising "identify the leased facilities as being part of the Ivy Inn Motor Hotel," the motor hotel's advertising, promotions and guest information treat the restaurant, banquet facilities and cocktail lounge as an integral part of the motor hotel operation. For example, a sign with the following words on it is presently located on the front lawn of the motor hotel:
IVY
DINING — COCKTAILS
A sign reading "IVY INN DINING" is located above the dining room window on the outside of the building, and a sign reading "IVY INN LOUNGE" is located above the cocktail lounge window outside the building. Signs reading "IVY INN" are located on the glass doors to the restaurant and cocktail lounge from the central lobby. Further, GNH must "retain and utilize the existing names of the facilities leased" (i. e., "Ivy Inn Supper Club and Lounge," "Ivy Inn Bar," "Ivy Inn Restaurant").
No officer or director of Mohs has been or is an officer or director of GNH or vice versa. Nor is there any common ownership of stock in and between Mohs and GNH. Further, GNH and Mohs use different accounting firms for bookkeeping purposes.
The Ivy Inn Motor Hotel has a telephone number and telephone listing in the Madison telephone directory separate and apart from the telephone number and telephone listing of the Ivy Supper Club and Lounge. However, motel guests who want room service place their calls toll-free through the motel switchboard to the restaurant, the motel front desk, and other guest rooms, whereas calls to locations outside the Ivy Inn premises are not toll-free.
Although not required by the lease, there are several promotional items which at least in part contain advertising language asserting the complementary nature of the services provided by GNH and Mohs.3 An "Ivy Inn" matchbook states that the "Ivy Inn Motor Hotel" has air-conditioned, fireproof rooms, dining and banquet rooms and cocktail lounge. A map of the area around the "Ivy Inn" lists "Ivy Inn Features and Services" including motel rooms, cocktail lounge, dining room, banquet facilities and room service. A poster for the "Ivy Inn" sent to University of Wisconsin departments emphasizes the motel rooms, the party and convention rooms, cocktail lounge and delightful dining.
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