Walling v. L. Wiemann Co.

• Decision Date: 12 November 1943
• Docket Number: No. 8332.,8332.
• Citation: 138 F.2d 602,150 ALR 878
• Parties: WALLING, Adm'r of Wage and Hour Division, U. S. Dept. of Labor, v. L. WIEMANN CO.
• Court: U.S. Court of Appeals — Seventh Circuit

150 ALR 878, 138 F.2d 602 (1943)

WALLING, Adm'r of Wage and Hour Division, U. S. Dept. of Labor, v. L. WIEMANN CO.

No. 8332.

Circuit Court of Appeals, Seventh Circuit.

November 12, 1943.

Frederick U. Reel, Douglas B. Maggs, Bessie Margolin, and Morton Liftin, all of Washington, D. C., and Frank J. Delany

and Victor M. Harding, both of Chicago, Ill., for appellant.

Morris Karon and Philip Weinberg, both of Milwaukee, Wis., for appellee.

Before SPARKS, MAJOR and KERNER, Circuit Judges.

SPARKS, Circuit Judge.

The Administrator of the Wage and Hour Division, United States Department of Labor, instituted this civil action under section 17 of the Fair Labor Standards Act of 1938, 29 U.S.C.A. § 217. It sought to restrain appellee from violating the Act. The District Court made a special finding of facts, stated its conclusions of law thereon, rendered its judgment favorable to appellee and dismissed the complaint on the merits. From that judgment this appeal is prosecuted.

The substance of the rulings complained of is that appellee's warehouse and central office employees are not engaged in interstate commerce, but are engaged in a retail establishment within the meaning of section 13(a) (2) of the Act.¹

The following facts are incorporated in the findings and are supported by substantial evidence. Appellee is a Wisconsin corporation which owns and operates sixteen retail stores in that State, twelve of which are located in Milwaukee and the other four in Fond du Lac, Green Bay, Racine and Madison. It also owns and operates in the city of Milwaukee a two-story building erected in June 1938, which is known as its general office and warehouse. Prior to such erection a part of one of its stores in Milwaukee was used for offices for the executives of the company, as well as for storage of merchandise to be redelivered to the other stores.

On the first floor of this general office and warehouse, three buyers have desk space; the balance is warehouse space devoted to the receipt, storage, and transfer of goods, in which work four employees are engaged. The second floor contains the private offices of appellant's officers, and desks for the clerical staff of six female employees. From here the executives supervise generally the activities of the company.

This office and warehouse is not open to the general public. No goods are sold or displayed there. Merchandise is ordered for delivery to this warehouse in order to save freight charges, by reason of larger volume shipments, and because manufacturers are often not willing to ship small quantities which would satisfy the requirements of an individual retail store. From 80% to 85% of all merchandise purchased by the company is shipped in from outside the State of Wisconsin. The manufacturers, rather than wholesalers or jobbers, supply ninety per cent of the company's merchandise.

The officials of the general office control the purchasing. They are assisted by the clerical employees, a part of whose work involves procuring and paying for merchandise. The buyers make up what is known as a listing for each manufacturer from whom goods are regularly purchased. For ready reference these listings are made up in permanent form, and are also mimeographed upon order blanks which are supplied to the manager of each store for use in making his selection when ordering merchandise. Orders placed by store managers are made out in duplicate, one copy being retained by such manager, the other forwarded to the general office for approval or disapproval. Unless an order from a single store is consolidated with those from other stores on the same manufacturer into a larger order, the order which has been executed by the store manager, upon its approval, is sent on to the manufacturer. However, when orders of various stores are consolidated, one new order is made by combining them. Consolidated orders usually specify the warehouse as the place of delivery. Twenty per cent of the merchandise purchased by the company is delivered in the first instance to the warehouse for a division and distribution among the various stores.

All warehouse employees perform work necessary to the receipt of merchandise and its distribution and transfer to the individual stores. Goods are delivered to the warehouse directly from the factory by motor carrier, or by a combination of rail and motor carrier. There is no unloading platform at the warehouse. The merchandise is unloaded at the warehouse to the floor of the warehouse. The warehousemen have instructions from the officers of defendant not to assist in unloading the trucks. After unloading, the merchandise is unpacked and checked and placed in the appropriate bin which has been assigned by appellee to the retail store requesting the shipment, or it is placed upon shelves for a later transfer to the bins.

Invoices pertaining to shipments of merchandise come in by mail and are checked against orders in the general office to determine that the company is being properly charged. The retail price is figured at the general office and noted on the invoice, as is also the appropriate part of the purchase price and freight expense to be charged to each store. A "distribution" is stamped upon the invoices, indicating the division of the shipment among the various stores. The invoice is then transmitted from the general office employees to the warehousemen.

When invoices have been checked by the warehouse employees against the goods actually delivered, they approve and forward them to the general office for payment. These employees also mark containers of merchandise with the retail selling price which has been figured in the general office. Each shipment of merchandise from the warehouse to the retail stores is recorded by warehouse employees upon an invoice charging the stores with the merchandise sent them. The average stay of goods in the warehouse is approximately ten days. Shipments are received by and sent out from the warehouse almost daily.

A small part of the work of the girls in the office is the making out of orders or invoices and paying for the goods which have been received from outside the State. The greater portion of their time, however, is used in taking dictation, typing letters, checking invoices, bookkeeping, computing and checking the salaries of more than four hundred employees in appellee's sixteen stores, preparing sales statements of the stores, checking bank statements and deposit slips, taking care of callers at the office, preparing inventory records and insurance reports, and at certain times of the year preparing income tax reports, O. P. A. reports, and other State and federal reports. More than 80% of their time is devoted to the retail functions of the appellee.

The District Court concluded that appellee's retail stores and general office and warehouse building together constituted a single retail establishment, whose selling was wholly in intrastate commerce at retail; that its warehouse employees were not engaged in interstate commerce, or in a process or occupation necessary to the production of goods for interstate commerce; that their duties and activities did not bring them within the purview of the Fair Labor Standards Act, and were not covered by that Act; that all goods delivered to the warehouse came to rest upon delivery to the warehouse, and their interstate commerce journey ended when they were unloaded from the trucks at the warehouse door. The court further concluded that the six clerical employees in the general office were engaged in performing clerical work incidental to the retail functions of appellee's business, which was a retail establishment, all of whose selling was in intrastate commerce, and the activities of such clerical employees were exempt under section 13(a) (2) of the Fair Labor Standards Act.

There seems to be no substantial controversy as to the truthfulness of the facts found, and we think they fully support the conclusions of the District Court.

Appellant insists that appellee's warehouse and central office employees are engaged in interstate commerce, and in support of that contention he relies upon Walling v. Jacksonville Paper Co., 317 U.S. 564, 63 S.Ct. 332, 87 L.Ed. ___; Walling v. Goldblatt Bros., 7 Cir., 128 F.2d 778; and Walling v. American Stores Co., 3 Cir., 133 F.2d 840. The same cases are relied upon by appellee to support its contrary contention in this respect.

The Jacksonville case involved the business of a wholesaler and not a retailer, and the Supreme Court held that goods shipped to a wholesaler's warehouse, not purchased in response to prior orders or contracts from his customers, but purchased merely in anticipation of future orders or contracts from customers for their immediate and future needs, were not in fulfillment of prior orders. It further held that where, as there, such goods are delivered to the wholesaler's warehouse, interstate commerce ends, and the goods must be treated like the goods acquired and held by a local merchant for local distribution. The court further added 317 U. S. 564, 63 S.Ct. 336, 87 L.Ed. ___: "We do not mean to imply that a wholesaler's course of business based on anticipation of needs of specific customers, rather than on prior orders or contracts, might not at times our emphasis be sufficient to establish that practical continuity in transit necessary to keep a movement of goods `in commerce' within the meaning of the Act." We can readily visualize such a "course of business" on the part of a wholesaler which might establish a continuity in transit. However, the court held that it was not present in the Jacksonville case, and with more reason we think there is no such course of business disclosed here. In the case at bar there is shown no wholesaler, no prior orders and no course of business based on anticipation of needs of any specific customer.

Appellant seems to construe the "lists" of needed goods, forwarded by...