Walling v. Roland Electrical Co.

• Decision Date: 03 February 1944
• Docket Number: Civ. No. 1919.
• Citation: 54 F. Supp. 733
• Parties: WALLING, Administrator of Wage and Hour Division, U. S. Dept. of Labor, v. ROLAND ELECTRICAL CO.
• Court: U.S. District Court — District of Maryland

54 F. Supp. 733

WALLING, Administrator of Wage and Hour Division, U. S. Dept. of Labor, v.ROLAND ELECTRICAL CO.

Civ. No. 1919.

District Court, D. Maryland.

February 3, 1944.

Joseph R. Hirschmann, of Baltimore, Md., and Lemuel H. Davis, of Richmond, Va., for plaintiff.

Raphael Walter, of Baltimore, Md., for defendant.

COLEMAN, District Judge.

This is a case under the Fair Labor Standards Act of 1938,29 U.S.C.A. §§ 201-219, in which the Administrator of the Wage and Hour Division of the United States Department of Labor seeks an injunction restraining the defendant, its employees and agents, from violating, as the complaint charges defendant has done ever since October 24, 1938, the provisions of Section 15(a)(1), 15(a)(2), and 15(a)(5) of the Act, 29 U.S.C.A. §§ 215(a)(1),215(a)(2)and215(a)(5), which prohibit carrying on an interstate business in goods in the production of which there was employment contrary to the wages and hours requirements of the Act.

There is a lengthy stipulation of facts in the case, as a result of which extensive testimony was dispensed with, although some testimony was taken at the hearing to supplement the stipulation, and also some that is related to factual questions not actually covered by the stipulation.

From all of the aforegoing we find the following facts:

The defendant is a corporation engaged in Baltimore in the business of buying and selling new and used electrical motors of various types; of repairing, reconditioning and rebuilding used motors, and of installing and repairing private, commercial and industrial wiring systems.

The detailed character of defendant's business is as follows: (1) The relocation and extension of wiring in systems already installed in private, commercial, and industrial establishments.(2) The repair of private, commercial and industrial wiring systems.(3) The installation of wiring in new private, commercial and industrial establishments.(4) The installation and relocation of commercial and industrial motors, including the installation of necessary switches, wiring, etc.(5) Sale of electrical materials and supplies over the counter.(6) Rental for periods of a month or less of motors, floodlights, compensators, etc., to commercial and industrial firms.(7) Sale of new and used motors.(8) Reconditioning, repairing, and rebuilding electric motors and generators in its shop and repairing motors and generators on its customers' premises by removing old and defective brushes, commutators, armatures, stators, wiring and bearings; and by replacing said parts with new, reworked, and built-in parts.(9) The fabricating, when necessary, of shafts, brushes and other motor parts in connection with its reconditioning, repairing and rebuilding operations.

A substantial number of the motors which defendant regularly sold, reconditioned, repaired, rebuilt and relocated, and a substantial part of the wiring which was installed, relocated and repaired for various customers of the defendant were used in the production of goods for interstate commerce; a substantial number of the motors repaired, reconditioned, and rebuilt were small motors, such as those used for electric fans, drink mixers, and oil burners, and a majority of the work in repairing and reconditioning motors in dollar volume was done on motors used for industrial purposes, such purposes being the production of goods for commerce.

In connection with its operations, it is stipulated that, as of November, 1942, the company had some thirty-six employees classified as follows: six office employees, nineteen in the shop department, consisting of a foreman, "trouble shooters", mechanics and helpers; and eleven in the wiring department, consisting of mechanics and helpers.The stipulation embraces rather elaborate tables showing the breakdown of the various types of activities performed and the volume of earnings in connection therewith.As of November 1, 1942, the company had approximately a thousand active accounts, 99 per cent of which were with commercial or industrial firms; during the period from January 1, 1942, through October 31, 1942, every mechanic of the defendant worked, during practically every work week, for some one or more of thirty-three of these customers whose accounts were the most active, either in the repair of their motors, generators, the reconstruction of used motors sold to them, or in performing electrical work at their respective establishments.Certain of these customers—four or five—were engaged in the repair of ships, tugs, barges, and other vessels which were intended for movement in interstate commerce.As respects practically the entire balance of customers on defendant's most active list, their business was that of the production of goods for interstate shipment, i. e., they shipped at least a substantial portion of their total production to points outside the State of Maryland.As of November 1, 1943, the defendant had in its shop approximately 400 motors awaiting reconditioning, repairing or rebuilding, a substantial number of which were used in the production of goods for commerce.

Defendant holds, and is currently operating under, a certificate of exemption from taxation on machinery as a manufacturer, issued by the City of Baltimore under a municipal ordinance.

The foregoing facts illustrate the main characteristics of the different types of activities in which the defendant company is engaged.It is undisputed that whereas defendant's annual gross business was of the value of approximately $300,000 in the period here involved, it made only six interstate sales during that period, aggregating a gross return of $910; and also that, in so far as its dealing in scrap-iron or other metal was concerned, it sold only 13,000 pounds and derived only $500 therefrom, which was sold to local junk dealers, and which ultimately found its way into interstate commerce.

From these facts it is conceded by the Administrator, as, indeed, it must be, that defendant, through none of its employees, was engaged in "commerce" as defined by the Act, that is, in interstate commerce, but the questions presented are (1) whether its employees are entitled to the wage and hour benefits of the Act, because engaged "in the production of goods" for commerce as defined by the Act; and (2) whether defendant is exempt as a "retail or service establishment" under the Act.As to production, the Act provides, Section 3 (j),29 U.S.C.A. § 203(j): "`Produced' means produced, manufactured, mined, handled, or in any other manner worked on in any State; and for the purposes of this chapter an employee shall be deemed to have been engaged in the production of goods if such employee was employed in producing, manufacturing, mining, handling, transporting, or in any other manner working on such goods, or in any process or occupation necessary to the production thereof, in any State."As to exemptions, the Act provides, Section 13(a),29 U.S.C.A. § 213(a): "The provisions of sections 206and207 of this title shall not apply with respect to * * * (2) any employee engaged in any retail or service establishment the greater part of whose selling or servicing is in intrastate commerce; * * *."

The business of the defendant, as disclosed by the facts just set forth, may be further summarized as follows: Approximately 27 per cent of its gross business is strictly motor and generator repair business; 35 per cent is that of installing new wiring systems in industrial plants and also in repairing their existing wiring systems; and the rest, nearly 40 per cent, of the company's activities relate to sales of motors and supplies, or, in terms of dollars, about $120,000 worth of business, out of a gross business of $300,000 for the period here involved, representing the sale of new and used motors and parts.The proportion of new motors so disposed of represents about 40 per cent and of used motors about 60 per cent of these total sales.The company manufactures no motors, in the sense of building them "from the ground up," but it buys completely new motors, and also repairs old ones.The majority of all of these motors, new and old, supplied to customers, are used, as has already been pointed out, by those customers in their business of "production of goods" for commerce.

Counsel for the Administrator contend that the recent decision by the Circuit of Appeals for this Circuit in Guess v. Montague, 140 F.2d 500, 503, is a direct authority for the position taken by the Administrator in the present case, namely, that defendant's employees are to be construed as being engaged "in the production of goods" for commerce and not exempt under Section 13(a)(2) of the Act, either as a "retail or service establishment."Since the decision just referred to had to do with a machinery repair shop, albeit the repairing was of a more general character —in that the concern involved apparently did not confine its work to any particular type of machinery, as does the present defendant—it is necessary to determine whether the...