West v. Wal-Mart, Inc., Civ. A. No. 575.
| Decision Date | 16 February 1967 |
| Docket Number | Civ. A. No. 575. |
| Parties | Mrs. W. W. WEST et al., Plaintiffs, v. WAL-MART, INC., Wal-Mart of Springdale, Inc., and Wal-Mart of Harrison, Inc., Defendants. |
| Court | U.S. District Court — Western District of Arkansas |
Davis & Mills and Curtis E. Rickard, Springdale, Ark., for plaintiffs.
W. H. Enfield, Little & Enfield, Bentonville, Ark., for defendant.
Statement
This action was commenced with the filing of the complaint by Mrs. W. W. West and others, in which they seek relief against Wal-Mart, Inc., under the Fair Labor Standards Act, 29 U.S.C.A. § 201 et seq. It is alleged that the plaintiffs are members of a class of employees of Wal-Mart, Inc., who have been paid less than the minimum wage prescribed by the Act (29 U.S.C.A. § 206), and who are entitled to recover the unpaid wages along with the penalty and attorney's fee in accordance with the provisions of 29 U.S.C.A. § 216.
The defendant Wal-Mart, Inc., filed its answer denying that it owed any unpaid wages, and alleged that its employees were not covered during the period in question because they were engaged in a retail service establishment meeting the requirements of 29 U.S.C.A. § 213, and were therefore exempt from the requirements of the Fair Labor Standards Act.
Upon the motion of the plaintiffs, Wal-Mart of Springdale, Inc., and Wal-Mart of Harrison, Inc., were joined as party defendants to the action.
Subsequent to the granting of the motion, the plaintiffs filed their amended complaint against all of the defendants, which amendment contains essentially the same allegations as the original complaint, but specifically alleges that the defendants are Arkansas corporations; that they operate stores in various cities in Arkansas; that they have substantially the same stockholders, directors and officers; that they are organized and operated for a common purpose; and perform related activities through unified operation and common control.
The defendants Wal-Mart of Springdale, Inc., and Wal-Mart of Harrison, Inc., filed their answers to the complaint as amended, denying that they owe the plaintiffs any unpaid wages, and also denying that the defendants have substantially the same stockholders, directors and officers, or that they are organized and operated for a common purpose, or are performing related activities through unified operation and common control.
The question of whether the parties are covered by the Act, as amended, was tried to the court on December 15, 1966. At the conclusion of the hearing, the question was submitted subject to the submission of briefs by the parties. Briefs in support of their respective positions have been submitted.
This court has jurisdiction over the subject matter and the parties pursuant to 29 U.S.C.A. § 216(b).
The question now before the court is whether or not the retail establishments by which the plaintiffs were employed were, during the time in question, subject to the minimum wage requirements of the F.L.S.A. (29 U.S.C.A. § 206), as amended. The plaintiffs contend that during the period in question they were paid wages below that which was required by the Act. The defendants do not deny that the wages paid were less than the amounts provided for by that section, but they contend that their activities were such that these plaintiffs were within the provisions of 29 U.S.C.A. § 213, and were therefore not covered.
The defendant corporations all operate, and did operate during the period in issue, various discount houses or stores in the northwest Arkansas area, all of which are known and referred to as "Wal-Mart." Wal-Mart, Inc., operates a store in Rogers, Arkansas; Wal-Mart of Springdale, Inc., operates a store in Springdale, Arkansas; and Wal-Mart of Harrison, Inc., operates a store in Harrison, Arkansas. The Rogers store was the first to come into existence, opening in early July, 1962. Prior to that time there were no other discount-type stores in northwest Arkansas. Mr. Sam M. Walton, a resident of Bentonville, Arkansas, had noted the success of this type of store in larger cities and felt that they could also be successful in smaller towns. He was at that time a 40-percent owner of a partnership known by the name of Walton's 5 & 10 Cent Stores. The remaining interest in the partnership was owned by his wife in trust for their children. This partnership became the majority stockholder in each of the three corporations. The following table shows the date of incorporation, the date of opening for business, the directors and stockholders, and the approximate percentage of ownership of each stockholder in each of the three corporations:
Wal-Mart, Inc Incorporated May 14, 1962; opened for business July 1962. Directors: Sam M. Walton, President Bentonville, Ark James L. Walton Versailles, Mo Helen R. Walton Bentonville, Ark Don Whitaker Rogers, Ark Stockholders: Walton's 5 & 10 Cent Stores, a partnership, Bentonville Ark., 500 shares (86.9%) James L. Walton and Audrey Walton, Versailles, Mo., 50 shares (8.6%) Don Whitaker, Rogers, Ark., 25 shares (5.0%) Wal-Mart of Springdale, Inc. Incorporated April 23, 1964; opened for business Oct. 1964. Directors: Sam M. Walton, President Bentonville, Ark. James L. Walton Versailles, Mo. Helen R. Walton Bentonville, Ark. Willard Walker Springdale, Ark. Robert L. Bogle Bentonville, Ark. Stockholders: Walton's 5 & 10 Cent Stores, a partnership, Bentonville, Ark., 500 shares (76%) James L. Walton and Audrey Walton, Versailles, Mo., 80 shares (12%) Willard Walker and Amy S. Walker, Springdale, Ark., 40 shares (6%) Walton Profit-Sharing Trust, Bentonville, Ark., 30 shares (4.5%) Robert L. Bogle and Marilyn Bogle, Bentonville, Ark., 8 shares (1.5%) Wal-Mart of Harrison, Inc. Incorporated June 11, 1964; opened for business August 1964. Directors: Sam. M. Walton, President Bentonville, Ark. Helen R. Walton Bentonville, Ark. James L. Walton Versailles, Mo. C. C. Baum Fayetteville, Ark. Willard Walker Springdale, Ark. Robert L. Bogle Bentonville, Ark. Don Whitaker Rogers, Ark. Stockholders: Walton's 5 & 10 Cent Stores, a partnership, Bentonville, Ark., 350 shares (58.3%) James L. Walton and Audrey Walton, Versailles, Mo., 100 shares (16.7%) Willard Walker and Amy S. Walker, Springdale, Ark., 50 shares (8.3%) C. C. Baum and Nadine Baum, Fayetteville, Ark., 20 shares (3.3%) Don Whitaker and Pauline Whitaker, Rogers, Ark., 40 shares (6.6%) Robert L. Bogle and Marilyn Bogle, Bentonville, Ark., 10 shares (1.6%) Walton Profit-Sharing Trust, Bentonville, Ark., 30 shares (5.0%)
All three of the stores are known as discount houses for the reason that they operate on a low overhead, high volume basis. Thus the merchandise is sold at a price lower than it could be sold under normal merchandising circumstances. All three stores, like other discount houses, handle basically the same types of merchandise for the reason that these types of goods lend themselves more favorably to the discount concept.
The three stores were all successful almost from the opening day of each. The sales and purchases for the stores during the years in question are as follows:
Gross Dollar Retail Sales
1963 1964 1965
Wal-Mart, Inc. (Rogers) $339,599.79 $496,794.40 $771,769.89
Wal-Mart of Springdale, Inc. -- 411,073.04 1,112,019.84
Wal-Mart of Harrison, Inc. -- 327,191.74 726,135.65
___________ _____________ _____________
Total $339,599.79 $1,235,059.18 $2,609,925.58
Gross Dollar Purchases
1963 1964 1965
Wal-Mart, Inc. (Rogers) $303,755.73 $432,271.70 $599,173.08
Wal-Mart of Springdale, Inc. -- 499,466.24 900,441.32
Wal-Mart of Harrison, Inc. -- 397,628.79 566,410.59
___________ _____________ _____________
Total $303,755.73 $1,329,366.73 $2,066,024.99
From 90 to 95 percent of all purchases were made from out-of-state sellers, and nearly all of the employees of the stores handled the goods which came in from other states.
The stores were run on somewhat of an individual basis with each manager having extensive authority with respect to control over his own operation. Each store did its own advertising and generally purchased its own goods for resale, but there was some exchange of goods and some joint purchasing. All matters concerning personnel were generally handled by the various managers, and there was no exchange of employees. Each manager also became a stockholder in the corporation which operated his store. Mr. Walton, however, was president of each corporation and had the personal authority to direct the managers in their operations and even hire and fire the managers if he saw fit to do so. In fact, the managers are not the employees of the various stores, but are employed by another corporation, the Walton Management Company, which furnishes the stores with managers under contract.
This management company, which is operated by Mr. Walton, also acts as trustee for the Walton Profit-Sharing Trust, which owns a beneficial interest in the stores as set forth above. The purpose of this trust is to channel a share of the profits to certain employees of the...
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