Western Union Tel. Co. v. McComb

Decision Date29 March 1948
Docket NumberNo. 10422.,10422.
Citation165 F.2d 65
PartiesWESTERN UNION TEL. CO. v. McCOMB.
CourtU.S. Court of Appeals — Sixth Circuit

Charles W. Milner, of Louisville, Ky. (Francis R. Stark and John H. Waters, both of New York City, Charles W. Milner, Hubert T. Willis and B. Hudson Milner, all of Louisville, Ky., of counsel; Bullitt & Middleton, of Louisville, Ky., on the brief), for appellant.

Morton Liftin, of Washington, D. C. (William S. Tyson, Bessie Margolin, Morton Liftin, Sidney S. Berman, and Frederick U. Reel, all of Washington, D. C., and Aaron A. Caghan, Regional Atty., of Cleveland, Ohio, on the brief), for appellee.

Before HICKS, SIMONS and MARTIN, Circuit Judges.

Writ of Certiorari Denied March 29, 1948. See 68 S.Ct. 743.

MARTIN, Circuit Judge.

On the suit of the Wage and Hour Administrator, the Western Union Telegraph Company was enjoined in the district court from violating the provisions of Sections 6 (a) (4), 7 (a) (3), 11 (c), 15 (a) (2) and 15 (a) (5) of the Fair Labor Standards Act of 1938, Act of June 25, 1938, c. 676, 52 Stat. 1060, U.S.C.A., Title 29, Section 201 et seq., at eight Kentucky towns, namely: Cynthiana, Georgetown, Harrodsburg, Irvine, Morehead, Nicholasville, Paris, and Versailles.

Specifically, the injunction was against employment by Western Union, in the operation of its facilities or equipment in carrying on its telegraph business at the named places, of any persons at a rate less than 40 cents an hour, except when a lower wage rate is authorized by an applicable order of the Administrator issued under section 8 (e) of the act, or when the employees are paid wages authorized by a special certificate issued under section 14 of the act. The company was also enjoined from employing persons at such places for a work-week longer than 40 hours, unless the employee receives compensation for a work-week in excess of 40 hours at a rate not less than one and one-half times the regular rate at which he is employed.

The injunction decree contained a mandate that Western Union shall not fail to make, keep and preserve records of its employees at such places, including all persons suffered and permitted to operate its facilities and equipment in carrying on its telegraph business at the named places, "and of the wages, hours and other conditions and practices of employment maintained by it, as prescribed by the regulations of the Administrator issued, and from time to time amended, pursuant to Section 11(c) of the Act, and found in Title 29, c. V, Code of Federal Regulations, Part 516." The Western Union Telegraph Company has appealed from the injunction decree.

The district court filed comprehensive findings of fact, which are challenged by appellant as clearly erroneous in certain aspects. Upon consideration of the lengthy transcript of evidence in the case, showing in detail the method of conduct of Western Union's business at each of the eight named places, we cannot accept the criticism as well grounded. In our view, the district court set forth without over-expanding minutiae a sufficiency of relevant facts important to decision, and no material discrepancy is disclosed in the findings when checked with the evidence introduced at the trial. The material findings of fact upon which the injunction was issued are certainly not deemed "clearly erroneous." Indeed, the findings are in no significant aspect contrary to the evidence.

As is well known, the Western Union Telegraph Company is now and long has been serving the public with the facilities for interstate and world-wide telegraphic communication. The company's operations include money order transfers; and the telephone, teleprinter and cable, as well as the telegraph, are embraced in its utilities. The present controversy relates to the method of operation of its business in small towns through what are designated as "9A offices." The eight towns here involved fall within that designation; and, in each, the company's business had been formerly transacted by payroll personnel who used its equipment. When the change was made, the telegraph company selected a "9A agent" in each town who, it contends, was an "independent contractor" under the arrangement made. The Administrator denies this contention; and the district court has held that none of these agents was an independent contractor.

Since February, 1944, all arrangements with 9A agencies have been made orally, the use of written contracts having been abandoned. The principal purposes of converting company offices into agency offices were to save money by reducing expenses, mainly wages paid, and to increase revenue by extending hours of service. In inaugurating the new plan, Western Union endeavored to place, under a commission and delivery allowance arrangement, its equipment in a local establishment, preferably a hotel, drug store, bus station, insurance office, or the like. Either the establishment, or some person therein, was carried on the company's records as its agent at the particular place.

The agents chosen by Western Union were appointed so as to procure essential personnel for transacting its communications business at all places covered by the injunction. Company equipment was used in each place in conformity with prescribed standards of service. Such supervision and control as was necessary to that end was exercised by the company; and, as was found by the district court, "for all practical purposes, other than the direct hiring and firing of personnel employed by the agents and direct payment of salaries to some of such personnel, the Company's relation to the agencies has been and is substantially the same as it was before the conversion was effectuated."

Western Union supplied, installed, inspected, repaired and maintained in these agencies all equipment necessary for handling its telegraphic business. The equipment included teleprinters, typewriters, operating tables, safes, lockers, counters, chairs, fans, stationery, tariff books, forms, supplies, pencils, delivery rules, letters of instruction, and Western Union signs and advertising material: all of which remained the property of the company.

Agency offices are under the immediate supervision of the district superintendent of Western Union, who is assisted by designated managers in the vicinity of the agency offices. The district superintendent and his assistants are instructed by the general manager to supervise and deal with agency offices as if they were company offices.

The district court found that Western Union's plan contemplated, at least for record purposes, that no individual or firm would be designated as its agent unless engaged in some independent enterprise, and that personnel of an agency would spend the greater portion of hours worked in activities other than transacting Western Union business. In practice, this plan was not fully consummated. Although on the records of the company a corporation or partnership was entered as agent, individuals at some places were dealt with as the company's agents and held responsible for the company's business.1

In January, 1943, Western Union began making social security and withholding tax returns on individuals and partnerships appearing on its records as agents. Subsequently, the company recognized that expenditures by agents for rent, as well as for certain other items, were deductible from agency earnings and, accordingly, deducted those items before making tax returns on its agents.

The equipment of Western Union at each agency office is connected directly with a relay office under the supervision of a Western Union manager; and no message can be sent or received without passing through the relay office, where each message is audited and a complete record made of every transaction at the agency office. Messages violating Western Union regulations are intercepted.

By either mandatory rules and regulations contained in printed tariffs, delivery manuals, money order manuals, and circular letters of instruction, or through oral instructions, the company has dealt with matters of personnel, hours of work, and details concerning the form, content, receipt, delivery and transmission of messages, as well as the rates to be charged and the means to be used in collecting.

Money orders constitute an important part of the business transacted at each agency office. All orders to and from an agency office are handled through a relay office, which exercises supervision over the money-order activities of the agency office. Money orders are paid by drafts drawn on Western Union funds in designated depositories. The personnel in agency offices are authorized to sign these drafts as Western Union representatives. Close supervision over money orders is exercised by the company, the agencies being strictly limited as to the amount of such orders permissible, as well as to the method of payment by the customer.

At each agency, a separate bank account is kept to cover both money order funds and funds received for the transmission and delivery of telegrams. At the expense of Western Union, all persons handling funds at its agencies are placed under bond to the company. Immediate investigation of an agency is made whenever it fails in any respect to observe Western Union's money order regulations.

The credit risk on approved customers is assumed by the company; and, under arrangements made by Western Union with telephone companies, the agencies are permitted to charge messages to telephone numbers.

All bookkeeping and accounting pertaining to agency transactions is done by Western Union at its relay office. The agencies are accountable for charges as computed by the relay offices. All billing and collecting on agency charges and telephone accounts is done by the relay offices. Before the complaint in this case was filed, the agencies were required to transmit their gross receipts to the relay offices, where...

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