Wirtz v. First State Abstract and Insurance Company

• Decision Date: 13 June 1966
• Docket Number: 18114.,No. 18113,18113
• Citation: 362 F.2d 83
• Parties: W. Willard WIRTZ, Secretary of Labor, United States Department of Labor, Appellant, v. FIRST STATE ABSTRACT AND INSURANCE COMPANY, a Corporation, Appellee. FIRST STATE ABSTRACT AND INSURANCE COMPANY, a Corporation, Appellant, v. W. Willard WIRTZ, Secretary of Labor, United States Department of Labor, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

362 F.2d 83 (1966)

W. Willard WIRTZ, Secretary of Labor, United States Department of Labor, Appellant, v. FIRST STATE ABSTRACT AND INSURANCE COMPANY, a Corporation, Appellee.

FIRST STATE ABSTRACT AND INSURANCE COMPANY, a Corporation, Appellant, v. W. Willard WIRTZ, Secretary of Labor, United States Department of Labor, Appellee.

Nos. 18113, 18114.

United States Court of Appeals Eighth Circuit.

June 13, 1966.

William Fauver, Atty., U. S. Dept. of Labor, Washington, D. C., Charles Donahue, Sol. of Labor, Bessie Margolin, Associate Sol., Robert E. Nagle, Atty., U. S. Dept. of Labor, Washington, D. C., and Beverley R. Worrell, Regional Atty., Birmingham, Ala., on the brief, for Secretary of Labor.

William H. Sutton, Little Rock, Ark., for First State Abstract & Ins. Co.

Before MATTHES and GIBSON, Circuit Judges, and HUNTER, District Judge.

HUNTER, District Judge.

The Secretary of Labor, as plaintiff, brought this action to enjoin defendant, First State Abstract and Insurance Company, from violating the minimum wage, overtime and record keeping provisions of the Fair Labor Standards Act (29 U.S.C. § 201 et seq.), and to restrain defendant from continuing to withhold unpaid minimum wages and overtime compensation due certain of its employees who were engaged in preparing insurance policies, applications, reports and other documents intended for interstate transmission in connection with the transaction of business for out-of-state insurance companies.

The defendant admitted noncompliance with the Act's requirements, but claimed that these employees were not subject to the Act. The District Court found that only to the extent the defendant's employees deal with and handle policies transmitted in interstate commerce from the insurers to the insureds through the medium of defendant's agency are the employees engaged in interstate commerce and covered by the Act; held that plaintiff failed to make a case for an award of back pay to any employee and declined to issue any injunction. Both plaintiff and defendant have appealed from those portions of the judgment they deem adverse to them.

The facts are relatively undisputed. Defendant is a wholly owned subsidiary corporation of the First State Bank of Lonoke, Arkansas, where it is engaged in a single office in performing title abstract work and in conducting insurance transactions for eleven nationwide insurance companies whose branch offices or agencies are located in Little Rock, Arkansas, and whose home offices are located outside the State of Arkansas. Defendant's insurance activities, which will be described more fully later, generally consist of the writing and selling of fire, of casualty, and of automobile liability insurance of these nationwide insurance companies, and in placing with them applications for Workmen's Compensation and other forms of business liability insurance. It is these insurance activities which are in question here, and it is not contended that any phase of the abstract operation is covered by the Fair Labor Standards Act.

Policies of fire, of casualty, and of automobile liability insurance of the nationwide insurance companies are written by defendant's employees and sold directly to the purchaser.¹ In connection with these particular transactions an employee of defendant interviews the prospective purchaser, prepares a detailed application for insurance on printed forms provided by the particular insurance company from its out-of-the-state office or its out-of-the-state printer, collects the premium, and prepares a separate "daily report" to advise the involved insurance company of the risk to which it is bound. Following each such sale copies of the application, the policy and the daily report are forwarded to the appropriate branch office in Little Rock which in turn forwards these documents to the home or regional office located outside of the state.

Workmen's Compensation policies and certain other forms of business liability insurance policies are written at the out-of-state home offices of the insurance companies, after receipt of and consideration of detailed applications which are prepared by certain of defendant's employees at defendant's Lonoke, Arkansas office. When one of these policies is written and approved, the out-of-state home office transmits it directly to defendant's office for delivery to the insured.

Each month on an average defendant sells or places, by one of the above described methods, 120 policies at a monthly dollar volume of $6,500 to $7,000 in initial premiums. At the end of each month certain of defendant's employees prepare for each of the insurance companies a detailed "account current" report based on entries made throughout the month, showing each policy issued, total premiums collected, premiums returned on cancelled policies and commissions due defendant. These reports, together with a check for the sums collected less defendant's commissions and refunded premiums, are forwarded to the respective insurance companies' Little Rock offices which in turn forward them to the appropriate office of the insurance company located outside the state of Arkansas.

At the present time the business of First State Abstract and Insurance Company, both insurance and abstract, is performed by two employees. During one transitional period defendant had three employees. A total of four present or past employees are involved in this action.

Norene Hicks, employed from October, 1961, to September, 1962, and her replacement, Helen Caperton, employed from September, 1962, to July, 1963, regularly performed the insurance activities above described, including writing and typing insurance policies, preparing applications, daily reports and other statements; posting and compiling the "account current" reports for each insurance company; preparing checks; sending statements, collecting and posting payments and making deposits. In addition to the initial premiums collected on new policies these two employees processed collections of recurring premiums on a daily basis. Mrs. Caperton was paid 50¢ an hour for the first two weeks, and 75¢ an hour for the rest of her employment. Mrs. Hicks was paid $1.00 an hour. These two employees apparently performed no overtime work.

Employee Eunice Brown has been in charge of defendant's office since 1961. In addition to her office management duties she regularly performed the same duties as did Hicks and Caperton, including the writing and typing of policies, applications, reports, statements, waiting on customers, and the posting and maintaining necessary accounts pertaining to the insurance transactions. She has regularly worked a 5½ to 6 day a week schedule (44-48 hours) for a salary of $350.00 a month without additional compensation for hours over 40 per week.

Employee Judy High does mostly abstract work but upon occasion she has, among other things, waited on insurance customers and has typed letters for forwarding to the Little Rock office of the various insurance companies. Mrs. Caperton when asked the frequency with which Judy High assisted in the insurance operation replied that usually some time during each day Miss High "would do something, maybe post checks that come in, take collections from insureds who came in to pay." * * * "occasionally if she was caught up in abstracts (the principal work) she would help us in insurance; we usually had something to do in insurance." Mrs. Hicks testified Miss High would take in insurance collections and sometimes if Mrs. Hicks made an error in the insurance Miss High would help her check to find the error. Miss High described her work as mainly abstracting but that she did insurance when it was necessary and when she could help and there was some overflow. She testified she had typed policies, had taken in collections, entered the premiums on the account current and had written checks for the insurance companies. While unable to specify exactly how frequently she had done these things she related that it had been more often since Mrs. Caperton had left (July, 1963) since there was only Mrs. Brown and herself in the office. She also had performed work in connection with the receipt of mail and over-the-counter payments, "sometime during every week" and in connection therewith would fill in the deposit book and pull the statement from the accounts receivable and mark it paid. Even when Mrs. Brown was present Miss High waited on customers and if they wanted to pay an insurance premium Miss High would take the money. If the customer wanted an insurance policy Miss High would either refer the customer to Mrs. Brown, or, upon occasion, take the information regarding the insurance the purchaser desired, and being unable to figure the policies, would give the information to Mrs. Brown. Miss High has performed these insurance duties right up to the present time. Miss High was paid 50¢ an hour from November, 1961, to March, 1962, 75¢ an hour from March, 1962, to March, 1964, and thereafter was paid at the rate of $1.00 an hour.

The principal issue before us on this appeal is whether the four mentioned employees of the defendant were engaged in interstate commerce or in the production of goods for interstate commerce within the meaning of the Fair Labor Standards Act.

In United States v. South-Eastern Underwriters Association, 322 U.S. 533, 64 S.Ct. 1162, 88 L.Ed. 1440 (1944) the Supreme Court, through Mr. Justice Black, declared that an insurance company which conducts a substantial part of its business transactions across state lines is "`engaged in commerce among the several states" and subject to regulation by Congress under the Commerce Clause. We believe it clear that defendant's insurance...