Wirtz v. Melos Construction Corp.

• Decision Date: 08 May 1968
• Docket Number: No. 66-C-981.,66-C-981.
• Citation: 284 F. Supp. 717
• Parties: W. Willard WIRTZ, Secretary of Labor, Plaintiff, v. MELOS CONSTRUCTION CORP., a corporation and Americo Melo, Individually and as an officer of Melos Construction Corp., Defendants.
• Court: U.S. District Court — Eastern District of New York

284 F. Supp. 717

W. Willard WIRTZ, Secretary of Labor, Plaintiff, v. MELOS CONSTRUCTION CORP., a corporation and Americo Melo, Individually and as an officer of Melos Construction Corp., Defendants.

No. 66-C-981.

United States District Court E. D. New York.

May 8, 1968.

Charles Donahue, John A. Hughes, U. S. Dept. of Labor, New York City, for plaintiff, Samuel Gorin, New York City, of counsel.

Kimmell & Kimmell, Mineola, N. Y., for defendants, Leonard S. Kimmell, Mineola, N. Y., of counsel.

MEMORANDUM AND ORDER

WEINSTEIN, District Judge.

The Secretary of Labor seeks to enjoin defendants, the Melos Construction Corp. ("Melos") and its president, Americo Melo, from violating the overtime and recordkeeping provisions of the Fair Labor Standards Act. 29 U.S.C. §§ 207, 211. Defendants concede that they have not complied with the Act, but insist that it is inapplicable because Melos is not "an enterprise engaged in commerce" within the meaning of the statute. For the reasons stated below, the injunction will be granted.

Melos, a construction company with a yearly income of somewhat over half a million dollars, is engaged in constructing foundations for suburban homes. It does all its work on Long Island, New York. While its materials and supplies are obtained only from dealers located in New York, the dealers buy from out-of-state sources.

The principal item purchased by Melos is locally prepared ready-mix concrete — a mixture of cement, sand, gravel, and water. About fifty percent of the cement used — valued at approximately $35,000 a year — is manufactured outside New York. In addition, about $10,000 a year is spent for other supplies — primarily steel and lumber — which originate outside New York.

The question presented is whether the use of products worth about $45,000 a year which its suppliers purchase from outside the state brings Melos within the scope of the Fair Labor Standards Act. The answer turns on whether Melos' employees are "working on goods which have been moved in or produced for interstate commerce."

The overtime provision, contained in section 207(a) of title 29, is applicable to an "enterprise engaged in commerce." It states, insofar as relevant:

"(2) No employer shall employ any of his employees who in any workweek is engaged in commerce or in the production of goods for commerce, or is employed in an enterprise engaged in commerce or in the production of goods for commerce, and who in such workweek is brought within the purview of this subsection by the amendments made to this Act by the Fair Labor Standards Amendments of 1966 —

* * * * * *

for a workweek longer than forty hours * * *

unless such employee receives compensation for his employment in excess of the hours above specified at a rate not less than one and one-half times the regular rate at which he is employed."

Recordkeeping provisions apply to employers covered by section 207(a). 29 U.S.C. § 211(c).

An "enterprise engaged in commerce" is defined by section 203(s) to include one whose employees are "working on goods that have been moved in or produced for commerce." It reads, in part, as follows:

"`Enterprise engaged in commerce or in the production of goods for commerce' means an enterprise which has employees engaged in commerce or in the production of goods for commerce, including employees handling, selling, or otherwise working on goods that have been moved in or produced for commerce by any person, and which —

* * * * * *

(3) is engaged in the business of construction or reconstruction, or both; * * *" (Emphasis added.)

If the substantial quantities of cement, lumber and steel used by Melos were shipped to it directly by producers across state lines, there would be no doubt that its employees were "handling * * * goods that have been moved in * * * commerce" and that, therefore, they would be protected by the Act. See, e. g., Childress v. Whitley Enterprises, Inc., 57 Lab.Cas. ¶ 32,002 (4th Cir. 1968) (construction company). Cf. Kirschbaum v. Walling, 316 U.S. 517, 62 S.Ct. 1116, 86 L.Ed. 1638 (1942) (broad interpretation to include maintenance workers in loft building where goods for interstate commerce were manufactured, approved in Senate Report No. 145, 87th Cong., 1st Sess., U.S.Code Cong. and Admin.News, pp. 1620, 1662 (1961)). Interposition of a local dealer in a product's movement from a steel, lumber or cement mill to a housing site does not eliminate the interstate character of the transaction.

The Fair Labor Standards Act was designed to protect workers not to encourage use of middlemen. Administrative interpretation of the statute, precedent, and legislative history all point to the conclusion that the statutory obligation to pay overtime cannot be avoided whether out-of-state purchases are made directly from manufacturers or indirectly through local distributors.

The regulations promulgated by the Department of Labor construe the phrase "goods that have been moved in * * * commerce," broadly. The goods, they indicate, remain in interstate commerce throughout their journey from manufacturer to ultimate consumer:

"For the purpose of section 3(s) 29 U.S.C. § 203(s), goods will be considered to `have been moved * * * in commerce' when they have moved across State lines before they are handled, sold, or otherwise worked on by the employees. It is immaterial in such a case that the goods may have `come to rest' within the meaning of the term `in commerce' as interpreted in other respects, before they are handled, sold, or otherwise worked on by the employees in the enterprise. Such movement in commerce may take place before they have reached the enterprise, or within the enterprise, such as from a warehouse of the enterprise located in another State. Thus, employees will be considered to be `handling, selling, or otherwise working on goods that have been moved in * * * commerce' where they are engaged in the described activities on `goods' that have moved across State lines at any time in the course of business, such as from the manufacturer to the distributor, or to the `enterprise,' or from one establishment to another within the `enterprise'". 29 C.F.R. § 779.242.

The courts have construed similar statutory language in a like manner. In Katzenbach v. McClung, 379...