# Petition for Writ of Certiorari — Sherry Corine Corp. v. Mitchell > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA04386419_0940%3A2 ## Record - **Collection:** Supreme Court brief - **Document type:** Petition for Writ of Certiorari - **Published:** January 1, 1959 - **Citation:** 360 U.S. 934 ## Text TABLE OF CONTENTS” OPINIONS BELOW 0G eee - QUESTIONS PRESENTED bees 2 STATUTE INVOLVED -— = s 2° STATEMENT-OF CASE e a REASONS FQR GRANTING WRIT ) 9 1. THE COURT OF APPEALS HAS ‘DECIDFD A- FEDERAL QUESTION IN A WAY IN CONFLICT * WITH AD ION OF THIS COURT - 9 2. THE C URT. OF APPEALS HAS DEFINED “RE. SALE” USED IN SECTION 13 (a).(2) OF THE FAIR R STANDARDS ACT IN A WAY THAT IS.IN CONFLICT WITH THE DEFINITION OF THE COURT OF APPEALS FOR THE FIFTH CIRCUIT 10 | | ae. eee ae eee - APPENDIX eee. ~~Opinion of the District Court® eeeecan "45 Fin Order. in District eR So es 49 i of the Court of “Appeals for the Fourth ‘Circuit 20 é. : - © t TABLE OF CASES @ Page Ben Keatersdy, Inc. ¢. Arnold, (CCA, 5th) 250 F. = 47, : » certforari granted May 4, 1959 10 Feffermen c. Marolin, 97 NS (24) 785. 12 Hotels Statler Co. &. D. C., 199 F. (2d) 172 : oS McLeod v. Threlkeld, (1943) 319 US 491, os an 9° Mitchell 0. Kentucky Finance Co., (CA 6th), US (decided : ‘April, 1959, reversing 254 F. (2d) 8) : | j @n2 ‘Robertson Products Co. % Nadehinen, @ (Lt. 1945) 59° NE (2d) 055 12. ” Welling ©. Roland Electric Co., (CA —_ Wo F. _ 745, cert. denied 326 US 657 nubian dewei ad “Fs \ ~~ test. -\, Fy a* Tue ‘Sap e Court of the Uni Ged States, sadetimisthonmmamnatiaisin wares S HERRY CORINE CORPORATION, Petitioner, hae AS ‘ : ae ~ e ‘JAMES P. MITCHELL, Secretary: of Labor, _ United States Department of Labor, o a: +. 8 _ To the United States Court of A inde | | For the Fourth Circuit : ee ——— -—————— 7 PETITION FOR WRIT OF CERTIORARI .. Your petitioner, The Sherry: Corine Corporation, is a- ‘corporayen organized and existing under the-laws of the ¢ State of Virginia, Wherein it is engaged in: ¢ 4 logal retail. restaurant business. Your petitioi prays that a writ of = ow "certiorari fssue'to the Unit ates Court of Appeals, Fourth Circuit, to review a judgmeit of that Court entered in a case- entitled “James~P. Mitchell,~Secretary of Labor, United States rtment of Labor vs. The Sherry Corine Corpora- per, Docket No. 7784”, reversing a judgment for the = titioner. rendered by the: United States District Gourt F The Eastern District-of Virginia, Norfolk Division (Albert .. V. Bryan, District Judge) and ordering that the case be re- “manded for ask preqeeangs in snepoame with its opinion. ” e i = : rs _ OPINIONS BELOW. ; | The Opinions rendered vos District Court. and ie the Court of Appeals, Fourth Circuit, have not as yet io officially or unofficially reported. Copies. of these Opinjons | are | east ale in the a to this Petition. . ‘ 4 : / re ck “JU RISDICTION ' The ‘poriedizilon of ‘this Court is invoked wader 28 USC, Section 1254 (1). The judgment of the Court of . Appeals for the Fourth Circuit was_entered. on. March 13, sisi . QUESTIONS PRESENTED . WHETHER A LOCAL RETAIL REST- ~ AURANT. PREPARING . COMPLIMENTARY ' ,.FLIGHT MEALS -FOR CONSUMPTION BY - AYRLINE PASSENGERS IS SUBJECT TO. THE PROVISIONS OF THE FAIR LABOR STAND- ' _ ARDS ACT? \ a ‘WHETHER A LOCAL: RETAIL REST- - fe AURANT PREPARING COMPLIMENTARY oy MEALS FOR CONSUMPTION BY AIRLINE PASSENGERS IS EXEMPT. FROM THE ACT AS A LOCAL: RETAIL ESTABLISHMENT? , ~ STATUTE INVOLVED — { The provisions of the Fair Labor’ Standards Act perti- nent to the questions presented ‘by this Petition are as.fol- © lows: priae y j q Sec, 3. As used i in this Act ™ i) “Goods? means is — ships and marine i. : equipment), wares, products, commodities, merchan- dise, of articles or sybjects gf commerce of an eee “acter, or any part or ingredient thereof, but ogs? not include goods after their delivery’ into the actual” physi- ‘cal possession of the yltimate consumer thereof other than a producer, manufacturer, or processor ‘thereof. —“(j) ‘Produced’ amleans produced, manufactured, mined, handled, or in any other ‘manner worked on in any: - * States and for the purposes. of this: Act an employee ‘. shall be deemed to have been engaged in the produc- family owned corporation, organized and existing under the tion of goods if such employee was: employed in pro- _ ducing, manufacturing, mining, handling, transporting, -or in.any other manner working on such goods, or in any closely related process or occupation -directly es- ‘sential to the producing thereof, in any State.” Section 13 (a)—The provisions of Sections 6 and 7 7 | shall not apply with respect to: eS oa Mw Osa a. eee eee 9 “(2) any employee employed by any retail or service P establishment, more than 50 per centum of which estab- --lishment’s annual dollar volume af sales of goods or services is-made within the State in which the establish- -ment is located. A ‘retail or service ‘establishment’. shall - mean an establishment 75 per centum of whose annual dollar volume of sales of goods or services (or of both) - is not for resale and is recognized as retail sales’ or services in the particular industry***” — STATEMENT OF THE CASE The petitioner, The. Sherry Corine Corporation, is a laws of the State of Virginia and having its wh aigiiein and < ‘only place of busine -the City of No rfolk’s Municipal Airport Building, locatetl in Princess. Anne County, Virginia: The business conducted by the petitioner is, a. local retail restaurantu, (Factual finding by District Court). "The cor- poration has two operations in the airport. building, one known as the Municipal Airport Grill, being located on the first floor and the other known as the Azalea Rogm Restaur- ant, being located on the second floor of said airport building. - The grill operation. is ‘carried on in one’small foom with . — work space in the center and customer counters surrounding said work space. All sales are retai! sales and the grill is - the only grill at the airport. The hme Room Restaurant is an attractive restaurant — ovrelooking the main runways and loading stations of .the airport. Adjacent to the dining areas is‘an adequate kitchen where food is prepared for sale in the Azalea Room and also where meals are prepared on.a per meal basis for sale” | to the Capital and National Airlines. for use as complimen- | ~ tary meals on their, passenger flights. : Petitioner has 45 employees, among. whom are cooks, _waitresses, cashiers and kitchen help in the grill and Azalea Room, and, also, “bus” boys, who deliver the meals pre--. pared ‘in, the. Azalea Room kitcheg’ to the bac eke so i to 100 feet away. Pattioner,:’ ‘among ifs other. activities in the: Azalea Room Restaurant, periodically furnishes’a meeting and din- irig place for various social, fraternal, business and profes- sional organizations. Petitioner sapiitarly prepares banquets for 75 to 250 members of such organizations. Such meals are handled. on a “standard” mea] basis (as distinguished from a Ia carté orders) and ar€ billed on a per meal basis. car a Petitioner also prapares from time to time food on a multiple meal basis for service at banquets held at the Masonic Tem- ple in the:City of Norfolk. On such occasions, thevitensis of. the Masonic Temple are used and are cleaned by the : . titigner. Once a year’ the petitioner prapares 4 000 box ~ nches for participants in the Annual Oyster Bow! otball “Parade and Game for Crippled Children. These box lunches are prepared and charged for ona unit basis; 2. i VE | Petitioner first made sales to the airlines i in }951. “Hier. ever, from 1951.to 1955, the only items sold to the airlines __. Were coffee and juice. The petitioner’s operation is so ‘small the airlines did not at first think it was-suitable as a “food - point” on their flight schedule.: During the years that the petitioner sold no mieals to the airlines, the business in the |. Azalea Room flourished as there was no other restaurant facility available to passengers boarding. or disembarking from planes. However, as soon as thé petitioner commenced . selling meals to: the airlines and Norfolk became a “food ~/. point” on. the airlines’ schedule, petitioner’s Azalea- Room — Restaurant business declined drastically as’ potential custo- mers ate the meals furnished to the airlines. ‘Petitioner has no written or oral contract with the air-. lines to furnish food., The only arrangement. between the - parties is that if the petitioner accepts. the-airlines’ daily re- quest for a specified number of meals, then’ such meals are — to conform to .a designated menu and are. to contain. the quantity and quality of food designated for the per meal price specified. But the airlines are not’ obligated to: buy | © from the petitioner, and it is not obligated. to sell to the air- — lines. Either party may cease doing business. with the other . wae prior Notice. - : ; 6 “ s . ae volume of petitioner" $ ‘shes to the. airlines. depends, -} : entirely bs eather conditions, holiday schedules, flight -. | sched .{\The'record indicates that at the time of trial f S Bin 2s farnisting food or beverages to approximately 15 a dy that.i Lis, meals for seven separate flights, and hg and’ juice for eight other flights. The food on-each of _ these flights is served to passerigers who are ‘aboard. the planc when it leaves Norfolk. eae 03% - ‘s : wae s stipulated that “46 per cent er: petitioner’s . gross ea a . business for calendar year 1956 and 49 per cent af its Zrosss : ; business for the calendar year 1957.were derived from food i 4 gales to the airlines. : = ; sida & , Petitioner. ‘charges and receives a retail price ry all food ee beverages sold | to the airlines, Petitioner has consistent- — ~ ly refused to sell’ to airlines, who “resell” such food and beverages to their’ passengers: “All food and beverages Sh y petitioner has been to airlines who give the food. to Gar Ne passengers as a “complimentary” meal, and advertise: such _ J in their flight schedules and other advertising media. ~ ay _ The’ petitioning corporation is a retail sale and: service - “restaurant, and. is so recognized in the. industry: The corpora: ation holds a retail réstaurant license from the Common- wealth of Virginia and is not subject to. regulation by any - -state. or federal agency having inspection supervision - of wholesalé restaurants or manufacturing concerns, .‘All of petitioner’s sales, both in the grill and inthe restaurant, and } = its cate services to local civic and social organizations and: 3 pom its sales.to the airlines are all retail sales for which a retail) pricé is charged. 4 : oe No employee of the petitioner iS employed in work ee across state lines and no food bipaaacis by ania is resold oo ~ . in interstate commerce within or ‘without the burders of Vir- ginia. bh ae and delivery of meals is completed: in Vir- _ ginia and ‘diate consumption in fights o occurs in Virginia. The same fate i is paid by the airline passenger. whethes he travéls on a meal flight or not. Petitioner’s employees do >: a not participate in flightsgand do not engage iin activities es7 sentiato commerce. The meals involved are niesared'énd "delivered as-a perishable. item intended for immediate ¢on- : - sumption.- The meals are not,n merchandise which is produced ° « for commerce and for the purpose of’ resale. The airlins: eg inv olyed are not engaged in reselling meals unless it can be rs , ‘said, the airlines.resells to the pagsengers fhe aspirin, maga- -. 9° Zines, toilet paper, ‘pillows, etc., availabl on each plane for-" + d. the price of the ticket. Doe v See ns ae a is cause ‘Was heard on the Compa bof the: Secretary , af Labor of the United States. seeking to-effjoin the petitiqner - from: alleged violations of the minimum wage, overtime, “ record keeping and shipping provisions of the Fair Labor - Standards Act. The cause was heard ore tenus by sg? eo » on March 3, 1958. The. petitioner conceded in the District Court that, as it is a local retail restaurant corporation, it has “never complied: | with the minimunt wage, overtime, record Le keeping, or shipping provisions’ of the said Act. The per hc. € tioner contended below, and the District Court so fund, des | : - it ds not-engaged in; commeite e the -production of goods’ | for ¢ commerce within the fearing of the Act; and, even if so a. engaged, j is exempt by ‘the. frovisions of Section 13 of the —° Act. See findings of ‘fact-famd conclusions. of law. in the Dis- © me trict Court’s Memorandum dated June 19, 1998 and : repro- duced. in. full in the appendix. : _* > ee, @ o The baie of Appeals: reversed the judgment of the . District Court and remanded the cause to the District Court for further proceedings, holding ‘that petitioner was subject to the’Act, and, though a local retail restaurant, was not en- titled to the exemption provided _" Section 13 ba (2) of: A he Act. %:" ‘The core of the reasoning by which the Court of Ap- | peals ‘arrived at the decision that the petitioner was covered by the Fair Labor Standards Act is contained in the follow- | ing quotation from the Court’s Opinion: “The initial question is whether the Corporation’ s _ kitchen employees and bus boys are ‘mn commerce’ or, _‘m the production of goods in commerce” within the . meaning of Section 6 of the Statute. It is generally held that employees engaged in-producing goods fo~ the instrumentalities in-commerce, such as railroad.and . ships, one ee : in the — of goods ii in com- merce.” The core ‘of the reasoning by which the — rt Ap. peals arrived“at the decision that the petitioner was not en- — titled to the retail exemption afforded by he Act is contained **in the following quotations from the Court’s Opinion: “Their meals are purchased by the airline not for self-consumption but for consumption by .the -passengers and although no separate specific charge is made, the cost is an operating expense taken into account in com- puting the rates of transportation. In some instances, moreover, meal s@rvice is’ an important factor which distinguishes first class flights from cheaper flights on _ which foad is. furnished only for an additional charg". The décisive factor, ‘ir ‘in our views is that the meals are 8 — , a” piorchased by the airlines to be distributed by ann’ tor individual passengers for consumption and that the air- lines are compensated for the cost by. making it a con- g__ Stitutent element for the charge for transportation. [n _a-broad sense, it may fairly be said that there is such a - resale as to exclude the transaction from the retail ex. emption of the aoual REASONS FOR GRANTING THE WRIT . THE COURT OF APPEALS HAS DE- - « eee A FEDERAL QUESTION IN A WAY | IN CONFLICT WITH A DECISION OF THIS COURT. The Court of Appeals has “decided a- federal’ question in a way that squarely conflicts with the decision of this Court in McLeod v. Threlkeld; et al, (1943) 319 US 491. In ~ that case, this Court held.the employees of an independent food contractor who furnished the -ingredients and prepared < - meals ona railroad dining car for consumption by mainte- nance of way employees of an interstate railroad “Was not covered by the Fair Labor Standards, Act for the reason that the employees were ‘neither engaged in the production of 7 guods for commerce ‘nor engaged in commerce. The District Court in the present case found that the Threlkeld case was controlling. The Court of Appeals, however, -held that the mere fact that an instrementality of interstate commerce purcased. _ the goods (meals here) for in transit consumption by ‘its “passengers is sufficient to. constitute production of goods for commerce under the Fair Labor Standards Act. Such a hold- ing squarely conflicts with the decision of this Couftt in the case of McLeod’ v. Threlkeld, supra. 9. —_ 2. THE COURT OF APPEALS HAS: DE-. — FINED “RESALE” AS USRD IN SECTION 13 (a) (2) OF THE FAIR LABOR STANDARDS ACT IN A WAY THAT IS IN.CONFLICT WITH ». THE REFINITION OF THE COURT OF AP- _ PEALS FOR’ THE FIFTH CIRCUIT. The decision of the Fourth Circuit in. this cause is in : ecules. with the decision of the: Fifth’ Circuit in the case. of Ben Kanowsky, Inc. v. Arnold, (CCA 5th) 250 Fed. (2d) 47, certiorari granted May 4, 1959. _ One of the essential elements of the ‘petal ae ‘afforded by Section 13 (a) (2) of the Fair Labor Standards Ac: is the proper definition of “resale” as therein used. “Fhe ‘ Act does not define resale, and, therefore, it must be given. its $ usual meaning and connotation as used in sales parlance. ' The Fifth Circuit 3 in the Ben Kariowsky cade gave the : word, “resale” its usual and-customary meaning when it said: “The word retail is not defined by the: Act: Given _ its Common and ardinary acceptation when used in sales parlance, it means a sale in small quantity or direct to the consumer, as distinguished from the word whole- sale, meaning agale in large quantity to one who intend: to resell. "The character of the sale is not altered by the use to which the consumer may put the. purchased commodity. ‘These sales were prepondreantly retail: ' * although the products sold were used subsequently for ee commercial purposes.” (Italics supplied). : . This definition was adopted by the Distriet Count in the instant case and your petitioner was afforded its retail exemption. The testimony was uniform:and conclusive that the sales here involved were not sales for: resales in the — ae. 10 . -¢ ‘ " : F sis ‘reatauirant industry. The: District ‘Court's action was in ac- éordance with the House Conferee Report as to the appli- cability of the exemption to restaurant establishments even _ though located in interstate ‘facilities. “Statement of House Conferees, 1949 Amend- ment:, ‘ Retail and Servies Establishments: ” aaa “The second test provides that in order for an . _ establishment to be exempt,. not less than 75 per cent “i sa annual dollar volume of sales of goods or services r both) must not be for resale. In other words, at least three-fourths of ‘the goods or services (or both ) sold must be:to purchasers who do not buy for the pur- pose of reselling. ‘Normally, goods are to be coggidered as sold for resale even though the mee 3 sells them in an altered form. * * * ie “The third test provides’ ‘that 75 per cent gal the estabishment’s annual dollar volume—of-sales-of-g or services (or both) must be recognized in the particu- lar industry -as retail sales’ or services. Under this test any sale or service, regardless of the type of customers, _ ‘will have to be treated ‘by the Administrator and courts as a retail sale or service, so long as such sale or service iS recognized” in the particular industry as a retail or service. * * * Likewise, sales or services of hotels, restaurants * *.* filling stations and the like, whether made or rendered to private householders or to business customers, will be retail so long as they are recognized — as retail sales or services in such industries. “Te location of the establishment, whether in an | - industrial came an office building, a railroad depot, or % . pes * . a Government JH make no difference in the application ption.’ So long as the estab- 1 lishment meets the tests described above, it will be ex- cluded from the minimum a provisions — | of the Ae:2#——— > ‘ See Mitthell v. Kentucky Finance Company, (CA 6), US, (Decided April, 1959, reversing 254 F. (2d) 8). ‘The Fourth Circuit, however, rejected the rationale that the word “resale” must be given its common and ordi- nary acceptation when_ used in gales parlance, and held that. meals purchased and pal for ‘by the airlines: as:a business expense are “resold” to. the gpassengers within the meaning, of Section 13 (a) (2) wf the Fair Labor Standards Act. The Court reached this conclusion regardJess of the fact@al tind- ihg that the meals are “complime p? the passenger ok does not €al asa separate charge. Items tscé. by a. customer and purchase by. the establishment as a busi- ness expénse have never / deemed to be “resales” in sales parlance. ‘See Robertson: Products Co. v. Nudelman, (Ill. 1945) °59 NE. (2d) 655; Fefferman v. Marolin, 9° NS (2d) 785; Hotels Statler Co. v. D. C., 199 FB (2d) 172. Thus, the decision of the Fourth Circuit riot only is in .con- flict with the rationale of the Ben Kanowsky case, which i: . presently pending before this Court; it. also constitutes ii tortured definition of the word “resale”, the critical criterion of: exemption. under Section 13 (a) (2). of the Fair Labor. Standards Act. ‘Such definition of “resale” is’ also in direct. conflict with the definition adopted by every .court which _ has had the question before it in whatever context. ae ‘ 2 The 1949 Amendment was tailored to overcome oe Administrator’s “business use” a which determined that 12 a sale for use for a-commercial purpose could: not be-a retail sale. In V alling v. Roland Etectrical Co., (CA 4) 146°F. (2d; 745, cert. den. 326 US 657,- the Fourth Circuit ac- ‘cepted the Administrator’s holding that the sale for a com- * mercial use is not a retail sale. “The House Conferees, i: their, report’on the 1949 Amendment, specifically noted thas the case of Walling v. Roland Electrical Co., supra, was * overruled by the 1949 Amendment. In the instant decision, the Fourth Circuit has:apparently: disregarded the | Purposes . ; of the 1949 Amendments, and has’ reaffirmed its previous decision in the Roland Electrical Company case by. holdin: that a sale for commercial use is a sale for-resale within. the meaning of the Amer t. | ey ——7 The 5 government « concedyd in the Fourth Circuit that — théP stitioner had established the other grounds essential t > the claiming of ‘exemption afforded by ‘Section 13 (A) (2) of the Fair Labor Standards ‘Act: namely, (1) that “more than 50 per centum” of petitioner’: “annua! dollar volume P ad of sales of goods or services is made within the State in which the establi-hment is lodited”, and (2) that 75 per certum. of petitioner’s annual doll r volume*of sales of good» and ser- vices | “is recognized as redgil sales ur services in the particular industry”. The sole question presented, therefore, is wheth cf of not petitioner’s sale_of meals to the airlines are’ sale- for resale within the 1949 Amendments to Section, 13 ( A) 2) of the Fair*Labor Standards Act. By its decision the Fourth Circuit has defeated the ends sought to“ be accom. | plished by the 1949 Amendments by holding that a sale for a commercial use (as distinguished from a personal or privats use) is a sale for resale and thus not a retail sale. Thougands of restaurant operators throughout the United Staffs have deemed themselves exempt under Section er 13 (a) (2) of the Faiz Labor Standards Act who will now be covered if this decision is allowed to stand. The appli-. _cabitity of such a definition of “resale” is not restricted in its affect to the restaurant business. Retail pusinggses of ~ Nwety nature (which have never considered a legitimate busi- | ness expense to be a “resale” of the. service rendered) will . now find they are subject to the Fair Labor Standards Act. This: will result ae of the local, retail nature of the business. « rae " Petitioner’s business rom been’ literally’ destroyed. over ‘ night by this definition of the word “resale” and its sole remedy is to urge upon this Court that*the correct, definitfon he announced. by this Court so that cand important federal * question can be settled. - CONCLUSION | It is respectfully submitted that this Petition for a Writ of Certiorari to the Court of — for the Fourth Circuxt ‘shoul: t be granted. < ree ia 2 Ropert R. MacMitiaw. - Counsel for Petitioner . — Howarp & MacMittan “i a ss 2 National Bank of Commerce Building See ; es Norfolk 10, ae : . May 28, 1959 , —_ . 7) * ve ~ Exhibit “ar ‘aie. Tue UNIT ED STATES |e COURT es 2 : rok THE EASTERN DISTRICT OF VIRGINIA At Norro.k . . i ; @ivit: 2526 Pte: ———— | \, ( — ° JAMES P. MITCHELL, Secretary of Labor, _ %e . 4 United — Department of Labor. rs v. - SHERRY C ORINE CORPORATION. MEMORANDUM BY THE courT Although the diteudans furnishes sods to passengers aboard interstate airliners, the “court is of the opinion that. the defendant is not subject Yo the Fair Labor Standards Act because the defendant is a localized restauranteur en- "gaged in a purely local. operation. :- Besides, the business is exempt from, the: Act.as retail, retail. characterized by, the - customary readiness of the counter or table to the patron and: of the service of food not needing further processing and not. intended’ for preservation. .29 USCA 206, 207, 213 (g)(2).. | : _ © TL. Defendant conducts a grill as. well as a more. for- | - * mal dining room at the Norfolk, Virginia municipal airport, | serving anyoné’who presents ‘himself. Without’ a contract > : 5. ! - with the airlines, it accepts their daily requests for each flight ‘for meals of a specified menu and at'a fixed -price: There is no standing obligation between them to buy or sell. ~The number of meals for ‘the flights varies from: one tu fifty-& not as many as the. defendant will frequently « serv ic club or other-group. ae nati of deplaning the passengers and faring them in the grill or dining room, the airline has the meals Drepght ; . to. them, but the same mieéls exactly. The foods for/im- ‘mediate eating; it is not simply the. constituents of S ; to be thereafter prepared. “Bus”? . boys of the defen nt deliver the.meals in individual trays (owned by the carrier ty the-side of the Ship, in lieu ‘of waiters setting them un tables. before the guetss. In return, the boys receive from -the planes similar but soiled: utensils for’ washing. —Al- - thought touching it, the defendant’s activities are not steps’. -seither pre-, or of, interstate commerce. .McLeod v. Threl- - keld 319 U.S. 491, 493 (1943). - II. ‘But, in any event, the employees, of t Bcfendien: are exempted from. the Act by Section 13 (a) a) in thes. ‘ ~ words: p85 ” 3)\ ‘any cnfloyee ciplayed by any: retail of service establishment, more than 50 per centum of which éstablishment’s annual dollar volume ,of sales of goods or services is made within the State, iri which the estab. lishment is located. A ‘retail or service establishment’ shall mean an establishment 7§ per centum of whose annual: dolar volume\of sales of goods“or services (or of both) is not for résale and is recognized as retail sales or services in the particular industry.’ "29 USCA - 213 (a): ae \ As ‘inital aw the’ Yeatule of the defendant un- mistakably mark it a retailer. whose scope of.action is clear- ly local. The defendant is so classified “in the particular industry” of which it is-a part,.and is so assessed for State license taxes. It meets, too, the other exactions of the : statute’s formular for retail emampuon. -_ , “More than 50 per centum of xx [its] xx annual dollar - volume of. sales of goods or services is made within the State” of its location, admittedly. If the sales to the air-- lines-are not “for resale”, then indisputably “75 per centum” of-its total annual saleS in dollar volume are not “for resale”. Ft he court concludes they are not, in law, sales for resale. True, the cost ot ‘the meals is an operating expense; , itis borne by all-;assengers, whether or not receiving.a meal, in the purchase“of their transportation. If this be a “resale” is is, as to those passengers who are furnished a meal, surely too tenuous to be real—too removed and too dilutéd to alter the.nature of the defendant’s trade. ‘The stark actualities of. . _ the defendant’s method of doing business are. not erased by.” “the reimbursement of the carrier by the passenger. It still remajns,’as originally, a chef-to-guest service, the character of the vendor unchanging. The status of a taverner is not affected by-who picks up the chit. eect ‘Nor i is the retail cast of defendant altered by the fact that its meals were sold for use in a commercial enterprise. - Defendant’s operations are nonetheless local and immediate with the consumer. But, more, since the 1949 amendment _ of the Act, such‘a commercial use no longer destroys the retail form of the sale; it is no longer a factor-in-the dermni- nation of the statutory exemption. By this change’ Congress emphasized that “xxx-sales or services of xx restaurants xx a whether. iia or rendered to private householders or tu j business customers” should be considered: retail. See Con- ~ ference Report No. 1453, October 17, 1949, 81st Congress,. First Session, U: S. Congressional Service, p. (2241, 2263-5. TIL Allied:to both points just, discussed ,is the fur- ‘ther . ‘consideration that in the - circumstances defendant’s ‘fe -operation does not involve goods or services within the Act.- \ | The meals furnished are, by statutory definition,- excluded . « as “goods”. for, as we have noted, they are delivered almost — directly “into the actual physical possession of the ultimate _ consumer thereof other than a producer, manufacturer, .or © processor thereof”. 29 USCA 203 (i). There’is no service” unless the subsequent washing: of the dishes on which the meal has been put be a service. But dishwashing is a service at once connected with the meal, a nact integral in the pro- vision of meals to.every kind’ of patron. . That the dishe> = belong to the airlines is ‘riot significant. Without stepping out of character, a licensed victualer may fill, rinse or wash’ the lunch pail, the picnic jug or. the Snally plate of his _ patrons. ) : Adopting this mianieesiilii as its findings of tee and _conclusions of law, the court is now entering an order deny- ing an ‘injunction and sirecing dismissal - the complaint. (Sgd.) ALBERT V. Bavast “8 United States District Judge _ Alexandria, Virginia es June L9th, «1958. . a eo ae 18 - : In THE UNITED sears DISTRICT COURT FOR THE EASTERN DISTRICT OF. VIRGINIA - = ! t Norrork : = ; : ig a Cans, 2526 JAMES P. MITCHELL, Secretary ‘of Labor, a ‘United States es of Labor » = A v. SHERRY CORINE CORPORATION a FINAL ORDER = Y Upon the findings of fact and conclusions of law, stated by the cotirt in writing and this day filed, it is ORDERED that the injunction and other relief prayed in the complaint. in this action be denied, the said complaint “dismissed and this action stricken from the docket, all of zg which is hereby done. ae / (Sgd.) Avsert V. Bayan 7 ~*~ 6 | . :. United States DistrictTudge —.. Alexandria, Virginia (peers > ; eo es jm: * 0 lC ae os Cac: oo ~ Eid ‘B’ ‘United States. Court of Appeals . | | _FQR ‘THE’ FOURTH CIRCUIT ~*~ C7 JAMES P. ‘MITCHELL, Secregary- of bidies z United States Department of Labor, ) ; / A ppellont, | vs. SHERRY -CORINE CORPORATION, Appellee. | APPEAL FROM THE Unitep Srates District Court For ~ B aces EASTERN District ‘oF ViRGINIA, AT NorrFouk. Avsery V.’ Bryan, District Jupce: * ¥e (Argued January 20; 1959. Decided March’ 13, 1959. ' tte SORELOFF; Cat ate, and Soper and’ Hayns- : WORTH, Circuit Judges. . ¢ Py "Sylvia S. Ellison and’ Beate Bloch, Attorneys, United State: Department of Labor, (Stuart Rothman, Solicitor, ‘and ~ Bessie Margolin, AssistantiSolicitor, United States Depart- ment of Labor, & brief) for Appellant, and Robert R. MacMillan (Breeden, Howard & MacMillan on brief) ‘for Appellee. — ‘ ) me oe ¢ . ie 920 ° °. Sort, Circuit Judge. —s. *, This’ action was instituted by the Séoretiry “of. Labor ‘ under the Fair Labor Standards Act, 29 U.S.C. Supp. IV, Sec. 201 et seq., to enjoin the Sherry Corine Corporation Lum violating the minimum wage and related sections of: . the statute at.the restaurants which it operates’ at the Mu- nicipal Airport in Norfolk,’Virginia. The defendant con- » ; tended that its employees were riot covered by Secs.. 6 and 7 ‘of the Act since they werg-not “engaged in commerce or in ' ” the production of goods:for commerce, as defined in Sec. 3 thereof, and «also because’ the business’ was a retail of service. establishment within the meaning of Sec. 13 of the Act©The District Judge sustained these defenses and dismissed the ‘complaint. The Corporation soliai a coffee’ shi on the first floor me a dining room and kitchen on. “the second floor of. the. - airport building. It employs 45 persons, including a chef, 2 ‘assistant chefs, 10 helpers and 10 bus boys. .In n gddition to the: patrons df the two restaurants, it regularly supplies” meals to Gapital Airlines and National Airlines to be served to their passengers énroute:on flights leaving Norfolk for destinations outside the ‘State’ of Virginia. This business produces bewteen 46 ak and 49 «a cent of the Corpora- , ition’ s annual gross reven _The Capital. Airlines purchases ‘meals prepared accord- ing to its specifications at an agreed price for, three of ‘ts © _* * Sixteen flights ‘leaving Norfolk each day. It notifies* the ‘~ defendant three hours before flight time how many meéals will -be required but reserves ‘the right of cancellation one anda half hours priag to time of departure upon payment of half price, “An hour before flight time the restaurant ‘ays 21 - prepares the required number of trays, eight to a carrier, . placing upon each tray the necessary accessories. Hot foods . prepared: in the kitchen in casserole dishes are kept, hot in electric ovens. . This equipment is the property of Capital Airlines.’ The trays and ovens are delivered to the planes and put in_place by the defendant’s bus’ boys twenty minut» * before departurt. Empty ovens, carriers and soiled equip- ‘mgnt are removed from the plane and cleaned jn defend- ant’s kitchen. The airlines hostess aboard the plane- serves the passengers after the plane has reached cruising. heigh:, . and generally the meal -has not beeri served and eaten unti! after the-plane has left the State. In the case. of ore flight, - service is not commenced until the plane has made its first stop. in Narth Carolina. Southbound and westbound’ flights — cross the State’s borders in eight to twelve minutes; north- bound flights in twenty-four to thirty-five minutes. Th ‘planes carry fronr twenty-four to fifty-seven passengers. The defendant alse provides coffee and fruit juices for other flights, and special cléaning service fof planes from out-of-_ .state that stay in Norfolk overnight. \The defendant’s ar- / rangement with National Airlines is sithilar in all material respects to its arrangement with Capital Airlines. s , “4 . Phe airlines sérve. meals o& certain first class flights witKdut specific additional charge. , This practice -has been a competitive factor in air transportation. The expense is recognized as part-of the cost of operation which enters into- the, authorized rate structure. "On cheaper flights the Civil - Aeronautics Board does no? permit the furnishing of meals except for’a.charge over and above the cost of the tidet. The airlines dre not under contract to furnish complete. meals ‘but ‘the ‘passengers have come to expect them, and Gme- ' times when ‘a flighyf's delayed mcals are served to them in AY, ° _ defendant’s restaurant at ‘the airport ‘at the expense of the * airline. 7 The ‘initial question.is: whether hte Corporation’s kitchen - employees and bus boys are “in commerce” or “in the pro- duction of goods in commerce” within the meaning of Sec, 6.-(a). of the statute. It is generally héTdthat employeag engaged in producing goods for instrumentalities in com- . merce, such as railroads and ships, are engaged in- ‘the,pro- duction of goods in commerce. Thus, in Hamlet Ice Co. v. Fleming, 127 F. id 165, we held that workmen engaged i in producing ice for sale to an interstate railroad for use in 1caing perishable freight, as well as food and beverages in dining cars, were covered by the statute. And i in Allstate Construc- tion Coe? . Durkin, 345 U.S. 13, the Suprente Court ‘held that canglcaionn of a manufacturer who produces a road sur- " facing mixture for -use in, the reconStruction and repair -of interstate ~oads are” engaged in the production, of goods for - commerce. See also “Atlantic Co. v. Walling, 5 Cir. 131 F. 2d 518; Chapman v. Home Ice Co., 6 Cir., 136 F. 2d 353, cert. den. 342 U.S. 814; cf. Ben Kanowsky, Inc., v. Arnold, § Cir.,:250 F. 2d 47. In Armstrong Co. v. Walling, \ Cir., 161 F..2d 515, it was held that workers in a cgymmissary department, which served as a kitchen and storeroom for selling counters of sandwiches and milk in a railroad station, : ‘and also for the service. of like articles on trains, were en-"~ gaged in the production df goods for commerce; and in \ Mitchell v. Royal Baking Co., 5 Cir., 219 F. 2d $32, it was - held that employees of a ihory thio furnished ‘meals to cafeterias, which used them in the preparation of flight meals - sold -to airlines for — planes, were simil engaged. These decisions have2not been deemed at variafice with McCleod v. — USS. 4; ‘where rt was, held that - . ° ee ‘ 23 (t _# * _ his‘employer and a railroad company, -is not engaged ines” . en ; . a - SY ee "an employee. who pacts: for iaienance-of way a . employees of art interstate railroad, under.a contract betwee _ commerce within the meaning of the’statute, : Paap aay _" opposition, the defendant contends that the ‘case “falls .. Within the exception contained: i in Sec. (3) °(i) of the Act tu. | the: effect: that the term “goods” does not: include. Loge after their delivery into the actual physical’ possession of © the ultimate consumer ‘thereof other thah a producer, manu--: facturer or processor. thereof.” The. activities of the em- _ ployees of the defendant who delivér the constituents of the meals to the -side’ of the ship. for consumption by the pas- sengers ts likened to thd service of waiters in the restaurant: who set meals on tables before the guests.* ‘The evidertoes+ e ‘shows, howevers: that the meals are not furnishel to th. “passengers by the defendant but by the airlines. Moreover, the arrangement not-orily serves the convenience 6f the p:- _ sengers but also facilitates the interstate operations of the” " airlines by obviating the delays incident to the service of meals at the airport. In most instances the. meals are con sumed’ during flights. from Virginia to neighboring’ states and it is of no consequence that they are delivered to th: planes before the inters:ate movement begins. In Powell 4 U.S. Cartridge Co.,-339, U.S, 497, ‘contractors Dedubens : munitions for the United States claimed that their produc: were excluded from coverage ‘by Sec. 3 (i) because they were delivered to the United States, the ultimate consumer, prior to interstate transporation, _ but the Court overruled this contention in these words (pp.. 514-15): -*ef., Dial, et al v-Hi Lewis Oil Co., D.C. Mo. 1951, 99 F. Supp. 118. Ss “We hold, therefore, that the fact that the pen | tions were produced for delivery} into the actual physical. Bascagee of the United States. as their ultimate con- . sumer," before their subsequent interstate shipment, does not deprive the émployees who produced the munition: of the benefits df the. Fair Labor Standards Act. It is” not material whether such. interstate transportation was ‘ to take place before or after the delivery of the muni- _» tions to the United States. In either event, thé em- ahd fie _ployees wer€é engaged in’ the production of ‘goods’ for ae ‘commerce’. To:hold otKerwise would restrict the Act not onily. ene but also inconsistently with. its eee _ purposes.” ‘The defendant, however, strongly contends that even if the meals constitute goods produced for commerce, the _employees. of: the restaurant engaged in preparing them | are expressly excluded from coverage by Sec. 13 (a) (2) of the Act relating to employees of a retail establishment, which is’ deflned as “an establishment, 75 pér ‘centum of - whose annual dollar volume of sales of g Is orfservices (or of both) is not: for resale’ and: is recognized as retail ‘ sales or services in the particular industry.” Since the sales... to the airlines constitute 46 per cent of the defendant’s’ busi- ness this contention: is not tenable unless it‘appears from the ._ . evidence (1) that the meals are not furnished to the airlines - for-resale anl (2) that the sales are recognized as tetail sales within the particular industry: The District Judge found, ‘on. the basis of substantial and uncontradicted evidence, that ° _ the: defmdant’s operations, including its airline sales, are recognized in the industry as retail sales, and hence he held that. the second component in the basis of the exemption had been‘establishel. The Government on its. part does not 25 \ \ a consider or. ‘discuss the evidence bearing on this point bu: relies on the contention that the arrangement amounts to 2 sale of goods for resale and therefore falls outside the _ Statutory exemption. . The principal basis for the defendant’s contention tha: the goods are not. furnishe? to the airlines. for resale is | that a specific saparate charge. is not. made for the meals; and that they are furnished to the passengers asa compli- mentary service in much the same way as free hotel ac- commodations’ and limousine service are provided when flights are delayed. . Since the fare charged between tw) | points is the same whether or not it takes place -at mea! time, which constitutes about one-third of flight time, it ts. said that the meals constitute a gratuity, which is justifies by the saving of expense that would be incurred by the air- lines if their flights were delayed by waiting at a terminal, : while the: passengers were at their meals 1 in the restaurant. In addition, our attention is called tu the operations of | the catering busygess where food is served in large: quanti-.” ties at receptions, banquets and conveptions, and the trans- actions are regarded as retail sales efkoods to be consume,| and not resold; and again the sales -ander consideration in the instant case are likened to the Sales of such articles as soap, towels, paper cups and so forth; to hotels to ba furnished to guests free of charge, in which situation it has been held that there is no resale of the articles tu the: guests although the cost of the goods undoubtedly’ enters into the charges for which the guests are billed. . See -FZoe! - ] 72. ‘ ‘We do not ttunk that these considerations give sufficient weight to the rule that this exemption in the Act is to. be as: = / Statler Co. v. District of Columbia, C.A., D.C., 199 F. 2a. iin nitrowly construed and it is not to be applied to situations except those plainly within its terms and spirit. See Phillsps Co. v. Walling, 324 U.S. 490-493. Obviously there is no resale of meals to the guests at a reception or to the mem-. ~ bers-of an association when the food is bought by it with‘ their funds for their consumption; and their is no practicable » Allocation of the cost. of miséellaneous services of the kind described above rendered by a‘hotel to its guests as there —can_be in the case of meals bought for and. consumed}pby 2. - definite number of passengers embarked for a flight. eals are purchased by the airline not for self-consumpQ\y bur for consumption by the passengers and although no separate specific. charge is made, the cost is an operating ex- © pense-taken into -account in computing’ the rates of transpor- tation. [1 se 1e instances, moreover, meal service is an im-: portant factor which distinguishes first class flights from | cheaper flights on which food is furnished only. for an ad- — litional charge. The deasive factor, in our view, is that eir R the meals are purchased by the airlines to be distributed by them to. individual passengers for odnsumption. and that tte airlines are compensated for the cost by making it a " constituent element for the charge for transportatiqn. In 2 broad sense, it may fairly be said that there is such |r “as to.exclude the: transactions “from the retail exemption of the. statute. The judgment of the District Court is _—" eo the case is remanded for further proceedings m accordance with this opinion. s * Reversed end’ remanded. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA04386419_0940%3A2. Public record. Not legal advice.