Petition for Writ of Certiorari — Travis-Edwards, Inc. v. Hodgson

In the

Supreme Court of the United States

OCTOBER TERM, 19....

eee ee eee eeeeeeeeeee

JAMES D. Hopcson, SECRETARY OF LABOR,

Unrtrep STATES DEPARTMENT OF LABOR,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

FIFTH CIRCUIT

y

3600 Republic National

Bank Tower

Dallas, Texas 75201

Area Code 214, 744-4511

Attorneys for Petitioner

INDEX

Page

Citation to Opinions Below ooo... eeseeseeeeneeeeeeee: 1

ale DE eee eS 2

III nnesirneecnesccseennvnniniiiiennunivonnevivenanrenscenes 2

EERE ee en 2

I I. csersievieoseninnioomcambssisincsinewes 2-3

A. The Decision of the Trial Court ........0..........00000. 4

B. The Decision of the Court of Appeals ................ 4-6

Reasons for Granting the Writ o.oo. 6-10

eg amnion 10-11

Appendix A

io eniorieenenectasainneniolcaioud 1-4

Appendix B

Decision of the Court of. Appeals .................... 1-14

Appendix B-2

Order of the Court of Appeals 200000000000... 1-2

Appendix C

Opinion of the Trial Court 202.0000... cece. 1-12

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ii Citations

Cases

Bozant v. Bank of New York, 156 F.2d 787

i RE AEC RON 3 Se 10

Kelly v. Ford, Bacon & Davis, 162 F.2d 555

(3. Cir. 1947) LF TEATS ARONA SO 10

Kirshbaum Co. v. Walling, 316 U.S. 517, 520

RARE be Sip SEM set RNs ARE. 7

Maneja v. Waialua Agricultural Co., 349 U.S.

IE I scssah te ca psiasercantt Mendaececc needa 7

Maryland v. Wirtz, 392 U.S. 183, 188 (1968) ............8

Mitchell v. Lublin, McGaughy & Associates,

250 F.2d 253, 259 (4 Cir. 1957) .. EN

Mitchell v. Welcome Wagon ‘pssemmanenane

Inc., 232 F.2d 892 (6 Cir. 1956) .. ee

School v. McWilliams Dredging Co., 169 F.2d

F | Rie a eee 10

Stevens v. Welcome Wagon International,

Inc., 390 F.2d 75 (3 Cir. 1968) .. vesvesee By 9

10 East 40th Street Building, Inc. v. Cotton

925 U.S. S7B (1945) once csecececsceeeeeees 4, 5, 7,8

Walling v. Jacksonville Paper Co., 317 US.

ner eee Ne 7

Statutes

I I ie cs ee en 2

UBL. Sie, ob ome. ...................................... 2, 4, 7, 8,9

In the

Supreme Court of the United States

OCTOBER TERM, 19....

TrAvis-EDWARDS, INC.,

Petitioner,

v.

JaMEs D. Hopcson, SECRETARY OF LABOR,

UnrTep STATES DEPARTMENT OF LABOR,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

FIFTH CIRCUIT

Travis-Edwards, Inc. (hereinafter “Travis-

Edwards”), Petitioner, prays that a Writ of Certiorari

issue to review the opinion, judgment and order deny-

ing rehearing of the United States Court of Appeals for

the Fifth Circuit in the subject case.

CITATION TO OPINIONS BELOW

The opinion of the United States Court of Appeals

for the Fifth Circuit is printed as Appendix B hereto,

pp. 1-4; it is not yet officially reported. The decision

2

of the District Court is reported at 320 F. Supp. 834

(DC La. 1971), and is printed as Appendix C hereto,

infra, pp. 1-12. The Order of the United States Court of

Appeals for the Fifth Circuit denying Petitioner’s Mo-

tion for Rehearing En Banc is not officially reported

but is reprinted as Appendix B-2 hereto, infra, p.._,

JURISDICTION

The opinion of the United States Circuit Court of

Appeals was rendered on July 10, 1972. Rehearing was

denied August 17, 1972. The jurisdiction of this Court

is invoked under 28 U.S.C. §1254(1).

QUESTION PRESENTED

Whether a purely local business is an “enterprise en-

gaged in commerce or the production of goods for

commerce” within the meaning of the Fair Labor

Standards Act, as amended, solely because two clerical

employees periodically communicate with corporate

officers who happen to live outside the state.

STATUTES INVOLVED

The relevant ‘statutory provisions are set forth in

Appendix A, pp. 1-4.

STATEMENT OF THE CASE

Travis-Edwards owns and operates the Henry C.

Beck Building, a 20-story office building located in

3

Shreveport, Louisiana, which rents office space to an

unrestricted variety of tenants (R.17).

Prior to January 1, 1979, Travis-Edwards also owned

and operated a concession stand located in the Henry C.

Beck Building and open to the public. Two employees

of Travis-Edwards worked in this concession stand (R.

18, 19). On January 16, 1970, Travis-Edwards leased

the space occupied by the concession stand to a third

party and sold to such third party all the equipment

and inventory used in the operation of the concession

stand (R. 18).

Employees of the Henry C. Beck Building consist of

the following:

1. Office employees who perform clerical and book-

keeping duties relating to the operation of the

building, and incorporate information concern-

ing the operation of the building into three re-

ports, copies of which are mailed to officers of

Travis-Edwards (R. 19-20) ;

2. Engineers who, “in the maintenance of the build-

ing” and in the “repair and maintenance of the

air conditioning and heating system” regularly

utilize certain material and equipment (R. 20);

3. Maids and porters who “in their custodial and

janitorial duties in and about Defendant’s build-

a certain materials and equipment (R.

4, Parking lot attendants who regularly and cus-

tomarily park and drive automobiles for tenants

and the public (R. 21); and

+

5. One maid who, in addition to her duties as a

maid, operates an elevator when it is used to

transport deliverymen with large deliveries of

freight; this maid takes no part in the handling

of the freight, and operates the elevator only

“in order to assure that it is promptly returned

to the basement, changed back to automatic

operation and made available to building ten.

ants” (R. 21-22).

A. The Decision of the Trial Court

Upon the basis of these facts, the Trial Court found

that Travis-Edwards is “not an enterprise within the

coverage of the Fair Labor Standards Act” (App. C,

p. 11. It reasoned that the office employees were

not covered by the Act because “in light of the funda-

mentals enuniciated” in 10 East 40th Street Building,

Inc. v. Callus, 325 U.S. 578 (1945), that operation of the

office building “as here, constitutes local business,” the

activities of the office employees did not constitute

“being engaged in commerce or in the production of

goods for commerce” (App. C, pp. 6-7); that the

maids, porters, engineers and parking lot attendants

were not covered by the Act because the materials and

equipment which they utilized ceased to be “goods’—

within the meaning of the Act upon their delivery into

the physical possession of the ultimate consumer (App.

C, pp. 7-8); that the “maid - sometimes - elevator opera-

tor” is not “engaged in commerce within the meaning

5

of the Act” (App. C, pp. 9-10); and that “operation of

a concession stand and an office building” are not

related activities within the meaning of the Act (App.

C, pp. 10-12).

B. The Decision of the Court of Appeals

In an opinion by Judge Tuttle, joined in by Judge

Ingraham, the Court of Appeals reversed the lower

Court and held that the Henry C. Beck Building is “an

enterprise engaged in commerce or the procuction of

goods for commerce” solely because the duties of some

of its office employees included preparation of certain

reports concerning the operation of the building and

mailing such reports to two corporate officers in Dallas,

Texas, and one corporate officer in Atlanta, Georgia

(App. B, pp. 1-9). The majority reasoned that al-

though “these documents may have no intrensic value,

and are for internal corporate use only, they are, in our

view, nonetheless sufficient to meet the wnexacting

standards of the statutory definition of ‘commerce’ ”

(App. B, p. 8).

Judge Roney dissented, saying:

“ ..I1 think the majority is wrong to hold that

. Defendant’s office employees are engaged in com-

merce and the production of goods for commerce,

within the meaning of the Fair Labor Standards

Act, solely by virtue of the fact that they prepare

and mail operating reports of a purely local busi-

— S out of town directors and officers.” (App.

»p.9).

He pointed out that in all decisions which held that

written materials were “goods” within the meaning of

the Act or that office workers who mailed such materials

were “engaged in commerce,” the employees performed

“an essential and integral part of (the employer's)

interstate business” (App. B, p. 10). Citing 10 East

40th Street Building, Inc. v. Callus, supra, Judge

Roney stated that if the officers and directors of Travis.

Edwards “lived in the State, there is little doubt that

the operation of the Beck Building would be held to be

local business” (App. B, p. 10). He further pointed

out that the opinion of the majority is in direct conflict

with the decisions of the Third and Sixth Circuits in

Stevens v. Welcome Wagon International, Inc., 390 F 2d

75 (3 Cir. 1968) and Mitchell v. Welcome Wagon Inter.

national, Inc., 232 F.2d 892 (6 Cir. 1956) (App. B, pp.

11-12).

Judge Roney concluded his dissent with the follow.

—

ek en Sp een ean oa é D>

goods for commerce within the ing of

I would affirm the decision of the District

(App. B, p. 12).

REASONS FOR GRANTING THE WRIT

The decision of the Court below is directly contrary

to the principles enunciated by this Court that Congress _

in enacting the Fair Labor Standards Act did not ex-

haust its constitutional power over commerce but left

APE TS PENIS POT TIMES TWEE RELI! —

e

2,

C

7

jocal business to the protection of the States, and that

running an office building constitutes such local busi-

ness. The decision is, moreover, in direct conflict with

numerous other Circuit Court decisions which have

consistently held that the mere use of the mails incident

to a purely local business does not constitute engaging

in commerce or in the production in commerce.

(1) The Fair Labor Standards Act, as amended, was

enacted to correct and eliminate detrimental conditions

“in industries engaged in commerce or in the production

of goods for commerce,” 29 U.S.C. §202. Construing the

Act and its legislative history, this Court pointed out

that Congress did not by the Act “see fit * * * to

exhaust its constitutional power over commerce”

Kirshbaum Co. v. Walling, 316 U.S. 517, 520 (1942);

that “the history of the legislation leaves no doubt that

Congress chose not to enter areas which it might have

occupied,” Maneja v. Waialua Agricultural Co., 349

US. 254, 272 (1955); that “Congress in enacting this

statute plainly indicated its purpose to leave local

business to the protection of the states,” Walling v.

Jacksonville Paper Co., 317 U.S. 564, 570 (1943); and

that, “We must be alert, therefore, not to absorb by

adjudication essentially local activities that Congress

did not see fit to take over by legislation,” 10 East 40th

Street Building, Inc. v. Callus, supra, 325 U.S. at pp.

582-583.

This Court in 10 East 40th Street Building, Inc. v.

Callus, Inc., supra, applied this limitation on the cover-

Sire) OPW PP Qenyereeta gy wre

~~

age of the Act and held that employees of an office

building similar to but more than twice as large as the

Beck Building were not covered by the Act. It said that

“Renting office space in a building exclusively set aside

for an unrestricted variety of office work spontaneously

satisfies the common understanding of what is local

business and makes the employees of such a building

engaged in local business,” 325 U.S. at p. 583. Referring

to the boundary of the Act’s coverage, this Court said

that:

ing an office building, are to

tsntell ap diaines inct from those necessary parts of a

Pater Senders SPSS US a tak (ene

sis supplied )

At least as to the office employees of Travis-Edwards,

nothing in the 1961 or 1966 Amendments to the Act

altered the proposition that regulation of local activities

was left to the states; as this Court pointed out in

Maryland v. Wirtz, 392 U.S. 183, 188 (1968), the effect

of the addition in these Amendments of the enterprise

concept was “to extend protection to the fellow em-

ployees of any employee who would have been pro-

tected by the original Act, but not to enlarge the class

of employers subject to the Act” (emphasis the

Court’s).

The building involved in the case at bar clearly is

not an industry “engaged in commerce or in the pro-

duction of goods for commerce” which Congress in-

tended to regulate by the Fair Labor Standards Act.

It is, as this Court established, a purely local business

which Congress left “to the protection of the States.”

The office employees of Travis-Edwards formed “part

of a distinctive enterprise, such as the enterprise of

running an office building”; their occupation therefore

is, as this Court said in Callus, supra, “to be treated as

distinct from those necessary parts of a commercial

process which alone, with due regard to local regula-

tions, Congress dealt with in the Fair Labor Standards

Act.” Accordingly, they are not covered by the Act and

the majority of the Court below erred in concluding

otherwise.

(2) As Judge Roney correctly pointed out in his

dissent, the decision of the Court below is in direct con-

flict with the decisions of the Third and Sixth Circuits

in the Welcome Wagon International cases, supra. The

majority decision is, moreover, irreconcilable with num-

erous additional decisions by other circuits, Mitchell v.

Lublin, McGaughy & Associates, 250 F.2d 253, 259 (4

Cir. 1957):

“The mere use of the mails and of )

facilities across state lines is not inter-

state commerce. There must be some relation to a

business which is interstate in character . . . where

a business is essentially local and there is no pro-

PPite sein adn Dba:

10

duction of ‘goods,’ communication which is merely

incidental to the local enterprise cannot be classed

as commerce.”"

School v. McWilliams Dredging Company, 169 F.2d

729 (2 Cir. 1948):

ariel ae re rhs

ew Yo in Sent

ior au to te Gta Uae aa ae ee

of

constituted his t in the i

goods for commerce. In our opinion, this work can-

not be so i since use of these

1947):

letters sent out by Kelly crossed state lines. But

even assuming that they did, we are satisfied from

our independent examination of the evidence, tha

the District Judge was entitled to as he did,

that these were ‘an incident of in te busi-

ness’” 162 F.2d at pp. 569-560.

"Significantly, this Court in Mitchell v. Lublin, McGaughy & Associates,

358 U.S. 207 (1959) did not disturb this portion of the Fourth Circuit

decision. It held that various employees including stenographers were

ll

Bozant v. Bank of New York, 156 F.2d 787 (2 Cir.

1946), in determining whether a bank’s employees were

covered, “the mere writing of letters or the drawing of

which have no value of their own except as

records, are not to be counted: 156 F.2d at 790; other-

wise, “the Act would sweep into its maw every business,

however local, which manufactured nothing whatever,

merely because it carried on by correspondence, which

is the case in all business” (156 F.2d at 789).

CONCLUSION

For the foregoing reasons, the Petition for a Writ of

Certiorari should be granted.

Respectfully submitted,

3600 Republic National

Bank Tower

Dallas, Texas 75201

(214) 744-4511

Attorneys for Petitioner

a a

1 APPENDIX A

STATUTORY PROVISIONS

FAIR LABOR STANDARDS ACT OF 1938,

AS AMENDED

(29 U.S.C. 201, et seq.)

SEC. 2. (a) The Congress hereby finds that the

existence, in industries engaged in commerce or in the

production of goods for commerce, of labor conditions

detrimental to the maintenance of the minimum stan-

dard of living necessary for health, efficiency, and gen-

eral well-being of workers (1) causes commerce and

the channels and instrumentalities of commerce to be

used to spread and perpetuate such labor conditions

among the workers of the several States; (2) burdens

commerce and the free flow of goods in commerce; (3)

constitutes an unfair method of competition in com-

merce; (4) leads to labor disputes burdening and ob-

structing commerce and the free flow of goods in com-

merce; and (5) interferes with the orderly and fair

marketing of goods in commerce.

* 7 =

SEC. 3. As used in this Act—

* * *

(b) “Commerce” means trade, commerce, trans-

portation, transmission, or communication among the

several States or between any State and any place

outside thereof.’

* s e

(i) “Goods” means goods (including ships and

marine equipment) wares, products, commodities, mer-

Pes of the Fair Labor Standards Amendments

APPENDIX A 2

chandise, or articles or subjects of commerce of any

character, or any part or ingredient thereof, but does

not include goods after their delivery into the actual

physical possession of the ultimate consumer thereof

other than a producer, manufacturer, or processor

thereof.

= * *

(j) “Produced” means produced, manufactured,

mined, handled or in any other manner worked on in

any State; and for the purposes of this Act an employee

shall be deemed to have been engaged in the production

of goods if such employee was employed in producing,

manufacturing, mining, handling, transporting, or in

any other manner working on such goods, or in any

other manner working on such goods, or in any closely

related process or occupation directly essential to the

production thereof, in any state.‘

* . *

(r) “Enterprise” means the related activities per-

formed (either through unified operation or common

control) by any person or persons for a common busi-

ness purpose, and includes all such activities whether

performed in one or more establishments or by one or

more corporate or other organizational units including

departments of an establishement operated through

leasing arrangement, but shall not include the related

activities performed for such enterprise by an inde-

pendent contractor: Provided, That, within the mean-

ing of this subsection, a retail or service establishment

which is under independent ownership shall not be

deemed to be so operated or controlled as to be other

| ee by section 3(b) of the Fair Labor Standards Amendments

oO ;

3 APPENDIX A

than a separate and distinct enterprise by reason of

any arrangement, which includes, but is not necessarily

limited to, an agreement, (1) that it will sell, or sell

only, certain goods specified by a particular manufac-

turer, distributor, or advertiser, or (2) that it will join

with other such establishments in the same industry

for the purpose of collective purchasing, or (3) that it

will have the exclusive right to sell the goods or use the

brand name of a manufacturer, distributor, or adver-

tiser within a specified area, or by reason of the fact

that it occupies premises leased to it by a person who

also leases premises to other retail or service establish-

ments.

* * .

(s) “Enterprise engaged in commerce or in the pro-

duction 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—

(1) during the period February 1, 1967, through

January 31, 1969, is an enterprise whose annual

gross volume of sales made or business done is not

less than $500,000 (exclusive of excise taxes at the.

retail level which are separately stated) or is a

gasoline service establishment whose annual gross

volume of sales is not less than $250,000 (exclusive

of excise taxes at the retail level which are separ-

ately stated), and beginning February 1, 1969, is

an enterprise whose annual gross volume of sales

made or business done is not less than $250,000 (ex-

clusive of excise taxes at the retail level which are

separately stated) ;

APPENDIX A 4

= . *

SEC. 6. (a) Every employer shall pay to each of his

employees who in any workweek is engaged in com.

merce, 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, wages at the

following rates:

(b)* Every employer shall pay to each of his em.

ployees (other than an employee to whom subsection

(a) (5) applies) who in any workweek is engaged in

commerce or in the production of goods for commerce,

or is employed in an énterprise engaged in commerce

or in the production of goods for commerce, and who,

in such workweek is brought within the purview of this

section by the amendments made to this Act by the

Fair Labor Standard Amendments of 1966, wages at

the following rates:

SEC. 7“* (a) (1) Except as otherwise provided in

this section, no employer shall employ any of his em-

ployees who in any workweek is engaged in commerce

or in the production of goods for commerce, or is em-

ployed in an enterprise engaged in commerce or in the

production of goods for commerce, for a workweek

longer than forty hours unless such employee receives

compensation for his employment in excess of the hours

“As amended by the Fair Labor Standards Amendments of 1961 and

“Section 7 as amended by section 7 of the Fair Labor Standards

Amendments of 1949, and as further amended as noted. Single asterisk

(*) indicates provision amended by the 1949 Act; * * *

OL OE Fs SEEPEM ILI N YE TOP EN Ta, a 88 NE REEE TYE IS OS a

—— . a oa a wo .

5 APPENDIX A

above specified at a rate not less than one and one-half

times the regular rate at which he is employed.

(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 sub-section by the

amendments made to this Act by the Fair Labor Stan--

dards Amendments of 1966—

(A) for a workweek longer than forty-four

hours during the first year from the effective date

of the Fair Labor Standards Amendments of 1966,

(B) for a workweek longer than forty-two hours

during the second year from such date, or

(C) for a workweek longer than forty hours

= the expiration of the second year from such

ate,

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.

aA ine GLEN RBS FIM BONUS F

SN GION TP PARE a Yel OTST TREE ETON NIE COI RE RSA Be

1 APPENDIX B

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 71-1297

JAMES D. Hopcson, SECRETARY OF LABOR,

Unrrep STaTES DEPARTMENT OF LABOR,

Plaintiff-Appellant,

v.

Travis Epwarps, INc.,

Defendant-Appellee.

Appeal from the United States District Court for the

Western District of Louisiana

(July 10, 1972)

Before TUTTLE, INGRAHAM and RONEY,

Circuit Judges.

TUTTLE, Circuit Judge: This appeal involves the

question whether the Fair Labor Standards Act applies

to the operation of the Henry C. Beck Building, a 20-

story office building located in Shreveport, Louisiana.

The district court held that this office building opera-

tion was not an “enterprise engaged in commerce or

the production of goods for commerce” within the

APPENDIX B

|

:

|

the relief he seeks.

a ST NE AE FN eS a a lm

3 APPENDIX B

JAMES HODGSON v. TRAVIS EDWARDS, INC.

ion of goods for commerce, including employees

handling, selling, or otherwise working on goods which

have been moved in or produced for commerce.” 29

USC 203(s).* The issue before us, then, is whether the

Beck Building has employees involved in commerce in

the manner prescribed by the Act. We think it does.

ve of the opinion that the office employees are “en-

gaged in commerce or in the production of goods for

*An additional requirement is that the business have annual gross

sales in excess of Gusaeee. 29 USC $8506) (1). Defendant aduite Gat

the Beck Building operation meets requirement.

"These employees “handled” and/or used cleaning materials,

paper towels and light etc. ”

‘This concession stand was operated by two employees until it was

lt see

oo reer

APPENDIX B 4

JAMES HODGSON v. TRAVIS EDWARDS, INC.

shareholders, likewise live out-of-state, one in Dallas

and one in Atlanta, Georgia.

With respect to the office employees the stipulated

facts reveal that “(these employees regularly and cus-

tomarily performed various clerical and

duties including the preparation and making of rent

ledgers, bank deposits, accounts receivable and payable.

“These daily and weekly facts and figures are then

assimilated into three reports, copies of which are mail-

(a) Mr. Wirt Davis, Dallas, Texas

(b) Mr. Joe B. Hutchison, Atlanta, Georgia.”

5 APPENDIX B

JAMES HODGSON v. TRAVIS EDWARDS, INC.

Our inquiry is directed to whether these employees

are “engaged in commerce or in the production of goods

Sr eummmnen” Though it is plain that coverage under

the Act will not here be derived from what the Beck

Building tenants do, the line of case dealing with such

derivative coverage’ is nonetheless relevant as bearing

on what is directly involved here, ie., the meaning of

the terms “engaged in commerce” and “engaged in the

production of goods for commerce.”

Of course, the pivotal question is whether there ex-

ists, in the regular administration of the Beck Building,

an element of “commerce” sufficient to meet the statu-

tory requirements. We think it plain that if there is

“commerce” here, the office employees are “engaged”

in it (by virtue of their regular interstate communica-

tions with executive personnel) and/or are producing

“goods” for commerce. See Wirtz v. Giometti and As-

sociates, Inc., 399 F.2d 738 (CA 5, 1968); PBA of

Birmingham v. Goldberg, (supra).

“Commerce” is defined by Section 3(b) of the Act

as “trade, commerce, transporation, transmission, or

communication among the several states.” (emphasis

supplied ). Taken literally the siatutory definition clear-

ly encompasses the varicus reports mailed to the out-

of-state officers and directors and stockholders of Tra-

vis Edwards, Inc, since such reports are without ques-

tion transmissions or communications among the states.

However, defendant argues that the use of the mails

here is incidental to the operation of a purely local bus-

"Kirschbaum Co. v. Walling, 316 U.S. 517; Public Building Authority

of Birmingham v. Goldberg, 298 F.2d 367 (CA 5, 1962); Allen v. Atlantic

Realty Co., 384 F.2d 527 (CA 5, 1967).

‘

“< co. |

PO EE ELIA IO EOE OE

APPENDIX B 6

JAMES HODGSON v. TRAVIS EDWARDS, INC.

iness or in effect that such communications must in-

volve some sort of business or profit-making activity

in order for the Act to apply. While we do not perceive

such a requirement in the statutory definition we would

not in any event agree that what a corporation such as

this one finds it worth paying its employees to do and

which must consume a substantial portion of their time

on the job is not a part of that business’ profit-making

activities.

Moreover, even upon the assumption that the sta-

tute may require something more than the mere mail-

ing of a paper across state lines, nevertheless this court

has expressly disavowed the notion that profit or a pro-

fit motive must attach to interstate communications

in order to satisfy the commerce requirements of the

Act. In PBA of Birmingham v. Goldberg, supra, the in-

terstate communications consisted of Social Security

checks mailed out to recipients in several states. This

court noted that while it was difficult to grasp the con-

cept that a government employee working on a Social

Security claim was producing goods for commerce,

“partially because commerce generally has a connota-

tion of business or profit,” nonetheless there need be

“no profit motive present to constitute commerce.”

(emphasis supplied). 298 F.2d 367 at 370; see also

Allen v. Atlantic Realty Co., supra.

The Supreme Court case of Ten E. 40th Street Com-

pany v. Callus, 325 U.S. 578 (1944), we think, throws

no light upon the proper disposition of the case. The

claim for coverage in that case was based upon the

ELISE SAPIENS ALT OSI SF TAT BO

_~_ 2

7 APPENDIX B

JAMES HODGSON v. TRAVIS EDWARDS, INC.

nature of the interstate business carried on by the ten-

ants of the office building. The court indicated that it

was a typical-office building with a variety of tenants,

the building being locally owned and locally operated,

and there being shown no interstate transaction of any

kind in the operation of the building. The distinction

between that cases and this is obvious; here the office

employees of Travis Edwards regularly engage in inter-

state communication by means of the operating re-

ports, the preparation of which requires a considerable

amount of their time.

Rather, we think the situation here is more closely

analogous to Allen v. Atlantic Realty Co., supra, in

which this court found the necessary element of com-

merce in executive material prepared in Atlanta to be

sent interstate to agents and employees of Southern

Bell, a company that occupied a substantial part of the

office building concerned. If anything, the case before

us, insofar as the applicability of the Act is concerned,

is even stronger than the Atlantic Realty case because

in that case the coverage was based on the activities of

a tenant of the building, whereas here the employees of

the building corporation itself are engaged in interstate

activities. Of course, the pure volume of interstate com-

munications is irrelevant to our decision since there is

no de minimis rule with respect to the application of

the Act. Schultz v. Kip’s Big Boy, 431 F.2d 530 (CA 5,

1970); see also Montalvo v. Tower Life Building, 426

F.2d 1135 (CA 5, 1970).

In sum, we note that the reports we are dealing

with are of such a nature as are required to be sent to

APPENDIX B 8

JAMES HODGSON v. TRAVIS EDWARDS, INC.

the president of the corporation and two out-of-state

directors. Although the record does not disclose how

many other directors there may be, indicating only that

the local manager of the building was also an officer

and director, it is common knowledge that a corporate

president is ordinarily responsible to some degree for

the success and management of the corporation. And,

of course, the directors are responsible for the action

of the president in the overall supervision and policy

guidance of corporate affairs. We cannot assume, there-

fore, that the operating reports have no relation to bus-

iness matters in a broad sense concerning the Beck

Building. Though these documents may have no in-

trinsic value, and are for internal corporate use only,

they are, in our view, nonetheless sufficient to meet the

unexacting standards of the statutory definition of

“commerce” (i.e., “... transmission or communication”

among the states). In this conclusion we are supported

by the case of Schultz v. Falk, 439 F.2d 340 (CA 4,

1971), cert. denied in which the Court of Appeals for

the Fourth Circuit held under similar circumstances

that the mailing of operating reports to out-of-state

owners was at least one element in the case which sat-

isfied the commerce requirement.

We conclude, therefore, that the office employes are

“engaged in commerce or in the production of goods for

commerce.” It follows that Travis Edwards, Inc. is a

covered “enterprise” and that all its employees, wheth-

er or not they themselves are involved in commerce,

9 APPENDIX B

JAMES HODGSON v. TRAVIS EDWARDS, INC.

are covered by the wage and hour provisions of the

Act.*

The judgment is REVERSED and the case RE-

MANDED for further proceeding consistent with this

“ir

RONEY, Circuit Judge, dissenting:

I think the majority is wrong to hold that defend-

ant’s office employees are engaged in commerce and

the production of goods for commerce, within the

meaning of the Fair Labor Standards Act, solely by

virtue of the fact that they prepare and mail operating

reports of a purely local business to out-of-town direc-

tors and officers.

The Secretary argues that the reports which these

employees mail across state lines are “goods” under

§3(s) of the Act, so that the office workers are en-

gaged in the “production of goods for commerce.” Al-

ternatively, he asserts that the office employees are

“engaged in commerce” under §3(s).

In certain circumstances we have held that docu-

ments and written materials can be “goods” as the

Act uses that term,’ or that office workers who mail

such materials can be “engaged in commerce.”’ But

those cases cannot be used as authority for a decision

"We note that the concession stand was leased to a third party in

January, 1970. Thus, employees, if any, of this third party are not cov-

ered. However, the Beck Building employees who operated the con-

cession stand prior to its being leased are entitled to recover unpaid back

wages as provided in the Act.

‘Wirtz v. A. S. Giometti & Associates, Inc., 399 F.2d 738 (5th Cir.

—y A + aa Authority of Birmingham v. Goldberg, 298 F.2d 367

ir. I \

"Montalvo v. Tower Life Bldg., 426 F.2d 1135 (5th Cir. 1970); Allen

ty Realty Co., 384 F.2d 527 (5th Cir. 1967), cert. denied, 390 U.S.

APPENDIX B 10

JAMES HODGSON v. TRAVIS EDWARDS, INC.

in this case. In those cases, as in every other case

cited to us by the Secretary’ where such documents

and reports were determined to provide the basis for

§3(s) coverage, the employer transacted some portion

of its business in interstate commerce. The employees

who were found to be covered performed “an essential

and integral part of [the employer’s] interstate busi-

ness.” Wirtz v. Wohl Shoe Co., 382 F.2d 848, 851 (5th

Cir. 1967). In the case before us, since the employer’s

business activity has no direct connection with inter-

state commerce at all, it cannot be found that Travis

Edwards’ office employees — duties which sup-

port or aid in any interstate business.

The holding of the Court converts an otherwise local

business into an interstate business merely because

its corporate directors and president live outside of

the state. If they lived in the state, there is little doubt

that the operation of the Beck Building would be held

to be a local business.‘ The majority concedes that

the coverage cannot here be derived from the inter-

state activities of the Beck Building tenants, and that

*Wirtz v. Valco, Inc., 407 F.2d 1322 (5th Cir. 1969), aff’g 280 F.Supp.

449 (S.D. Tex. 1968) (small loan company operated with funds supplied

by out-of-state lender); Wirtz v. Wohi Shoe Co., 382 F.2d 848 (5th Cir.

1967) (employer operated retail shoe outlets in 42 states); Credit Serv.,

Inc. v. Fleming, 372 F.2d 143 (5th Cir. 1967) (11% of employer’s business

was with out-of-state customers); Beneficial Fin. Co. of Wisconsin v.

Wirtz, 346 F.2d 340 (7th Cir. 1965) (employer was branch office of inter-

state consumer finance system); Wirtz v. Wardlaw, 339 F.2d 785 (4th

Cir. 1964) (employees mailed cards and clippings to out-of-state business

prospects, with aim of obtaining these prospects as customer); Wirtz v.

C&P Shoe Corp., 336 F.2d 21 (5th Cir. 1964) (substantially all the shoes

sold by employer came from out-of-state suppliers and manufacturers);

Mitchell v. Kroger Co., 248 F.2d 935 (8th Cir. 1957) comgeeger operates

interstate grocery chain); Union Nat’l Bank of Little Rock v. Durkin,

207 F.2d 848 (8th Cir. 1953) (bank handled “large quantities” of stocks,

bonds, checks, and commercial paper shipped to and from points out of

state); Meeker Cooperative Light and Power Ass’n v. Phillips, 158

F.2d 698 (8th Cir. 1946) (electric cooperative provided power upon which

interstate businesses depended).

‘10 East 40 Street Bldg., Inc. v. Callus, 325 U.S. 578, 583 (1945)

(“Renting office space in a building exclusively set aside for an unre-

stricted variety of office work spontaneously satisfies the common under-

standing of what is local business and makes the employees of such a

building engaged in local business.”’).

11 APPENDIX B

this does not fall within the Public Building Authority

of Birmingham and Allen line of cases. See notes 1

and 2 supra.

The very argument presented by the Secretary here

was before the Third Circuit in the case of Stevens

vy. Welcome Wagon International, Inc., 390 F.2d 75 (3rd.

Cir. 1968). The plaintiff in that case was a Pennsyl-

yania resident who operated a Welcome Wagon serv-

ice which was entirely local in its scope of operation.

She was, however, required to submit daily, weekly, and

monthly reports to company offices in Tennessee and

New York. The Court, in analyzing plaintiff's con-

nection with “commerce,” found it appropriate to

quote the following language from Mitchell v. Welcome

Wagon, Inc., 139 F.Supp. 674 (W.D. Tenn. 1954), aff'd

932 F.2d 892 (6th Cir. 1956):

“The communications with Defendant’s divi-

sional offices, including the rare transmittal of the

executory service contracts, are purely internal,

and like the confidential daily reports sent to the

subscribers, are incidental to the local services per-

formed by the employee. The records, gy and

the service contract have no value of their own.

They are not Defendant’s objective and Defendant

does not sell them as goods. Their preparation and

transmission incident to a business whose purpose

does not comprise the production of goods at all,

do not constitute engaging in the production of

‘goods.’ ” 390 F.2d at 77, 78 [citations omitted].

The Court then concluded:

“We realize that the Fair Labor Standards Act

is to be given a liberal interpretation in favor of

finding coverage and that the issue of whether an

employee is engaged in commerce should be de-

cided by applying practical rather than technical

standards, Mitchell v. C. W. Vollmer & Co., 349

US. 427, 429, 75 S.Ct. 860, 99 L.Ed. 1196 (1954), but

APPENDIX B 12

it is self evident on the record before us that ap.

ye activities were local in nature ess sof

communications with appellee’s New

York City and Memphis offices. Nor can we accept

appellant’s contention that she was engaged in

the production of goods for commerce. See,

Mitchell v. Welcome Wagon, Inc., supra, 139 F,

Supp at page 679 and cases cited therein.”

I think that the reasoning of the Third Circuit in

Stevens applies with equal force to the situation pre-

sented here.*

Finding that no other employee group of defendant

is engaged in commerce or in the production of goods

for commerce within the meaning of the Act,’ I would

affirm the decision of the District Court.

~ ‘Shultz v. Falk, faery dy de 1971), upon which the majority

relies, is not in point here. There the reports were not mailed to owners

of the business,

P'sPhe employer is the consumer of the soap, waz, paper towel, igh

664 (S.D. Tex. 1970); Shultz v. Arnheim & Neely, ne., 304 F

bag | Pa. 1969); cf. Mitchell v. Sherry Corine Co , 264 F.2d 831 (4th

ce relied ‘om by the Secretary: Shultz »» Falk, cts

on

1970) ; ionstr. Corp., 408 F.2d 626 (2nd Cir. 1969):

33s

7H

=

is

Cir.

v. Union Trust Bank of St. "Petersburg, 297 F. Supp. 1274 (M.D. Fla.

1969); Irby v. Davis, 311 F. Supp. 577 yen Ark. 1970); Wirtz v. Mayer

Constr. Co., 291 F.Supp. 514 (D. N.J. 1968).

The Secretary cites no cases to suppo ~) 7

parking lot attendants and the contention that the automobiles are

“goods” ———— eee

interpretation of the Statute.

DPN eC Se AALS TIE NN RO TSU Red !

1 APPENDIX B

IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 71-1297

James D. Hopcson, SECRETARY OF LABOR,

Untrep STaTES DEPARTMENT OF LABOR,

Plaintiff-Appellant,

v.

Travis Epwarps, INc.,

_ Defendant-Appellee.

Appeal from the United States District Court for the

Western District of Louisiana

ON PETITION FOR REHEARING AND

PETITION FOR REHEARING EN BANC

(Opinion July 10, 1972, 5 Cir., 1972, ..... , a ).

(August 17, 1972)

Before TUTTLE, INGRAHAM and RONEY,

Circuit Judges.

PER CURIAM: The Petition for Rehearing is DE-

_. NIED and no member of this panel nor Judge in regu-

lar active service on the Court having requested that

APPENDIX B-2

2. J. D. HODGSON, ETC. v. T. endian INC.

the Court be polled 2 en banc, (Rule 35

Federal Rules of Appella ure; Local Fifth Cir.

cuit Rule 12) the ction for Rehearing En Banc is

DENIED.

1 APPENDIX C.

__IN THE UNITED STATES DISTRICT COURT FOR

THE WESTERN DISTRICT OF LOUISIANA

SHREVEPORT DIVISION

CIVIL ACTION

No. 15,083

Grorce P. SHuLTz, SECRETARY OF LABOR

Unrrep STATES DEPARTMENT OF LABOR,

v.

TRAVIS-EDWARDS, INC.

FOR PLAINTIFF MESSRS.

L. H. Silberman, Solicitor of

Labor

United States Department of

Labor

Washington, D. C. 20210

Beverly R. Worrell

Roger J. Martinson

United States Department of

~ Labor

1317 Peachtree Street N.E. —

FOR DEFENDANT Larry M. Lesh

Locke, Purnell, Boren, Laney

& Neely

Republic National Bank Tower

36th Floor

Dallas, Texas 75201

Barry R. Nelson

Nelson and Evans

Beck Building

Shreveport, Louisiana 71101

BEN C. DAWKINS, JR., CHIEF JUDGE

APPENDIX C 2

OPINION

The Secretary of Labor (the “Secretary”) instituted

this action under Section 17 of the Fair Labor Stan.

dards Act of 1938, as amended, 29 U.S.C. §§ 201, et seq.

alleging that defendant Travis-Edwards, Inc. (“Travis

prise within the meaning of Section 3(a) (1), 29 U.S.C.

§ 203(a) (1).

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APPENDIX C 6

The Court in 10 East 40th Street Building 3

Co. v. Cals: concluded:

has not chosen to do so. Absent such action, it must be

concluded that operation of an office building leased

|

;

325 US. 583 (1945); See also Tobin v. Girard ies, Inc.,

206 F.2d 524 (5th Cir. 1953); Johnson v. Dallas Downtown lopment

*C}. Stevens v. Welcome Wagon Int'l, Inc., 390 F.2d 75 (3d Cir. 1968);

Billeaudau v. Temple Assoc., 213 F.2d 707 (Sth Cir. 1954). In Wirtz v.

i

‘

eF

|

7 APPENDIX C

««* * * The records, reports * * * have no value

and Defendant does not sell them as goods. Their

= do not constitute engaging in the pro-

uction of “goods” * * *

“The Defendant’s employees who and

transmit such records are not in the

production of goods for commerce ithin the mean-

In light of the fundamentals enunciated in Callus,

that operation of an office building, as here, constitutes

the Act.

Il. MAIDS, PORTERS, ENGINEERS, AND

PARKING LOT ATTENDANTS

them “employees handling, selling, or otherwise work-

ing on goods that have been moved in commerce” and

thus they are covered by the Act. This contention

primarily is based on these employees’ use of products

which were produced outside the state and employed

in performance of their respective duties. We cannot

accept such a strained interpretation of the Act.

“ ‘Goods’ means goods * * * wares, products, com-

modities, merchandise or articles * * * but does not

include goods after their delivery into the actual

en

ee

———

APPENDIX C 8

a en, manufacturer or processor

thereof.” (Emphasis added.)”

Clearly, Travis-Edwards is neither a producer, manu-

facturer, or processor.

The Secretary argues that the 1966 amendments to

the Act extended coverage to the above captioned em-

ployees. That clearly strained interpretation of legis-

lative intent is not supported.” This legislative history

does not support such a revolutionary interpretation.

We think the rearrangement in phrasing of the section

rather than to create an entirely new theory of cover-

age.

The Secretary’s own interpretation of the Act dis-

poses of his contention with respect to the maids, por-

ters, and engineers here:

“.. . the term ‘handling or in any other manner

...” 29 C.F.R. 779.240(b) (Enaphasio added)”

working on goods’ includes who sort,

scssan prado, ot0en, pack, label sdivens, tunmpert.

ee Se ae Sean ee & SES

on goods.” 29 C.F.R. 779.240(b).

“ .. An employee will be considered in

‘handling . . . or otherwise working on ” with-

"29 U.S.C. § 203(1).

“The Secretary relies heavily on statements to

of the Act as to the scope of its coverage. We think statements

not reflect legislative intent.

cf

i

ts

é

i

g

:

moved in for commerce

son.” 29 C.F.R. 779.240(b) (Emphasis

E

).

|

f

:

Fl

:

l

i

q

a

F

Ee

It seems clear that coverage of the Act does not ex-

tend to a maid or porter who uses wax, etc., in his

duties, an engineer who uses screws, etc., or an attend-

to the “affecting commerce” coverage which was re-

jected.” Accordingly, we reject the Secretary’s argu-

ment that the maids, porters, engineers, and parking

lot attendants are “handling, selling or otherwise work-

ing on goods that have been moved in or produced for

commerce by any person.”

II MAID-ELEVATOR OPERATOR.

The Secretary argues that because one maid has as

part of her duties operation of an elevator when it is

. Inc., F. Supp... , 19 W. H.

Bldg. : 4

32, 218 (D.C. Tex 1969).

infra.

:

ner pe ail

APPENDIX C 10

used to transport deliverymen with large deliveries that

she is engaged in commerce. Again, the Secretary’s con-

tention must be rejected as urging too tenuous a con-

nection with commerce or the production of goods for

commerce to come within the scope of the Act.

The Fifth Circuit Court of Appeals noted,"*

“ * * * we do not think Congress intended that

the Act with respect to those who are only ‘engaged

in commerce’ should be stretched and strained to

cover every person whose labor is of use or conven-

ience or whose labor in some fashion contributes to

the comfort or convenience of one who is so

* * * Clearly, Congress intended the coverage

the Act to stop somewhere, and the line bounding

coverage must be drawn.”

We do not think the maid-sometime-elevator operator

is engaged in commerce within the meaning of the Act."

IV. CONCESSION STAND EMPLOYEES

It is clear that the activities of the concession stand

empluyees are of the type of activity contemplated with-

in the “handling” language of the Act. “However, the

question then becomes whether operating of the con-

cession stand is part of an “enterprise” as contemplated

by the Act.

“(r) ‘Enterprise’ means the related activities

performed (either through unified operation or

common control) by any person or persons for a

common business purpose, and includes all such

activities whether performed in one or more estab-

lishments or by one or more corporate or other

~¥Johnson v. Dallas Downtown Development Co., supra, at 289-290.

“See Houchin v. Thompson, 2 CCH W. H. Cases, Para. 32,377 (1970),

aff'd 6th Cir. No. 20158, Aug. 26, 1970, distinguishing Wirtz v. Columbian

Mutual Life Ins. Co., 246 F. Supp. 198 (W.D. Tenn. 1965). We think the

Houchin rationale is applicable under the instant facts.

w—

11 APPENDIX C

organizational units including d ts of an

establishment operated <j arrange-

ments, but shall not include related activities

performed for such enterprise by an independent

contractor: Provided, That, within the meaning of

this subsection, a retail or service establishment

which is under independent ownership shall not be

deemed to be so operated or con as to be :

other than a separate and distinct enterprise * * *

reason of the fact that it occupies premises '

leased to it by a person who also leases premises :

to other retail or service establishments * * *” 29 f

99 U.S.C. § 203(r). (Emphasis added.) §

With respect to activities which are not related and :

are not performed for a common business purpose, the '

Secretary has stated: '

“Activities which are not related even if fe

formed by the same employer are not included as

a part of the enterprise. receipts from the

unrelated activities will not be counted toward the

annual dollar volume of sales and the employees i

performing such unrelated activities will not be

covered merely because they work for the same

employer. Common ownership standing alone does

not bring unrelated activities within the scope of

the same ——. If, for example, one individual

owns or controls a bank, a filing station, and a fac-

tory, the mere fact of common ownership will not

make them one enterprise. Activities which are

not ‘related’ will be treated separately for purposes

of the tests contained in section 3(a)(1) through

(5) of the Act. For example, in the cases where a

single company operates retail grocery stores and

also engages in an unrelated business of manufac-

turing clothing, the ‘enterprise’ for purposes of

section 3(a)(1) of the Act will consist of the retail

grocery stores and any activities related to them.

The clothing manufacturing will not be included

egy meer -

prise has one million dollars in sales and meets the —

other conditions of section 3(a)(1), and the factory |

employees will not be covered merely because the —

retail business is covered. The manufacturing busi. —

ness will be considered separately under section ©

3(a)(3).” (Emphasis supplied.) 29 C.F.R. 779.211, 7

While the question is not totally free from doubt, |

we do not believe that operation of a concession stand —

them so related, nor does the common profit motive.” —

To find that the maids, porters, engineers, parking lot ~

attendants and office employees, which, as discussed ©

above, do not meet the criteria for coverage in them. —

selves, should be covered simply because Travis-Ed- —

wards also operated a concession stand is to place a |

strained interpretation on the Act which we think is |

unwarranted. :

Accordingly, we hold, upon the facts stipulated, that —

Travis-Edwards, Inc., is not an enterprise within the ©

coverage of the Fair Labor Standards Act”

The Secretary's prayer for relief is denied. A prop- ©

er decree should be presented.

Chief Judge

THUS DONE AND SIGNED, in Chambers, in

Shreveport, Louisiana, this 3rd day of November, 1970.

“Cf. Wirtz v. Columbian Mutual Life Ins. Co., supra, at 907.

™“On the terms in which Congress drew the legislation we cannot

esca’ the duty of drawing lines. And when lines have to be drawn they

are to appear arbitrary when judged solely by bordering cases.

10 East 40th Street Building Co. v. Callus, at 584.